Microeconomics Telecom Industry Is a Vast Growing Term Paper

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Microeconomics

Telecom industry is a vast growing sector which deals with the transmission of information to far distances. During the older days, telecommunications was via visual signals such as smoke, flags and telegraphs. Audio communication was transmitted through drumbeats, whistles and horns. Globalization has seen this sector upgrade and today they use electrical devices which include telephones, fiber optic, and the latest internet technology among others. Several companies have come despite the government's intervention in issuing of licenses. The influx is alarming because controlling production of sub-standard goods become hard (Seybold, 2008).

Products offered by telecom

There are many services offered by this industry. They can be broken in to five major categories for clarity. First is the business network and IT services. This includes data centers, mobility services, and network access and voice communications among others. Secondly, there is Business and Technology software. This is an important product because it involves application platforms, data centre technology, enterprise networking and security. Thirdly there is the consumer devices products which include the smart phones, personal connected devices and the digital home devices. Telecom also has consumer services which include trackers. Lastly there is service provider infrastructure as a product of telecom.

Largest firms in Telecom Industry

Telecom is global and has many firms operating under them. These are the AT$T, Vodafone, British Telekom, Vivendi and France Telecom. British Telecom which operates under the name BT is a multinational corporation whose head office is in London. There are many companies that are coming up due to high technology and they pose some danger in the telecommunication industry especially the well established firms (Seybold, 2008).

British Telecom

It is a big company that is operating in around one hundred and seventy countries. Due to its large size, it is able to provide its services not only to the government but also to corporate clients. Its retail sector provides the telephones, broadband and the television cables that are under subscription. The company was founded in 1846 and by 1912; the General Post Office which was a government department became the monopoly of the telecoms supplier. In 1980 Telecom became an independent company and was privatized in 1984 with half of its shares being sold to the investors. The company has seen its turnovers change from 1992 when figure was at 13,337 million pounds to 2011's turnover reading 20,076 million pounds. This is quite encouraging and it is due to the increased potentials with its employees. In 2009 BT had to cut down 15000 jobs after merging with Lynx Technology and only offered part time jobs.

AT$T

This is among the biggest communications firms. Its presence in United States is felt because it serves over twenty two states. It is a global company working in two hundred and twenty five countries. This company has over 252,330 numbers of employees. Its market value is 202,625 million dollars with outstanding shares of 5863 million dollars. This is quite a big country offering all telecom products.

Vodafone Telecommunication

This is another big telecom company that has over eighty five thousand employees as per a report released in 2010. Its turnover is about 31,104 million pounds. Its customer base is well set and has around 341.1 million mobile customers globally. The company has its presence felt in all the seven continents of the world. Vodafone is a British multinational telecommunications and just like BT it has its headquarters in London. It is operating in 30 countries though it has its subsidiaries that have penetrated into 40 other countries. Vodafone is listed in the London Stock Exchange and it is the second listed after NASDAQ. Its market capital is around 89.4 billion pounds. It is known for its mHealth solution which is unique and has assisted several people. There was a case in Tanzania where text message based information enables the control of anti-malaria medical supply control (Woolley, 2001).

Vivendi Telecommunication

Vivendi is a telecom company whose headquarters is in France. Its services include television, telecommunications, music and filming and also games. In 2002 the company reported its worst loss which totaled to 23.3 million Euros. By 2008, its total revenue was valued at 29.6 million dollars. Its vibrant expansion was too expensive for this companies hence the drop in share value. However Vivendi has 73 million in mobile subscriptions. The number of employees has grown from 34,694 in the year 2006 to 58,318 in the year 2011. This confirms that the corporation is mounting in size and technology.

France Telecom

It is a multinational telecom company based in France too. It is the principal in Europe and next biggest globally. Currently it employs over one hundred and eighty thousand employees with half of them based outside France. Its global number of customers is about 192.7 million people. In the year 2010, its revenue was 45.5 billion Euros. Until 1988 France telecom was part of the ministries in the France government. In 1990 it became an independent company with Marcel Roulet being the first chairman. Between 2008 and 2011, it was reported that sixty employees had committed suicide due to work related stresses.

Problems in telecommunication Industry

A). Decline in demand is one big factor affecting the telecommunication industry. The high economic crisis has contributed to a decline in demands. The invention of high speed internet and cables has also minimized the demand for these products and services. Society has also switched to the refurbished products which are flooding in the markets hence affecting the supplies of quality products. Decrease in demand means decrease in supplies hence decrease in economic production. China has been known to be popular in production of counterfeit products and this is affecting other markets as well.

B). Globalization is one factor that is affecting the industry. This is because fashion and style has changed with it. The industry has to be vibrant enough to meet its rising demands. Exposure through media has made the society's standards of living high and every firm has to adjust with them. There is currently a demand of smart phones which are expensive to produce but the demands require the companies to distribute them.

C). Competition is another drawback in this industry. Many vibrant industries are coming up and this threatens the existing ones. The issue on high digital televisions and internet are also a threat to the industry. With so many companies coming up, there would be a flood and even sub-standard productions might flood in the market. The pressure is too much for the employees and as mentioned earlier, suicides have been reported in some firms. This is a big challenge because lack of employees means low production (Woolley, 2001).

D).The economic crisis that has been around since 2008 has seen many industries go down. Telecom is one of the affected industries because they are not able to meet the demands. With the crisis, their turnovers have gone down and as much as they would want to introduce new brands in the market, the finances put a barrier. With the crisis, the society has switched to cheaper goods and they include the generic phones that china produces for the third world markets (Seybold, 2008).

E).The issue of the government intervention has been there due to licensing. The government is the regulator of any companies coming up in the markets. The requirements required for licenses are quite high and most firms are not able to meet them. The government taxes have also gone up and this puts pressure on the industry. The labor force is tensed because the employees are not satisfied with the salaries. The industry is not able to raise the salaries due to the low turnover. The laborers are thus minimized which is a ripple affect since they are forced to work extra hours to meet…[continue]

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