Future of Telecommunications
| WORK CASE 15 | Case Study 15 | Bus5480 Strategic Management Professor: Dr. Uchenna Nwabueze | Skype versus AT&T and the Future of Telecommunications | 4/8/2012 | Prepared by: James Whetsel
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Executive Summary
This report was written to analyze the competition among the Voice-over Internet Protocol (VoIP) industry segment, especially as it relates to the relationship between Skype and AT&T and the competition between the VoIP market and the land line market. In analyzing this segment we found that VoIP is a growing industry in what has historically been predominately a land line telecommunication company such as AT&T.
The industry segment is faced with a rivalry type competitive market that is currently being influenced by federal government through the Federal Communications Commission (FCC). This agency is considering a new law (Network Neutrality) on the websites that would decrease the power of big telecommunications companies like AT&T. The segment may feel continued pressure from substitutes in the form of other retail segments, but this should not have a strong effect on the over-all competition within the industry.
The biggest difference between the competitors was that AT&T used traditional telephone, is run through a public switched telephone network (PSTN) and was much more expensive. Skype offered its customers VoIP, which, defined simply, was the transmission of voice traffic over IP-based networks. In other words, it was telephone via an Internet connection.
VoIP is expected to show constantly increasing growth rates in the near future. According to a report by Infonetics Research, the global VoIP services market had reached $15.8 billion in 2006, an increase of 66 percent over 2005, and was on track to triple to $48.9 billion by the end of 2010. Projected growth for the decade was in the area of 145-150 percent. However, VoIP’s market share in the overall global telecommunications market was still
|
Executive Summary
This report was written to analyze the competition among the Voice-over Internet Protocol (VoIP) industry segment, especially as it relates to the relationship between Skype and AT&T and the competition between the VoIP market and the land line market. In analyzing this segment we found that VoIP is a growing industry in what has historically been predominately a land line telecommunication company such as AT&T.
The industry segment is faced with a rivalry type competitive market that is currently being influenced by federal government through the Federal Communications Commission (FCC). This agency is considering a new law (Network Neutrality) on the websites that would decrease the power of big telecommunications companies like AT&T. The segment may feel continued pressure from substitutes in the form of other retail segments, but this should not have a strong effect on the over-all competition within the industry.
The biggest difference between the competitors was that AT&T used traditional telephone, is run through a public switched telephone network (PSTN) and was much more expensive. Skype offered its customers VoIP, which, defined simply, was the transmission of voice traffic over IP-based networks. In other words, it was telephone via an Internet connection.
VoIP is expected to show constantly increasing growth rates in the near future. According to a report by Infonetics Research, the global VoIP services market had reached $15.8 billion in 2006, an increase of 66 percent over 2005, and was on track to triple to $48.9 billion by the end of 2010. Projected growth for the decade was in the area of 145-150 percent. However, VoIP’s market share in the overall global telecommunications market was still
References: 2. Thompson, Arthur A. et all. Crafting & Executing Strategy. The Quest For Competitive Advantage. Concepts and Cases. 18th Edition. McGraw-Hill Irwin. New York. 2010. pgs. C-226 to C-242. 11. A Guide to Case Analysis. Strategy: Core Concepts and Analytical Approaches. McGraw-Hill Irwin. New York. Retrieved from: http://highered.mcgrawhill.com/sites/dl/free/0078112729/898109/18e_Guide_to_Case_Analysis_final041311.pdf. March 17, 2012