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Telecom Equipment Makers Face Intense Competition from Manufacturers in China, Business and Industry Trends Analysis

Telephone service providers around the world have been facing up to vast changes in telecom technology.  They have invested hundreds of billions of dollars in advanced switching equipment capable of providing ultra-fast internet service, wireless service and VOIP.  Such investments involve massive purchases of state-of-the-art equipment.  In the not-too-distant past, American companies were the world’s leading makers of telecom equipment.  Today however, there is intense global competition.
China-based telecom equipment manufacturers are booming.  For example, Huawei Technologies Co., Ltd. has become a global leader.  Chinese firms such as Datang Telecom Technology and ZTE Corp. are winning major contracts with telecom service providers around the world, including large sales of VOIP equipment, wireless infrastructure and network equipment.  China has gained respect as a base for the manufacture of technology gear of very high quality.  ZTE historically had sold to customers in China, elsewhere in Asia, and Africa.  However, the firm is now aggressively marketing to telecom companies on a worldwide basis.  ZTE has opened offices in U.S. cities and in Canada, as well as dozens of offices throughout Europe, Latin America, Africa and Asia/Pacific.
Nonetheless, some corporations and governments are uncomfortable installing and relying upon vital telecom equipment that has been designed and manufactured by Chinese firms.  Particularly in today’s environment of concerns about Chinese hackers gaining access to proprietary and highly sensitive corporate and government via the internet, some observers are worried that security breaches may be built into equipment made by companies like Huawei and its competitor ZTE, with or without the knowledge of corporate management.
In addition to a growing dependence upon wireless devices and ever-faster internet access, major corporations are committing to VOIP for their future telecommunications needs.  VOIP not only saves on their voice communication costs, it also saves on costs for data and video.  This is due to the fact that voice, video and data are able to run on the same network under VOIP.
Chinese competition was particularly hard on equipment maker Alcatel-Lucent.  The France-based firm was the result of the merger of a leading European firm, Alcatel, and a leading U.S. telecom gear manufacturer, Lucent.  The company was acquired by Nokia in 2016.
While Chinese telecom equipment makers have gained market share, many U.S. firms continue to do well in particular sectors.  An industry giant is Cisco Systems, Inc., one of the world’s leading makers of IP-based networking and communications technology.  Additional leading firms include F5 Networks (internet traffic management tools), Ciena Corp. (network infrastructure equipment) and Viavi Solutions (formerly part of JDS Uniphase, which has split into two firms including Viavi).  The newest phase of global telecom equipment purchases is focused on upgrading services to ultra-fast 5G networks.  Over the long-term, 6G technologies loom on the horizon, which will require both huge investments in research by equipment manufacturers, and immense investments in infrastructure by wireless services providers.

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