The International Handbook of Telecommunications Economics, Volume III
Edited by Gary Madden
23. Making markets: telecommunications in Western Europe Willem Hulsink and Andrew Davies INTRODUCTION From 1910 to the early 1980s most telephone systems in Europe were controlled by state-owned national monopolies or postal, telegraph and telephone (PTTs) agencies. International telephony was administered by a cartel that included European PTTs, American Telephone and Telegraph (AT&T) and foreign telephony administrations. Major European PTTs and their favoured equipment suppliers were protected from domestic and international competition until the 1980s and early 1990s. Traditional closed national systems have since been transformed into more open competitive domestic and international regimes. Following the US, UK and Japan, European countries have privatized state-owned PTTs to form public telecommunications operators (PTOs) and liberalized their telecommunications markets. A new international political economy is emerging in telecommunications services as PTOs face strong domestic competition and form global telecommunication companies in international markets. The monopoly of European PTOs was abolished on 1 January 1998 when the European Commission (EC) liberalized telecommunications markets, including both infrastructure and voice telephony. A few member states of the European Union (EU) (Greece, Ireland, Luxembourg, Portugal and Spain) negotiated deferment for opening their domestic markets. Closely linked with the EC liberalization measures was the implementation of the Fourth Protocol to the General Agreement on Trade in Services of the World Trade Organization (WTO) to enhance market openness and international trade in telecommunications (OECD, 1999). Some member states that insisted on a temporary moratorium on market entry and liberalization have since embarked on accelerating the introduction of...
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