Transportation IT Spending Projected To Grow - InformationWeek

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Transportation IT Spending Projected To Grow

Government-intelligence firm Input says state and local spending on transportation IT systems should rise from $1.8 billion in fiscal 2005 to $2.5 billion in 2009.

Implementing technologies to improve highway safety and efficiencies, coupled with the federal government's effort to create the next generation of intelligent transportation systems, should increase state and local spending on transportation IT systems to $2.5 billion in fiscal year 2009, up from expected expenditures of $1.8 billion in fiscal 2005, which begins Oct. 1, according to a study to be released next week by the government-intelligence firm Input.

"A steady influx of federal funding, driven by the need to address our nation's crowded highways, will ensure that the market has a continual infusion of capital to help drive key initiatives across state and local jurisdictions," James Krouse, Input's manager of state and local market analysis, says in a statement that will accompany the report.

Much of the investment will focus on dedicated short-range communications, technology that's expected to support applications for smart highway initiatives such as real-time traffic and weather updates to motorists, comprehensive automobile tracking, and universal electronic toll collection. Today, that technology is primarily employed for automated toll collection, as a combination of wireless and radio-frequency identification technologies, used to support a wide range of roadside-to-vehicle and vehicle-to-vehicle public-safety applications.

Though investments in dedicated short-range communications and other advanced technologies should continue to generate opportunity in this sector, the Input study says, spending by local and state governments on transportation systems will be driven increasingly by federal policy and money to support a more coordinated and integrated plan to improve the national transportation system. An increased number of homeland security initiatives for logistical management, tracking, and control also will help bolster the market, Input says. "After relatively flat growth over the last couple of years, the market has rebounded with considerable growth across all categories," Krouse says.

Input estimates state and local transportation IT spending will increase conservatively in the next two years but will then pick up, growing at a compound annual growth rate of 8% through fiscal 2009. Despite early market dominance by smaller specialized companies, Input sees that big contractors with deep resources will be well positioned to successfully compete for large-scale systems integration and intelligent communications systems contracts in this growing market.

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