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Wireless Telecommunications Industry Analysis

Wireless

Industry

Introduction

Definition:

Companies who operate and maintain switching and transmission facilities to provide direct communications through airwaves.

NAICS CODE

517210

Wireless Telecommunications

Carriers in the US

Key Competitors

Key Competitors

Primary Activities

  • Local/Long Distance Service
  • Messaging Services (SMS)
  • Wireless Telecommunication Equipment Rental
  • Wholesaling Infrastructure Capacity

Products and Services

Products and Services

Mobile telephony - Cellular telecommunications services (e.g. voice and text messaging)

Internet Access Services

Reselling Services -The outsourcing of already purchased capacity and selling it to other consumers

Dominant Economic Features

Structure

Growth Rate

Market Size

Competition

  • Internal competition
  • Price
  • Product innovation
  • Service
  • Geographic coverage
  • External competition

Conduct

Life Cycle Stage - Mature

# of Rivals

Performance

Industry at a Glance

Costs

PRODUCTS

Key Drivers of Change

  • Retail sales of smartphones (reselling 22.5%)

  • Internet services (46.4%)

  • Mobile telephony (22.1%)

  • Other (Cybersecurity 9%)

PESTLE

PESTLE Analysis

Political: Trade war with China may keep industry from expanding into a market with 1.368 billion people

Economic: Fears of recession are looming. GDP for U.S. and U.S. allies has been slowing recently

Social: Baby boomers consistently becoming more tech savvy

Technological: 5G will change the processing speeds and download speeds via data without using WiFi

Legal: FCC may become more strict after merger of T- mobile and Sprint

Environmental: Verizon has started investing in green energy, will expect to generate 50% of current electric energy with green energy by 2025

Product innovation & technological change

Main changes in technology

  • The main drivers in technological change in the industry
  • Will enable quicker downloads and search speeds
  • 5G towers are strategically placed around the city for maximum coverage

Industry in the future

Oligopolistic Competition

  • There have been events in the last month that have changed the industry more
  • 70% of the industry is now owned by three companies: Deutsche Telecom, AT&T, and Verizon.
  • They have significant power over consumers as the amount of companies competing diminishes
  • The FCC may oversee pricing regulations, as well as unfair team building more closely now.

Five Forces Overview

FORCE

STRENGTH

WEIGHT

.3

High

Threat among existing Competitors

Porter's Five Forces

Power of Buyers

.2

Moderate

Threat of New Entrants

.2

Low

Power of Suppliers

.2

Moderate

Moderate

.1

Threat of Substitutes

Threat of Existing Competition

Most Critical

  • The existing competition is extremely high as all of the major players in the industry have similar markets, products, and services

Threat of Substitutes

Weakest

  • The threat of substitutes is fairly low because although there are other substitutes, they are not as effective and most people do not have the drive to switch to these methods

Strongest/Weakest Positions

Strongest & weakest Positions

Verizon

AT&T

T-Mobile

Sprint

Metrics

Service & Pricing

1

Reliability, speed, customer satisfaction and value

Market Share/ ratios

2

Their value comes from future cash flows and market power

Technology 5G

3

Future growth

Key findings

Market Share and Ratios

Market Share and Ratios

Efficiency ratios

Effiency Ratios

ROA: 5.9%

ROA: 3.5%

ROE: 29.7%

ROE of 10.2%

ROI of 5.9%

ROI: 12.2%

Net profit margin: 12.2%

Net Profit margin: 10.6%

Technology

Not all 5G is built the same

Verizon is the only company to use millimeter wave 5G (6GHz and above)

Sprint has suspended its 5g deployment pending the merger

All other companies currently use a sub 6GHz (low band) spectrum

LOGO PLACEHOLDER 3

AT&T has tried to gain a marketing advantage with its 5Ge campaign

Strategic Group Map

Key Success Factors

- Key success factors state the important elements required for a company to compete in its target markets.

- What companies must do, and do well its goals.

Key Success Factors

Quality of service

  • The ability to provide satisfactory service to their customers

-EX: Verizon’s service coverage

covers 70% of the united states

With 4G LTE network.

Quality of Service

Product Attributes

  • Characteristic that defines a particular product and will affect a consumer's purchase decision.
  • Can Be tangible and intangible

-EX: Tangible: Color, size, data

storage

Intangible: Social status

Product Attributes

Operating Management

Operating Management

  • Company’s management quality is very vital for continued success.
  • Telecommunication industry members that have strong processes in place to combat:

-shifts in technology

-changes in regulation

Market Position

  • Refers to the consumer’s perception of a brand or product in relation to competing brands or products.
  • Having a loyal customer base and being able to control their perception, companies ensure competitive success.

Market Position

Analysis and Summary

Analysis & Summary

Industry Attractiveness

Industry Attractiveness

  • Unattractive Industry (to enter)
  • Margins of 8.60%
  • High initial Investment
  • Barriers to entry and exit
  • FCC regulation
  • 70% of market share owned by large established firms
  • Spectrum bids totaled to 43 billion in 2014
  • Competitive forces will strengthen between the remaining industries

Long Term Profitability

Long Term Profitability

  • Growth rate of the industry 3.12%
  • Margins 8.60%
  • 282.9 billion dollar industry (70% of market share owned by the big players)
  • Expansion most likely emerging markets
  • Firms can tackle unattractive forces by lowering differentiation or price leadership
  • Driving forces (economy) may decrease profitability

References

References

Moses, J. (2019, August). Wireless Telecommunications Carriers in the US . Retrieved February

2020, from https://my.ibisworld.com/download/us/en/industry/1267/1/0/pdf

(n.d.). Retrieved from https://my.ibisworld.com/us/en/industry/51721/industry-at-a-glance

Holst, A. (2019, September 13). US wireless/mobile subscribers by carrier 2018. Retrieved from

https://www.statista.com/statistics/283507/subscribers-to-top-wireless-carriers-in-the-us/

https://www.whistleout.com/CellPhones/Guides/verizon-coverage-map

https://smallbusiness.chron.com/key-components-competitive-success-business-604.html

https://www.statista.com/statistics/283507/subscribers-to-top-wireless-carriers-in-the-us/

https://rootmetrics.com/en-US/content/review-of-the-us-mobile-landscape-US-1H-2019

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