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Finnish is a language that isn't easy to understand unless you are a Finn or happen to come from Estonia. What's more, the country is not really in the middle of things - with 1/3 of its area north of the Arctic Circle. The paradox is this: One might think that this state of affairs could lead to communications problems. Far from it - Finland has a very healthy communications industry. Witness the proliferation of Nokia mobile phone handsets.
The story of the Finnish telecom system is worth studying, since it is an object lesson in how liberalisation, if handled sensitively, can be made to work. Liberalisation has led to competition, which in turn has led to good prices and excellent services. But first, it is worth understanding the country's background=. From 1155 until 1809, Finland was ruled by the King of Sweden. In 1809, it became an autonomous Grand Duchy of the Russian Empire. Independence from Russia was declared in 1917, following the Russian Revolution, and a democratic constitution was adopted.
Telephone services were first established in Finland in 1877, the year after Alexander Graham Bell received his patent for the telephone. The telephone operations were organised on a national Finnish basis and not considered to be under imperial Russian control, as was the case, for instance, with the telegraph in Finland. Furthermore, telecommunications were considered as being vital for the country's development, and it was therefor essential (for the Finns) to keep the companies local, thus ensuring Finnish ownership. Hence, several privately-owned local telephone operators started to emerge all round Finland to provide services for local residents. The local companies operated as local monopolies. In the 1920s and 1930s, the government created an organisation that provided local services where none existed, and also provided the national trunk network. This body is now known as Telecom Finland - see http://www.tfi.be/ - and until 1987 it held the monopoly for the provision of most national services.
In the 1930s, there were 800 local telephone countries, but by the 1960s this number was steadily reducing through mergers and strategic acquisitions on the part of Telecom Finland. By 1996, there were only 46 telephone companies in operation. In 1987, the Imperial Telephone Decree of 1886 was replaced with the Telecommunications Act, which required all telephone operating companies to have a State concession in order to construct, operate and maintain a telecommunications network. The role of the regulator was now carried out by the Ministry of Transport and Communications; prior to this, Telecom Finland was both operator and regulator. The 1987 Telecommunications Act was only one of a series of statutory telecoms-related measures.
From 1990, Telecom Finland became a state-owned business enterprise; it no longer depended on the government for its budget, and it started to pay taxes. In 1991, the local telephone companies regrouped under the name TeleGroup of Finland, to boost their international profile. In 1995, this grouping was renamed as the Finnet Group - see http://www.finnet.fi/inenglish.html
In 1992, local telephone companies were empowered to operate their own long distance networks, and, from 1994, Telecom Finland was granted general access to the lucrative local market.
The Telecommunications Act Amendment, 1996, introduced a number of measures. For instance, regulation of tariffs will only be effected where capacity is rented from a competitor, and bundling of terminal equipment is prohibited. Another measure, number portability, was also introduced in 1996, for limited commercial use in the fixed telephone network. Other significant changes in the pipeline are the liberalisation of the local loop and further deregulation of markets.
These changes can certainly be felt, and they are generally regarded as for the better. Ari-Matti Auvinen, director of an SME in Espoo, says:
The Finnish telephone system delivers the service I need. For instance, I have five telephone subscriptions but pay only one invoice every month. The amount is averaged, so I don't get unpleasant surprises when we've been busy. The ISDN service is great, too, although I hear that it's become so popular that installation times are rising.
Today, Finland's telecom market is amongst the most developed in the world. The total telephone penetration is high: in 1995, there were 2.8 million exchange lines in service and the total capacity was 3.2 million. This represents a telephone penetration of 55 per 100 inhabitants - a wired telephone connection for practically every household; the number of Internet accounts per head of population is just as impressive. The Finnish telecom network is all-digital and Telecom Finland was the first company in the world to open a commercial ATM network service.
The penetration of mobile telephones for Finland is the highest in the world. This is not entirely surprising; Nokia is a Finnish company. The following table shows the number of mobile phone subscriptions per 100 inhabitants:
Finland 30
UK 12
Germany 7
France 4
USA 17
Japan 15
The actual figures for Finland are accounted for by 910,000 GSM and 620,000 NMT (Nordic Mobile Telephone) subscriptions. Mobile subscriptions are growing at the rate of 35,000 new subscriptions every month, mostly for private use.
No piece on the Finnish telecom scene would be complete without a mention of Nokia - see http://www.nokia.com/mian.html
The company was started by Fredrik Idestam in the 1860s - see http://www.nokia.com/company/overview/nokia_story.html - he studied in Germany, with the intention of becoming a mining engineer. In the course of his studies, he encountered a wood-pulping machine. When he returned to Finland, he set up a company to make wood pulp using one of the self-same machines. In 1965, the Nokia Corporation merged with two companies, one making rubber products and the other making cables.
Nokia is now the second largest manufacturer of mobile phones in the world. The company has rapidly transformed itself from a diversified conglomerate into a specialist market of telecommunications. The company produces handsets, mobile networks, switches and data communication products. Nokia currently has 31,000 employees world-wide, with R & D programmes in Europe, the Asia-Pacific region and the U.S. The net sales in 1996 were $8,454 billion.
But Finland has also another mobile phone manufacturer, Benefon - see http://www.benefon.fi/contents.html - this was founded in 1988 and it manufactures phones for the NMT and ETACS (Extended Total Access Communication System) cellular systems. 90% of its production is exported to over 40 countries worldwide. The net sales in 1996 were $62 million. Recently, Benefon received Type Approval for their GSM Gamma phone, marking their debut into the GSM market.
Despite the apparently booming telecommunication industry, Finland has more than its fair share of unemployment. For Finland, the recession started in the 1990s and has been the worst in Finnish history. One reason for the recession was the new banking regulations that removed restrictions on currency transfers. However, many Finns tend to blame the recession on the Russians, although it is difficult to make this claim stick. Nevertheless, trade with the Soviet Union was very important, and it suffered severely with the Soviet collapse in 1991. Trade with the former Soviet Union has started to build up once again, and there are other positive signs on the horizon. Against this optimistic outlook is the shadow of unemployment, currently running at 16-17%. This is a striking figure, especially when the telecom industry is crying out for more staff; the problem is that the skill level is not adequate amongst those seeking jobs.
With a world class reputation for research in telecoms, it's not surprising that there are Finnish institutions involved in ACTS projects. 33 ACTS projects have Finnish partners, three of which have Finnish prime contractors. These are:
IMMP (Integrated Multimedia Project - AC 023)
See http://www.nokia.com/mian.html
Contact person: Antti Ylä-Jääski, Nokia Research Centre, antti.yla-jaaski@research.nokia.com
IMMP studies the integration of interactive multimedia services and service architectures addressing both residential and business users, focusing on the overlaps and synergy between the two. The evolution of multimedia applications will take place in a step-by-step fashion with successful services developed only after extensive end-user evaluations. This process will be followed in this project emphasising end-user trials and the feedback from them. IMMP will run focused trials with selected services to understand the key issues: technical, human and commercial, which will affect the successful deployment and end-user acceptance of such services. Of particular relevance will be the common new services that can be utilised in both business and residential areas. The objectives of the project are:
Develop system architecture and components that allow creative, interactive multimedia applications to be developed, used and tested using end-to-end ATM connections.
Study business and residential multimedia environments, applications, and integrated services.
Demonstrate and evaluate the feasibility of multimedia services within one operator environment and across several operator and country boundaries.
Evaluate and test end-user requirements and needs and measure the acceptance of these services.
Measure and study the economic and social impacts, and develop options (technical and/or otherwise) to minimise any negative effects.
The IMMP project will produce an open multimedia platform to be used in the user trials as a basis for defining a future-proof open multimedia architecture. The purpose of the trials is to evaluate the performance of the entire system, from multimedia server through the network to the end user, whether a business or residential customers.
The project will also develop an international trial network, using existing access networks and ATM switching, on which experiments with integrated multimedia services can be delivered. The network will ultimately be connected to European ATM networks through the National Hosts. The network will provide access for local residential users of the Cable-TV access. Business users, both local and remote, will be connected through ATM networks. The target IMMP trial network configuration is shown below:
MOMENTS (MObile Media and ENTertainment Services - AC 002)
See http://veppi.mm.wdss.ntc.nokia.com/
Contact person: Jukka Salo, Wireless Data Server Systems/Multimedia, Nokia Telecommunications Oy, jukka.salo@ntc.nokia.com
The MOMENTS project will demonstrate the technical feasibility and business viability of a wireless media highway for the distribution of advanced multimedia products. This will contribute to the understanding of users' perception of the value of wireless multimedia services, and identify how commercial exploitation of the services using third generation systems can be accelerated.
Furthermore, the project will create new enabling technologies, in particular for the presentation of visual material. It will also assess the feasibility and velocity of electronic money transfers during the trials. It is anticipated that this will make a valuable contribution to the standardisation process.
The Service Trials will be based on the phased implementation of the System Platform features and Services. The objective of this approach is to give time for the implementation of the most sophisticated System Platform features, and to enhance the Services and the System Platform according to the feedback from end-users of the Service Trials. As a result, the trials will be in an environment which is based on state-of-the-art technologies and on users' increasing interest for the wireless multimedia services. The following evolutionary steps in the development work and the trials have been identified:
End-user trials on the Basic Service Platform were initiated in January 1997. They are conducted in three operational personal telecommunications networks (Germany, Italy and the UK), suitably upgraded to provide multimedia services. The figure below depicts the structure of the trial network configuration in each country.
WAND (Wireless ATM Network Demonstrator - AC 085)
See http://www.tik.ee.ethz.ch/~wand/
Contact person: Seppo Haataja, Nokia mobile Phones, seppo.haataja@nmp.nokia.com
The WAND project has three main objectives.
The WAND project has three major phases. In the first phase, system and component design will be undertaken. In the second phase an implementation of the design will be produced. The implementation will be as close as possible to the targeted functionality defined in the design phase; this will use mobile terminals based on the portable computers used in combination with wireless Access Points (AP) serviced by an ATM switch. In the final phase, wireless ATM access system will be tested out with real end users to verify the system operation. The user trials consist of two different approaches:
See http://www.vtt.fi/tte/nh/
Contact person: Henryka Jormakka, VTT Information Technology, Telecommunications: consortium of finnish organisations has established a specialised national host to support r&d in advanced mobile systems. the main partner is vtt information technology - see http://www.vtt.fi/tte/index.html - a division of VTT - see http://www.vtt.fi/
The National Host supports ACTS projects carrying out user trials of advanced wireless communications concepts. It can also develop advanced multimedia applications using second generation mobiles systems.
By Thorbjorn Thorbjornsen and Adrian Rawlings.