Telecommunications is no longer a key industry or state-owned enterprise (SOE) due to significant technological, economic and regulatory shifts, particularly since the late 20th century. While telecommunications remains critical to modern economies, its transformation from a monolithic, state-controlled sector to a diverse service that is competitively priced in the commercial economy. This reflects changes in infrastructure, use cases, and market dynamics. This shift occurred once mobile wireless telephony services took off. The evolution of telecommunications systems diversified and more and more uses and use cases arose. Telecommunications, both fixed line and wireless (radiocommunications) then took on a broader role in economic activities. Today we have besides fixed broadband services and mobile broadband services, a host of services involving Internet of Things devices, machine to machine communications and services that require ultra high reliability (such as driverless vehicles).
Evolution of Telecommunications Systems
Telecommunications has evolved from analog, fixed-line networks requiring massive state investment to decentralized, digital, and internet-based systems that thrive in the commercial economy which has brought about huge innovations. This shift has reduced the rationale for state ownership and diminished the perception of telecommunications as a singularly ‘key’ industry in the traditional sense. Although in some countries, such as Australia, a national broadband network is still a key industry. It is a core infrastructure platform, interconnecting major population centres via high-capacity fiber optic transmission lines (often described as a transit network or core network). It links Points of Interconnection (POIs) for regional exchange hubs where retail service providers (RSPs) connect to deliver internet to end users, this being part of the commercial economy.
The End of Monopoly
In the early-to-mid 20th century, telecommunications was a natural monopoly due to high infrastructure costs (e.g. laying copper lines) and economies of scale. State ownership or regulation – like AT&T’s monopoly in the USA or PTT (Post, Telegraph, Telephone) ministries in Europe – ensured universal service and controlled pricing. For example, in 1980, most telecom firms globally were state-owned, handling over 90% of phone traffic.
With the advent of digital networks, mobile telephony (post-1980s), and internet protocol (IP)-based systems (1990s onward) there was a lowering of barriers to entry in the telecommunications market. Cellular networks, fiber optics, and satellite systems required less centralized infrastructure than analog grids. By 2000, mobile penetration globally exceeded 10%, driven by private firms like Nokia and Motorola, i.e. not by states. The first commercial 2G network was established in 1991, launched by Radiolinja (now Elisa) in Finland, and was based on GSM technology. By 2001, the first commercial 3G network was established in Japan by NTT DoCoMo, using WCDMA (UMTS). Global adoption was relatively swift and by the early to mid-2000s 3G networks were established in Europe, North America, and Australia. This then evolved to 4G networks and now into 5G networks.
As telecommunication services could now be offered via the commercial economy, privatization waves began. For example, British Telecom in 1984, Japan’s NTT in 1985, and EU deregulation in the 1990s. Each fragmented telecommunications into competitive markets. Today, private firms (e.g. Verizon, Vodafone, Reliance Jio) dominate, with global telecom revenues projected at $1.5 trillion in 2025, largely from private players. States no longer need to own telecommunications to ensure access; regulation suffices to ensure access through the fixed line universal service obligation and guarantee found in many countries. Of course, from a Proutist view these telecommunications companies would operate as large-scale cooperatives. But in many respects when it comes to number of employees, they are not such large scale, as these enterprises do not need tens of thousands of employees.
The important point is that the evolution resulted in a decentralization away from state control and a diversification of infrastructure. Modern telecom systems now include cloud-based services, 5G, and IoT, which rely on distributed networks rather than centralized control. A distributed network in telecommunications is a type of network where processing, data routing and control functions are spread across multiple interconnected nodes, rather than centralized in one place. For instance, 5G deployment involves thousands of small cells, often built by private vendors like Huawei or Ericsson, not state monopolies.
Internet as Backbone
The internet, is governed by multi-stakeholder models (e.g. ICANN). It has overtaken traditional telecommunications as the primary communication platform. This reduces the strategic need for state-owned telecom enterprises, as no single entity controls the ecosystem. The shift to decentralized, interoperable systems means telecommunications is less about physical infrastructure (once a state forte) and more about innovation, where firms in the commercial economy excel. States do retain oversight (e.g. FCC in the USA, TRAI in India), but ownership is less critical. Though, importantly, the state is the legal authority for granting radiofrequency spectrum rights and in this regard radiofrequency allocation remains a key industry. Allocation is commonly based on over the counter administrative means with prices at shadow market value or free general authorisations, or where spectrum has to be efficiently and effectively used via auctions based on just profit theory (rational profit). That is, the state makes a just profit from selling the spectrum right and it is the proceeds from these auction is just at a level that gives a reasonable return to the taxpayer while ensuring that holders of spectrum rights cannot monopolise the market and so earn fair profits rather than profits that involve little effort.
Diversity of Use and Use Cases
The explosion of telecom use cases ranges from voice calls to streaming, IoT, AI, and cybersecurity. Again,0 this has diversified the industry beyond the scope of traditional state enterprises. This diversity drives competitive pricing in open markets and reduces telecom’s status as a standalone “key” sector, embedding it within broader digital ecosystems.
The vast range of expanded applications has meant that telecom now longer means voice and basic data (e.g. fax), as it once did, but a diversified digital communications service offering. State ownership aligned with public goods like universal phone access, critical during emergencies or for rural connectivity. Now those services are mandated by regulation, at least in the fixed line communications.
Modern use cases have exploded. Today, telecom enables streaming (e.g. Netflix uses 15% of global bandwidth), cloud computing, smart cities, autonomous vehicles, and telehealth. By 2025, IoT devices are expected to exceed 80 billion, relying on telecom networks for connectivity. Some of these applications require specialized services with low latency for gaming, high bandwidth for virtual reality, and firms in the commercial economy are best placed to innovate, including faster delivery of services.
Diverse use cases has fragmented telecoms into niches (e.g. enterprise solutions, consumer broadband), reducing the need for a single state provider. Private competition drives tailored offerings, unlike one-size-fits-all state models. Furthermore, telecoms is integrated with other sectors. This blurs the lines. Telecom is no longer distinct but part of a digital economy where tech giants (e.g. Google, Amazon) and startups shape connectivity. This is well beyond the scope of a state owned enterprise to manage or handle. For example, Starlink’s satellite internet bypasses traditional telecom infrastructure, while WhatsApp’s VoIP competes with legacy voice services.
Telecom’s share of GDP has also declined relative to tech. In the USA, telecom’s direct contribution to GDP is about 2%, compared to tech’s 10%+. Globally, internet-based services (e.g. e-commerce, $5 trillion in 2024) overshadow traditional telecom revenues. As telecom integrates with tech, it’s less a standalone “key” industry and more a utility enabling others. States don’t need to own utilities when markets ensure delivery.
Economic and Regulatory Factors
Economic liberalization and regulatory frameworks have further eroded state ownership, aligning with global trends toward privatization and market-driven innovation. Since the 1980s, over 80% of telecom SOEs globally were privatized, raising $1.3 trillion by 2010. In some countries like India (BSNL partial privatization) and China (China Mobile’s market listing) telecommunications moved to the commercial economy, but the state retained and ownership stakes, while encouraging competition. Placing telecommunications in the general economy has boosted efficiency and innovation, and where necessary foreign investment. For instance, post-1998 EU telecom liberalization, prices dropped 30% and mobile subscriptions soared. State ownership often led to bloated bureaucracies and underinvestment—e.g. India’s BSNL lost market share to private Jio due to slow 4G rollout.
Placing telecommunications in the commercial economy has also delivered better services than state monopolies, reducing telecom’s status as a state-controlled “key” sector. Even in China, where SOEs like China Telecom exist, private firms like Tencent shape digital infrastructure.
Regulation Over State Ownership
The modern way of oversight is that states now regulate spectrum allocation, universal service obligations, aspects of cybersecurity, consumer protection and competition rather than owning telecommunications networks. For example, the EU’s Digital Markets Act (2022) and USA’s Net Neutrality debates focus on fairness, not ownership. Regulation ensures public interest without ownership, aligning with telecom’s diversified role. States intervene strategically (e.g. Huawei bans for infrastructure equipment in the USA and Australia, but not for end-user equipment), but day-to-day operations thrive in the commercial economy.
Furthermore, international organizations like the ITU set technical standards, reducing the need for state enterprises to control innovation. Private 5G consortia (e.g. 3GPP – really a civil society type organization) drive faster advancements than government-led efforts.
Connection to Ethics
State-owned telecom followed a rigid public-service model unsuited to today’s dynamic use cases. Placing telecommunications in the commercial economy (though it happened via privatization) reflects a “moral” shift toward efficiency and access over dogmatic state control. This does risk prioritizing profit over universal service, but in most countries a fixed line universal service is mandated, so the tension is resolved to an extent. In any case, Sarkar suggested a 15% rational profit margin was acceptable, which is actually a quite high profit margin.
However, private telecom giants raise new ethical concerns, such as data privacy, complicating governance. But the obvious answer is a privacy law regime. Laws like the EU’s GDPR (2018) aim to enforce ethical conduct around privacy matters without state ownership.
Why Not “Key” Anymore?
Telecom remains vital but not uniquely “key” because it’s ubiquitous. Its integration into broader tech ecosystems dilutes its standalone status. Of course, it is critical infrastructure, so states have commonly designated it as critical infrastructure under critical infrastructure legislation which adds a host of regulatory obligations, but is designed to ensure continuity of services. For example, losing telecom would cripple economies (e.g. $500 billion global loss per day of internet outage), but so would losing cloud services or logistics.
Any remaining state ownership in telecommunications (other than a backbone network) is less about control and more about legacy or geopolitics (e.g. China’s Great Firewall). Globally, only 10% of telecom operators are fully state-owned in 2025. The reality is that diversity of use cases has fuelled innovation. Though it has also created gaps, e.g. in rural or remote areas where access to mobile telecommunications lag (e.g. 25% of sub-Saharan Africa lacks mobile coverage). In these cases private firms can also prioritize profit over equity, so government intervention is required. States stepping back risks moral failure if universal access is not enforced.
Trends such as 6G, quantum networks, and AI-driven telecom will further diversify the sector. States may reassert control in crises (e.g. cybersecurity), but ownership to states is unlikely to return.
Conclusion
Telecommunications is no longer a “key” industry or state-owned enterprise because digital systems, mobile networks, and internet protocols dismantled the need for monopolistic control, while diverse use cases – from IoT to streaming – fueled private innovation. Privatization, starting in the 1980s, aligned with economic liberalization, shifting state roles to regulation. Though critical, telecom’s integration into broader tech ecosystems reduces its singular importance in terms of being a key industry. Ethical tensions persist, e.g. private firms may neglect public goods, but the reality is that placing telecommunications in the commercial economy has generally driven access better than SOEs in most cases.
