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What telecomm managers need to know now about Europe '92.

Improved communications lies at the heart of Europe's plan for a single, unified market after 1992. It's widely recognized that a sound communications infrastructure will be needed for pan-European business and trade to flourish.

That's why, collectively and individually, the 12 member countries of the European Community (EC) are embracing deregulation and equipment market liberalization as they replace the patchwork of national networks with a Europe-wide communications grid supporting common standards and interoperable equipment.

Britain, France, and Germany are already offering public ISDN services, which will be deployed on a much larger and wider scale after 1992. In addition, plans are in place to lay a pan-European broadband backbone network by 1995.

The fiber optic Managed European Transmission (Metran) network will link member nations of the Conference of European Postal and Telecommunications (CEPT) administrations. It will be based on the sunchronous digital hierarchy transmission standard, which allows for the dynamic multiplex of channels ranging from 2 to 155 Mb/s.

Meanwhile, France and Italy are offering a metropolitan area network (MAN) service using the Fiber Distributed Data Interface (FDDI) standard. Other European countries, including Britain, Germany, and Switzerland, also are testing FDDI services.

British Telecom is preparing to offer a broadband service using the IEEE 802.6 MAN standard. Similar to the switched multimegabit data service (SMDS) being tested by the regional Bell companies, BT's offering will provide managed bandwidth on demand for packetized data at speeds from 2 to 34 Mb/s.

Denmark and Germany are planning service trials this year, with France, Italy, the Netherlands, Spain, and Switzerland to follow. Ultimately, the service could lead to international LAN networking via SMDS.

Cellular services

At the same time, Europe is pioneering the use of mobile and "personal" communications. European regulators have been lenient about allowing private cellular service providers to compete against the PTTs. As a result, these providers are likely to emerge as competitors to the continent's common carriers.

For the moment, cellular services are about three to four times more expensive than terrestrial network services, but the prices are expected to become competitive within the next decade.

To prepare for a pan-European digital cellula radio network, 15 western European countries have agreed to develop common technical standards and allocate the same frequencies so motorists will be able to travel from one country to another and still use their cellular phones. Previously, there were four incompatible versions of cellular systems in use, with different frequencies allocated for each.

Plans also are underway for advanced paging services and a revolutionary public telephone service, calle Telepoint, that uses pocket-size cordless telephones costing a fraction of the cellular ones currently in use.

The latest cordless telephones, known as CT2, are about the size of a pocket calculator and come with a built-in antena. They allow users to make calls through a national network of base stations located in busy public places.

Telepoint customers can use the same cordless phones at home and in offices equipped for the service, sowing the seeds for a "personal communicator" which could be carried from home to office as well as on business trips.

Nine countries have already agreed to implement Telepoint service in compliance with the Common Air Interface (CAI) standard. By 1993, all major cities, airports, and train stations in Europe will be equipped to accommodate Telepoint service, enabling customers to use their portable telephones virtually anywhere in Europe.

Catch-up in space

In another area of communications, private satellite networks, Europe currently lags the U.S. by a wide margin. To redress this situation, the EC is planning to abolish carrier monopolies over the sale of earth stations to users.

The Community's Green Paper on satellite communications in the EC calls for free and unrestricted access to satellite capacity for users and vendors.

It also promotes competition in the provision of satellite services and creation of a new licensing system to expedite the development of private, pan-European satellite networks.

The document parallels the 1987 EC Green Paper on Telecommunications, which initiated the liberalization of the terminal equipment and value-added services markets and the deregulation of the PTTs.

Part of the motivation was the EC's belief that Europe's state-owned, monopolistic PTTs could not respond quickly enough to technological change nor exploit new market opportunities. As a result, business users were being denied new services and missing out on a competitive advantage.

Also, for European communications firms to compete successfully against their Japanese and U.S. counterparts, the fragmented European national markets needed to be unified to provide the advantages of large-scale implementation. To unify the markets, the EC is introducing a system to mutually recognize national standards, so a product approved in one country could be sold in all other EC countries.

The Green Paper called for the harmonization of tariffs across Europe and created a framework for Open Network provision. ONP defines the access conditions for value-added service providers and sets up a code of practice whereby the PTTs guarantee delivery periods, quality of service, maintenance levels, and conditions of use.

The goal of ONP is to introduce competition quickly and fully into the value-added services marketplace, and permit simple resale of excess capacity.

Leased lines, telex and voice telephone services to the general public continue to be a monopoly controlled by each EC nation. However, the ONP directive restrains PTTs from taking unfair advantage of their status when supplying services to users and new providers. ONP reduces restrictions on the use of leased lines.

It also requires PTTs to base their prices for leased lines on cost, offer standard public network interfaces throughout the EC, and support one-stop shopping for telecomm services.

Standard work

Another legacy of the Green Paper was the creation of the European Telecommunications Standards Institute. Based in Nice, France, ETSI was established by the CEPT and has taken over the standards work previously undertaken by that organization.

The Green Paper recommended creation of the body to concentrate efforts in developing European communications standards with the full participation of industry and users. Since its creation in November, 1989, ETSI has grown quickly beyond the founding telecomm administrations to include over 100 manufacturers, including U.S. firms, and close to 30 user groups and research bodies.

By far, the most active area for ETSI is ISDN.

In contrast to the U.S., ISDN services are already widely available in Britain, France, and Germany. France Telecom, in particular, has taken a very active role in the commercialization of ISDN, which is known by the trade name of Numeris. France Telecom opened its first commercial ISDN service in Brittany in 1987, inaugurating service in Paris a year later, and then gradually extending it to other major cities.

France Telecom expects to have 150,000 Numeris subscribers by 1992 and up to 700,000 by 1995.

To encourage ISDN usage, France Telecom developed partnerships with service providers, along the lines of its Minitel videotex ventures. It supplies financial and technical support for the providers to develop new applications and projects for ISDN.

In Germany, ISDN also is headed for success, thanks to an incentive program for PC users and discounts for Basic Rate access. Deutsche Bundespost (DBP) Telekom expects the price-cutting incentives and growing base of ISDN applications to increase the current 14,000 ISDN customers to between 300,000 and 500,000 by 1995. ISDN service already extends to 135 cities, covering all of western Germany's major business hubs.

To encourage ISDN use, DBP Telekom gave a credit to any customer signing up for Basic Rate access who also bought an ISDN PC adapter card. Another credit was given to users installing ISDN PBXs with one or more ISDN interfaces.

Germany also has taken the initiative in creating ISD links with its neighbors. Starting with the Netherlands in 1989, DBP Telekom has since established ISDN links with France Telecom, British Telecom, and Italy, with Japan and the U.S. scheduled to connect to Germany's international ISDN services later this year.

OSI, X.400, X.500

In addition to ISDN, European countries have pushed OSI networking since introducing the concept in the 1970s. The open systems movement has already won the backing of the EC; the governments of Britain, France, Sweden, and Germany; and many commercial users.

A group of 13 major European companies recently united to establish OSI-based networks and application using such standards as X.400, File Transfer, Access and Management, and possibly X.500. The group, which includes large banks, chemical companies, utilities, and consumer conglomerates, expects to develop the applications in the next few months, with the first links between participating companies established during the summer.

Users also are starting to circumvent telecomm operators when needed services are unavailable.

Europe's 12 central banks, for example, are setting up a pan-European X.400 network for electronic mail. The banks, which are responsible for the circulation and control of currency in each country, claimed Europe's telecomm operators could not offer them a pan-European solution because they have not interconnected their X.400 services.

Europe's national railway companies are also threatening to bypass the telecomm administrations with a project called Hermes. The project would establish a pan-European fiber optic network, offering basic voice and data services in competition with the PTT administrations.

Such developments are accelerating the pace of communications deregulation throughout Europe. PTT Telecom Netherlands was privatized as a government-owned company two years ago in a liberalization move that also created a separate telecomm regulatory ministy.

In Belgium, the Regie des Telegraphes et des Telephones is about to become a government-owned company and renamed Belgacom. Even Germany's rigidly monopolistic DBP has embraced deregulation and liberalization with unexpected fervor and speed.

Last Dec. 29, France relaxed its rules for the communications industry with sweeping new legislation that will bring greater competition to the country's network services.

Among other things, the Telecommunications Regulation Law Legalizes public network bypass by allowing users to deploy privately owned facilities for private networks. It also authorizes more competition in France's mobile telephone market and in the sale of basic data transport services.

Also, to ensure compliance with EC initiatives on liberalization of the terminal equipment market, France will adopt a new equipment certification system using Europe-wide testing criteria and standards.

Britain, however, remains the deregulation model for all other EC countries. British Telecom was privatized in 1984 under then Prime Minister Margaret Thatcher, and has gone on to become a major worldwide communications and information technology player.

Now, Britain's Department of Trade and Industry wants to make the U.K. market the most deregulated in the world. It proposes to discard the country's current duopoly system, which restricts competition to British Telecom and Mercury Communications, Ltd., and allows any financially viable company to provide local, long-distance, or international network services.

The government will also allow resale of switched and dedicated services over private lines between the U.K. and other countries that allow international resale, such as the U.S.

In a development related to the new policy, British Telecom agreed to an average 10% one-time reduction in international switched service prices, and to abide by a new price cap on increases for domestic and international services. The new rules will also allow British Telecom to offer volume discounts to large users for switched and private-line services.

U.S. reaction

Communications managers at U.S. multinational firms have greeted the deregulation and unification of European communications with great enthusiasm.

U.S.-based carriers and computer suppliers have also responded vigorously to the opening of Europe's $120 billion market. AT&T, MCI, US Sprint and the regional Bell companies have cooperative ventures with the PTTs. Among computer firms, Digital Equipment has transferred its communications business to France, while IBM is moving its Communications Systems Division's headquarters to the U.K. to address expected growth from a unified European market after 1992.

Exactly 500 years after Columbus sailed for America, Europe is again exploring new territory. This time, the U.S. awaits the fruits of the "New World" of communications in Europe with great anticipation.
COPYRIGHT 1991 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:single European market
Author:Edwards, Morris
Publication:Communications News
Date:Jun 1, 1991
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