Discussion Papers

Nr. 224: Dieter Elixmann

Der Markt für Übertragungskapazität in Nordamerika und Europa
Nr. 224 / Juli 2001

Summary

The focus of the present study is on companies deploying and marketing fiber optic transmission infrastructure ("Next Generation Carrier (NGCs)"). The objective of the study first and foremost is an empirical appraisal of the status quo, i.e. the study is aiming firstly at identifying the most important players in North America and Europe, secondly at analysing important features of their activities in the market and thirdly at characterising factors crucially impacting the development of and the competition within the market.

The study identifies 24 (22) market entrants in North America (Europe). In Europe the aggregate total length of the network infrastructure is roughly equal to 100,000 Rkm (as of mid 2000). Taking into account the planned capacity for the next 2-4 years this figure increases to about 270,000 Rkm. The aggregate network capacity in the U.S. today is still more than three times higher than in Europe. Yet, the future plans suggest that this ratio will be dimished to a factor of under two. Each of the "big" players in the U.S. makes annual investments of at least US $ 1 bill. for several consecutive years. In Europe the investment outlays vary considerably across the relevant players. Together the pan-European NGCs account for total investment outlays in the year 2000 of roughly DM 15 bill. Germany is among the countries entered at an early stage of the infrastructure deployment of the pan-European companies.

The bulk of the players in the market for transmission infrastructure both in North-America and Europe is quoted at the stock exchange (mostly in New York). Moreover, their annual revenues are (sometimes far below) US $ 1 bill. and they incur (partly high) deficits. The most important strategic features of the market positioning of the pan-European companies are the purchase of transmission capacity (usually as dark fiber) with respect to particular routes and fiber swaps, the operation of MANs as well as data centres and the increasing focus on last-mile activities.

To sum up, our analysis yields that both in North-America and in Europe there are a lot of NGCs. The national telecommunications incumbents no longer are the main players in the (trans)national bandwidth markets. With respect to Europe it is obvious that the actual developments in the market for bandwidth have lived up to the expectations and hopes of economic policy to use the liberalisation as a vehicle to create a market environment open for competition and fostering market entry. Yet, it is worth to be emphasized that the activities of NGCs in Europe and in particular in Germany are still very much focused from a geographical perspective. Otherwise stated their contribution to regional and local competition is rather limited.

Only German language version available.

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