TELECOM MARKETING;EU MEMBERS GET READY FOR 1998 DEREGULATION;WESTERN EUROPE; STATE TELECOMS PRIVATIZE PAINFULLY, ANTICIPATING BENEFITS

Published on .

Although British Telecom controls 90% of the U.K. consumer market, minor competition from the likes of Cable & Wireless subsidiary Mercury Communications still spurs extensive BT marketing campaigns by Abbott Mead Vickers/ BBDO, London. As the U.K. requires BT to lower its prices annually, pressure is very real.

The U.K.'s cellular market is split among five companies, two of which-Cellnet, 60% owned by BT, and Vodaphone-each claim 40% of 5 million domestic subscribers. Mercury One 2 One, People's Phone and Hutchison Telecom-owned Orange share the remaining 20%.

BT bought 20% of U.S.-based MCI in 1993, and in 1994 they formed Concert, Reston, Va., offering business telecommunications services including data services and intracompany voice phone calls. BT owns 75% of Concert and markets its services everywhere outside the Americas, where 25% owner MCI handles.

The U.K. aside, Western Europe still is largely a region of state-run telecom monopolies reducing state ownership to prepare for the European Community's 1998 voice service deregulation.

BELGIUM

In late 1995, Belgium entertained bids for 49.9% ownership of Belgacom from Ameritech and Telsource, a consortium including PTT Nederland and Swiss Telecom. Belgium's telecom revenue is estimated at $5.2 billion.

But other groups hope to grab a slice of the market when it opens. Telnet Flanders, a venture between U.S. West and several Flemish cable companies, is developing an upgraded phone system for the nation's Dutch-speaking Flanders region.

Two companies have licenses to provide cell service: Belgacom Mobile, 25% owned by U.S.-based AirTouch International, controlling most of the market, and the newer Mobistar, a consortium of France Telecom Mobile International and the domestic Telinfo.

Belgacom also plans to break an integrated system digital network ad campaign in 1996, and create an international digital leased-line network carrying voice and data transmission.

ITALY

The state-run Telecom Italia is expected to privatize early this year. Held by government-controlled company STET, TI's 1994 revenues reached $11.9 billion. Armando Testa, Rome, handles multimedia campaigns for residential and small businesses, and SCS Integrated Communications, Rome, a state-owned agency, handles business for large commercial clients.

TI plans to research and develop strategies in new media, such as interactive and cellular services, and now advertises these services heavily. Ads for TI's cellular phone Insip play off the frustration of phones incompatible with local service, and TI's call-waiting and domestic long-distance marketing emphasize consumer convenience.

Telecom Italia Mobile became its own entity in July and competes with Omnitel, part-owned by communications technology marketer Olivetti and scheduled to start its commercial phase last month.

"The market is not yet saturated, but by 2000 we expect to have a client base of 10 million," compared with 3.5 million users now, said Carlo Fornaro, TIM spokesman. J. Walter Thompson Co., Milan, handles most TIM advertising.

SPAIN

Spain publicly sold 11% of its Telef¢nica de Espa¤a, Madrid, in fall 1995. The state, retaining 20%, spearheaded the sale with an $18 million multimedia campaign, by Ruiz Nicoli and Tapsa/NW Ayer, advertising its profits and international presence.

Telef¢nica is responding to rapid changes in Spanish and international laws, technology and its public image, giving it the now-familiar challenge "to go from being the only ones to being the favorites," said Guillermo Medina, communications and corporate relations manager.

Consistent with the pattern of many privatizing telecoms, Telef¢nica is trying to make reparations for historically poor service and high prices.

GERMANY

Germany's Deutsche Telekom, Bonn, is on a rocky road to privatization. Providing basic, cellular, cable and integrated system digital network services, it may yield $10 billion to $20 billion when it sells a third of its shares in November.

"Deutsche Telekom did not succeed in positioning itself as a service provider for the multimedia future," said Hans Dieter Maier, manager of the Bavarian Advertising Academy, Munich. "It advertises heavily with little strategical content."

Nevertheless, it spent $75 million in 1994 on ads by Lintas, Hamburg, and BBDO and Spiess Ermische Andere, both D?sseldorf. Mobile service subsidiary DeTeMobil spent $30 million more on ads by Springer & Jacoby, Hamburg. Deutsche Telekom named S&J and SEA to handle its new corporate sales campaign.

Deutsche Telekom anticipates four partnerships applying for competing domestic services next summer: CNI, owned by Mannesmann and Deutsche Bank, with AT&T expected to invest; VebaCon, linked to Cable & Wireless; Viag Interkom, owned by BT and Thyssen BellSouth; and DB Com, a subsidiary of German rail service Deutsche Bundesbahn.

Deutsche Telekom enjoys presence and brand identity saturation, and the surviving com-petitors will have an uphill marketing battle. Viag Interkom is handled by J. Walter Thompson Co. and CNI by Wunderman Cato Johnson, both Frankfurt.

FRANCE

Perhaps the telecom most resistant to privatization in Europe is the region's second-largest company. France Telecom boasted 1994 profits of $2 billion on $670 billion in revenue, but its market protectionism threatens to leave it standing at the starting gate in 1998.

Efforts to deregulate and prepare France Telecom for private competition have failed miserably. France said reform of France Telecom must occur before 1998 to battle any slimmer, more agile arrivals and to improve chances of reaching new markets.

But France Telecom's new alliance with Sprint and Deutsche Telekom, in a joint venture called Atlas, allows exploitation of liberalizing European markets and paves the way for forming Phoenix, a venture with Sprint that would link their serviced markets worldwide. France Telecom's domestic protectionist monopoly worries U.S. regulators, who have not finalized the approval of Phoenix-a venture that would give France T‚l‚com a 20% stake in Sprint for $4 billion.

France Telecom is also keeping up with technological innovation, having introduced an interactive information teletext service, Minitel, a fixture throughout the country's homes.

Minitel's success is partly due to the project's high budget, which allowed France Telecom to provide the terminals free and charge only for line use.

The company sends a value-and-utility message to residential consumers with massive advertising. 1994 spending reached $88 million, with Euro RSCG, BDDP, Publicis, Saatchi & Saatchi and other shops. A $10 million multimedia campaign by Saatchi broke in October.

Contributing to this story: Amy Barone, Milan; Jennifer Conlin, Brussels; Bruce Crumley, Paris; Deborah Klosky, Madrid; Dagmar Mussey, Dusseldorf; Charles Siler, London.

In this article:
Most Popular