NEW DOCTORAL THESIS | How Stenbeck managed to deregulate the telecom market

In the 1980s, Jan Stenbeck and his Comvik broke up Televerket’s monopoly on the Swedish telecoms market. How did he succeed? A new thesis explores the role of entrepreneurship in institutional change.

Veteran Televerket had enjoyed a monopoly since the 19th century. It was an authority and an established player with sole access to the public telecommunications network. The rules of the telecom market were set by politicians and officials who were keen to secure Televerket’s position. They had only made exceptions for another company’s business phones in the 1950s, otherwise they strongly resisted anything that smacked of competition.

During the 1980s, Jan Stenbeck had spent time in the United States and was inspired by neoliberal ideology. He returned to Sweden with the modest ambition of deregulating the country. He had the Kinnevik Group behind him. With new mobile telephony, money and contacts, Stenbeck’s Comvik (yes, spelled with a ‘k’ at the beginning) tried to enter the Swedish telecom market. But it was a difficult match.

– Televerket fought hard to keep the monopoly. They put obstacles in the way of Comvik, not allowing them to have frequencies in the telecommunications network or the same modern equipment as Televerket itself had, says Klas A.M. Eriksson, Stockholm University, who studied institutional entrepreneurship in his doctoral thesis.

But ten years later, in 1993, the market is deregulated. The era of Televerket is over, it is privatized and becomes Telia. Comviq’s mobile subscription (the company name was now spelled with a q) became the obvious choice for many Swedes when we got our first mobile phone.

Building the David and Goliath narrative

Behind the deregulation was the entrepreneur Jan Stenbeck and people within the Kinnevik Group. Abolishing the monopoly was their main focus. The reason they succeeded was that for ten years they conducted grandiose campaigns in the political arena.

– They used pressure tactics against politicians and authorities, had an effective media strategy and hired professors in law and technology to give weight to their arguments. With their many contacts and financial capital, they managed to establish the narrative of David and Goliath, says Klas A.M. Eriksson, explaining that such methods are part of institutional entrepreneurship.

– The entrepreneur Stenbeck with his Comviq focused first and foremost on the political market. Contrary to the expectations of many, they were better at the political market than Televerket was, even though it was the state-owned Televerket that could be assumed to have the most important contacts in the political sphere.

To succeed in deregulating a market when a large established player is profiting from it is an achievement, according to Klas Eriksson. Monopolists often have the financial and political resources. They act in their own interests and want to protect their privileges regardless of whether they have a private or state monopoly.

– Stenbeck and Comviq’s strategy was to use proactive methods to change institutions in their favor. They did well largely because they had the Kinnevik Group behind them. They could afford to be in the red for ten years. Such protracted institutional entrepreneurship costs money and is thus not for everyone.

Contact klas.eriksson@ekohist.su.se

More about the thesis
Klas A.M. Eriksson will defend his thesis How the City was Owned: Markets, property rights, and entrepreneurship in Stockholm, Sweden 1726-2020 at Stockholm University on June 15 at 10.00 a.m. The overview chapter of the thesis can be downloaded as a pdf. Email Klas A.M. Eriksson for the full thesis.