Input Predicts Fed SpendingInput Predicts Fed Spending

RESTON, Va. -- Federal telecommunications spending over the next five years is expected to see a compound annual growth rate of five percent starting from just over $17 billion in fiscal year 2006 and reaching nearly $22 billion by fiscal year 2011 (FY11), according to a report released today by INPUT, the authority on government business. The telecom segment is predicted to be one of the few bright spots on the federal horizon despite an overall market slowdown.

Critical homeland security initiatives focused on interoperability and information sharing as well as the evolution of Department of Defense net- centric warfare will remain key federal communications spending drivers over the next few years. Additional spending will be seen across other civilian agencies as the government continues to gravitate to a more mobile workforce that will be supported by wireless communications and mobile network connectivity.

"There is no question that telecommunications spending will remain strong in the federal marketplace over the next several years," said James Krouse, acting director, public sector market analysis at INPUT. "But, with the advancement of new technologies, introduction of new vendors, and continued merger and acquisition activity, the competitive landscape will change significantly."

Wireless spending represents the most aggressive portion of growth over the forecast period, and introduces a variety of new competitors into the federal market. However, INPUT expects that large-scale telecommunications companies and systems integrators will continue to compete effectively as agencies increase their reliance on larger, all-service encompassing contracts. To remain responsive to new technologies in the market, the larger federal vendors will need to seek creative partnerships and potentially restructure offerings.

"With significant federal budget dollars being dedicated to improved national integrated communications, the telecom market will remain vibrant and dynamic over the next few years with heavy competition for those dollars," added Krouse. "This situation will be further exacerbated as increased reliance on government-wide acquisition contracts and schedules force larger, common contract opportunities."

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