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. Last Updated: 07/27/2016

Telecoms: Leveling the Field

LONDON -- Architects of the information superhighway say a battery of "no-entry" signs are hampering the seamless flow of traffic essential to the future of the billion-dollar business of high-speed communication.


The way these roadblocks thwarting the linkage of networks and services are dismantled is crucial to the competition in the telecoms market and its future structure, they say.


"Interconnection is increasingly coming to the foreground as one of the key issues which will determine the shape of the industry," said European Union telecoms official Ben van Houtte.


The toppling of monopoly service and network providers has left governments worldwide struggling with how best to create and enforce a level playing field between the dominant operators and new players. The tussles range from debates over which services should be provided competitively to technical standards and the appropriate tariffs for interconnection with the incumbent operators in a market -- all essential elements of interconnection agreements.


As countries move from telecom monopolies to free markets, such issues are generally being resolved by regulation based on new legislation and through a national regulatory authority, said Michael Grant, an analyst with telecoms consultancy Analysys based in Cambridge, England.


Countries that have taken this approach include France, Singapore, Britain, the United States and Australia.


New Zealand is one country that has adopted regulation based on anti-trust laws with courts being the arbiter of disputes.


"This approach has often proved a slow and costly means to resolve complex business issues in a fast-moving industry," Grant said at a recent business conference in London.


While telecoms competition initially focused on services it has increasingly shifted to networks -- both mobile as well as traditional fixed-wire. In Europe groups ranging from utilities, and railways to savings banks and cable TV companies are gearing up to offer them.


With the exception of Britain, however, few competing networks are yet in operation within countries in Europe. But even in the United States, where network and services competition is more advanced, debates still rage about the appropriate structure for the industry.


A telecommunications bill aimed at opening up local phone markets to competition recently collapsed with the "Baby Bell" regional operating companies blamed for its demise although they claimed they had supported it.


"You can't expect incumbents to fight with their hands tied behind their backs against aggressive new competitors," Van Houtte said at the London conference.


But he said the new players obviously face hurdles which in Europe are now being assessed as the EU revises its so-called Open Network Provision ahead of January 1, 1998, when telephone services in most of the region will be opened to competition.


The provision originally applied to operators with special or exclusive rights to public telecom networks or services -- generally the state-owned monopolies. Once these are abolished the market power of the player will be the relevant factor.


Van Houtte said commercial negotiations are seen as the best basis for interconnection agreements with common principles for interconnection charges reflecting such things as reimbursement for one-off costs for providing the interconnection required. Industry officials and analysts agree regulators will need to run fast to stand still in the face of consumer demand and technical change.


"The future telecoms market seems likely to consist of many successful and innovative service providers relentlessly pushing the boundaries of their product and service offerings," David Harrington, director general of the Telecommunications Managers Association, said.


He said advances in technology would likely eventually make the cost of transmitting services negligible to the point where all the revenue generating potential of the telecoms market would be in the retailing and provision of advanced multimedia-type services such as widespread information access, home shopping and interactive entertainment.


"Within this future scenario, (the network) will come to be considered as merely another utility through which services are delivered transparently from the service provider to the customer," he said.