Service providers, government clash over GSA Networx contract revenue potential

Service providers and the federal government can't seem to reach common ground on the revenue potential for General Services Administration's (GSA) Networx multi-billion government telecom services contract, a new study indicates.

Jointly underwritten by CenturyLink (NYSE: CTL), one of the Networx Universal and Enterprise contract holders, and the Telework Exchange, the new Off the Hook: Federal Telecom Disconnect study revealed that there are "significant" differences in priorities related to costs savings and changes in telecom mobility.

Last year, the government and the supplier community said that 50 percent of government Networx users increased Networx spending, while 44 percent of Networx contractors reported a rise in revenues.

However, the 2012 forecasts tell a completely different story. In 2012, only 13 percent of government survey respondents said they'll increase Networx spending, while 86 percent of Networx contractors forecast their revenues will grow.

What's creating the disparity is that 95 percent of the respondents said that federal agencies are going to focus more on cost savings over last year. Interestingly, only one in three respondents said they would reduce service prices.   

Exacerbating the problem is who actually makes decisions to buy services within each agency. While 83 percent of the respondents from the supplier industry argue that CIOs should have more power, only have of the federal government respondents agreed. Instead, federal government leaders believe that IT managers, IT directors, and IT administrators should have the power to decide on key service purchases.  

In addition to spending trends, the majority of industry suppliers and government agencies agreed that the use of mobility and teleworking will continue to rise. By 2014, some version of mixed-use phones and/or Bring Your Own Device (BYOD) will be largely adopted by a large number of federal agencies.

"Today's mobile society means that Federal agencies must have the telecommunications tools to do their jobs - and communicate about them - remotely," said said Diana Gowen, CenturyLink senior vice president and general manager, in a statement.

For more:
- see the release

Related articles:
UPDATED: Sprint, Level 3 suffer Networx Enterprise sales slump as agencies delay transition
CenturyLink lights up private line services for five DoD agencies
CenturyLink secures spot on GSA's CONNECTIONS II contract vehicle
AT&T, CenturyLink, Verizon among 21 to win seat on GSA CONNECTIONS II contract

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