Telecommunication Services

In the US, about 11,000 companies provide telecommunication services, with total annual revenue over $500 billion. Large companies include AT&T, Verizon Communications, and Comcast. The industry includes 3,000 wireline carriers (annual revenues about $185 billion); 3,000 wireless companies ($185 billion); 1,400 cable companies ($100 billion); and satellite companies and telecommunication resellers. The industry is highly concentrated: the 50 largest companies hold nearly 90 percent of the market.

COMPETITIVE LANDSCAPE

Demand is driven by technological innovation and by growth in business activity and consumer spending. The profitability of individual companies depends on efficient operations and good marketing. Large companies have big economies of scale in providing a highly automated service to large numbers of customers, and have the financial resources required to build and maintain large networks. Smaller companies can compete effectively in small markets or by providing specialty services. Due to a large degree of automation, average revenue per employee is a high at about $500,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

The industry provides mainly telephone, TV distribution, and data transmission services (such as the Internet). Companies provide service through networks of wires, computers, transmitters, and receivers. In the voice and data segments, companies merely provide a channel over which customers transmit their own information. In the TV distribution segment, companies also supply the content transmitted to the customer.

The operations of telecom service providers revolve around building, maintaining, and operating networks to reach customers. Networks can be built by ...