major telephone companies

Solution

First of all let's look at the major telephone companies in the last two decades. In 1990's, there were eight major US companies providing local telephone service. GTE, "Baby Bells," (the operating firms which spun off from the old AT&T) and five significant long-distance companies which are AT&T, MCI, Sprint, LDS WorldCom and Qwest. In a few years, these 13 companies have merged into five telecommunications giants, in a series of record-breaking merger deals. LDS WorldCom acquired MCI and now has acquired Sprint. Southwestern Bell, Pacific Telesis and Ameritech have been combined to form SBC Corp. Bell Atlantic and NYNEX, merged, and the new Bell Atlantic acquired GTE. Qwest acquired the US West, and is now expected to merge with BellSouth, after BellSouth's failure to acquire Sprint. Meanwhile AT&T, which retains the lion's share of the long distance market, acquired two huge cable television and Internet access companies, TCI and MediaOne, as well as McCaw Communications, a leading cellular phone company.

We can consider AT&T as the market leader with its substantial market share and leading position in developing new technologies and business models. SBC corp. is another strong firm that plays as a market challenger and follows an aggressive strategy to gain market share. On the other hand companies like Bell Atlantic can be categorized as "safe playing" market followers. They tend to take less risk. Bellsouth is a nicher because it focuses on specific segments and tend to acquire companies in cellular industry (like Sprint). It gains competitive advantage through effectiveness rather than efficiency. As the firms merge and form bigger organizations, the degree of competitiveness decreases in the telephone industry. Most of these firms carefully follow the principles that fit to their positions in the market. For example AT&T is continously trying to expand the martket by finding new uses of the products and services and focuses on reducing costs. Today it has the lion share in the long-distance services and calling cards. SBC also has important price discounts and the firm continously introduces new services and fill the gaps that the leader doesn't perform. On the other hand Bellsouth avoids the leader and go after firms its own size or smaller. It has a smaller base but it knows this customer base intimately.

Sources

1. Monopolies grow ever bigger: US telecom merger tops $100 billion mark
http://www.wsws.org/articles/1999/oct1999/merg-o07.shtml

2. The telephone industry
http://www.ims.ccsu.edu/Tele.htm