Detail

The telecommunication sector makes communication possible through the phone or the Internet, through airwaves or cables, through wires or wirelessly. The largest companies in the sector are telephone (both wired and wireless) operators, satellite companies, cable companies, and Internet service providers.

The telecommunications industry began in the 1830s, with the invention of the telegraph, which shortened communication from days to hours. The industry broadened with each new invention: the telephone, radio, television, computer, mobile device. At one time, telecommunications required physical wires connecting homes and businesses. In contemporary society, technology has gone mobile. Now, wireless digital technology is becoming the primary form of communication.  

Since the early 2000s, the industry has been swept up in rapid deregulation and innovation. In many countries around the world, government monopolies are now privatized and they face a plethora of new competitors. Traditional markets have been turned upside down, as the growth in mobile services outpaces the fixed-line and the Internet starts to replace voice as the staple business. 

The sector's structure has also changed from a few large players to a more decentralized system with decreased regulation and barriers to entry. Major public corporations act as the service providers, while smaller companies sell and service the equipment, such as routers, switches, and infrastructure, which enable this communication. Plain old telephone calls continue to be the industry's biggest revenue generator, but thanks to advances in network technology, this is changing. Telecom is growing less about voice and increasingly about video, text, and data. High-speed Internet access, which delivers computer-based data applications such as broadband information services and interactive entertainment, is rapidly making its way into homes and businesses around the world. The main broadband telecom technology, Digital Subscriber Line (DSL), has ushered in a new era. The fastest growth comes from services delivered over mobile networks.

The telecommunications sector consists of three basic sub-sectors: telecom equipment (the largest), telecom services (next largest), and wireless communication. Wireless communications is a very fast-growing sector within telecommunications; more and more communications and computing methods shift to mobile devices and cloud-based technology. This piece of the industry is the anticipated keystone for the continued global expansion of the telecommunications sector.

Residential and small business markets are arguably the toughest markets. With literally hundreds of players in the market, competitors rely heavily on price to slog it out for households' monthly checks; success rests largely on brand name strength and heavy investment in efficient billing systems. The corporate market, on the other hand, remains the industry's favorite. Big corporate customers, who are concerned mostly about the quality and reliability of their telephone calls and data delivery, are less price-sensitive than residential customers. Large multinationals, for instance, spend heavily on telecom infrastructure to support far-flung operations. They are also happy to pay for premium services like high-security private networks and video conferencing.Telecom operators also make money by providing network connectivity to other telecom companies that need it, and by wholesaling circuits to heavy network users like Internet service providers and large corporations. Interconnected and wholesale markets favor those players with far-reaching networks.

The sector's biggest challenge is to keep up with people's demand for speedier data connectivity, higher resolution, quicker video streaming, and ample multimedia applications. Meeting people's needs for faster and better connections as they consume and create content requires significant capital expenditures. Companies that can meet these needs thrive.