The telecommunications sector is characterized by massive structural changes due to changes in technology as well as in the regulatory environment. Research and development activities become more and more important for the development of the industry as they determine the competitive position of firms and nations to a large extent. Both the equipment manufacturer and the network service provider depend on their technological competence. In the past, the national research and development systems of the industrialized countries in the telecommunications sector developed separately, and the systems that emerged were quite different from one country to another. With the liberalization of the telecommunications markets and the increasing international competition (so far mainly in the equipment sector), the different national research and development systems have come under pressure and begun to change. This paper presents theoretical and methodological remarks; provides an international comparison of research and development expenditures and patents; presents the characteristics of national research and development centers in Japan, the United States, France, the United Kingdom, and West Germany; and discusses the implications of current developments for future competitiveness in the international market. (GL)