How big is the U.S. business customer market for connectivity services?
AT&T earned about $7 billion in fixed network business revenue in its third quarter of 2018. Make annual revenue $28 billion. Total business segment sales, including mobility services, was about $9.2 billion for the quarter. So make annual business segment revenue $36.8 billion.
Verizon earned about $4.2 billion in fixed network business revenues in the third quarter. Make that $16.9 billion on an annualized basis. Verizon also earned about $16 billion in the third quarter in mobile revenues. Assume 14 percent of that is business customer revenues, or $2.2 billion. Annualize business mobile revenues to $9 billion. That in turn leads to annual business customer revenues of about $26 billion.
CenturyLink booked about $3.4 billion in U.S. business revenues. Make that $13.6 billion in annual business revenues. Based solely on sales by those three companies, U.S. businesses spend $76 billion on connectivity services. Add $18 billion in revenue earned by cable operators to that total and one derives $94.4 billion in annual business customer connectivity revenues.
Then add about 20 percent more revenue earned by all other service providers in the “telco” segment (20 percent of $76 billion), to add $15.2 billion. The grand total for business connectivity services then would be about $109 billion.
That is quite a bit lower than many other estimates.
By some estimates, U.S. business and government spending on communications is about $256 billion annually.
By other estimates, total U.S. telecom spending is about $376 billion annually. As a rule of thumb, business spending drives 40 percent at minimum to perhaps half of all telecom spending. So that would imply business connectivity spending (not including phones and other equipment) is between $150 billion and $188 billion.
By such measures, U.S. cable operators have gotten between 9.5 percent and 12 percent share of the U.S. business connectivity revenues market.
Another way to estimate U.S. business spending is to assume that U.S. telecom spending is about 25 percent of global telecom spending, which is perhaps $1.5 trillion. That implies U.S. spending of perhaps $300 billion. If business spending is 40 percent of that, one derives a figure of $128 billion. If business spending is as much as half of total U.S. connectivity spending, the figure could be $150 billion.
The point is that a conservative metric, the U.S. cable TV industry already has gotten as much as 16.5 percent share of the business communications market.
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