Telecommunications in Business
This article discusses the role of telecommunications companies and the related communications services they provide to the business sector. Additionally, the historical role of telecom companies in providing communications infrastructure and services to commercial and private (residential) markets will provide a context in which to examine the current role of telecom in the US economy. Traditional telecommunications companies and their core services are facing increasing competition in the marketplace from cable companies and from the pervasive presence of the Internet. The implications of providing secure, reliable, and cost-effective communications options in the global economy present many challenges and opportunities. Today's business communication customers rely on mobile technology to keep them virtually connected to their data, colleagues, and markets, and their expectations are high. Agility and innovation will be required of telecommunications providers as the business sector market for communication evolves.
Keywords 3-G Mobile (Mobile Broadband Network); Average Revenue per User (ARPU); Bluetooth; Business Communications; Business Sector Telecommunications; Cable Communications; CDMA (Code Division Multiple Access); Cellular Network; Communications Managed Services; Communications Security; DOS (Denial of Service); Dual Mode Phone; Emerging Telecommunications Technology; GSM (Global System for Mobile Communications); Malware; Mobility Strategy; Multiple System Operators (MSO); PBX Exchange (Private Branch Exchange); Smart Phone; Transport Layer Security (TLS); Wi-Fi; Wi-Max (Worldwide Interoperability for Microwave Access); Wireline
Business Information Systems: Telecommunications in Business
The Telecommunications Act of 1996 broke up monopolies and served as a catalyst for the growth that became the telecom "boom." Mergers and consolidations were common as the industry adjusted to the new marketplace rules. Telecom, while always a capital-intensive industry, carried high rates of debt at 60 percent. Huge capital outflows of money that were needed for improved infrastructure and equipment typically didn't yield profits for two to three years and resulted in negative cash flow (Ryan, 2000). Consequently, breakout spending forced many telecommunications companies into Chapter 11 bankruptcy. By the year 2000, the telecom industry had hit the doldrums. The telecom industry as a whole suffered greatly at the start of the new millennium; some of its more persistent woes were:
- Boom-and-bust operating policies of the industry as a whole
- Recovering from Y2K or the “millennium bug”
- Increased federal regulations
Even though growth in the telecom sector was flat after 2000, many still saw telecommunications as a "catalyst for growth in the greater IT industry." The migration of voice telephony to internet protocol (IP) was just one example (Carlson, 2004).
The blending of old service and new technology was a great opportunity within the telecommunications sector; but the highly regulated nature of this industry left many worried that policy makers would impose burdens that would stifle emerging services and innovation.
In 2003, things started to look up for the telecommunications industry as a whole. “The ordeal of the past three years has transformed the telecom industry,” according to Steven Rosenbush. “During the downturn, chief execs realized they had poor insight into many aspects of their operations, from customer demand to inventory and the supply chain. Now they have better information on all those fronts, thanks to improvements in the software tools and data links used to plan supplies and forecast sales; all which allows them to react more quickly than in the past. ‘We’re going to be operating in an environment where cycle times are dramatically compressed,’ says Scott Kriens, CEO of communications-equipment-maker Juniper Networks Inc. ‘and that will change everything, from the business model to [raising funds]’” (Rosenbush, 2003, ¶5).
Fast forward a few years, and one is reminded that only some of the telecom optimism was translated into reality. There's a "telecom mindset" that focuses too much on communication and connecting A to B. This type of thinking will inevitably create a collision course between media, telecom, and Internet. The Internet is about open access and distribution of content and applications, while telecom is afraid of such a model. After all, telecom companies have made huge profits by driving users to their networks and charging for use. "Access is not their [telecom] model" (Clark, 2007).
Traditional telecommunications providers (phone) dominated the communications markets for many years, but a further discussion in this essay will reveal that government regulation, lack of foresight and innovative competitors have challenged telecom companies in their dominance of the business communications market.
Telecom Marketplace Presence
Without question, telecommunications companies are the leading provider of communications services to the business sector. Current estimates of the annual expenditure by the US business sector for telecommunications services is at no less than $100 billion and could be as high as $131 billion.
“Mark Palazzo, VP and general manager of Scientific-Atlanta’s Metro Access Business Unit, says the telcos are scooping up about 97% of that $131 billion. ‘The commercial(business) customer is a cash cow for the telcos,’ he says. ‘There is effectively no competition in that space today.... We see it, as do the financial community and the MSOs (multiple system operators), as a great opportunity [for cable] in the future.’ To achieve that growth, cable needs to grab market share from the telcos” (Caranicas, 2006, ¶2).
From the perspective of the telecommunications industry, one business customer is equivalent (in revenue) to ten residential customers. With numbers like these, and hundreds of billions of dollars at stake in the marketplace, it is no wonder that telecommunications companies are working so hard to stay ahead of their fast-approaching competitors.
Telecom Offerings to Business
Telecommunications providers are supporting the explosion of smartphones, which have become standard equipment for all mobile employees. Smartphones have become the staple of mobility and wireless; they function as communication tools, handheld computers, and offer ways to access multimedia offerings.
Smartphone developers focused on two types of critical data for mobile users: email and access to corporate data. A smartphone with mobile broadband is a virtual "office to go." The device was designed to interface well with other enterprise solutions such as Oracle, Sun, and Lotus databases. The hardware components of a smartphone are obviously smaller than for a laptop or tablet, but many vendors are offering a lean version of their projects to insure that performance for mobile users doesn't suffer.
Even with smartphones and tablets at their disposal, many mobile workers will continue to see limitations to services. "Today, mobile business users navigate a patchwork of wireless networks. Most connections must be set up, torn down and reinitiated when users cross Wi-Fi and cellular network boundaries. Work is afoot, however, to stitch together multi-radio devices, Wi-Fi LANs and cellular networks into one big mobile sphere" (Wexler, 2006, p.34).
The technology needed to support this convergence is literally a bridge between cell and Internet. Wi-Fi and cellular boundaries are currently separate and don't allow users to move seamlessly and reliably across the networks. Mobile VPNs are coming into use and must be able to connect to multiple networks, but voice is not part of the mobile VPN. Cellular carriers do worry about cannibalizing their revenues by taking away their bread-and-butter cell offerings and bundling voice into Wi-Fi.
Even within the physical confines of organizations, a mix of communications offerings is being used. Many companies installed wireless LANs (local area networks) but failed to anticipate that users would quickly grow accustomed to on-demand wireless that runs across multiple applications. These same companies have not optimized their LANs for voice coverage.
“‘Our Wi-Fi network is built for conference rooms and guests,...
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