The telecommunication industry has seen significant regulatory reform from the 1990s onwards to the present date. There are major sectors in the industry such as fixed line telephony, television delivery, mobile telephony, fixed wireless access, satellite service, radio and postal sector. I am going to predominantly focus on mobile telephony sector of the industry. Particularly on what were the attractive features of the industry analyzing it by using porter’s five forces which determines the attractiveness of the industry. I will discuss what attracted Meteor into the industry; analyze Meteor strategies entering the market and what factors caused them to alter their strategies and finally how I envisage the telecommunication industry in five years time.
The Irish telecommunication industry was developed by the direct involvement of the Irish government, which created a state owned monopoly industry in Ireland. A monopoly market is not efficient as a lack of competition leads to inefficiency, restricts customer choice and exploitation of the customer by charging high prices in the market can occur. A new regulation was much needed. Under the world trade organization act Ireland was given until 2000 to open up its telecom market , in spite of this the Irish government decided to advance the deadline to 1st of December 1998 (Essick, 1998).The Irish telecommunication industry was now fully liberalized . I will now access the attractiveness of the industry by using Porter’s five forces.
Threat of new entry; an ideal situation for a firm is to be in an industry where there are many barrier of entry for a new firm to enter the industry. The biggest barrier being access to finance to cover the huge fixed and off course ownership of license. If the firm is in the correct side of the barrier it has a competitive advantage in the industry thus increasing the attractiveness of the industry. Before the industry regulation the Irish mobile industry was a duopolistic market with Eircell and Esat Digifone being the only firms in the market. Eircell was more dominant with 330,000 customers where as Esat Digifone had 80,000 (Comreg, 1998).
Etain Doyle the Director of Telecommunications, opened application for a third mobile network license commentating on the results Ms Doyle said “The licensing of a third mobile telephone operator will increase competition and choice, and the Irish consumers will benefit through lower tariffs and the availability of high quality services” (Comreg,1998).
Meteor won the lucrative license against Orange. With the entry of Meteor in the market Eircell and Esat would now have to be on guard, as a new competitor had arrived with its new ideas and business plan in its attempt in being the dominant firm in the industry.
Intensity of competitive rivalry; competition between firms in the telecommunication industry is cut throat, there are many similarities between firms such as the industry growth rate is slow , fixed costs are high...