In telecom, the vendor business suddenly looks very different

The communications equipment industry is one of those that lends itself to oligopoly.

The small number of customers are cost-conscious and risk-averse, while suppliers traditionally have had the happy ability to lock in their relationship with legacy kit.

The sector experienced the brief excitement of the telecom bubble and the subsequent downsizing, after which it returned to obscurity while investors and media turned their attention to exciting startups like Google and Facebook.

Now nearly two decades later networks are again thrust into the limelight. 5G is a matter of national security, Chinese firms are sanctioned and US officials want to know why they no longer have a national champion.

Washington’s heavy hand hasn’t been a particularly sensible way to encourage competition, but it has opened the way for smaller players like NEC and Samsung.

As the Wall Street Journal pointed out, Samsung’s 7.9 trillion won ($7.1 billion) multi-year 5G contract with Verizon “compares with the roughly 5 trillion won Samsung’s network business racked up in revenue in all of 2019.”

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