Emurse

The telecommunications industry is at the forefront of the information age—delivering voice, data, graphics and video at ever increasing speeds and in an increasing number of ways. Whereas wireline telephone communication was once the primary service of the industry, wireless communication services and cable and satellite program distribution make up an increasing share of the industry.

During the late 1990s, the telecommunications industry, experienced very rapid growth and massive investment in transmission capacity. Eventually this caused supply to significantly exceed demand, resulting in much lower prices for transmission capacity. The excess capacity and additional competition led to either declining revenues or slowing revenue growth, which has led to consolidation within the industry, as many companies merged or left the industry.

The largest sector of the telecommunications industry continues to be made up of wired telecommunications carriers. Establishments in this sector mainly provide telephone service via wires and cables that connect customer's premises to central offices maintained by telecommunications companies. The central offices contain switching equipment that routes content to its final destination or to another switching center that determines the most efficient route for the content to take. While voice used to be the main type of data transmitted over the wires, wired telecommunications service now includes the transmission of all types of graphic, video, and electronic data mainly over the Internet.

These new services have been made possible through the use of digital technologies that provide much more efficient use of the telecommunications networks. One major technology breaks digital signals into packets during transmission. Networks of computerized switching equipment, called packet switched networks, route the packets. Packets may take separate paths to their destination and may share the paths with packets from other users. At the destination, the packets are reassembled, and the transmission is complete. Because packet switching considers alternate routes, and allows multiple transmissions to share the same route, it results in a more efficient use of telecommunications capacity as packets are routed along less congested routes.

The transmission of voice signals requires relatively small amounts of capacity on telecommunications networks. By contrast, the transmission of data, video, and graphics requires much higher capacity. This transmission capacity is referred to as bandwidth. As the demand increases for high-capacity transmissions—especially with the rising volume of Internet data—telecommunications companies have been expanding and upgrading their networks to increase the amount of available bandwidth.

One way wired carriers are expanding their bandwidth is by replacing copper wires with fiber optic cable. Fiber optic cable, which transmits light signals along glass strands, permits faster, higher capacity transmissions than traditional copper wirelines. In some areas, carriers are extending fiber optic cable to residential customers, enabling them to offer cable television, video-on-demand, high-speed Internet, and conventional telephone communications over a single line. However, the high cost of extending fiber to homes has slowed deployment. In most areas, wired carriers are instead leveraging existing copper lines that connect most residential customers with a central office, to provide digital subscriber lines (DSL) Internet service. Technologies in development will further boost the speeds available through a DSL connection.

Wireless telecommunications carriers, many of which are subsidiaries of the wired carriers, transmit voice, graphics, data, and Internet access through the transmission of signals over networks of radio towers. The signal is transmitted through an antenna into the wireline network. Other wireless services include beeper and paging services. Because wireless devices require no wireline connection, they are popular with customers who need to communicate as they travel, residents of areas with inadequate wireline service, and those who simply desire the convenience of portable communications. Increasing numbers of consumers are choosing to replace their home landlines with wireless phones.

Wireless telecommunications carriers are deploying several new technologies to allow faster data transmission and better Internet access that should make them competitive with wireline carriers. One technology is called third generation (3G) wireless access. With this technology, wireless carriers plan to sell music, videos, and other exclusive content that can be downloaded and played on phones designed for 3G technology. Wireless carriers are developing the next generation of technologies that will surpass 3G with even faster data transmission. Another technology is called “fixed wireless service,” which involves connecting the telephone and/or Internet wiring system in a home or business to an antenna, instead of a telephone line. The replacement of landlines with cellular service should become increasingly common because advances in wireless systems will provide data transmission speeds comparable to broadband landline systems.

Cable and other program distribution is another sector of the telecommunications industry. Establishments in this sector provide television and other services on a subscription or fee basis. These establishments do not include cable networks. (Information on cable networks is included in the statement on broadcasting, which appears elsewhere in the Career Guide.) Distributors of pay television services transmit programming through two basic types of systems. Cable systems transmit programs over fiber optic and coaxial cables. Direct broadcasting satellite (DBS) operators constitute a growing segment of the pay television industry. DBS operators transmit programming from orbiting satellites to customer's receivers, known as minidishes.

Establishments in the cable and other program distribution industry generate revenue through subscriptions, special service fees—primarily installation--and advertising sales. They also charge fees for services, such as the transmission of specialty pay-per-view or video-on-demand programs; these often are popular movies or sporting events.

Some cable and satellite systems facilitate the transmission of digital television signals. Digital signals consist of simple electronic code that can carry more information than conventional television signals. Digital transmission creates higher resolution television images and improved sound quality. It also allows the transmission of a variety of other information. Digital television also uses compression technology to expand the number of channels.

Changes in technology and regulation now allow cable television providers to compete directly with telephone companies. An important change has been the rapid increase in two-way communications capacity. Conventional pay television services provided communications only from the distributor to the customer. These services could not provide effective communications from the customer back to other points in the system, due to signal interference and the limited capacity of conventional cable systems. As cable operators implement new technologies to reduce signal interference and increase the capacity of their distribution systems by installing fiber optic cables and improved data compression, some pay television systems now offer two-way telecommunications services, such as video-on-demand and high-speed Internet access. Cable companies are also increasing their share of the telephone communications market both through their network of conventional phone lines in some areas and their growing ability to use high-speed Internet access to provide VoIP (voice over Internet protocol).

VoIP is sometimes called Internet telephony, because it uses the Internet to transmit phone calls. While conventional phone networks use packet switching to break up a call onto multiple shared lines between central offices, VoIP extends this process to the phone. A VoIP phone will break the conversation into digital packets and transmit those packets over a high-speed Internet connection. Cable companies are using the technology to offer phone services without building a conventional phone network. Wireline provider's high-speed Internet connections also can be used for VoIP and cellular phones are being developed that use VoIP to make calls using local wireless Internet connections. All of the major sectors of the telecommunications industry are or will increasingly use VoIP.

Resellers of telecommunications services are another sector of the telecommunications industry. These resellers lease transmission facilities, such as telephone lines or space on a satellite, from existing telecommunications networks, and then resell the service to other customers. Other sectors in the industry include message communications services, such as e-mail and facsimile services, satellite telecommunications, and operators of other communication services, ranging from radar stations to radio networks used by taxicab companies.