#Business RSS feed Observer RSS feed Turn autoplay off Turn autoplay on Please activate cookies in order to turn autoplay off * Jump to content [s] * Jump to site navigation [0] * Jump to search [4] * Terms and conditions [8] Edition: UK * US Sign in Mobile * Your profile * Your details * Your comments * Your clippings * Your lists Sign out Mobile About us * About us * Contact us * Press office * Guardian Print Centre * Guardian readers' editor * Observer readers' editor * Terms of service * Privacy policy * Advertising guide * Digital archive * Digital edition * Guardian Weekly * Buy Guardian and Observer photos Today's paper * The Guardian * G2 features * Comment and debate * Editorials, letters and corrections * Obituaries * Other lives * Sport * MediaGuardian * Subscribe Subscribe * Subscribe to the Guardian * iPhone app * iPad edition * Kindle * Extra * Guardian Weekly * Digital edition * All our services The Guardian home The Observer home ____________________ [Business.....] Search * News * Sport * Comment * Culture * Business * Money * Life & style * Travel * Environment * Tech * TV * Video * Dating * Offers * Jobs * Business It's Uncle Sam on the line for Europe * Share * Tweet this * * * Email * Jamie Doward * The Observer, Sunday 17 October 1999 Shock, horror. Hold the front page. 'European telecoms company wins major deal.' Why all the hullaballoo over something only marginally less dull than ditchwater? Well, the year is 2003, and what sociologists call the Americanisation of the globe has spread to the European telecommunications sector. In this scenario there are few European players, never mind UK ones, left. A relentless tide of US know-how and money has washed into a Europe still struggling to wake up to the opportunities of deregulation. Some incumbents, only recently privatised, have been swept away in a round of defensive mergers; many European start-ups have been swallowed whole by US predators; the rest operate in niche markets, or are voiceless in unhappy alliances with their transatlantic counterparts. Some European players have collapsed completely, their skeletons picked over by the remaining firms. In this scenario, the fact that a European operator has been able to defeat American competition becomes a headline-grabbing event. It is only a scenario, but it is a likely one. The Americanisation of this European market has been happening for years. Last week, when Global Crossing acquired Racal's telecoms business for £1 billion, what had previously been done by stealth was thrown into sharp focus. The US telecoms firms are over-financed and over here. If they are not building their own networks, they are buying those built by others. Or they are buying into other companies. 'US funds made a lot of money backing US startups and they've now decided that Europe is the place to be,' said one analyst. This is not that surprising. Europe is a cash cow. Energis, the UK company outbid by Global Crossing for Racal, estimates that Europe is 31 per cent of the £438bn global telecoms market, compared with 27 per cent for the US and 12 per cent for Japan. This figure is expected to increase as demand surges. Companies are becoming increasingly pan-European, and their empires are stretching. They want to ship vast amounts of data as quickly and as securely as possible. The Internet and other new media will also continue to boost - and create - demand. The first US invader was MCI WorldCom, the hugely acquisitive US telecoms giant, which this month broke all records when it merged with Sprint in a deal valued at $129bn. MCI Worldcom started a pan-European network in 1996. Today, while most other players are only starting to build their networks, MCI has 10 city networks in place in Europe and is two-thirds of the way to building the backbone to link them. Currently the company links 4,000 buildings in the UK to 35,000 in the US. By building from scratch, it has wrong-footed the incumbent firms. 'They're very slow,' said Liam Strong, chief executive of MCI WorldCom International. 'If you're a PTT [a traditional post, telegraph and telephone company], you're not designed to be a modern telecoms company. Look at what we have built in the past 18 months; no PTT has moved as quickly.' Other companies soon hurried to get a slice of European action. Take GTS. It started life in the Eighties as a not-for-profit organisation financed by George Soros to link Russian and Californian universities. A series of acquisitions in the Nineties, however (including the UK's Esprit Telecom for $1.1bn last year) led to a GTS network through 12 countries. Level 3, formed by a group of ex-MCI executives, has embarked on a giant network roll-out that joins 16,000 miles of US network to a 3,400-mile European system at a cost of up to $10bn.Then there is Viatel, a Nasdaq- listed company, like GTS and Level 3, that is building a pan-European network linking Belgium, France, Germany, the Netherlands and the UK. The firm has raised more than a billion dollars through junk bonds to pay for it. The US Baby Bells, once the local telephone compa nies, are also piling in. SBC Communications (which owns, among other things, Southwestern Bell, Pacific Bell and Nevada Bell) this month completed its acquisition of another US operator, Ameritech, which will make it the largest non-European telecoms investor in Europe. 'The likes of SBC are awash with cash that is now pouring into Europe,' said Selim Choonara of telecoms analyst CIT Research. Other players include iaxis, the Dutch-based, US-financed company that is building an undersea network in the Mediterranean to link Europe, Africa and Asia. Then there are the conventional European cable opera tors such as Telewest, in which Microsoft has been building strategic stakes. Bill Gates' company also has a stake in NTL, the UK firm that recently bought Cable & Wireless's residential arm but is listed on Nasdaq and backed by US money. James Dodd, head of telecoms at independent investment bank Bryan Garnier, says those leading the US invasion have two key weapons: cash and knowledge. 'They've had management experience in running independent operations, plus they've had a ready availability of money, which means they're able to build their own networks.' Finally, US investment firms are increasing their stakes in the European telecoms industry. After all, they have had some notable success. Whisper it quietly: the UK's favourite telecoms stock, Colt, is majority-owned by US backers. Given the rush to wire Europe, some analysts predict problems with a bandwidth bonanza: too many cables, not enough demand. But for now the US companies are confident. 'If you give people more efficient ways to communicate, they will communicate more,' Strong said. Increasingly these 'efficient ways' will have an American provenance. Uncle Sam is making the calls. * Print this Print this * Share * Contact us Send to a friend Close this popup Sender's name ____________________ Recipient's email address ____________________ Send Your IP address will be logged Share Close this popup Short link for this page: http://gu.com/p/2zey * StumbleUpon * reddit * Tumblr * Digg * LinkedIn * Google Bookmarks * del.icio.us * livejournal * Facebook * Twitter Contact us Close this popup * Contact the Business editor financial@guardian.co.uk * Report errors or inaccuracies: reader@observer.co.uk * Letters for publication should be sent to: letters@observer.co.uk * If you need help using the site: userhelp@guardian.co.uk * Call the main Guardian and Observer switchboard: +44 (0)20 3353 2000 * + Advertising guide + License/buy our content Article history About this article Close this popup It's Uncle Sam on the line for Europe This article appeared on p4 of the Observer Business, Media & Cash section of the Observer on Sunday 17 October 1999. It was published on guardian.co.uk at 03.22 BST on Sunday 17 October 1999. Business Observer * Share * Tweet this * * * Email Our selection of best buys * Mortgages * Credit cards * Loans * Savings Lender Initial rate HSBC 1.99% More HSBC 1.99% More Woolwich (Barclays) 2.39% More * See more mortgage best buys * Get a personal quote Name BT Rate BT Period Barclaycard Platinum Credit Card with Extended Balance Transfer 0.00% 24 months More Barclaycard Platinum Credit Card with Balance Transfer 0.00% 23 months More MBNA Platinum Credit Card 0.00% 23 months More * See more credit cards best buys * Compare over 300 credit cards Provider Headline rate APR Clydesdale Bank Personal Loan 5.10% 5.1% More Sainsbury's Shopper Personal Loan 5.20% 5.2% More Derbyshire Personal Loan 5.40% 5.4% More * See more loan best buys * Compare over 500 loan providers Provider AER West Brom BS 2.3% More Post Office® 2.1% More Virgin Money 2% More * See more savings account offers * Compare over 4,000 savings accounts Social media for business course * Social media Facebook marketing 26&27 January Learn how to harness the power of social media to connect and expand your business Learn more and book We Own The Weekend * Get £2 off Guardian & Observer Celebrate the Guardian and Observer Weekend by signing up to receive £1 off the Saturday Guardian and £1 off the Observer for two weekends. Watch our video and get your vouchers Today's best video * Lance Armstrong Lance Armstrong tearful in second Oprah interview Disgraced cyclist wells up as he speaks about his son's denials of his doping * Ned Kelly Ned Kelly given memorial service after 132-year wait Legendary folk hero's descendants gather in Victoria, Australia * Kim Dotcom - video Kim Dotcom's internet heroes Entrepreneur hails Google as 'society's most important achievement' * the dreamers We are Obama's dreamers Migrants Kathe, Antonio and Hendry on their goal of US citizenship On Business * Most viewed * Latest Last 24 hours 1. [ca2881be-9f72-4c47-baaa-9f49a35c9c94-140.jpeg] 1. Eurozone crisis as it happened: Finance chiefs vote in new leader as Juncker bows out 2. 2. HMV backtracks over refusal to accept gift vouchers 3. 3. Why Boeing's 787 Dreamliner was a nightmare waiting to happen 4. 4. A 1930s-style building boom could bring back growth 5. 5. RBS awaits hefty fines for Libor rigging 6. More most viewed Last 24 hours 1. [HMV-003.jpg] 1. Gift voucher law must be changed 2. 2. Cyprus bailout delayed until spring 3. 3. Is Stelios serious about selling family's easyJet stake? 4. 4. Boeing 787 Dreamliner: regulators split on cause of malfunctions 5. 5. Stelios threatens to sell easyJet stake 6. All today's stories Guardian business journalists Follow the latest business news, comment and analysis on Twitter * _fionawalsh _fionawalsh: The Portuguese conman turned economist who fooled the nation for months;: http://t.co/hYNqd5Ob #business about 8 hours, 7 minutes ago * _fionawalsh _fionawalsh: Profits at HR Owen will top forecasts on back of boom in luxury car sales http://t.co/BNNnBSUw #business about 12 hours, 57 minutes ago * _fionawalsh _fionawalsh: Why bankers dread the "donut" (it's City slang for zero bonus) http://t.co/tc57lBHj #business about 13 hours, 12 minutes ago â¢Â Follow our journalists on a Twitter list IFRAME: http://www.dianomioffers.co.uk/smartads.epl?id=609 Guardian Bookshop This week's bestsellers 1. Examined Life 1. Examined Life by Stephen Grosz £11.99 2. 2. What Has Nature Ever Done for Us? by Tony Juniper £7.99 3. 3. Play it Again by Alan Rusbridger £15.19 4. 4. Heaven on Earth by Sadakat Kadri £7.99 5. 5. English Affair by Richard Davenport-Hines £16.00 Search the Guardian bookshop ____________________ (Submit) Search Sponsored feature guardian jobs Find the latest jobs in your sector: * Arts & heritage * Charities * Education * Environment * Government * Graduate * Health * Marketing & PR * Media * Sales * Senior executive * Social care Browse all jobs ____________________ Search Senior Business Analyst - Subscriptions London | Competitive GUARDIAN NEWS AND MEDIA Top stories in this section Top videos Most popular Today in pictures * sports peronality 2012 BBC Sports Personality of the Year â in pictures Bradley Wiggins capped his remarkable sporting year by taking home the big prize at the ceremony in London * Martin Parr's M Video Christmas party photograph Dinner, dusk and dancing Russians: my best winter shot A glass of wine with a rough sleeper, Santa in trunks, a thousand partying Muscovites ⦠in a My Best Shot special, top photographers pick the image that sums up winter for them * Kimon, a long-tailed monkey grooms a kitten, whom, she treats as her baby, Bintan Island, Indonesia Monkey adopts kitten â in pictures Kimon, an eight-year-old pet female long-tailed monkey, treats a kitten as her baby in Bintan Island, Indonesia * Hot topics * Eurozone crisis live * Banking * Retail industry * Bank of England * Economics * License/buy our content | * Privacy policy | * Terms & conditions | * Advertising guide | * Accessibility | * A-Z index | * Inside the Guardian blog | * About us | * Work for us | * Join our dating site today * © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. * Share * Tweet this * * Quantcast