Telecommunications Development in Central and Eastern Europe
| DOI | 10.1177/019251219501600307 |
| Published date | 01 July 1995 |
| Author | Michael Berlage |
| Date | 01 July 1995 |
| Subject Matter | Articles |
283-
Telecommunications
Development
in
Central
and
Eastern
Europe
MICHAEL
BERLAGE
ABSTRACT.
The
development
of
the
telecommunications
infrastructure
is
seen
as
an
important
prerequisite
for
economic
development
in
the
countries
of
Central
and
Eastern
Europe.
The
financing
of
the
upgrading
of
the
infrastructure
becomes
a
major
future
problem
for
these
countries,
especially
with
regard
to
investment
in
the
local
telephone
networks.
This
article
gives
an
overview
of
recent
developments
and
different
approaches
to
telecommunications
development
and
the
reform
of
the
regulatory
framework
in
the
countries
of
Central
and
Eastern
Europe.
Issues
in
Telecommunications
Development
Since
modern
telecommunications
facilities
are
an
important
prerequisite
for
economic
development,
changes
in
the
telecommunication
sector
play
an
important
role
in
the
economic
restructuring
of
Central
and
Eastern
Europe.
To
develop
the
sector,
several
interdependent
problems
have
to
be
solved
simultaneously.
First,
the
growth
and
modernization
of the
networks
needs
to
be
accelerated.
The
issue
of
economic
development
goes
beyond
the
local
and
regional
to
include
integration
into
the
world
economy.
Within
this
field,
social
policy
objectives
will
also
play
an
important
role.
Second,
new
technologies
need
to
be
introduced
into
the
market.
This
includes
meeting
the
growing
demand
of
business
subscribers
for
new
and
enhanced
telecommunications
services.
Since the
new
digital
technology
is
to
a
large
extent
based
on
software
rather
than
on
mechanical
techniques,
totally
differ-
ent
qualifications
for
the
workforce
are
required.
Similarly
the
skills
needed
for
a
customer-oriented
management
are
inadequate.
The
necessary
knowledge
can
be
realized
in
cooperation
with
foreign
partners.
This
relates
to
the
third
problem:
the
need
for
a
new
competition-oriented
framework
to
increase
efficiency
within
the
telecommunications
sector
as
well
as
to
attract
private,
especially
foreign,
capital.
Given
the
shortage
of
capital
within
Eastern
Europe,
the
inflow
of
foreign
private
capital
is
a
touchstone
of
economic
reform.
284
The
changes
in
Central
and
Eastern
Europe
have
brought
several
new
players
to
the
scene.
The
continuing
move
towards
federalism
has
led
to
an
increased
articu-
lation
of
the
interests
of
local
governments
whose
aims
are
often
centred
on
local
development
issues.
In
the
ongoing
process
of
democratization,
the
interests
of
users
and
the
public
are
also
brought
into
the
debate.
Whereas
business
users
demand
high
quality
services,
residential
subscribers
and
the
general
public
want
basic
telephone
services
at
reasonable
rates.
The
restructuring
of
the
economy
has
created
new
private
enterprises
both
in
the
field
of
equipment
manufacturing
and
network
operation.
At
the
same
time
foreign
companies
have
entered
the
East
European
markets
as
well.
However,
private
capital
will
only
come
into
the
market
if
the
expected
profit
is
attractive.
Since
private
capital
is
scarce
in
all
sectors
of
the
economy
in
Eastern
Europe
and
investment
is
still
accompanied
by
risk,
the
profit
expectations
of
the
new
investors
are
high.
These,
in
turn,
may
interfere
with
the
multiple
public
interests
mentioned
above.
As
a
result,
telecommunications
policy
has
to
deal
with
a
number
of
conflicting
goals.
The
resulting
strategy
in
telecommunications
development
can
therefore
be
evaluated
with
regard
to
the
responses
to
many
different
social,
economic
and
political
problems.
The
following
survey
will
give
an
overview
of
developments
in
the
telecommuni-
cations
sector
in
Eastern
Europe.
The
framework
will
roughly
refer
to
the
issue
of
a
universal
service,
the
financing
of
which
is
one
of
the
main
problems
of
telecom-
munications
policy.
To
speed
the
recovery
of
the
economy
in
Eastern
Europe,
prior-
ity
will
probably
be
given
to
the
demands
of
business
customers.
And,
considering
the
scarce
financial
resources,
this
strategy
may
be
the
best
use
of
the
resources.
On
the
other
hand,
a
universal
service
should
be
promoted
for
various
reasons.
A
fast
provision
of
telephone
lines
lies
in
the
interest
of
private
households.
For
polit-
ical
reasons,
private
communication
was
given
a
very
low
priority
in
the
former
communist
countries,
and
overcoming
these
restrictions
is
an
important
issue
in
the
democratization
process.
Local
government
may
favour
this
approach,
while
giving
priority
to
business
clients
may
solve
the
wider
problems
of
economic
development,
but
this
will
not
address
local
issues.
However,
because
of
low
private
incomes
in
East
European
countries,
it
may
be
difficult
to
cover
the
cost
of
a
new
main
line
(Laidlaw,
1992)
and
universal
service
may
require
massive
subsidization.
The
following
sections
will
look
at
developments
in
telecommunications
in
Eastern
Europe
with
regard
to
conflicting
policy
goals
in
the
field
of
universal
service.
It
is
argued
that
this
issue
is
more
complex
than
it
has
been
for
West
European
countries.
Not
only
is
the
financial
background
less
sound,
but
the
telephone
networks
must
be
expanded
and
all
the
modern
telecommunication
services,
a
commonplace
in
the
west,
need
to
be
introduced.
Therefore,
the
problem
of
implementing
public
policy
issues
vis-~-vis
the
economic
interests
of
private
investors
is
comparably
more
complex.
The
Status
of
Telecommunications
in
Central
and
Eastern
Europe
The
rapid
political
and
economic
changes
in
Central
and
Eastern
Europe
revealed
the
telecommunications
sector
to
be
highly
unsatisfactory.
The
infrastructure
was
insufficient
both
in
quantity
and
quality.
The
provision
of
main
lines
was
well
below
West
European
standards.
Figure
1
shows
the
number
of
main
lines
per
100
inhab-
itants for
some
Central
and
Eastern
European
countries
for
the
year
1991.
Compared
to
the
OECD
countries’
average
of
43
main
lines
per
100
inhabitants,
the
gap
is
enormous.
Moreover,
quite
a
number
of
these
official
figures
are
estimated
To continue reading
Request your trial