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Telco Essay

1349 words - 6 pages

TELECOMMUNICATIONS:
THE BATTLE OF THE INDUSTRIES

April 24, 1999
Econ 635



There have been many changes in the way telecommunication companies have been doing business- not only to satisfy the needs of the consumer, but to compete with other telecommunication services, too. Advances in technology have led to the integration of several telecommunication services which enter a home through existing copper wires or newer optical lines. New laws are even allowing companies to merge or acquire smaller companies for the purpose of increasing their leverage in the market.
Cable Industry
Currently, the cable industry relies heavily on the use of coaxial cable to transmit its ...view middle of the document...

Broadband Access
As consumers spend more time at home on the Internet, they are demanding faster access speed. Therefore, telecommunications service providers are implementing new broadband (high-capacity) systems to meet the demand. To boost network capacity, "two of the primary broadband product solutions are cable modems and digital subscriber line (DSL) technologies." (Industry Surveys).
Cable modems are used to connect a personal computer to the cable TV network to offer high-speed Internet access. The modems are sold separately or integrated into set-top boxes.
One drawback to this technology is that most cable networks are not yet equipped to control two-way Internet traffic.
"Only 20 percent of the nation’s cable TV infrastructure has been upgraded to support two-way traffic," according to Telecommunications magazine. (Industry Surveys).
The two main Internet providers, which use cable modems, are RoadRunner and At Home. They currently have 300,000 subscribers, but research firms believe that the number of users could increase to 10 million between 2001 and 2004.
Another option in response to higher-speed Internet access is how, "telephone companies are pushing telecom equipment vendors to release products that exploit the telephone companies’ greatest asset: their existing copper wiring." (Industry Surveys). The diffusion of DSL has been held up by lack of trained installers, competing standards and the poor quality of copper networks. The DSL industry will receive a major boost when retail store will have DSL-compatible modems on the shelves.
Forrester Research predicts that one-quarter of all on-line U.S. households (about 16 million), will use broadband connections to the Internet by 2002. Twenty percent of this broad band market will be serviced by DSL, with cable modems secure the rest of the market.

Fiber Optics
Fiber optics transmit high volumes of telephone, data and video signals as laser-generated light pulses over "hair-thin" strands of specially conditioned glass. A single strand of glass can carry up to 8,000 simultaneous telephone calls and data transmissions- far greater than current copper wires.
Telecommunications remains the predominant utilization of fiber optics, accounting for over 80 percent of the total market. Part of this success of fiber optics is due to greater integration in recent years. According to the U.S. Industry & Trade Outlook:
Telecommunication networks and fiber distributed data interface for LANs have gained universal acceptance among deployers of fiber-optic systems and equipment. These standards have created a more uniform environment which allows competing manufacturers to create compatible products for deployment in telecommunication networks, contributing to
market growth.
Mergers and Acquisitions
1996 began a new era as major forces within the communication industry began to merge. During this year, many competitive barriers were taken down encouraging...

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