The Liberalization of Telecommunications in Sweden: Technology and Regime Change from the 1960s to 1993 (review)

The Internet has become a metaphor for the transformation from an industrial to a networked information and knowledge-based society. At the heart of this revolution are advances in computing and telecommunications. These formerly separate industries are currently integrating with content providers into a vast digital information and communications sector, penetrating all other realms of the economy. For a long time, this integration process was complicated by a dichotomy in the organization of computing and telecommunications. Most countries’ telecommunications systems had historically been organized as state-owned monopolies. In contrast, computing and office electronics were essentially unregulated competitive businesses. In his fascinating study, Magnus Karlsson analyzes the frictions between these industries and the resulting transformation of the Swedish telecommunications monopoly to a more open, market-based sector.

Sweden is a unique example of the global reorganization of telecommunications. Unlike its counterparts in other countries, the Swedish state-owned telecommunications service provider, Televerket, never enjoyed a statutory monopoly over the provision of networks and services. However, it had a regulated monopoly over the connection of terminal equipment to the state-owned telephone network. Spared the destruction of World War II, and relying on modern management techniques, Televerket built one of the most efficient telecommunications systems in the world. Thus, the argument that the inefficiency of public operators contributed to the demise of the monopoly regime has only limited relevance for Sweden. Rather it was the incompatibility between the traditional monopoly and the newly emerging competitors that transformed the system.

The author conceptualizes this evolutionary change as a collision between the sociotechnical culture of the traditional monopoly regime and the sociotechnical culture of the growing independent industry sector. A sociotechnical culture is constituted by “a pattern of established beliefs, values, and practices, associated with the social embeddedness of technology, in a technological system or in an industrial sector centered around a particular kind of technology” (p. 58). System change is slowed down by sociotechnical inertia, the tendency of a system to remain the same and to resist change and adjustment to new external conditions. Until the late 1970s, the conflicts between the two sociotechnical cultures could be resolved with adjustments within the traditional regime. Thereafter, tensions intensified, and the issues needed to be turned over to the political system for settlement. Televerket and left political forces initially attempted to resist procompetitive reform and to protect the traditional monopoly. New competitors, large users, and liberal political parties favored competition and a narrowing of the monopoly domain.

Karlsson utilizes William Dutton’s “ecology of games” approach to model this process of political interaction. All players are involved in several simultaneous and overlapping games with different possible payoffs. The outcome of the complex interaction between technological and political forces was a gradual opening of the terminal equipment market, especially during the 1980s. Once the Social Democratic Government and Televerket abandoned their resistance to procompetitive reform in the late 1980s, network and service markets could be opened to competition. The reconfiguration of the system was concluded with the introduction of a new telecommunications law in 1993. Regulatory functions were separated from Televerket into the National Telecommunications Agency, and Televerket reorganized as Telia AB.

Karlsson has managed to integrate a vast amount of empirical and historical information with a multifaceted heuristic framework based in concepts of governance regimes and sociotechnical evolution. The book is rich with institutional detail and provides a valuable documentation of important government and corporate documents. It would have been interesting to explore the usefulness of concepts of information economics in modeling the liberalization process. Such a perspective would have allowed Karlsson to incorporate problems of incomplete information and bounded rationality into the process of strategy and policy formation. Regardless, the book will be of value as a comprehensive study of the unfolding of telecommunications liberalization. Researchers interested in the interactions of technology, corporate strategy, and the formation...