As Spain looks back over its first 10 years of membership of the European Community, it is impossible to ignore the changes that have taken place in telecommunications, with the arrival of a number of new operators on the scene, competing to offer their equipment and services in a progressively liberalised market. Approval of the […]
As Spain looks back over its first 10 years of membership of the European Community, it is impossible to ignore the changes that have taken place in telecommunications, with the arrival of a number of new operators on the scene, competing to offer their equipment and services in a progressively liberalised market. Approval of the Cable Telecommunications Law is still pending, and then on January 1, 1998 the whole process should be completed with the liberalisation of voice-transmission telephony. A decade ago, the sector was characterised by a strict monopoly on the supply of services and terminals. The first step down the path to open up telecommunications was taken in 1989, when the terminals market was liberalised in response to calls from the industry to remove the restrictions stunting the opportunities for growth of a large number of companies. In the services arena, the opening of the radio-paging market in 1992 aroused considerable optimism, but this was glister rather than gold, since three years on there are only 100,000 subscribers, and prospects for growth have been clearly threatened by the arrival of mobile telephony. New operators in this field have found it exceedingly difficult to compete for market share with the operator that had formerly held the monopoly, Telefonica de Espana SA. Data transmission was the first service to offer a genuinely interesting volume of business – it currently generates around $825m a year – and since 1993 it has attracted a number of operators from both sides of the Atlantic, which have no doubt taken up a position with a view to their progressive involvement in other services, as they become liberalised. So companies such as France Telecom, British Telecommunications Plc, Telecom Italia SpA, Sprint Corp and Cable & Wireless Plc have entered the battlefield to compete with Telefonica. It cannot be denied that data transmission suffered certain teething problems in the early days; it was some time before the regulations for operation became clearly established, there was a shortage of circuits available to supply the service, and price structures were not particularly competitive. The unquestionable dominance of Telefonica in this area will soon be challenged by a new network infrastructure supplier, Retevision, currently a publicly-owned television transmitter operator, which the government is grooming to become the second Spanish force in telecommunications, in an attempt to stave off the ‘invasion’ of competition from abroad when voice telephony services are liberalised in 1998. Meanwhile, the dust has only just settled following the scramble to pick up the second licence offered to operate a cellular Groupe Speciale Mobile service, finally awarded to the Airtel consortium. The healthy prospects for business aroused the interest of some of the most powerful Spanish companies in the utilities, commercial distribution, construction and banking sectors, while operators such as Vodafone Group Plc, BellSouth Corp, Cofira SA, British Telecom, Ameritech Corp and AirTouch Communications Inc vied for the opportunity to operate the Groupe Speciale Mobile service in Spain.
Held up in parliament
There was great controversy over the fact that Telefonica, which was granted the first licence, did not have to pay $650m for the privilege, while Airtel did. Telefonica plans to commence its MoviStar mobile service this summer and Airtel is going all out to be ready by October 3. Attention has now been turned to the fortunes of the projected Cable Telecommunications Law. Nobody is in any doubt that increased speed, flexibility and bandwidth are factors that guarantee the future of advanced services for both businesses and the private consumer. The bill is still held up in parliament, but a government said recently that the law would be passed before the end of the year, because all the political groups are aware of its importance to the future of the sector and, indeed, the country. Over the last decade, Telefonica has been forced to adapt to the changing times, modify
ing its organisational management, refocusing its marketing strategy and embarking on an ambitious expansion programme, in order to reach new markets. The recently signed agreement with AT&T Corp, its participation in the Unisource BVconsortium, and the inroads it has made into the Latin American market, are clear signs that it’s not letting the grass grow under its feet.