New telecomms operators face a bumpy ride as incumbent suppliers continue to tighten their strategies to face open competition.
According to a report entitled ?New Operators in western Europe?, from telecomms consultancy Analysys, consolidation in the market will continue as alliances mature into mergers and weaker players are forced out of the market.
Said Micheal Denmead, consultant at Analysys: ?The newly privatised incumbent operators are under pressure to maximise shareholder value and as a result they are taking actions, such as tariff rebalancing, to ensure they retain as strong a market position as possible.?
New operators will need to compete on service as well as price, he continued.
They will have to pump five years? worth of investments in their operations before they can begin to reap rewards, notes Analysys. During this time, new entrants will also need to overcome a few regulatory hurdles including interconnection, universal service, unbundled network access, number portability and carrier selection.
Entry into new markets will almost certainly be delayed as only eight of the 15 EU member states have published interconnection terms - the fees new entrants pay incumbents to carry calls.
In addition, many regulators still have to resolve whether new entrants must contribute financially to provide universal service - currently national operators must guarantee service even to loss making customer groups.
In France, universal service fees are added to the interconnection rate. In the UK, only new operators that gain ?significant market power? need contribute.
Universal service has caused much tension between new and existing operators. Incumbents feel they are forced to carry the burden of providing telecomms service for all. But new players do not understand why they should compensate for the ?inefficiencies? of the national operator, explained Denmead.
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