Instability in the Telecommunications Industry
Currently the Telecommunications industry is in a state of flux. The industry is reporting record growth rates but at the same time is seeing diminishing returns. Subsequently stock prices and the value of these companies are falling. Focusing on two industry leaders in the US are AT&T Wireless (AWE) and Verizon (VZ). The number of cellular subscribers in 1997 was 42.8 Million and in 2000 that number went to 66.4 Million. That works out to a 55% growth in usage. Over time it took 15 years to get to 42.8 Million subscribers, but it took only 3 years to gain 23.6 Million subscribers for a total of 66.4 Million. The industry has seen major growth over the past 4 years. Some reasons for this change are the changes in cellular technology for the past 20 years Analog signals have been in use but in the past 5 years Digital technology has been introduced. Currently both cellular systems are in use but new subscribers are leaning towards the Digital signal systems and phones, due to the clarity in connection, advanced features, and expanded service. As well as older customers are switching over to the new digital system and phones.
Some of the issues that exist within the industry. With the change in cellular systems and the proliferation of new cellular providers the customer is receiving many benefits such as falling prices from the diverse competitive market. The cost for cellular plans are constantly falling but at the same time the amount of Minutes offered by the plan is increasing. Recently an advertisement offered 3000 minutes for $35.00 per month, no long distance, and the cellular phone handset was free. The cost of such a plan works out to about $0.01 per minute. So as technology advances and prices continue to fall the consumer uses the cellular phone to make all calls both local and long distance, subsequently the long distance carriers are losing market share as consumers change their usage habits. At the same time the manufacturers of cellular handsets such as Ericsson and Motorola are forced to produce more products, and new products for less money. As an example the Motorola StarTac sold for $250 6 months ago, now that same product sells for $70, that is a 72% reduction in price over 6 months.
In 1990s, ground-based wireless phone service grew rapidly around the world. A key factor in the growth of wireless phones was the adoption of a single standard, known as GSM, in Europe and parts of Asia. There were 480 million cellular subscribers worldwide by January 2000 and it reached more than billions before 2005. The economy of scale that introduced will provide the extent of competitive pressure in the business environment. It helps to stimulate Iridium to consider price-performance tradeoff that offered by the substitutes and the need of product differentiation alternatives in advance.
McCracken, H. (2011, March 20). A Brief History of the Rise and Fall of Telephone Competition in the US, 1982-2011. Retrieved from http://technologizer.com/2011/03/20/att-buys-t-mobile/
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.
The dominant economic traits of this industry start with having an enormous amount of capital required for staying competitive. One is also required to spend lots of money on research and development, as the telecommunications industry seems to be the vision of the future. More and more companies like AT&T are trying very hard to combine their network services of phone line, video and data transfer, high speed internet access, and television cable via one line in the consumers homes. With a successful combination of the above stated services AT&T is hoping to be the industry leader in the near future.
As the largest telecommunication company in the United States, Verizon sells the superiority of its network as the number one competitive advantage. However, over the course of a decade the telecommunication industry changed and having the best network was simply not enough to stay relevant. Telecommunication is an expensive business. “The financial challenges of keeping up with rapid technological change and depreciation can be monumental” (Investopedia, 2015). The Porter’s 5 Force Analysis of the telecommunication industry revealed that the availability of substitutions are high. This drives increase competition in the industry. Furthermore, deregulation has helped to increase new entrants.
Verizon Communications Inc. is one of the leaders in providing communication services around the world. Its primary offerings are wireless, wireline, and broadband communication resources to meet residential, business, and government needs. As a leader in its industry, how can Verizon continue to grow its business? What strengths, weaknesses, opportunities and threats impact the success of Verizon now and in the future?
The competitive landscape of the wireless telecommunications industry is likely to intensify and leaders in the industry are competing to retain and gain customers in new and innovative ways. One of the biggest forces driving this competition is the drive to beat competitors to the punch in terms of expanding network coverage, increasing network speed, and the development of new technologies. It is extremely important for Verizon to anticipate and act before their competitors to keep their position as the nation's leading wireless service provider. Verizon’s main competitors have invested large amounts of capital into catching up with their network coverage, and
Americatel is positioned within the small to mid-sized market in the telecommunications sector. However, their primary competitors Movistar and Claro compete within the large-sized market. With only 10% overall market share, Americatel has the potential to capture additional growth as the industry growth rate is growing at 6%. To accomplish this we recommend that Americatel own their position in the small to mid-sized market by capitalizing on their competitive advantage of providing superior customer service as well as leveraging new solutions to further drive customer satisfaction.
China Mobile is located in China while Verizon Communications and AT&T are located in the United States, which are regions with a high population. The general income levels for residents in these countries are significantly high. Consequently, the buyers have immense buying power. China has a host of other major players like China telecom that provides a stiff challenge to China Mobile. Similarly, Verizon Communications is located in the same region as AT&T (Rajasekar & Al Raee, 2013). Subsequently, buyers have the power to determine the telecommunication service provider to adopt. Major industrial players are aware of the buyer’s bargaining power, and they do everything possible to lower their prices and improve the quality of their
The telecommunications industry is of vital importance to the development of the information-based economy. AT&T need to supply access to cost efficient, timely and innovative telecommunications services.
The cellular-service industry in the United States has reached maturity with AT&T, Verizon, Sprint, and T-Mobile taking the largest share of the market. Each company has
Telecommunications gained mainstream attention in the early 90’s; however the initial key market was business men and women, who used their phones whilst being on the move and so allowing them to communicate with their companies with ease. Though in the modern era, telecommunication went through segmentation in the market trends, and now in this day and age it would be difficult to find someone who does not own some form of mobile technology. Many phone providers battle to provide the best service for their customers (Figure 1).
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.
The changes in the technological can influence many part of societies. When the AT&T Company introduce their new product and services which is wireless and wire line technology will effects occur primarily through the new products, processes, and materials. Thus, changes in technological also often can achieve higher market share and earn higher return because, newly emerging technology from AT&T could derive competitive advantages. For example, internet today becoming more remarkable capability to provide information easily, quickly, effectively, and also can create more value for customer in the future and to anticipate future trends.
The intent of this paper is to perform an analysis of the cable industry's external environment. The first sections of the document will discuss environmental scanning and define the telecommunication niche that is currently occupied by cable operators such as Comcast. The next section will identify the macroeconomic variables that currently impact cable operators and will compare two variables to two corresponding industry variables. The final section of the paper will identify some of the challenges and opportunities facing the industry. An external analysis of the industry will provide a clear picture of the environment as well as any opportunities and threats faced by Comcast. By understanding the environment, opportunities and threats a company has the ability to create strategies to support its business goals. The primary process by which Comcast will gain an understanding of its external environment is environmental scanning.