EUROPEAN CARRIERS RETOOL APPROACHES TO U.S. MARKET

Citing weaker-than-expected demand and delays in third-generation wireless builds, Stockholm, Sweden-based carrier Telia last week announced plans to cut back its international efforts.

The move, one of the first big steps taken by new Telia president and CEO Anders Igel, includes plans to discontinue domestic capacity services in the U.S.

While backing away from the world's largest telecom market was unthinkable just a few short years ago, such a decision now fits in with the more refined view of this country that many European carriers are developing.

According to Sandra Palumbo, an analyst with The Yankee Group, during the past decade there was a temptation for these service providers to approach the U.S. in what can be described in hindsight as a haphazard manner.

“When the market was at its peak and everyone was focusing on everything, companies would be more likely to go out there and see what they could get,” she said.

But taking such an all-you-can-grab approach to the U.S. market has proved to be a mistake for these carriers, which find themselves separated from the market by any number of factors, ranging from differences in corporate cultures to time zones. Chastened by the economic downturn, these same carriers now are most likely to attack the U.S. in a more focused manner, centering their efforts on specific vertical sectors.

That's exactly the approach British Telecom is taking. The London-based carrier saw its presence in the U.S. decrease significantly early this year with the unwinding of Concert, its joint venture with AT&T that aimed to provide services to multinational corporations.

As part of that venture, BT had the ability to approach any customer. Now, said a company spokeswoman, the carrier focuses on three verticals: financial, IT and petro-commercial. In addition, BT is centering its efforts on corporations with significant international presences within those verticals.

“If we were going to talk to a major U.S. company, and most of their requirements were domestic and they needed a limited amount of connectivity somewhere else, that probably wouldn't be the best customer for us,” the BT spokeswoman said.

In addition to changing the types of companies they chase, European carriers with global aspirations likely will change their organizational approach to the U.S. as well. Past joint ventures Concert and Global One unraveled under the onerous organizational structure one would expect to find when major carriers from opposite sides of the Atlantic collaborate.

The end result is that most European carriers with global aspirations will go it alone in the U.S., and should they need capacity to serve a customer in this country, they will most likely purchase it from a domestic carrier, said Stuart McIntosh, senior vice president with Adventis.

In part because of the effects of the global telecom downturn, European carriers also are not pursuing the U.S. market as aggressively as they once did. According to Palumbo, however, that won't last long.

“As the market begins to stabilize and everyone sees where carriers are going to end up, then you may see some non-U.S.-based carriers again taking a much closer look at the U.S. market to see what, if any, holes are open here,” she said.