Telecom Industry

TELECOMMUNICATIONS INDUSTRY 1. DEFINITION Telecommunication is a sector which includes telephone services, distribution of sounds, images, data or other information via cables, broadcasting, relay or satellite networks [7](Telecom industry report 2006) 2. INDUSTRY BACKGROUND The telecom industry includes companies which help transmit information for the purposes of communication [4]. Telecom companies are any company that provides devices meant for communication. In many cases they are associated with phones. World telecom industry is an uprising industry, proceeding towards a goal of achieving two third of the world’s telecom connections.

Over the past few years information and communications technology has changed in a dramatic manner and as a result of that, world telecom industry is going to be a booming industry. Substantial economic growth and mounting population enable the rapid growth of this industry. According to QFINANCE the telecom industry can be divided into two principal sectors: fixed-line services, and mobile services. 2. 1 . The mobile sector This sector has proved the main engine of growth over the past decade, and has proved a boon to many consumers in emerging economies who previously did not have access to fixed-line services.

Broadband experts in developed economies have also predicted that the mobile-phone network could replace copper wire as the principal method by which people connect to the internet in the next few years. However, after many years of rapid growth, sales of mobile handsets have been dealt a blow by the global economic slowdown. Worldwide mobile phone sales to end-users totaled 1. 211 billion units in 2009, a 0. 9% decline from 2008 (Gartner). But, in the fourth quarter of 2009, the market registered single-digit growth as mobile phone sales to end-users surpassed 340 million units, an 8.

3% increase from the fourth quarter of 2008. 2. 2. Fixed Line Sector The number of fixed-line subscribers around the world as a proportion of the population has been in decline since 2006(ITU). In 2009, the figure of fixed-line subscribers showed 17. 8 per 100 inhabitants while there were 67 mobile phone subscriptions per 100 inhabitants in the same year. One important challenge in bringing more people online is the limited availability of fixed broadband access, which is primarily confined to internet users in developed countries and some developing countries (ITU).

The ITU says that “promising developments are currently taking place in the mobile broadband sector. The introduction of high-speed mobile internet access in an increasing number of countries will further boost the number of internet users, particularly in the developing world. Indeed, the number of mobile broadband subscriptions has grown steadily and in 2008 surpassed those for fixed broadband. ” 3. THE PORTER’S FIVE FORCES ANALYSIS By definition the five potter? s forces is model which helps to identify and analyze the 5 competitive forces that shape every industry and helps determine an industry?

s weaknesses and strengths (investopedia. com). These are: Competition in the industry, Potential of new entrants into industry, Power of suppliers, Power of customers and Threat of substitute products. Telecommunication Industry is one of the largest and the oldest World industries with competition involved. Over a period of time there has been lot of major inventions. For instance in the past the smoke signal which could be used for a short distance, nowadays it allows people to communicate each other from anywhere around the world using either internet or mobile phones.

This shows a great evolution of the telecom products. Even though the traditional telephone is the major revenue generator the other technologies and substitutes are growing in heaps and bounds [5]. Also there is a significant competition among the players in the industry. For instance with the major companies like AT&T, Telstra, Verizon, Vodafone, BSNL the competition is cut throat. These companies are obliged to lower their prices in order to increase consumer call ratio by minimize per minute profit margin but increasing overall company revenues [5].

On the other hand, because of this huge competition and rivalry among the companies in the industry, the buyers are the one who are most widely benefitted as they are having a great variety of service providers to choose from. But this can affect the company’s profit margin because of the huge amount of cost pressure. Because Telecom industry is a vast and diversified industry and needs a huge capital to invest it is very difficult for any new company to enter the market and with all these big companies in the market to survive would be practically impossible for the new company.

Also, ownership of a telecom license can represent a huge barrier to new entry. For instance, in the U. S, fledgling telecom operators must still apply to the Federal communications commission (FCC) to receive regulatory approval and licensing. We can also talk about the telecom equipment manufacturer that are the suppliers who are not happy as they also have a lot of competition with big companies in the field like Lucent, Cisco, Nokia, Nortel Alcatel, Ericson, etc. These manufacturers have a very less bargaining power as the telecom service provider have a lot of options to choose from. 4. CONCLUSION The telecommunications industry is changing.

A number of research works are being carried out all over the world. The rapid adoption of data intensive mobile and internet technologies is leading to a fundamental shift in business models and competitive structure. As revealed by the Phoenix Center research, in the coming years, there will be a healthy competition among the providers of telecommunication services. I think now Companies should choose a part of cooperation and mergers and acquisitions which would avoid much competition and will help in earning a good profit for them and provide quality and affordable services to the consumers.

REFERENCES [1]http://www. qfinance. com/sector-profiles/telecoms [2]http://www. economywatch. com/world-industries/telecommunications/world-telecom-industry. html [3]http://www. globaleprocure. com/Telecommunication. aspx [4] http://www. wikiwealth. com/company:telecom [5] http://www. oppapers. com/essays/Telecom-Industry/162059? topic [6]http://www. grin. com/en/e-book/183574/industry-analysis-the-global-telecommunications-industry [7] http://www. emarketservices. com/clubs/ems/prod/Report%20060113_Telecom. pdf [8] http://www. economywatch. com/world-industries/telecommunications/telecom-indus