New deals will shift telecom balance

Feds look to combine network infrastructure and end-user applications, a market analyst says

A major shift in the way the federal government buys its telecommunications services will disrupt the "competitive equilibrium" between telecom carriers and integrators, according to a leading federal market analyst.

Many agencies are considering contracts that bundle network infrastructure with end-user applications, said Warren Suss, president of Suss Consulting Inc., a firm specializing in the federal technology market. The Navy Marine Corps Intranet is an example of this type of integrated contract.

But such deals threaten the delicate balance that has reserved the infrastructure for telecom carriers and has left applications up to integrators, Suss said Thursday during his opening remarks at the TeleStrategies Inc.'s Federal Telecom Opportunities for Today and Tomorrow conference in Reston, Va.

Many of the services that agencies seek as part of the package are a long distance from the carriers' core strengths, Suss said.

"If the carriers can move into the applications-infrastructure space, then they will have a shot at leading these integrated deals," Suss said. "If not, they will have to take second place."

To date, there are only a few examples of integrators stepping on carriers' turf, including the Treasury Communications System. The award of that system to an integrator is more traditional, with much of the telecom transport being shifted back to a carrier, Suss said.

NMCI, however, represents the future of telecom contracts in the federal government, he said, and that type of market convergence will have a great impact on the federal market.

According to Suss, the winners in that shift will be:

Companies that have developed integrated telecommunications network solutions for large corporations, enabling them to showcase their ability in meeting service-level agreements. Companies that think of the business case for integrating infrastructure and applications instead of focusing on the engineering. Companies that think creatively and focus on future issues such as bandwidth and security constraints. Companies that commit to a strong post-award marketing and sales plan to overcome internal resistance and pressure from incumbents. Organizations such as the Defense Information Systems Agency and the General Services Administration's Federal Technology Service also need to pay attention because the shift to large, integrated contracts is a major threat to the future of government-run entities that have served as the channels to industry's telecom resources, Suss said.

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