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Surviving TheTelecom Meltdown: Competition in the Eastern European American Long Distance Market and How It Affects the Industry Establishment
Global Advertising Strategies, March 2003
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 entireethnic 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
1. review the Eastern European American (EEA) markets and assess their telecom needs.
2. We evaluate the competitiveness of the Polish, Ukrainian, and Russian markets anddescribe, profile, and analyze, the major players selling in EEA markets.
The purpose of this study is to assist managers and marketers from the telecom industryin 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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