Spending on telecommunication services by financial firms and other companies will increase 4.7% this year, said Robert Mason, research director for enterprise network services at Gartner.

That is roughly double the expected growth in overall spending on information technology, he indicated at a presentation to the Wall Street Technology Association Wednesday.

Overall, IT spending this year will increase roughly 2% to 3%, he said. That follows a drop of 4.7% last year.

Spending on Wall Street, though, is likely to finish flat, though, a different Gartner analyst indicated in October at Gartner's annual Symposium in Orlando, Fla.

“Several key vertical industries, such as manufacturing and financial services, will not see IT budgets recover to pre-2008 levels before 2012 or 2013,” Peter Sondergaard, senior vice president at Gartner and global head of Research, said. ”Emerging economies continue to be the locomotive of enterprise IT spending, substantially outpacing developed economies.”

But high-speed traders are leading the way, at least in pushing for innovation in communications networks, Larry Robinson, vice president of sales for the Optimum Lightpath business in the New York area for Cablevision.

"Every microsecond matters,'' he said. And the drive to deploy faster algorithms and greater access to a wider set of market centers is forcing supporting technologies to keep up, regardless of the industry served.

In 2008, he said, capital markets firms accounted for 95 percent of the 1 gigabit a second services Optimum Lightpath supplied in the New York metro area.

In 2010, the same firms are accounting for 95% of the 10 gigabit services that the company now offers. And he expects this will keep up when 40 gigabit service is introduced.

This is causing companies to insist on service level agreements that insist on "five nines" reliability in a network.

"Five nines" means 99.999% uptime. That, in turn means, only 5 minutes and 15 seconds of downtime in a year of 365 days.

It also is driving demands for route diversity and agreements on just how few milliseconds or microseconds it will take the service provider to deliver instructions to various points on the network, he said.

But the "need for speed" is not the only item driving telecom spending. As Mason noted, use of video, which requires huge amounts of bandwidth, is surging. That will mean many companies will need to spend heavily to increase capacity by 100 times, to distribute high-quality video throughout an organization.

The need for "reach" is increasing, now that users are getting accustomed to using iPads and other mobile devices as "endpoints" -- and starting points -- for consuming and creating video.

Morgan Stanley Analyst Mary Meeker Tuesday noted, for instance, that the amount of video being sent over wireless networks is soaring. In January, "real-time entertainment" accounted for 27% of wireless traffic. By September, that was 41%.

 

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