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FROM A LITTLE PR ACORN ...A TRUNK NETWORK GREW
Background: Finnet International was a new entrant to the Finnish telecommunication market when it was opened up to competition during the 90s. The Finnet Group was the name attributed to the collection of the various regional operators and their subsidiaries that were up against the government owned incumbent, Telecom Finland. In the domestic market, telephone operations was basically a duopoly. Different market areas were opened up one at a time; first mobile, then data communication, followed by domestic long-distance and then lastly international traffic. The Finnet Group set-up Finnet International to enter the fray. The problem Finnet International had was that it did not own any of its own cables -- the company relied on renting capacity from its competitor, the state owned Telecom Finland.
The problem: Although obliged by law to offer transit capacity, there was little incentive for Telecom Finland to offer competitive rates and so the prices charged were seen as 'extortionate'. Complaints fell on deaf ears, as the government was reluctant to get involved...sorry, did I mention who owned Telecom Finland?
The transit fees were so high, it was calculated that over a matter of only few years it would be cheaper for Finnet to lay its own international cable. However, its a huge capital cost and it would still be a few years away before it would be operational.
So there was the problem, what avenues were left open to reduce the fees? Raising a legal dispute wasn't working and negotiation wasn't happening. The answer, strangely enough, lay in PR.
The solution – Press, price and PR: The MD of Finnet International had mulled over the problem for some time and had exhausted all other avenues. He called me in to his office to discuss the issue and we went through various ideas. We argued about raising anti-competitive behaviour, in the end agreeing it may be seen as sour grapes, especially across Europe where Finnet had to negotiate with other incumbent operators to route their calls. The merits and pitfalls of various options were discussed at length. In the end, it was decided a whisper campaign promised to be the most effective with little downside. Plausibility and deniability were key in such a sensitive time where telecommunication markets were being opened up across Europe.
“Sources say....” has often been seen or heard in the media, but not always explained. In most cases it is not a whistle-blower or an employee championing the free world from within. No, it is usually something pre-orchestrated. In some way, it is like the almost proverbial "government leak", which is consciously done to test the waters with deniability at the forefront if the news leaked receives negative coverage.
In briefing journalists on competition in Finland, the first thing was to be very positive about the opening of the market and heralding the cost reductions for both consumer and businesses. However, there were four sentences that could only be quoted on the understanding that they could only be attributed to 'sources'. “We are not happy that we cannot make further savings for our customers due to costs. We have gone from a regulatory monopoly to an economic one. We are being held over a barrel with regards to transit fees. In reality, it would be cheaper to lay a cable ourselves and pay for it over ten years.”
The message translated into press copy that Finnet were looking to lay a cable to another country to bypass Telecom Finland's stranglehold over its competition.
Within weeks of these stories appearing in the international press Telecom Finland had got back in contact to reduce the fees dramatically; from their point-of-view it was best to get some revenue than none at all.
A whisper campaign that cost Finnet a matter of a few hundreds of dollars had saved them millions.
In a further twist, the press exposure led to other new entrants in Finland and neighbouring countries to get in contact. The story struck a chord, as new entrants in other countries were also being held to ransom by their incumbent operators. The companies getting in contact were looking to share capital costs in laying a cable and this, ironically, included Telecom Finland that was looking to build redundancy into its international network. The rumour of laying a cable reduced Finnet costs dramatically, but now by sharing the capital costs of actually laying that cable would also put Finnet in a far stronger negotiating and financial position in the future.
In 2000, a new international cable connecting Finland to Estonia was laid. So, it could be said that from a little PR acorn, a trunk network grew.