Telecom Industry

Telecom industry is a fast-growing industry across the globe. The telecom industry encompasses a host of new services such as mobile telephony, Internet access, virtual private networks, net telephony and data services.

The telecom industry can be classified into two categories:

• telecom services
• telecom equipment.

The telecom equipment business though big, largely facilitates telecom services. The services segment of the telecom industry can be further classified into fixed-line services and wireless services.

How the telecom industry has changed

Worldwide the telecom industry started off with fixed-line services, but now increasingly gravitates toward wireless services. The growth rate of wireless services is indeed astonishing. The International Telecommunication Union, for instance, believes that the number of global mobile subscriber base overtook main telephone lines for the first time in 2002 and estimated to have touched 1.33 billion in 2003. A growing trend in the telecom industry is the substitution of a fixed-line service by a cellular service.

The mobile telephony has indeed revolutionised telecommunications and the telecom industry in developing countries. The slow expansion of fixed-line services limited telephone connections to a privileged few. The introduction of mobile telephony, however, brought telephone connection within the reach of the masses and led to an upsurge in telephone density.

The late adoption of mobile telephony in developed countries had an unexpected technological benefit. Instead of having to upgrade an old network, telecom operators in developed countries had the opportunity to opt for latest technological platforms such as 3G technologies. Consequently, the mobile networks in many developing countries rival those in developed countries in sophistication.

The mobile or cellular revolution has been possible because of the liberalization of the telecom industry. The World Trade Organisation has played a crucial role in the freeing up of the telecom industry. Most countries allowed the private sector into the basic services first and subsequently allowed them into mobile telephony as well. The private players are largely responsible for kick-starting a telecom revolution in many countries.

The future of the telecom industry

The telecom industry will receive a further boost if governments worldwide start privatising the state-owned telecom entities. Traditionally, state-owned entities provided telecom services for a range of reasons. With private telecom entities keen to bring in capital and technology in recent years, the state is fast running out reasons for staying in the telecom business. The privatisation of state-owned telecom entities in many parts of world will take telecom industry to a different level. Some countries have already converted their state-owned telecom entities into corporations, which indicate that the anticipated boost from privatisation will come sooner than later.

The countries which have liberalized their telecom markets have had to establish a telecom regulatory authority for regulating their telecom markets. The number of telecom regulators worldwide has increased from 12 in 1990 to 112 in 2003. Now the basic framework is in place in the telecom industry for accelerating the globalisation of the telecom markets.

The biggest beneficiaries of the liberalisation and globalisation of telecom industry have been the consumers. The competition in the telecom industry has not only increased the availability of telecom services—which is still a critical issue in most emerging economies—but also led to cheaper rates and better services. Now telecom operators provide a range of value-added services such as multimedia messaging services in addition to the main service. Some have also begun to beam content as well—leading to a convergence of telecommunications, information and entertainment from the telecom industry.