Factors Responsible for the Growth of the Telecommunications Sector

Two major issues contribute to the growth and changes in telecommunications: Technology and competition. The changes in technology and the shift to a more competitive environment /market contributes to the growth in the telecommunications sector globally.

Technology

We can identify four major technological issues that contribute to growth in the telecom sector:

Capacity

New technologies such as optical fibre have enormous capacity to carry information. They can be used for anything from entertainment and distance education to the transmission of highly detailed images for remote medical diagnosis. Satellites also offer a tremendous amount of bandwidth.

Digitization

Telecommunication networks are becoming totally digital, so that any type of information, including voice and video, may be sent as a stream of bits in a compressed form and reconstructed for use at the receiving end. Compressed digital video can be used to transmit motion video over as little as two telephone lines (128 kbps) for teleconferencing and to deliver hundreds of digitised television channels via satellites.

Ubiquity

Advances in wireless technology such as cellular radio, Personal Communications Services (PCS), and low earth orbiting (LEO) satellites will provide mobile and personal communications virtually anywhere. These technologies also make it possible to serve rural communities without laying cable or stringing copper wire

Convergence

The convergence of telecommunications, data processing, and imaging technologies has ushered the era of multimedia. Voice, data, and images may be combined according to the needs of users, and the distinction between traditional sectors of telecommunications, information processing, and broadcasting are increasingly arbitrary and perhaps irrelevant (Hudson 1997).

The use of mobile network has dramatically improved access to telecommunications in most developing countries. For instance there is a growing and thriving cellphone market in Africa. Previously unconnected people on the continent are getting connected to telecommunications services through the mobile phone network. The technological changes in the telecommunication industry have two distinct effects: "to create glut instead of capacity shortages of the past and to reduce barriers to entry and make new sorts of competition possible" (The Economist, Telecommunications Survey 1995: 6).

The increase in the capacity of telecommunications can be attributed to two issues: the first is the increasing use of fibre-optic cables. These cables carry more traffic than copper wire. A single fibre, which is thinner than a hair strand can carry over 30,000 simultaneous telephone conversations. The second, switches -telephone exchanges- "have moved from eavesdropping operators and clunky electro-mechanical devices to become increasingly like computers, their costs are falling and their capability expanding inexorably" (The Economist, Telecommunications Survey 1995: 6).

Competition

There was a time when telecommunications seemed to be natural monopoly worldwide. Now, the trend is changing; more and more national governments are liberalising and introducing competition. The introduction of competition has brought numerous advantages to the growth of the telecom sector. Prices are reduced, technological developments are enhanced and high quality standards of telecom service are maintained.

With the introduction of competition, many service providers enter the market to provide a gamut of services. Competitors are diverse in their operations; they are not limited to telecommunications operators. Telecommunications operators have to compete with providers in parallel markets and vice-versa. An example is a telecom company providing Internet service.

The liberalisation of the telecom sector has brought competition to the telecom markets. Consequently, this has improved efficiency in performance, and reduced prices in service provision. It has also spurred technical advances and expanded network capability. As a result, the introduction of competition has contributed enormously to the growth of the telecommunications sector.