Telecommunications is one of South Africa’s fastest growing sectors and is one of the most advanced networks in Africa. The market is divided into three primary sectors; fixed lines, mobile networks and broadband. The structure of the industry will be described in an attempt to illustrate core economic principles, primarily related to market structures.
Some people may argue that the fixed line market is an oligopoly, since the entrance of Neotel in 2006. However, in 2012, Neotel only held 6% of the market while the other 94% held by Telkom (Mawson 2012). Telkom’s dominant market share indicates that the market is still operating as a near monopoly; it cannot be a pure monopoly due to the fact that there is another competitor that is a close substitute and it does not function effectively as a duopoly due to Telkom’s dominance. Furthermore, one may consider it a regulated monopoly due the role ICASA plays as the regulator.
Despite the new competitor and the fact that Telkom was losing customers due to mobile industry growth, Telkom used its monopoly to the best of its advantage: since 2000, its operating profit margin increased from R1.54 billion to just over R9 billion in 2007. In order to achieve such profit margins, the costs clearly must be high which was the case as South Africa is currently one of the highest in the world and studies have indicated Telkom's pricing as disproportionate (Ponelis & Britz 2008). Telkom had 4.8-million fixed-line subscribers in 2003 and only 3.9-million by 2012. In 2003, its network carried nearly 33-million minutes of telephone calls. By 2012, it struggled to carry 19-million minutes. Furthermore, fixed lines only accounted for 40% of their market share. Despite this, the declining market did n...
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Of particular importance is the deregulation of the telecommunications industry as mentioned in the act (“Implementation of the Telecommunications Act,” NTLA). This reflects a new thinking that service providers should not be limited by artificial and now antique regulatory categories but should be permitted to compete with each other in a robust marketplace that contains many diverse participants. Moreover the Act is evidence of governmental commitment to make sure that all citizens have access to advanced communication services at affordable prices through its “universal service” provisions even as competitive markets for the telecommunications industry expand. Prior to passage of this new Act, U.S. federal and state laws and a judicially established consent decree allowed some competition for certain services, most notably among long distance carriers. Universal service for basic telephony was a national objective, but one developed and shaped through federal and state regulations and case law (“Telecommunications Act of 1996,” Technology Law). The goal of universal service was referred to only in general terms in the Communications Act of 1934, the nation's basic telecommunications statute. The Telecommunications Act of 1996 among other things: (i) opens up competition by local telephone companies, long distance providers, and cable companies ...
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Years later, the Telecommunication Act of 1996 triggered dramatic changes in the competitive landscape. SBC Communications Inc. established itself as a global communications provider by acquiring Pacific Telesis Group and becoming the new AT&T. The merger of AT& T and BellSouth, along with the ownership consolidation of Cingular Wireless and YELLOWPAGES.COM, will speed convergence, competition and continued innovation in the communications and entertainment industry, creating new solutions for consumers and businesses and positioned to lead the industry in one of its most signifi...
Background One. Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). At first, it looked to get the advantages from deregulation of the telecommunication industry by reselling other network’s capacity and making money through stock market speculation. Rich and Keeling tried to increase the company’s shares rather than profit the company (Cook, 2001). Initially, One.
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The following report will analyse Vodafone and their current position in the international market. This report will cover the competitive strategy of Vodafone and their influence of products and services in relation to the demand of the market.
In conclusion, current trends and significant events concerning T-Mobile were examined. A hard look was given to the economy, demographics, technology, political and legal issues, and social characteristics. T-Mobile is strong across the board, with surprising statistics backing up a variety of topics. The economy is strong, the demographics are not far-fetched, technology is improving, there’s no huge political or legal scandal, and T-Mobile is socially strong.
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Network goods are commonly sold by monopolies, or the controller of a specific market. The reason for this is because new companies in a specific network industry have difficulty, for they start with no network at all. This a...
Scope of competitive rivalry: primarily major carriers (revenue more than $1 billion). Legacy carriers developing low-cost offshoots
There is a slowdown in sales of mobile handsets, in some markets like the UK, as the mature part of the product lifecycle is reached. Customers are exposed to a barrage of different images and messages by mobile phone companies, as the competition gets tougher. Vodafone appeals to new customers and aims to keep its existing ones by emphasising the uniqueness of the brand.
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By 2002-03, Indian market has grown highly competitive. Due to fall in ARPU (average monthly revenue per customer unit), players fought to capture new subscribers. With industry consolidation, the focus is switching from having a national footprint to the ability to provide value-added services. Opera...
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switching behaviour. Literature reveals about the factors of switching cost, better customer care services, networking coverage, advertising , etc for switching behaviour of customers. The researchers identify the problem of industry that if one firm gains then other must be losing a customer. Number of network providers are increasing calling for an intense competition. Empowerment of technology has led to growth of mobile industry more economical.