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Wireless Telecommunications Carriers Industry Analysis

In: Business and Management

Submitted By sala7atabani
Words 844
Pages 4
Environmenttal Analysis:
As defined by the NAICS, This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services.[1]
The Cellular Telecommunication & Internet Association listed 30 wireless telecommunication service provider in the US. Some of the largets carriers are Verizon, AT&T, Sprint Nextel and T-mobile. Wireless annual revenue was $ 164.6 billion in June 2011, up 6% from the same period in 2010. [2]
In June 2011 there were 327.6 million wireless subscriber connection, with 9% increase from the year before June 2010: 300.5 million. [2]
Some of the main entry barriers into the wireless industry are the capital investment, the regulatory condition and the spectrum availability. The cost of starting a new wireless carrier is very high, and with the strong competition and small profit margin, many businesses find it unprofitable to start a new carrier. Wireless regulators also limit the number of carriers in one country since the available frequency spectrum is limited.
Below is Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis for the wireless industry:
Internal Strengths
 Loyal customers: low churn rate
 Innovative branding and customer experience
 Rich asset and infrastructure Weaknesses
 Commodity based products: companies provide similar products (no uniqueness)
 Competition is high, lowering the margin
 Most companies are targeting the mass market
External Opportunities
 Bundle products and services with other growing industries

Threats
 Over The Top (OTTs) applications (Skype, Viber, Whatsapp, etc.)
 Maturing products
Customer Analysis:
Since the barrier to use wireless services is low, the demand size for telecommunication services include almost all the population except young children who can not use mobile phones. Wireless companies adopt different segmentation models depending on their needs. Geographic segmentation is sometimes used in big countries, such as the US, since customers (B2C) in each region have different needs, culture and behavior. Most companies, however, adopt either psychographic or behavior segmentation. Wireless companies have huge information about customer usage behavior which help them cluster and segment customers based on their usage and design value propositions that suit every segment need to stimulate their usage. The fact that wireless consumers can easily be reached (through SMSs, direct selling, and recorded autodialing) make it easy for wireless carriers to target microsegments. Customers are usually segmented based on the products they use (voice, broadband, SMS, VAS, etc.) and their usage behavior (on net, off net, international calls, call duration, usage times, etc.).
Wireless carriers also target B2B providing services such as Closed Users Groups (CUG), dedicated connectivity and broadband services. B2Bs are usually segmented based on the business type (automobile, food, agriculture, etc.) and size (Large, SME, corporate, NGOs, and government).
There are no available data about the actual segments that companies identified since it is usually derived from the internal company database and they keep it as confidential information.

Competitor Analysis:
The top four wireless carriers that will be analysed are: Verizon, AT&T, Sprint Nextel, and T-mobile

Source: [3]
Verizon and AT&T are the leaders in the wireless industry. Verizon provide a strong network coverage across the US, and their strategy is to expand their Fiber optic network to provide the fiber to home service which ensures a high speed broadband network. On the other hand AT&T is known for its fast internet connection since they use the Global Mobile System (GSM) which later upgraded to a strong 3G network. AT&T is also known for their exclusive iPhone bundle offer. Although Verizon is now also providing iPhone bundle, iPhone was exclusive to AT&T for a long period giving AT&T a value over Verizon.
Sprint provide a wide range of free and low cost Value Added Service such as GPS and Sprint TV. Sprint also provide a wide range of Android phones.The company also communicate that they have compelling and superior customer service.
Executive Summary:
AT&T is to face a real challenge not just from its main competitor Verizon, and other smaller carriers but also from the OTTs applications.
OTTs such as Skype and Viber are of big threats to the whole industry. Many strategist predict that wireless carriers are going to be “dumb pipes” that only provide bandwidths to the end users, OTTs are then going to provide innovative and targeted products that will satisfy customer needs. To reduce the wave of OTTs, AT&T increased its data services prices and decreased the voice service charges.
AT&T should focus on alliances with companies from other industries to provide services that can not be provided by OTTs.

[1] North American Industry Classification System (NAICS) http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517210&search=2012%20NAICS%20Search
[1] International Telecommuniaction Union (ITU) http://www.itu.int/ITU-D/ict/newslog/More+Cell+Phones+In+The+USA+Than+People.aspx

[3] Fiercewireless: http://www.fiercewireless.com/special-reports/grading-top-us-carriers-second-quarter-2013

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