Some headlines just make you read articles. We hope that BillingViews occasionally has that effect.
This headline did it for us:
Working on the assumption that Vodafone et al were not feeling particularly unloved and in need of a hug from Neelie Kroes, the article was duly read.
Essentially it reports on an open letter sent to Ms Kroes by the major telecoms companies in Europe asking for the rules on Mergers and Acquisitions to be relaxed. Presumably because the major telecoms companies in Europe are planning on merging or acquiring less major telecoms companies. In the article it cites the case of Telefonica wanting to buy e-plus.
It all has a feeling of deja-vue about it.
In the early to mid 1990s we went from monopolies to varying degrees of competition around the world. In Finland, the incumbent lost 50 percent of its market share overnight, in the States, customers were almost drowned in mailings about long distance deals, in the Czech Republic the Billing Manager was recalled from getting on a flight because billing was losing millions of dollars of revenue. Which turned out to be the competition, not billing. In the UK, nothing much happened at all.
And then the world went back to near monopoly status. In the words of the wife of one of the executives who helped break everything up – when she saw news of mergers – ‘why on earth are you putting it all back together, you just spent years breaking it all up?’
It seems we are starting the cycle again, although this time there is a twist. Large telecoms companies are creating their own competition, since they already have competitive markets.
Whereas before there was a vast array of start-ups, there is now an emerging army of MVNOs. Some of them, in China for example, are no small companies either. Some of them are addressing niche markets, such as M2M or the younger, online consumer market. Some major telecoms companies, such as AT&T, Tele2 and others are setting up their own MVNOs.
Perhaps the reasoning behind this emerging wave of M&A activity is a realization that connectivity and bandwidth, as we now know we will need it, is only viable at huge scale. Perhaps it is just that market power is still at the top of the financial market’s mind and disruption moves stock markets. Perhaps issues such as roaming can only be properly addressed at a European level, and not at a country level.
Or perhaps it is a bit of both. Major telecoms companies know that scale is needed to support the connectivity and bandwidth demands and maybe they now know that innovation and clear thinking can only come from start-ups or companies with a start-up mentality.
Either way, it is going to mean some serious integration in the backgrounds of the major merging telecoms companies and hopefully some innovative products and price plans from the MVNOs and start-ups, mainly based around real-time knowledge of customers, habits, location – everything.
On this occasion we agree with the spirit of the open letter. Instead of sending any merger that will result in less than four major telecoms companies in one market into ‘Round Two’ of scrutiny, let the market shake itself out.
Let the competition begin! – Again.