Meet Communications Providers
Learning Objectives
After completing this unit, you’ll be able to:
- Describe the different types of communications providers in the communications industry.
- Provide examples of communications providers.
- Explain the purpose and impacts of regulation on communications providers.
Types of Communications Providers
The communications industry consists of communications equipment providers, wireless communications providers, and communication service providers (CSPs). You learn a bit more about each type of provider next, and then identify communications providers that fit in each category.
Communications Equipment Suppliers
The largest sector. It supplies the underlying hardware and software required on a network. Communications equipment includes a wide range of technologies, from mobile phones, radios, and answering machines to transmission cables, routers, communications satellites, telecom towers, and all the software required to run the equipment.
Communications equipment suppliers that provide infrastructure generally serve major telecommunications providers (such as the wireless communications providers discussed next) as their customers. However, communications equipment like mobile phones, routers, and modems may be supplied directly to the consumer market and the business market.
The communications equipment market is massive: Smartphone shipments worldwide were estimated at 1.38 billion units in 2021 (Statista).
Wireless Communications Providers
The second-largest sector in the communications industry. Wireless communications providers, also known as mobile network operators, transmit analog and digital signals wirelessly using the radio spectrum. They provide products such as Wi-Fi, mobile phone services, messaging services, and GPRS (General Packet Radio Services). They also often include infrastructure to convert wireless communications onto a wired network when required.
While some wireless communications providers own their own network infrastructure, some lease a network or combine leased and owned facilities. Optus, an Australian wireless communication provider, owns its own network infrastructure, but also acts as a wholesaler to other wireless communications providers. Wireless communications providers tend to be strictly regulated since the required resources for wireless communications (such as radio frequencies) are limited.
Customers may be other telecommunications service providers, B2B customers, or consumers. Customers subscribe to the wireless service and must authenticate their devices on the network to use the service.
Communications Service Providers (CSPs)
CSPs offer a mix of information and media services over networks, including wireless, satellite, cable, and landline services. CSPs include telecommunications carriers, content and application service providers, cable and equipment installation contractors, and cloud communications service providers.
As technology evolves, the category of CSP expands. Cable and satellite TV services now generally include two-way communication facilities, so could be included in this category.
Apply What You’ve Learned
Match the communications providers to their sector. Remember many large communications providers work across multiple sectors—so this is tricky!
Provider Subtypes
The three main sectors can be further broken down into subtypes. Common subtypes include:
- Geographical region
- Global service providers, such as AT&T, T-Mobile, and Vodafone.
- National service providers such as Bouygues Telecom in France and Telkomsel in Indonesia.
- Regional service providers, such as Indigo Wireless, which services Pennsylvania in the USA.
- Products specialism
- Telenor Satellite in Norway is a wireless communications provider that specializes as a wholesale supplier of satellite services for communications service providers.
- Global Marine specialize in laying and maintaining subsea communications cables.
- Customer type
- Providers specifically for the military, government, or consumer market, like EuroControl and SITA, that specialize in telecommunications for the aeronautics industry.
Multisector Providers
Most large telecommunications companies work across at least two sectors. Consider one of the biggest and oldest telecommunications companies in the world: AT&T. This company offers telecommunications, media, and technology services on a global scale. Within its communications division, AT&T works across a range of sectors.
- Mobility provides wireless communications services and equipment.
- Video provides video services and multiplatform advertising.
- Broadband provides internet and good old-fashioned telephone services.
- Business Wireline provides voice and data services, and IP-based services.
This approach, with specialist subdivisions, is a common model for large CSPs, including Verizon Communications, Nippon Telegraph & Telephone Corp (NTT), and Deutsche Telekom.
Regulation and Competition
Communications products and services are now critical infrastructure for most countries. For this reason, communications providers tend to be regulated in terms of competition, innovation, consumer choice, and consumer pricing.
Levels of regulation are closely linked to political systems and market forces. The global trend is toward deregulation and increased competition in the industry, with over 96% of the OECD (Organization for Economic Co-operation and Development) market open to competition (Telecommunication Regulation Handbook). However, deregulated competitive communications markets are not a free-for-all!
Most markets have regulatory authorities that closely monitor them. Here are a few.
- Electronic Communications Framework/European Electronic Communications Code (Europe)
- Federal Communications Commission (USA)
- Telecom Regulatory Authority of India
Each regulatory authority has its own priorities, but most focus on providing fair deals for customers and allocating resources. In the past, telecommunications companies generally had few competitors and were often state-owned. Large companies, such as British Telecommunications and AT&T, were vertically integrated. This meant they provided both telephony services and the hardware infrastructure required to deliver the services. This gave them an unfair advantage over potential competitors. By the late part of the 20th century, many state-owned telecoms companies were privatized and large businesses broken up.
Impacts of Heavily Regulated Markets
Heavily regulated markets generally have few competitors, if any. There are high barriers to entry. Often the same company owns and delivers infrastructure and services. The government may own companies. Some state-owned telecommunications companies include China Telecommunications Corporation and Telecom Egypt.
The regulatory authority may set pricing so that customers have little choice in their purchasing decisions. However, benefits of heavily regulated markets include strict rules for service quality and use of resources, such as radio bandwidth. Regulatory authorities generally reinvest profits from more lucrative parts of the industry into infrastructure or supplying customers in more expensive service areas.
Impacts of Deregulated/Competitive Markets
In deregulated telecommunications markets, multiple suppliers tend to compete for a limited customer base. As discussed, regulatory authorities monitor most of these markets, which helps maintain fairness for suppliers and customers. Authorities can also break up monopolies and promote price competition, and governments can step in to ensure fair play.
Entrance and departure of competitors is common in a competitive market, as are mergers and acquisitions. These bring their own challenges, for example when integrating customers, business units, and IT systems.
Consumer churn is common in a competitive market, with customers shopping for competitive rates and offers that suit their needs and lifestyles. CSPs must innovate and improve their products and services to better suit their customers. However, deregulated markets can be difficult for customers to navigate. Sometimes the telecommunications infrastructure provider company is separate from the service provider. This means when a service fails, it can be difficult to establish who’s responsible, and the consumer is left to sort it out.
In summary, there are pros and cons to regulation. It’s great to have choices, but it can create complexity for both the customer and the provider.
In this unit you learned about the three main types of providers in the communications industry. In the next unit, the focus moves from the suppliers to the customers.