Strategic & Policy Issues Paper: Strategic Issues in the Telecommunications Industry - A Porter Model of the Telecommunications Industry

After over a century of static technology and rigid regulation, the Telecommunications industry is in the midst of being redefined. In order to understand the strategic issues of the industry from a contemporary context, SPI Team One has employed Porter\u27s Five Forces [1] as a tool for strategic analysis. We apply the principles of Porter\u27s model to three segments of Telecommunications, comprised of the traditional landline network services, mobile services, and internet telephony services. By focusing our research on competitive issues from these three perspectives, we find evidence of rapid market evolution characterized by an increased number of new entrants to the market. Such traits indicate the enormity of long standing entry barriers generated by restriction of distribution and proprietary technology. In order to establish and sustain a market presence in today’s Telecommunications industry, managers must address the new environment driven by two tremendous forces: 1) the deregulatory period beginning with the forced break up of AT&T in the mid eighties and punctuated by the Telecommunications Act of 1996; and 2) disruptive technologies which capitalize on the digitization of voice transmissions and their consequential transformation of the industry’s cost structure. Further, we found that effective management of technology is critical to understanding the potential threats to market share, as growing consumer awareness of value-added features on wireless and data products rapidly diminishes the value traditional telecommunication products and services. Note: The presentation associated with this report is included here as a supplemental file