Whither the Telephone? Some Thoughts on the Telecommunications Industry

Electronic telecommunications are a marvel of the age in which we live. Across the street or around the globe, we can contact anyone easily by landline telephone, wireless gadgetry, satellite connection, or via the Internet. We are only out of touch if we really want to be.

Let's look a little closer today at the telephone companies. Most of us in the U.S. deal with one of the big three: AT&T, Verizon, or Qwest. But some use smaller service providers like Fairpoint or Embarq. Still others have abandoned fixed-line operators entirely and rely on cellphones and other wireless-enabled devices. The most profitable companies now and in the future are likely to be ones which bundle diversified services, ranging from wired and wireless voice usage and messaging to broadband services such as data transmission, music and TV downloads, and web surfing.

Dallas-based AT&T, founded in 1983 as Southwestern Bell, offers residential services, including local and long-distance calling options, DSL (digital transmission over phone lines), wireless technology, and Internet access, as well as business services such as networking, site hosting, and VoIP (digital audio over the Internet). In a phenomenon prevalent throughout the telecommunications industry, growth in wireless and broadband usage has outpaced regular land-line demand among customers. But AT&T remains committed to making the most of its copper wires before investing heavily in fiber optic lines capable of handling the higher speeds and increased bandwidth needs widely regarded as inevitable. The company's chief competitors are the cable operators, like Comcast and TimeWarner which bundle ISP services, digital phone connections and TV channels, rather than fellow telecommunications providers.

New York City-based Verizon Communications, started in 1983 as Bell Atlantic and later merged with GTE, delivers wireline, wireless, and broadband services. The company is betting the farm on its new FiOS service, a fiber-optic technology allowing the individualized packaging of Internet, phone, and TV services to residential and business customers. Promises of easy access to HDTV programming and super-fast Internet speeds appeal to many. However, as marketing costs for the program have been rather high, some critics wonder if FiOS will prove as profitable as Verizon apparently hopes.

Qwest, founded in 1996 and headquartered in Denver, currently serves 14 western states, not including California. Its wired lines feature local, long-distance, data and DSL services for residences and businesses. Its wireless services are handled currently by Verizon but were previously under the oversight of Sprint. For TV, the company sells DirecTV digital services to most of its customers. Fiber-optic cables installed along railway right-of-ways, not copper wires strung on tall poles, forms most of this company's infrastructure.

Much smaller telecom, Fairpoint Communications, based in Charlotte, NC, also offers full-featured services like local and long-distance voice, Internet, TV, broadband, and business networking to rural markets in 18 states. Newcomers to its services are residents in the three New England states of Vermont, New Hampshire, and Maine. Providing all customers with fiber-optic access to Internet-based services is a top priority for the expanding company.

While technological innovation has had a tremendous impact on huge companies such as AT&T and the others mentioned here, with intense R&D efforts to satisfy demand for video and audio downloads, data transmission, and constantly increasing voice and messaging traffic, there have also been some setbacks due to unforeseen problems. For example, an earthquake off Taiwan or a ship's anchor dragging along the seabed off India can damage cable lines responsible for international communications. Blackouts are possible and have occurred in the U.S. and elsewhere; however, alternative pathways and backup systems are standard, at least in the developed world. Glitches in providing wireless WiFi hotspots have also cropped up in big cities like San Francisco and Chicago. Yet mobile services may become the key to profitability for the telecoms as demand for connectivity on-the-go supplants satisfaction with land-line access.

Today it is hard to imagine a time, not so very long ago, when instant communication with anyone was a pipe dream. The use we make of these modern technological marvels, these frivolous gadgets and useful tools, has the potential to change the world as we know it more and more every day.

Saul Hansell, "Verizon's FiOS: A Smart Bet or a Big Mistake?", New York Times
"U.S. Telecom Growth Slower Than Global Industry", PC Magazine Online
Jim Erickson, "Hanging by a Thread", Time Magazine International
"Wireless Data Drives High Growth in U.S. Telecommunications Industry Says New Report", FierceWireless
Ed Gubbins, "Fairpoint breaks silence, details integration process", Telephony Magazine Online
"Connecting with Qwest's CEO", Business Week Online
Jeffrey Marshall, "Keeping communications snag-free", Financial Executive Magazine