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European Research Notes |
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European Research Notes |
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Convergent Communications Europe
by Amy RodgerEvent Summary
A group of 13 carriers and organizations claimed Europe's incumbent operators were practicing "strategic incompetence" in the pricing and provisioning of local access leased lines. The group sent an open letter on Tuesday, November 20 to Mario Monti, EU competition commissioner, and information society commissioner Erkki Liikanen, raising their concerns about Europe's uncompetitive leased lines market. Signatories, including KPNQwest, WorldCom, and user group INTUG, complain that European incumbents are maintaining an anti-competitive market. The group wants immediate and effective implementation of existing regulation. A spokesman for Liikanen said they will cover this issue in a report on implementation of telecoms legislation next week.
Market Impact
As the Yankee Group noted in a recent Convergent Communications Europe Report, "Leased Lines in Europe: Too Little, Too Late," incumbents continue to dominate the local access market. As a result of this limited competition, local access leased lines, also known as tail circuits, have not experienced the dramatic price falls seen in the cross-border market. The group claims that the development broadband and the vision of an e-Europe is consequently being stifled, with incumbents' delays in local loop unbundling only exacerbating the situation. The group also cites inefficient monitoring of regulators' adherence to the principles of competition.
Across Europe, prices for local access leased lines, also known as tail circuits, can vary up to 300%, with prices being more than double the EU recommended level in France. Delays in leased line provisioning from carriers has been as long as nine months, from cases cited in Germany. In some countries, such as Spain and Italy, other European incumbents seeking leased lines outside of their countries are also filing complaints about the situation.
Recommendations
- A new regulatory framework is currently before parliament, and therefore, the EC must take immediate action to ensure necessary improvements are included into this framework.
- Governments and regulatory agencies have devoted too much attention with little success to local loop unbundling and DSL, and not enough to leased lines, which are the core bandwidth service for corporations.
- Incumbents in local areas are likely continue to dominate and charge over the odds unless prevented from doing so by regulators. Regulators therefore must monitor pricing and provisioning more closely.
- Carriers must continue to apply pressure on regulators to ensure a competitive environment is created.
Wireless/Mobile Europe
by Philip TaylorEvent
On Monday, November 19, Nokia's CEO Jorma Ollila announced the launch of three new Nokia phones, the 7650, the 6510, and the 5210, and proclaimed a "mobile communications paradigm shift" from "listen to what I say," to "see what I mean."
Market Impact
While the Yankee Group analysts, still bleary-eyed from the early flight to Barcelona, didn't really understand what that meant, Mr Ollila's pronouncement of a paradigm shift was based principally on the features present in the Nokia 7650, which was the centerpiece of the launch. Most importantly, the 7650 introduces multimedia messaging service (MMS) capabilities into a Nokia device for the first time, prompting Ollila to compare the jump from SMS to MMS as comparable to the transition from radio to television. This, combined with an integrated digital camera, presents, in Nokia's view, a leap forward in service possibilities and has resulted in the Nokia marketing slogan—"Capture the moment, capture the market." Ollila further stated, that by the end of 2002, over half of Nokia's shipments will be MMS-compatible terminals with all new Nokia devices being MMS-compliant by 2003. The 7650 will be commercially released only in the second quarter of 2002.
Conclusions
- Nokia came to its current dominant position through leadership in design and innovation in functionality. Although news of a Nokia phone with a color screen, Java, Bluetooth, and MMS, is welcome, the fact that it will not be released until around the middle of next year should be of concern. Ericsson's MMS-capable, color-screened, Bluetooth-ready T-68 has been in stores in certain European markets for over a month. If Nokia is to continue to retain market share, it must up its game in the face of renewed competition.
- Nevertheless, while we retain reservations about the 7650's form factor and size, we believe that the integrated camera will succeed in stimulating the growth of MMS traffic and that messaging will retain its dominance among mobile applications in Western Europe.
Convergent Communications Europe
by Justin Neville-RolfeEvent
Twenty years after separating from its telecommunications division, the UK's Post Office is set to launch telephony services in direct competition to BT. The Post Office has chosen Swedish operator Tele2 as its private labelling partner for an indirect access service targeted at the residential market.
Tele2, which offers competitive telephony services in 11 European countries, will bundle a digital cordless phone as a free incentive for customers taking US$71 (£50) of prepaid minutes (or a prefix-dialer for those spending US$28 [£20]). The I-Hear phone automatically routes calls onto the Tele2 network without the need to dial a prefix number. Other phones can access the service with a four-digit prefix number.
Analysis
The Post Office's interest in the deal is strategic and financial. It hopes to retain customer loyalty in its core postal market, which is also now deregulated, by offering new services. However, like most channels for telecom products, the service also must become profitable. The Post Office is a strong sales channel due to its high visibility with the general public: half the UK population enters a branch every week, and the Post Office has a reputation for providing basic and reliable communications services.
Tele2 is one of the few competitive operators that is focusing successfully on the voice market. And unlike other operators' attempts to capture the indirect access market in the UK on a simple price argument, Tele2 is taking an innovative approach in offering a DECT handset to subscribers. Through this device, the service is as easy to use as BT's. The Post Office/Tele2 service will also offer itemized billing for the service to customers who prefer to have a separate bill for different types of calls, such as teen-line replacement, teleworkers, and shared homes.
The introductory offer is very generous, and calls are charged at a level that means it will take some time to recoup the cost of the phone and dialer.
Recommendations
- Tele2 is continuing its aggressive drive across Europe, establishing channel partners and its own brand in most of Western Europe. This package will be very attractive to end users that can afford the US$71 (£50) initial charge required to get the free phone. However, it will have limited appeal (but with very limited associated risk) for those customers who cannot prepay US$71 (£50) to get a handset.
- BT should be concerned that such a strong retail brand in the UK is offering a service that is much cheaper and as easy to use as its own service. However, along with other dominant indirect access plays such as British Gas (BG) and Sky television, indirect access is an attractive means (for BT) to maintain access line revenues from customers and keep in touch with its customers. This will help it in its war against the cable companies (from whom indirect access is not available).
- Retail brands BG and Sky should see Tele2 and the Post Office as serious threats to their markets. The Post Office is a new heavyweight brand with an attractive value proposition, if it can define the right marketing message. BG has access to a significant proportion of the market, which the Post Office does not have direct contact with. Sky has a high-touch relationship with its customers, but its addressable market is smaller.
Free Space Optics 2001: A Networking Odyssey
enbav2n15, Report, November, by Lindsay SchrothE-Commerce Regulations in the Asia-Pacific Region
isapv2n12, Report, November, by Koji OkiE-Commerce Regulations in the Asia-Pacific Region
jmsv2n15, Report, November, by Koji OkiWith Mobile Phones, We've Got the Whole World in Our Hands
wmtv2n15, Report, November, by David BerndtEuropean Cellular Handset Forecast: Revolving Around the Replacement Cycle
wmev5n16, Report, November, by Farid YunusThe State of the Wireless Union—2001 Edition
wmsv2n15, Report, November, by Roger EntnerBack to Table of Contents
November 30 2001
A Convergent Communications Europe Audio Conference
The European Global Network Strategies SurveyDecember 3 2001
An E-Sourcing Strategies Audio Conference
Service Providers: Forecast Revenues and Profitable Business ModelsDecember 5 2001
A Mobile Commerce Strategies Audio Conference
Topic to be announced shortlyDecember 6 2001
A Carrier Convergence Infrastructure Audio Conference
Carrier Convergence: Where Truth meets DareTo Register, to Get More Information, or
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