Emerging highway technology to spur state and local investment

News Input August 31, 2004
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Increased spending on emerging technologies that allow for the efficient and safe movement of traffic on our nation¹s highways, combined with a concerted federal effort to create the next generation intelligent transportation system, are expected to boost state and local spending for transportation IT systems from $1.8 billion in FY 2005 to $2.5 billion in FY 2009, according to a report released today by Input, a provider of government market information.

Increased transportation technology investment will center on Dedicated Short Range Communications (DSRC), the technology 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. Used today primarily for automated toll collection, DSRC is 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, according to Input.

Jurisdictional investments in DSRC and other advanced technologies will continue to generate opportunity in this sector, according to the Input report, but IT spending in the state and local transportation market will also be driven increasingly by federal policy and funding in support of a more coordinated and integrated plan for upgrading the national transportation system. An increased number of homeland security initiatives for logistical management, tracking and control also will help bolster the market.

"After relatively flat growth over the last couple of years, the market has rebounded with considerable growth across all categories," said James Krouse, manager of state and local market analysis at Input. "A steady influx of federal funding, driven by the need to address our nation¹s crowded highways, will ensure that the market has a continual infusion of capital to help drive key initiatives across state and local jurisdictions."

Input estimates the state and local transportation IT market will grow conservatively between FY 2005 and FY 2006, but will then pick up speed, growing at a compound annual growth rate of 8% through FY 2009. Input projects that despite early market dominance by smaller specialized companies, large contractors with the resources to compete for large-scale systems integration contracts and intelligent communications systems will be well-positioned to capitalize on the growing market.

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