analysis of telecomunication industry
...s connecting homes and businesses to the internet in the US increasing dramatically every year. Experts in the industry believe that in the long term, VoIP may end up being the greatest competitive threat to incumbent landline services. Cable companies Let alone providing internet service, the cable companies are competing with the Bells via cable telephony offerings. Cox Communications Inc. is already providing phone service and the largest of the cable providers, Comcast Corp. is planning to launch the service by 2006. It is expected that the cable companies will offer a discounted bundle of telephony service and their traditional television service. With a large marketing budget and established customer loyalty, they highly seem to have the ability to put pressure on the traditional voice carriers. 2. Wireless communication industry Industry trend In the seven years from 1997 to 2003, the number of wireless subscribers in the United States nearly tripled, from 55.3 million to 161 million. During 2003, the industry realized increased service availability, lower price for customer, innovation, and a wide variety of service offerings. With wireless becoming increasingly convenient and affordable, calling volumes remain on the rise. Yet widespread consumer acceptance has made it harder for carriers to find new customers. Subscriber growth rate have slowed in the last few years, compared with the 1990s. Most of service providers have been posting double-digit subscriber growth, but it is expected that they will realize a slowdown to low double-digit growth of net subscribers from 2005. Fierce Competition and Market Maturity In the last few years, wireless operators have adjusted their own growth strategies. Rather than seek market penetration at any cost, they are now favoring higher quality, profitable growth with higher customer retention, lower customer churn, and more focus on market segment. According to Federal Communications Commissions(FCC), 97% of the total US population live in counties with access to three or more wireless carriers. 87.5% of the US population, live in counties in which five or more wireless carriers offer service. This situation leads severe competition among wireless carriers. Between 2002 and 2003, the average price per minute of mobile telephone service usage fell 13% versus a 9% decline between 2001 and 2002, continuing the historic trend toward diminishing price. Because it costs more to sign up a new subscriber than to serve an existing one, wireless carriers do their utmost to retain their most profitable subscribers. To retain subscribers amid the price-cutting, carriers must offer excellent network coverage, extensive training of frontline sales and support associates, and implementation of retention program. 3. Leading companies - AT&T Corp. AT&T is a major business services communications provider in the US. The company offers a variety of global communications services to approximately three million customers, including large domestic and multinational business, small and medium-sized businesses and government agencies. AT&T operates one of the largest telecommunications network in the US and also provides an array of services and solutions in 60 countries and 850 cities worldwide. AT&T benefits from its streamlined positions. AT&T is a significant feature within its markets by virtue of its scale of infrastructure, with numerous points of presence, large networks, expansive product sets, and vastly more sales and support staff than its competitors. The company also has over 700 points-of-presence in the US, with the majority served by high-speed fiber-based technology offering high-speed data connectivity to the majority of US business centers. - Sprint Corp. Sprint is a global communications company whose principal activities are conducted through FON Group and the PCS Group, each of which has its own tracking stock. The FON Group consists of Sprint’s wireline operations. The PCS Group includes the company’s PCS wireless telephony products and services business. In December 2004, the company announced plans for a merger between Sprint Corporation and Nextel Communications presenting the company with many opportunities for increased synergies and economies of scale. The company has obtained licences to serve the entire US population, as well as Pueto Rico and the US Virgin Islands. These licenses give Sprint access to the massive US telecommunications market, which will give the company the opportunity to potentially generate big revenues and profits. - BellSouth Corporation BellSouth is a communication services company serving more than 46 million customers in about 16 countries worldwide. For the fiscal year 2004, it generated revenue of $?? billion. The company offers telecommunications services, internet, data, and eCommerce applications, wireless communications, entertainment services, and online and directory advertising. It provides services for residential and small to large business customers. The company’s competitive advantage comes from its geography and customer service. BellSouth is the predominant telecommunications services provider in th...