Telecommunications equipment overview and applications

Telecommunication equipment industry has undergone drastic developments and changes since the 1990s. The telecommunication equipment industry has become quite popular due to the tremendous increase in the use of communication services all over the world. This paper provides a deep insight into the major manufacturers involved in the telecommunication equipment industry. It also highlights the core policy transformations and privatization changes occurring in the global telecommunication industry which is affecting the service providers present in the industry.

Telecommunication Equipment

Telecommunication equipment industry has encountered tremendous development in a consistent way since its very inception. The term "telecommunication equipment" comprises of a variety of telecommunication related devices which are manufactured by several vendors spanning over the entire industry. The demand for new and better services has actually fueled up the purchase of advanced telecommunication equipment all over the world (Brown, 2011). The changing regulatory environment of the telecommunication industry has affected the manufacture of telecommunication equipment to a great extent. This paper firstly explains the devices and equipment which are included within the domain of telecommunication equipment. It then gives a detailed account of the popular manufacturers of these telecommunication equipment. Lastly, the article explains some regulations pertaining to the telecommunication equipment industry and the consequences of such policy regulation on business organizations and strategies of the telecom industry.

Overview of Types of Telecommunication Equipment

Telecommunications is basically a mammoth industry which involves the production of hardware equipment, the development of relevant software products and the formulation of appropriate communication services using both the hardware and software products. Hardware telecommunication equipment involves catering users with communication services spanning worldwide through telephone handsets, fiber-optic transmission cables, and video broadcasting satellites. The services catered through telecommunication equipment include provision of internet access and configuration of private networks for corporate business firms. Software is designed for controlling the telecommunication equipment in an effective way.

Telecommunication equipment can be categorized in to three core units on the basis of the functionalities offered by each equipment. These types comprise of transmission equipment, public switching equipment and customer premises equipment. Transmission equipment basically deals with transmission lines and base stations which serve as a medium of transferring the signals. Transmission equipment usually comprises of transmission lines like optical fibers, base transceiver stations, multiplexers, and local loop and communication satellites. Most telecom service providers are upgrading the wired transmission techniques from copper cables to fiber optic cables. The demand for fiber optic-based transmission equipment has increased drastically over the recent years. Public switching equipment comprises of analogue and digital switches which cater the exchange of information among different users (Kabacinski, 2007). Switching equipment actually complete connections between callers by routing the signals appropriately.Customer premises equipment includes routers, modems, mobile phones, and landline phones etc. which are manufactured for the end users to get themselves connected with the entire telecom transmission system.

Major Industry Players in Telecommunication Equipment

The core telecommunication equipment manufacturers spanning worldwide comprise of Ericsson, Huawei, Alcatel-Lucent, Motorola, Nokia Siemens, Nortel and several other Chinese firms as well. All these companies are operating worldwide and cater end-to-end telecom solutions comprising of hardware and software products along with services to enterprise customers and service providers (Maadivanan et al., 2007). We can further segregate these major players in the domain of telecommunication equipment on the basis of specialized equipment manufactured by each. Ericsson, Huawei, Alcatel-Lucent, ZTE and Nokia Siemens are ranked amongst the top telecommunication equipment vendors present globally. Apart from the Cisco systems and Juniper Networks are also two renowned names in the industry of switch manufacturing. Samsung, Nokia, Motorola, Apple and HTC are also considered as the top mobile handset vendors all over the world. The following section of the paper will now briefly discuss the details of the core telecommunication equipment manufacturers.

Ericsson

Ericsson is ranked as the largest telecommunication equipment maker which captures a significant market share globally. Ericsson is ranked highly for its quality mobile network infrastructure and telecom services as it captures a market share of 38%, according to the statistics of 2011. It caters with end-to-end solutions, systems and services enabling fixed and mobile networks to transmit voice and data effectively. They ensure that all the elements present in the communication chain are integrated well with each other. Ericsson caters mobile operators with base stations, radio network controllers, mobile switching centers and service application nodes. Ericsson is basically a Swedish company which has the privilege of being the inventor of Bluetooth. During the 20th century Ericsson leaded the market of manual telephone exchanges. It encountered heavy losses after the crash of telecommunication industry in 2000.

ZTE and Huawei

Huawei and ZTE are the two core Chinese firms which are ranked as the world's second and fifth largest telecom equipment makers for years. These Chinese enterprises have surpassed their foreign counter parts in the capital intensive and technology intensive industry. According to the statistics of 2012, Huawei is said to have overtaken Ericsson in terms of telecommunication equipment manufacturing (Xinyu, 2012). The core factor leading towards Huawei's success is the investment made by it in the Research and Development sector. The telecommunication equipment made by Huawei is characterized by low cost manufacturing and efficient supply chain management system. Huawei caters three core business segments which comprise of manufacturing equipment for telecom networks, provision of global services and consulting service to enterprise customers. Fixed and mobile soft switches, Internet Protocol Multimedia Services (IMS) and next generation Home Location Register are the significant equipment manufactured by Huawei for telecommunication networks. Global services provided by Huawei comprise of system integration services for enhancing the operational efficiency of telecom networks. USB modems, tablet PCs, smartphones, wireless gateways, fixed wireless terminals and set-top boxes are the important and latest devices made by Huawei for telecom networks.

Alcatel Lucent

The telecommunication equipment manufactured by Alcatel Lucent comprises of mobile, fixed and converged network technologies and IP technology software and services. Bell labs were founded by Alcatel Lucent which is regarded as the largest R&D and innovation center present in the communication industry. Its success is actually attributed to the merger of Alcatel and Lucent technologies which were two different telecom solution providers in Europe and U.S. respectively. Alcatel possessed a strong wire line access equipment business while Lucent technologies were a champion in the wireless industry with tremendous in-depth knowledge pertaining to UMTS, 3G and CDMA platform. The merger thus served as a strong asset for both the companies and earned them great synergies due to the combined resources. Alcatel Lucent caters four business divisions namely: Fixed Networks, Core Networks, Platforms and Wireless. The research department of Alcatel Lucent is centered on the domains of radio frequency systems, fixed broadband access, IP, optics and core networks.

Nokia Siemens

Nokia Siemens is a telecommunication equipment manufacturer and a multinational data networking company formed through the merger of mobile network giant Nokia in Finland with the carrier related communication division of Siemens in Germany. This merger company is ranked as the third largest player in the telecommunication equipment manufacturing industry (Maadivaanan et al., 2007). The integration of handset business of Nokia with the home gateway business of Siemens actually opened new prospects of advancements in the domain of next generation networks, home networking and IPTV. Nokia Siemens catered the telecommunication equipment manufacturing industry with business communication services ranging from mobile backhauling to device management, customer care support and WCDMA frequency reframing. The company catered services for both GSM and UMTS RAN networks which further enhanced the company's portfolio.

Motorola

Motorola Inc. leads the world of wireless telecommunication solutions, with WiMax being its fundamental achievement in the domain of broadband wireless technology. Its global presence made it easier to capture the mobile markets in Africa and Asia. Enterprise mobility solutions and Home & Network mobility solutions tend to be the two core services catered by Motorola in the domain of wireless technology. It presents RFID-based solutions, wireless infrastructure devices and data communication devices to customers worldwide. It also develops digital video systems, interactive set-top devices and voice and data modems for cable networks and digital subscriber lines (Maadivaanan et al., 2007).

Cisco Systems and Juniper Networks

Cisco systems and Juniper networks tend to be the two significant networking equipment manufacturing companies which are based in America. These companies cater a wide variety of switches and routers for forming different sort of network in enterprises and homes. Cisco Systems provide security solutions, VoIP conferencing devices, network storage devices, line of access points and cable modems for forming telecommunication networks at home and enterprises.

Major Policies Regulating Telecommunication Equipment Industry and their Impact

Regulations in telecommunication equipment industry are needed for interconnection, telecom licensing, network connection, and telecom security. Regulations are needed for fostering competitive markets to cater good quality services, efficient prices and efficient supply of telecommunication services to the service providers. It lends a hand in preventing market power abuse which results in excessive pricing and anti-competitive behavior of dominant firms. Regulatory and licensing processes cater transparency which ultimately promotes public confidence. Regulations are instrumental in promoting optimized usage of scarce resources like radio frequency spectrum (Waden, 2009). Regulations in the domain of telecommunication equipment are made for issuing licenses for the provision of telecommunication services, allocation of spectrum, deciding upon the tariff rates, management of the telecommunication numbering system and registration of the Internet domain name. ITU-t and ITU-R are also international telecommunication regulation organizations which cater the issue pertaining to the investment made for the development of the telecommunication equipment industry (Terault, 2000).

The industry of telecommunication and communication equipment is governed rapid technological changes. Telecom regulations in most countries are centered on maintaining a balance between competition and the level of regulation. The large sunk and fixed costs involved in building telecommunication infrastructure imply the regulators to form laws regarding sharing of the infrastructure and reducing the prices of alternative infrastructure (Little, 2008). Regulatory measures pertaining to telecommunication industry have direct impact on cross-border trade flows and foreign direct investment. Economy wide regulations actually deter cross-border trade, while sector-specific regulations and restrictions on foreign ownership have significant impact on FDI (Molnar, 2008).The major issue confronting telecom service providers is the fact that they need to meet customer requirement keeping in view security, auditing and archiving.

Telecommunication regulators in many countries resort to techniques like revenue sharing, profit sharing and price caps for effective cost reduction and excessive investment in the telecom sector. Price regulation involves freezing of the prices of telecom services which cannot be changed by firms (Cambini & Jiang, 2009).The breakup of AT&T in 1983 brought about drastic changes in USA after 30-year of battle between USA government and AT&T on antitrust legislation. The paradigm regulation thus shifted from regulation of the incumbent monopoly towards the regulation aimed at breaking the monopoly of the incumbent. This served as a symbolic milestone in the domain of regulations pertaining to the highly competitive telecom marketplace where technology changes tend to be the core drivers of the competition (Brown, 2011). The trend of deregulation was then followed by UK which aimed at liberalization of the telecom market. The principle of liberalization and globalization further lead to the adoption of telecom liberalization wave by majority of the European countries as well. Apart from majority of the European countries, many Arab states also followed the same trend of deregulation in the 1990s. Another drastic phase of regulation occurred with formulation of appropriate rules for tackling the monopolistic situation of a single organization which operated the Public Switching Telephone Network. Technical, legal, and controversial objectives of different players present in the telecommunication equipment industry make it quite difficult to form standardized regulations.

The access regulation policy does promote short-term competition yet it results in the reduction of infrastructure investment by both new entrants and incumbents present in the telecom industry. Thus regulations on access actually depressed the investment incentives of the incumbent and consequent investments aimed at fiber platforms (Molnar, 2008).

Voice communication is ranked amongst the "killer" inventions of the telecom industry which has revolutionized it to a great extent. The conflicting nature of VoIP has actually resulted in serious issues in the domain of telecommunication equipment. The socio-economic progress and productivity gains catered by VoIP encourages its adoption by majority of the service provide worldwide. However, VoIP poses severe threats to PSTN networks and is thus subjected to several restrictions in many countries. At times VoIP also advocates complete bypassing of the PSTN. Due to this telecommunication equipment regulations in many countries either prohibit the VoIP technology or it is permitted under restrictive conditions. Skype is a successful application of VoIP support which has alarmed European regulators to intervene and carefully inspect that the mobile users aren't blocked from using their cell phones for calls. The Swedish government has actually ruled that Skype needs to pay to the government for its revenue generating services. UAE countries like Oman have blocked Skype for protecting the profit of the telecos (Mitwally, 2009).

As the telecom sector is approaching towards the trend of convergence which involves merging up of networks, firms, services and devices, complex regulatory challenges are emerging at a rapid pace. As convergence involves multiple layers, it becomes unclear as to which entity will bear the responsibility for complying with the national laws and regulations and which government entity is entrusted with the responsibility of enforcing the regulation. Mergers and acquisition in each country are regulated by telecommunication rules and regulations which aim at restricting the new entrants from upsetting the service-specific competition policy (Mitwally, 2009). This policy regulation has also limited U.S. telecom firms from reselling their domestic or international telecommunication services in China as U.S. firms are reluctant in paying the high capitalization requirement.

The require of high capitalization imposed by China for telecommunication companies for executing their operation in China has made market entry for U.S. based telecom firms to be difficult. U.S. actually wants these high capitalization requirements to be removed or reduced so that it gets easier for the new entrants to make some place within the telecom market. Another Chinese regulation affecting greatly the business and revenue of U.S. based telecommunication firms is the fact that U.S. firms are required to have a joint venture with a Chinese firm to offer its services in China. This regulation has limited opportunities of success for foreign firms in China, as the foreign partner of the joint venture tends to be completely dependent on the Chinese operator as the Chinese have not licensed any other operator alone and thus no one possesses the relevant requisite experience (Terault, 2000).

The telecommunication regulation framework in any country needs to keep in view the frequently occurring technological changes and must keep on updating the policies accordingly for safeguarding the interest of all the telecom equipment players in the market.