Spains Retevision Turns on Telephony

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Madrid, Spain -- Retevision, Spain's
television-signal-distribution agency and second national telephone operator, officially
put an end to Telefónica de España's 74-year monopoly over telephony last week by
launching its own services, with rates as much as 25 percent lower than those of its
entrenched competitor.

Retevision began offering domestic long-distance and
international service last Friday, with local service set for September. At that time,
Retevision will begin using the infrastructure of its shareholders -- such as Spanish
electric utility Endesa and Italian telco Stet -- which have been awarded one cable
franchise and are bidding for more. Until then, Retevision customers will receive local
service through Telefónica.

In its bid to be a low-cost provider, Retevision won't
charge its customers sign-up or monthly connection fees until next year at the earliest.
Telefónica charges 20,000 pesetas ($133) for sign-up and 1,200 pesetas ($8) as a monthly
connection fee.

'Retevision will always offer cheaper rates than
Telefónica,' asserted Anna Birulés, general manager of Retevision.

Stet will be initially be Retevision's sole carrier
for international phone calls, but Birulés has said that the company will use more
international carriers in the medium term. Retevision will introduce other services over
the next few months, such as virtual communication and intelligent networks, data,
Internet and advanced voice services.

To counteract Retevision's push, Telefónica has
delayed implementing rate increases that were recently approved by the government. The
government has allowed Telefónica to decrease long-distance rates to a point that might
equal Retevision's, but Telefónica hasn't yet done so.

Still, competition will be fierce in Spain as the year
unfolds, with the potential for Telefónica, Retevision and other new players to all go
after the same telephony customers.

'Retevision will have to push hard not only against
Telefónica, but against cable telephony and a third operator,' said an industry
analyst, noting that cable-telephony providers will soon join the telephony fray in Spain,
and that the government will award a third national telephony license by April.

Additionally, the country's main MSO, Cableuropa, will
begin offering telephony in May.

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