Explosive Growth Abounds the Telecommunications Industry by Monica M. Huddleston

The telecommunications industry is not just hot.  It’s sizzling!  Explosive growth abounds.  The dominant technology is all about high-speed data delivery and oversized capacity of the transport media.  Data products and services dominate what most telecommunications companies offer their customers because that is what they demand.  Career and entrepreneurial opportunities for the college graduate sharp enough to match his/her talents with the companies seeking them are plentiful.

First, it is important to understand the scope of telecommunications.  It includes any medium used to transmit or receive voice, data, or video signals and information.  That means telephones, wireless/mobile phones, pagers, and broadcast or cable television.  Its modem-equipped computers, digital subscriber lines (DSL) and cable modems to carry that traffic to the worldwide network of communications paths we call the Internet.  We can’t leave out satellites and all the signals they bounce between earth and space.  Fast invading the marketplace is wireless internet access from a mobile phone, a PC, or even your Palm Pilot, from and to anywhere.  Each of these components of the telecommunications arena are useless without software application programming to enable, manage, and improve them.

So, what are the trends driving the use of all of this technology?  The predominant theme song of the industry is broadband.  To push through all the voice, data, and video signals today’s and tomorrow’s customers present to the various telecommunications networks, the pipes or paths over which it all travels must be big – very big.  As Jason Myers, editorial director of Telephony magazine (August 28, 2000 issue) puts it, “Broadband defines the infrastructure that feeds, supports, runs, maintains, steers, tests, and powers your networks.”  To illustrate the difference between broadband and narrow-band technology, one need only attempt to download a large data file over a regular dial-up modem phone line (narrow-band) and time it.  Then, download that same file from a PC that is connected to a DSL or cable modem line.  Customers prefer the 1.5 megabit-per-second and higher download speed to the 56 kilobit-per-second slower speed.  Fiber optic backbone networks and related electronics controlling them are the key enablers of high-speed data delivery.  So much so there is a worldwide shortage of fiber, which is hampering timely broadband deployment.

An Organizational Economics forecast illustrated in the August 28, 2000 issue of Telephony magazine predicts that there will be 4.4 million cable modem lines and 1.6 million DSL lines in service by the start of 2002.  The latter is a conservative estimate. By all accounts, cable modem and DSL penetration in the marketplace will double or triple by 2004. 

Broadband service providers plan to give their customers everything from video-on-demand to voice over Internet protocol (IP) in the next few years.  The video-on-demand service allows a customer to download a movie any time, with the ability to stop, rewind, or fast forward it as if it were a tape in the VCR.  Eventually, holding a conversation over the Internet will be commonplace.  It is done somewhat today, but the clarity of transmission leaves a lot to be desired in most cases. 

Another tremendously attractive service facilitated by broadband networks is E-commerce (electronic commerce), also known as B2B (business-to-business).  E-commerce is the business of inter-company transactions – electronic ordering, billing, and bill payment over the Internet.  Online shopping is another growing form of this broadband innovation.

Telecommunications is an incredibly lucrative and fast-growing industry indeed.  The financial scope of the telecommunications industry is huge.  The local exchange market alone generates $187 billion in revenue annually (Commissioner Brett Pearlman, Texas Public Utility Commission data).  That’s the segment carrying the local calls.  Other segments make up the balance of over half-a-trillion dollars in annual revenue.

Who are the major players in the telecommunications industry who battle it out for market share?  Who are these companies paying entry-level management salaries from the high $40,000 to $70,000 range, not counting hiring bonuses and benefits?  Consider just a few of the major local exchange and long distance players’ numbers highlighted in the table below.  All of these companies have Web sites you can access for more information about their products and services, mission, strategic goals, and employment opportunities.  Most are accessible by typing online, www.companyname.com.  Just insert the name of the company in the ‘companyname’ space and you’re most likely there.  Besides the $40,000 to $70,000 entry-level management salary, it is worth noting that the average annual salary for a tenured manager in telecommunications is $62,500, per a July 2000 Cornell-Rutgers study of over 600 such companies.  The September 4, 2000 St. Louis Post-Dispatch newspaper reported in an article about a study that employees at Internet companies or online divisions averaged $82,000 in earnings in 2000, an 8.5% increase over 1999.  The study was done by Buck Consultants, a unit of Mellon Financial Corp., and was based on a survey of 233 companies.  That same study confirms that more companies are paying healthy hiring and retention bonuses than ever before.  Most are actively seeking, make that courting African-American college graduates.

(FCC, 12/31/99 data, from the Statistics of Communications Common Carriers report, August 11, 2000) 

Here is a partial listing of telecommunications companies, by category:

Local Exchange Carriers (LEC):  Verizon, SBC Communications, Inc., Bell South, and US West.  At one time there were seven regional Bell operating companies (RBOCs), prior to the Department of Justice-ordered breakup of the old Bell system.

Inter-exchange Carriers (IXC):  AT&T, Sprint, Worldcom (formerly MCI Worldcom), Williams Communications.  These companies provide the long distance calling networks, selling wholesale and retail minutes of use to residential and business customers.  It is important to note that LECs and IXCs are rapidly becoming each other.  Regulatory approval from the FCC has already allowed two LECs to become long distance service providers (SBC in a few states, and Verizon in New York).  It is just a matter of time until LECs and IXCs will be in each other’s business full force.

Competitive Local Exchange Carriers (CLEC):  Covad Communications, Nextel, NorthPoint Communications, Qwest Communications, Nextlink Communications, Inc., Broadspan Communications.  These are just a few of the hundreds of companies that rose to significantly compete with incumbent LECs after the Telecommunications Act of 1996.  CLECs typically concentrate on luring away the LECs’ large business customers.

Wireless:  Sprint PCS, Cingular (Southwestern Bell & BellSouth wireless merger), Verizon, AT&T, Alltel, Nextel.  Most of the major LECs and traditionally Inter-exchange carriers (IXC) have a wireless subsidiary.

Hardware Manufacturers:  Lucent, Nortel Networks, Siemens, NEC, Cisco, Fujitsu, Ericsson, Nokia, Motorola, Alcatel, Tellabs, 3COM, Texas Instruments, Corning Cable Systems (formally Siecor), Ciena.  These and many other companies make the switching, transport, networking and multiplex equipment used by telecommunications companies in the delivery of their products and services.

Software Manufacturers:  Microsoft, Telcordia, and African-American owned TeleCommunications Systems, Inc. are but a few.  Several of the hardware manufacturers also do software application development, production and sales.

Internet Service Providers (ISP):  America Online (AOL), Prodigy, UUNET, Alta Vista, and the many LECs and IXCs also have Internet companies offering the service.  There are over 5,000 ISPs in the United States.

Cable TV and modem providers:  AT&T Cable Services (formerly TCI), Charter Communications, Time Warner, Cox, MediaOne, and several others.

A discussion on telecommunications, or any other business discussion in the world today, would not be complete without mention of the merger-mania that continues to dominate the news.  In the world of business, the name of the game is retaining market share at a minimum, and growing it steadily, rising to exponentially at best.  One of the most common ways to accomplish this business imperative is for those who are experts in their strong suits, but not as experienced or endowed in other areas, to acquire, merge or otherwise strategically partner with another entity.   

Hardware manufacturer Nortel Networks has executed 12 acquisitions in as many months.  The latest purchase is of Sonoma Systems, an integrated access device vendor.  This purchase is expected to strengthen Nortel’s market positioning in hardware sales.  Bell Atlantic and GTE sealed their merger deal following FCC approval in 2000.  Their marriage, intended to expand their scope and footprint nationwide, makes Verizon (new name of merged companies) the largest U.S. telecommunications company.  SBC Communications, responding to its need to expand its wireless footprint in the U.S., acquired BellSouth’s wireless entity in 2000.  Other mergers include Qwest and US West, AOL and Time Warner, Verizon with DSL provider NorthPoint Communications to form a new broadband company that will carry the NorthPoint name, and Southwestern Bell Internet Services with Prodigy, Sterling E-commerce, and a few others in which they have purchased some equity. 

SBC and Covad Communications announced an agreement in September, 2000, making Covad a DSL provider.  SBC will also invest $150 million to acquire a stake in Covad.  After much public discussion, Sprint and WorldCom dropped plans to merge as they listened to the loud and negative regulatory grumbling from the FCC. 

The story has been told on the industry, its technology and services, its enormous revenue generation, and its major players.  But, what about African-American success stories in this industry?  Where do we fit?  The good news is that there are African Americans who have persevered through the barriers to rise to meteoric heights.  The bad news is there just aren’t enough of us.  Just a few of the ones who have excelled are celebrated here.

Priscilla Hill-Ardoin, (right) Senior Vice President-FCC for SBC Communications, Inc.  Priscilla directs the regulatory activities from the firm’s Washington, D.C., office.  She successfully balances her sensitivity to what the FCC Commissioners want with the shareowner value she is obligated to deliver for the company.  Her keen negotiating and interpersonal skills were key ingredients to the company getting the SBC-Ameritech merger nod from the FCC in 1999, and another regulatory victory when the FCC approved SBC’s entry into the long distance market in Texas on June 30, 2000.  She has a law degree from St. Louis University, MBA from Washington University, and M.A., Communications from Purdue.  Says Hill-Ardoin, “SBC is spending $6 billion over the next three years on its Project Pronto to bring high-speed internet access to 77 million Americans.  Our customers want it and we are all in the race to deliver it to them.”

Maurice B. Tose’, (left) Chairman, CEO, and President of TeleCommunications Systems, Inc. (TCS) – This U.S. Naval Academy graduate founded TCS in 1987.  His is the only African-American owned firm that owns intellectual property, the advanced intelligent network software that runs over 18 carriers’ networks worldwide, including Frontier, Sprint, Air Touch, and PrimeCo.  Following receipt of this year’s NABTP Granville T. Woods Award for Outstanding CEO, he shared plans for the multi-million dollar company’s wireless Internet gateway market entry.  TCS is also about to go public (NASDAQ), adding itself to only about a dozen other African-American owned publicly traded companies.  Tose' reminds us all to “think big.  I kept my eye on the prize, prayed before every business meeting, and obeyed my Savior, God, enduring huge financial losses before things started to turn around.”

Paget L. Alves, (right) Chief Executive Officer and President, PointOne Telecommunications– Paget leads this relatively new (1998) voice-over packet telecommunication provider.  He prepared himself for this prestigious position by completing his law degree at Cornell and applying his talents in various positions at Sprint, including President of Sales and Support for that company’s Business Services Group. He told an audience attending the National Association of Black Telecommunications Professionals, Inc. (NABTP) Spring 2000 convention in Dallas, “If you want to pick an industry, telecommunications is the place to be.”

How can you become a telecommunications success story?  First, familiarize yourself with the industry trends, companies, products and services by reading business journals and trade publications like Telephony magazine and Utility Business.  Also, read the various companies’ annual reports and consult their Web sites regularly.  While in college, select the courses that match the area of telecommunications you want to enter, namely computer science, business administration, marketing, telecommunications management, engineering, or a math and science concentration.  Sharpen your oral and written presentation skills so you can present yourself well to that potential employer. 

Positions are available in the more technical network engineering and operations divisions of these companies, but also in information technology, sales and customer service.  Inquire at the companies mentioned in this article about internships for the summer as many of them have such programs.  They often favor the summer interns for permanent positions upon college graduation because they are already familiar with the corporate culture and have proven that they can contribute to the company mission and goals accomplishment.  Finally, network with telecommunications professionals like those in the National Association of Black Telecommunications Professionals, Inc. (NABTP), www.nabtp.org or 1-800-946-6228. Networking and learning from those who know this lucrative industry best will serve your personal and professional development interest well in the long run.