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RealTime IT News

Spanish Telecom Price Wars Promise Cheaper Net Access

In the aftermath of this month's liberalization of the telecommunications industry, new companies are engaged in a price war that may translate to cheaper Net access.

Retevision, which offers its Iddeo Internet service, launched the price war by offering clients local rates 9.3 percent cheaper than those of Telefonica, Spain's largest operator and former monopoly. This benefit is currently extended to only 20,000 companies. The company--Spain's second largest operator--has also led the way in billing clients by the minute, rather than by several minute cycles.

Uni2--owned by France Telecom, Cableuropa, Ferrovial and the Banco Santander--is also breaking with tradition by not charging callers the cost of establishing a phone connection. The old practice raised the ire of Internet activist groups because users were being billed for failed connections in addition to valid online time. The company is also reducing its rate for nighttime calls.

According to a study by the Organization of Consumers and Users (OCU), of Spain's three main telephone companies (Telefonica, Retevision, and Uni2), the latter offers the most competitive pricing.

Rafael Arias-Salgado, Spain's Minister of Development and Public Works, said that, despite liberalization and "price wars," his ministry and the Telecommunications Market Commission (CTM) will continue to share certain regulatory functions in "establishing a price fixing system for telephone service."

Currently, infant companies are required to use Telefonica's infrastructure--and are thus subject to the company's base price--though the minister told Radio Nacional de Espana that these new operators will be operating entirely independently of Telefonica by March 1999 "at the latest."

Telefonica offers a number of Internet access plans of its own and many third parties access cyberspace through its InfoVia Plus onramps.

"I think Telefonica is in a good position despite losing its monopoly," said Arias-Salgado. " [It's] probably better than it would be willing to recognize publicly, given that among the great telephone monopolies of the Western world, Telefonica has been one of the most efficient."

More than twenty other companies have applied for licenses to operate in some aspect of telephony. The CMT has announced that all should be granted by January.