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, including cable TV systems, since cable companies are now aggressively offering local exchange service and high-speed Internet access. The relationship between the telecom and cable sectors has become even more complex as telcos are now selling TV via IP (Internet protocol) services, 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 sales and consulting?  Or, should it be considered to be services only, such as subscriber lines and datanets?

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, data networks, the Internet, wireless communications, (including cellular and remote wireless sensors) and satellites.

Globally, in the broadest possible sense, the telecommunications industry will be about a $4.25 trillion sector in 2011. (This figure includes equipment and related services, as well as subscriber revenues and other business revenues.) The widely recognized TIA (Telecommunications Industry Association) estimated global telecom revenues at $3.1 trillion for 2010, including $985 in U.S. revenues.

There were approximately 5.3 billion wireless service subscriptions worldwide as of March, 2011, according to LM Ericsson. 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, at approximately 4.2 billion, as many people have more than one subscription.

The base of global wireless subscribers will continue to grow rapidly, as low-cost providers are making service prices low enough to be affordable for vast numbers of people in emerging nations. Inexpensive cellphones are now indispensable to consumers from Haiti to Africa to New Guinea.

Telecommunications remains one of the major providers of employment in the world, with 899,700 employees in the U.S. alone.

The ITU estimates global landlines at 1.18 billion at the end of 2010, down from 1.21 in 2009, and 1.27 at the end of 2008. This is only 17.2 landlines per 100 global population, compared to about 80 per 100 population for wireless subscriptions. For the U.S., the FCC states there were 113.5 million households with wired landlines at the end of 2010, down slightly from the previous year.

Several major factors are creating 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 wired services to wireless; c) intense competition between cable and wired services providers; d) steady increases in Internet usage for communications of all types; and e) the continuing evolution of advanced wireless technologies, including more smartphones, wider availability of 3G services and 4G services that will slowly but surely roll out.

Ingenuity, innovation, cost control and a reasonable approach to spending and investment will help to move the industry ahead. New cellular, cable, satellite, VOIP and wireless technologies promise continuous rapid change in this sector and pose a massive threat to traditional landlines. 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, cellphone manufacturers are adding advanced new features to smartphones on a regular basis. These phones now contain significant computing power and memory. On the low end, handset makers are introducing good quality units for as little as $15 to $20 for high volume sales in emerging markets such as Africa.

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. Meanwhile, wireless access to the Internet threatens traditional DSL broadband suppliers.

As more consumers recognize the promise, and good value, of phone service using VOIP, millions of households and businesses worldwide have signed up for less-expensive VOIP service as an alternative to landlines, often through their cable providers as part of a bundle of services. Several heavy hitters, such as Comcast, have jumped on the VOIP bandwagon, along with startups like Skype (acquired by Microsoft in 2011) and Vonage.

At the same time, local phone companies, led by Verizon and AT&T, 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. This is the big telcos’ way of fighting back. 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 the Internet. AT&T and its peers are focusing on bundled service packages (combining wireless accounts, very high-speed Internet access and entertainment such as video on demand and TV via IP, in addition to VOIP or landlines). Next, service providers are offering innovative new value-added services that are accessed online. For example, consumers might respond well to bundled services that monitor home security or adjust home energy usage, or services that monitor the movements and needs of elderly family members at home. The right value-added services, controlled via cellphones, remote wireless sensors and/or the Internet, could get consumers hooked, with the potential to build new revenues and stop customer turnover.
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