British Telecommunications Plc wants it now, the Deutsche Bundespost Telekom wants it too, but not yet, and France Telecom wants to think about it a bit more. All are agreed, however, that competition in European telecommunications is more or less inevitable, as a debate at last week’s Networked Economy Conference in Paris, organised by Communications Week International, demonstrated. France, Germany and Italy came out on the sceptical side, with the UK, the Netherlands and North America on the other. Although the positions hadn’t changed, the exchange was rousing. Iain Vallance, chairman of British Telecom, quipped that the attitude of some of Europe’s PTTs toward competition is like that of St Augustine toward chastity: O Lord, let me be chaste, but not yet! Vallance took direct aim at the three sceptical competitors. The argument in Italy that ‘we’re not ready for competition’ goes something like ‘since we haven’t been able to serve our customers as we should up until now, no one else should be allowed to!’ he said. In Germany, the Bundespost Telekom’s argument is that it has to complete the reconstruction of eastern Germany’s telecommunications infrastructure before it can allow competition, Vallance said.
Procrastination
But should all of those people who had no part in that decision be made to wait?, he added. France Telecom is the most ready and able to compete of any of the European PTTs, but it is waiting too. He jibed that maybe it is waiting for some cross-shareholding agreements with Bundespost Telekom. The arguments for procrastination must be taken apart, Vallance said. The notion that without a monopoly the country will be without universal service, for example, is just not true, if you look at the US, Sweden [and] the UK he pointed out. It is precisely timing that should be the topic of discussion, said Ben Verwaayen, president of Koninklijke PTT Telecom Nederland NV, which is scheduled for privatisation next year. The market will be liberalised. If we continue debating this among ourselves, the rest of the world, our customers, will get fed up, he declared firmly.
By Marsha Johnston
But is competition an end in itself? Is it the only way telecommunications will develop in Europe? asked Marcel Roulet, president of France Telecom. In an environment as complex as European telecommunications, we must be wary of short cuts. Any change must protect universal service, must treat firmly the non-European aspect of competition and must provide a level playing field. La Stet SpA, Italy’s state-owned telecommunications holding company, favours liberalisation, but opposes a system in which new telecommunications operators could take over just the most lucrative business, such as national long distance, which subsidises local calls, said Umberto Silvestri, STET’s chief executive. Looking at what happened in the US under the push of liberalisation in the air transport market, you can’t necessarily say it was better afterward, Silvestri said, carefully avoiding to choose the US telecommunications system as his example. Deutsche Bundespost Telekom board member Dieter Gallist took a similar line to both Roulet and Silvestri, but was pessimistic about competition in Germany because of the constitution, which says that the government must own the postal and telecommunications services, and a change in the constitution requires a two thirds majority in both the Bundestag and Bundesrat. Along with privatisation, Gallist said the political will to rebalance tariffs exists, but when it comes to specifying the timeframe, we may have more problems. For now, he added, Telekom is very cheap on short distances, but not so very cheap on long distances. Nevertheless, he continued, We can’t just say that competition and free market are solutions. I agree with Roulet that everyone has to fight for equal conditions, and then we are happy to share. We should balance monopoly and free market. When I look at my colleagues in the US, I can’t say that total competition is total success. Regardless of their
positions on competition, everyone acknowledged the need for, and the limitations of, partnerships. In response to a question from Communications Week editor Denis Gilhooly about whether Eunetcom, Syncordia and Infonet could be merged in some meaningful way, Roulet said, We set up Eunetcom to compete with Syncordia.
Diminished returns
Vallance said further that the chances that British Telecom would enter into Eunetcom or Infonet are slender because of the diminished returns in a joint venture with too many partners. And would MCI Communications Corp, AT&T Co or Sprint International Inc be willing to take a minority share in a European consortium in exchange for opening up their US customer base? MCI’s Roberts said the response would be tied to the number of partners and the exact nature of the reciprocal arrangement. We will not give up the US customer base to anyone unless it’s done in a partnership. We do not look at ourselves in any kind of subservient relationship. Roberts added that neither does MCI intend to take an equity position in a European PTT. Paolo Guidi, president of Sprint International, said only that his company makes partnerships with people, and Randall Tobias, chairman of AT&T International, said, I won’t put constraints on what we might do. It’s AT&T’s policy to look for partnerships worldwide.
