After record capital expenditures by some U.S. carriers in 2002, the new year is expected to bring a slowdown in spending as next-generation network deployments are completed.

The carriers are expected to lay out $21.8 billion on capital expenditures in 2003, down about $2.4 billion from last year, according to analysts at Raymond James, which also forecasts 2004 capex at $18 billion. The reason for the decline is two-fold: Carriers are completing their upgrades to either GSM/GPRS/EDGE or cdma2000 1xRTT, and existing equipment is so solid that its replacement costs are declining.

The declining capex is good news for the carriers, but bad news for the manufacturers, which have to seek other markets or build other products and services. It's good news for carriers because they've already invested more than $118 billion in their networks since 1984–an average of $880 for each of 130 million subscribers.

AT&T Wireless and Cingular Wireless are the big spenders as they overlay TDMA networks with GSM/GPRS. Both also are installing EDGE radios, a process that will take them beyond 2004.

Meanwhile, Verizon Wireless and Sprint PCS nearly have completed their upgrades to cdma2000 1x. The latter says its 1x network is completed, while Verizon still has a few holes to fill.

Verizon is in the midst of a $5 billion, three-year contract it signed in early 2001 with Lucent Technologies for 1x infrastructure. Lucent is the largest supplier of equipment to Verizon, which hasn't detailed how much of that it will spend in 2003.

Sprint PCS has told analysts it expects capital spending to be $2.3 billion to $2.4 billion in 2003, down from $2.8 billion in 2002. Those investments are largely for network expansion and increased capacity, the carrier said.

Also on the CDMA side, U.S. Cellular in December signed a $100 million deal with Lucent to upgrade to 1x, with most of that planned for 2003. Sprint PCS' largest affiliate, Alamosa Holdings, has said it will spend between $40 million and $50 million in 2003, mostly for general maintenance since it completed its 1x upgrade in early 2002. Alltel has nearly completed its 1x upgrade but has not announced how much capex it has planned for 2003.

Both AT&T Wireless and Cingular spent at record levels in the fourth quarter, according to CapEx Report.

AT&T Wireless has said it would spend $5.1 billion in 2002, which amounts to one-fourth of all capex among the nation's six national carriers, CapEx Report said. Nearly half of that came in the fourth quarter. The carrier also has said it expects 2003 capital spending not to exceed $4 billion, down 22 percent from the previous year.

Cingular Wireless said it would spend between $4.2 billion and $4.4 billion in 2002, with about two-thirds of that for GSM/GPRS, CapEx Report said. The carrier has not given any guidance on its capex plans for 2003, but was estimated to have 70 percent of its upgrade completed by the end of 2002.

T-Mobile USA has not divulged its capex plans, which not only includes its GSM/GPRS network but also its T-Mobile HotSpot Wi-Fi network. "They've been making big investments in 802.11," says Ray Jodoin, wireless research director for In-Stat/MDR, a sister company of Wireless Week.

Jodoin said T-Mobile nearly has completed its GPRS upgrade and most of its future spending likely would be for coverage.