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Executive SummaryOver the last few years the US telecommunications sector has undergone fundamental transformation. Telecommunications is no longer a separate industry. It has converged with the broadcasting, broadband Internet access, mobile (wireless) and electronic equipment industries, and become one of the most competitive communications arenas in the world.This report analyses and documents the forces behind this transformation, delivers a deep and up to date understanding of a dynamic industry undergoing change, and sets a foundation for accurate predictions about its future.In the USA, telecommunications is no longer a separate industry. It has converged with the broadcasting, broadband Internet access, wireless and electronic equipment industries.Players in the converged communications industry compete to deliver triple-play service bundles of voice, Internet access and TV/video content services to the customer.Players include fixed-line carriers, cable TV operators, satellite TV operators, mobile carriers, ISPs, and new broadband technologies such as Broadband over Powerline (BPL), WiFi and WiMax.In 1996, the Clinton administration attempted to stimulate competition by passing the 1996 Telecommunications Act, which attempted to force the Incumbent Local Exchange Carriers (ILECs) to unbundle their networks. When the Bush administration took office in 2001, government strategy reversed from intervention to a hands-off policy. The government stood back and allowed new technology, especially VoIP to take the monopolistic power over telecommunications away from the ILECs. The 1996 Telecommunications Act has been overturned, but competition has not reduced. It has intensified and is now a war between infrastructures rather than resellers.In November 2003, the government enforced Wireless Local Number Portability (WLNP). In the USA, fixed-line and wireless numbers are interchangeable and portable. This directive not only removed barriers to competition between wireless carriers, but also between fixed-line and wireless carriers, and started the trend for young professionals to cut the cord and substituted their landline for a wireless only connection.Virtually all competitive barriers have been removed, and now a larger number of players compete in the same communications market.Market consolidationWireline the long distance providers AT&T and MCI have been taken over and the market is now dominated by three Regional Bell Operating Companies (RBOCs), Verizon, SBC and BellSouth; Wireless recent mergers and acquisitions have concentrated the wireless market into the hands of three players Verizon Wireless, Cingular and Sprint Nextel; Cable the cable triple play market is dominated by three MSOs, Comcast, Time Warner and Cox; Satellite there are two satellite DBS operators, News Corps DirecTV network and EchoStars Dish network.Infrastructure developmentWireline The RBOCs are spending billions to build out Fibre-to-the-Home (FttH) networks to deliver high-speed broadband to their customers to be able to compete effectively in triple-play; Wireless the wireless carriers are racing to build out their 3G networks and launch triple play services; Cable the MSOs are upgrading their networks to deliver high-speed networks to compete with the rollout of FttH by the telcos; Satellite the satellite networks are upgrading their networks and launching new satellites to deliver broadband Internet access and interactive TV features. New disruptive technologiesVoIP has entered the mainstream and transformed the telecommunications market. It has enable new players to enter the telecommunications arena from ISPs such as Vonage and AOL, to cable MSOs, and new technology that provide a broadband Internet connections such as WiFi, WiMax and BPL; WiFi a disruptive technology that allowed new operators into the lucrative broadband access market. In the USA, WiFi has now largely merged with the wireless carriers and become part of their cellular services; WiMax an emerging technology that threatens to disrupt the communications industry, wireline and wireless sectors alike. Championed by Intel, in a few years WiMax could be built in to the motherboards of all new laptop computers, much like WiFi; BPL Broadband over Powerline could give the powerful US power utilities access to the US communications market by building low cost communications infrastructure over the existing electrical power distribution network. New services and electronic equipment the convergence for all services to be delivered over broadband has created an environment of immense innovation in communications equipment and services including:DVRs, plasma screens and home entertainment networks; IPTV, Interactive TV, HDTV and Video on Demand (VoD); TV over mobile and Global Positioning Systems (GPS). In 2005, all sectors of the US communications industry related to digital technology, including telecommunications, broadcasting and broadband, will have double digit or higher growth in subscribers. Telecommunications copper wire local access lines, and analogue TV broadcasting, will decline in subscribers or have a minimal increase. |