Telecommunications Resellers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,600 telecommunications resellers in the US either sell local, long distance, or wireless phone services using other companies’ networks, or sell and install phone systems for businesses using third-party equipment. Local fixed line service resellers include competitive local exchange carriers (CLECs) who resell local phone services using the networks of incumbent local exchange carriers (ILECs). Equipment resellers resell products from equipment suppliers (Avaya, Cisco, etc.) and provide system integration services for small and medium businesses.

Transition To Internet Telephony

The telecommunications industry is in the midst of a transition from traditional fixed line circuit switching for voice traffic to packet switching of voice, data, and video over the Internet and wireless networks.

Dependence On Economy

Spending on telecommunications services is driven by business activity and demand for telecommunications resellers falls when the economy is weak.

Industry size & Structure

An average telecommunications reseller has about $11-12 million in annual revenue and 29-30 employees.

    • The US has about 1,600 telecommunications resellers who generate about $19 billion in revenue and employ 49,000 workers.
    • The industry is moderately concentrated - the top 50 companies account for 82% of industry revenue.
    • At the same time, there a large number of small companies - about 79% of telecommunications resellers have less than 10 employees.
                            Industry Forecast
                            Telecommunications Resellers Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Mar 6, 2023 - Biden Administration Announces Cybersecurity Strategy
                            • The Biden administration revealed a new National Cybersecurity Strategy that seeks to rebalance the responsibility to defend cyberspace by shifting the burden for cybersecurity away from individuals, small businesses, and local governments, and onto the organizations that are most capable and best-positioned to reduce risks, according to a White House statement. The initiative is intended to expand the use of minimum security standards for critical infrastructure and establish a common set of regulations to make it easier to comply with that baseline. It would also shift some liability for software and services to developers that ignore recommended cybersecurity practices or ship products with known vulnerabilities. Administration officials say that they hope to work with Congress and companies on legislation that bars total liability and sets tougher standards for "specific high-risk scenarios." A safe harbor provision would protect companies that make a sincere effort to develop secure products.
                            • Global smartphone shipments decreased nearly 20% year over year in Q4 2022, according to International Data Corporation (IDC), making it the largest-ever quarterly decline. “We have never seen shipments in the holiday quarter come in lower than the previous quarter. However, weakened demand and high inventory caused vendors to cut back drastically on shipments,” said Nabila Popal, a research director with IDC’s Worldwide Tracker. Popal noted that smartphone sales did not necessarily drop during the quarter, but the lack of need for additional shipments denotes the overall decrease in consumer interest. Anthony Scarsella, a fellow research director for IDC’s Worldwide Quarterly Mobile Phone Tracker, also noted declining consumer interest: “We continue to witness consumer demand dwindle as refresh rates climb past 40 months in most major markets,” he said.
                            • The US office vacancy rate, an indicator of demand for telecommunications services and equipment, was 18.7% in Q4 2022, up from 18.5% in Q3 2022, and 18.1% in Q4 2021, according to real estate analytics firm Reis. It was the highest vacancy rate for offices since 1992. Demand may decrease as the vacancy rate increases.
                            • Hackers are turning to traditional IT remote monitoring and management tools to execute cyberattacks on businesses and other organizations. Legitimate monitoring and management tools used by organizations including telecommunications resellers are being used by hackers to discover client-side applications and to conduct exploitation/post-exploitation activities. “The problem of course, is their effectiveness for legitimate security professionals make them effective for cybercriminals who crack them to remove any licensing requirements to use for free,” according to Chris Clements, vice president of solutions architecture at cybersecurity firm Cerberus Sentinel. “There are numerous hacker malware packages that are great for controlling computers, but they run the risk of being detected and removed by endpoint protection tools like anti-virus software and endpoint detection and response software,” Clements said. “Remote monitoring and management tools by and large eliminate this possibility as they are very often deployed for legitimate IT administration purposes.”
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