Four Vertical Industries Spend Most on Telecommunications

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BOONTON, NJ. December 16, 2002:

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Four vertical industries will account for more than 50 percent of all corporate spending on telecommunications services in 2002, says a new market research report from Insight Research.  By the close of 2002, US businesses will have spent nearly $150 billion on wireline telecommunication services, and by 2007 business spending is forecasted to grow to $217 billion,, according to the new research study. 

Insight’s newly-released market analysis report, Telecom Services in Vertical Markets 2002-2007, reveals that four industries — wholesale trade; financial, insurance, and real estate; professional business services; and communications—will account for 67.7 percent of the corporate telecommunications expenditures by the end of 2002.  The study analyzed 14 vertical industries categorized by the Standard Industrial Classification (SIC) system, and focuses on corporate spending for wireline voice and data telecommunications services in each industry.

“With business spending down in all sectors of the economy and the telecommunications industry particularly hard hit by the corporate spending slowdown, it’s the right time for carriers to move away from a generic ‘one-size-fits-all’ service offer and begin defining vertical marketing strategies,” says Robert Rosenberg, president of Insight.  “Vertical marketing allows telecom service providers to competitively differentiate their services with industry-specific solutions, get their costs in line by focusing on niche opportunities, and squeeze revenue from those business sectors with historically high telecom expenditures,” Rosenberg concludes.

Insight’s study reports that 89.6 percent of carrier service revenue is still attributable to voice, a commodity service that allows little differentiation.  When telecom providers focus on vertical market solutions, however, they move away from the commodity voice sale and toward higher-margin, value-added services, the report says.  The vertical approach to marketing strengthens customer loyalty by developing closer links to the customer’s core businesses.

A free report excerpt, table of contents, and ordering information is available online at www.insight-corp.com/vert02.asp.

IP Telephony: Service Revenues and OSS Expenditures for Voice over Packet Networks 2002-2007

Donna Savino

at Insight Research