By Richard Handford, Contributing Writer

A new survey jointly conducted by TM Forum and NetCracker reveals the current economic downturn as the overwhelming concern of leading figures in the communications industry, at least in the short term. Unsurprisingly, the economy is the industry’s main challenge over the next 18 months, according to nearly 60 percent of respondents.

But look three years ahead, and the picture changes. Respondents point to the re-emergence of traditional headaches such as new competition, technology change and a lack of business agility. The state of the economy does not even rate a place in the top five concerns, pointing to the industry’s expectations of how the economic cycle will turn.

“One would have to be blind not to be concerned what is happening in the wider economy, but in a longer perspective the communications industry is very confident,” says Sanjay Mewada, NetCracker’s vice president of strategy.

Interestingly when asked about their top priorities over the next 18 months, respondents opted for technology evolution ahead of cost reduction, which ranked only second along with operational agility and customer focus. The survey was conducted over the last four weeks.

“There is a fairly straightforward explanation. One of largest costs today is managing legacy systems and one of the key ways to reduce that is to begin migrating to next-generation systems,” says Mewada.

But the industry will feel some pain from budget cuts, according to the survey. Respondents forecast a reduction of between 8 and 15 percent in 2010 budgets from 2009 levels. This figure refers predominantly to OSS/BSS investment.

But possibly the survey overstates the bad news, according to Keith Willetts, chairman and CEO of TM Forum. He has heard of CFOs who cut savagely last autumn when setting budgets for 2009. Subsequently, this was seen as an over-reaction. “Most people I talk to are very aware of the upside opportunity and are going back to ask for a renegotiation of the budget.” If rerun in a few months, then the survey might produce more positive budget projections, he says.

There is wide acknowledgement in the industry that internal transformation such as migration to a single IP network must be undertaken whatever the economic situation.  “I get asked far more ‘how do I do right?’ rather than ‘should I do it?’” says Willetts. The Forum will be following this week’s survey with an in-depth analysis on the same subject in June.

This week’s survey consisted of interviews with 25 of the most influential figures in the communications industry. They included leading fixed, mobile and cable operators from the around the world, along with leading industry analysts and other thought leaders.

The purpose of the survey is twofold: give a sense of perspective to those in the communications industry about how the downturn will impact them personally. Secondly, the survey is intended to project the long-term benefits of the industry to an audience in the wider economy.