UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

AT&T has entered the local market via its newly acquired cable TV subsidiary. Cable
TV companies offer local telephony, broadband internet services and TV programs.
In the UK competition in long distance and international telephony was introduced
in the form of a duopoly in 1984, followed by broader competition after 1990 in
this field (local telephony is becoming open for competition only as of 2001). US cable
operators – facing restrictions at home – entered the British market in the early 1990s
and offered new service packages including internet services. In order to create competition
the dominant telecommunications operator BT was not allowed to enter the cable
TV market; in the Netherlands the government forced the ex-monopoly operator KPN
in 1998 to reduce its share to one of over 300 regional cable franchises; and to a minority
position.
1998 was the starting date for EU liberalization in telecommunications network
operation and telecommunication services. Several smaller EU countries obtained an
extended grace period. The number of ISPs in Europe has strongly increased in the
1990s, but at the turn of the century the ISP business has internationalized and consolidated.
While many leading ISPs in Europe are subsidiaries of the formerly dominant
telecommunications operator, the leading players in the US were newcomers to the
telecommunications sector, namely AOL, YAHOO and MSN (Microsoft); Excite@home
is the only major ISP in the US which is a subsidiary of a major telecommunications
operator, namely AT&T. US telecommunications companies were slow to
understand the economic significance of the internet. However, US computer and chip
producers have strongly pushed for the growth of the internet and the information society,
respectively (BRESNAHAN, 1999; MACHER / MOWERY / HODGES, 1999).
1.2 Telecommunications and Technological Dynamics
The 1990s have witnessed an enormous increase in patent applications and patents
granted in telecommunications, both in the US and Europe. There has been a clear acceleration
of patent dynamics at the U.S. Patent and Trademark Office, largely in the
context of mobile telecommunications and internet-related technologies (Figure 1).
The growth rate of telecommunication patents was the highest among the top
ten fields of patent applications at the European Patent Office (see Table 1). Advanced
electronics, which has links to telecommunication and computer networks, is also
among the top ten in Europe. The figures on technological specialization show that the
US and a few European countries (Sweden, the Netherlands and Finland) have a positive
patent specialization in telecommunications; Germany is negatively specialized in
this field.
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