PESTEL analysis of the telecommunications industry
This is a comprehensive PESTEL analysis of the telecommunications industry. It draws examples from several countries to evaluate the industry’s global nature and prospect. No doubt that the telecommunication industry continues to be a major player in the global economy. It impacts on individuals and organisations alike; however, it is also affected by some forces beyond its control.
Political factors that affect the telecommunications industry
The telecommunications industry is influenced by many different political factors. The regulations and laws that govern the industry are constantly changing, and therefore, the business leaders in this industry need to be on top of these changes to stay competitive.
Different governmental policies and actions can have a major impact on the telecommunications industry. For instance, this industry in Canada is among the world’s strictest foreign ownership rules which many critics argue contributes to the high prices for mobile and internet service.
Political rivalry can also impact on the telecommunications industry like many other industries. For example, several countries (notably Australia, New Zealand, Japan, Taiwan and the U.S.) have decided to ban and phase out Huawei’s products within their mobile networks (Buchholz, 2020).
Economic factors that affect the telecommunications industry
A key area of discussion in the PESTEL analysis of the telecommunications industry is the economic environment. Certainly, every industry is affected by the economy to some extent. The telecommunications industry is no different in this regard.
The telecom industry is driving the global economy in many ways. From the innovation and investment that it brings, to boosting the global competitiveness and helping to create jobs for people – it makes a huge difference.
When economic conditions are stable, people usually spend a lot of money on luxury goods. Expensive smartphones are literally a luxury for many people around the world, and therefore, they may not purchase one if they are financially strapped.
Many people are nowadays using social media to promote their businesses, while many others are simply running their businesses on social media and other platforms. This is certainly good for Internet service providers as without the Internet, online business does not exist.
Telecom companies consider the economic circumstances of their customers, and therefore, come up with products and services accordingly. For example, Apple and Samsung products are generally considered expensive, while Xiaomi, Motorola, Oppo, and many others are often perceived as providing affordable products and services.
Many telecom companies are now outsourcing their networks to third-party providers because there are significant savings for both upfront capital costs and operational costs, which can be passed onto customers in the form of lower prices.
Social factors that affect the telecommunications industry
The telecom industry is a vital part of today’s society. Whether it is through cell phone, cable provider, or internet provider, people rely on these services to function day to day. Telecommunications plays a role in how people communicate and interact with others. It also has played an important role in shaping the way societies function today.
The telecommunications industry is a dynamic and fast-moving field. Technology evolves at a rapid pace, and the industry is constantly adapting to technological shifts in order to stay competitive. A good example of this phenomenon is the way smartphones have changed the world in just a few short years. They are now more prevalent than laptops, they cost much less than laptops did just a few years ago, and they have created entirely new industries that did not exist before smartphones became mainstream—like ride-sharing apps or online shopping apps.
More and more people are using social media for business and entertainment. From rural areas in developing countries to town centers in developed ones, this phenomenon is clearly evident though with some variations. Many people love to remain connected on the go. This is simply their lifestyle. This social factor offers huge opportunities for telecom companies to offer their customers better internet connectivity and devices.
Technological factors that affect the telecommunications industry
In today’s world, technology is everywhere. It is used as a means of communication, education, and entertainment. Surely, the telecommunications industry has been affected tremendously by the introduction of new technologies. The costs of cell phones and internet plans have dropped dramatically in recent years, while at the same time, the quality and variety of products offered has increased significantly.
Jablonski (2021) states that 5G is going to change the society fundamentally. It involves the whole range of new technology, infrastructure, and mobile connectivity. It is not only changing the speed at which people communicate, but also changing their ability to share information. Therefore, a big race is well underway among telecom companies to get the best out of 5G technology which can significantly boost their market share and public image.
Environmental factors that affect the telecommunications industry
An important area of discussion in this PESTEL analysis of the telecommunications industry is the environment. The telecommunications industry has always been more technologically advanced than many others. It offers a good alternative to transporting goods and/or people by carrying information in different forms such as written, oral, and visual.
However, with more technologically advanced products and services, there are also more dangers that come with it. According to ETNO (2021) the telecommunications industry contributed 2.6% of total global carbon dioxide (CO2) emissions in 2020. Therefore, companies need to make their products and services more sustainable.
Legal factors that affect the telecommunications industry
The telecommunications industry is affected by many different legal factors. For example, in the USA, the Telecommunications Act of 1996 established a framework for how to provide nationwide telephone service while preventing monopolies that could damage competition in this sector.
Similarly, individual countries have their own laws to regulate telecommunications providers. For example, the UK has The Communications Act 2003, and Australia has TIA Act 1979. Telecom companies must abide by the rules of the land where the operate.
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Last update: 20 January 2022
Buchholz, K. (2020) Which Countries Have Banned Huawei? Available at: https://www.statista.com/chart/17528/countries-which-have-banned-huawei-products/ (accessed 19 January 2022)
ETNO (2021) Connectivity & Beyond, available at: https://etno.eu/library/reports/96-connectivity-and-beyond.html (accessed 20 January 2022)
Jablonsky, S. (2021) The next generation of communication: How 5G will impact our businesses and our lives, available at: https://www.forbes.com/sites/forbesbusinesscouncil/2021/04/19/the-next-generation-of-communication-how-5g-will-impact-our-businesses-and-our-lives/?sh=1ad409bb69ba (accessed 19 January 2022)
Author: Joe David
Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.