E.C, Phone Home
March 1 1992 by Rosario P. Romanelli
Europe, Inc., is here.
In 1992, the 12-nation European Community comes into being. The EC along with the seven-nation European Free Trade Association form Europe, Inc., a powerful economic bloc that in 1989 posted a gross domestic product of $5.3 trillion. As the former Eastern European nations move to a free market economy, there is no doubt that their growing economic clout will be added to that of their neighbors to form an even larger challenge and opportunity to
While there’s no doubt that
THE EUROPEAN TELECOM ENVIRONMENT
Many companies are surprised to learn that the task of implementing a pan-European telecommunications network is quite different from that in the
The European Community Commission, recognizing how essential a unified telecom structure is to the success of the European Community, issued in June 1987 a “Green Paper” calling for the restructuring of the region’s fragmented telecommunications marketplace. In general, the paper calls for the introduction of European-wide competition to lower costs and speed the introduction of new technology, and it removes the barriers that currently prevent a larger European market so that European businesses may achieve the economies of scale necessary to compete in the larger global marketplace.
The directives of the Green Paper call for the elimination of restrictions placed on terminal equipment such as office switchboards, data transmission, and other equipment connected to the public network. They also call for competition in value-added services such as information networking and processing, and for cost-based tariffs. On the other hand, they permit the national telecommunications administrations (NTAs) to preserve as a monopoly basic telephone service.
The open network provision of the paper is intended to facilitate open and efficient access to
MAKE THE RIGHT CHOICE
But the Green Paper calls for a dramatic departure from traditional thinking on the part of European administrations, which historically were very parochial in their outlook. The pre-EC environment was one of self-interest; there was little incentive to embrace technological advancement or to form service alliances with other administrations. Without competition there was no pressure for lower pricing.
Old habits die hard. For this and other reasons a truly competitive pan-European telecom infrastructure is something yet to be achieved.
Some countries such as
In terms of corporate management, there are continuing discussions that could lead to severe restrictions on the transborder transmission of personal data including mailing lists and personnel records.
TURNING UP THE HEAT
This roller coaster of good news/bad news can end on the upbeat. There are factors other than Green Paper directives that are helping nudge the more reluctant administrations into the ’92 frame of mind.
One is national interest. Countries that do not offer liberalized telecommunications laws may find themselves at an economic disadvantage as international commerce gravitates to those countries that do. Robert Wilkes of Brown Brothers Harriman says that the development of a telecommunications infrastructure is a high priority in many countries because it is perceived to be an engine for economic growth. This thought is confirmed by the increasing commercial presence of the European administrations in the
Customers are being heard. George Dellinger of County NatWest Securities thinks users are driving open the barriers and that concern over infrastructure and competitiveness has spilled hack to the regulators and politicians.
In the long run, competition will be the master regulator of all as the guiding force behind rebalancing telecommunications costs and the introduction of competitive pan-European networks. Innovation is driven faster by competition than by regulation. For example, once the cost of portable telephone service becomes attractive in the
WHERE TO GO FOR HELP
While the outlook for the European telecom environment is encouraging, progressive companies must implement their networks under today’s mixed bag of rules, regulations, and service offerings. As a chief executive, you have a critical role in this activity because it is your responsibility to clarify your company’s long-term plan for Europe so that your telecom professionals have a clear picture of what the network is expected to do and know when and where it will grow.
Involve your telecom staff in the planning process. If they’re doing their job, they should be able to provide meaningful suggestions to head off potential problems. Senior executives of companies must communicate business vision to the telecom personnel so that they can implement the networks to best serve the company.
If you don’t have a telecom staff on board, assign the responsibility for the network to a planning group and give them the authority to participate and contribute in your planning activity. The planning group can seek outside assistance from several sources, and best of all, these are the same sources used by the telecom professionals.
Your first source should be a
The reasoning for local representation is clear. In building overseas networks, cultural as well as technical and regulatory perspectives must be addressed. The best way to do this is to involve local people who are tuned to the local regulations, who are involved with the local administrations, and who are in the best position to represent you in getting approval to install the equipment you need in the nations the network is to serve.
Continuing liberalization in
A second important resource is the overseas NTAs. They are aware of the importance of
A third resource is a qualified international telecommunications consultant. Consider using the Society of Telecommunications Consultants and editors of telecom trade journals as a source of recommendations.
THE TELECOMMUNICATIONS HUB
Companies planning a significant presence in
As the name implies, a hub is a focal point for a telecom network. Historically, hubs have been co-located with corporate headquarters with private lines and switch services branching out to key company, supplier, and customer locations.
This makes sense for a national network with common rules and regulations covering telecom usage. But to carry the huh concept overseas where languages, regulations, and service quality are not (yet) universal requires different thinking. For example, if your company requires only a few contact points in
ONE STOP SHOPPING
In your discussions on hubbing international networks you’ll hear about something called “one stop shopping.” It’s a service under which your
However, the ability of the larger
On the other hand, smaller independent ISCs are less likely to be viewed as strong competition by the European administrations. As these smaller carriers install overseas facility management and technical operations centers, they become capable of providing true “end-to-end” service for your company’s European operations. End-to-end service, which means your
PRICING AND CONTRACT FLEXIBILITY
A big benefit of deregulation in
Thanks partly to competition and partly to efforts by the U.S. Federal Communications Commission, many European NTAs are lowering their artificially high international rates to bring them more in line with costs. At the same time, however, European domestic rates are edging up. This “balancing” of local and long distance charges may or may not be beneficial to your operations, but they should be analyzed to see how operations may be affected. They could also influence the site of your European hub.
Never have the opportunities to participate in the European market been so exciting, nor have tasks in building an international telecom network to support this participation been so challenging. Companies grappling with designing an international network are working with a fast-moving target where the rules of the game change almost daily. As a CEO, you should encourage your managers to take advantage of the expertise that is available by seeking out the ISCs and NTAs who understand your requirements, who will work with your company in developing a system that meets your current and future needs-and who are there to help during its ongoing operation.
Rosario P. Romanelli is vice chairman of TeleColumbus