Identification

• The Global Industry Classification Standard (GICS) describes telecommunication companies as those that provide fixed-line communications, cellular and paging phone services and providers of high bandwidth or fiber-optic cable network companies. Telecommunications companies can be integrated providers of both fixed-line and cellular communications or focused specifically on wireless or alternative communication channels.
  
  

History

• Telecommunications started with Western Union for telegraph and the Bell Companies for telephone in the second half of the 1800s. The Bell System eventually controlled the majority of U.S. phone services until it was broken up in 1984 into AT&T for long distance and seven regional telephone companies known as the Baby Bells. In 1983, the first cell phone service was offered. Since the mid 1980s, there have been numerous mergers and spinoffs in the telecommunications industry. At the same time, the growth of cellular and mobile data services significantly changed the telecommunications industry.
  
  

Component Stocks

• The telecommunications sector of the S&P 500 has a total market capitalization of $330 billion as of October 2010. This amount represent about 3.3 percent of the total value of the S&P 500 stocks. AT&T, Inc. makes up about half of the total value of the total value of the telecommunications sector, with a market cap of $165 billion in October 2010. Other large U.S. telecommunications companies include Verizon Communications, with a market cap of $92 billion and Qwest Communications, worth $11 billion.
  
  

Potential

• Investors can buy individual telecommunications stocks or purchase sector focused exchange traded funds (ETFs) that will hold a portfolio of stocks in the telecommunications sector.
  
  

Considerations

• Investors who are looking for telecommunications exposure in their investment portfolios should consider international stocks according to an article from Bloomberg BusinessWeek. Global telecommunications stocks can provide exposure to rapid cellular and Internet services in countries such as China, India and Brazil.