Telecom equipment spending in the region for the first three quarters of 2007 was, at US$47.1billion, up 6% on the same period in 2006. Outside of Japan, though, capex rose at a much stronger 19.5% clip to $31.8billion. “NTT’s long anticipated next-generation network build-out is largely still on hold, so vendors heavily reliant on this market are struggling,” notes Matt Walker, Ovum RHK’s Senior Analyst for Network Infrastructure. But Asia Pacific’s big emerging markets are another story as carriers race to extend mobile coverage and introduce new services. India is the biggest single contributor to growth in these markets, where the focus is rapid construction of low-cost mobile networks. Capex in India and Indonesia rose at rates of 18% and 27%, respectively, compared to same period 2006. Even China, where the equipment sector had slowed in previous quarters, saw carrier capex intensity (capex divided by revenues) increase in the first 9 months of 2007, from 23.7% to 24.8%. Capacity expansions to support broadband growth and scaling new broadband value added services are factors in China, as is wireless spending aimed at improving quality of service, supporting rural expansion, and lifting ARPU of urban subscribers. Much of the growth in the region’s emerging markets outside Japan and China has similar sources, but network transformation is also becoming a driver in some markets such as Australia and Korea. According to Ovum RHK analysis, wireless infrastructure is a clear beneficiary of emerging market growth, but wireline optical (ON), DSL, and packet transport (PT) segments all enjoyed increased sales. Changes compared to the same period in 2006 saw Huawei move from fifth to second spot in packet transport (PT); Alcatel-Lucent solidified its #2 rank in wireline optical and held steady in PT and DSL; and there is strong carrier interest across Asia Pacific in deploying video-based services (e.g. IPTV over DSL/FTTx) and enterprise Ethernet services.