Consumer and Business Patterns for US Telecom Purchases Changing

By Joe Rizzo
TMCnet Contributing Writer

We have seen a great many changes in the telecommunications markets these past several years. I remember when I attempted to get the first version of Voice over IP (VoIP) up and running and more importantly, consistently. Those days seem to be far behind us now. In the past, there was always a clear cut distinction between what a consumer was looking for in terms of telecommunications as opposed to business needs.

Not too long ago, you needed voice, data and video services when you were at home. When you got to the office, you required multi-station voice and private data services. It seems however, that these distinctions are becoming blurred, the boundaries between business-to-consumer (B2C), business-to-business (B2B) and consumer-to-consumer (C2C) domains are now considered to be old models.

Back in the days of wireline telephony, when all phone calls went over the PSTN, businesses would purchase “trunks” or a dedicated line or for larger companies, a bundle of circuits from their service provider. These days, we have seen the adaption of the concept referred to as “trunking.”

A SIP trunk is the use of SIP or Session Initiation Protocol, to set up communications between an enterprise IP-PBX (News - Alert) and a service provider where voice becomes just another application over the Internet. Unlike in traditional telephony, where bundles of physical wires were once delivered from the service provider to a business, a SIP trunk is a logical connection from one point to another over an IP connection

Probably the biggest factors in this blurriness is that over the past several years the Internet along with smartphones, tablets and a wide variety of wireless access devices have improved and become both home and business devices wrapped up into what we refer to as BYOD.

Insight Research Corporation is a research firm whose perspective comes from more than a decade of market research expertise, performed by senior-level analysts with around 10 to 15 years of practical industry experience in engineering, product management, marketing research and business development.

Insight offers various market research reports. A recent report entitled “U.S. Telecom Buying: Changing Consumer & Business Purchase Patterns, 2014-2019″ it is a 153 page report. It tracks consumer versus business spending across four broad areas that include hardware, software, managed services and connectivity. In addition, each of these areas is broken down further into their own segments.

The overall finding is the forecast for telecommunications spending is going to see a two percent increase over the next five years. This would represent an increase from the current $422 billion to about $456 billion in 2019. To come to this conclusion, 19 different hardware, software, and service segments tracked.

An example given on the hardware side is that business purchasing will grow nearly 16 percent over the five year period while consumers spending on this type of hardware, which specifically deals with cell phones, will decline at an even faster rate.

Robert Rosenberg, who is the president of Insight Research made the following comment, “The very wide disparities in projected spending growth that we found when looking at consumer and business buying trends across more than 19 different telecommunications categories came as quite a shock Our research left little doubt in our minds that the carriers, their software developers and their equipment suppliers are going to put ever greater amounts of their development budgets into areas that meet the needs of businesses.”

Another example that we see from the excerpt of Insight’s report is connectivity spending by business versus consumer is further divided into the following categories;

• cellular voice
• cellular data
• cellular data cards
• cellular routers and gateways
• wireline voice, wireline WANs
• DSL high-speed Internet connectivity
• fiber high-speed Internet connectivity
• cable high-speed Internet connectivity

If we take a minute to look at managed services, we will see that the comparison of spending between the business and consumer market is also segmented into machine-to-machine (M2M) services, unified communication (UC) services and managed hosting services.

It is easy to see how the lines can be blurred when your home device is now being used as a work device. As companies make improvements to UC services and everyone in the workforce has to stay connected not only to their office, but with their colleagues and clients as well, it seems understandable that we will see an increase in business spending with the related decrease in consumer spending. After all, wouldn’t you rather have your company paying for your smartphone and tablet usage?

Edited by Maurice Nagle