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It’s time for Light Reading's Top Ten Telecom Stocks list â€" a straight-to-the-gut take on what telecom and communications equipment stocks could blast off in 2007.

Here’s what we were trying to find: (1) The stock should be, ideally, related to the telecommunications market, and (2) has a decent shot at going higher.

Of course, it’s not easy to predict how Wall Street’s whims will treat telecom. For example, we just saw a period, 2002-2006, which was a healthy bull market by most measures, but one that yielded mixed results in telecom. In 2005, with the broader market rallying, large incumbent service providers were the “Dogs of the Dow.” Yet, in 2006, telecom service providers were the world’s fair â€" they exploded higher, leading the market.

Can telecom continue to rally? It seems so. After the telecom bust, it’s a subdued industry that is mostly drawn toward asset rationalization. Venture capitalists are no longer even very active in the space. So, in a contrarian sense, this lack of enthusiasm points to the potential for more gains.

Supporting the market are several long-term trends:

Enormous growth in emerging market telecom networks, especially in mobile

Large demand for access bandwidth, including both fiber and wireless

A large-scale migration from copper fixed-line to fiber and broadband wireless

More efficient networks (and ongoing job cuts) will reduce costs

Consolidating carriers and equipment makers will make the industry more profitable

A reversion back to the “bigger is better” concept of the do-it-all carrier will yield stability

Relatively low investment expectations

With these trends firmly in place, we’re set up for a decent year in telecom. So here are our top ten stock picks for 2007:

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