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Without stopping to think about it, we take for granted that the liberalisation of our communications industry and its globalisation would benefit us all. Those who know me know that I don’t think there are benefits without drawbacks. At first, we stopped reviewing the benefits promised by the proponents of liberalisation.

Prior to liberalisation, for example in Germany before 1998, there was only one telecommunications company, a monopolist, owned and controlled by the state. Without competition, a monopolist can’t be expected to function efficiently. Through the liberalisation and the globalisation resulting from this, it was assumed that among others the following benefits would be brought about:

  1. An optimisation of the relationship between quality and prices of services
  2. A widening of the range of providers and consequently of innovative services
  3. An increase in the accessibility and range of the part of the users

Quality – Price

What does the quality of communication mean for us? If we talk mainly about the quality of transmission or reception, it’s clear that quality deteriorated after the end of the monopolies. Those who experienced it, know there was a time when every call was connected immediately and without interruptions.

As for the quality of the content of the communication, we can’t really see any improvement. Think of all the unwanted communications you receive every day or of how you have to reply to instant messages and calls in the various different everyday scenarios with low-quality content. If a stranger contacts you, you don’t know if it’s someone with a fictitious identity or if it’s a hoax. I believe it is possible to see how quality has in fact deteriorated.

And what about price? Naturally, we have experienced a dramatic upheaval in prices owing to liberalisation, but perhaps today communication is costing us more than ever; and I’m not referring solely to the money we spend on buying numerous latest-generation devices or on obtaining a large amount of services from different providers, but also to the excessively high price that we pay for all the free services that invade our lives and delve into our private data to manipulate and control us. If you write a message, you have to be careful not to mention subjects that could be used to sell you something, or much worse, to send you political advertisements aimed at influencing the balance of presidential campaigns, as in the recent case of Facebook and Cambridge Analytica.

To sum up: the liberalisation of telecommunications did not improve the quality/price relationship, but made it worse.

More providers and more innovative services

Many new participants entered the market straight after liberalisation but how many of them still exist today?

The market has been consolidating itself since it was opened up to the present day and not only on a national but also a global level. Many providers are being absorbed by global players. The majority of countries with open markets have no actual national provider. This process could continue until there are only a few monopolies left. But what kind of monopolies? Since the national telecommunications monopolist belonged to the state and with it the public interests, the current monopolies are so big that they could fall out of the hands of the national states.

We see the same situation in the sector of producers of solutions and technology. While the national markets were being closed there were national specialists in the majority of the most important countries like Lucent in the USA, Ericsson in Sweden, Siemens in Germany, Nokia in Finland, Alcatel in France, etc. Today, all these companies have merged to form only two mega-companies and analysts are expecting these to merge in the future in such a way as to have only two global-level producers, one in China and one in Europe. But how secure would the world be if the infrastructure of the telecommunications networks were to come from China?

Of the countless startups founded in the short period since liberalisation until the DOTCOM crash, only some like our company ECT continue to be successful, continuously creating and transforming their market niches. Globalisation and the culture of startups don’t provide the right basis for real sustainability. This statement is the product of my own personal experience.

A small number of providers always entails less plurality. Although thousands of new apps appear every day, the majority of these are subject to the rules of Google and Apple, which results in a global homogeneity. Generally speaking, innovation is limited to transferring established services to the cloud, such as PBX for example, in the same way that Hollywood is doing replicas of popular old films because it doesn’t have the courage to create something new.

Naturally, our company ECT, specialists in developing value-added services, is also developing standard and “me too” services, but we are investing the major part of our time and money in innovation. Nonetheless, we are experiencing in interactions with providers around the world their resistance to any form of innovative service. Future growth in the telecommunications industry will depend upon advancements in industry-specific technology. Furthermore, for CSPs to compete with the OTTs, the evolution of new local competitors is required, as well as the creation of innovative new services. Almost nobody, however, wants to launch something completely new for the first time.

In short: globalisation supports the plurality of neither providers nor services.

Accessibility and range of the user

In the new world since globalisation, every person should be able to communicate with the whole world at all times and in any location. Yet this world certainly does not exist because there are many regions, like in Mexico, without basic services and a large number of countries, like Germany for example, with limited coverage (for private providers which don’t belong to the state it isn’t worth investing in poor or underpopulated regions).

Furthermore, there are many independent isolated islands of communication like Skype, WhatsApp, Facebook, Twitter, etc. which have closed groups of non-contactable users outside said islands. Have you recently seen a business card or the “Contact Us” page on a website with more addresses than ever: Twitter, Facebook, LinkedIn, Skype… and perhaps a telephone number as well?

In reality, we wouldn’t want anyone to be able to contact us at any time but instead would want to be left in peace. Previously, only rich people could afford a smartphone; today only rich people have enough money to hire an assistant to complete all their transactions on the Internet and take care of the messages and calls on their behalf, that is to avoid entirely communication services and thereby maintain their privacy.

The future

Despite viewing the liberalisation of telecommunications and the globalisation of our industry in a very sceptical light, I hope I haven’t given you the impression of being an old curmudgeon who would like to stop the clock or better still go back to the good old days. I am more interested in the industry’s future than its history. However, I do believe that states, providers and consumers could learn from history to reform the system.

The state should recognise its obligation to regulate the essential markets in order to guarantee the public interests. In the same way that the unintended effects of the liberalisation of the supply of water are righting themselves by means of regulation, politicians should take into consideration the following:

  1. The application of the same regulations such as the support of emergency calls, the legal interception of calls and messages, the provision of data for judicial uses and presence on the national public network with the capacity to maintain the services in the event of disasters, both for the national providers and for those who render their services beyond their borders.
  2. The regulation and control of the storage and usage of all the data of users and subscribers, including at least absolute transparency for the same, the requirement of prior authorisation for the specific usage of data and the prohibition of the storage of data outside the national state.

In general, the providers should summon up their courage and not only defend their position but also attack the global providers of OTT services, demanding from politicians that they create just and uniform regulations for all the participants situated inside and outside the state. In this case, the providers could offer consumers more innovative services which prevent the isolation of the OTTs.

Consumers should accept that nothing is free and be careful with the commercial strategies that exist behind free services. In addition to loving the concept that “everything could be better if it were faster and more voluminous”, they should be questioning it. With regard to communication, quality could be better if we realised fewer communications at a lower speed.

Want to know more about us and our solutions in 2021? Let’s schedule a meeting.
Marshall E. Kavesh

Marshall E. Kavesh

Marshall E. Kavesh, born in 1960 in the Unites States, received his MA in Germanic Languages and Literatures at The University of Pennsylvania and his Ph.D. in Social Systems Sciences at the Wharton School of Business, continuing with postdoctoral studies Mathematical Logic at the Ludwig-Maximilian University in Munich. Prior to ECT, Marshall worked eight years in the telecommunications industry as a subcontractor for Siemens. Together with the other two company officers, Hans Huber and Walter Rott, Marshall founded ECT in 1998 and is a principle shareholder in the company. As CEO, Marshall is responsible for general management, sales, marketing and finances.

One Comment

  • blank Borut Jočić says:

    Even if the original objectives of telecommunications industry liberalization were more focused on the benefits of end users, I couldn’t agree with you more.

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