Telecommunication carriers are some of the largest companies in the world. In fact, AT&T, which is the leading telecommunications company in the U.S., had a market value of over $230 billion in 2018 and ranked 12th overall on the Forbes list of top global companies.1
In addition to noteworthy mergers and acquisitions, the industry has most recently been focused on the advent of 5G cellular service, which promises 10-20 times faster download speeds for mobile data and could dramatically change the way telecom companies operate.
However, before we delve in any further, let’s start with some basic definitions:
- The term “telecommunications carrier” is a catch-all that covers all entities that provide some form of telecommunications services to consumers, businesses, governments and other telecom providers as their primary business. This may include fixed or mobile communications, and/or voice or data.
- A carrier network is the proprietary network infrastructure belonging to a telecommunications service provider such as AT&T, Verizon or Sprint. Telecom carriers are authorized by regulatory agencies to operate telecommunications systems.
- Carrier networks are made up of large, complex configurations of hardware, interconnected to provide communications services to people spread over large areas.
- Devices served by a carrier network include telephony equipment, CATV (community access television) receivers, satellite television receivers, mobile computing devices, PCs, and certain types of specialized devices, such as medical and surveillance equipment.
In short, carrier networks distribute huge quantities of data across the globe! Today, most of this is done through fiber optics, although portions of some networks still use cable. Even internet service to individual users can take place through fiber optics, although cable, wireless and satellite internet are more common.
Is the Price Right?
Remember the game show, The Price is Right, which involved contestants guessing the prices of various items? Well, determining pricing from telecom carriers can be a bit like that – a guessing game! Prices can vary dramatically based on location (i.e., they are highly sensitive to geography) and may change quickly as technology evolves.
Getting quotes for telecom services used to be a time-consuming, manual process and would consist of “estimates” or price ranges. Today, services such as GeoQuote by Telarus (https://www.telarus.com/geoquote/) provide real-time pricing by retrieving multiple quotes from multiple databases associated with multiple service providers, making the selection process easier.
While these services have improved the accessibility and accuracy of real-time pricing, there are still some unknowns. While copper-based (cable) pricing is generally easy to determine, fiber optics can be trickier. Vendors are still building their infrastructures, so companies are not sure what to charge the customer until they complete a site survey. There are a number of variables to consider when determining fiber optic pricing, which is why its more difficult to get “guaranteed” pricing ahead of time.
Cutting the Cord
While more and more people are “cutting the cord” and using wireless services, there are still telecommunications carriers that offer local and long-distance voice services using the public switched telephone network, along with wholesale access to networks for use by companies that provide voice communications to customers.
As you might expect, this industry is struggling to remain relevant. Wireless telephony and Voice over Internet Protocol (VoIP) technology have taken a large portion of revenue away from traditional wired networks. This industry has also suffered due to the growing demand for fiber-optic broadband internet access, which has contributed to the decline in demand for landline services.
Over the past five years, the wired telecommunications carrier industry in the U.S. has declined by 5.3% to $73 billion in 2018. During this time, the number of businesses in the industry has dropped by 6.1% and the number of employees has declined by 7.0%. Interestingly, the business market for landline telephony has increased over the past five years, based on its reliability and low cost.
However, as mobile telephony continues to improve in quality and reliability, consumers are increasingly viewing wired telephony as unnecessary and eliminating their landlines. Overall, forecasts call for a continued decline in demand and revenue in the wired telecommunications industry.
Currently, the companies with the largest market share in wired telecommunications in the U.S. include AT&T, Verizon, CenturyLink and Comcast.
A Wireless World
On the flip side, the wireless telecommunications industry has experienced growth over the past five years. The popularity of the smartphone is one of the major reasons for this expansion, as households have decided to disconnect their landlines and rely on their mobile devices. In fact, many newer households have never purchased a wired phone service.
According to the Cellular Telecommunications and Internet Association (CTIA), revenue in this industry has grown 1.6% annually to reach $273 billion in 2018. Continued growth is expected, particularly in data services. Internet-connected phones garner significantly more revenue from consumers than those that provide only voice or text messaging. Although the number of mobile internet connections is increasing, the rate of growth is beginning to slow as the industry approaches saturation.
The companies with the largest market share in wireless telecommunications include some familiar names – AT&T and Verizon – along with Deutsche Telekom AG and Sprint.
Connecting the Future
According to a recent report from Transparency Market Research, newly emerged technologies, such as 5G network, big data, Internet of Things (IOT), cloud computing and machine-to-machine (M2M) will continue to boost and transform the telecom industry. The top 10 largest telecom companies in the world are expected to maintain their leadership in the global market and continue to expand their operations.
Top 10 Telecom Companies in the World by Market Value in 2018
|1. AT&T||United States||$233 billion|
|2. Verizon||United States||$201 billion|
|3. China Mobile||China||$193 billion|
|4. Nippon Telegraph & Telephone||Japan||$96 billion|
|5. Softbank||Japan||$85 billion|
|6. Deutsche Telekom||Germany||$81 billion|
|7. Vodafone||United Kingdom||$76 billion|
|8. Telefonica||Japan||$51 billion|
|9. Orange||France||$48 billion|
|10. China Telecom||China||$39 billion|
- 1 “The World’s Largest Telecom Companies 2019,” by Sarah Hansen, Forbes, May 15, 2019
- “The Top 10 Telecom Companies in the World 2018,” by Nick, Electronics and Telecom Technology.
- US Industry Reports – Wireless Telecommunications Carriers Industry in the U.S., Industry Market Research Report, February 2019.
- US Industry Reports – Wired Telecommunications Carriers Industry in the U.S., Industry Market Research Report, February 2019.