Telecommunications

Telecom companies build and operate the wires, cell towers, and fiber networks that carry voice and internet traffic. They sell access to that network as monthly subscriptions — mobile plans, home broadband, business circuits.

It's a heavy-infrastructure business. Building a national network costs tens of billions. Once it's built, the marginal cost of adding a customer is small. That's why it's a few big players, not many.

Build cell towers and fiber connecting them. License spectrum from the government (expensive). Sell SIM cards and plans. Maintain the network.

Most of the cost is upfront infrastructure. The trick is getting enough monthly subscribers to pay for it.

Mostly monthly recurring revenue. Mobile plans (the big one), home internet, business circuits, fiber to towers (selling backhaul to other carriers).

Increasingly: bundling. Combining wireless + home internet + streaming services into one bill, which keeps customers from switching.

Telecom is a near-saturated market. Everyone already has a phone and home internet. New customers come mostly from stealing from competitors — which means heavy promotional spending.

The good news: customers rarely cancel. Churn is low, cash flow is steady, dividends are huge. The bad news: pricing power is limited and growth depends on convincing people to pay more for faster service (5G, fiber).

Mobile carriers (Verizon, AT&T, T-Mobile) sell wireless plans. T-Mobile has been the fastest grower in recent years.

Cable companies (Comcast, Charter) sell home internet and TV, increasingly bundled with mobile service that rides on a wireless partner's network.

Heavy debt loads — most carriers carry $100B+ in debt to fund networks. Rising rates make that more expensive. Cord-cutting from cable TV. And the threat of Starlink or other satellite internet entering urban markets eventually.

Regulation around net neutrality and spectrum auctions also matters. And the 5G/fiber buildout is far from done.