TIGHT WITH A BUCK

BY IAN OLGEIRSON, KAGAN

Wall Street has begun calling for additional investment in infrastructure needed to deploy advanced services such as on-demand products. However, MSO capital spending habits in 2002 and the projected levels for 2003 show that budgets for head-end equipment, so-called scalable infrastructure, are expected to shrink by roughly 24%. Proportionally, the category will be flat, indicating the breadth of MSO capex reductions. Capital devoted to consumer premises equipment is also falling by nearly one-quarter year-over-year, but will remain flat proportionally at nearly 40% of the total budget. Fickle investors, however, show promise of loosening the purse strings.