Economics: Overview of the Telecommunications Industry

Running head: ECONOMICS
ECONOMICS
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Executive Summary
Australian telecommunication sector has grown hugely in the past years and the rate of growth
has been greater in the bigger firms. Similarly, the telecommunication sector has successive
grown in New Zealand and UK. Market concentration of the telecommunication sector in these
economies are analyzed with respect to the Herfindahl-Hirschman Index (HHI). The economic
profits and market structure of these economies are analyzed with respect to the market
concentration value. The price of the goods are analyzed and in case of high prices, several
government policies are denoted.

Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................4
Market structure and concentration of the telecommunication industry in Australia, UK and New
Zealand............................................................................................................................................4
Attainment of economic profits with respect to premiums in pricing.............................................9
Strategies used by government to lower the prices and its impacts..............................................10
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................13

Introduction
The telecommunication industry is a huge industry that comprises of the provision of
services like wireless connections, communication equipment, long distance carriers, domestic
and foreign telecom services, broadband and mobile networks. Fixed broadband and mobile
phone services are the two most used services in the telecommunication industry. Australia has
one of the most successful sectors where the market structure is highly competitive and the
revenue has successfully grown in the past years. The shift from wired source of
telecommunication to wireless networks has effectively increased consumer demand in these
areas of data connectivity and mobile connections in New Zealand, Australia and UK (Bhatti,
Abareshi & Pittayachawan, 2017). The aim of the paper is to determine the market concentration
of the telecommunication industry in New Zealand, UK and Australia and denote the market
competitiveness in these economies.
Discussion
Market structure and concentration of the telecommunication industry in Australia, UK
and New Zealand
The Australian telecommunication market has been dominated by big firms like Optus,
Telstra, NBN Co Limited and Vodafone Hutchison Australia (VHA), who had generated huge
profit margins in the past years. Mobile subscriptions has significantly increased in the past
years. Thus, the market structure of the telecommunication industry is oligopoly where the
market is mainly governed by few big firms who has extracts huge revenues. Oligopolistic
market structure is governed by few firms with infinite number of buyers. These firms provide
more or less similar prices that is differentiated by quantity, pricing, services and advertisements.
Firms under an oligopolistic market are dependent upon each other as one’s strategy will have a
significant effect on other firms (Behl, 2015). They try to keep a high price and refrain new firms