Investing in Telecommunications – The Problem with Broadband

Telecommunications is a blanket term that consists of Internet, video, and voice communication services. This includes Internet service providers and cell phones, two services that almost every American uses on a daily basis. With electronics such a big part of our modern lives, investors are looking to cash in by investing in telecommunications. Aside from telephone and Internet services, investors look into television and other forms of media to diversify their portfolios. Broadband Internet, satellite TV, satellite Internet, mobile Internet, cable TV, and online video chat services are far-reaching, influencing consumers around the globe.

Telecommunications may be, in fact, a no-brainer investment. This sector has consistently been one of the favorites for American investors because of the lucrative payouts and consistent growth of technology and demand. What some investors don’t realize, however, is that the American telecommunications sector is actually lagging behind its foreign counterparts where broadband Internet is concerned. These providers in the rest of the world offer services at lower prices, and these broadband services come with much faster speeds than that in the United States. Because of this, foreign investors have much more to work with in markets that are not overly saturated like the United States market.

This doesn’t mean that investing in broadband in the United States is a bad move. A broadband deficit can only mean that there is plenty of room for improvement, which could translate into earning potential. Domestic investors can also take advantage of foreign markets by buying stocks from countries that are leading technology and Internet development. Some US-traded stocks that exist in promising foreign markets include America Movil SAB de CV, China Mobile Ltd., Millicom International Cellular S.A. and VimpelCom Ltd.

Investors not wanting to dunk a huge amount into one investment may consider exchange-traded funds (ETFs) from the international telecom industry. These include SPDR S&P International Telecommunications Sector ETF and iShares S&P Global Telecommunications Index Fund. The more innovative domestic companies will be startup endeavors that are created on a foundation of brand new ideas, and plenty of these types of investment opportunities exist and are in need of investors to help get them started. The US is aware of the lack of telecommunications technology and has implemented certain programs like the Broadband Stimulus, which is one indicator that the future will only get brighter for investing in telecommunications domestically. In the meantime, weigh all options before making any major financial investment decision.

About Richard Wilson