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To: Gary Korn who wrote (9915)	3/2/1999 12:01:00 AM
From: pat mudge	Respond to of 18016

From Financial Times: World Trade March 2 1999 TELECOMS: Survey predicts fierce rivalry By Alan Cane Telecommunications operators with high costs are likely to be absorbed by competitors as global competition intensifies, according to a new study. The research, by Analysys, the Cambridge-based consultancy which advises operators worldwide, says that operators and service providers of all sizes are for the first time competing in a globalised and highly dynamic environment. "A business strategy for globalised telecoms is no longer an optional development for a handful of major service suppliers with some general global ambitions," it asserts, "it is essential to the survival and prosperity of all participants, large and small. The catalysts for the changes reshaping the telecoms business are market liberalisation and new technologies. Analysys sees several stages in the way the market will develop: an explosion of new entrants immediately after liberalisation followed by alliances, mergers and acquisitions leading to a new globalised environment populated by a few major groups and a large number of niche players. David Cleevely, Analysys managing director, said he did not believe the telecoms industry was likely to achieve the kind of "steady state" it exhibited in the first half of this century for at least 20 years. The report essentially destroys the idea that competing globally is for telecoms groups a matter of choice. Successful companies in the new environment, it says, will combine low operational costs with tight business direction and control, unitary operations across chosen market segments and a recognition that there will be opportunities both in major markets and in niches. "Operators with a high cost base will lose absolutely, irrespective of their position," it warns, pointing out that many, including AT&T of the US and KPN of the Netherlands, have started to shed staff and costs. Deutsche Telekom, on the other hand, retains a high cost structure despite cost-cutting. It warns that a large operator with global coverage but narrow focus may fail to become an industry leader if it lacks other strengths. Valuations afforded the mobile operators Vodafone AirTouch, or DoCoMo of Japan, may be justified by the enormous potential of cellular communications, but could be overturned by developments in other sectors - electronic commerce, video-on-demand - in which full service operators such as AT&T have powerful resources. Global Turf Wars by Tim Hills with David Cleevely, £1,495, Analysys Publications, Suite 2, First Floor, Quayside, Cambridge, UK