Telcos Need to Ramp Up R&D to Stay Competitive

With venture capitalists still leery about telecommunications investments after the fallout from the dot-com crash, telcos should beef up their R&D if they want to stay competitive, Dave Burstein, a longtime telecommunications reporter, wrote on Aug. 26. Two percent of sales would be a good start, he suggests, which would mean $2.48 billion and $1.94 billion for AT&T (T) and Verizon (VZ), respectively. AT&T spent $892 million in 2008, down from $985 million in 2007. Verizon doesn't disclose its R&D spending, but analyst Chris King at Stifel Nicolaus estimates it's very little, as most of its vendors do the work.

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