The Fodor`s of fiber looks at Europe
Stephen M. Hardy
Editor in Chief
With the advent of summer comes the start of tourist season in most parts of the world. As you read this, travelers everywhere are thumbing through their copies of Fodor`s or Baeddecker`s to discover where to find a good hotel in Kuala Lumpur or a McDonald`s in Reykjavik.
In the telecommunications arena, the inauguration of deregulation is the start of the business tourist season. Newly competitive markets are the hot resort spots on the economic travel itinerary--and right now, Europe is the place to see and be seen. The continent began a new wave of deregulation January 1 of this year; combined with the open door policy adopted by the World Trade Organization, this embrace of competition has attracted the attention of fiber-optics companies from around the globe.
Yet, unlike the typical tourists looking for a pleasant way to spend a week or two in a foreign clime, companies that hope to establish a presence in Europe can`t just go to the bookstore and buy a guide to these new markets. The rules of the competitive game across the continent are far from uniform, which means that businesses are just as vulnerable to being "taken" as the average tourist. Oh, for a copy of Selling Fiber in Europe on Twenty Dollars a Day....
I had the pleasure of chairing a pair of sessions at the International Engineering Consortium`s Global Telecom Market Forum (part of last month`s supercomm proceedings in Atlanta) that attempted to answer some of the questions fiber-optics tourists might research in a European market guidebook. While space does not permit a review of all the points that were discussed, here`s a look at some of the more salient observations.
According to Bill Garrison, director of the International Communications Studies Program at the Center for Strategic and International Studies (Washington, DC), the most fertile ground for competition is within the European Union (EU)--which may prove to be more conducive to competition than the United States. The EU not only boasts regulators who appear to take their jobs seriously and objectively, but the countries in this organization also have established strong mechanisms to address problems that new market entrants may face in getting incumbent national carriers to deal fairly with them. Looking outside of the EU, he says that countries that have embarked on liberalization of their markets before privatization of their in-country telecommunications monopoly tend to be more receptive to competition than those that have taken these steps in reverse order. (Garrison says that this is true worldwide, not just in Europe.) He points out, however, that while competition in the EU and other European countries may prove more advanced than in the United States, the infrastructure available to take advantage of the competitive environment is less advanced.
Carol Ansley, vice president of international programs at next-generation carrier ixc Communications Inc. (Dallas, TX), agrees that leasing fiber infrastructure can be a problem for countries looking to establish a beachhead in Europe. The underlying cost structure of doing business in Europe can therefore be significant, even if you own your own switches. The higher labor and social benefit rates as well as the necessity of dealing with multiple currencies and value-added tax structures also add to the cost and complexity of moving into Europe. However, the fact that Europe represents a $4 billion wholesale market with anticipated high growth rates and relatively little competition makes the continent attractive to firms from other areas of the world.
Whether a company chooses to go it alone or link with an established European partner, new entrants must acquire in-country expertise if the new venture is to prove successful, she emphasizes.
I imagine if you are one of Lightwave`s European subscribers, you may be reading this with a mixture of curiosity and chagrin. All these new visitors represent an infusion of new capital and the opportunity to make more money in your home markets. On the other hand, they can be boorish and make your life more difficult and unpleasant.
Just like tourists.