The telecommunications sector is an important strategic segment of the modern economy. As globalization set the stage, the telecommunications industry became gradually a more global industry with increasing competition. The first factor shaping the telecommunication industry to what it is today is globalization. The telecommunications industry transports information at such incredible speeds that the concept of the virtual world has become true. This article will discuss the impact of globalization and the risks and opportunities it present to the industry.
The first factor shaping the telecommunication industry to what it is today is globalization. The telecommunications industry transports information at such incredible speeds that the concept of the virtual world has become true. Users can stay connected on a global scale without traveling and can collaborate in a virtual world enabled by the telecommunication industry. Telecommunications has become tremendously important to the successful operation of almost every organization around the world, large or small, in both the public and private sector, and for most of the trans-border organizations, it is the backbone of their business. Discussions of globalization, the Internet, and e-commerce typically emphasize the increasing pace of change happening today.
The traditional distinction between local and long-distance telephone service, as well as the demarcation between voice, record, data, and video services, is fast disappearing. The Internet has reached one-third of the world population. There exist 5 billion wireless subscribers still growing at a fast pace. Comparable changes are taking place on the international scene as the conventional separation between local, national, and global communications are being eroded, and as integrated telecommunications usage readily transcends national boundaries.
International communications are the fastest-growing segment of the total communications industry. It is estimated that global traffic would appear to reflect the same type of usage concentration that exists in domestic long-distance traffic, in which 20 percent of the business customers account for 80 percent of business revenues. Global telecommunications will have a significant impact on the growth rates of both industrialized and developing nations.
Many telecommunications providers have strong incentives to expand operations across nations. By expanding internationally they can exploit core competencies across a larger set of opportunities because the emergence of global network equipment markets and a trend toward deregulation, technical competencies in network operations, and services are now having increased global applicability. Global customers will demand services that are well integrated across national borders in both technical and customer-service dimensions.
Globalization also provides an opportunity to diversify the risk. In addition to general macroeconomic and political risks, communications industry growth rates are likely to vary significantly across countries. Still there exists an opportunity to explore telephony service as telephone penetration rates worldwide are still low compared to some of the countries. Telephony is a well-established service that brings value to customers from many different backgrounds and cultures; there is huge potential for telephony service growth around the globe. To lessen the risks of any particular country achieving its growth potential, businesses linked to telephony service growth can position themselves to exploit growth that might occur in other countries.
Companies who are participating in international commerce have to deal with important cultural differences and also the absence of a common internationally applicable legal framework. Such differences are particularly significant in telecommunications markets because the services exchanged are complex and the regulatory framework is crucial. Globalizing a company is also a means to lessen transaction costs and to facilitate quicker reactions to new business opportunities.
During the last decade "globalization" was more of a slogan than a reality, since it referred mainly to alliances between major operators to provide end-to-end services to multinational enterprises. Public networks and residential customers were relatively unaffected by this kind of globalization. In the current decade, globalization has already become much more of a reality and in future, it is going to be possible for foreign operators to have direct access through interconnection and interoperability to public networks in most of the world's major telecommunication markets, as well as to make direct investments in the development of those networks.