Fed Telecom Spending To Soar

A new report predicts a spending increase of nearly 70% over five years in the Homeland Security Department.



The Homeland Security Department is going to spend heavily on telecom goods and services, according to an analysis by a market-intelligence firm of government spending. Information security and knowledge management will also see sizable spending increases.

A report by the firm Input predicts that Homeland Security officials will spend nearly 14% more annually on telecom and networking wares and services through fiscal 2008. According to the company, the department spent $623 million on telecom this year and will spend $1.05 billion in 2008—almost 70% more over the five years.

More than any other technology, Input says, telecom, which is embedded throughout the national homeland security strategy, represents the bridge that's forming between federal agencies and state and local governments. Input's report states that interagency communications and information sharing will require additional spending on data communications, networking, and professional services.

Increased spending by Homeland Security will propel overall federal telecom government expenditures during the next five years to a projected $17.3 billion, from this year's $12.5 billion, Input estimates, a 7% annual growth rate.

Though the largest percentage increase in telecom spending will come from Homeland Security, the Defense Department and its military branches will continue to dominate federal spending on telecom. Defense, according to Input, is more dependent on telecom services than civilian agencies because of its need to link worldwide bases and units. The combined telecom spending by the Defense Secretary's office and the four major service branches will increase to $9.3 billion by 2008, up 39% from $6.7 billion in 2003. During those five years, the Air Force will overtake the Army as the branch spending the most on telecom: $2.2 billion versus $2 billion in 2008.

Just behind Homeland Security will be the Transportation Department, with spending estimated to rise 31% over the next five years, to $733 million; Treasury, 37.1%, to $731 million; Energy, 32%, to $643 million; Agriculture, 42%, to $627 million; and NASA, 29%, to $558 million.

Input says MCI and AT&T will maintain the biggest share of the contracts, holding 16% and 10%, respectively, of the federal telecom market.

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