Telecommunication Industry

TELECOMMUNICATIONS INDUSTRY The telecommunication industry is considered a vital part of our everyday lives. Although it only represents about 2.4 percen, the services it provides are important to other sectors in the economy. One of the most debatable topics in economics is the Telecommunication Act of 1996, and according to the Federal Communication Commission, “It is the first major overhaul of telecommunications law in almost 62 years. The goal of this new law is to let anyone enter any communications business -- to let any communications business to compete in any market against any other” In the old days, the telecom industry was viewed as an example of “natural monopoly.” This was due to increasing returns to scale, where the telecom services could only be provided efficiently by a monopoly provider. In the U.S., this pattern started many years ago when the American Bell Telephone purchased the Western Electric Company of Chicago. Alexander Graham Bell patented the telephone in 1876 and formed Bell Telephone. AT&T, which is today one of the leading company in the wireless telecommunication industry, was formed in 1885 to connect the Bell Companies. In 1913, AT&T agreed to become a regulated monopoly. Although their monopoly was allowed, they were required to connect competing local companies and let the Federal Communication Commission to approve their prices and policies. In January of 1982, AT&T agreed to break itself into a national long-distance carrier and seven “baby bells” in order to end the long-running antitrust suit by the U.S. Department of Justice. The break occurred in 1984.
At the time of the breakup of AT&T, almost all telephone companies were monopolies and the increased growth toward competition has been a steady trend. Mobiles phone have grown rapidly since their introduction, and in the majority of nations there is competitio. Through the years, there have been many mergers and acquisitions in the industry that decreased the number