Mobile Telecommunications: emerging European Markets

Abstract

If y o u have cver wondered why t h e Nordic countries have such a technological edge in mobile communications as evidenced by t h e global leadership of companies like Ericsson, Nokiain wireless technology and the prevalence of the NMT (Nordic Mobile Te lephone) systems throughout theworld, this bookmight give you an answer. Or if you wanted to know how the Communists throttled the development of telecommunications in Central and Eastern Europe (CEE) before their cventual downfall, this bookwill tell it detail. Packed with solidly researched data and written in a prosaic, staid style, this book documents the status of telecommunications, fixed and mobile, from different perspectives historical, market oriented, technological, a n d regulatory in t h e newly liberated CEE countries. The editors and contributors to thisvolume are academics from various universities andresearchinstitutesinEuropewith specialization in telecommunications, business and economics. The emerging European markets covered are the countries of Hungary, Poland, Czech, Lithuania, Estonia and Latvia and the former East Germany. Sweden and Austria are also described as a study in contrast. The last three chapters are devoted to a comparative analysis of the countries represented, which is mainly a rehash of the data given in the previous chapters. A large appendix full of telecommunications statistics of the above mentioned countries would be the envy of any self respecting almanac. T h e most interesting chapters a re that of Sweden and Germany. Sweden offers a text book case of how a state controlled monopoly can leverage the power of competition for general welfare . T h e book describes the innovations, both technological and marketing, by Swedish Telecom (now Telia) that led to its leadership in mobile telephony. With its early head start, initially with the MobileTelephone SystemA (MTA) in the 1940s, Telia skillfully managed the development and marketing of wireless communications which led to the success of later systems such as the NMT 450 and NMT 900 and to the present day evolution of GSM. Telia pioneered the concept of selling portable telephones through mass market retail outlets which led its phenomenal success. The earlyrecognition (in the 1970s) by Ericsson to actively support mobile telephony in its= telephone switch enabled it to gain over 70% market share of GSM systems today. The unified Germany is portrayed as a special case where the development of telecommunications infrastructure in the former East Germany was rapid due to the deep pockets of Deutsche Bundespost (DBP) Telekom. This rapid overinvestment brought the telecommunications infrastructure on par with its western counterpart in a fairly short amount of time. The surprise here is that the initial explosive growth in mobile communications was a response to a lack of fixed wireline telephony and as the latter became more widely available the demand for wireless telephony dropped. This can be contrasted with the usage pattern in the western part of Germany where the demand for wireless was based primarily on mobility and convenience. The book also paints the dismal picture on the state of telecommunications on the less fortunate countries of the former Soviet Bloc. A long history of underinvestment, profit skimming to subsidize other enterprises such as post and broadcast, labeling the telecommunications sect o r as "unproduct ive" as opposed to "productive" industries such as steel , machinery and agriculture, keeping the tariffs too low to pay for any expansion, modernization or maintenance, the lack of hard currencies and the West's export restrictions of sensitive equipment had cont r i bu ted to this sad s t a t e of affairs. Another peculiar aspect was the evolution of closed private networks to service the needs of government, transport, power and other industries, independen t of t he public switched network. This siphoned off the revenue that would otherwise b e spent o n the public network. Repl icat ing these private networks was a n expensive proposi t ion since the economies of scale offered by the public networkwere not exploited. The liberalization and deregulation programs enacted after the fall of the Soviet Union does not seem to have the desired effect of rapid modernization. The new cautious Western investment consortia prefer the slow development process which can be financed through local subscriptions rather than the fast infusion of technology and external capital. While offering such interesting anecdotes, most of the book is devoted to serious discussions on telecommunication policies, regulation, economic conditions and market opportunities in these countries. The book is filled with data tha t would b e useful t o any Wes te rn telecommunications executive who is contemplating investment forays into these countries or for that matter any emerging economy. The discussions on the effects of various deregulation scenarios might enlighten any bureaucratwho has interests in telecommunications policy. And the histor ical perspect ive served u p by t h e book will make interesting reading for the general audience. I found it odd that the biggest CEEmarket i.e., Russia has been omitted from the discussions while the smaller markets such as the Baltic republics have been given more prominence. In fact no country from t h e Commonweal th of Independent States (CIS) has been discussed in this book. It would have been interesting to include some of the nonex-Soviet Bloc countries of Europe such as Spain, Greece o r I re land who do not perhaps have an advanced telecommunications infrastructure as Sweden or Germany and hence can also be classified as "emerging". As is the case with many edited books, it suffersfromvaried and inconsistentwriting a n d p resen ta t ion styles. Bu t t h e comparative analysis towards the close of the book does portray a fairly unified picture. The impressive amount of data that is available in the bookmight be more assimilable if theywere displayed in some graphical representation.