Posts Tagged ‘economy crisis’

Global Crisis’ Effect to Telecom Companies

The world economic crisis has forced even the sturdiest of companies to bend down. And the telecommunications industry is no better. Most of these telecom firms are bracing for the worst, especially when the financial crisis caused a global recession.

Telecom operators and network providers have expected a downturn in the telecommunications market as early as 2006, yet the devastating results have only been felt recently.

Despite the global crisis, telecom companies have continued operations simply because they are providers of an essential service. Analysts even state that telecommunication businesses are likely to be shielded from the worst effects of the financial crisis because consumer would still use their phone, probably the most convenient way to communicate.

Some economists even say that, with the right playing cards, telecom companies may even strengthen their position on the consumer market in these times. Of course, operators are faced with a gargantuan task of whether to invest in new network infrastructure or to keep what spending power they have left to keep them afloat in such turbulent times.

Telecom companies stopped developing new services and focused its energy on their main services. At the end of the day, consumers would still use their handset to call, send SMS and log online. Other consumer offers that can enhance the mobile experience of consumers like download services (for games, music, applications, upgrades and themes) would still be available, although some companies give little importance to their other product offerings, since non essential services are used less.

Of course, the mobile market is also in survival mode in times like this. In previous years phone manufacturers have the luxury to release quite a number of phone models in one go. For example, Sony Ericsson can come up with five handsets with almost the same features at once. It is also the case with Nokia, when they can produce new handsets in an interval of months.  But now, they could no longer afford that since this practice is counterproductive – the phones they release can actually compete with the other models from the same manufacturer, resulting to some models not making its mark in the mobile phone market.

As times get tough, replacement cycles as well as the release of new handsets takes a longer time. Manufacturers are thinking twice before introducing high-end phones in the market as purchase of pricy handsets are typically slow. They focus their attention on designing trendy models that are cheap. Take, for example, the LG Cookie (released in some countries, specifically in the Asia Pacific). Its design and touch screen feature at such a cheap price make it a marketable product for wary consumers. For once, forget about WiFi connectivity and other technological features. The LG Cookie is a basic mobile phone with a decent camera and a touch screen interface.

Other telecom companies turn to developing markets. After all, some countries are not severely hit by the financial crisis that putting their investments there will not pose big risks.

There’s no guarantee that the telecommunications industry can escape the grasp of the global crisis. But so far, they have been resilient.