The Closing of the Net  "original and valuable"  Times Higher Education


EUROPEAN TELECOMMUNICATIONS - American giants dominate market. 
897 words
20 November 1989
The Times
Copyright Times Newspapers Ltd, 1989

Monica Horten

For American telecommunications companies operating public network services, Europe presents a window of opportunity.

The action to date has been slow, with only a few big events such as American Telephone and Telegraph's purchase of Istel, the British communications services company. But behind the scenes there is a lot of activity which could burst into the open over the next 12 months.


The window has opened as a result of two main factors: the new networking demands of businesses as they begin to co-ordinate manufacturing, sales, distribution and accounts on a Europe-wide basis; and the major disparities between the services offered by each of the national telephone operators.

An illustration of the business needs is described by Ken Sanders, vice-president of Texas Instruments' semi-conductor group. "We want to optimize business levels based on inventory levels in each country," he says. "Effectively we have one warehouse, though it might exist in four locations."

Texas Instruments is already well advanced in deploying a pan-European business strategy. It is building its own advanced network across Europe, which integrates its telephone voice and data networks. The difficulty is that the high-speed digital lines which it needs are offered in a different configuration in each country, and linking them to create a network can be a headache.

Many companies are not prepared to do all that work themselves, and this creates a problem for the national telephone operators. Their position is summarized by Philippe Gluntz, president of the French telecommunications company Alcatel: "They have to be in a position to offer well-interconnected, Europe-wide data services, and then they will be in a position to compete."

Businesses are demanding a co-ordinated approach one-stop shopping with a single port of call for billing, network maintenance and administration. According to Eddie Mooney of General Electric Information Services (GEIS), there are two levels of demand. Some businesses want a basic transport network to shift their data around, while others want a technology which will give them a competitive edge the value-added service.

If the national operators cannot supply the service they want, then users will go to those who can who tend to be US-owned. GEIS already carries a lot of pan-European traffic, and can customize a network to suit the client's business. It is also able to offer electronic data interchange (EDI), where standard business documents such as invoices and order forms are sent directly between customer and supplier.

IBM has this year enhanced its information network across Europe to provide a more resilient service. It offers a range of applications and value-added services, including EDI, and has recently simplified customer liaison procedures and contracts to cater more fully for its pan-European clients.

EDS, the information technology services subsidiary of General Motors, is also a contender in this market, although it takes a slightly different view. It will build and service a network to customer requirements, but does not run a managed service in the same sense as IBM or GEIS.

EDS also hopes to take advantage of the deregulation of satellite transmission, which is on the European Commission's agenda as part of the deregulation process. Satellite links can be installed more quickly and efficiently than terrestrial lines, and for businesses in locations where the national telephone operators are slower to improve their services, that could be a boon.

The fourth big player to date is Infonet. Infonet owns its own worldwide network, on which it can offer businesses a fully managed service, tailored to their data communications requirements. The network was originally founded by Computer Sciences, a US company, which still has a 35 per cent holding. In July 1988 shares were bought by France Telecom, the Deutsche Bundespost, Televerket of Sweden and Telefonica of Spain. These were followed in 1989 by Belgium, The Netherlands and Switzerland, and two non-European operators. Management control remains in the US, although the European operation is staffed by Europeans.

The involvement in Infonet by the European national telecommunications operators is widely regarded as a protective move. It enables them to provide a service to those customers which have pan-European or world-wide requirements, and at the same time benefit directly from the extra revenue.

Their other defence has been to get together to agree a formula for one-stop shopping on leased lines. In September, a memorandum of understanding was signed by 16 European national telecommunications operators, which set out the basic procedures for ordering, fault reporting and billing via one operator only; it, instead of the customer, deals with the others involved.

They have given themselves just one year to get the service operational, and are now in the process of sorting out the details. British Telecom, for example, is already testing a system with both France and West Germany. The next step will be an agreement on co-ordinating public data networks, such as BT's Packet Switched Stream, and France's Transpac.

Two new players hovering on the horizon are AT and T and US Sprint, which compete with each other for long-distance telephone traffic in the US. AT and T's purchase of Istel was a strategic part of its move into the European services market, because of Istel's EDI capabilities.







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