Spain
|
|
Spain |
| You
may also access synoptic tables presenting a synthetic
view of the telecom ventures initiated by alternative
networks providers by EU Member State (PDF format)
|
1.
Background The effective opening of the telecommunications sector commanded by the European Commission is taking place in Spain since the first of January 1998 and will be totally fulfilled by the first of December 1998. As a consequence of this liberalisation process in this, up to now, closed market, many newcomers are trying to access to the telecommunications sector. Strategies of non-telecommunications companies to enter this new liberalised market are not completely defined at this point, probably because it is too early for these companies changing their main competitive goal. Since January 1998 up to date, the situation of these companies has experienced a slow change process. The biggest companies from transport or energy sector have based their strategies participating in the telecommunication market through the acquisition of shares of telecommunication companies or constituting their own specialised telecommunication service companies (such as Endesa, etc).
The types of networks can be grouped in two main areas according to their impact on IS projects.
During these last months, the strategies shown by newcomers to the Telecommunications market are suffering a process of consolidation. This means that those companies that were looking for an agreement or alliance with other companies, both belonging and not belonging to the sector, have improved in their efforts. Some of them have reached an agreement, as it is the case of Endesa or Unión Fenosa. Despite this fact, considering previous surveys, the current situation should be considered as moving step by step following the right pathway. Electric companies are among the most active ones in preparation of projects related to new telecommunications services. It is clear that, as these companies present an actual telecommunications network (to link the production plants and to improve internal management), they can act almost immediately as infrastructure providers. Therefore, their main objective when attacking this new open market is to conclude any kind of alliance to share each other infrastructure and know-how in telecommunications service providing. These electric companies are very interested in the acquisition or participation of new telecommunication media. For example, Endesa has been recently privatised. It is developing a dynamic activity in this field and, as a matter of fact, this Group can be considered as the leader in the telecommunication scope within the electricity sector. This company and STET Telecom won the call for tender of the Spanish Government related to the privatisation of (60% capital stock) Retevision, which is the TV cable and basic telephony operator, becoming a global operator (voice, video and data) and the main Telefonica company's competitor. Retevision has an infrastructure of 1,600 integrated installations that broadcast TV signal for all the Spanish territory. The new operator has also a digital radiolink of 47,000 km and more than 11,000 km of fibre-optic lines. Moreover Endesa has become partner of several companies such as Grupo Electrico de Telecomunicaciones S.A., Ibercaja, Heraldo de Aragón, constituting a new telecommunication local company- Aragón de Cable S.A, which is expected to become the main cable operator of Aragón Region. In Madrid, Endesa has constituted association with the cable operator CYC in order to provide coverage to a wide zone. Moreover Endesa group, together with Telecom Italy and Andaluzas Saving Banks is developing important cable projects is this region. The foreseen investments of this company until 2002 year related to diversification activities are around 150,000 M. PTAs. One of the key objectives is to increase its quota in the telecommunication sector through the participation in Retevision and take part in other activities such as water and gas. Enditel Company (Endesa ingeniería y comunicaciones) has been created in October 1998 for developing the Andalucía Regional Government corporate network. This company is the main telecommunication services provider of Endesa, which has got 60% of its capital. It is relevant to remark the activity of Red Electrica Española (REE). The Spanish electrical network is all managed by this single operator, which is also in charge of deciding who and when produces energy and provides it to the network. REE is owned by the main electric companies and, in a small part (1 %), by the Spanish State. REE has a communication infrastructure of 8.000 Km of fibre which is currently used to manage the electric network and the electric production, but which can be potentially used for other purposes. The telecommunication services are based on the data, voice and video transmission. REE will be privatised in 1999. At the end of September 1997 the REE Public Offering was not still approved by the Ministers Council but all the arrangements are being prepared. Different electric companies, such as Iberdrola, have also their own communication infrastructures, to link the production plants and to improve internal management, although in these cases the communication infrastructure is usually strictly limited to real needs (as is imposed by the current law). However Iberdrola is focusing its new strategies on making profitable its electricity infrastructures by renting them to the telecommunication operators and diversifying the telecommunication activities through its participation in the telecommunication operators, main telecommunication companies and telecommunication equipment providers. Electric companies have different geographical coverage, but in all cases these are very wide zones of the Spanish territory. The following companies, (besides REE) can be cited:
According to the Spanish law, these companies have had to create affiliated companies specifically devoted to those purposes. (Iberdrola-UIPICSA, Unión Fenosa-Unión Fenosa Inversiones, Sevillana-NUINSA,...). Their main activities in these fields are:
In August 1998, it is remarkable that Unión Fenosa (the second private electric company of Spain and the third more important telecommunication Group after Telefonica and Endesa) has created UFINET, a society whose first objective is to yield the surplus capacity and infrastructure related to the private telecommunication network. This society is providing its services to Unión Fenosa on the same way than previously were provided by Union Fenosa´s Telecommunication Division. This society provides also its services to all the participated companies. UFINET has planned investments around 121 M. ECUs for the next five years. The turnover in the future may be higher than the forecasted figure taking into account the active participation the Union Fenosa is carrying out in the Telecommunication sector (Retevisión 8.14%, Airtel 8.2%, CyC Telecomunicaciones Madrid 24.25%, Canal de Comunicaciones Unidas 49%, Sistelcom 37.61%, IPT 90%, Cesatel 60% and Sogatel 90%). The main agreements reached to be considered are as follow:
Additionally CyC Telecomunicaciones Madrid has planned starting its operations as cable service provider in October 1998. All water and waterways utilities are grouped following geographical criteria (covering certain areas or managing different rivers), and in almost all cases, those companies are under public control. The size of these companies tends to be small and focused in not wide areas, except by companies supplying Madrid and Barcelona areas. In Spain, these companies are now concentrated in optimising water resources more than in diversificating to other fields. However, they have their own communication infrastructures that are potentially useful for other purposes under certain conditions. Some movements in this sense has been detected, although with different intensity, than in electric sector and with the same restrictions in laws. For this reason they create affiliated companies to handle the extra telecom activity. Two companies can be cited: Canal de Isabel II and Sociedad General de Aguas de Barcelona (AGBAR):
The Spanish railways network is clearly dominated by RENFE. This public company covers all the Spanish territory. RENFE has a 2,530 Km fibre-optic (9,000 Km foreseen at end of 1998) and it is currently interconnected with the network of Retevisión (current provider of basic infrastructure for television and second operator of basic telephony) in more than 40 provinces. The coverage of RENFE is in an area with the 62% of the users and of the 80% of the traffic. RENFE is also integrated in HITRAIL, a European initiative to manage the fibre network of the different European railways companies. RENFE has reached an agreement with the consortium awarded with the second basic telephony operator (Retevisión) leaded by Endesa for the utilisation of its telecommunications infrastructure network. At the end of October of 1998, the Telecommunication Company named Radioelectronica and RENFE signed an agreement for developing international projects related to systems for improving the railway traffic. The objective is to develop an advanced technological railway traffic system that enables railway operators to improve the security, communication and operation of the railway network. There are other companies with more reduced but relevant coverage like FEVE, in the Northwest part of Spain, and some regions which have their own railways service like Ferrocarrils de la Generalitat in Catalonia or Ferrocarriles Vascos in the Basque Country. Cable i Televisió de Catalunya (CTC) is starting to implement cable in Terrasa (Barcelona). The implementation of this broad-band fibre-optic cable network will be carried out in November through the use of railway networks from Generalitat de Catalunya railways. This Network will be extended gradually covering Barcelona, L´Hospital de Llobregat, Girona, Tarragona, Sabadell, Badalona, Mataró, etc. Metro de Madrid (subway public company in the metropolitan area of Madrid), has been performing several improvements in the fields of telecommunications since 1975, but it is not until 1985 that it does not begin installing optical fibre for its own telephony requirements. Since then, Metro de Madrid has planned a technological strategy which is presented in its Communications General Plan (1997), and its management has been awarded to Unión Fenosa. The General Plan involves:
Services to be provided include the installation of 2.500 cameras all along the subway network. The most important fact is that almost the 50% of the network capacity can be devoted to other tasks. This means that it can be hired to other companies, including cable operators. Up to now there are only primary contacts between Metro and CyC in order to develop common projects using that non used capacity. New relevant investments are being planned for the next years for the diversification and increase of telecommunication services. Since May 98, the company "Ferrocarriles de Catalunya" (the catalan railways company) provides mobile telephony facilities to the users, through the utilisation of its terminals in the most places of the railways network. With an investment more than 2 millions of Ecus, Movistar company has become the first supplier of mobile telephony in the tunnels and facilities of the public Catalan railway. The highest technology has been incorporated through the implementation of the last generation of transceivers equipment, providing services to 42 km of subway, 30 stations and 22 tunnels. The Spanish law of cable services has left the initiative of cable infrastructure development regulation and control to local (cities, towns) authorities. Small operators can provide now cable services in several cities and regions (not national-wide coverage). Only important towns and cities, where quick return of investment is expected, have started the installation of cable infrastructure. These small operators are usually created by a joining of an electric company and a telecommunication operator or a service provider. Other new operators have arisen as consequence of the buying of branches of important telecommunication operators. This is the case of SINTEL (Sistemas e Instalaciones de Telecomunicaciones) which has been branch of Telefonica Company until the last months of this year. Sintel has been brought by Mastec firm (at the end of 1998 the participation of Telefonica will be reduced to 70% and less than 50% for next year).The strategy taking into account the forecasted decreasing of basic telephony business will be focused on the cable market. SINTEL will sign agreements with Retevision and Cableuropa Now, the most important use of these networks is for TV services. These services usually include a basic package of certain number of TV channels can be received by the user by paying a fixed fare. This could be usually completed with a "premium" package offering special quality programmes like recently released or classical pictures or musical events like concerts or operas, which suppose an increased fare; and, finally, a "pay-per-view" service in which users decide if they want to see a special event (generally sports) and pay a specific fare for it. The use of cable network for data transmission and other kind of information services does not seem to be the first intention of ongoing initiatives, although it is expected to be increased in the future, when big groups currently organised enter the market. As the Spanish law for cable services has left the initiative of cable regulation and control to local (cities, towns) authorities, the most important improvements in this area can be summarised in the already mentioned agreements:
Grupo Cable has been created in the second half-year of 1998, this new operator will invest around 268 M. Ecus for the next 10 years. It will allow providing coverage around 620,000 housings in the Galicia Autonomous Community. In January 1999, more than 15,000 housing will have access to these services. Grupo Cable constitutes the first multimedia services operator and will implement in Galicia one of the most modern cable network with digital technology and more than 2,000 Km of fibre-optic. It will enable customers to have a wide set of integrated telecommunication services as for example: Audio-visual services (TV, radio HIFI, Premium channels, video, etc), Telephony (basic telephony, RDSI, virtual private network, video-conference, etc), Data Transmission Services (access to internet, Frame Relay, ATM) and other Value-added services (tele-banking, tele-shopping, tele-medicine and tele-training). In the next Council of Directors (to be celebrated in the beginning of 1999) will be agreed the incorporation of new partners with wide experience in the telecommunication sector. After the final re-adjustments, the holding companies of Grupo Cable will be predictably: Unión Fenosa (22%), Caixa Vigo (15%), Endesa Group (15%), Telecom Italia (15%), Faro de Vigo (10%), Cable Total (10%), Confederación de Empresarios de Galicia (8%) and Hidrocantabrico (5%). In the last months, Endesa Group and telecom Italy have reached a leading position, covering the principal part of the market. Both groups have committed to make investments higher than 2,241 M. Ecus. The distribution is as follows: Endesa around 1,000 M. Ecus, Telecom Italy around 779 M. and Unión Fenosa 462 M. Ecus. The cable operators such as Cableuropa, have also increased remarkable their activities in order to obtain a more wide market share. This firm has expanded its services in order to become one of the main leaders in its influence area. The planned investments for the next two years in telecommunication infrastructure are around 189 M. ECUS (it supposes the 40 % of the total estimated amount for the next 10 years). As telecommunication suppliers has been selected Alcatel Company. The forecasted objective is to provide cable services to more than 250,000 homes in the influence area. An electric company -Hidrocantábrico" has diversified its activities participating in the cable company-Retecal- in order to provide cable services in the Castilla and León regions. The distribution by areas by September 1998 is almost finished, only some demarcations like Canary Islands, Castilla-La Mancha, Sanlúcar de Barrameda, Ceuta and Melilla remain still without being adjudicated. However these areas only represent the 8% of total potential business market. By porcentage, Endesa covers almost 63.2% of market and Cableuropa the 32.8% (this estimation has been made according the number of homes reached). 3.5 Other Networks. Gas, Petroleum & Motorways. The role of other networks in telecommunication field is being not so active, or at least, not so publicly known up to date. Gas and Petroleum companies are more centred in their diversification of energy resources and energy generation. However, all these companies have a communication infrastructure for internal use that could be potentially used for different purposes. The following companies can be cited:
The most important step taken by the listed companies has been done by Gas Natural, and it does not imply the use of an alternative network. The former company has reached an agreement with Vía Digital for creating a television channel of social interest, with informative content and an educational orientation. Test broadcasts began in April 1998. Concerning the petroleum companies such as Repsol or Cepsa, the last studies show that they have not a direct involvement in the development of telecommunication projects by the use of their surplus capacities. This activity is carried out through the participation in main telecommunication companies. The tasks of administering airport facilities and managing telecommunication systems are carried out by AENA (the Spanish Airport Authority). It manages 40 airports and 5 air transit control centres in four flight Information Centres. So the main air transport companies in Spain use these telecommunication facilities and services. It is forecasted than the investment in telecommunication will be triplicate for the 20001 year. The main project of Aena is the development of the RECOA network for the connection (including data, voice and image transmission) of all airports and control centres.
4. Infrastructure deregulation: consequences on the competitive edge 4.1 Regulatory framework Since the Telecommunication Act -1997- (Ley de Ordenación de las Telecomunicaciones) which established a juridical framework for the Telecommunications market development, Spain has experienced an accelerated change in "the rules of the game". Many modifications have been included to follow different EU directives (88/301/CEE and 90/388/CEE) intended to create a liberalised Telecommunications market. One critical step was taken in 1996 when Real Decree Law 6/1996 was approved. The main consequence of this Real Decree was the creation of the Market Telecommunication Commission (CMT). This public organisation was created as part of the Fomento Ministry to safeguard the effective competency conditions in the Telecommunications market. This safeguard also included control on tariffs to be applied. It started its operations during March 1997. On April 1997 it was approved a new law: Telecommunication Liberalisation Act (Law 12/1997). This law was developed to reinforce free market principles in the Telecommunications market by protecting effective market conditions, controlling pricing policies and regulating possible future disputes among the sector. Since then, invitations to tender for the concession of cable telecommunication service have been carried out almost over all national boundaries. The main consequence of the deregulation caused by the evolution in the laws is that not only big companies have been able to enter into the market but SMEs companies have been able to do it. Probably, the sector in which the new deregulated environment has produced the most significant change is the field of cable telecommunication services, many SMEs companies have been awarded with licences to operate by local authorities. Additionally, or as a consequence of deregulation, not only newcomers have to deal with changes, Telefónica, as representative of the existing monopoly, is changing its operative behaviour to adapt to the new situation. This has produced an increase in the quantity and quality of the services offered by all the competitors and, what is usually more important from the point of view of the final users, the ratio between service and cost is getting fairer than before, so for example in September, Telefonica reduced the tariffs of services provided by Moviline (related to analogical mobile telephony) around 53% and 12%.depending on type of contract. Finally, it should be mentioned that despite the fact that Spain is not going to provide fully liberalised telephony services until December 1998, the process is not stopped at all. A clear example of this continuous development can be seen in the following:
4.2 Influence of Telecommunication Liberalisation process in the energy and transport sectors On December 1st 1998 is the data established by the Spanish Government for the complete liberalisation of the telecommunication sector. Previously to that data, a new juridical framework has been put into effect a new juridical framework through the publication of Telecommunication General Law (LGT) which reduces many of the limitations of the preceding regulation. One of the basic objectives of the Government is to modern the productive structure of the energy and transport sectors through the implementation of advanced systems supported by telecommunication applications. So the Government is trying to promote new measures and regulations more flexible and less restrictive that reduce the Public Administration’s control in order to allow these companies to increase their capability in the telecommunication field and to enable the access of newcomers. These measures are mainly focused on:
The new juridical framework will allow the implementation of the new rules gradually and they will be addressed to protect the consumers´ rights, so the LGT provides that the free competition can not cause a detriment of the citizens´ rights for the access to the basic services. 4.3 New Measures and rules of the Ministry of fomento for the alternative networks The Consumers and Users Association (OCU) has claimed to the Ministry of Fomento a reduction of the interconnection tariffs (that is to say those tariffs which are paid to Telefonica by the competitors for the connection to its network) in order to establish better conditions for free competition. Concerning this issue, the Telecommunications Secretary-General Mr. José Manuel Villar affirmed that the Ministry is designing diverse measures in order to encourage the investments in alternative networks related to local telephony operators and to make easier the competence in this field. Three Real Decrees were issued by the Ministry of Fomento in July 1998 and one Real Decree Project was prepared by the Telecommunications Advisor Council (27/07/98), which regulates the use and application of the telecommunication networks. These Regulations have a wide effect on those companies (from electricity, gas, water sectors, etc) which offer alternative networks. These Regulations are:
4. New alliances and potential entrants In Spain during the last three months, has arisen a strong competition in order to increase the participation in the telecommunication market as foreign companies as Spanish companies. Diverse foreign operators are trying to access to the Spanish Telecommunication market, such as British Telecom whose strategy is based on providing all the interactive services integrating voice, data and image in an unique IP network. The key purpose is to develop its own multimedia platform. For reaching this aim, this British operator is looking for entering into alliance with other companies. This alliance could be reached in the next future with some companies from different sectors (i.e. industry, energy, transport, etc). British Telecom is just prepared to supply a complete service range to its customers, although it will be not possible until that this company get the third basic-telephony license requested the last October 7 1998. Once obtained this company should agree with Telefonica Company the interconnection contract. This company is building in Spain a fibre-optic network of more than 7,000 km and it is establishing fibre-optic communication rings in the main cities. In December 1998, BT will launch its alternative platform to Infovía, named Interpista. BT Telecomunicaciones (subsidiary company of BT) presented in October 1998 its solicitude to the Telecommunication Market Commission (CMT) for providing services in basic telephony in Spain. Some Spanish companies such as Jazztel telecomunicaciones are reaching agreements with other companies for funding their investments in this field. Jazztel requested on October 14th 1998 a license in order to provide telephone services (including local basic telephony) in Spain, in competition with Telefonica, Retevisión and Lince companies. Jazztel aims to create a telecommunication signs network with 7,500-km fibre-optic around the entire Iberica peninsula. This company will provide its services mainly to enterprises. The companies that will be involved in the development of this network will be:
On November 16 1998, Jazztel reached a leasing agreement with RENFE. The Railway Company will invest around 66 M.ECUs for the fibre-optic network implementation, which will be used by the telephone operator. On a yearly basis, Jazztell will pay to RENFE around 3.4 M. ECUs during twenty years for using that infrastructure. With this agreement Jazztel will complement the agreements reached with Nortel. After five months from getting the third basic telephony license, Lince Telecomunicaciones Company has disclosed its main strategic plans for its starting on December 1st. It will be named UNI2 and will provide indirect services through the dialling code 052 (for inter-regional and international calls) from that month. In June 1999 this service will have a direct access and it will cover during that year 43 cities. The objective is to provide in three years coverage to all the cities with more 100,000 inhabitants. The plans of this company are focused on providing the maximum coverage in a short time. As consequence of the lackness of an own network, UNI2 has signed contracts with RENFE and FEVE for using their infrastructures. These railway companies will make 6,000 kms of fibre-optic available to UNI2. The electric Group Endesa and Gas Natural are reaching alliances and preparing a combined investment Plan. Although there is not still any pronouncement about their telecommunication activities, it is possible that can be also established any common actions or agreement. From that the Telecommunication Market Commission allowed the basic telephony licenses access, up till now have been presented a dozen of requests, some of them are as follow:
Currently there are more than 50 companies in competition pool position for participating in this new Market. It includes national basic telephony operators (Retevisión, UNI2 and BT), operators for services to companies (RSLCom, Esprit, Colt and Equant), cable companies (CYC in Madrid, CTC in Catalonia, etc), telephonic carrier companies (Global One and C&W) and mobile telephony companies (Airtel and Retevisión Móvil), etc |
