Telecomm Industry Report
U.S. Telecom Industry Report
Market Structure
This single industry report focuses specifically on the United States consumer mobile telecom providers. The industry leaders also service international markets but this report focuses on the specific dynamics of pricing, competition, and market strategy of U.S. telecom companies in the U.S. market as cell phone service plans are still primarily dictated by international boundaries to define the well-established industry. Other products are available to allow consumers to communicate wirelessly such as laptops, tablet devices, and radio technology but these are considered substitutes that are part of different industries all together. As such these industries will not be covered in this single industry analysis.
The telecom industry can be defined as an oligopoly, which is dominated by four main companies: Verizon, AT&T, Sprint, and T-Mobile. Together these four companies hold a commanding 89% of the market share, Figure 1.1 Many smaller companies like Metro PCS and local service providers hold the other 11% of market share.2
Figure . US Telecom market share. Industry data used from S&P Capital IQ
To gain a better understanding of the market structure we have taken the market share data provided by S&P’s Capital IQ website and have performed a Herfindahl-Hirschman Index test to see how strong of an oligopoly the four firms have. A higher score indicates how concentrated the industry is in the largest firms. The industry scored an HHI of 22.97%, which is a moderately concentrated score signaling that it is a somewhat strong oligopoly. This market structure shows that the telecom industry is far from perfect competition allowing large influences in the pricing of goods by the oligopoly companies, which will be touched on later.
U.S. Mobile Market Demand
Wireless devices have become indispensable tools used not only for voice and text communication, but also, since the advent of the smartphone, a
Market Structure
This single industry report focuses specifically on the United States consumer mobile telecom providers. The industry leaders also service international markets but this report focuses on the specific dynamics of pricing, competition, and market strategy of U.S. telecom companies in the U.S. market as cell phone service plans are still primarily dictated by international boundaries to define the well-established industry. Other products are available to allow consumers to communicate wirelessly such as laptops, tablet devices, and radio technology but these are considered substitutes that are part of different industries all together. As such these industries will not be covered in this single industry analysis.
The telecom industry can be defined as an oligopoly, which is dominated by four main companies: Verizon, AT&T, Sprint, and T-Mobile. Together these four companies hold a commanding 89% of the market share, Figure 1.1 Many smaller companies like Metro PCS and local service providers hold the other 11% of market share.2
Figure . US Telecom market share. Industry data used from S&P Capital IQ
To gain a better understanding of the market structure we have taken the market share data provided by S&P’s Capital IQ website and have performed a Herfindahl-Hirschman Index test to see how strong of an oligopoly the four firms have. A higher score indicates how concentrated the industry is in the largest firms. The industry scored an HHI of 22.97%, which is a moderately concentrated score signaling that it is a somewhat strong oligopoly. This market structure shows that the telecom industry is far from perfect competition allowing large influences in the pricing of goods by the oligopoly companies, which will be touched on later.
U.S. Mobile Market Demand
Wireless devices have become indispensable tools used not only for voice and text communication, but also, since the advent of the smartphone, a