Telecom Communications Industry Is Far Away from Recovery

The Telecommunications industry is having a hard time recovering from their recent economic downfall. Analysts are predicting that U.S. and European telecommunications revenue is going to fall from 2002 to 2003. I fact, expectations have gotten so low that a "win" will be any growth in the market whatsoever. Robert Switz, chief executive of equipment maker ADC Telecommunications Inc. says he doesn't expect the recovery until the year 2005. In fact, one of the reasons for his prediction is that in our current economy there are "hallmarks of jobless recoveries." Mr. Switz also states that the market will only increase if the carriers start adding new lines and wireless subscribers; therefore spending more money on newer equipment.

As the demand for telecom services increases, analysts are still suspecting both the U.S. and European telecommunications' revenue to fall a substantial 2% in the year 2003, as compared to the previous year. This is a very random retraction since the telecommunications industry is usually one of greater industries in overall economic growth. Even though the industries are currently growing and the prices have sharply increased from $.70 to $11.58 in only one year; it proves to show that the factors do not even make the industry have a full out recovery. Telecom countries are constantly battling between the U.S., Europe, and Asia, with price wars that have higher and higher margins. The telecom industries are a great example of an oligopoly because they have control over price that is limited by mutual interdependence and collusion. There are also battles between companies in the industry because there is typically a great deal off non-price competition and product differentiation. In fact, analysts are saying that they will be on the right track if there is even the slightest increase or growth whatsoever.