Communications Industry

The global communications industry was worth USDD1.4 trillion in 2003. An overwhelming 78 percent of this sum came from telecommunications services. Revenue from fixed-line services was USDD455 billion for 2003 and that of mobile services (including the mobile phone industry) was USD414 billion for the same period. Other telecoms related services, such as data communications and telex, accounted for the balance. By the end of 2004 the communications industry is estimated to have been worth USD1.5 trillion.

Much of this business revolves around the developed world with a recent shift, however, to the developing world. Worldwide, the communications industry is becoming more open to competition, in response to technological developments and the failure of state-owned telecoms monopolies to satisfy the growing telecommunications needs of users and economies. Pro-competitive and deregulatory telecommunications polices have swept the world sand there is now a trend towards setting up independent regulatory bodies across the globe.

The reduction of trade restrictions and other regulatory barriers, has led to an increased flow of telecoms services across borders. There has also been a rise in the number of cross border mergers and joint ventures. During the past decade the telecom industry has experienced a wave of mergers and acquisitions as many communication companies have realized that mergers and strategic alliances with other major players are necessary for global recognition. In addition, the industry has consolidated to achieve greater economies of scale and thus enable the efficient deployment of network infrastructure.

At the same time, however, consolidation, deregulation, and liberalization are making the jobs of regulators much tougher, especially those in the developed world. Currently, regulators all over the world are busy coming to terms with 3G licensing. 3G technology marks the remarkable transition from voice to data-based transmission. By combining high-speed mobile access with Internet Protocol (IP) based services, consumers will be offered new ways to communicate, access information, and conduct business.

Amongst the leading technologies for mobile communications, the Global System for Mobile communications (GSM) continued to lead the market with a 71 percent share of the global subscriber base in 2003 rising to 76 percent in 2004. Other competing technologies include Code Division Multiple Access (CDMA), Time Division Multiple Access (TDMA) and Personal Digital Cellular (PDC).

The widespread adoption of Voice over Internet Protocol (VoIP) telephony and the attendant integration of voice and data services on to the same network have triggered a wealth of opportunities. These market forces are spawning fresh business models for the industry that will affect every facet of service provider strategies and operations. Aggressive new competitors from each part of the digital value chain are intent on grabbing a slice of the telecom market. In this mixed-service model, operators no longer provide just a simple connection, but a host of value-added services that offer the customers a total telecoms experience.

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