CHICAGO Top telecommunications executives attending an industry conference this week forecast wireless, video and Internet services would increasingly converge, bolstering demand for Internet network capacity.
Cisco Systems Inc. (CSCO.O) Chief Executive John Chambers, speaking at the NXTcomm communications conference in Chicago, said demand for bandwidth would likely grow 300 percent to 500 percent each year in the next several years, a trend that will likely lift Cisco's sales of routers.
"The transition is going to happen much quicker than people anticipate," Chambers told reporters.
One of Cisco's clients, top U.S. telephone company AT&T Inc. (T.N), unveiled at NXTcomm a video-sharing service for its next-generation wireless customers.
The service, called Video Share, allows users to send live videos to each other during phone conversations. A man at a baseball game, for example, can send live footage to a friend he is talking to on his mobile phone.
AT&T said the service, initially limited to a small market, was a step toward converging video and phone communications.
"Today, video share is a one-to-one mobile service, but you should expect this to quickly reach the other two screens, and that's the PC and the television," AT&T Chief Executive Randall Stephenson said.
Analysts have said Apple Inc.'s (AAPL.O) iPhone, which combines a cell phone with a music and video player, will fuel the launch of more all-in-one tech gadgets from competing consumer electronic makers.
Stephenson said AT&T's exclusive deal with Apple could help boost its market share.
Of the one million people who have shown an early interest in the iPhone, which should go on sale on June 29, about 40 percent were not yet AT&T's wireless customers, he said.
In addition to "convergence," IPTV (Internet-protocol television was another buzzword at NXTcomm, with both AT&T and No. 2 phone company Verizon Communications Inc. (VZ.N) touting the virtues of their advanced Internet and video networks.
Both AT&T and Verizon are rolling out advanced video services, which feature high-definition channels and video on demand, to fight cable television providers' "bundles" of video, phone and Internet services.
Verizon CEO Ivan Seidenberg defended his company's strategy of building an expensive, all-fiber network, called FiOS, saying it was necessary to ensure it has sufficient bandwidth.
Verizon said it now had nearly 500,000 FiOS video subscribers, up from 348,000 at the end of the first quarter. It also said it had 1 million FiOS Internet users. Not all FiOS customers have access to video, partly due to regulation.
"We're convinced that there will always be a need for more bandwidth," Seidenberg told reporters.
Ernie Carey, vice president of AT&T's Advanced Network Technologies, told Reuters on the sidelines of the conference that a top priority was to expand U-Verse, its IPTV service, called as quickly as possible.
"I would tell you my belief is the biggest challenge right now is finding ways to go faster in the build," he said.
Despite the upbeat comments, analysts said attendance at the conference in Chicago's McCormick Place, one of the world's largest convention centers, appeared low after a wave of mergers left the industry with just a handful of big players.
"It's because service providers have merged," said Jeffries & Co. analyst Bill Choi.
AT&T completed its acquisition of BellSouth late last year. Equipment providers, including Alcatel-Lucent ALU.PA, have also merged in line with the consolidation of their clients.
Analysts said equipment vendors at the conference seemed less eager to jostle for attention.
"The industry has benefited from some period of stability," said Stifel Nicolaus & Co. analyst Blair Levin.