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Growing importance of communications markets
Rapid changes at a continuously accelerating speed has characterised recent economic developments. Among the most significant changes are the breakthrough of information technology which has extended to all branches of the economy, the economic growth since the mid-1990s, the ongoing globalisation of the economy, and the business restructuring associated with these developments. The communications market has been at the forefront - it covers many major sectors, from telecommunications and the Internet to television, radio, postal services and the press.
Inherent factors in the communications market causing problems
During 2001, the effects of slower economic growth materialised in the communications market. The change in the economic situation was reflected by the delay of digital TV transmissions and the construction of third-generation mobile networks. Neither were all expectations related to the Internet fulfilled. Overoptimistic expectations, in particular in the information technology sector, led to obvious overrating of technology shares and great oscillations in stock prices. The decline in prices for technology shares during the year is, however, a sign of more realistic expectations. In addition, developments in the IT sector have eliminated the market's more inefficient players.
The communications networks form an essential infrastructure within the economy, providing the main electronic products and services (voice, picture and data) upon which the information society depends. Problems in the communications market, however, often originate from inherent factors centered on the possession and control of the networks. Particularly in the telecommunications sector these factors consist of unchallenged market shares, dating from the monopolised period, and the traditional operators' dominant position compared with competitors. Because of the way network ownership is structured, established actors in the communications market often possess unusual economic/production strength, which gives them control of the whole production chain from network services to content production.
The pressure of competition is not always distributed evenly. The mobile communications market serves as an example of uneven distribution of competitive pressure. The mobile networks' high interconnection fees reveal the absence of serious competition and consequently the need for control by the authorities in the otherwise competitive mobile market.
Communications market facing changes
In the future, operators will strive to acquire more extensive communications networks, and through this, more and more clients. Along with traditional telecommunications operators, companies utilising Internet data transmission technology will also act as operators. Cable television companies are already providing Internet services. Power companies, as well, are anxious to enter the communications market, and the adaptability of electrical networks for data transmission is under investigation. Technical evolution provides more competing alternatives. Regulation which is independent of the technology is a basic condition for a functional and efficient communications market and for sound competition. The consumer is in a key position with regard to the uptake and success of products and services which exploit the new technology.
The European market for postal services is also opening up for competition. It is thought that the creation of a single internal European postal market will increase the competitiveness of Europe. The new Act on Postal Services, which took effect in Finland at the beginning of 2002, already permits competition in the domestic market. The Finnish government has granted two companies a licence for postal operations, by only Finland Post Ltd carries out postal operations in accordance with the licence.
The operating conditions for commercial television companies in the communications market may improve due to a decision that the licence fees for analog television broadcasting which they are obliged to pay to the Finnish Broadcasting Company (YLE) will be reduced by half. The development of digital transmission and the production of programmes and services for digital TV in Finland have been facilitated by another decision stipulating that no licence fees will be collected for digital transmissions for periods covered by the licence up to the year 2010.
Functional competition needs regulation
The intense technical development typical of the communications market is likely to continue, not least through the convergence of different communications technologies. This evolution will require more and more economic and intellectual resources and technical capability. This also presents a challenge to the authorities. In spite of the economic developments and technical breakthroughs regulation is still needed. Without the authorities' effective involvement in the functioning of the markets, this critical period may be to the advantage of the established actor and to the disadvantage of those seeking to enter the market. Regulation and increased competition between companies are both necessary to improve consumers' and customers' choices.
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