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GovWin Forecasts State & Local Telecom Spending to Grow 70 Percent by FY10

20-Jul-05

Cross-jurisdictional information sharing drives budget priorities

Reston, VA – July 20, 2005 – Telecommunications spending in the state & Local government market is expected to grow 70 percent from $9.6 billion in fiscal year 2005 (FY05) to $16.4 billion in fiscal year 2010 (FY10), according to a report released today by GovWin, the leader in government market intelligence. Initiatives for comprehensive, interoperable communications across government jurisdictions, particularly for homeland security, will be the primary factors driving significant market growth for the foreseeable future.

The Department of Homeland Security (DHS) has made significant efforts to construct the Homeland Security Data Network (HSDN), a centralized network to share classified information with intelligence and law enforcement officials across federal, state and local governments. However, recent findings by the DHS Inspector General found that the network inadequately protects the integrity of the information. Further, with only a limited number of DHS agencies currently connected to the network, additional efforts are required to reach all targeted state and local authorities, which are expected to drive significant spending for several more years.

Although, well-publicized programs for improved interoperable communications for first responders have received large federal grant funding, limitations in traditional hardware and software technologies, as well as disputes over jurisdictional control have hampered the effects of the programs. As operating standards and industry regulations are developed for these new technologies, additional federal grant programs and awards are expected to fund even greater growth for interoperable communications.

"In addition to increased contract opportunities and grant programs we expect to see supporting communications initiatives, we're also seeing some attrition among traditional telecommunication service providers due to mergers and acquisitions,” said James Krouse, manager, state & local market analysis at GovWin. “All of these factors are allowing new vendors with competing technologies to enter the same market segment, resulting in healthy pricing and service-level competition."

New technologies such as Voice over Internet Protocol (VoIP) and WiFi are gaining greater acceptance among the general public but government support remains unclear. “State and local government agencies are in a unique situation with regard to these new technologies," stated Krouse. “Although the utilization of these solutions moves technology forward, they also have economic consequences. Therefore, state governments are in a position to make large investments in these leading-edge technologies in order to accomplish their mission, but will later suffer substantial tax losses because of it.” As an example, while governments may embrace VoIP as a means to improve efficiency and reduce costs, these services are essentially tax-free. While governments may favor utilizing the technology, they may not be in favor of widespread adoption by the general public.

GovWin's complete State & Local Telecommunications TargetView is available to clients of GovWin's State & Local Market Analysis subscription program. For more information on the subscription program, visit slma.GovWin.com or call 703-707-3500.

About GovWin

GovWin is the leader in government market intelligence. Established in 1974, GovWin helps vendors manage and grow their government business and helps government organizations work with vendors. Over 1,000 members varying in size from small specialized companies to the largest systems integrators use GovWin’s high quality subscription information and powerful information management tools. For more information about GovWin, visit www.GovWin.com or call 703-707-3500.

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