1. INTRODUCTION *
2. TELECOMMUNICATIONS INFRASTRUCTURE IN FINLAND *
2.1 Operating Environment of Finnish Telecommunications
*2.2 Regulatory Structure
*2.3 Liberalization of Finnish Telecommunications Markets
*2.4 Telecommunications Market Act
*2.5 Major Players in Telecommunications Market
*2.6 Characteristics of Finnish Telecommunications Market
*2.7 Equipment Manufacturing in Telecommunications
*2.8 Prospects for Finnish Telecommunications Market
*3. THE FINNISH MEDIA/BROADCASTING INFRASTRUCTURE *
3.1 Introduction
*3.2 Media companies
*3.3 TV Operation
*3.3.1 National and Local TV Channels
*3.3.2 Cable and Satellite TV Channels
*3.4 Radio Operations
*3.5 New Technology
*3.6 Newspapers
*3.7 Magazines
*3.7 Advertising Industry
*4. INFRASTRUCTURE OF THE FINNISH COMPUTER AND INFORMATION INDUSTRY *
4.1 Characteristics of Finnish Computer and Information Industries
*4.2 Computer and Information Market
*4.3 International companies operating in Finland
*4.4 Domestic hardware importers and manufacturers
*4.5 Domestic Software producers
*4.6 Examples of Online information Services in Finland
*4.7 Prospects for the Finnish Computer and Information Industries
*LIST OF REFERENCES *
1. INTRODUCTION
Today, telecommunications and information industries face a multitude of challenges: increasing global liberalization, fast networking requirements among companies and technical advances, to name but a few of the most important ones. Finland has positioned itself quite advantageously, being among the most liberalized and technologically developed countries in the global arena of telecommunications as well as in the international information and computer industries. Furthermore, Finland places great emphasis on the creation of the information superhighway leading the way to structural change of the society, i.e. to information society.
Tougher global competition will dictate and accelerate the modernization of infrastructure technologies as well as create competitive networks and services. Information networks and various telecom services will become a vital part of the everyday life of companies and households. Finland, known for its innovative touch to technological development and early utilization of technical advances, will be one of the major players in the sharp global competition in the 21st century, too.
This report aims at providing an overview of the Finnish infrastructure regarding telecommunications, media/broadcasting, and computer/information industries.
2. TELECOMMUNICATIONS INFRASTRUCTURE IN FINLAND
2.1 Operating Environment of Finnish Telecommunications
Finland is leading the European field in the utilization of telecommunications technologies. Accordingly, Finland’s telecommunications market is the most developed in Europe and among the most developed in the world. Practically every household has a conventional wired telephone connection and almost every Finn out of three carries a mobile phone. Moreover, the degree of network digitalization is 100% and data transmission speeds are among the fastest in the world. And last but not least, the number of Internet accounts per capita is not far away from occupying the number one place in the whole world.
The Finnish telecommunications market is also among the most liberalized in the whole of Europe. In Finland, the telecommunications operations have been gradually opened to competition since 1985. The liberalization process has not been as difficult in Finland as in many other countries, because some telecommunications operators have always been private. It can be said that Finland is a pioneer in telecommunications liberalization, since all restrictions on telecommunications services have been abolished since 1994 and the country is open to full competition. So far competition has had a favourable effect on the price and quality level of services. Consumers in particular have benefited from falling prices for telecom products and services.
In Finland, the level of telecommunications costs is among the lowest within OECD countries. Consequently, the Finnish "telecom cluster" is highly competitive in the international arena and experiencing continuous growth, also in its importance as a provider of employment.
According to the Data Communications International, Finland’s telecom market is characterized by healthy competition in the following areas: international leased lines, domestic and international VSAT, international telephony, ISDN/switched digital services, domestic and international X.25 and frame relay services, as well as mobile data services. Only regarding domestic leased lines and domestic telephony Finland received a moderate health check rating in the Data Communications analysis of service offerings in 42 countries around the world.
Previously, operator had to acquire a license granted by the Council of State in order to provide public telecommunications services with unrestricted subscription. However, the Telecommunications Act was amended in 1996 and thereby it was stated that licenses are only needed for telephone and mobile network construction. According to the new Telecommunications Market Act passed in April 1997, nowadays only a notification is required to start public telecommunications services, with the exception of, however, construction of a mobile network which still requires a license. The Ministry of Transport and Communications grants the license to everyone who fulfils certain conditions defined by the law.,,
Until 1987, PTT had a double role as a telecommunications regulator and a teleoperator. According to the Telecommunications Act in 1987, the regulatory status was transferred to the Ministry of Transport and Communications and PTT continued merely as a telecommunications operator. The Ministry is nowadays responsible for drafting the legislation, policy-making, regulation, licensing and supreme supervision. The Telecommunications Administration Centre (TAC), established in 1988, takes care of technical supervision and inspection of radio and telecommunications equipment. TAC is also responsible for type approvals and standardization as well as frequency planning and numberings., Table 1 next page presents the division of regulatory tasks in Finnish telecommunications.
Table 1. Structure of the Finnish Telecommunications Regulatory System
|
Ministry of Transport and Communications
|
Telecommunications Administration Centre |
|
• drafting of legislation • preparation and handling of licenses • policy-making and regulation • supreme supervision and promotion of telecomms and radiocomms • international co-operation
|
• technical supervision and inspection of telecomms and radiocomms • frequency and numbering planning • type approvals • standardization • international co-operation |
Source: Liikenneministeriö, http://www.vn.fi/lm/vho/tu/market2.htm
2.3 Liberalization of Finnish Telecommunications Markets
As the European integration deepens, Finland is leading the liberalization of the telecommunications market. In the EU, only Finland, Sweden and Great-Britain have liberalized their markets for competition. EU's general principle of liberalization is to remove the entry barriers and to change the field of telecommunications into a normal business that is regulated by competition and consumer protection laws. The telecommunications markets shall be opened up in the EU as well as in Japan and the U.S. from the beginning of 1998.,
The Finnish telecommunications market was first opened up to competition when data communication and business networks were liberalized. The Telecommunications Act of 1987 introduced the first elements of competition to Finnish telecommunications market abolishing all privileges based on former law.
In 1990, competition was widened to cellular networks. In 1994, the telecommunications market was fully liberalized and each segment of the telecommunications market, e.g. the long-distance and international operations, has been subject to competition ever since.
From the beginning of August 1996, the regulation of telecommunications fees was dissolved in the amendment of the Telecommunications Act. The Act also relieved the entry into business for new companies and defined more accurately the rights and obligations of service providers.
2.4 Telecommunications Market Act
In April 1997, the new Telecommunications Market Act was passed in the Finnish Parliament and entered into force in the beginning of June. The new act is expected to accelerate competition in the field of Finnish telecommunications and thus enable small and medium-sized enterprises as well as households to benefit from the competition.,
The main objectives of the 1997 Telecommunications Market Act are to open the local loop for competition and further liberalize the markets. Telecommunications Market Act promotes telecom competition mainly by requiring telecommunications companies to economically separate the provision of telecoms networks and services from each other. A network operator with a significant market power operating local telecommunications has to lease subscriber connections to other operators and the connections have to be priced on the same grounds as the operator's own services.
"Significant market power" is a new concept introduced in the Telecommunications Market Act: a company with significant market power can be subject to stricter obligations than other companies in order to allow competition. Competition is also promoted by allowing a telecommunications company requiring connections from a network operator to indicate those points in the network between which it desires a connection. The free section of a network must be leased to all telecommunications companies on impartial and reasonable conditions independent of the service to be provided. The new Act lowers entry barriers to the telecommunications sector as the construction of a fixed telephone network is no longer subject to a license; however the construction of a mobile network still is.
The Telecommunications Act of 1996 stated that branches of foreign undertakings entered in the Trade Register in Finland were allowed to apply for a license in public telecommunications. In the new Telecommunications Market Act no restrictions to foreign ownership are mentioned.,
The Act does not, however, intervene in relations and profit distribution between telcos and the users, although it was part of the initial plans when the law was prepared. Competition in the field is namely hindered by the fact that the users are tied to the existing company due to their agreement with it. This hindrance is however, expected to be removed, since private telcos aim at changing the structure of the company. Finnish Parliament has requested the Ministry of Transport and Communications to follow closely the development and, if the competition in the field of local telecommunications does not expand as expected, to take measures amending the Act.,
The Parliament has also requested the Ministry to clarify means for increasing consumers' rights. Attention was paid to the more efficient protection of children from the negative impacts of erotic telephone services. Moreover, it was also considered of crucial importance to enable the handicapped to have access to a sufficient number of teleservices at a reasonable rate.
2.5 Major Players in Telecommunications Market
As already described, the Finnish telecommunications market is one of the most liberalized in Europe. Currently, the market comprises about 70 competing teleoperators offering a wide variety of telecommunications services, most them being private local telephone companies. Finland’s first telephone company, Helsinki Telephone Company (HPY), was established already 1882 when Finland was part of the Russian Empire. After that, the number of telephone companies grew fast, amounting to 800 in the 1930s. However, mostly due to mergers, there are nowadays 46 local telephone companies. The Finnish State started telecommunications operations in 1917 when Finland became independent and founded Posts and Telecommunications of Finland (Telecom Finland since 1994) whose task was to build long-distance lines to the whole country and provide telecommunications services in scarcely populated, rural areas. Nowadays the state-owned Telecom Finland Oy provides its customers a wide range of telecommunication services telecommunications services, and hence, competes with the local telephone companies.,,
Before 1993, the Finnish telecommunications market was characterized by a duopoly situation. Telecom Finland Oy took care of the long-distance and international telephone services as well as local telephone services in rural areas. Private telephone companies operated in towns and cities for local area telephone services, especially in southern and western parts of Finland. Currently, according to the Finnish Ministry of Transport and Communications, the Finnish telecommunications market is characterized by competition between three main network operators: Telecom Finland Oy, Finnet Group (privately owned consortium of local telephone companies) and Telivo Oy (a subsidiary of state-owned power companies). Furthermore, there are several other companies entitled to construct their own networks. Foreign operators in the Finnish telecom market, such as France Telecom, Unisource, Cyberlink, and Sprint (data transfer) are service providers. Table 2 highlights the competition between the network operators (see next page).
Table 2. Network Operators’ Market Shares(%), 1995
|
Telecom Finland |
Finnet Group |
Telivo |
Others |
|
|
Local teleoperations |
29 |
70 |
0 |
1 |
|
Long-distance teleoperations |
42 |
531 |
5 |
0 |
|
International teleoperations |
76 |
172 |
7 |
0 |
|
Mobile teleoperations |
90 |
103 |
0 |
0 |
|
Data communications |
55 |
402 |
0 |
5 |
Source: Liikenneministeriö, http://www.vn.fi/lm/vho/televies.htm
1
Kaukoverkko Ysi Oy2
Finnet International Oy3
Radiolinja Oy4
Datatie Oy
As can be seen from Table 2, in 1995 companies comprising Finnet Group dominated the local telephony market, whereas Telecom Finland held a dominant position in the international telecom operations, mobile telephony and data communications. The figures, however, represent the situation in 1995, and some changes in market shares can be seen for example in mobile telephony: Radiolinja Oy has increased its share to about 18%, whereas Telecom Finland dominates the GSM market with a share of 68%.
Finnet Group began to compete with Telecom Finland for long-distance telephony services in 1994. Telecom Finland was faced with plummeting share of the long-distance market, similar to the earlier sharp decline in leased-line prices due to the competition between the PTT and Finnet. The reason why Finnet Group has been so successful in competing with Telecom Finland is that the local carriers that comprise the group own most of Finland’s local telecom infrastructure. However, Telecom Finland fought back successfully, for example by offering high-speed ATM services at such low prices that some users in Finland are able to leapfrog a whole generation of networking technology. Moreover, Telecom Finland was the first PTT in Europe to offer frame relay services, and for a quite along time its services accounted for more than half the frame relay traffic in all of Europe.
Telecom Finland Oy’s service range covers all telecom services. In addition to being a network operator, Telecom offers telecommunications to consumers and companies. The four main fields of operation include network, mobile communications and valued-added services as well as special business services. Additionally, Telecom Finland has several partnership companies abroad. Telecom Finland provides long-distance telephony with the 101-dialling prefix, and international telecoms services with the 990-dialling prefix respectively.
Finnet Group, a consortium of 46 private local telephone companies, aims at efficiently competing for customers mainly with Telecom Finland by combining the key excellencies of its owner companies. The local carriers comprising the Finnet Group own the concessions to operate. The four Finnet Group’s operator affiliates are owned by the private telephone companies and specialize in different fields of expertise, offering a wide range of services from the fixed network through data services to mobile telephony:
Telivo Oy is jointly owned by the state-owned power company IVO (25%) and a Swedish teleoperator Telia (75%). Telivo Oy started operationally as a long-distance carrier in mid-93. Nowadays Telivo Oy provides both long-distance (1041-dialling prefix) and international telephony services (994 prefix). Telivo Oy was recently - at the same time as Telecom Finland and Radiolinja Oy - granted a concession to operate a DCS 1800 mobile telephone network.
According to Telecommunications Administration Centre (TAC), Finnet Group covers 73% of subscribers and 25% of land area in Finland in their traditional operating area. Due to the competition in telecommunications, subscribers have several possibilities to choose the appropriate long-distance or international carrier according to their communication needs. As the European telecommunications market continues to become more and more liberalized, it is highly likely that the three main network operators in Finland get other European telecom competitors.
2.6 Characteristics of Finnish Telecommunications Market
In Finland, the number of telephone lines is fairly high: according to OECD, there are 55 telephone lines per 100 people. Telecom Finland Oy owns approximately 28 % of the telephone lines and private, regional telephone companies mainly own the remaining 72 %. In 1995, 91 % of all households owned a telephone, whereas the corresponding figure for 1990 was 94 %. The decline in the penetration of telephones is partly due to increase in the penetration of mobile phones and partly to the recession. The digitization of the telephone main lines began in the 1980s and, today, according to a report published by the Ministry of Transport and Communications, practically all main lines and telephone exchange offices are digital. Although the Finnish telecom market is highly developed, the number of ISDN connections is still quite low: according to Statistics Finland, there were 5 962 basic rate ISDN connections (2B+D) and 454 primary rate ISDN connections (30B+D) in Finland in 1995.
According to Statistics Finland, there were approximately 1.5 million subscribers of mobile telephone networks in the beginning of 1997. Thus, the penetration of mobile phones (approximately 29 per 100 people) was the highest in the world. The high penetration is mainly due to inexpensive phone rates. There are several mobile phone network operators: ARP (car radiophone), NMT-450 and NMT-900 networks are operated by Telecom Finland Oy. On the other hand, regional AutoNet networks are operated by regional private telephone companies, which belong to the Finnet Group. Furthermore, GSM networks are operated by two companies, namely Telecom Finland Oy, and by Radiolinja Oy (Finnet Group). Telecom Finland Oy, however, is the leading GSM network operator with market share of 68%. Table 2 presents the number of mobile telephone network subscribers by networks and operators.
Table 3. Subscribers and Operators of Mobile Telephone networks 1996
Source: Tilastokeskus
1997 (Statistics Finland)
In 1995, there were 48,211 subscribers to paging networks. Telecom Finland Oy operates a nationwide paging network, and Helsinki Telephone Company (HPY) has a regional paging network in southern Finland.
The number of special networks targeted at high-speed data transmission amounted to 36,632 in 1995. Table 6 presents the number of subscribers by data rate.
Table 4. Data Transmission Networks
2.7 Equipment Manufacturing in Telecommunications
There are several small Finnish companies specializing in terminal equipment for PSTN, leased-lines and X.25 (e.g. Erikois-Elektroniikka Oy, H. Vesala Oy, Instrumentointi Oy, Telemic Oy, Älykone Oy, Teleste Oy, Alfatel Oy, Arisoft Oy, ASM-Piko Oy, Sondi Oy, etc). Nevertheless, the major Finnish equipment manufacturer is arguably Nokia Telecommunications, which is the leader in global telecommunications technology. Nokia Telecommunications, a total system supplier, develops and produces systems for digital mobile and fixed networks. Nokia has delivered digital cellular phone networks to 58 operators in 32 countries. Moreover, in fixed networks, Nokia has supplied optimized solutions to PTTs, cable companies, new telecom companies and utilities in over 45 countries in Europe and the Asia-Pacific region. In 1996, the annual sales of Nokia Telecommunications amounted to FIM 13.3 billion and the number of personnel was approximately 14,600.
Nokia Telecommunications started 1962 with transmission equipment such as radio links and private telephone networks and exported its products in the mid-70s for the first time. Today Nokia Telecommunications’ products range from medium sized digital exchanges through cellular mobile exchanges and PCNs to SDH transmission equipment.
2.8 Prospects for Finnish Telecommunications Market
The future of Finnish telecommunication industry looks prosperous. Telecommunications exports are blooming and telecom companies are able to exploit new opportunities emerging along with the gradual liberalization of the EU telecommunications markets. Finland’s competence in telematics-based applications provides a good basis for exports of telematic-based solutions in various fields, such as business, health care, education, transport and information services. Accordingly, the strong promotion of the Finnish information superhighway and information society in overall by the Ministry of Transport and Communications certainly creates a lot of potential for Finnish telecom companies to tap. On the other hand, the recently adopted Telecommunications Market Act further strengthens Finland's position as a leading country in the liberalization of telecommunications sector. Finally, the emergence of the information highway will further strengthen and speed up the convergence of information technology, telecommunications and electronic media, hence bringing new competitors into the field of telecommunications and forcing telecom companies to create new strategies to survive in the world of fast changes.
3. THE FINNISH MEDIA/BROADCASTING INFRASTRUCTURE
Finnish media and broadcasting infrastructure is facing big changes: both a new commercial TV and radio channel started their operation in early spring and new local medias will be soon available for advertising. Furthermore, the Internet is gaining in popularity as a medium and several new on-demand services are entering market.
Due to the changes in media and broadcasting infrastructure, regulations also have to be changed: the Finnish Ministry of Transport and Communications is currently preparing a new law which will cover all electrical media and broadcasting activity. The current regulations form a group of separate laws, settings, guidelines, and some of them date back to year 1927 when radio broadcasting started in Finland. Thus, there is clearly a need for law reform.
This section briefly describes the infrastructure of Finnish TV and radio broadcasting and the relating main regulation issues. The discussion in this section is mainly based upon a report by the Finnish Ministry of Transport and Communications, unless stated otherwise.
In Finland, there is only one public media operator, Yleisradio Oy. In 1995, it was the biggest generator of sales with net sales FIM 2 million. The next biggest media companies are Sanoma Oy (printing), Aamulehti Group (mainly printing), Helsinki Media Company and MTV Oy (both television production). At the moment, MTV Oy and Aamulehti Corporation are merging to establish a new mass communication company, which is due to be registered in the Trade Register at the beginning of 1998. The consolidated net sales of the new company will total approximately FIM 2.5 billion. The new company will enable both MTV Oy and Aamulehti Corporation to participate in the new era of digital communications.
TV operation in Finland can be divided into public and commercial activity. The public operating is regulated by legislation and the commercial operating mainly by licenses.
3.3.1 National and Local TV Channels
Local TV channels are very rare in Finland. Only three towns have their own local channels. Instead, there are four nationwide TV channels operating in Finland: TV 1, TV 2, MTV 3 and TV Four. In addition, there is a Swedish channel called TV 4 that covers South-Finland. Yleisradio Oy, which is a public operator, is responsible for TV 1, 2 and Swedish TV 4. On the other hand, MTV 3 is owned by MTV Oy and TV Four by Oy Ruutunelonen Ab. Both MTV and Ruutunelonen are commercial operators and they get their revenues from advertising.
The activities of Yleisradio Oy are funded mainly by TV licence fees (80 %) that every TV owner has to pay. Other sources of revenue include rental fees from television networks and public service payment. However, according to the Finnish Ministry of Transport and Communications, TV license fees are no longer the best solution for funding the public TV operating, because not all of the TV owners want to view public channels. They might use, for example, only satellite channels or on-demand services. The main problem is how to control the usage of the public channels if they are funded by TV license fees paid only by the real users. On the one hand, the government could fund the activities of Yleisradio Oy, but then the public operations would depend on the government. On the other hand, advertising in public channels could be allowed, but it might change the role of the operator as a public interest server, if it engages in commercial activity.
3.3.2 Cable and Satellite TV Channels
Currently, there are 190 licences for cable TV activity and in 1995, there were approximately 820,000 cable connections in Finland, which means that 42 % of all Finnish households have cable TV. The cable TV companies offer altogether 40 foreign channels: some of them are so-called free channels and some of them demand monthly payment for using. The largest companies offering cable TV connections are Helsinki Televisio Oy, Telecom Finland Oy and Tampereen Tietoverkko Oy. The cable TV operators are currently converting their networks into bidirectional. Thus, in the future, cable modems capable of achieving data rate of up to 30 Mbps can be deployed.
The usage of satellite channels has increased during the 1990s. Circa 160,000 houses have satellite antenna; i.e. the penetration of satellite TV was 10 % of all households in 1995. All the satellite channels require monthly payment. Most of the households receiving cable TV in Finland are located in cities.
The penetration of VCRs in 1995 was 61 %. According to Statistics Finland leisure survey, approximately 80 % of the households use their VCR primarily to record TV programs for later viewing and 10 % to view rented or purchased videos. On the average, only 12 % of Finns used their VCR daily in 1995.
The public operator, Yleisradio Oy, has four national radio channels. In addition, Suomen Uutisradio Oy, will start its commercial news channel nationwidely during this year. Local radio channels started the broadcasting in Finland In 1985 and at the moment, there are 57 local radio channels operating. Furthermore, government has given licences for a rock music channel covering the biggest cities in South-Finland as well for 20 local classical music channels.
Radio and TV are entering a new era of digital communications: digital radio and TV trials will begin this year. Unfortunately, statistical information about so-called new electrical services is not available to a large extent, but it is known that the usage of the on-line services by big companies has increased rapidly (sales 370 Mmk).
The importance of new technology is also highlighted by the plans of Yleisradio Oy to move from analog to digital broadcasting. Digital broadcasting will require less bandwidth after compressing and it is also cheaper than analog broadcasting. Moreover, every digital TV channel enables operators to offer several services, like on-demand services and Internet services in TV network (e.g. e-mail or traditional text TV in HTML form).
On the average, 94 % of Finns read daily newspapers regularly. In 1994, 235 newspapers were published in Finland and they can be divided as follows:
56 of all newspapers were dailies, i.e. they were published 4 to 7 times a week. Daily newspapers were typically biggest papers in each market area or evening papers. Their average circulation in 1994 was 43,000 copies and total circulation 2,400,000 copies.
The number of non-dailies (published 1-3 times a week) was 179. Typically, non-dailies concentrate on local issues and are circulated in restricted areas. Their circulation was on the average only 6,300 copies and in total 1,136,000 copies.
Approximately 69 % of Finns read magazines at least once a week. In 1995, the number of magazines published at least four times a year, totaled 2,656 of which:
Figure 1 next page shows the magazine division.
Figure 1. Percentage Division of Magazines
The total volume of Finnish magazines was 395 million copies in 1995. Figure 2 shows the division of total volume by magazine types.
Figure 2. Percentage of the Total Annual Volume by Magazine Type
Quite many Finnish newspapers and magazines are released in the World Wide Web: in November 1996, there were 17 Finnish newspapers and over 100 different Finnish magazines in the WWW.
The advertising industry in Finland is in itself a major know-how business. Approximately 70% of the advertising agencies in Finland are partly or 100% foreign owned. Most of the major advertising agencies are members of the Finnish Association of Advertising Agencies (MTL). About half of the MTL member companies, advertising and media agencies, are Finnish owned. International advertising agencies operating in Finland or comprising ownership in Finnish companies include big names as Saatchi & Saatchi, BBDO Worldwide, Grey International, J. Walter Thompson, McCann-Erickson, to name but a few.
MTL member companies account for ca. 75% of the gross margin on sales of the Finnish advertising agencies and almost 100% of the media agencies respectively. Thus, the figures presented in this section can be said to describe the main part of the Finnish advertising industry. The net sales of advertising and media agencies is FIM 2,672 billion, and they also contribute to ancillary services, such as publishing, video production, photography, Internet, direct marketing. MTL advertising agencies fare well measured on the basis of the overall performance, return on investment, solidity and liquidity.
Technological advances in and increased utilization of telecommunications and information technology have had a significant impact on advertising agency operations. Increased networking has required further training and investments on information technology and telecommunications networks. Investments of advertising agencies total over FIM 10 million annually and over FIM 40 million is spent on equipment leasing. Some of the advertising agencies use the Internet as a part of the normal planning, and they implement it either themselves or through partnership companies. A great deal of the agencies have established own companies to carry out digital communications. Export advertising accounts for FIM 50 million (1996 estimate), and about 0-54% of the annual sales, depending from the agency, comes through international chains.
In recent years, new media industry has become the fastest growing industry in Finland. It is estimated that net sales of new media companies will double in 1997, totalling almost FIM 500 million. At the moment, there are about 300 new media companies operating in Finland, which are mainly content producers for digital media and information networks. Characteristics of the new media industry are the small size of companies, rapid growth (375% in 1995-1995) and annual net sales of less than FIM 2 million. The strengths of the Finnish new media industry can be found in the technical know-how, strong infrastructure and the flexibility of companies due to their small size. New markets will open up for the new media companies, as the problems of the electronic money, standardization and security, are solved. New media industry will undoubtedly become a major competitor to the traditional TV, movie and video production.
4. INFRASTRUCTURE OF THE FINNISH COMPUTER AND INFORMATION INDUSTRY
4.1 Characteristics of Finnish Computer and Information Industries
The penetration of PCs in 1995 was 25 per 100 people and 62 per 100 officials. In 1995, there were 9 modems per 100 people. Moreover, the number of Internet hosts was 62 per 1 000 people in January 1997. Internet usage has grown rapidly during the past two years: at the end of 1996, 419,000 Finns used Internet at least once a week.
In 1995, there were two information networks and 235,000 information network subscribers. Telecom Finland Oy (TeleSampo) and Finnet Group (Infotel) operated the networks. The main users were households and the most popular application related to banking services.
Public libraries play an important role in Finland’s information infrastructure. For example, in 1996 over 60 % of all libraries provided Internet access and the figure has risen ever since. In libraries, everybody can access the Internet for free. It is likely that in the future everyone might be given a free e-mail account through public libraries.
4.2 Computer and Information Market
The Finnish computer and information industry is characterized by intense competition. In 1995, top 100 companies shared the Finnish market of around 20 billion FIM. However, the net profit in the field was only 536 million FIM, accounting for only 2,8 % of the total turnover. The 20-80% -rule applies well in Finnish computer and information industry: 20 largest top 100 companies made 80% of the total turnover on the market, while the turnover of a median company was 45 million FIM.
Table 7. Top 20 Computer and Information Companies in Finland in 1995
|
Company |
Turnover FIM million |
Turnover growth (%) |
Net profit FIM million |
Personnel |
ROI (%) |
Debt/Equity Ratio (%) |
Net Debt (%)/Turnover |
Rating (A-D) |
|
|
1 |
ICL Personal Systems |
2856 |
5 |
1065 |
|||||
|
2 |
ICL Data Group |
1816,1 |
7 |
116,4 |
1634 |
29 |
35 |
-5,5 |
A |
|
3 |
IBM |
1151,6 |
-5 |
78,5 |
671 |
17 |
42 |
2,6 |
A |
|
4 |
TT-Tieto |
1148,7 |
17 |
71,8 |
1778 |
18 |
45 |
13,7 |
A |
|
5 |
Hewlett-Packard |
1078,4 |
34 |
19,9 |
247 |
18 |
40 |
4,1 |
A |
|
6 |
Canon |
901,4 |
36 |
1,5 |
473 |
7 |
46 |
7,5 |
B+ |
|
7 |
KT-Tietokeskus |
816 |
17 |
20,2 |
887 |
17 |
39 |
6 |
A |
|
( Novogroup) |
|||||||||
|
8 |
Computer 2000 |
672 |
55 |
15,4 |
90 |
35 |
30 |
2,4 |
A |
|
9 |
Digital |
584,5 |
5 |
4,8 |
307 |
4 |
60 |
-23,6 |
B+ |
|
10 |
Martis |
562 |
29 |
324 |
|||||
|
11 |
Compaq Computer |
514,1 |
50 |
32 |
|||||
|
12 |
Teleste |
424,4 |
8 |
26,9 |
650 |
17 |
56 |
-3,3 |
A |
|
13 |
Scribona |
417,1 |
31 |
10,8 |
121 |
21 |
36 |
2,9 |
A |
|
14 |
Facidata |
376,7 |
9 |
10,2 |
96 |
43 |
19 |
4 |
B+ |
|
15 |
Rank Xerox |
313,1 |
-28 |
2 |
314 |
4 |
42 |
-13,5 |
B+ |
|
16 |
Instru Data |
251,6 |
32 |
6,7 |
124 |
25 |
37 |
5,6 |
A |
|
17 |
Siemens Nixdorf |
232,7 |
-5 |
-63 |
320 |
-84 |
24 |
20,7 |
C- |
|
18 |
Microdata |
229,5 |
50 |
4,9 |
25 |
49 |
14 |
15,7 |
B+ |
|
19 |
Pohjanmaan Mikro |
216,9 |
63 |
4,7 |
21 |
48 |
44 |
3,6 |
B+ |
|
20 |
PC-Superstore |
216,7 |
58 |
4,5 |
87 |
77 |
38 |
-3,5 |
A |
Source: http//www.talentum.fi/tietoviikko/tietoviikko/top100-96.html
4.3 International companies operating in Finland
As can be seen from the top20 chart, international companies such as ICL Personal Systems, ICL Data Group, IBM, Hewlett-Packard and Canon are the leading companies in the computer and information industries in Finland. These and many other companies on the top20 list are subsidiaries of international companies. Also many Finnish based companies are partly owned by foreign investors or other companies. The next section focuses on companies with Finnish ownership of over 50%.
4.4 Domestic hardware importers and manufacturers
1. POMI ( Pohjanmaan Mikro)
Pomi is one of the largest Finnish hardware importers and a seller of basic computer components. Its business idea is simply to sell components with cheap fixed prices, for cash, directly from the store without delay to the Finnish retailers. The company also offers fast after-sales service. By restricting the selection of products, Pomi Oy can increase its efficiency. Pomi Oy. The company provides the longest guarantee of 37 months for POMI computers.
2. Microdata Oy
Microdata Oy, founded in 1977, imports computer hardware, concentrating on importing information, network and multimedia products. Microdata Oy's distributors include over 300 retailers as well as wholesalers such as Computer 2000, Scribona and Dava. Microdata represents products from U.S:Robotics, Digi International, D-Link, Boca Research, and SpartaCom. Microdata Group include also PC-Superstore, Gametech and Megabaud. PC-Superstore is a Finnish retailer of computer hardware, selling products of all the main hardware manufacturers.
4.5 Domestic Software producers
This section presents the main Finnish software manufacturers.
1. TT-Tieto
TT-Tieto is the largest Finnish software house, part of the Tieto Group, which is a Scandinavian company offering its customers comprehensive expert services in information technology mainly in Northern Europe. Moreover, Tieto Group operates globally in its strongest areas of expertise. Tieto Group was formed in December 1995, as Tietotehdas Oy, the VTKK Group and Unic Oy joined their forces.
The corporate philosophy of the Tieto Group is to have an positive affect on the efficiency and performance of its customers with the aid and through the application of information technology and networks. Tieto offers its customers processing, network and software services independent of the customer sector as well as industry specific professional services. The customer sectors include banking and insurance, public administration, services and industry. Tieto concentrates on services where it can achieve the highest expertise in the sector, good profitability and a leading market position in Northern Europe.
Key Figures of TT-Tieto:
2. Novo Group Ltd (formerly KT-Tietokeskus)
Novo Group Ltd is one of the largest service companies in the field of information technology in Finland. Novo Group’s business idea is to provide high quality IT services and products supporting customers’ business operations. Novo Group specializes in integrating software, services, and hardware from different sources into complete systems. Novo Group solutions are based on the idea of openness, which means that customers are not bound to one particular technical platform.
Novo Group includes the parent company Novo Group Ltd and the subsidiaries Novosys Ltd, and Novobit Ltd. Novosys is the largest hardware reseller in Finland (representing, for example, Compaq, Digital, Fujitsu, Hewlett-Packard, IBM, and Toshiba). Novobit is an innovative software company specialized in accounting and personnel management systems for medium sized companies and municipalities.
Novo Group's turnover in 1996 was FIM 1.14 billion and it employed 956 people at the end of 1996.
3. Teleste
Teleste is a technology company specializing in telecommunications and teaching systems as well as multimedia technology. Teleste focuses on narrow market segments in a growing market and aims at a global market position. In telecommunications, Teleste's most important area is cable connected multimedia technology, which is both citywide and building related. The company supplies wideband signal processing and transmission equipment for cable TV, satellite reception, master antenna and pay television systems. Their other central expertise area is a fibre optic network for control applications.
Teleste is an international market leader in language teaching technology: every third language laboratory in the world has been supplied by Teleste. Their most recent deliveries are complete multimedia-based language teaching systems and ready-to-use language laboratories complete with software and furniture. Europe continues to be our main market area. The development of sales in the USA and the Far East has continued favourably. Significant advances were made in breaking into the Chinese and Brazilian markets.
Teleste was founded in Turku, Finland in 1954. Due to the enterprising attitude and capable professionals in the electronics field, Teleste grew into a notable manufacturer specializing in the reception and transmission of radio and TV signals. The company has grown into a technological pioneer in its special fields.
Since the early 1970’s, Teleste’s principal owner has been Sponsor Oy. At the end of 1995, Sponsor Oy bought up the remaining minority interest in the company.
4. Instru Data
Instru Data (part of the Instrumentarium Group) is a information technology company, which delivers systems solutions and related services. Its products and services cover the following areas: wholesale, workflow and high availability products and solutions, system software, technical and software services as well as training services. Instru Data operates in Finland, Lithuania, Latvia and Russia.
4.6 Examples of Online information Services in Finland
This section briefly highlights some examples of Finnish on-line information services, which represent only a small amount of available selection. Nevertheless, they are among the main services
Solo banking services
Solo is an online service provided by Merita Bank Finland to its customers. In Solo, customers can make banking transactions, sell and buy stocks, load money on their cards, to name but a few.
Helsingin Sanomat Verkkoliite
Helsingin Sanomat Verkkoliite is an online service provided by the largest newspaper in Finland. In verkkoliite, it is possible to look for latest news, old news files, different marketplaces (e.g. real estate), Internet search etc. However, Verkkoliite is only for subscribers
MTV3 has also its own online service where the latest news are released.
Yellow pages of the whole of Finland are available on the Internet.
Keltainen Pörssi
Keltainen pörssi is an online swapping site where customers can sell and buy almost everything.
The Helsinki Stock Exchange
The Helsinki Stock Exchange is the leading market place for shares of Finnish companies. The HSE produces a diverse range of data also through the Internet to meet the market needs concerning the stock exchange trading and investment instruments.
The HSE WWW pages provide information on the Finnish securities market and its development. The HSE pages include information such as prices, HEX indices, daily values of mutual fund units, and company announcements sent to the Stock Exchange by listed companies.
4.7 Prospects for the Finnish Computer and Information Industries
Table 7. already shows how many large international companies operate in Finland. Even though most of these companies, e.g. ICL Data and IBM, are only subsidiaries of larger multinational companies, the majority of employees are Finnish, products and services are produced here and the taxes are also paid to Finland. Thus, they can almost be classified as Finnish companies.
Finnish owned computer and information companies tend to be quite small. The trend in the past years has been acquisitions: companies aim at growing by buying small and especially medium sized companies. TT-Tieto is a good example of the fast growing companies. The result of concentration in the market is that there are not so many medium sized companies left, but instead many small (less than 5 employees) companies and few big ones. This trend of acquiring small and midsize companies is likely to continue and the existing larger companies are now moving to international fields looking for potential small companies to acquire abroad and also for potential partners to start business in another country.
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