Telecom’s big bang: burgeoning global telecommunications equipment and services markets
It is an intuitive truth: the ability of a nation to rapidly and efficiently communicate information, both internally and with the rest of the world, is crucial to that nation’s economic future. Accordingly, few industries today can boast the kind of explosive growth being experienced by information technologies industries, and few markets hold the promise for future growth associated with the global telecommunications market. Recent worldwide market growth for telecom equipment and services — driven most recently by newly unleashed demand, technological advances, privatization and liberalization movements, and declining prices — is characterized by extraordinary numbers: the global market for telecom equipment was estimated in 1996 at $180 billion and is forecast to grow to $208 billion in 1998. The world’s telecom services industry is projected to bring in an estimated $725 billion in revenue in 1997.
From the earliest developments in telephony to the development and first commercial use of optical fiber and the deployment of wireless communications networks, U.S. companies have pioneered many of the technologies that are now integral parts of modem communications networks around the world. The combination of a burgeoning global market and U.S. dominance in telecom technology, marketing, and expertise has made significant economic engines of the U.S. telecom equipment and services industries. The knowledge, skills, and advanced technologies of U.S. telecom firms have secured, and will continue to secure, the United States a significant share of the burgeoning world market.
The performance of the U.S. telecom industry in the world market has been impressive. For the fourth straight year, the United States registered a telecommunications equipment trade surplus. This surplus increased sharply from $901 million in 1994 to more than $3.2 billion in 1995. While the U.S. surplus declined somewhat in 1996, it remained at a healthy $2.4 billion. U.S. equipment exports surged to $15.5 billion in 1995 — up $3.26 billion — and rose to $15.7 billion in 1996. Imports of telecom equipment were almost $12.3 billion (up $930 million) in 1995, and in 1996 increased to $13.3 billion.
Over the last four years the U.S. telecom equipment surplus has more than doubled, a remarkable fact given that 1993 marked the first telecom equipment surplus in 10 years. This reflects not only the desire of foreign countries to upgrade and expand their telecom networks, but also the high quality of U.S. equipment and the hard work of U.S. companies and their marketing teams.
The surge in exports since 1993 has been led by seven product categories: 1) radio transceivers; 2) parts for radio equipment; 3) satellites; 4) modems; 5) parts for telephonic apparatus; 6) carrier line equipment; and 7) television transmission equipment.
Telecom equipment exports to Japan exceeded predictions in 1996, reaching a record high of $1.9 billion. Elsewhere in Asia, telecom equipment exports to South Korea increased by $131 million (16 percent) in 1996 to $928 million, and exports to China, a market with enormous potential, rose to $761 million for the year. U.S. telecom equipment exports to Canada, America’s largest telecom trading partner, increased by $547 million 32 percent to $2.3 billion. Brazil, a market whose potential is just beginning to be realized, imported an additional $117 million of U.S. telecom equipment in 1996 for a total of $735 million.
Telecommunications services industries, including data transmission and wireless services, are also significant engines of growth for the U.S. economy. U.S. carriers continue to be recognized as the world’s best, providing high-quality services at lower costs using the latest technologies, and international services will be increasingly profitable for U.S. companies. The United States is the world’s largest telecom services market, accounting for about 30 percent of the world’s revenue in 1996, and U.S. companies are world leaders in the development and market of telecom services worldwide.
The global telecom services market is projected to average 12 percent growth from 1995 to 2000 as continued expansion of foreign networks and lower prices from competition and new technologies fuel demand. Expanding opportunities abroad for U.S. telecom firms will also stimulate the U.S. market for network equipment, since many of the countries where new telecom networks will be built do not manufacture the advanced equipment that will be needed.
A notable share of the American workforce now depends on exports of goods and services for employment, and certain segments of the U.S. telecom industry are significant job producers. The cellular telephone services sector, one of the most internationally competitive segments of the U.S. telecom services industry, is a case in point. The Cellular Telecommunications Industry Association estimates that approximately 34,000 new jobs have been created by cellular operators since 1992. In 1995 alone, wireless carriers created 14,285 new jobs, with 7,498 new employees in the last six months of the year. Cellular carriers have reportedly created more than 70,000 new jobs in the last 12 years. When related services and manufacturing activities are included, approximately 275,000 jobs have been created by the wireless industry alone.
While the U.S. domestic market is the world’s largest, U.S. participation in the global telecom market has had a profound effect on many U.S. telecom equipment and services companies. In the communications equipment industry, a primary indicator of growth is the extent to which the number of small communications equipment manufacturers grows over time to take advantage of expanding opportunities, domestic and international, even as these markets become more competitive. The number of small U.S. companies manufacturing communications equipment has grown significantly since divestiture in the 1980s, especially very small companies (less than 20 employees). As the communications equipment market in the United States has moved further away from a monopoly environment, small manufacturers have sprung up to capitalize on small- and medium-sized market niches in the United States. and American companies are now taking the products developed for the U.S. market of the ’80s to the rest of the world.
The Commerce Department is committed to providing a foundation of support which will help translate U.S. telecom industries expertise into exports — strengthening our economy and our future. To facilitate telecom equipment and services exports and the U.S. jobs they support, the Clinton Administration has initiated trade policy, promotion, and advocacy programs aimed at opening foreign markets to U.S. telecom exports. These initiatives are designed to level the playing field and provide access to the rapidly opening global telecommunications equipment and services markets.
This mix of U.S. technological advances and marketing savvy and U.S. Government efforts to open foreign markets has produced a boom in U.S. exports of telecom equipment and services. From wireline to wireless communications, U.S. firms are on the cutting edge of technological development and are poised to take full advantage of future growth in the world’s market.
The feature articles that follow were written by staff members of the Commerce Department’s Office Of Telecommunications.
COPYRIGHT 1997 U.S. Government Printing Office
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