From Nationalistic to Regional Telecommunication Market Structures
During the past few years, the Danish telecommunication market has experienced dramatic changes. Following the liberalisation in 1998, many new companies blossomed due to a strong deregulation.
The deregulation in Denmark has been very efficient giving opportunities to many new companies. At the end of 2001 there was thus approx. 50-60 telecommunication companies in Denmark compared to only a few in 1998.
Of course there are still issues to be addressed such as cost of last mile access, but the smaller telecommunication companies now find other regulatory forces to be of equal importance - the natural regulation of the market powers.
In a market where the fixed line and mobile penetration rate is higher than 70% and the Internet penetration rate has exceeded 37%, there is very little room for real growth in the Danish telecommunication market. Competition is therefore extremely high, and smaller companies including customers find themselves being acquired by larger ones striving for market shares.
As in many other European countries, the national incumbent still enjoys market leadership, which is also the case with TDC in Denmark. TDC currently enjoys a fixed line market share of 88% and a mobile phone market share of 41% followed by Sonofon (24%) and Orange (15%). On the Internet market, TDC enjoys a market share of 34% followed by Tiscali (23%) and Tele2 (21%).
The market powers are thus pulling the development in the other direction leaving less space for the new telecommunication companies, which to some extend is only natural.
To be able to survive in a time like this, a telecommunication company therefore needs a solid market share, a strong financial background or to serve a niche market small enough to avoid the hungry eyes of the large telecommunication companies.
As an example there are only very few fibre based infrastructure vendors left in Denmark. Leaving the large telecommunication companies out, there is actually only one left being GlobalConnect A/S. All other companies have either been taken over by larger companies or they have climbed up the value chain offering products competing with their customers. This is on the one hand a difficult time for a company like GlobalConnect but on the other hand an advantage.
The difficulty of course lies in the threat from the large companies that may not necessarily see the company as a significant player but still be able to lower prices to an unnatural level. On the other hand, the products of GlobalConnect apply to companies that do not want their network supplier to act as a competitor on other levels.
Starting with the liberalisation in 1998 the market has therefore gone through a process with substantial growth in terms of number of players but only 3-4 years later, the market is falling back on a path that will lead to monopoly or in best case an oligopolistic structure.
This market structure is so far still limited to a national level but within the next five years we will surely see the structure apply on a regional level. The merger between Swedish Telia and Finnish Sonera is a clear indication of the development.
The liberalisation and deregulation in the respective European countries have set the market powers free. It is however questionable whether the respective governments had foreseen the relatively fast outcome of the market powers where the tendency so far is moving from monopolistic or oligopolistic market structures from a national to a regional level.
 Top of Page
|
