Wired Telecommunications Services
Buy This Industry Report
Get more in-depth industry information with a First Research industry report containing business challenges, trends, executive insight, call prep questions, and so much more!
Industry Overview
The US wired telecommunications services industry includes about 2,000 companies with combined annual revenue of about $160 billion. Major companies include AT&T, Verizon Communications, Comcast, and CenturyLink. The industry is highly concentrated: the 50 largest companies generate more than 90 percent of revenue.
The global wired telecommunications services industry comprises roughly 1.2 billion fixed telephone lines and 550 million fixed broadband Internet subscriptions, according to the International Telecommunication Union (ITU). China has the most fixed lines (294 million), followed by the US (151 million), Germany (45 million), and Russia (44 million). Major wireline carriers include Japan's Nippon Telegraph and Telephone Corporation (NTT), Spanish firm Telefónica, and China Telecom.
Companies in the industry, which provide services such as local and long-distance calling, Internet access, and TV program distribution, own and operate telecommunications networks. Cable TV system operators are discussed in the Telecommunications Services industry profile. A separate profile covers Wireless Telecommunications Services.
Competitive Landscape
Demand is driven by new services and growth in business activity. The profitability of individual companies depends on efficient operations and effective marketing. Large companies have economies of scale in providing a highly automated service to large numbers of customers, and the financial resources required to build and maintain a large network. Smaller companies can compete effectively in small markets or by providing specialty services.
Products, Operations & Technology
Major services are local and long-distance calling, TV distribution, and Internet access services. Local calling and TV program distribution each account for about 20 percent of industry revenue; long-distance calling and Internet access each account for about 10 percent. Other services include network access, data transmission, private networks, installation, equipment sales, and calling features such as caller ID and voice mail. Network access charges are levied against other carriers, mainly long-distance and wireless service providers, that need access to local wired phone systems.
Telephone systems consist of wires, connections, and switches. From a demarc (demarcation) box located at a customer's address, wires are strung on poles or underground to a local facility called a central office. Here, the wires are connected to a main distribution frame (MDF) that in turn is connected to a class 5 switch, basically a large computer. The entire collection of equipment and wires leading up to a central office is called the outside plant.
Local central offices are connected with each other in what is called the public switched telephone network (PSTN). Companies may own and operate different pieces of this network, either local connections or regional and national "backbone" systems. The common technical language that allows all switches in the network to communicate with each other is called signaling system 7 (SS7). Companies use customized business and operational support systems (B/OSS) to manage their parts of the network and to supply services.
To provide data and Internet services, phone companies may use existing wires or may string special cables such as fiber-optic cable to a customer's location. Connections among central offices and between cities are usually sent over fiber-optic cable.
Most companies are replacing older equipment that dedicated an entire path for a single phone call with equipment that allows many digital signals to use a path at the same time, through a method called voice over Internet protocol (VoIP). VoIP technology has enabled providers to lower their costs of providing data and voice services and add multimedia offerings without widespread network upgrades.
