This paper aims at analysing the competitiveness
situation of the mobile telecommunication industry of Finland and Germany.
The comparison of industries in two different countries makes it necessary
to use an appropriate framework to be sure to cover all factors and the
recommended framework is "Porter’s diamond".
Country-specific demographic issues,
degree of mobile penetration and acceptance of new technologies are described
in detail in the factor conditions. In demand conditions the
focus is on the factors, which influence the buying decision. Market opportunities,
described in the model as chance, is discussed in the demand conditions
as well. In strategy, infrastructure and rivalry, attention is paid
to the infrastructure of the mobile networks. The manufacturing side is
closely analysed in related, supporting industries, but is not covered
in this paper. The regulatory situation in both market areas is
discussed in government.
Finland has the highest penetration of mobile phones in the world. In June 1999 60% of the Finns had a mobile phone subscription. Finland is also the first country in the world where number of mobile subscriptions has exceeded the number of fixed line subscribers.
Even though that every month more then
200 million SMSs are sent in German mobile networks the penetration is
fairly low at around 20 percent of all inhabitants. The mentality of German
people tends to be conservative, and therefore they are not as fast in
adapting to new technologies and in utilizing them, mainly due to the age
structure and the culture.
Finland
The history of mobile telecommunications in Finland started with analogue ARP (1980) and NMT (1982) networks operated by Sonera. Operation of ARP network will be terminated by the end of year 1999 and NMT900 network by the end of year 2000. Operation of NMT450 network will continue (Sonera Interim Report 1-6/99).
National digital GSM900 networks are operated by Radiolinja, and Sonera. A licence for building a national GSM1800 network has been given to Radiolinja, Sonera and Telia. Sonera and Radiolinja have started to use GSM1800 networks together with their existing network in major cities. Telia´s GSM1800 network covers the area of Helsinki, Tampere, and Turku. Also several local phone operators have their own local GSM1800 networks.
By the end of 1998 Sonera had a share of 61% of subscribers in digital mobile networks. Radiolinja's share was 38%. Telia and local Finnet operators shared the remaining 1%.
Intermediate steps towards UMTS technology
are HSCSD (high speed circuit switched data) and GPRS (general packet radio
service) which will enable the data transfer speed to reach about 100 kbit/s.
Not all the Finnish operators will immediately adopt HSCSD technology to
upgrade their GSM data service. All the operators will adopt GPRS, which
will offer greater opportunities to their services.
Germany
Deutsche Telekom established in 1985 their first mobile network, the analogue C-Net. At the moment 330.000 subscriber are using this network that will be closed down beginning of the year 2000.
Nowadays, four mobile phone operators offer a digital network at the moment.
The biggest one is Mannesmann Mobilfunk GmbH with their D2 network. This company has around 42,2 percent market share. DeTeMobil is a daughter of Deutsche Telekom AG and has around 41,2 % market share, including 300.000 subscriber from the analogue network. E-Plus is the third biggest operator and has roughly 15,4 percent market share. The smallest operator is VIAG Interkom GmbH & Co. with only 1,2 percent market share. This company owned by VIAG AG, British Telecommunications plc and Telenor AS started the beginning of this year.
Deutsche Telekom bought in June 1999
HSCSD as the first mobile operator in Europe. E+ already utilizes GPRS
technologies in their network.
In addition, the great selection of different mobile subscriptions gives the customers a chance to match their telephone behaviour in an economical way. The new subscription type for dual band phones is likely to attract more cost-conscious businesses and end customers in future. Due to high rate of young mobile phone users the prepaid subscription type will win attention.
The coverage of all provider differs between the GSM 900 and GSM 1800 operator. The latter have a very small coverage of the total are of Germany. However, still due to roaming agreements with international mobile operators, it is also for the subscriber of these networks possible to use their mobile phones everywhere in Germany.
D1 and D2
E+
E2 (Viag Interkom)
There are several subscription types that are taking into account the different kinds of users and their usage behaviour. If you examine all these different models closer, you should mention in any case that Viag Interkom is the only one that offers a so-called "home-cell". In this cell the subscriber has to pay the same amount for the calls as he would you the fixed-line. The new tariff model increased immediately the popularity of this new service. Other customer services, such as pre-paid SIM cards are offered, but not very accepted by the market since there are several limitation such as limited international roaming agreements and the limited SMS usage.
Finland and Germany
The significant trends in Finnish as well as German telecommunications market are listed below, will affect mobile network operators perhaps to a greater extent than the fixed network operators, because of the rapid growth of mobile users:
The obligations of Finnish telecom
operators are set out in the Telecommunications Market Act.
Compared with other telecommunication
activity in Finland, which is non-licence based, entry to the mobile operator
market is based
on individual licences granted by
the Ministry of Traffic and Communications. The licences are valid for
20 years. The licence is free of
charge, only an administration fee
needs to be paid.
The following list describes the Finnish regulatory characteristics of the mobile market:
With getting one of the licenses for mobile telecommunication the licensee has also to fulfill some duties. For example it is regulated how fast the network has to be build up, and how much of the area has to be provided with the area. In addition, the licenses running out after a while. They are valid for roughly 20 years.
The regulation of telecommunications
and posts, frequency regulation and number management are sovereign tasks
of the Federation. The aims of regulation are specified in the Telecommunications
Act and the Postal Act. The purpose of these laws is to promote competition
through regulation and to guarantee appropriate and adequate services (infrastructure
obligations) throughout the country. Technical regulation serves to ensure
the efficient, non-discriminating and interference-free use of resources
and the control of obligations ensuing from laws, ordinances or licence
terms and conditions.
Operator | |
D1 | Duty to cover
94 % of all inhabitants of the western part and 90 % of the eastern part
until 31.12.1994.
Vaild until 31.12.2009 |
D2 | Duty to cover 75 % of all inhabitants. |
E1 | Duty to cover
88 % of all inhabitants in the western part until 31.12.1995 and 98 % of
all inhabitants until 31.12.1997.
Valid until 31.12.2012 |
E2 | Duty to cover
75 % of all inhabitants until 31.12.2001
Valid until 31.12.2016 |
The mobile operators have to pay for the licences. Very recently some new licences were sold through an auction and D1 and D2 paid each around 600 MFIM to obtain new frequencies to expand their service.
The UMTS frequency is going to be sold
next year (auction).
Ministry of Traffic and Communication,
URL: http://www.mintc.fi [referred 7/11/99]
Sonera, URL: http://www.sonera.fi [referred 6/11/99]
TAC, URL http://www.thk.fi [referred 7/11/99]
GSM Organization, URL: http://www.gsm.org [referred 5/11/99]
Deutsche Telekom, URL: http://www.dtag.de
[referred 5/11/99]