The Attractiveness of Telecommunication Industry in 1998 Ireland

1903 Words Feb 19th, 2014 8 Pages
The Attractiveness of Telecommunications Industry in 1998 Ireland

The Irish telecommunications industry has been heavily regulated since the 1980s. A state-owned body, Bord Telecom Eireann, being simultaneously the largest employer in the country and the provider of the poorest quality Telecom Systems in Europe, introduced the controls that fundamentally eliminated the competition and created a monopoly. This seemingly new, but propitious industry faced numerous obstacles, as its capital requirements related to infrastructure were excessive. The investors were not willing to risk their resources for the supply of telephone lines, routers or essential networks. This combination of high prices, subdued investment and poor infrastructure
…show more content… 8. Despite the fact that the market penetration rate in mobile phone industry increased in 1998 to 25.5%, the customers still possessed a low bargaining leverage and consequently were unable to influence the decisions or strategies or the primary players in the mobile industry.

4. Threat of Substitute Product
The threat of substitutes in the telecommunications industry in 1998 was almost non- existent, as buyers’ inclination to substitute was extremely low. Despite the growth of the mobile sector to 40% in its revenue, the delay of the entrance of Meteor to the Irish market until 2000 diminished the threat of more competitive prices for Eircell and Esat Digifone. The high switching costs, required investment in the new, quite uncertain market and product development have certainly reduced the threat of incoming companies in duopolistic Irish telecom market of 1998 3. The two prime movers in the market enjoyed increased opportunities, as after entering a contract a customer was attached to the network for a prolonged period of time.

5. Bargaining Power of Suppliers
The Bargaining Powers of suppliers of the two major players in the industry was extremely high. As in 1998, the connection could only be maintained through costly building of base towers/masts with antennae, networks co-operated. Eircell, that was the owner of the majority of masts in the country

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