Telecommunications Phone, cable, Wireless and more
Industry Profile
Telecommunications has made it possible to speak or exchange text and/or images with virtually anyone in the world by pushing a few buttons. This immediacy of communication has had dramatic effects: Worldwide commerce is easier; totalitarian regimes are more vulnerable to dissenting voices carried by fax or e-mail; shopping is more convenient. High-tech telecommunications in particular, including fax, e-mail, and wireless phones, let families and friends stay in contact more easily and less expensively. As reference material moves online, the Web makes academic and business research possible with less need to go to a physical library.
Telecommunications is a mammoth industry, comprising companies that make hardware, produce software, and provide services. Hardware includes a vast range of products that enable communication across the entire planet, from video broadcasting satellites to telephone handsets to fiber-optic transmission cables. Services include running the switches that control the phone system, making access to the Internet available, and configuring private networks by which international corporations conduct business. Software makes it all work, from sending and receiving e-mail to relaying satellite data to controlling telephone switching equipment.
The breakup of AT&T; in 1984 created the modern telecommunications industry, subjecting phone companies to free-market forces for the first time. The long-distance market became competitive almost immediately, but the so-called Baby Bells fought a rear-guard action against letting companies like AT&T; or MCI enter the local phone market. But the Telecommunications Act of 1996 deregulated local phone markets. Proponents say deregulation makes telecommunications services more competitive, benefiting consumers. Critics say it gives a few, giant companies untrammeled sway over our ability to communicate with each other.
Trends
A New Meaning for “Convergence” Even the big long-distance carriers want to get into the local phone-service ring — and because of deregulation, they’re starting to do just that. The reason is that local service has higher margins than long distance. Meanwhile, the Baby Bells are trying to build their residential long-distance businesses; indeed, Verizon now offers long distance in six states, and SBC does the same in five states). The Baby Bells are also trying to horn in on the lucrative business long-distance market. The result? Greater competition in almost every sector of telecom — and lower prices, to boot.
Turnaround The telecom industry was extremely stung by the economic downturn of recent years. However, there are at least a few signs that the industry may be starting to stage a recovery. Industry expenditures and revenues are both expected to rise in 2004, the first rise in both areas since 2000. The biggest revenue gains are supposed to come in the wireless services sector. At the same time, companies seem to be hiring again — especially startups and companies emerging from Chapter 11, as well as companies in areas like wireless communications and computing, and Internet telephony.
VoIP Voice over Internet Protocol makes it possible to send phone calls as "data packets" across networks — no longer must phone calls travel through local phone company wirelines. Local telephone companies, long-distance companies, and cable companies are all fighting for their piece of this potentially large new market. Indeed, long-distance providers Sprint and MCI are both working with cable provider Time-Warner to bring VoIP service to cable subscribers, and AT&T;, Verizon, SBC, and Qwest are all working to bring their own VoIP offerings to market.
How It Breaks Down
Prior to the Telecommunications Act of 1996, a variety of regulations divided telecommunications artificially — cable TV companies were prohibited from offering local telephone service, video programming over phone lines was banned, and local service companies and long-distance service providers were forbidden from competing in each other's markets. The Telecommunications Act lifted these competitive restrictions. One regulatory barrier that remains prohibits service providers from manufacturing telecommunications equipment. The cleanest way to break this industry down, then, is between those who make the software and hardware and those who provide various services.
Service Providers These companies provide local and long-distance wireline telephone service. Industry insiders call this POTS, for plain old telephone service. Wireline providers include the large long-distance service providers — AT&T;, WorldCom, and Sprint — and the RBOCs (the Baby Bells) like SBC Communications and BellSouth. A new generation of companies is laying fiber-optic wire networks to handle the rapidly increasing data traffic, including Qwest, Level 3, and Verizon.
Wireless Service Providers Marked by carrier consolidation and partnering to augment geographic reach and gain economies of scale, wireless communication services have shaken up the telecom service industry. They have also brought telecommunications to the far corners of the earth, including parts of Africa and South America where there's no existing wireline infrastructure, and have made local markets far more competitive in the United States.
Satellite Telecommunication Services Satellite telecom services breaks down into fixed satellite services such as INTELSAT; low earth orbit companies (LEOs), which include Globalstar and mega-LEO Teledesic (controlled by Craig McCaw); direct broadcast satellite companies such as DirecTV; and the global positioning system (GPS). Satellite services include everything from navigation systems (such as those being included in the dash of some new model vehicles) to video broadcast and data transmission.
Internet Service Providers (ISPs) These consist of those companies that make it possible for you to go online — Microsoft, AOL, MindSpring, and the RBOCs. The Internet, which has become an integral part of the telecommunications industry, is also the vehicle by which a huge dose of talent and energy has been added to telecom as voice and data networks converge.
Customer Premise Equipment (CPE) Manufacturers Telecommunication service providers are the biggest customers of telecommunications equipment makers. When they sell a service to a company, for instance, they purchase the switch, which can serve anywhere from 15 to 100,000 people, as well as other customer premise equipment (CPE) — everything from telephones to voice-mail systems to private branch exchanges (PBXs). Local area networks (LAN) require their own routers, switches, and hubs. The big players here include Lucent Technologies, Nortel, Fujitsu, Siemens, and Alcatel.
Networking Equipment and Fiber Optics Manufacturers Networking equipment includes the stuff that makes the local area network operative, including routers, hubs, switches, and servers. Fiber optics consists of the optical fiber and fiber-optic cable, transmitters, receivers, and connectors that carry data and voice messages. The biggest switch makers are Nortel and Lucent. Cisco and 3Com are among the biggest makers of networking equipment.
Wireless and Satellite Communication Equipment Manufacturers These are different categories that we've grouped together. The radio-based communications systems, the switches, transmission, and subscriber equipment for this sector differ from those the wireline service providers use. Large players in wireless equipment include Motorola, Qualcomm, Hughes Electronics, Sony, and NEC. Satellite communication equipment makers include Comcast and Loral Space, as well as a number of cable companies, such as Cox Communications, DirecTV, and the Dish Network.
Job Prospects
Telecom companies built staff and infrastructure like crazy during the boom times of the 1990s. In the early 2000s, many telecoms used layoffs, massive reorganization, and spinoffs to offset losses — making the outlook bleak for job seekers. More recently, though, the industry has been recovering somewhat, and the outlook for job seekers is looking more favorable.
In the long term, employment in the industry is expected to grow, but not at breakneck speeds. According to the Bureau of Labor Statistics, telecom employment is expected to grow by 12 percent between 2000 and 2010, slower than 15 percent average growth for all industries combined. In this varied field, demand for workers, or lack of it, will be based mostly on technology. For example, as new voice recognition technology improves productivity, jobs like telephone and directory assistance operators will continue to decrease in number. But the need for engineers who develop that technology will increase.
The outlook is good in telecom sectors that are bringing exciting new technologies to market. High-speed data services; voice communications over the Internet; wireless networking: These and other technologies will increase the need for electrical and electronics engineers, computer software engineers, systems analysts, customer service professionals, and the likes.
If you want to work in an industry that requires you to learn fast and adapt quickly, this is it.
