SURVIVING THE TELECOM MELTDOWN: Competition in the Eastern European American Long Distance Market and How It Affects the Industry Establishment

Countries covered: United States By 2005, U.S. ethnic consumers will spend over $65 billion dollars on local, long distance, Internet access, and wireless services, approximately half of the current expenditures for all U.S. telecom consumers. Despite this situation, giants like AT&T, MCI, and Sprint are not taking advantage of the benefits that ethnic markets offer, losing potential customers to small providers like Econodial and Master Call. As a result, a dozen of ethnic telcos currently control up to 70 percent of the ethnic long distance market and are aggressively expanding their service offerings to obtain a strong position in other industry sectors as well. This report includes: Overview and description of Eastern European American (EEA) markets and consumer demand of telecommunication services in these markets Evaluation and analysis of each particular Eastern European American market (Polish, Ukrainian, Russian) Description and in-depth profiles of major telecom players (revenues, owners, strategic plans) in the EEA market, and their current tactics and strategies Rankings and ratings of major players in the EEA market based on the market share and customer satisfaction surveys Major sources of information affecting consumers when they are choosing a particular LD services provider Ranking of factors that could influence EEA consumers to change their LD services provider Tips for telecommunication companies on creating bundles for EEA consumers Recommendations for providers regarding targeting each particular EEA market Developments in the telecommunications industry and their importance to the EEA market Overview of major players in the ethnic telecommunications market (IXCs, RBOCs and CLECs) In-depth analysis of various trends in the telecommunication industry, especially in the long distance (LD) services market

Imagine that instead of pitching 1-800-CALL-ATT the ever annoying Carrot Head is pitching Ma Bell’s prepaid calling cards in Polish. This is no joke. By 2005, ethnic consumers will spend over $65 billion dollars on local, long distance, ISP, and wireless services--approximately half of the current expenditures for all U.S. telecom consumers. This is not a big surprise if you consider census information - altogether ethnic minorities make up approximately 100 million Americans. Who calls home the most? After Latin America, Eastern Europe is the second hottest destination for international phone calls.

Giants like AT&T, MCI and Sprint are largely missing out on this market, beaten by tiny competitors with the names like Econodial and Mastercall. A dozen of ethnic telcos currently control up to 80 percent of the entire ethnic long distance market, a stunning success given some of these operations have revenues that are less than the amount of Carrot Head’s contract with AT&T.

Are these carriers immune to telecom industry’s ills? Of course not. Their customer acquisition costs have doubled and price-based competition has come to a dead end as international prices have come to an all time low last year. Some are troubled by debts, many need to invest in better customer service and fatter service bundles, and many are still driving towards profitability.

That said, ethnic telcos are still registering explosive revenue growth, an indication that a major niche has been uncovered in the U.S. telecom market and was not addressed properly by the large competitors.

In this report we review the Eastern European American (EEA) markets and assess their telecom needs. We evaluate the competitiveness of the Polish, Ukrainian, and Russian markets and describe, profile, and analyze, the major players selling in EEA markets.

The purpose of this study is to assist managers and marketers from the telecom industry in identifying opportunities in the Eastern European American markets and analyzing major market players, as well as to familiarize the general business audience with these markets and telecom trends associated with them.

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