The smooth flow of online communication and commerce between
Europe and the U.S. is at risk of interruption, thanks in part to naked
opportunism on the part of European telecommunications giants. If the
governments involved fail to keep online barriers between the
continents low, the Internet’s potential to be an engine of global
economic growth will be constrained.
Take
Deutsche Telekom AG (DTE) (DTE), the largest provider of high-speed Internet access and wireless services in
Germany and the largest telecommunications organization in the European Union. To expand, the company will have to
acquire additional communications companies; in order to do so, it hopes to free itself from the German government’s
32 percent ownership
in the company. It has also expressed a desire to diversify into
non-telecommunications lines of business, such as technical-services
delivery.
The snooping scandal at the U.S. National Security Agency may help
Deutsche Telekom achieve both these goals. T-Systems International
GmbH, the company’s 29,000-employee-strong distribution arm for
information-technology solutions, has been losing money selling
systems-integration and data-processing services. Now, in response to
customers’ loss of trust in American services, Reinhard Clemens,
T-Systems’ chief executive officer, says he wants to
refocus the company on providing cloud services.
Deutsche Telekom has also proposed to help
Europe
avoid NSA surveillance by creating “Schengen area routing,” a network
for the 26 European countries that have agreed to remove passport
controls at their borders. This network would supposedly allow these
nations to securely exchange data among themselves. Conveniently, the
Schengen area does not include the U.K., which is now known to be
closely cooperating with the NSA.
Deutsche Telekom undoubtedly thinks that it will be able to collect
fees from network operators in other countries that want their
customers’ data to reach Deutsche Telekom’s customers -- and that the
company has the market power to raise those tolls ever higher. As
things stand, networks already try to avoid Deutsche Telekom’s wires
when routing
Internet traffic to German customers because the company refuses to swap traffic on a no-payment basis -- the
common practice of competitive carriers around the world.
With hundreds of lobbyists in Berlin, Deutsche Telekom can see to it
that if any German legislator is asked what to do about the NSA
problem, he or she will respond with “Secure routing of traffic.”
Surely this secure Schengen area routing would be even smoother if
Deutsche Telekom owned more of the telecommunications operators
involved.
Meanwhile, European telecom regulators, anxious to help European
companies avoid the risk of being bought up by Verizon Communications
Inc., AT&T Inc. or
Carlos Slim, the Mexican wireless monopolist, are encouraging
consolidation
-- with Deutsche Telekom’s full support. “Now is the right time” for
consolidation, Deutsche Telekom Chief Executive Officer Rene Obermann
said in November.
Read more:
NSA Scandal May Help Build Cyber-Barriers - Bloomberg
