Boosting competition

The announcement by Tellas, a joint telecom venture between Public Power Corporation (PPC), Greece’s main electricity producer, and Italian mobile phone operator Wind, that it will start providing fixed-line and Internet services next month, marked a major change in the local business landscape. The partnership’s goal of capturing a 17 percent share of the fixed-line market and a 15 percent share in Internet services by 2006, combined with the expected news that PPC (which owns half of Tellas’s shares, and which pays OTE about 7.2 million euros annually) will be Tellas’s first customer, pits one of the biggest Greek public corporations against the biggest one, upsetting a long tradition of state-controlled and non-antagonistic companies. The privatization of these firms and their drive for profit has forced them to function according to free-market criteria, reversing previous practices. It would not be an exaggeration to say that PPC’s bid to challenge OTE’s monopoly is the most striking sign of this break with the past. The positive elements of this new course are already visible. Tellas is trying to woo OTE subscribers by offering considerably lower prices than those set by the former state telecommunications monopoly. Seeing the danger, OTE is about to respond with packages that will push down the cost of services. Spewing price reductions and an improvement of services, free-market competition will be a tonic for the workings of public operations. It will boost consumer demand and act as a strong barrier against price hikes. It remains to be seen, of course, whether these will become reality. These favorable prospects should be a guide for the government also. PPC’s competitive urge should not spark reservations and disguised resistance; it must be seen as an opportunity for higher productivity. Furthermore, the move should set an example for the private sector, where one often gets the impression that companies ensure a slice of the market by acting in collusion with other firms rather than competing with each other. Here is where the State can play a crucial role by enhancing competition incentives and discouraging companies from colluding not to compete with each other. The battle toward increasing one’s market share is the best, if not the only, recipe for improving the present lack of competitiveness of Greek products and services in foreign markets.

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