Global Players in Telecommunications: Proceedings of a Congress Held in Munich, April 20/21, 1994

162 Pages·1994·4.56 MB·English

by  Eberhard Witte (auth.), Prof. Dr. Dres. h. c. Eberhard Witte (eds.)

Telecommunications
Publications of the
Mtinchner Kreis
Supranational Association for Communications Research
Volume 20
Global Players
in Telecommunications
Proceedings of a Congress
Held in Munich, April 20/21, 1994
Editor: E. Witte
Springer-Verlag
Berlin Heidelberg New York
London Paris Tokyo
Hong Kong Barcelona Budapest
Miinchner Kreis
Ubernationale Vereinigung fUr Kommunikationsforschung
Supranational Association for Communications Research
Tal 16, D-80331 Miinchen, Telefon: [phone]
Chairman of the Congress:
Prof. Dr. Dres. h. c. Eberhard Witte
Institut fiir Organisation
der Universitat Miinchen
LudwigstraBe 28, Rgb.
D-80539 Miinchen
ISBN-13 :978-3-540-58488-9 e-ISBN-13:978-3-642-85182-7
DOl: 10.1007/978-3-642-85182-7
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Contents
E. Witte
Opening Address. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
P. Tarjanne
The Implications of Global Telecommunications Systems for the ITU.. 5
Sir I. Vallance
Putting Global Costumers First .............................. 15
M. Roulet
Chances of France Telecom in a Global Market. . . . . . . . . . . . . . . . .. 20
H. Ricke
New Opportunities Through Cooperation. . . . . . . . . . . . . . . . . . . . . .. 32
E. L. Brown, Jr.
Overcoming National Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . .. 45
V. Vucins
Strong by the Joint Venture: The Unisource Spitit . . . . . . . . . . . . . . .. 52
T. Irmer
Strategies of Leading Companies ............................ 66
D. M. Leive
The Global Telecommunications Economy -Barriers to Entry. . . . . .. 76
E. Eidenberg
MCI: Creating One World Network .......................... 105
P. Walker
Global Services and Partnership Strategies Goals . . . . . . . . . . . . . . .. 111
C. B. Coe
Bellsouth Strategies for Global Participation ................... 119
J. S. Mayo
Directions in Technology and Customer Needs at AT&T .......... 127
Rt. Hon. Lord Young
Tradition and Future of a Global Player ....................... 138
T. Irmer
Future Development ...................................... 149
Index of Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 155
Session Chairmen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 157
Opening Address
Eberhard Witte
Telecommunications enable people separated by great distances to exchange
infonnation -- people who otherwise could not keep in contact without the help of
technology. In this sense, the fundamental idea behind telecommunications has
always been focused on long-distance systems -- systems which ultimately spanned
the entire globe. The ftrst telegraph line between England and India, built in 1867,
could be called the ftrst true global communications system. The geographical aspect
of telecommunications, then, is nothing new to discuss at this congress. The
worldwide switching system linking calls among more than 600 million people with
phones is actually the largest automated machine in the world. This system bridges
all continents and seas of the earth.
The traditional systems used to achieve this miracle of technology were not
internationally organized from the outset, but very much nationally oriented. In the
past, the world's telecommunication systems were distinguished by three features:
• In all countries throughout the world --even in the United States with its
privately operated telephone systems --telecommunications was considered to be
a public service for the general population. In most countries, the government
organized telecommunications as a public authority --as a postal, telephone and
telegraph system combined in one organization.
• Universal services stood in the foreground: telegraphy, telephony, followed in
later years by text transmissions and simple data exchanges. Nationwide service,
unifonn tariffs and the obligation to operate for the common good were declared
as the principles behind government control of telecommunications.
• These monopolies dominated the development of telecommunications in every
country around the world up until 1982. Telecommunication networks were
frequently viewed as natural monopolies; competition was not only undesired,
but considered to be impossible.
2
With the beginning of deregulation in the United States --a trend that quickly spread
to Britain, Japan and other countries --the picture rapidly changed:
• State-owned telecommunications administrations were privatized step by step.
• Universal services were supplemented with value-added services, with special
offers targeted at specific user groups. At the same time, there was a parallel
development of various network systems (cable networks, terrestrial radio
networks, satellite networks).
• Territorial monopolies were gradually loosened up and ultimately eliminated
completely. Competition frrst arose on the periphery of the telecommunications
industry (mobile radio, paging systems, satellite services), and gradually spread
to the very heart of telecommunications --telephony.
These developments were preceded by the accelerating internationalization of major
businesses. Companies in the automobile, chemical and engineering industries, as
well as banks and insurance firms spread their activities around the world. They no
longer wanted to deal exclusively with their traditional national carrier, who in tum
passed on their communication needs to other national carriers. Instead, they
increasingly sought a single partner who would look after them worldwide and
guarantee them the same tailored services, the same software, and standardized
terminals wherever they were located.
This new diversity of telecommunication suppliers and complete entrepreneurial
freedom spawned by deregulation has called the old system of national, limited
telecommunication systems into question. The new vendors on the market as well as
the former state-owned operators that are now privatized no longer view national
borders as a boundary for their business activities: they are moving aggressively into
foreign markets.
Companies that have abandoned their original concentration on national markets to
move into the international arena can be called global players. Their strategies for
building up international business take various forms:
• The simplest way to move into the international market is by acquiring another
national telecommunications company. This has been the tactic used by
European companies throughout South America. If this policy of company
merger and acquisition would be carried to the extreme, a single global player
3
would ultimately emerge. The resulting telecommunications company would then
operate throughout the world and have a global rather than a national monopoly.
This development is undesirable both politically and economically.
• One alternative is for a national carrier to found a subsidiary in another country.
Once this subsidiary obtains an operating license in the host country, it
automatically creates a competitive situation in a national market formerly
dominated by the domestic carrier. This is the type of market penetration
currently being employed by mobile radio, paging and data communication
companies.
• The most commonly used tactic is the reciprocal exchange of capital between
public telephone operators (PTOs). Usually the participants found a joint
venture, which then operates in a number of countries. These joint ventures
continue to have a national home market, yet achieve geographical diversity by
spreading into foreign markets as well.
• One future-oriented alternative is to form strategic alliances. In these cases, there
is no need to exchange equity capital or found new subsidiaries outside the home
market. Rather, the national PTOs cooperate in various markets around the world
by signing agreements and coordinating their long-term global strategies. In this
manner they can offer global services on global networks, and remain
competitive with other strategic alliances pursuing the same objectives.
The services offered in this global game include:
• national and transnational telecommunication services,
• basic services and enhanced services, particularly innovative services.
The strategy is primarily aimed at providing enhanced services on the international
market. Networks are usually leased and seldom built by the company itself.
Terminals and peripherals are procured on the open market, and are generally
compatible. Vertical integration --particularly the linking of telecommunication
services and the production of telecommunications hardware -- is undesirable, yet
still exists and has re-emerged in certain countries.
This development has become so obscured and complex in recent years, that the
Congress of the Munich Circle has decided to attempt to obtain a clear overview of
4
the current international situation. This project is of particular interest to the Gennan
telecommunications industry, since the postal and telecommunications refonn now
being carried out in various stages in Germany will ultimately create a completely
open and competitive market that will attract the global players. On the other hand,
Gennan companies want to grasp opportunities to participate in the international
market and also fonn their own strategic alliances.
It has been especially fortunate that the CEOs of the world's largest
telecommunication companies have agreed to participate in this congress and present
their respective global strategies.
As host of this Congress, I wish to thank all our guests who are prepared to openly
talk about their company strategies and discuss the major strategic alternatives of the
global players.
The Implications of Global Telecommunications
Systems for the lTV
Pekka Tarjanne
Mr Chairman,
Ladies and Gentlemen,
It gives me great pleasure to address this distinguished conference on the subject
of global telecommunications. The very raison d'elre of the International
Telecommunication Union is to be "global". Indeed, the purposes of the Union, as
stated in the Geneva Constitution, include the provisions to "maintain and extend
international co-operation ... " to "promote the extension of the benefits of the new
telecommunication technologies to all the world's inhabitants" and to "promote, at
the international level, the adoption of a broader approach to the issues of
telecommunications in the global information economy and society ... ". So the
ITU has always been global in scope. But whereas our Members have
traditionally represented sovereign national interests, they now increasingly also
represent global interests. And whereas most of the services they provide were
originally intended primarily for domestic customers, they are now increasingly
targeted at foreign and multinational clients. In this paper, I wish to examine the
nature of globalisation in the telecommunication sector and to consider what
implications it has for the work of the lTU and its Members.
Telecommunications and globalisation
The idea that we are living in a global or borderless world is relatively new. The
meaning we now attach so easily to the word global was unknown 100 years ago
when the world was still in the process of being divided up into independent
sovereign nation states. However, the dramatic events which have taken place in
the twentieth century -- including the development of global transportation and
telecommunication systems, and the rise of global products, markets, and
corporations -- have convinced many people that we are indeed living in a new
historical era in which the economic, social, cultural and political structures that
shaped relations between people over the past two centuries will be transformed.
Though accounts differ as to why this is so, most emphasise the central role played
by developments in telecommunications, computer and information technology.