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If you think the North American telecommunications landscape is confusing, consider Europe. On January 1, 1998, the European Union (EU) officially opened up the local telecommunications market to competition, virtually erasing the borders between its 15 member countries, each with its own distinct languages, cultures and residual regulatory routines. Chaos? You bet. Like a sudden jolt of high-octane espresso, the launch of full-fledged, open-market competition has sent hundreds of new telecommunication suppliers of every size and description scrambling madly for a stake in the new regime. Those looking for obvious long-term winners will be disappointed. Like the stock market, success will be driven by a number of factors-many still unknown. What is indisputable, however, is the market boom currently being played out across Europe. Rapid growth Although Europe lags many years behind the United States in terms of telecommunications development, the landscape is changing rapidly. According to the BT World Communications Report 1998/99, international traffic is already growing at a rate of 10% annually and the number of Internet hosts is increasing at a rate of 63% annually. Cellular usage is also expanding at a phenomenal rate of 50% annually. Indeed, the European Commission, which regulates the EU telecommunications industry, anticipates more than 40 million wireless users by the end of the year. To help manage all of the new digital wireless technologies, the European Commission recently decided to introduce a third-generation, integrated universal mobile telecom system (UMTS). The UMTS will provide an efficient means of implementing the large number of different personal intelligent communicators (PIC) and personal digital assistants (PDA) coming into use. Europe is also experiencing a massive fiber optic boom and several new transborder fiber networks are currently under construction or in development. Some networks are being implemented by existing players like British Telecommunications (BT) and Unisource (an alliance of Spanish, Dutch and Swiss carriers). Others are by new players like Qwest Communications International Inc., MCI WorldCom, Inc. and Hermes. Although today Europe's bandwidth prices are as much as 10 times higher than in the United States, these new fiber networks will inevitably bring prices in line with the United States. New suppliers The biggest change of all involves the staggering number of new national and international carriers now on the scene. In the United Kingdom, where open competition has existed since 1996, customers can now choose from more than 100 carriers offering international services. In addition, more than 150 carriers are licensed to provide services domestically. (U.S. Office of Telecommunications, 1999) None of the more recently deregulated countries, such as France, Belgium and Germany, has reached those extremes yet, but they may in the future. The investment possibilities in these recently liberalized monopolies are simply too good to overlook. According to the BT report, at least two well-funded new entrants offer cut-price services in every European country, with more expected soon. Some of these new investors are American players buying into Europe's huge growth potential. Others are existing regional carriers seeking to expand into new territory. Still others are offspring of local power utilities, cable television, software and computer companies. OSS in demand Whatever the origins, all of them will ultimately depend on cutting-edge operational support systems (OSS) for their survival. As the price market stabilizes and competitive differentiation becomes key, OSSs will give them the leverage they need to push ahead of the competition. Cutting edge OSSs will be essential for the incumbent national carriers too—partly for the development of new software-based specialty services, but also for universal interconnection between new and legacy systems with faultless interoperability. How these OSSs will communicate, and how so many languages will be negotiated, remains to be seen.  Incumbents reach out Of all the players in the new environment, the incumbents seem to be having the least amount of fun. Hungry new competitors are taking serious chunks out of their traditional fiefdoms and incumbents are slow to develop the fast-paced mindset required to generate successful new streams of revenue. Deutsche Telekom (DT) is a case in point. Eighteen months ago it was Germany's monopoly provider, the third largest carrier in the world, and accounted for 25% of the total European market. Today, German customers can choose from over 50 fixed-line operators, switching with ease from one to the other at any time. Constrained by high costs and high prices, DT lost about 30% of its long distance business to competitors in 1998 alone. (U.S. Office of Telecommunications, 1999) With its home markets under attack, DT has been struggling for a foothold in new European and international territories, but with little success to date. Its Global One alliance with Sprint Corporation and France Telecom has faltered from a lack of unified vision. In 1999, DT also lost a take-over bid for Telecom Italia to Olivetti, the old Italian typewriter company that now earns most of its money selling telecommunications services. Evidently, it is too early to predict who will come out on top, but when the current flurry of investment and cross-border activity quiets down, it will be time for the Big Shake-out, and then we will see who is still left around. From Current OSS, Winter 2000, Vol. 1, No. 2. Published by Eftia OSS Solutions. |