Industry Overview: Telecommunications

Posted by The Editors on December 3, 2012

Technically, telecommunications encompasses any communication over a distance, be it via telephone, television, radio, wireless network, computer network, telemetry, or other means-but traditionally, the term referred to telephone service. These days, though, all these technologies and others are converging-indeed, nowadays you can access the Internet, play videos, or track your children's movements via global positioning system (GPS) technology on your cell phone-so the lines between telecommunications and other industries like computer hardware and consumer electronics are getting blurrier all the time.

In other words: If you want to work in an industry that requires you to learn fast and adapt quickly, this is it.

Telecommunications is a mammoth industry, comprising companies that make hardware, produce software, and provide services. Hardware includes a vast range of products that enable communication across the entire planet, from video broadcasting satellites to telephone handsets to fiber-optic transmission cables. Services include running the switches that control the phone system, providing Internet access, and configuring private networks by which international corporations conduct business. Software makes it all work, from sending and receiving e-mail to relaying satellite data to controlling telephone switching equipment to reducing background noise on your cell phone call.

The breakup of AT&T in 1984 created the modern telecommunications industry, subjecting phone companies to free-market forces for the first time. The long-distance market became competitive almost immediately, but the so-called Baby Bells fought a rear-guard action against letting companies like AT&T (since acquired by SBC) or MCI (recently acquired by Verizon) enter the local phone market. But the Telecommunications Act of 1996 deregulated local phone markets. Proponents say deregulation makes telecommunications services more competitive, benefiting consumers. Critics say it gives a few giant companies unchecked sway over our ability to communicate with each other. Regardless, deregulation appears here to stay, with the industry swept up in waves of consolidation that are likely to continue.

Convergence Confusion
With each passing year, and each new generation of products introduced in the marketplace, it's getting harder and harder to pigeonhole companies and their products into traditional categories like telecommunications, computer hardware, and consumer electronics. Consider cell phones: These days, cell phone users can use their phones to do everything from take digital photographs and send and receive email to surf the 'Net, download and watch videos, and transmit their geographic location via global positioning system (GPS) technology. You tell us: Should cell phones that do all that be called consumer electronics products? Telecom products? Computer hardware products?

One result of convergence is that players in the consumer electronics, computer hardware, and telecom sectors are increasingly finding themselves competing head-to-head to determine who will lead in brand-new product categories such as wirelessly connected cell phones. Turmoil, in the form of mergers and acquisitions and fluctuations in profitability, is likely to result in each of these industries as time passes.

The Growth of Wireless
The wireless sector is growing like gangbusters. A Deloitte Research report predicts that the number of wireless connections made in 2006 will be some 500,000,000 greater than the number made in 2005. The launch of dozens of 3G networks is leading to faster speeds, facilitating quicker downloads and improved service. At the same time, wireless carriers are undergoing a wave of consolidation: In recent times, Cingular acquired AT&T Wireless; Sprint joined Nextel; and ALLTEL acquired Western Wireless.

VoIP, or Voice over Internet Protocol, makes it possible to send phone calls as data packets across the Internet and other IP networks (such as private Local Area Networks, or IM-based VoIP like Skype and Yahoo! IM), meaning phone calls no longer have to travel through local phone company lines. Quality, consistency, and reliability of VoIP doesn't equal that of old-timey phone networks-but it's getting there. And the price sure is right: like emails, VoIP-to-VoIP phone calls are free-the only cost is the cost of your broadband Internet connection, which is typically a relatively small, fixed, up-front cost. There are currently some downsides to VoIP offerings (while the phones usually continue to work even during power outages, if your power goes out and you don't have a generator, most VoIP users will be unable to make VoIP phone calls-and most VoIP offerings do not support encryption, so the security of VoIP phone calls can be questionable), but use of VoIP is growing all the time.

Prior to the Telecommunications Act of 1996, a variety of regulations divided telecommunications artificially-cable TV companies were prohibited from offering local telephone service, video programming over phone lines was banned, and local and long-distance service providers were forbidden from competing in each other's markets. The Telecommunications Act lifted these competitive restrictions. One remaining regulatory barrier prohibits service providers from manufacturing telecommunications equipment. The cleanest way to break this industry down, then, is between those who make the software and hardware and those who provide various services.

Service Providers
These companies provide local and long-distance wireline telephone service. Industry insiders call this POTS, for plain old telephone service. Wireline providers include the large long-distance service providers such as Verizon and Sprint and the RBOCs (the Baby Bells) like SBC Communications and BellSouth. A new generation of companies is laying fiber-optic wire networks to handle the rapidly increasing data traffic, including Qwest, Level 3, and Verizon.

Wireless Service Providers
Marked by carrier consolidation and partnering to augment geographic reach and gain economies of scale, wireless communication services have shaken up the telecom industry. They have also brought telecommunications to the far corners of the earth, including parts of Africa and South America where there's no existing wireline infrastructure, and have made local markets far more competitive in the United States.

Satellite Telecommunication Services
Satellite telecom services break down into fixed satellite services such as Intelsat; low earth orbit companies (LEOs), which include Globalstar and mega-LEO Teledesic (controlled by Craig McCaw); direct broadcast satellite companies such as DirecTV; and the global positioning system (GPS). Satellite services include everything from navigation systems (such as those being included in the dash of some new model vehicles) to video broadcast and data transmission.

Internet Service Providers (ISPs)
These consist of those companies that make it possible for you to go online-Microsoft, AOL, Earthlink, and the RBOCs. The Internet, which has become an integral part of the telecommunications industry, is also the vehicle by which a huge dose of talent and energy has been added to telecom as voice and data networks converge.

Customer Premise Equipment (CPE) Manufacturers
Telecommunication service providers are the biggest customers of telecommunications equipment makers. When they sell a service to a company, for instance, they purchase the switch, which can serve anywhere from 15 to 100,000 people, as well as other customer premise equipment (CPE)-everything from telephones to voice-mail systems to private branch exchanges (PBXs). Local area networks (LAN) require their own routers, switches, and hubs. The big players here include Lucent Technologies, Nortel, Fujitsu, Siemens, and Alcatel.

Networking Equipment and Fiber Optics Manufacturers
Networking equipment includes the stuff that makes the local area network operative, including routers, hubs, switches, and servers. Fiber optics consists of the optical fiber and fiber-optic cable, transmitters, receivers, and connectors that carry data and voice messages. The biggest switch makers are Nortel and Lucent. Cisco and 3Com are among the biggest makers of networking equipment.

Wireless and Satellite Communication Equipment Manufacturers
These are different categories that we've grouped together. The radio-based communications systems, the switches, transmission, and subscriber equipment for this sector differ from those the wireline service providers use. Large players in wireless equipment include Motorola, Qualcomm, Sony, and NEC. Satellite communication equipment makers include Comcast and Intelsat, as well as a number of cable companies, such as Cox Communications, DirecTV, and the DISH Network.

According to the U.S. Bureau of Labor Statistics, "Employment in the telecommunications industry is expected to decline 7 percent over the 2004-14 period, compared with 14 percent growth for all industries combined."

In this varied field, demand for workers, or lack of it, will be based mostly on technology. For example, as new voice recognition technology improves productivity, jobs like telephone and directory assistance operators will continue to decrease in number. But the need for engineers who develop that technology will increase.

The outlook is good in telecom sectors that are bringing exciting new technologies to market. High-speed data services, voice communications over the Internet, and wireless networking are some of the sectors that will be hiring, and small companies are good places to find jobs. Electrical and electronics engineers, computer software engineers, systems analysts, customer service professionals, and the likes will find opportunities growing faster than overall for the industry as networks expand, providers invest in R&D, and computer technology grows more sophisticated. Line installers and repairers should also find work as businesses seek to increase connections to suppliers and customers and residential customers add broadband service.

Reach Out and Touch Someone
In telecommunications, you're working with products that people know and use. Everybody knows what voice mail, caller ID, and portable phones are. One insider says, "It's stuff I identify with and my friends identify with." As a consequence, your work more than reaches out and touches someone-it touches a lot of people.

So Many Ways to Call
"The products are varied," says an insider. "It's changing incredibly fast. That's not unique to telecom, but it's certainly true of telecom." Wireless, speech recognition, Internet telephony-the long list of new products driving change in this industry will have a huge impact on our lives. If you can deal with the ambiguity that comes with change and get a charge from the excitement that goes along with all the new opportunities, then this is a great industry to work in.

New Directions
"Where does telecommunications end and the Internet start?" asks an industry insider. Because the Internet has drawn a lot of talented, innovative employees and workers, it has injected new life and energy into telecommunications as well. This makes both new products and the work environment particularly exciting, while bringing a variety of industries together.

Old Bells
The monopolies that the Bells held for so long didn't exactly make telecom a stimulating industry. New technology and deregulation have changed this, but there's still a lot of holdover. The four remaining Baby Bells still dominate local phone service. "Telecom was so regulated for so long, you didn't have to be good to go far," say an insider. "It was such an inbred industry." Join a newer company if you want to avoid this aspect of the industry.

Red Tape
Historically, telecommunications has been one of the most regulated industries. "One thing that's kind of a love-hate thing is the regulatory environment," says an insider. "It impacts just about every company in the industry. Some days I think it's an added challenge to deal with the industry and also with this complexity. Some days I wish it weren't there."

The Hugeness
The biggest players in telecom are huge. "That's not for everybody," says an insider. In particular, the Bells and major long-distance service providers are large, often bureaucratic organizations where you'll need lots of people to sign off before you can get a project approved. In contrast, there are a large number of smaller companies, many of which have found niches or picked off share exactly because of their mobility.

Engineers of various types are in great demand in this industry. Although the specifics of different assignments will vary (for example, field engineers will install equipment at a customer site, and network engineers will plan out network needs), most positions will require a degree in computer science, electrical engineering, or system engineering, as well as knowledge of Windows NT, C++, Unix, and other programming languages. Salary range: $45,000 to $105,000.

Test Engineer
The test engineer makes sure the product works, especially the switches, which are critical. If email or voicemail doesn't work, it is, after all, considered an urgent issue. The test cycle is often as long as the development cycle. Salary range: $45,000 to $100,000.

Software or Applications Engineer
These engineers concentrate on writing code. Most companies require code to be written on Unix-based machines. Salary range: $45,000 to $100,500.

Product Manager
Essentially, product managers make the product happen. Product managers determine what service or product they'll sell to the end user, then help develop it, be it wireless service, DSL, caller ID, or voicemail. On the manufacturing side, they need to understand the technology. This position generally requires an MBA or similar experience with another company, preferably in networking or data communications. Salary range: $60,000 to $125,000.

Salespeople sell the product to the customer. They usually have a smaller base salary and larger commission than their counterpart, the technical sales rep or sales engineer, who often accompanies the sales rep in order to answer the customer's technical questions. Salary range: $25,000 to $100,000 or more, depending on commissions.

Customer Support Staff
Customer support answers customer phone calls or emails, helping to solve problems. This includes everything from identifying problems to fixing bugs. This is often a good place to start a career in telecom, particularly if you lack an engineering background. Customer service managers earn at the high end of the scale. Salary range: $30,000 to $50,000.

Public Relations and Government Relations
The role the government has played in regulating telecommunications has resulted in a number of jobs within the major companies to work with the government and press to enhance relations. These include lobbying government officials, helping draft legislation, and working with the press to garner favorable coverage for regulations your company supports. Salary range: $50,000 to $150,000.

Here are a few things to think about before you start looking for a job in telecommunications:

  • Keep your training in the industry up to date. In this rapidly changing field, new training will be the key to getting that first job and additional promotions.
  • If you want a job in telecom, your best bet is to study up on the industry. There's a host of industry trade magazines covering a variety of areas, and these will provide you with a sense for the peculiar argot of the industry.
  • The bigger companies, such as SBC and BellSouth, recruit on college campuses. Career fairs at your school are great places to make contacts.
  • Smaller companies typically look for people with experience in some aspect of the industry. If you do have experience in the industry, including such areas as networks or computer telephony, this will give you a leg up in finding work.
  • Insiders in the industry say that your best route to finding a job is networking. Although this is true in most industries, it's particularly true for telecommunications. Companies talk to each other a lot. If you know a few people in the industry, you can pretty easily get additional contacts.
  • Be careful about going to work for a company that's a potential takeover target. If there are lots of articles speculating that a company is a buyout candidate, it's probably going to get bought out within two years. If you work in corporate sales or another area where there will be serious duplication-line installers, however, shouldn't worry-you may want to think twice about accepting an offer.