Global Players in Telecommunications: Proceedings of a Congress Held in Munich, April 20/21, 1994 PDF
Preview Global Players in Telecommunications: Proceedings of a Congress Held in Munich, April 20/21, 1994
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: (089) 22 32 38 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 Dieses Werk ist urheberrechtlich geschiitzt. Die dadurch begriindeten Rechte, insbesondere die der Ubersetzung. des Nachdrucks. des Vortrags. derEntnahme von Abbildungen und Tabellen. der Funksendung. der Mikroverfilmung oder der Vervielfaltigung auf anderen Wegen und der Speicherung in Datenverarbeitungsanlagen. bleiben. auch bei nur auszugsweiser Verwertung. vorbehalten. Eine Vervielfaltigung dieses Werkes oder von Teilen dieses Werkes ist auch im Einzelfall nur in den Grenzen der gesetzlichen Bestimmungen des Urheberrechtsgesetzes der Bundesrepublik Deutschland yom 9. September 1965 in der jeweils geltenden Fassung zulassig. Sie ist grundsatzlich vergiitungspfiichtig. Zuwiderhandlungen unterliegen den Strafbestimmun gen des Urheberrechtsgesetzes. © Springer-Verlag Berlin Heidelberg 1994 Die Wiedergabe von Gebrauchsnamen. Handelsnamen. Warenbezeichnungen usw. in dies em Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme. daB solche Namen im Sinne der Warenzeichen-und Markenschutz-Gesetzgebung als frei zu betrachten waren und daher von jedermann benutzt werden diirften. Sollte in diesem Werk direkt oder indirekt auf Gesetze. Vorschriften oder Richtlinien (z.B. DIN. VDI. VDE) Bezug genom men oder aus ihnen zitiert worden sein. so kann der Verlag keine Gewiihr fiir Richtigkeit. Vollstandigkeit oder Aktualitat iibernehmen. Es empfiehlt sich. gegebenenfalls fUr die eigenen Arbeiten die vollstandigen Vorschriften oder Richtlinien in der jeweils giiltigen Fassung hinzuzuziehen Satz: Reproduktionsfertige Vorlagen der Autoren SPIN: 10470061 62/3020 -5432 1 0 -Gedruckt auf saurefreiem Papier. 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.
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