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Media Ownership and Concentration in America$
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Eli Noam

Print publication date: 2009

Print ISBN-13: 9780195188523

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780195188523.001.0001

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Telecommunications Services and Equipment

Telecommunications Services and Equipment

Chapter:
(p.231) 11 Telecommunications Services and Equipment
Source:
Media Ownership and Concentration in America
Author(s):

Eli M. Noam

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195188523.003.0011

This chapter examines market concentration trends in the telecommunications industry in the United States. The overall concentration trend of the telecom sector has been strongly U-shaped; this concentration declined significantly in 1983 with the AT&T divestiture; a gradual decline occurred from 1984 to 1996, the multichannel phase of communications media; this was followed by a pronounced reconcentration. The chapter then turns to the equipment side of the sector. Traditionally, telecommunications equipment industries were divided into two categories based on the destination of their products: fairly simple consumer and office-oriented “customer premises equipment”, and carrier-oriented network equipment. As instability became part of the environment, telecom companies responded in three ways: by cutting costs and prices, by creating differentiated products and services, and by reducing competition and the commoditization that lowers profitability and future investments. The third response requires market power, which leads to consolidation of firms into oligopoly. This is a main driver of concentration trends in the telecommunications sector.

Keywords:   United States, market concentration, telecommunications industry, AT&T, telecommunications equipment, customer premises equipment, carrier-oriented network equipment, competition, oligopoly

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