Technological Leaps and Lower Prices

Until recently, European telecommunications companies charged high tariffs for international calls. Since the majority of international callers were businesses, the consumer was caught in the middle, paying high rates without much hope of competition's bringing change. At the beginning of 1998, most European Union countries, along with some nonmembers, opened up their telecommunications markets fully to competition. Fierce rivalry among incumbent and new service providers has resulted in plummeting prices for phone calls and a raft of new services.

Liberalization in Europe has coincided with huge leaps in technology that have lowered the costs of building infrastructure and providing service. A new generation of carriers has emerged that is exploiting the situation, including MCI WorldCom, Level 3 and Qwest. Originally, one fiber pair had the capacity to carry 32,000 voices at once, but a new fiber-optic technology called Wave Division Multiplexing (WDM) means that, according to Guy Powell, vice president for Europe, Middle East and Africa for equipment maker Ciena, ''Fiber systems that will support almost 3 million calls at once will be deployed soon - in data terms, that's the equivalent of a million million bits.''

The introduction of prepayment schemes for mobile in Europe has boosted uptake, particularly in Italy, Greece and Portugal, where market growth has been in double or even triple figures in the last year, according to the financial institution Salomon, Smith and Barney. Among many subscribers, particularly the younger ones, cellular is rapidly supplanting fixed-line phones - a trend that looks set to continue as prices fall, and text and data applications become more widely available on mobile terminals.

Annie Turner