Your Television Is Ringing: A Survey of Telecoms Convergence
Essay title: Your Television Is Ringing: A Survey of Telecoms Convergence
In relation to The Economist survey on the telecoms industry entitled ‘Your television is ringing: a survey of telecoms convergence’, examine the macro environment in which traditional ‘fixed-line’ telecoms companies (such as BT or France Telecom) operate, and describe the main challenges they face. (50% of the marks)
In the heyday of the telecoms market prior to deregulation, voice data traffic was the core product of all the major players, France Telecom, Deutche Telecom, British Telecom, Energis, Cable and Wireless and so on. It was in the late 1990’s that the macro environment started to change. There was a final upsurge in voice traffic which was due to the proliferation of internet access into homes and was carried over the analogue systems as voice traffic, rather than the now commonly used data transmission and this was charged per minute.
BT the government incumbent at the time had the monopoly on the market (Adapted from Grant, 2002), this was due to it controlling the government owned “last mile” of copper to every home in the country. All of this meant that BT had very little competition from potential entrants and had huge supplier power over any new competitors
OfTEL was formed in1984 to help control the monopoly situation and has previously been renamed to OfCOM in December 2003, this move in itself echoes the level that convergence has changed the industry as it shows that minutes (Traditional POTS) was no longer the core element of the industry and that other communication methods were now overtaking and the industry is moving to a commodity based model. The industry has moved to an oligopoly where the few remaining companies also have some control of the local loop previously controlled by BT
Below is a STEP (Fahey and Narayanan 1986, pp.28-34) analysis of the macro environment at the time of the changes.
There are drivers of change in each of the areas within the industry