EMCC dossier on the European telecoms sector
Published: 20 May 2005
/In less than two decades, Europe’s telecoms sector has moved from a nation-based industry, monopolised by public telecommunications operators to a free market system, operating on an international scale. The European Commission has played a key role in promoting market liberalisation through its regulatory regime. This EMCC dossier provides an in-depth analysis of the trends and forces driving change in the sector, using a compilation of relevant reports, company case studies and scenarios to give a comprehensive insight into a continuously evolving industry./
In less than two decades, Europe’s telecoms sector has moved from a nation-based industry, monopolised by public telecommunications operators to a free market system, operating on an international scale. The European Commission has played a key role in promoting market liberalisation through its regulatory regime. This EMCC dossier provides an in-depth analysis of the trends and forces driving change in the sector, using a compilation of relevant reports, company case studies and scenarios to give a comprehensive insight into a continuously evolving industry.
Over the past two decades, the telecommunications services sector in Europe has undergone major transformation, evolving from a mainly monopolistic sector to a competitive, productive and increasingly innovative sector. The sector is no longer defined as telephone services only. Today, the telecoms sector (NACE Rev1.1: 64.20) embraces many areas, including the distribution of data, sound and images and other information via cable, broadcasting, relay or satellite. The management and maintenance of networks, as well as the provision of services using these networks are also included in this category, although the production of radio and television programmes is not.
The transformation of the telecommunications industry has not been restricted to EU countries, but has taken place on a global scale. One unique feature of the EU telecommunications industry is the leading role played by the European Commission (EC) in promoting market liberalisation and dismantling state monopolies. During the 1990s, EC regulation gradually opened up the sector’s segments to competition: from the services directive (90/388/EEC) in 1990, the mobiles directive (96/2/EC) and full competition directive (96/19/EC) in 1996, to the new regulatory framework in 2002. Defining an EU regulatory framework has helped to provide a more stable environment for the sector on a European scale, although some national differences still persist between countries.
As a result, the sector’s industry has undergone large-scale restructuring over the past two decades. Indeed, a number of former national public telecommunications operators (PTOs) have become part of major international operations diversifying their activities as service providers and/or network operators. Thus, the organisational complexity of telecommunications operators has increased significantly in recent years. This, in turn, has led to restructuring among the major European companies in order to streamline their activities and to increase efficiency.
However, major challenges still lie ahead for the telecoms sector. Following several years of robust growth, mainly generated by the expansion of mobile telephony, the market is now slowing down. New services, in particular, data mobile and internet services, have ignited new engines of growth. Nevertheless, the high mobile density levels, evident in most EU countries, and price pressures generated by increased competition, have created more difficult market conditions for telecom operators. Therefore, they are becoming more innovative in terms of product range and marketing, while still continuously focusing their efforts on increased efficiency.
The European Monitoring Centre of Change (EMCC) of the European Foundation for the Improvement of Living and Working Conditions has compiled this comprehensive dossier comprising references to relevant reports and company case studies as well as an outline of four possible scenarios. It offers an in-depth analysis of the current situation and examines the factors likely to shape future developments within the telecommunications industry in the years ahead.
Trends and drivers of change in the EU telecoms sector
The mapping report provides an overview of the European telecoms sector, covering all 25 Member States. It outlines major market trends in relation to growth, telecommunications operators, and broadband and mobile services as well as the sector’s integration in the world economy. The report also examines the current employment situation and work organisation in the sector, looking at the required skills sets and training of employees.
The report analyses the main drivers of change, including: market regulation and liberalisation; the impact of the dot.com collapse in 2001; greater competition due to new operators entering the market; and innovation in processing technology as well as standardisation.
Various aspects of these trends and drivers have been picked up in the scenario outline, the company case studies and the case study on the restructuring of Europe’s telecom incumbents (see below).
The full mapping report, Trends and drivers of change in the EU telecoms sector ( 361 kb), is available for downloading free of charge. |
Regulatory framework for a sustainable telecommunications industry
European Commission
The eCommunications networks and services portal of the European Commission’s DG Information Society, provides an overview of the European legal framework, aimed at developing and reinforcing the single market, promoting competition and safeguarding public and user interests in the electronic communications sector. It offers links to:
highlights about recent developments and events in the sector;
an overview of the current regulatory framework, its implementation and enforcement;
useful information, including a library with access to the legislative texts in force and EC communications, and links to national regulatory authorities;
the previous telecoms website which constitutes a valuable source of information for the sector’s development throughout the 1980s and 1990s.
UNI Telecoms
UNI Telecoms is the global union in the telecommunications industry with over two million members and supports the campaign for the universal roll-out of affordable broadband networks, to combat the digital divide, and to have regulation and competition that ensures strong and viable companies, good jobs and quality service. UNI Telecoms website provides access to the latest news of telecommunications companies worldwide.
In June 2004, the union published a position paper, UNI Telecoms in the long run - Regulation and a sustainable telecommunications industry (available in English, French, German, Spanish and Swedish), in order to promote a regulatory and business model that will ensure a sustainable telecommunications industry. The statement outlines the union’s positions regarding: universal, affordable services; local competition; quality services and jobs; privatisation; labour standards; dealing with technological change; financial disclosure and transparency; mergers and acquisitions as well as cross-border investment and trade policies; and inclusion of the social partners in decisions affecting the industry.
Statistics in focus
In January 2005, Eurostat published an issue of its Statistics in focus series on telecommunications in Europe (
400 kb), covering all 25 Member States and reflecting data availability as of December 2004. The issue summarises recent developments in the EU telecoms sector looking at employment, number of main telephone lines, mobile telephone subscriptions, and Internet access and service provision.
The telecoms sector of tomorrow
The future of telecommunications services provides an outline of four different scenarios for future development in the European telecoms sector up to 2010. It includes one reference scenario - Surprise-free scenario- and three alternative scenarios - The disruptive scenario: Information society, The steady progress scenario and_The standstill scenario_- to cover a five-year perspective of possible employment and company trends in the telecoms sector.
First the report reviews the scenario-building process. Each scenario then paints a very different picture of the possible Europe of 2010, with regard to the development of: demand and usage of telecommunications services; regulation and policy; and technological and industrial developments.
| The scenario outline, The future of telecommunications services (346 kb), is available for downloading free of charge |
EMCC case studies in the telecoms sector
The cluster case study, Restructuring of Europe’s telecom incumbents, examines how the telecom incumbents adapt to a more competitive market and face the evolution of customers’ needs. Compared to mobile telecom operators, cable operators or new entrants, telecom incumbents face the largest organisational transformation because of their historical ‘heritage’.
The six company case studies embrace two telecom incumbents, French France Télécom and Lithuanian Lietuvos Telekomas, and four so-called ‘triple play services’ companies, offering integrated television, Internet access and telephony services. The case studies outline how these companies are currently positioning themselves and dealing with the positive and negative effects of change in the face of increasing market liberalisation and competition. Each case study sets out with a company profile followed by an analysis of the market dynamics and changes within the company and the workforce, to sum up with lessons learnt.
The case studies are downloadable free of charge as pdf files by clicking on the company’s name below.
286 kb) - This cluster case study describes and analyses how telecom incumbents are matching their organisation and internal skill requirements in a more competitive market and in the context of rapid changes in customers’ needs.* France Télécom (
362 kb), Europe’s third largest telecom operator is confronted with increasingly keen competition in its home market. The French incumbent operator has thus diversified its activities with the development of Internet and mobile services and international expansion in the 1990s. The impact of the dot.com collapse in 2001 forced the group to revise its strategy leading to its ‘Ambition FT 2005’ plan.* Lietuvos Telekomas (
170 kb), the incumbent Lithuanian telecommunications operator provides fixed line voice and data services and became a subsidiary of TeliaSonera when privatised in 1992. With greater competition in the telephony market, the incumbent operator has lost market shares and its revenue has decreased. Consequently, the company has undergone profound restructuring, which has resulted in workforce reduction, transformation of management practices and culture. The incumbent operator also put in place a new product and marketing strategy.* Telefónica Deutschland (
63 kb) was established as the result of the merger of two Telefónica subsidiaries, mediaWays and HighwayOne, in 2003. Telefónica Deutschland combined the infrastructure of mediaWays and the product portfolio of both firms to create an integrated offer of Internet Protocol (IP) wholesale services. In order to adapt to the new company structure, the workforce composition changed while overall employment levels remained approximately the same. Staff training is on the basis of sophisticated online methods complemented by personal assistance.* UGC Europe (
100 kb) is a major provider of broadband communication and entertainment in Europe, offering analogue and digital cable television, telephony, broadband Internet access and satellite television services in 17 countries. The company has grown through acquisitions and consolidations of cable network companies and other content provider firms. The need to integrate the companies acquired into a common strategy has demanded frequent staff readjustments, including the elimination of posts.* FastWeb (
243 kb) provides ‘triple play’ services - TV, telephony and Internet access - to the Italian residential and business markets by means of its own fibre cable TV network. Growth in revenues and in number of users has been constant since the company started its operations in 1999. FastWeb has paid high attention to training and retraining the workforce, the company’s staff turnover rate is therefore less than 4%.* ONO (
120 kb), Spain’s third largest broadband cable communications company was established in 1997. The company, based on an open and free flow of communication, with very few organisational levels, has maintained its stability. At the time of the sector crisis in 2000-2001, ONO changed its structure from region-based corporate services, to a central organisation aimed at improving efficiency and reducing costs. Workforce reduction took place through an outplacement programme in cooperation with other companies of the sector.
Company restructuring in the sector
The [European Restructuring Monitor](/search/node/emcc OR erm OR ?oldIndex) (ERM) provides an overview of restructuring activities and employment effects in Europe, including the telecoms sector. All information is based on the analysis of daily newspapers and the business press in the EU25 and two candidate countries, Bulgaria and Romania. The data gathered is presented in concise [online fact sheets](/search/node/emcc OR erm OR index.php?oldIndex), which can be searched and sorted by different criteria - for example, by country, company or type of restructuring.
In addition, the spring 2005 issue of the ERM quarterly presents a [sector focus](/search/node/emcc OR erm OR ?oldIndextemplates/displaydoc.php?docID=27) (
372kb) on post and telecommunications, including an overview of restructuring cases for the period from January to March 2005. This issue also looks at the restructuring of Deutsche Telekom, Europe’s number one telecommunications company and the third largest carrier worldwide.
Industrial relations
In November 2003, the European Industrial Relations Observatory (EIRO) explored the [procedures and costs involved in collective redundancies](/search/node/eiro OR thematicfeature6?oldIndex) at a European level - i.e. the dismissal of a number of employees for economic/organisational reasons (rather than reasons related to the individuals concerned); the levels of, and reasons for, redundancies over recent years; and the debate on the issue.
As monitoring tool, EIROnline offers regular updates and analysis on industrial relations in the [telecommunications sector](/search/node/eiro OR sectors OR 2 OR 2005?oldIndex).
Further relevant information sources
EMCC also highlights [further information sources](/search/node/emcc OR indexes OR sector OR post OR and OR telecommunications?oldIndex) looking at the telecoms sector, providing a brief summary and access details.
Eurofound recommends citing this publication in the following way.
Eurofound (2005), EMCC dossier on the European telecoms sector, article.
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