Federal Spending On Telecom To Continue Growing - InformationWeek

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Federal Spending On Telecom To Continue Growing

The Department of Homeland Security and E-government are among the drivers that will boost federal telecom spending, according to the government market-research firm Input, which released a study Wednesday.

Federal spending on telecommunications is expected to expand to nearly $21.4 billion in fiscal year 2010, driven heavily by e-government and Presidential Management Agenda objectives, according to Input, which released the market intelligence study Wednesday.

Chris Campbell, senior analyst, federal market analysis, said in an interview that the year 2006 will be the switchover year in which leased data line spending will surpass leased voice line spending for the first time.

He said data lines will record a compound annual growth rate of 7 percent versus 5 percent for voice lines over the period. Data line spending will grow from about $5.6 billion annually in 2005 to $7.8 billion in 2010 while voice will move from $5.4 billion in 2005 to $7.0 billion in 2010.

Wireless communications will boom in the period, Campbell said, adding: "No individual segment of the telecommunications market has seen as explosive growth as the wireless segment. The advantage afforded to agencies by being able to stay in constant communication with key personnel, whether they are on the battlefield or in a remote office, greatly enhances an agency's ability to perform its mission."

Campbell said wireless spending should grow at almost twice the rate of spending for the overall federal telecom market, jumping from $1.9 billion in fiscal year 2005 to $3.3 billion in 2010. "But wireless can't be broken down into separate subcategories," he said. "(A lot) of wireless is wrapped up into larger expenditures."

One area slated for telecommunications growth is the Department of Homeland Security. A major overhaul of the agency began to be outlined this week by Homeland Security Secretary Michael Chertoff. Campbell said he had been predicting steady telecommunications growth for DHS, but he indicated the numbers could change as the agency is overhauled.

"I expect a lot of (DHS) programs will be on-hold during the reorganization," he said. "We'll just have to wait and see."

As for the impact of President Bush's Presidential Management Agenda, outlined shortly after the President first took office, the analyst said telecommunications providers are involved in expanding the use of IT among government agencies and IT as it is used to improve communications with the nation's citizens.

"New technologies, new competitors, and a slew of mergers and acquisitions are changing the overall landscape of a market that historically has been rather static and controlled by a limited number of industry heavyweights," Campbell said. "Now, even systems integrators are emerging as dominant vendors for market share in the federal telecom market."

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