The domestic telecommunications market is growing rapidly. Growth has come chiefly through new services, especially those which combine aspects of the telecommunications, cable television, broadcast television, computer, Internet and utility industries. The objective of this study is to analyze the various industry trends and the most successful prospects for the next 5 years. Since preliminary research indicates the most activity will be in services, this segment of the market is the main focus of this report. While equipment revenue is summarized, it is not discussed in detail.

Reasons for Doing this Study

In 1984, AT&T, the monopoly telecommunications company in the United States, was forced to divest its Bell Operating Companies (BOCs) and compete with other companies for customers of its long distance services. This marked the beginning of a growth period in telecommunications. Cable regulation changes in 1992 were followed by the launch of satellite television in 1994. This increased high-technology options available to the average American household. By the mid-1990s, continued growth was further fueled by the explosion of Internet usage, increasing reliance on wireless services and the overlapping of the telecommunications, cable and computing industries. This was better known as convergence. The Telecommunications Act of 1996 further deregulated telecommunications by opening up local access service to competition.

The combined forces of telecommunications deregulation, i.e., explosive Internet usage and technological advances in related sectors, have brought about products and services which were considered at best, a "some day" possibility. Technological change has spurred social changes as well, which, in turn, drive demand for more technological solutions. Home-based small businesses and telecommuting have become commonplace, spurring demand for home networks, high-speed data connections and "smart home" services.

In spite of continued growth, however, telecommunications providers also have encountered regulatory, competitive and cultural challenges. New competitive challenges have emerged, as many companies that had been categorized as computer companies, utility companies or cable companies, are now considered part of the telecommunications industry. Regulators seem unable to keep up with the pace of change, and frequently prefer to let the market rule itself unless there are overriding antitrust or social policy concerns. Meanwhile, the American public is increasingly concerned with social issues that directly touch this fast-paced industry, including privacy and environmental issues. Both industry and consumers also are seeking ways to provide telecommunications access to as many Americans as possible, as the direct link between financial/career opportunities and technology becomes stronger.

Methodology

The forecasts in this study are reached through several different approaches. Projected percentage growth, estimated revenue increases and historical data are all carefully studied, and the projections contained herein are a result of reconciling these three data flows. Since some technologies and industries may overlap or compete for the same customer base, not all projections are necessarily positive. Other tables show positive growth throughout, but this growth will be at the expense of either individual company revenues within the sector, and/or sectors of industries not covered by this report.

Scope and Format

The scope of this report is to describe the current telecommunications services market in the United States, and to discuss the trends that will shape this market over the next 5 years.

This study is divided into four major parts:

an introduction, overview and reference to similar BCC reports and services;
a discussion of market size and market segmentation;
a discussion of issues which will directly impact the telecommunications industry over the next 5 years, and how telecommunications providers can optimize their chances of success in the market;
profiles of 20 companies in the domestic telecommunications industry, discussing their current status, product and service offerings and future plans. These companies are profiled as an example that highlights the growth and challenges discussed earlier in the report. Other tele-communications companies are listed after these profiles, giving the company name, location and pertinent facts about the company's role in the telecommunications market.
Contributions of the Study and for Whom

This study is aimed towards telecommunications service providers of all sizes and in all sectors of the industry, including those companies that identify themselves as computer, cable, Internet, e-commerce and/or utility companies. It also provides valuable information for end users of these services. To that end, this is a useful study for any executive decision-maker (private or public), as well as community groups concerned about market forces in telecommunications and their impact on society.

Information Sources

Information was gained through corporate Web sites and information packages, press releases, trade press information, FCC and other government reporting, standards bodies and trade groups, interviews with industry participants and third-party information sources.

Related BCC Work

In addition to this study, there are a number of related reports from BCC, which you may wish to purchase. These include:

G-049U Electronic Mail: Technologies, Applications, What's Ahead, April 1999, 110 pages.
G-148RD Non-U.S. Worldwide Telecommunications Markets: A Detailed Analysis, March 1999, 150 pages.
G-199 The Future of Telecommunications Teleconferencing: Audio, Graphics, Data and Video, May 1998, 122 pages.
G-223 Commercial Satellite Services, June 1999, 75 pages.

--------------------------------------------------------------------------------

TABLE OF CONTENTS
Titles
P.Nos.

INTRODUCTION
VIII

STUDY GOALS AND OBJECTIVES
VIII

REASONS FOR DOING THIS STUDY
VIII

CONTRIBUTIONS OF THE STUDY AND FOR WHOM
IX

SCOPE AND FORMAT
IX

METHODOLOGY
X

INFORMATION SOURCES
X

RELATED BCC WORKS
X

BCC ON-LINE SERVICES
X

SUMMARY
XII

MARKET SUMMARY
XII

MARKET SIZE
XII

INDUSTRY OVERVIEW
1

TELECOMMUNICATIONS AND THE OVERALL U.S. ECONOMY
1

HISTORY OF TELECOMMUNICATIONS
1

1876-1976: THE FIRST 100 YEARS OF THE TELEPHONE
1

1976-1990: PRECURSORS TO CONVERGENCE
2

THE 1990s: THE INTERNET AND CONVERGENCE
2

TELECOMMUNICATIONS AND THE FUTURE
3

1999-2004: RAPID GROWTH, RAPID CHANGE
3

2005 AND BEYOND
4

MARKETS BY PRODUCT TYPE
5

U.S. EQUIPMENT MARKET
5

OVERVIEW
5

YEAR-BY-YEAR DETAIL
6

U.S. SERVICES MARKET
6

OVERVIEW
7

YEAR-BY-YEAR DETAIL
8

MARKETS BY COMPANY TYPE
10

OVERVIEW
10

INTERNATIONAL
10

KEY ADVANTAGES
10

KEY CHALLENGES
11

ILECs
11

KEY ADVANTAGES
11

KEY CHALLENGES
11

COMPETITIVE TELECOM
12

KEY ADVANTAGES
12

KEY CHALLENGES
12

OTHER
12

KEY ADVANTAGES
13

KEY CHALLENGES
13

COMPARATIVE ANALYSIS BY COMPANY TYPE
13

INTERNATIONAL
13

ILECs
14

COMPETITIVE TELECOM AND OTHER TELECOM
15

MARKET GROWTH AND FORECAST BY COMMODITY SEGMENT, 1999-2004
17

OVERVIEW
17

TRADITIONAL FIXED SERVICES MARKET
17

STANDARD ADVANCED SERVICES MARKET
17

EMERGING ENTERPRISE BUSINESS SERVICES MARKET
17

EMERGING CONSUMER SERVICES MARKET
17

COMPARATIVE REVENUES BY COMMODITY
18

TRADITIONAL FIXED SERVICES MARKET
19

BASIC LOCAL TELEPHONE SERVICES
19

Factors Impeding Growth
20

Reasons for Growth
20

LONG DISTANCE FIXED SERVICES MARKET
21

Reasons for Growth
21

Factors Impeding Growth
22

STANDARD ADVANCED SERVICES MARKET
23

Land-based POTS Additions
23

Long-term Projections
24

Reasons for Growth
24

WIRELESS PHONE SERVICES
25

Factors Impeding Growth
25

Reasons for Growth
26

Security Concerns
26

Future Developments
26

Wireless vs. PDA
27

BUSINESS SERVICES
29

Reasons for Growth, Then Decline
29

Factors Contributing to Growth
30

EMERGING BUSINESS ENTERPRISE SERVICES MARKET
30

WIRE-BASED IP TELEPHONY
31

Forecast Discussion
31

Issues THAT MAY Impede Growth
31

WIRELESS BUSINESS SERVICES
32

Reasons for Growth
32

Factors Impeding Growth
33

Future Developments
33

Growth in Newer Areas, More Revenue in Older Ones
34

The Importance of the Emerging Consumer Market
35

CONSULTING SERVICES
35

Factors Impeding Growth
36

Factors Contributing to Growth
37

EMERGING CONSUMER SERVICES MARKET
37

INTERNET/E-MAIL SERVICES
38

Forecast: 1999-2001
38

Forecast 2002-2004
39

Future Developments
39

Growth Limitations
40

DSL vs. Cable Modems
40

HOME-BASED PC NETWORKS
41

Home-Based PC Networks and Telecommunications Revenue
42

SMART HOME SERVICES
42

Reasons for Growth
43

Growth Limitations
43

Societal Impact
43

FACTORS FUELING GROWTH
45

DEREGULATION
45

FALLING HARDWARE PRICES
45

CUSTOMER SOPHISTICATION
45

CHANGES IN WORK AND CULTURE
45

GLOBAL COMPETITION
46

AMERICAN DOMINANCE IN THE TELECOMMUNICATIONS SECTOR
46

LACK OF MAJOR MILITARY CONFLICTS AND CHANGES IN THE MILITARY
46

FAVORABLE ECONOMY
47

A NEW STANDARD OF INNOVATION
47

ISSUES IMPACTING GROWTH
48

TECHNOLOGICAL ISSUES
48

UNCONTROLLED GROWTH
48

BANDWIDTH
48

RELIABILITY AND REDUNDANCY
49

YEAR 2000
49

SUN ACTIVITY
50

MARKET ISSUES
51

U.S. INVESTMENT AND TECHNOLOGY OVERSEAS
51

CUSTOMER SERVICE EMPHASIS
51

SERVICES DOMINATE
52

TIME TO MARKET
52

UBIQUITOUS COMPETITION
53

HEDGING BETS
54

PINPOINT PARTNERING
55

REGULATORY ISSUES
55

LOCAL CALL/LOCAL TOLL DEREGULATION
55

LEGISLATIVE DEVELOPMENTS IN PROGRESS
56

MERGER AND ACQUISITIONS REVIEW
56

AREA CODES
56

THE CABLE INDUSTRY
57

THE FUTURE OF TELEVISION
58

THE COMPUTER INDUSTRY AND THE INTERNET
58

GLOBALIZATION AND "THE AT&T QUESTION"
59

LAGGING GOVERNMENT TIMELINES
60

TAXATION AND REAL ESTATE
60

FINANCIAL ISSUES
61

CAPITAL OUTLAY
61

SHIFTING FINANCIAL INDICATORS
61

SOCIAL AND CULTURAL ISSUES
62

CONSUMER ACCEPTANCE OF NEW TECHNOLOGIES
63

A NEW WAVE OF NECESSITY AND CONVENIENCE
63

TIME-TO-MARKET CONSUMER REACTION
64

PRIVACY, HEALTH AND SECURITY
64

AFFINITY GROUPS
65

PROVIDING ACCESS FOR DISADVANTAGED AMERICANS
66

STANDARDS ISSUES
67

A SAMPLING OF COMPANIES IN THE DOMESTIC TELECOMMUNICATIONS BUSINESS
69

AIRWIRE.NET, INC.
69

AMERICA ONLINE, INC. (AOL)
70

AT&T
70

BELLSOUTH CORPORATION
71

CELLNET DATA SYSTEMS
72

CLEARWORKS TECHNOLOGIES, INC. (CLEARWORKS.NET)
72

CORNING INC.
73

COX COMMUNICATIONS
73

ECHOSTAR COMMUNICATIONS
74

EL PASO ENERGY CORPORATION
74

ERICSSON
75

GENERAL INSTRUMENT
75

GTE/BELL ATLANTIC
75

HEWLETT-PACKARD
76

HUGHES ELECTRONICS/ DIRECTV?
76

IRIDIUM
76

LUCENT
77

MICROSOFT
77

MOTOROLA
77

NATIONAL BROADCASTING COMPANY (NBC)
78

APPENDIX
79

INDEX OF COMPANIES
79

LIST OF TABLES


SUMMARY TABLE


TOTAL U.S. TELECOMMUNICATIONS MARKET, 1999-2004
XIII

1 TOTAL U.S. TELECOMMUNICATIONS EQUIPMENT MARKET, 1999-2004
5

2 TOTAL U.S. TELECOMMUNICATIONS SERVICES MARKET, 1999-2004
7

3 FORECAST OF TELECOMMUNICATIONS SERVICES BY PROVIDER TYPE, 1999-2004
13

4 SERVICES MARKET REVENUES BY COMMODITY, 1999-2004
18

5 TRADITIONAL FIXED SERVICES MARKET, 1999-2004
19

6 TRADITIONAL FIXED SERVICES MARKET FOR BASIC LOCAL TELEPHONE SERVICES, 1999-2004
19

7 TRADITIONAL FIXED SERVICES MARKET FOR LONG DISTANCE TELEPHONE SERVICES, 1999-2004
21

8 STANDARD ADVANCED SERVICES MARKET, 1999-2004
23

9 STANDARD ADVANCED SERVICES MARKET FOR LAND-BASED POTS ADDITIONS, 1999-2004
24

10 STANDARD ADVANCED SERVICES MARKET FOR WIRELESS PHONE SERVICE, 1999-2004
25

11 STANDARD ADVANCED SERVICES MARKET: WIRELESS DEVICES BY METHOD, 1999-2004
27

12 STANDARD ADVANCED SERVICES MARKET: BUSINESS SERVICES, 1999-2004
29

13 EMERGING BUSINESS ENTERPRISE SERVICES MARKET, 1999-2004
30

14 EMERGING BUSINESS ENTERPRISE SERVICES MARKET: WIRE-BASED IP TELEPHONY, 1999-2004
31

15 EMERGING BUSINESS ENTERPRISE SERVICES MARKET: WIRELESS BUSINESS SERVICES, 1999-2004
32

16 EMERGING BUSINESS ENTERPRISE SERVICES MARKET: BUSINESS LINE REVENUE COMPARISON, 1999-2004
34

17 EMERGING BUSINESS ENTERPRISE SERVICES MARKET: CONSULTING SERVICES, 1999-2004
36

18 EMERGING CONSUMER SERVICES MARKET, 1999-2004
37

19 EMERGING CONSUMER SERVICES MARKET: INTERNET/E-MAIL SERVICES, 1999-2004
38

20 EMERGING CONSUMER SERVICES MARKET: INTERNET/E-MAIL SERVICES BY METHOD, 1999-2004
39

21 EMERGING CONSUMER SERVICES MARKET: HOME-BASED PC NETWORKS, 1999-2004
41

22 EMERGING CONSUMER SERVICES MARKET: SMART HOME SERVICES, 1999-2004
42

LIST OF FIGURES


SUMMARY FIGURE


TOTAL U.S. TELECOMMUNICATIONS MARKET
XV

1 TELECOMMUNICATIONS SERVICES BY PROVIDER TYPE, 1999-2004
16

2 HOURS OF LONG DISTANCE, 1999-2004
22

3 WIRELESS DEVICE USAGE BY METHOD, 1999-2004
28

4 BUSINESS LINE REVENUE, 2004
35

5 INTERNET ACCESS BY METHOD
41

6 AN OVERVIEW OF PRODUCT MARKETING BY SOCIOECONOMIC CLASS, 1999
67