Market Analysis – 83112404 – Multi point analog telecommunications circuit

Executive Summary

The market for multi-point analog circuits (UNSPSC 83112404) is a legacy category in terminal decline, with a projected 3-year CAGR of est. -12% to -15%. The global market size is contracting as enterprises and utilities migrate to more flexible and cost-effective IP-based alternatives like SD-WAN and cellular IoT. The single greatest threat is supply discontinuity, as incumbent carriers accelerate the decommissioning of their copper networks. The primary strategic objective is no longer cost reduction through competitive sourcing, but rather risk mitigation and managed migration to modern replacement technologies.

Market Size & Growth

The specific Total Addressable Market (TAM) for analog circuits is not tracked by major analysts, as it is a sub-segment of the broader, and also declining, leased-line market. The global TAM for dedicated private line services is estimated at $18.2B in 2024, with the analog portion representing a small and rapidly shrinking fraction. The projected CAGR for analog circuits is sharply negative, estimated at -15% over the next five years as forced migrations to digital services accelerate. The largest geographic markets remain mature economies with extensive legacy infrastructure: 1. North America, 2. Western Europe, and 3. Japan.

Key Drivers & Constraints

1. Constraint (Technology Obsolescence): The fundamental driver is the superiority of IP-based technologies (SD-WAN, MPLS, 5G/LTE). These offer exponentially higher bandwidth, greater flexibility, and lower total cost of ownership, making analog circuits non-viable for all but the most niche legacy use cases.
2. Constraint (Supply-Side Decommissioning): Major telecommunications carriers are actively decommissioning copper-wire infrastructure to reduce operational expenses and fund investments in fiber and 5G. This results in forced migrations, reduced service availability, and end-of-life notices for analog circuits.
3. Driver (Legacy System Dependency): Demand persists from critical infrastructure sectors, particularly utilities and industrial manufacturing, for SCADA and other industrial control systems (ICS). These systems have long lifecycles and were designed around the high reliability of analog point-to-point circuits.
4. Constraint (Shrinking Talent Pool): The number of technicians qualified to install and maintain analog circuits is rapidly diminishing. This leads to longer repair times (MTTR) and increased maintenance costs, which carriers pass on to customers.
5. Driver (Niche Security): In a very small number of high-security government and industrial applications, the non-IP, "air-gapped" nature of a true analog circuit is still perceived as a security benefit against cyber threats, though this is a diminishing driver.

Competitive Landscape

The market is a classic oligopoly dominated by Incumbent Local Exchange Carriers (ILECs) who own the physical last-mile copper infrastructure. Barriers to entry are nearly insurmountable due to extreme capital intensity and regulatory requirements.

⮕ Tier 1 Leaders * AT&T: Dominant ILEC in 22 U.S. states; aggressively decommissioning copper to fund fiber/5G expansion. * Verizon: Major ILEC presence in the U.S. Northeast and Mid-Atlantic; actively migrating customers from copper to their fiber network (Fios) and wireless solutions. * Lumen Technologies (formerly CenturyLink): Extensive national footprint, particularly in rural and western U.S. states; managing a large portfolio of legacy voice and data circuits. * BT Group (UK): The UK's incumbent, with a stated public plan to shut down the PSTN and ISDN networks by 2025, forcing all customers to IP-based alternatives.

⮕ Emerging/Niche Players The concept of "emerging" players is not applicable. Niche players are typically aggregators or Managed Service Providers (MSPs) who do not own infrastructure but specialize in managing complex, hybrid networks and orchestrating the migration from legacy circuits to modern platforms for enterprise clients.

Pricing Mechanics

Pricing for analog circuits is based on a Monthly Recurring Charge (MRC) model. The price build-up is a function of a few key components: the number of endpoints ("drops"), the physical distance or mileage between points (priced by V/H coordinates), and any service-level agreements (SLAs). Unlike dynamic commodities, pricing is not market-driven but is set by carrier tariffs and is highly inelastic. Carriers often use steep price increases on out-of-term contracts as a tool to force migration to strategic IP services.

The most volatile cost elements are not input commodities but carrier-imposed charges on a shrinking customer base. 1. Maintenance Surcharges: Carriers are increasing fees to cover the rising cost of maintaining aging copper plants. Recent increases on specific circuits have been +10% to +25% year-over-year. 2. "Forced Migration" Price Hikes: Upon contract expiration, carriers may present renewal quotes that are est. +50% to +200% higher than the previous term, making a migration to a digital alternative the only financially viable option. 3. Regulatory Fees: Changes in state and federal fees, such as the Universal Service Fund (USF) charge, can fluctuate quarterly, adding +/- 1-3% to the total invoice cost.

Recent Trends & Innovation

Innovation in this category is centered on replacement and decommissioning, not enhancement. * Accelerated Copper Retirement (Q4 2023): AT&T and Verizon have both filed notices with the FCC detailing plans to retire copper in thousands of census blocks, accelerating timelines to cease support for legacy services like analog circuits in those areas. [Source - FCC Filings, Q4 2023] * SD-WAN over Cellular as Primary Replacement (2023-2024): A clear trend has emerged where organizations are replacing analog SCADA circuits not with wired MPLS, but with more agile SD-WAN appliances using dual-carrier 4G/5G connectivity for redundancy and rapid deployment. * Managed Migration Services (2023-Present): Major suppliers like Verizon and AT&T are now bundling "Managed Migration" professional services with new SD-WAN or fiber contracts, offering project management to ease the transition away from their own legacy analog products.

Supplier Landscape

Regional Focus: North Carolina (USA)

Demand in North Carolina is driven by the state's large utility sector (e.g., Duke Energy), extensive manufacturing base, and state/local government agencies. These entities rely on analog circuits for legacy SCADA, alarm, and remote monitoring systems. Demand is declining but remains "sticky" due to the high cost and operational risk of upgrading embedded systems. Supply is dominated by AT&T (the historical BellSouth ILEC) and Lumen, with some competitive overlap from Spectrum. Local capacity is actively being reduced as carriers prioritize fiber and wireless build-outs in high-growth areas like the Research Triangle and Charlotte, increasing decommissioning risk for circuits in more rural parts of the state. The North Carolina Utilities Commission (NCUC) regulates tariffs, but federal decommissioning rules largely dictate supply availability.

Risk Outlook

Actionable Sourcing Recommendations

1. Initiate a "Sunset Audit" and Migration Plan. Conduct a full audit of all active analog circuits to map service locations, costs, contract end-dates, and the equipment they support. Use this data to create a risk-based, phased migration plan to a modern equivalent (e.g., SD-WAN over broadband/5G). Prioritize migrating sites with the highest MRC or those located in areas where carriers have announced copper retirement to avoid service disruption.

2. Leverage Migration as a Negotiation Tool. Consolidate the portfolio of circuits and approach the incumbent carrier with a holistic proposal. Offer the future-state spend on replacement technology (e.g., a multi-year SD-WAN contract) in exchange for favorable end-of-life terms on the legacy circuits. This includes price freezes for the remaining term, waived early termination fees for circuits being migrated, and dedicated project management resources to support the transition.