Our firsts

The world of telecoms, media and technology is in constant flux, transforming economies and shaping the way we live. At Analysys Mason, we help our clients navigate the sector’s changing landscapes. Experts in our business for over 25 years, we are at the forefront of the industry – our groundbreaking thinking often re-writes the rules...

Making the case for competitive telecoms markets in Europe

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In 1990, the European Commission needed evidence to support its policy of liberalising national telecoms markets. Our far-reaching study of the sector examined how the competitive landscape would play out with the development of new technologies and demand over the next 20 years.

To deliver the clear evidence on which the European Commission could build an argument for a single liberalised telecoms market, we developed models of each national market. These showed how sector revenue, investment, and the financial viability of telecoms operators might respond to different scenarios for the rate of change.

We predicted the fall in size and price of handsets and how broadband and mobile services would replace fixed-line analogue services. We foresaw the mass-market for broadband-enabled portable devices – though we didn’t know they would be called iPhone and iPad. And we forecast the widespread uptake of high-speed data, its convergence with broadcasting, and the rise of data protection and security concerns.

Above all, we created a vision of a competitive telecoms market in Europe that would work and would benefit the economies and societies of the European Union. In doing this, we played no small role in making that vision a reality.

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The death of distance and the end of time

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Today it’s hard to believe all the extra costs that used to appear on home telephone bills: extra minutes on the internet, higher fees for long distance and charges for cross-network calls to name but three. Fortunately, our economic analyses for the UK regulator and others helped consign them to history.

In 1996 we produced a pioneering project for Oftel (Ofcom’s predecessor) to determine the drivers of call costs in the UK. Our revolutionary “Death of Distance” study showed that in fact distance was no longer the main driver. This led to an overhaul of the pricing structure for voice calls and made expensive long-distance calls a thing of the past.

With the advance of the internet came new pricing challenges. In 2000-01, our analysis and research supported new entrants to the UK ISP market in their campaign for unmetered access to dial-up internet services.

With unmetered access eventually the standard, the internet became more affordable and accessible.

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A vision for the sky

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In the 1990s, our business case for a network of satellites to provide global broadband services was at the centre of Teledesic’s unique vision for the sky. With ever-increasing demand for ubiquitous broadband coverage, this vision is now becoming a reality.

Teledesic’s big idea was to create a network of over 840 satellites providing a global and seamless broadband, internet and digital data service of a ‘fibre-like’ quality.

To illustrate potential market demand, we developed a series of hypothetical case studies showing a variety of service uses across different industry and geographical scenarios building an appropriate marketing strategy for each. Finally we provided expert input on specific areas of the business plan, including cost and price forecasts for competing technologies in specific territories.

The early years of the 21st century were unkind to major satellite ventures. The dotcom crash brought reduced investor confidence and a string of high-profile failures and bankruptcies. But with enormous investment now earmarked for the provision of ubiquitous high-speed connectivity in the USA and elsewhere, the internet in the sky is now taking its place alongside other leading technologies.

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Making Universal, Universal

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Access to a basic fixed-line telephone service for all parts of the UK was a big issue in the 1990s. Our groundbreaking analysis of the cost and funding of the obligation to provide universal service became the basis for policy in more than 20 countries. The same issues we grappled with then are re-emerging in the roll-out of fibre networks today.

During the liberalisation of telecoms markets in the 1990s the monopolies were reluctant to be saddled with the cost of guaranteed service to remote and uneconomic customers. Our initial 1994 project for Oftel (Ofcom's predecessor) to estimate the costs of BT's universal service obligation (USO) was the first of its kind and ensured that an equitable service was provided across the UK.

In a follow-up study in 1995, we produced detailed and precise calculations of the net cost to BT and Kingston Communications (the UK’s other ‘monopoly’ operator), of providing universal service in high-cost areas and to low-spending customers.

We then went on to address similar issues around the world – across Europe, USA, Asia and Australasia. In Europe, the work culminated in a project for the European Commission to make recommendations on the future of universal service.

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A telecom first in Pakistan

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The first privatisation of an incumbent fixed and mobile telecoms monopoly in a major developing country began in 1998, when Goldman Sachs retained Analysys Mason to conduct a valuation of PTCL in Pakistan and to draw up proposals for a competitive market framework. This helped lay the foundations for a liberalised telecoms market capable of competing for international investment with its neighbour India.

Our consultants worked closely with investment bankers, legal advisers, and the client – drawing up the legal framework, modelling subscriber growth and revenue. We advised on the licence conditions for universal service obligations and set the standard for the transition towards a competitive environment.

In 2003, we advised the government on its market opening policy, including the number and type of licences, the viability of new entrants’ business plans, and the development of employment and government revenues under different scenarios. The market opening was a great success story for our client. Very strong interest from local and foreign investors led to the establishment of a wide range of new firms offering voice and data communications in what came to be seen as a vibrant, exciting new market.

Our work in the area continued with the development of a strategy and business plan for 3G services in Pakistan. Despite challenges, Pakistan can today lay claim to a liberalised telecoms market that successfully competes for international investment with regional neighbours – a long way from where we started nearly 15 years ago.

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