Competing against yourself: State duopoly in the Luxembourg telecommunications industry

Abstract

The Luxembourgish telecommunications market, not too dissimilar to many other advanced industrial countries around the world, is undergoing a process of market liberalisation. However, there are some particular features of Luxembourg’s ‘informed follower’ mode of market liberalisation, which are sociospatially distinct and therefore warrant investigation. In particular, the government of Luxembourg has sought to proactively intervene in the direct provision of telecommunications services, in the form of two competing but 100% state-owned operators, whilst simultaneously supporting market liberalisation. An understanding of the role of the state in this process is clarified through the conceptual lens of the state as policy-maker, regulator and operator. Through examining the multiple roles performed by the Luxembourgish state in the wider context of the EU telecommunications reform packages, the paper reveals the competitive tension that exists between each of the different arms of the state, that is, between POST and Luxconnect. The paper critically appraises the intertwining decisions, factors and considerations that led to this state-controlled duopoly and analyses the outcomes to date of attempts to liberalise the telecommunications market as well. This analysis of the geographical and historical complexity of the Luxembourgish telecommunications sector helps to reveal the powerful role of the state in market liberalisation.