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Telecom industry rings in 9 percent growth, study says

Despite increased competition in the telecommunications market, established companies are still able to increase sales by tapping the growing markets for high-speed services.

Despite increased competition in the telecommunications market, established communications companies are still able to increase sales by tapping the growing markets for high-speed services, according to a new government report.

An annual survey of telecommunications providers released today by the Federal Communications Commission (FCC) found that industry revenue grew 9 percent this year to $269 billion, up from $246 billion last year.

New voice and high-speed Internet services have created new opportunities in the overall market as consumers and businesses look for new ways to expand their information networks and, as a result, spend more money than ever on communications.

Incumbent providers, namely the local Bell phone companies, managed a 4 percent increase in total revenues to $112 billion, up from $108 billion a year ago.

Bell companies have benefited from the increasing interest in dial-up Internet access and the resultant demand for second phone lines and also have seen growth in the deployment of digital subscriber line (DSL) services.

Competitive local communications providers are growing rapidly, with revenue up 55 percent to $5.7 billion from $3.4 billion a year ago. Despite the skyrocketing growth, competitors to the Baby Bells still managed to garner less than 5 percent of the total revenue for the industry.

Wireless providers also saw a spike in revenues, up 30 percent to $48 billion from $37 billion last year. Incumbent telecommunications providers are among the most aggressive players in wireless, another factor in their ability to grab additional sales.

Long-distance revenue showed just 3 percent growth, to $108 billion from $105 billion. The FCC attributed the slow growth to "sharp reductions in the price of international calling," which resulted in part from FCC actions designed to encourage foreign governments to offer lower connection rates.

Slow revenue growth in long distance isn't news to investors, who have watched Sprint and WorldCom warn Wall Street of lower earnings expectations. AT&T, meanwhile, is considering restructuring its business in an effort to boost its foundering stock.