PS Consultants - ideas & solutions

Telecom Deregulation in Europe
February 1998

January 1st 1998 saw the long awaited opening up of the 200 billion ECU European telecom market, bringing competition to many markets for the first time. It's worth reminding ourselves that the UK enjoys one of the world's most liberal telecom markets (next to the USA) so what does this mean for Europe? When BT was privatised at 15.01 on Monday December 3 1984, attitudes ranged from the unbridled glee of the City's hooray Henry's and their multiple fraudulent applications, to those dark forebodings from the socialist persuasion who declared that the end of the world was nigh, and no one's phone would ever work again.

Well, if you can cast you mind back far enough, you will realise that phones didn't actually work very well before that date. In fact, BT and before it the GPO were one of many traditional Aunt Sallys of institutionalised British bureaucratic nationalised inefficiency that we all loved to hate, personal dogma permitting.

However, just as those who declared that folks' brains would explode once they exceeded 30mph, the inestimable Luddite faction of British public life had been over cautious, and the result of privatisation was a phone system that become the envy of the world amongst nations struggling to deal with the sort of heritage system that BT was faced with modernising.

BT did all this largely because at the same time as being unhitched from the uncertainty of politics, it was granted a monopoly, and there is nothing so efficient as a monopoly when allowing a business to plan its future spending and development plans. I imagine that discussions on the board of board went something like:

Director of technology "Hey, I fancy another £billion to spend on new toys for the network next year"

Director of Finance "OK Cyril, would you want that in fifties or will used fivers suit you then..?""

So privatisation was good for technology, and next up came the de-regulation process, when the carefully protected monopoly was dismantled a bit at a time to allow competition the sharpen the reactions of the marketplace.

BT was lucky, because for a long time the only competition it faced was from just the sort of competition that they would have specified if given the chance: Mercury Communications (now Cable & Wireless). And then the cable companies joined the fray in earnest, and around 5 years ago when the cable companies realised that cable TV was largely a waste of time, but the technology had suddenly drawn the focus to telecommunications instead, all hell broke lose.

UK telecom deregulation gathered pace, and now just about anyone can bowl along to Oftel and ask for a telecom operators license, it seems. There are numerous call-savers schemes and the consumer has never had it so good, albeit the obfuscation of marketing makes it difficult to compare one charging scheme with another.

Europe makes the transition at a time when all the precedents are set - there is nothing like BT's original heritage of an electromechanical museum piece to shackle them and provide the opportunities for innovators (however clumsy, like Mercury) to trump the technology. Already the EU Monopoly Commission has urged the German government to sell Deutsche Telekom's extensive cable network. In the Commission's view, Deutsche Telekom is so well emtrenched that it will take a considerable amount of time for competitors to gain ground, and the sale of the cable network would greatly assist competition.

In France, (the country that perversely chose the SEECAM colour TV scheme instead of PAL, you will recall), the socialist and communist parties view the deregulation of France Telecom as an assault against the company's public service responsibility. Both groups displayed their distaste by introducing several hundred amendments in an attempt to delay the bill's passage.

Bottom line: Will a UK operator be able to set up in Germany or France as readily as a French or German operator can set up in the UK..? Have a guess…