|
|
|
The
Telecommunications Industry & Profitability: A Survival Guide for
2002-2007
a market research report
|
|
It is not uncommon for high
growth industries to overestimate customer demands. When supply
far outstrips demand, however, prices spiral downward, and companies are
driven out of the marketplace. Gone are the days when Wall Street
would throw money at any business plan that showed any kind of growth in
EBITDA. The key to survival in today’s environment is
profitability.
The good news is that
telecom is a growth industry, and that most service metrics continue to
trend upward. In this study, Insight examines survival strategies
and tactics for local, long distance, Internet backbone, wireless, and
high-speed access service providers. The Telecommunications
Industry & Profitability: A Survival Guide for 2002-2007 draws
startling conclusions, suggesting that today’s biggest winners may be
facing dire consequences tomorrow.
|
|
|
Report Excerpt
|
|
Telecom Will
Recover
This report
examines usage trends and forecasts for a variety of services-local,
Internet, long distance, and wireless-in the US telecommunications
industry, and outlines some of the major important strategy
considerations for service providers conducting business in a depressed
market environment. The good news is that, from an end-user perspective,
all of the major service segments show continued growth. Some market
segments, however, are experiencing either a slowdown in the growth of
subscribers, or a defection of those subscribers to other
technologies.
Several of the
major trends to watch include:
- The total
number of local broadband digital subscriber line (DSL) and
cable modem subscribers, both consumer and business, is forecast to
increase at a rate of 30 percent per year through 2007. This is a
slower growth rate than seen in 2000 and 2001, but still robust.
- Internet
services revenue follows a similar pattern: a slower growth rate
than in 2000, but still approximately a 10 to 20 percent increase
per year.
- Although
overall minutes continue to grow in the highly competitive long
distance segment, the major carriers-AT&T, WorldCom, Inc.,
and Sprint-are billing for fewer minutes of use directly to
end-customers. A significant amount of long distance voice traffic
is now carried by other providers and/or originates on wireless
networks.
- Wireless
subscriber additions have slowed somewhat from previous years, but
new subscribers are still being added every quarter. More troubling
is the slowdown in wireless revenues, which have dropped from a
quarterly growth rate of over 30 percent in the first quarter of
2000 to 13 percent in the fourth quarter of 2001. INSIGHT is
forecasting revenue growth in the wireless segment to average about
12 percent per year through 2007.
Overall, the
trends INSIGHT Research analyzed do not suggest signs of a mature
industry. Increasing usage patterns, combined with declining revenue,
highlight the drastic price erosion which has created turmoil throughout
the telecommunications industry. These price declines are evidence of
excess capacity rather than market maturity. As has been the case with
other industries, prices will eventually stabilize, the number of
competitors will be reduced through consolidation, and investment will
resume. In essence, INSIGHT foresees a return to more rational, if
conservative, growth over the forecast period.
In the meantime,
service providers need to focus on areas of profitable growth. Service
providers also need to do a better job segmenting their customers,
utilizing existing plant, and planning for consolidation and
acquisition.
Back to Top
|
|
Market Segmentation
|
|
|
- North American Net
Additional Broadband Subscribers
- US Access Line Annual
Additions
- Percentage Increase
- Lines in Millions
- US LEC Access Line Quarterly
Additions
- Verizon Consumer Access Line
Quarterly Growth Rates
- US LEC Access Line Annual
Reductions
- BellSouth Historical Private
Line Quarterly Growth Rates by Circuit Type
- Private Line Count by
Circuit Class
- US Internet Backbone Revenue
Quarterly Growth Rates
- US Internet Service Provider
Revenue
- US Long Distance Minutes of
Use Quarterly Growth Rates
- US Long Distance Minutes
- US Wireless Subscriber
Quarterly Additions
- US Wireless Subscribers
- US Wireless Revenue
Quarterly Growth Rates
- US Wireless Service Revenues
Back to Top
|
|
Table of Contents
|
|
|
Chapter I
EXECUTIVE SUMMARY
1.1 Telecom Will Recover
1.2 Survival Tactics for Local Providers
1.3 Survival Tactics for Internet Service Providers
1.4 Survival Tactics for Long Distance Providers
1.5 Survival Tactics for Wireless Providers
Chapter II
SEGMENT TRENDS AND FORECASTS
2.1 Accelerated Consolidation Follows Accelerated Growth
2.2 Local Trends
2.2.1 Broadband Access Growth
2.2.2 Primary and Secondary Access Line Growth
2.2.2.1 Historical
2.2.2.2 Forecast
2.2.3 Private Line Growth
2.2.3.1 Historical
2.2.3.2 Forecast
2.3 Internet Trends
2.3.1 Historical
2.3.2 Forecast
2.4 Long Distance Trends
2.4.1 Historical
2.4.2 Forecast
2.5 Wireless Trends
2.5.1 Historical
2.5.2 Forecast
2.6 The Years Ahead
Chapter III
SURVIVAL TACTICS
3.1 Overview
3.1.1 Customer Segmentation
3.1.2 Increasing Plant Utilization
3.1.3 Consolidation/Acquisition Plans
3.2 Local Operator Strategies
3.2.1 Cable Operator Strategies
3.2.2 CLEC Strategies
3.2.2.1 Facility Ownership
3.2.2.2 Cost Containment
3.2.3 ILEC Strategies
3.2.3.1 Defending Access Revenue
3.2.3.2 Manage the DSL Dilemma
3.2.3.3 Turn Weakness to Strength
3.2.4 ISP Strategies
3.2.4.1 Plan for Consolidation
3.2.4.2 Offer Value-Added Services
3.3 Long Distance Provider Strategies
3.3.1 Cost Reduction
3.3.2 Price Plans and Marketing Costs
3.4 Wireless Provider Strategies
3.4.1 Reduce Customer Acquisition Costs
3.4.2 Generate Wireless Data Revenue
3.4.3 Segment Customers
Appendix
GLOSSARY
TABLE OF FIGURES
Chapter II
II-1 North American Net Additional Broadband Subscribers, 2002-2007
(Millions)
II-2 US Access Line Annual Additions, 1985-1999 (Millions)
II-3 US LEC Access Line Quarterly Additions, 1999-2001 (Thousands)
II-4 Verizon's Consumer Primary/Additional Access Line Quarterly Growth
Rates, 2000-2001
II-5 US LEC Access Line Annual Reductions, 2002-2007 (Thousands)
II-6 BellSouth Historical Private Line Quarterly Growth Rates by Circuit
Type, 1999-2001
II-7 US Internet Backbone Revenue Quarterly Growth Rates,
2000-2001
II-8 US Internet Service Provider Revenue, 2002-2007 ($Billions)
II-9 US Long Distance Minutes of Use Quarterly Growth Rates,
2000-2001
II-10 US Intrastate and Interstate Long Distance Minutes, 2002-2007
(Billions)
II-11 US Wireless Subscriber Quarterly Additions, 2000-2001
(Thousands)
II-12 US Wireless Subscribers, 2002-2007 (Millions)
II-13 US Wireless Revenue Quarterly Growth Rates, 2000-2001
II-14 US Wireless Services Revenue, 2002-2007 ($Billions)
Chapter III
III-1 Ownership of CLEC Customer Lines, 1999 and 2001
III-2 ILEC Share of Access Points to the Network, 1999 and 2001
III-3 National Backbone ISP Company Consolidation Status, 2002
III-4 ALLTEL's Long Distance Service Penetration of its Customer Base,
1997-2001
III-5 Quarterly Roaming Revenue for ALLTEL's Wireless Service,
1999-2001
TABLE OF TABLES
Chapter II
II-1 Private Line Count by Circuit Class, 2002-2007
Chapter III
III-1 Typical Pricing Elements for Wireless Services, 1999 vs.
2002
(Back to Top)
Back to Top
|
|
Pricing Information
|
|
|
Hard Copy Price
$ 600
Electronic Copy Price
(PDF
License Descriptions)
$ 870 Single-User Printable PDF
$ 1200 6-Seat Printable PDF
$ 1500 Unlimited Corporate-Wide Distribution
Back to Top
|
|
Telecom
Market
Research,
