Input predicts broad telecom growth

State and local governments’ demand for upgraded and advanced interoperable communications networks will spur telecommunications spending by 70 percent during the next five years, according to a report by Input.

The report forecasts that the total market value will increase from $9.6 billion this year to $16.4 billion in fiscal year 2010. Spending will be on network services, leased voice and data circuits and professional services, software and hardware needed to support telecommunications.

Homeland security initiatives will continue to be major investment drivers in the telecommunications market. The federal government has provided first responder grants targeting development of interoperable communications, but disputes over jurisdictional control coupled with hardware and software limitations have slowed projects and widespread adoption, the report states.

The Homeland Security Department is also developing the Homeland Security Data Network, a communications backbone to share classified information with intelligence and law enforcement officials across federal, state, and local governments. But the department’s inspector general reports that the $337 million network was constructed too quickly, doesn’t adequately protect the integrity of information and only connects some DHS agencies, the report states.

Despite that it is expected to take several years before state and local law enforcement and other agencies are hooked up to the system, funding is expected to remain consistent and sufficient, the report states.

Telecommunications investments also will be made in other areas using advanced technologies. For example, implementation of voice over IP and Wi-Fi systems will allow residents in remote rural areas online access to e-government services, provide Internet access to lower-income residents and help economic development. While those technologies are popular among the public, government support remains unclear because technologies as voice over IP is essentially tax-free.

“State and local government agencies are in a unique situation with regard to these new technologies,” said James Krouse, Input’s state and local market analysis manager and the report’s author, in a press release.

“Although the utilization of these solutions moves technology forward, they also have economic consequences,” he added. “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.”