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Telecom Industry - Essay Example

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The market structure characterized by the nature and type of players, products, and demands wield an influence on the overall economy of that particular industry. Market Structure refers to the competitive environment in which the buyers and sellers of the product operate…
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Telecom Industry
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Telecom Industry

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In this essay we shall discuss about World Telecommunication Industry in general and the UK industry in particular, analyzes its market structure, figure out the entry barrier for the operators and understands its advantages and disadvantages.
The telecommunications industry provides many services to businesses and consumers, using a growing variety of technologies and spanning an increasing range of communications media (voice, image, data, etc.). Worldwide, the ITU estimates that telecommunication service revenues have more than doubled, from US$ 517 to US$ 1,216 billion over the last ten years. As a result, total telecommunication revenues have substantially increased as a percentage of GDP in Africa, Oceania and Asia and have remained stable in Europe and the Americas. Today, they represent almost five percent of GDP in Africa, compared to 4.5 percent in Oceania, 3.8 percent in Asia, 3.3 percent in Europe and 2.9 percent in the Americas. (World Telecommunication / ICT Development Report, 2006)
2. Regulation and liberalization in Telecom Industry
Initially all the dimensions of the public telecommunication services namely ownership, entry, pricing and output choices were controlled by the governments of the respective countries. Up to the beginning of 1980s, the telecommunication services were provided by the governmental enterprises that enjoyed monopoly in majority of the countries. These had strict regulations in the range, amount and the prices of services, regulated to meet the social goals and the constraints on returns. Large economies of scale relative to demand would justify the establishment of price regulated legal monopolies and externalities (network effects and the spill over effects on public goods such as health, information and defence) would justify the particular kinds of price and output restrictions. Direct ownership of the public telecommunication services and restrictions on foreign investment in the telecom industry were seen as the perfect strategy to meet the implications of the public telecommunication policies.
But over the past two decades, these public telecommunication operators have been fully or partially privatized in many of the countries. Regulations concerning access to telecommunication markets, provision of services to users and pricing mechanisms have undergone a sea of change. The technological improvements and the changing structure of demand for telecommunication services necessitated the changes in the regulation and provided a ground for bringing liberalization policies. This resulted in erasing the monopoly structure of the telecom ...Download file to see next pagesRead More
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