Telephone Excellence by Mike Mitchell

TELECOM and the ECONOMY - Part II
By Mike Mitchell

Last month I reviewed two perspectives, the upside and the downside, of the economic fallout effecting Telecom. In part ll of this two part series, I point to the economic realities due to AmericaТs changing demographics as well as the telecom outlook. Is change predictable as well as inevitable? Is there a reason for cautious optimism in the telecom community, especially healthcare?

In his fascinating book The Age Curve, author and researcher Kenneth W. Gronbach focuses on the changing American demographics and its effect on the economy. Here are some of his findings:

The Boomers are Still Kicking (but not as hard)
Х The Baby Boomer live birth population (now ages 44 to 63) is 78 million.
Х They spent billions of dollars and spurred the economy but spending is now decreasing.
Х Today they are just entering the age where healthcare is becoming a necessary expense. Those healthcare dollars are being taken away from other markets like cars and houses.

Gen Xers to the Rescue?
Х The Gen Xers population (ages 24 to 43) is 69.5 million. 9 million (or 11%) fewer than Boomers.
Х They (as a generation) canТt sustain the consumption levels of the Boomers.
Х The internet is their primary source of relevant information (bad for newspapers, radio and TV).

Can Gen Yers Help?
Х They are younger than 23 and yet to be born (1985 to 2010). Estimated population of 100 million.
Х They adapt easily to new technology and inhale electronics (phones, computers, iPods, etc)
Х The Boomers changed the rules in the 1960s; the Gen Yers are changing the actual game plan.

Economic Realities
There are not enough Gen Xers to buy all the Boomer houses or DetroitТs non-green cars/SUVs. Gen Yers are demanding better, faster, and smarter technology. The marketplace and the economy are changing. To keep up with the natural and fast-paced changes, AmericaТs companies must identify new markets, rethink their approach to old markets, and look for new solutions in order to survive. Old things are passing away, but exciting things are on the horizon. What does this mean for healthcare telecom?

A Cautiously Optimistic Telecom Outlook
УTechnology Trends: Analyzing Global Enterprise IT Budgets 2008,Ф a report by independent market analyst firm Datamonitor was referenced in a November 2008 Certification Magazine article СHealth Care to Avoid Global IT Budget Crunch.Т According to the Datamonitor report: УЕ[the] aging baby-boom generation is starting to increase demand on the health services, leading to rising costs for national and private health systems. In an attempt to address this, the health care industry is investing in new technologies that will enable it to cut costs and provide more efficient care.Т

The same report gave survey results showing global cutbacks in IT budget, with this caveat, УThe exception, however, is the health care sector which, contrary to other verticals, is planning a significant number of increases in IT spending in 2009.Ф It continued, СЕwith 57 percent of respondents [8000+ IT decision makers] in the industry saying they plan to expand IT expenditure.Т

The telecom world is not falling apart. It just needs to make adjustments as demand for wired and traditional services decreases. As the current and future generations are demanding better, faster and more mobile telecommunications solutions, the innovative, flexible and responsive companies will not only survive but will become strong. Meanwhile healthcare is gearing up its technology up to meet the future challenges of 78 million boomers.

-Mike