Digital Convergence Weblog: European Telecoms at the crossroads

September 22, 2006

European Telecoms at the crossroads

Ricardo Perez Garrido

Related to the coment by Julian on European Telecoms and their role in the ability of Europe to compete in this new stage of evolution of what has been called the networked economy - or what the EU calls the Information Society-, The Economist runs a story this week about the competitive landscape that the european incumbents are facing and the latest movements.

The fact is that while some governments are holding to a stake in their "national champions" -DT and FT- others, like Telefonica or Vodafone are trying to evolve rapidly and gain size and muscle to compete globally. The article refers to size as a value for a future negotiation with content providers, which assumes a future where content creators will be clearly leading way for the additional revenues that the industry needs after the revenues for voice minutes finally dissapear in the next years. Their competitive situation is quite different, and the news about TIM's sale by Telecom Italy have created not only surprise, but also a new opportunity to take positions in another european country, which has been part of the strategy of all the major companies, and in the next months we will probably see all major european markets as part of the competition amongst the big national champions. In the meantime, the regulator is adding some noise to the system with the regulation of the roaming prices.
While everybody is focusing on the new bundles, adding all their opperations and waiting for the customer to buy more and more multimedia content, the fact is that the killer application for multimedia and broadband are peer-to-peer netwoks, and only small number of content producers are being able to sell their products over these new channels - and most of them associated to the other big success that is the iPod.
Is there a chance for the survival of a european telecom giant? Some of them - Telefonica and Vodafone at the top of the list- have big chances of winning size and keeping their international profile, but they probably need home markets where they can develop and test new products and invent what the Information Society really is, not what the regulatory bodies would like it to be. That probably doesn't mean keeping a participatory stake as a nation to defend a company, but probably moderating the agresiveness with which national regulation impacts competition, and a careful analysis of the definition of competition and what is good for a society, and for its customers.

Posted on 22 September 2006 in Telecom

Comments

Regarding the roaming charges that the regulators want to reduce, to some extent I'd find that necessary. For example, calling within Europe, (and sometimes using the home operator's network abroad) is avoided by residential customers as it's quite expensive. And with a common standard such as GSM, the routing of calls between operators is not a difficult task. What is true is that operators in Spain e.g., are required to serve a lot of tourists in certain areas during the summer, and this requires extra-investment. But what shouldn't occur is that this roaming charges subsidize other services.

If the regulator's proposals are not too much intrusive and each case is deeply studied in particular to reach fairness, from my point of view that shouldn't be too damaging for the incumbents.

Posted by: Daniel Torres at September 25, 2006 02:47 PM

The Telecommunication sector have been totally regulated because it was consider as a "strategic sector"
The deregulation have been an opportunity for several entrepreneurship's (Martin Varsavisky is an example).
Now we are looking for the new killer application. But the new international environment, where everything is going so fast to stop using a regulatory system, could be not the answer.
I think that the solution is to help enterprises to develop services and products. May be with subventions or helping with taxes.

Posted by: Fco. Javier Suberviola at September 25, 2006 05:43 PM

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