U.S. Telecom Industry Losing Market Share

The U.S. telecommunications industry is still a world leader in high-tech products but sales of its low-end goods have fallen, causing a drop in the overall global market share, a Commerce Department report said Thursday.

“The report demonstrates that the U.S. industry remains strong, but the long-term trends are not going in a positive direction,” said Under Secretary of Commerce Michael Farren.

Farren told a news conference that although private industry must take the lead to regain competitiveness, the government was doing its part to help.

“In an industry as pivotal as telecommunications, U.S. companies must maintain their lead in the Pacific Rim, the New Europe and our own hemisphere,” said Commerce Secretary Robert A. Mosbacher in a statement issued with the report.

Mosbacher called on industry to spend more on research and development, improve manufacturing technology and stress exports further.

“The U.S. government will do its part by aggressively pursuing measures to open markets in countries that erect unfair barriers,” he added.

The report, ordered by Congress, said U.S. producers will likely remain competitive in such high-end telecommunications as advanced switching and information services, but not in more basic telephone equipment.

It said U.S. companies were disadvantaged compared to Japanese and some European companies because American workers lacked the needed education and training of their competitors.

The report added that foreign market barriers and state subsidies granted to some overseas companies created drawbacks for American firms trying to sell products abroad.

The report said the overall trade picture was mixed, citing both last year’s export increases, which cut the telecommunications trade deficit by $673 million, and the remaining substantial deficit of $1.9 billion.

U.S. market share in fiber optics fell to 50% in 1987 (the latest year available for detailed figures) from 75% in 1984, and in office data switching equipment to 36% from 100%, according to the report.

But in other areas, the United States held its ground. The report said the U.S. share in voice mail systems remained at 100% during the period and in local area telecommunications networks fell only 2% to 98%.

The report said current Administration proposals that would help competitiveness include capital gains tax relief.