Standard & Poor said it expects the U.S. wireline market to continue slowing over the next year as consumers continue to opt for wireless and voice-over-IP services as replacements. Additionally, the ratings agency is predicting that cable operators will have an early advantage in triple play offerings, but that telcos could begin catching up in 2007.

The three quarterly reports--Industry Report Card: U.S. Telecommunications And Cable; Industry Report Card: Canadian Telecom, Cable And Media; and Industry Report Card: Investment-Grade Telecoms In Europe--also forecast stability in the Europe, Middle East & Africa (EMEA) region despite pressures and mixed results in Canada.

"The high level of M&A activity observed recently among telecom firms is just one of the factors reshaping the U.S. telecommunications sector," Richard Siderman, managing director and credit analyst, S&P Ratings Services said in prepared remarks.

In the EMEA region, S&P dropped a number of carriers’ credit ratings in the third quarter of this year in large part due to the their “aggressive stance and the increasing operating pressures that are rapidly extending throughout the sector.” However, overall the region will continue to be home to plenty of carriers with investment-grade credit.

In Canada, the outlook is similar to the U.S., though S&P credit analyst Joe Morin wrote that there is greater opportunity for wireless growth due to lower existing penetration rates.

"Canadian telecom market dynamics are being driven by the continued proliferation of broadband and IP and resulting changes, as the cable and telecom operators start competing in each others' traditional areas of dominance," he said.