From national monopoly to multinational corporation: How regulation shaped the road towards telecommunications internationalisation

Abstract

One of the consequences of major regulatory reform of the telecommunications sector from the end of the 1970s – particularly, privatisation, liberalisation and deregulation – was the establishment of a new business environment which permitted former national telecommunications monopolies to expand abroad. From the 1990s, a number of these firms, particularly those based in Europe, joined the rankings of the world's leading multinational corporations. Their internationalisation was uneven, however: while some firms internationalised strongly, others ventured abroad much slower. This article explores how the regulatory framework within which telecommunications incumbents evolved over the long-term shaped their subsequent, uneven, paths to internationalisation. Two case studies representing ‘maximum variation’ are selected: Telefónica, whose early and unrelenting expansion transformed it into one of the world's most international of multinational corporations, and BT, whose overseas ventures failed and, with eroding domestic market share, forced the firm to partially retreat, becoming the least international of the large European incumbents. Long-term ownership, access to capital, management style and exposure to liberalisation strongly influenced firms' approaches to internationalisation.

Keywords:

• regulation
• telecommunications
• internationalisation
• Europe
• privatisation
• liberalisation
• multinational corporations

Notes

1. Telefónica was originally called the Compañía Telefónica Nacional de España until the 1980s, when, in a re-branding exercise, this was shortened to Telefónica. For convenience, Telefónica will be used here.

2. Detailed results of the correlation analysis can be found in more detail in Clifton et al. (2010).

3. Little (1979) describes the ‘wheeling and dealing’ between the Behn brothers and highly-placed Spanish officials and US Ambassadors to favour ITT's successful control of the telecommunications market.

4. ITT was considering selling off Standard Eléctrica (El País, 8 January 1981), and did so in 1988 to Alcatel NV, a subsidiary of the French publicly owned multinational Compagnie Générale d'Électricité.

5. The incumbent supplier of telecommunications in Britain was called British Telecom from 1980 and BT from 1991.