Wireless Telecommunications Services
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Industry Overview
The US wireless telecommunications services industry includes about 3,000 companies with combined annual revenue of more than $185 billion. Major companies include the four national wireless carriers: AT&T, Verizon, Sprint Nextel, and T-Mobile USA (an indirect subsidiary of Deutsche Telekom). The industry is highly concentrated: the 50 largest companies generate more than 90 percent of industry revenue.
The industry includes companies that operate wireless telecommunications networks and related facilities. Companies that resell wireless telecommunications services are not included in the industry.
Competitive Landscape
Demand for wireless services is driven by consumer income and innovative service offerings. The profitability of individual companies depends on marketing and customer service. Large companies have advantages in marketing and in delivering a comprehensive array of services nationally. Small companies can compete effectively by delivering economically attractive service packages tailored to niche groups regionally. The industry is capital-intensive: average annual revenue per employee is more than $900,000.
Products, Operations & Technology
Major services provided include voice telephony (ordinary cell phone service); messaging (voice, text, image, and video); Internet access; music and video distribution; and ringtone distribution. While voice telephony traditionally has dominated wireless network traffic, data is expected to surpass it.
Cellular communications networks consist of a series of low power base transceiver stations (BTS) interconnected through a regional base station controller (BSC) to a mobile switching center (MSC). The BTS, or cellular tower, consists of a set of antennae mounted on a tall structure or tower with a large two-way radio. The BTS communicates with mobile phones and devices in its geographic area, or cell. The BSC, which controls communications with up to several hundred cellular towers in a geographic area, allocates radio channels to individual mobile phones and controls handovers from one cellular tower to another. The mobile switching center connects calls between network users and is also connected to the wired phone system, the public switched telephone network (PSTN).
The two main cellular standards in the US are global system for mobile (GSM) and code division multiple access (CDMA). GSM is the standard in Europe. CDMA is slightly more efficient in spectrum usage and has a more advanced methodology for hand-offs between cellular towers. Some older legacy analog systems are being gradually phased out.
Companies with their own cellular communication networks are known as premise-based operators. Companies typically have roaming arrangements with other operators, which permit their customers to use other networks for a fee. Some operators also have wholesale arrangements with non-premise based operators, who resell under their own brand name.
Users of cell services demand high quality services (no dropped calls, no crosstalk between calls); accurate billing; and responsive customer service. To meet these needs, cellular operators frequently survey their operating areas, gauging signal strength and number of users. New base stations are added as needed to maintain operations quality. Most operators have centralized computer systems to collect call records and process billing.
