ECO 436 Industry Seminar Dr. David G. Loomis Illinois State University 309-438-7979.

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Presentation transcript:

ECO 436 Industry Seminar Dr. David G. Loomis Illinois State University

What is Telecommunications? n Definition is difficult n Changes with technology and customer preferences

Industry Segments n Voice n Video n Data

In Each Segment n Wireline technologies n Wireless technologies

Causes of Convergence n Technology / Internet Protocol n Telecommunications Act of 1996 (TA ’96) n Economics – reduce costs, increase revenues, maximize profits

4 Products that Consumers Seem to Want n Landline voice n High speed Internet Access n Cable TV / Entertainment n Wireless voice/data

Landline Voice n Long Distance Voice n Local Voice

Wireless Voice

Video / Cable TV

Data / Internet Access

International

Market Structure Today n Key to understanding wireline market structure is LATAs n LATA - Local Access and Transport areas - created at the divestiture of AT&T, these are areas that the RBOCs are precluded from operating outside of. (map of IL LATAs)

Types of Calls n Local calls - defined by company regulated by state commission n Intra-LATA calls - "toll" calls - calls that originate and terminate within the same LATA. Usually defaults to the local telephone company. Some states allow competition. Regulated by state regulatory commissions. n InterLATA intrastate calls - calls that originate and terminate in different LATAs but are still within the same state. Regulated by state regulatory commissions.

Types of Calls n InterLATA interstate calls - calls that originate and terminate in different LATAs and states. Regulated by the FCC. n Local telcos provide access to the local network to IXCs for interLATA calls. This is called "switched access". Access for intrastate switched access is regulated by state; interstate is regulated by FCC.

Company “types” – Local Exchange Companies (LECs) n 7 RBOCS - NYNEX; Bell Atlantic, Bell South, SBC (formerly Southwestern Bell), Ameritech, US West, Pacific Telesis. n In 1982, 25 Bell Operating companies served 81% of the phone lines but only 41 % of the assigned geographic territory in the U.S. (Brock p. 65) n Large "independents" - GTE, Sprint Local (Centel), SNET, thousands of small independents n A total of 1,432 independent telcos served the remaining 59 % of the territory but provided only 19% of the telephone lines. (Brock p. 65)

Company “types” - Interexchange carriers (IXCs) n Traditional Long Distance Carriers - AT&T; MCI/Worldcom, Sprint, Qwest, and thousands of resellers.

Market Share of IXCs (WSJ, A3, 9/27/99) CompanyMarket Share AT&T43% MCI Worldcom 26% Sprint11% Qwest2% All Others18%

Company “types” n CAPs Competitive Access Providers n ALTs – Alternate Local Transport companies n CLECs – Competitive Local Exchange Companies n Started by supplying high-speed data and voice in local market to large business n MFS, Teleport, Eastern Telelogic

Industry Fragmentation

Regulation and History n Communications Act of 1934 n FCC vs. States n Increasing Entry n Divestiture n LD competition n Local Competition