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Top European telcos plan consolidation into EU-wide mobile network. How about competition?
Europe’s four biggest telecommunications companies are in talks to integrate their services in order to better serve European consumers. It has to be emphasized that at this point the preliminary talks are for integration within the EU market, because these companies have a much larger presence outside of the EU than within the continent.
The integration of services for Deutsche Telekom, Telefonica, France Telecom, and Telecom Italia is a matter of economics and scale. It is easy to see the benefits for the consumers, like lower roaming charges, integrated infrastructure within the continent, possible lower costs, and better services for voice and data transmission. Here are a few key benefits.
Single point of contact. For mobile phone manufacturers, there should be no difference whether the European landscape is fragmented or not, but for companies such as Apple, Microsoft and Google — which have to talk to different regulators on the continent — one point of contact is a big benefit. Currently, these companies have to negotiate with European regulators, as well as country regulators on an individual basis. With a single company that covers a big part of Europe, entry into the hardware, and software market would be much easier.
Easier billing and monetization. The picture looks even better for developers who want to charge online games via phone bills. Instead of negotiating with at least four companies, they only need to sign up with one in order to be able to accept payment for game use. Increasingly, it is clear that one of the best and most convenient ways for game players to pay for their games is through the phone bill.
Better technology adoption. In terms of technology, a single company operating with a wide coverage can push for better adoption of 4G technologies. Costs for network integration can also be much lower, as well as lower operating and inter-network costs.
These four telcos may be based in Europe, but their biggest markets are outside of their own countries.
- Telefonica has more than 300 million subscribers, most of them in South America. More than 75% of Telefonica’s business is outside of the Spanish peninsula (composed of Spain and Portugal).
- Deutsche Telekom owns T-Mobile International AG, which is the holding company for all their businesses outside of Germany. It has presence in eleven countries in Europe, as well as the United States. It has more than 170 million subscribers worldwide.
- France Telecom, for its part owns Orange, which has a presence in 24 countries including France, with around 150 million subscribers around the world.
- Telecom Italia, also has a major presence in South America, with more than one-third of its income coming from Argentina and Brazil.
Besides their dominating presence in their home countries, they also have interests and cross-ownership and presence within the other countries in the European Union. It is not a far stretch that any movement towards an integration of this sort will result in cross ownership of the current companies. If government regulators do not allow a single company as a unifying presence, an alternative is to launch a holding company, which will then own the integrated company. In theory, at least, this is likely to be more acceptable to regulators, and should be within anti-trust rules.
With this kind of coverage, regulators will have their work cut out for them. The main barrier to such an implementation is the fear of a monopoly, which would make it harder for the smaller players, like local companies and private startups. Additionally, anti-trust is about not letting any single entity control the market, which unfortunately, a conglomeration like this is bound to have, whether intentionally or not.
Is Europe ready for a unified mobile network?