Chp. 3 – Industry OverviewTraditional Telephone Companies & Cable TV Providers

Mobile ProvidersSmaller Competitors

Internet Based CompetitorsWhy Governments Regulate Telecommunications

The Bell System in 1984

• SBC purchased BellSouth, the former AT&T’s long distance and AT&T Wireless

• SBC changed its name to AT&T In 2005 after the above purchases

Incumbents: AT&T, CenturyLink and Verizon

AT&T Inc.– AT&T Wireless– AT&T Landline services

• Residential Internet access, voice telephone & TV

• Business & Commercial offerings– broadband– Cloud and managed

services– International Networks

• Wholesale offerings to other carriers

• Verizon Communications– Verizon Mobile

• Jointly owned by Vodafone and Verizon

• Verizon/CTLINK landline services

• Residential Internet access, voice telephony & TV

• Business & Commercial offerings– Business broadband– Cloud and managed services– International Networks

• Wholesale offerings to other carriers

4

Industry Overview

Carrier/competitor• Group 1: AT&T Inc.,

Verizon Communications, CenturyLink

• Group 2: XO, Level 3, Windstream

• Group 3: Apple, Google, Amazon, Netflix

• Group 4: Comcast and Charter

Each group answer all questions• What services do they

offer?• Who are their

customers?• What are their

strengths?• What are their

challenges & weaknesses?

Mobile Providers

Largest providers • Verizon Wireless

– 60% owned by Verizon– 40% by UK’s Vodafone

• AT&T Mobility• Sprint Nextel• T-Mobile USA

– Owned by T-Mobile Germany– MetroPCS

Industry issues• Advantages

– No wires! • Challenges

– Upgrades– Competition

• Margins• Churn

– Regulations– Capacity

Cable Multiple System Operators (MSOs)

Largest cable MSOs• Comcast• Time Warner Cable• Cox Communications• Charter

Offerings• Triple plays

– Pay TV– Internet access– Voice telephony

• Business offerings– Cloud & managed services– Fiber to the premise– Voice and long distance

• Wholesale offerings – Backhaul to mobile carriers– Metropolitan networks

Industry Segments• Facilities based Carriers• Resellers

– Wireline– Wireless

• Cable TV vs. traditional phone companies• Internet based competitors

Internet Based Competitors• Amazon• Apple • Google• Microsoft• Netflix

• Technological enablers– Fiber– Broadband– Powerful computers– High-speed processors

• Competing offerings– VoIP – Streaming TV– Cloud services

Netflix

Comcast to homes

9

Results of Competition

Providers

• - Comcast• Local telephone companies:

AT&T and Verizon and CenturyLink

• - Competitive providers: XO, Level 3 and Windstream

•  -Vonage, Google, and Skype• Wireless carriers: Sprint, T-

Mobile, Verizon Wireless, AT&T Mobility, MetroPCS

Competition• What are benefits of

competition?• What are drawbacks of

competition?• How have your choices

increased or decreased? • What do you think are the

result of so many mergers?

Rationale for Government Regulations

Safety

SecurityWars

National disasters

National defense

Consumer protection

Competition

Regulatory Issues• Mergers• Spectrum• Intercarrier compensation

Comcast

• Cable TV is too expensive!

• Can we change our provider?

Summary

• A complex industry– New competitors

• Technological enablers• Changes in consumer access to entertainment• Changes in modes of communications

• Why do governments regulate telecommunications?• Regulatory impact

– Competition– Licensing– Court decisions– Subsidies