THE TELECOM INDUSTRY REVOLUTION IS CREATING UNPRECEDENTED MARKETING OPPORTUNITIES. TREND-SETTING TELECOMS THAT FACED COMPETITION FIRST ARE SHOWING THE INS AND OUTS TO THE NEWCOMERS.; TELECOM MARKETING

By Published on .

A marketing explosion will reverberate around the world in the next few years as the estimated $800 billion telecommunications industry undergoes massive deregulation and privatization.

This liberalization will lead to vast marketing opportunities, as telecoms target consumers, businesses and governments through every medium imaginable-TV, newspapers, magazines, the World Wide Web, even old-fashioned door-to-door sales.

"The state telecoms are starting to realize that customers are demanding better service, and that means privatizing and deregulating," said Diana Wolf, spokeswoman at U.S. long-distance provider MCI. "Probably every country in the world will have an open market eventually," she said, "but it's going to take time."

Countries with long-deregulated telecom industries and related marketing experience-such as the U.S. and U.K., which started deregulating in 1984-are best poised to exploit emerging overseas opportunities.

The U.S. is in the vanguard, with its long-distance and regional service providers having competed with marketing campaigns for more than a decade. British Telecom also loosened its monopolistic grip that year, and BT and competitor Cable & Wireless have invested greatly overseas.

BT took risks in 1995, moving into still-closed markets by opening a Beijing office and setting up a joint venture with Max India to bid for the country's cellular licenses.

Cable & Wireless also has interests in 50 countries, including a 58.4% share of Hongkong Telecom, 24.5% of Australia's Optus Communications, 39.9% of Sweden's Tele 2 and 10% of Israel's Bezeq.

"The whole industry is driven by three primary considerations," said Russ Ryan, director of corporate communications at Sprint Corp. "The changing regulatory environment around the world; technology that now enables companies and individuals to be easily and seamlessly connected worldwide; and increasingly sophisticated, demanding users who demand better service."

Countries increasingly are paying for their share of the huge global industry. "The trend worldwide is to further liberalization, opening markets to foreign investment," said Phillip Armstrong, senior analyst at Northern Business Information, a New York consultancy.

Last month, the U.S. Federal Communications Commission began permitting foreign investors to buy into U.S. telecoms.

European giants France Telecom and Deutsche Telekom have been slow to privatize and expand, but they now recognize the revenue they can generate. Last month the FCC approved their bid for a 20%, $4.2 billion stake in Sprint. The venture, now called Phoenix, will start this year with a $50 million Grey Worldwide campaign.

Another global venture, network service provider Concert, grew in 1994 from MCI and the U.K.'s BT. MCI handles all Concert marketing in the Americas, and BT handles it elsewhere.

"We look at extending our brand overseas in the consumer market in a variety of market segments," said Terry Macko, MCI's VP of segment marketing. BT plans no above-the-line Concert marketing from London roster agencies Abbott Mead Vickers/ BBDO and Saatchi & Saatchi.

TELECOM AT&T in 1995 began splitting into communications services, hardware and multimedia services divisions. Its 43 joint venture marketing alliances include Canada's Unitel, a Ukraine alliance with Deutsche Telekom and PTT Nederland and AT&T (China) Co.

China, with more than a billion potential customers, is a market telecoms are eyeing curiously. State Directorate General of Telecom has not deregulated, but it allows investment from all three U.S. long-distance providers.

MCI is brand-building in many markets with its MCI Card and WorldPhone Service, but wildly variant market regulations make global marketing impossible.

DISCREET MARKETING

An open market does not mean open marketing. "Singapore doesn't allow any competition at all," said MCI's Ms. Wolf. "Our Singapore office asks us to send the local names we get from reader-response cards, because if we advertise, the government will shut us down."

Many economies, growing suddenly after decades of socialism, need U.S. telecoms' technological and marketing experience-but they ask discreetly, promoting only local names to consumers wary of foreign encroachment.

In Eastern Europe, the challenges range from laying down a national infrastructure to facing competition with brand identity.

"Ameritech has been very subtle, if not nonexistent, in overseas advertising," said Dennis LaComb, director of international affairs, Ameritech Corp. Ameritech will push its name in Europe and Asia this year, he said: "Nothing frightening, just something to give local consumers a sense of what Ameritech is."

Eastern Europe, Asia-Pacific and Latin America are regions promising "economic development," said BellSouth International spokeswoman Maria Schnabel.

"We are in partnerships, so we don't use the BellSouth name," she said. "Once BellSouth's partnership wins the license and starts the company, it's run by local management, which makes marketing decisions."

U.S. regional provider Nynex shouts its name to business and residential consumers in Asia-Pacific and Eastern Europe, where Nynex Information Resources publishes telephone directories.

"We educate business people on the role and value of advertising," said Mark Herrick, Nynex VP-international. Leo Burnett Co., Warsaw, handles Nynex in Poland, and BBK Time, Prague, is its agency in the Czech Republic.

Regional operator U S West put about 70% of its investment in the U.K., entering soon after the market opened in 1984.

A SHIFT IN FOCUS

September 1993 saw the start of a U S West joint venture with the U.K.'s Cable & Wireless subsidiary Mercury-Mercury One 2 One, the first commercial personal communications service company. "Using the Mercury name was a tough decision to make, with all the misconceptions about ownership, but the brand positioning was worth having," said Catherine May, public relations director. Bartle Bogle Hegarty handles its $15 million budget.

U S West plans to shift its focus to emerging markets. "We're moving into countries where penetration of local telecoms is very low, but whose economies are starting to pick up," Ms. May said. But the U S West name is left out: "It's better to build up a name suiting the local market."

Bell Atlantic is an established presence worldwide. With partner Ing. C. Olivetti & Co., Bell Atlantic in November joined France Telecom, Deutsche Telekom and Sprint Corp. to challenge Telecom Italia's grip on Italy. Southwestern Bell Corp., San Antonio, markets business and consumer services worldwide-including cellular ventures in Mexico and South Korea-and a 10% stake in the U.K.'s TeleWest.

In this article:
Most Popular