No other industry touches as many
technology-related business sectors as telecommunications, which, by
definition, encompasses not only the traditional areas of local and
long-distance telephone service, but also advanced technology-based services
including wireless communications, the internet, fiber-optics and
satellites.
Telecom is also deeply
intertwined with entertainment of all types.
Cable TV systems, such as Comcast, are aggressively offering local
telephone service and high-speed internet access.
The relationship between the telecom and
cable sectors has become even more complex as traditional telecommunications
firms such as AT&T are selling television via the internet, and competing
directly against cable for consumers' entertainment dollars.
Consequently, the various organizations that
monitor the global telecommunications industry have their own ways of
estimating total revenues, and their own thoughts on including, or not
including, specific business sectors.
Does “telecom” include equipment manufacturing and certain types of
consulting? Or, should it be considered
as services only, such as subscriber lines and data networks?
Information and Communication Technologies
(ICT) is a term that is used to help describe the relationship between the
myriad types of goods, services and networks that make up the global
information and telecommunications system.
Sectors involved in ICT include landlines, private networks, the
internet, wireless communications, (including cellular and remote wireless
sensors) and satellites.
Globally, in the broadest possible sense (based
on ICT), the telecommunications industry is expected to grow to about a $6.5
trillion sector in 2018.
(This figure
includes
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No other industry touches as many
technology-related business sectors as telecommunications, which, by
definition, encompasses not only the traditional areas of local and
long-distance telephone service, but also advanced technology-based services
including wireless communications, the internet, fiber-optics and
satellites. Telecom is also deeply
intertwined with entertainment of all types.
Cable TV systems, such as Comcast, are aggressively offering local
telephone service and high-speed internet access. The relationship between the telecom and
cable sectors has become even more complex as traditional telecommunications
firms such as AT&T are selling television via the internet, and competing
directly against cable for consumers’ entertainment dollars.
Consequently, the various organizations that
monitor the global telecommunications industry have their own ways of
estimating total revenues, and their own thoughts on including, or not
including, specific business sectors.
Does “telecom” include equipment manufacturing and certain types of
consulting? Or, should it be considered
as services only, such as subscriber lines and data networks?
Information and Communication Technologies
(ICT) is a term that is used to help describe the relationship between the
myriad types of goods, services and networks that make up the global
information and telecommunications system.
Sectors involved in ICT include landlines, private networks, the
internet, wireless communications, (including cellular and remote wireless
sensors) and satellites.
Globally, in the broadest possible sense (based
on ICT), the telecommunications industry is expected to grow to about a $6.5
trillion sector in 2018. (This figure
includes equipment and related services, as well as subscriber revenues and
other business revenues.) The United
States market is expected to grow to $1.8 trillion by 2020. These estimates come from the
Telecommunications Industry Association (TIA).
Telecommunications remains one of the major providers of employment in
the world, with 716,800 employees in the U.S. alone as of mid-2019, and that
number reflects only jobs in pure telecommunications service sectors.
There were approximately 8.2 billion wireless
service subscriptions worldwide as of 2019, This is immense growth from about 4
billion at the end of 2008 and 1.41 billion in 2003. However, the actual number of individuals
holding those subscriptions is somewhat less, as many people have more than one
subscription. The Cisco Visual
Networking Index (VNI) forecasts a seven-fold increase in global mobile data
traffic from 2016-2021.
Wireless service providers have set service
prices low enough to be affordable for vast numbers of people, even in very
low-income nations. Inexpensive
cellphones are now indispensable to consumers from Haiti to Africa to New
Guinea. Simple handsets can be bought
for as little as $20 in such markets, and they can be topped-off with a segment
of prepaid minutes for as little as 50 cents.
Smartphones are more expensive, but good smartphones that are
internet-capable are on the market at modest prices.
The International Telecommunication Union (ITU)
estimates global landlines at 942 million as of 2018, down from 1.21 billion in
2009. This is only 12.6 landlines per
100 global population. Clearly, the
worldwide boom in telecommunications is in wireless subscriptions and internet
access—not in old-fashioned landlines.
Several major factors are creating deep changes
in the telecommunications sector today, including: a) a shift in business and commercial
telephones to VOIP (Voice Over Internet Protocol) services, that is, telephone
via the internet; b) a shift in residential and personal telephone use from
landline services to wireless; c) intense competition between cable and wired
services providers; d) soaring growth in the amount of data and video accessed
via the internet and over wireless devices for information and entertainment,
especially video; the e) introduction of advanced, more cost-effective
satellites, f) rapid growth in machine-to-machine communications (the Internet
of Things) and g) the continuing evolution of advanced wireless technologies,
including more powerful smartphones and upcoming introduction of
ultra-high-speed 5G services. Simply
put, a growing number of telecommunications service users prefer to make their
phone calls, download data, view entertainment and otherwise access the
internet via smartphones, not fixed telephones or PCs plugged into the wall.
Ingenuity, innovation, cost control, mergers
between large companies and a reasonable approach to spending and investment
will help to move the telecom industry ahead while it goes through these
evolutionary changes. New technologies
promise continuous advancement. The cost
of a cellphone call has become a bargain worldwide. Meanwhile, competition among handset makers
is more intense than ever. On the higher
end, manufacturers are adding advanced new features to smartphones on a regular
basis. These phones now contain
significant computing power and memory, to the extent that today’s smartphones
easily have more computer processing power than a PC of 15 years ago, at a
fraction of the size and weight of a PC.
Improved cellphone service has prompted tens of millions of consumers to
cancel their landlines altogether, eating into traditional revenue streams at
AT&T and Verizon, among others.
As more consumers recognize the promise, and
good value, of phone service using VOIP, millions of households and businesses
worldwide have signed up for this less-expensive service as an alternative to
landlines, often through their cable providers as part of a bundle of
services. A handful of firms, such as
Comcast, lead the VOIP market, along with relatively young companies like Skype
(acquired by Microsoft in 2011) and Vonage.
Savvy consumers realize that some VOIP services are free, such as
certain international calls on Skype or Viber.
At the same time, local phone companies, led by
Verizon and AT&T, as well as some cable companies, are laying fiber-optic
cable directly to the neighborhood, and even into the home and office, in order
to retain customers with promises of ultra-high-speed internet connections and
enhanced entertainment offerings online.
If cellphone owners are dropping their landlines, while VOIP over cable
takes even more landline customers away, then the best weapon that traditional
telcos can use in their battle for market share is very high-speed
internet. AT&T and its peers are
focusing on bundled service packages (combining wireless accounts, very
high-speed internet access and TV, in addition to VOIP or landlines).
AT&T took a
significant strategic step in mid-2015 by completing its acquisition of
satellite TV firm DIRECTV for $48.5 billion.
This will turn AT& T into America’s largest TV distributor. In June 2018, AT&T completed a massive
acquisition of Time Warner, Inc., adding such entertainment content as HBO,
Warner Bros. and Turner to AT&T’s business.
AT&T clearly has the opportunity to offer compelling service
bundles, including wireless subscriptions, to its customers.
Telephone giant Verizon completed a strategic
acquisition of AOL in 2015, largely to acquire AOL’s superb online advertising
technologies. In mid-2017, Verizon
acquired Yahoo!’s online businesses, also to boost Verizon’s advertising
capabilities.
In addition, government regulations are
evolving quickly, which will bring even bigger changes to business
strategies. In Europe, and to some
extent in the U.S., regulators want much greater control over the practices of
internet carriers. Overall, the
telecommunications industry is in a state of continuous technological and
economic flux driven by intense competition and new technologies.