CIOs say telco spending will be less than originally forecasted

UBS Warburg released its quarterly CIO Telecommunications Study earlier this month that shows shaky user confidence. The effects of war and a troubled economy are taking a toll on CIOs at some of the largest companies across the U.S.

The report shows that 54% of CIOs say they will actually spend less on telecommunications services in 2003 than they had originally estimated in January. But UBS Warburg points out that the majority of respondents still anticipate spending more on telecom this year than they did in 2002.

The financial research firm surveyed 50 CIOs from Fortune 1000 companies spanning 11 industries.

And while 46% of CIOs say they will spend as much as they anticipated in January, all are sensitive to incurring new expenses.  A full 82% of respondents say that “return on investment” is the most important factor when buying new telecom services and equipment.

UBS Warburg also asked executives how they spend their telecom dollars. Local, long distance and international voice services make up 52% of users’ total telecommunication dollars. Data services, including frame relay, IP, ATM and private line services, make up 27% of spending for CIOs. Respondents say 11% of their spending goes toward the ambiguous “other” category.

The research firm also questioned CIO’s about the competitive nature of the major service providers and UBS Warburg says it was surprised to see that AT&T is considered the most competitive.

Some 28% of CIOs surveyed say AT&T “always” makes competitive bids. WorldCom ranked as the second most competitive carrier according to 21% of respondents. SBC, Qwest, Sprint and Verizon are considered less competitive at “always” making competitive bids according to 9%, 7%, 6% and 5% of CIOs, respectively.