Telecommunications infrastructure industry

Industry Snapshot

GENERAL INDUSTRY: Communications

CAREER CLUSTER: Arts, A/V Technology, and Communication

SUBCATEGORY INDUSTRIES: Satellite Telecommunications; Wired Telecommunications Carriers; Wireless Telecommunications Carriers

RELATED INDUSTRIES:Computer Systems Industry; Internet and Cyber Communications Industry

ANNUAL DOMESTIC REVENUES: Wireless telecommunications carriers: US$333.8 billion (IBISWorld, 2024); wired telecommunications carriers: US$67.4 billion (IBISWorld, 2024); satellite telecommunications providers: US$8 billion (IBISWorld, 2024); wireless tower construction: US$11.3 billion (IBISWorld, 2023); transmission line construction: US$96.9 billion (IBISWorld, 2023); radar and satellite operations: US$18.7 billion (IBISWorld, 2023)

ANNUAL GLOBAL REVENUES: Telecommunications services: US$1.805.61 billion (Grand View Research, 2022)

NAICS NUMBER:517 (5171–5175; 5179)

Summary

The telecommunications infrastructure industry facilitates the transmission of voice, video, data, images, media, internet, financial services, and medical data through wired, wireless, satellite, cable, and fiber connections throughout the world. Transmission methodologies may be based on a single technology or a combination of technologies. Customers range from individual subscribers to companies and governments throughout the world.

History of the Industry

Optical telegraphy in the late 1700s through the use of the telescope enabled the first practice of transmitting information across long distances by mechanical forms of signaling from a sender to a receiver. Electrical telegraphy was enabled by the growth of the science of magnetism and electrical principles. This replaced the optical (sight-based) forms of telecommunications with forms of coded marks or sounds sent over a wire. The use of copper and insulation gave rise to hardwired connections between continents, countries, and people in order to connect transmission equipment to receivers of coded information. The speed of transmission and reception increased many times beyond the limitations of optical telegraphy.

The science of electromagnetic radiation enabled the change to wireless methods of transmission, emulating and then surpassing the forms used in the copper wire era. Fiber optics enabled the development of optical transmission in glass fiber, opening up higher-speed communications for multimedia in an "always on" world of information exchange. Voice, data, and images sent over fiber are of higher quality, with no delays evident in the sound or picture.

Telecommunications services were used to meet the needs of governments to govern, wage war, defend themselves, and communicate with other governments. Over time, services were made available to traders, companies, and individuals. Finally, both wired and wireless telecommunications became the veins and arteries for the internet. Thus, services have become available to all without borders. From individuals to large entities, the need for instant information in all forms of data, voice, video, and images changed the divisions within the wired and wireless industry segments. Divisions became multifaceted, encompassing computing, software, networking, protocols, encoding, electronics, materials science, and transmission technologies that all come together to provide the infrastructure.

Finance, technology, and deregulation (as in the United States market) and privatization of government monopolies in Europe have served to restructure the environment of competition. Landmark technologies and products have also shaped the industry significantly in a relatively short period of time. For example, the introduction of the Apple iPhone in 2007 and subsequent boom in the popularity of smartphones brought the network bandwidth of the telecommunications provider to its knees and negatively impacted its net profit. At the same time, the door was opened to other providers to fill the void created by such rapid demand for this technology.

Business parameters involving cost and revenue accounting have been challenged. Alternative models include revenues based on the amount of data transmitted or the time required for transmission. Costs and where they are assigned to the transmission become an issue in traditional business income statements. Communication activity is a flow involving speed, time, and crossing of technology-provider barriers among wireless, wired, and satellite technologies such that the value of a piece of transmitted information is a dynamic one within the reporting of revenue apportioning. The cost across these participants in the transmission pipeline becomes a complex equation, much more complicated than the situation when a single person looking through a telescope at a sender in the distance could figure out the cost to further transmit the sender's message. Cloud computing and cloud telecommunications challenge not only technologists in the telecommunications world but also business professionals to keep up with changes.

With parallel developments in computing, computing chips, communications, and internet protocols, the world stands at the precipice of a new explosion of information at very high speeds and low costs. Latest-technology installations of wireless, cellular, and internet have sped connections even in developing countries. The environment for telecommunications service providers of the twenty-first century will evolve rapidly while providing simpler and more comprehensive solutions to customers than ever before.

The Industry Today

Today, wired and wireless service providers range from small, regional providers to large multinationals doing business in vast regions or across the country. A small provider can be a single rancher with a cell tower providing services in a rural area, a wireless internet service provider inside a small town or section of a large city, or a small cable franchise providing media, internet, and phone service to a defined area. Midsize providers are members of the same set but sell their services over wider geographical areas. Some have absorbed smaller providers into larger franchises. Large providers are publicly held corporations or large international corporations with branches in the United States. Many have grown to their present state through mergers and acquisitions, spurred by the breakup of AT&T by the Department of Justice in 1984.

Services provided by smaller and midsize businesses fit the definition of wired and wireless market sectors. The large entities participate in wired and wireless provision of services or partner with others like the large satellite television companies to provide a complete package of services to their customers (examples being large telephone or cable companies providing a trio of services of voice, internet, and television). Large national voice and cell phone companies, national cable television providers, and internet service providers with voice over internet protocol (VOIP) capabilities provide telecommunications in various packages to their customers. Small and midsize businesses compete by providing advantages to their customers with technology or region- specific coverage. Larger companies may create partnerships or have their eyes on smaller companies for future acquisitions.

A combination of forces is driving opportunities in the telecommunications industry. Advances are being made in computing and software technology, in semiconductor technology, and in communications protocols and encoding methods. Fiber-optic cable is being installed more broadly and reaching more consumers. Satellite technologies, including the satellites themselves and applications exploiting them, continue to expand. New applications are being developed to leverage mobile technology, such as those enabling consumers to make purchases through their cell phones, for example. Increased speed and reliability alongside cost reductions are leading to a society that is "always on."

There is an exponentially increasing opportunity for small and midsize businesses to start and emerge while larger providers meet the challenges of serving their existing customers. Can large providers move fast enough? Traditional computer equipment companies are becoming sole source providers for delivering telecommunication and information infrastructure to cities of the future under construction now. This is an example of one industry becoming a principal contributor to the old definition of telecommunications service providers. Large providers are learning to grow through mergers and acquisitions as well as by innovation. Companies previously categorized as computer or networking companies are morphing into wired and wireless telecommunications providers through subdivision or acquisition. Cable companies often provide phone and internet services, in addition to television. Satellite television companies are continually adding capabilities that expand into the telecommunications world.

Subindustries have spring up to provide infrastructure such as wireless hot spots in buildings, towns, and businesses wherever people congregate with their handheld devices to gain access to information. Traditional revenue models for the large traditional players are being threatened by the change in delivery over the telecommunications infrastructure. One example is the sharp decline in the number of land lines as customers increasingly move to a wireless-only method of access.

One of the challenges facing companies continues to be conflict over access to the infrastructure. Once a provider allows access of one type of business on top of their existing channels, problems of filtering, delaying, or barring of content may arise. This provides a demand for new solutions of both technology and business model acumen to these industries. An example is when owners of "dark" fiber (unused capacity in existing fiber cables) contract with content providers and find that the content is in competition with their own. One solution is to control the speed or quality of their competitor. VOIP transmissions on telecommunications infrastructure owned by traditional companies is an example of where complaints of this type have arisen.

Common partnerships early in the twenty-first century are traditional phone companies providing packages that include satellite television and internet service. Emerging partnerships might include commercial enterprises partnering backwards into the traditional telecommunications sector in order to provide phone contact, images, commercial sales, and process control information to customers. A simple example is the use of a network to control power usage in peak consumption times of homes and buildings. VOIP companies could well become a part of traditional land line companies in order to preserve the revenue streams and usage of the fiber optic infrastructure installed both in ground and under the ocean in the twentieth century. Media companies (newspapers and magazines) are threatened by the emergence of the application of telecommunications technology; they might well become telecommunications providers of their own content or be merged into existing providers.

A look at the state of the industry opens up exciting new possibilities for combinations and permutations of technologies as demands upon the telecommunications infrastructure escalate. Innovations do not necessarily occur just in the domestic US arena. Applications that use the telecommunications infrastructure in Scandinavian countries, Japan, and European countries often exceed what is available in the United States. This situation leads to a massive pent-up demand for services in the United States. Once maps and music are on one device such as a cell phone, the pressures are even higher to implement applications across the network. More strain on existing telecommunications infrastructure exists, opening new opportunities for growth for new alliances and new providers.

The result is a massive parallelism of growth and opportunity to participate in this industry sector. Required skills and accompanying job titles in business processing, engineering, customer service, sales, marketing, maintenance, and deployment of infrastructure are changing. This is increasing demand for an accelerated rate of growth in this sector. Other factors involving training, certification, and renewal of skills will follow the curve of application of a broader and more complex world of telecommunications providers. Entry into these industries will be available in all sizes of businesses and in captive applications (such as telecommunications infrastructure within a company or law office). Provision of services in a defined area (such as wireless services to a town or airport space) is growing daily. National and international growth occurs as developing countries race to the future and the digital divide is crossed.

Industry Outlook

Overview

The telecommunications industry faces ongoing transformation as new technologies and models emerge. The influence of social networking, television everywhere, texting, facial recognition and other forms of biometrics, GPS location services, high-speed technologies, commercial transactions processed through handheld devices, and video conferencing are all factors changing the landscape of the telecommunications infrastructure. Many experts predict that many environments will be dominated by applications in the near future, all of it relying on telecommunications technology.

Despite rapid growth, however, there remains a digital divide. A vast distance exists between the developed world that is enjoying this technology and the developing world. Although economic factors will continue to limit access for some populations, in general developing nations may actually benefit from being able to install and use the latest telecommunications technology without having to work through the stages that occurred from the late sixteenth century to the present. Emerging economies that are able to make use of modern telecommunications infrastructure stand to gain greatly from increased connection, stimulating further development.

According to Market Growth Data, the US telecommunications infrastructure industry was predicted to grow at a compound annual growth rate (CAGR) of 5.44 percent from 2022 to 2030. Industry growth is expected to continue to be driven by wireless technologies, which offset steady decline in the wired sector. The ongoing proliferation of the "internet of things" (IoT) and related fields such as autonomous vehicles will demand higher and higher bandwidth and supporting infrastructure. Within the wireless sector, there will be an increasing need for customer service, automated support of customer service representatives, and personnel to implement, install, and support the new combinations of technology. Thus, employment prospects are bright in most levels and stages of the industry. It is up to the individual to be knowledgeable of these trends and factors that affect skill sets in order to navigate one's career. Because of the speed of change, personal responsibility for upgrading skills is a key factor for enjoying a long career in telecommunications.

Over the long term, movements by government to deregulate, de-monopolize their existing providers, and implement telecommunications-friendly regulations and taxation will create the environment for the emergence or contraction of various forms of delivery of telecommunications services. In addition, the economy on a national and international basis is a determining factor in providing capital for the design and implementation of infrastructure and technology.

Employment Advantages

The telecommunications infrastructure industry supports a large and diverse array of jobs, from upper-level management to unskilled labor. Whether a position is at a major multinational corporation or a small start-up, the industry's economic strength and bright outlook presents opportunities for competitive wages and career growth. Employees may also derive satisfaction from the fact that the telecommunications industry is vital to many essential aspects of people's daily lives. Others may be excited to work at the forefront of cutting-edge technologies or services.

Current exciting prospects for expansion, such as increased usage of satellites and large-area coverage of wireless connections, will rapidly be eclipsed with new technology not yet named. The environment is a constantly moving window of change and the challenge will be to renew one's skills in order to stay at the crest of the wave.

Annual Earnings

In 2022, revenues in the US telecommunications industry as a whole were $589.9 billion according to Statista. Grand View Research in 2022 estimated the global industry revenues to be $1.806.61 billion. In 2023 IBISWorld reported US wireless telecommunications carrier revenue was $313 billion annually, while revenue for wired carriers was $67 billion.

Bibliography

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