Telecoms spending set to stagnate

News Analysis

Telecoms spending set to stagnate

Even though enterprises across Europe are spending increased sums on their telecoms networks, the coming year will see expenditure trimmed back in the UK, a survey by Forrester has revealed.

The survey of 305 telecom decision-makers at large European enterprises showed an average 3.4% spending increase in communications equipment, with the most popular areas being IT security, IP equipment, and mobile equipment and services. However, it also found that cost and security were the biggest stumbling blocks to the adoption of telecom technology by enterprises.

Forrester found that big differences across countries in terms of telecom budget plans for 2005. While UK and Irish firms expected to reduce spending by 0.1%, French firms expected to increase spending by 5.6%.

Forrester suggested that a more competitive UK enterprise market and differences in telecom equipment purchasing cycles explained the gap, overriding the positive impact of the superior economic outlook for the UK.

Some technologies will see much stronger growth than others. Spending on IT security, IP equipment and mobile voice will experience the strongest growth compared with 2004 spending levels, with 67%, 51%, and 47% of firms, respectively, planning increases. Not surprisingly, the majority of firms will keep their PSTN and legacy data spending stable in 2005.

The survey also showed a marked interest in managed solutions for most connectivity, security and IP communications technologies. Forrester said this came about for a variety of reasons including cost savings, simplicity and skills. Just over two-thirds of respondents said they were interested in a managed desktop VoIP service.

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