The history of Spanish telecommunications is not only a story of technological development, but also of the socio-economic and political changes that have shaped the sector over the years. From the earliest beginnings of telegraphic communications to the era of universal Internet access, Spain has come a long way, reflecting the changing role of communications in society. This article will look at the evolution of telecommunications in Spain, considering the key events that have shaped this vitally important sector in the country.
Compañía Telefónica Nacional de España
On December 16, 1877, the first telephone call was made in Spain. A connection was established between Montjuich Castle and the City of Barcelona. A few months later, the first fixed telephone line was installed in Frenegal de la Sierra (Badajoz). The first signs of the legalization of telecommunications services came from the Royal Decree of August 11, 1884. This decree ceded the monopoly of telephone service to the state, which in turn granted the operation of the service to various concessionaires. Long-distance service was launched in Spain on March 18, 1891, when the state issued a license to build and operate the network, which was granted to the “Compañía Peninsular de Teléfonos.”
Initially, the Spanish telecommunications market was based on the presence of a single company, Compañía Telefónica Nacional de España (CTNE), known as Telefónica. This company was founded in Madrid on April 19, 1924, during the dictatorship of Primo de Rivera, with an initial share capital of 135 million pesetas. The main shareholder was the American company ITT (International Telephone and Telegraph Corporation). One of the first significant events in Telefónica’s history was the launch of the first automatic switchboard in Santander in 1926. On December 29 of the same year, King Alfonso XIII opened an automatic exchange in Madrid.
The years 1945 and 1946 saw several fundamental changes in the organization and regulation of Telefónica. The state, under dictator Francisco Franco, took a 79.6 percent stake in the International Telephone and Telegraph Corporationnby buying out the shares held by the International Telephone and Telegraph Corporationnand thus became a major shareholder in Compañía Telefónica Nacional de España. The process of change culminated in the signing of the State Contract on December 21, 1946, which defined the scope of Telefónica’s operations for more than four consecutive decades. After Antonio Barrera de Irimo assumed the presidency, the high proportion of state holdings was reduced in 1967, through an increase in capital and assets. This coincided with the beginnings of satellite communications. Full privatization was carried out through two public offerings of shares in 1995 (under Felipe González) and 1999 (under José María Aznar).
In 1955, the number of telephones installed by Telefónica exceeded one million, making them the world’s second largest communications network. In 1957, the Madrid-Zaragoza-Barcelona fiber optic cable line with 432 telephone circuits went into service. In 1962, the second millionth telephone was installed, and the third four years later, in 1966. 1969 was another important milestone in the history of Spanish telecommunications – with the installation of 10 million kilometers of circuits, half of long-distance calls could be dialed automatically. In addition, the integral automation of Spain’s network began in 1965, including intercity calls between Madrid, Zaragoza and Barcelona.
As for international communications, special mention should be made of the extensive network of submarine cables managed by Telefónica, which places Spain among the top three circuit operators in the world. Telefónica has made available to its users a wide range of advanced services such as data transmission, mobile communications, satellite communications, smart grid services, etc. The company is also a leading innovator, as demonstrated by Telefónica’s inauguration in 1971 of the world’s first public packet-switched data network (Iberpac). In addition, since 1986 Telefónica has offered its customers an integral business communications service known as Ibercom.
The first public telephones in Spain,began to be installed in late 1962, in both Madrid and Barcelona. Public telephones with the ability to pay before making a call on the streets played an important role in providing the public with a means of telephone communication without the need for a subscription to any operator for more than half a century. Their gradual introduction, beginning in the 1960s. in large cities and later expanding to all towns, facilitated access to the service not only for passersby, but also for residents of neighborhoods and towns where their homes lacked telephones. However, advances in technology and widespread use of cell phones have contributed to the disappearance of the need for these devices.
In the 1990s. In the 1990s, Telefónica changed its name to Telefónica, S.A. and created a subsidiary called Telefónica de España, which absorbed its operations and activities in Spain. It then took over the part of Telefónica Internacional that it did not own and merged with it.
The external impact of the first wave of European liberalization, forced changes in telecommunications regulation and the relationship between the state and Compañía Telefónica Nacional de España, which had monopolized the telecommunications market since 1924. Unlike other European countries, by then CTNE had a majority of private capital and was not part of the state’s administrative structure. The company was not subject to state contract regulations, but to a contract signed in 1946. As a result, it had a large scope of action, including both the selection of technical standards and control over the electronics and telecommunications industry through purchasing policies.
The process of liberalizing telecommunications in Spain began in the mid-1980s and was completed in 1998. It was an integral part of the package of reforms introduced in Spain as a result of its integration into the European Economic Community (EEC). Although the initial impetus came from local authorities, the path, pace and strategy were shaped by sectoral interests and the Spanish government’s perception of the impact of liberalization on overall economic policy goals. In particular, liberalization was linked to the pursuit of universal access to fixed telephony throughout the country and the control of inflation required by the convergence agreed to in the Maastricht Treaty.
Initially, it was feared that liberalization could increase disparities in access to telecommunications services, so various governments delayed the process, but in 1993 there was strong domestic political pressure for rapid and deep liberalization of the sector. The need to find new ways to fight inflation and improve the competitiveness of the economy led the authorities to focus on liberalizing public services as a complement to restrictive monetary policy.
Thus, a wide range of internal and external factors led to the adoption, in the last five years of the twentieth century, of a series of laws and policy decisions that began the process of privatizing the communications sector. Since then, the gradual introduction of competition has not only broken the long-standing monopoly, but also opened the market to a relatively large number of new players.
In 2024, the Spanish state reacconcerted Telefónica, S.A. with the goal of controlling a 10% stake in the company. The company is subject to regulations established by the Government and the European Community. In this regard, Telefónica is bound by a state agreement of December 26, 1991, which replaced an agreement signed between the two parties in 1946. Telefónica’s shares are listed on the world’s major stock exchanges (London, Paris, Frankfurt, Tokyo and New York), as well as on the continuous market of the Spanish Stock Exchanges (Madrid, Barcelona, Bilbao and Valencia).
Impact of external regulation
In the 1980s, European institutions began to worry about the weak state of the European telecommunications industry, especially compared to the US. It was believed that the fragmentation of national markets and existing monopolies were significant obstacles to the development of services.
The split of American Telephone and Telegraph (AT&T) in the United States, as well as the decision to privatize its state-owned telecommunications monopolies in the United Kingdom and Japan, put pressure on the European Parliament and the Council of Ministers of the European Union to decide how to act on the issue. A program for the development of the sector was adopted in 1984, and then the European Commission’s Directorate General XIII carried out detailed studies, which in 1987 were immortalized in a Green Paper that contained a program for reform of the sector, including liberalization of the markets for equipment and terminals, ancillary services, harmonization of networks, and separation of the regulatory and operational functions of telecommunications services.
The first result of these measures was a 1988 directive liberalizing the telecommunications terminal market, followed in 1989 by an agreement to liberalize ancillary services. Spain was among the countries that objected to these provisions. It therefore filed complaints with the Court of Justice of the European Communities, which, however, found them to be unfounded. As a result, a group of thirteen countries, including Spain, signed an agreement to establish a pre-1991 pan-European network with the Pan European Global System of Mobile Communications (GSM). In Spain, however, Telefónica chose the TACS-900 analog cell phone system, considering it more developed at the time.
Spain thus had to bring its regulations in line with the objectives of the Community’s telecommunications policy set in 1984. Enrique Barón’s reform of the ministry’s organizational structure proved crucial to future telecommunications policy. Among other things, the old Telecommunications Regulatory Board was abolished in 1985. Telecommunications Regulation and the General Secretariat for Telecommunications was created. Telecommunications, the Directorate General for Telecommunications. Telecommunications and the Telecommunications Advisory Council. Telecommunications.
General Telecommunications Act of 1998 – new regulations in the telecommunications sector.
Following the end of the moratorium period, the government of José María Aznar set out to create a new regulatory regime that was to take effect on December 1, 1998. There were a number of important issues to be resolved, including:
- How to ensure the preservation of public telecommunications service in the new liberalized market?
- How to regulate Telefónica prices?
- What competition models should be introduced?
- Who will be responsible for regulating the market?
The answer was the enactment of the General Law on Telecommunications (LGTEL) on April 24, 1998. At the time, it was determined that the previous Telecommunications Law of 1987 was inadequate, outdated and too restrictive. Telefónica had lost its public monopoly status, and liberalization of the basic telephony market was close at hand. It therefore became necessary to introduce a new, more flexible regulation for the sector.
LGTEL incorporated a liberalization schedule in line with European standards into Spanish law and set the rules that would govern the market starting in 1998. The new law nullified previous regulations and brought together in one place all the scattered rules.
The most important provision of LGTEL was the recognition that public service does not include all telecommunications activities, but applies only to certain services. In this way, telecommunications services ceased to be treated as public services and were instead considered general services. This change allowed for the liberalization of the market, while retaining the ability to impose public service conditions on certain operators. Under the new approach, the state was to intervene in the market only if there were compelling national reasons or the need to establish public service obligations. In 1998, the LGTEL law assigned Telefónica the task of providing universal service. This included providing all residents with access to basic telecommunications services at an affordable price, such as telephone calls, faxes, phone books and public payphones.
In addition, LGTEL introduced new categories of authority to provide telecommunications services. By abolishing the old system of licenses and permits, competitors were able to enter the market more easily; however, to prevent potential abuse, stricter regulations and sanctions were also introduced. Another important innovation was the introduction of the concept of a dominant operator, which had to meet various public service obligations. This concept was a key element of telecommunications regulation, allowing public service obligations to be defined and promoting competition.
Competition
The model of network competition introduced by the Ministry of Development began to reveal its limitations, particularly in the area of local telecommunications. During the period from January 1 to November 30, 1998, competition between Telefónica and Retevisión focused mainly on the long-distance connections offered by Retevisión through indirect access. It was only toward the end of this period that cable operators in some regions were able to gain subscribers and began to gradually roll out urban connections. On December 1, 1998, a third fixed-line operator, Lince Telecomunicaciones, entered the market and began commercial operations under the name Uni2. However, the period of gradual market opening was so short that it made it virtually impossible for new entrants to get started. The government eventually set reduced interchange prices between networks to facilitate calls between subscribers using different networks, to make it easier for new operators to enter the market through indirect access. This allowed the second operator to offer long-distance and international calls even when its network was still very limited. In just one year, Retevisión, Euskatel and Uni2 gained a market share of 5%.
However, competition has not spilled over into other services, such as city connections or the installation of new lines. New operators wishing to enter the market faced many obstacles to starting their commercial operations. Until 1998, how to gain access to buildings to install equipment was not regulated. Operators also did not obtain city rights-of-way permission from housing communities to roll out their networks. Interconnection negotiations between Telefónica and the operators were also very difficult.
Thus, network development proceeded very slowly. Cable operators watched helplessly as satellite TV platforms overtook them, offering entertainment services that were their main advantage against Telefónica. Under these circumstances, the government made numerous changes to improve the competitive ability of new entrants.
Mobile telephony
Movistar, formerly known as Telefónica Móviles, is owned by Spanish telecommunications company Telefónica S.A., a telecommunications giant founded in 1924. Since its founding in 1995, Movistar has been one of the oldest and largest operators in the Spanish market. It offers a wide range of services, including mobile, fixed line, Internet and television. Movistar has a strong market presence in both the residential and business customer segments.
In 1994, the Airtel – Sistelcom – Reditel consortium was formed. That same year, Airtel won a license for mobile services, beating the Cometa SRM consortium.In 1995, the government granted Airtel Móvil a license to provide GSM mobile services, which involved a fee of 85 billion pesetas. A year later, the European Commission required the government to compensate Airtel for the fee it had to pay to obtain the license. As part of that compensation, in 1997 the Spanish government undertook to issue a DCS 1800 license worth 26,000 million pesetas, which allowed Airtel’s network to connect to other fixed or mobile networks in Spain or abroad, and to extend the license to 25 years with an additional five-year extension. In 1999, Airtel reached 5 million customers. In 2000, Airtel obtained a UMTS (3G) license. In December, Brussels approved Vodafone’s acquisition of Airtel, and Airtel closed the year with 7 million customers.
In the mobile communications sphere, the European Commission set January 1, 1998 as the deadline for allocating frequencies in the electromagnetic spectrum necessary for the development of the second generation of GSM cellular technology, based on the digital cellular system. At the outset, the Spanish government took action to challenge the decision before the European Court of Justice, claiming that the Commission had no authority to do so. However, faced with the inevitability of this proceeding, a few months later the new People’s Party government acted to grant new GSM licenses.
The process of liberalizing the mobile sector posed two key questions for the government: first, how many licenses should be granted and how to regulate service prices? Originally, the Ministry of Development proposed to open the market wide by introducing three national GSM operators and various regional operators – a model in line with the approach of other European countries. However, in the end, Rafael Arias-Salgado decided to allow only the introduction of a third operator with national coverage to compete with Movistar and Airtel.
In 1997, when the DCS-1800 licenses were awarded to Airtel and Telefónica Móviles, the terms for the third license were also set. The competition for the third license attracted the interest of many companies, especially new fixed-line operators who wanted to obtain a mobile license to become global players. Two business groups entered the competition: Retevisión Móviles (controlled by Telecom Italia, Unión Fenosa and Endesa) and Alas (led by France Télécom). The license was eventually awarded to Retevisión, which began operating in January 1999 under the Amena brand. A few years later, this operator came under the control of France Télécom and operated under the Orange brand.
Amena entered the market at a time when Telefónica Móviles and Airtel already had a significant number of customers, but managed to grow rapidly thanks to the rapid development of mobile communications. To support this operator, the government decided that Airtel and Telefónica had to wait six months before they could use the DCS-1800 system. In addition, they were required to provide Amena with national roaming for two years, although Amena finally completed its network in November 2000, which not only reduced costs but also provided better customer service.
Today, Spain’s telecommunications infrastructure is one of the most developed in Europe. The country is leading the way in the introduction of modern technologies, such as broadband, 5G networks and innovative telephony video communications.
Spain’s broadband network covers both urban and rural areas, providing equal access to the Internet for all residents. Telecommunications operators are constantly investing in infrastructure development, improving the quality of service and increasing data speeds.
One of the most important developments in recent years has been the introduction of 5G networks. Spain was one of the first European countries to deploy the technology on a large scale. The 5G network opens up new possibilities for mobile communications, enabling faster data transfer, lower latency and support for more devices connected to the network.
Third wave and competitive market
The separation of telecommunications service operations from telecommunications infrastructure has opened up new opportunities in the market, fostering the emergence of competition. Today, new players have easier access to the industry without being obliged to have their own extensive networks of outlets. This in turn translates into more competitive subscription prices for users. Using the existing infrastructure of other companies has created favorable conditions for the development of new independent operators, giving consumers more choice and better services.
Since it first entered the market, Spain’s Cellnex Telecom has established itself as one of the key players in the wireless telecommunications infrastructure and services industry in Spain and Europe. The company, which now has an impressive number of up to 135,000 sites in Europe, was founded in 2000 as Acesa Telecom and later transformed into Abertis Telecom before adopting its current name in 2015.Cellnex Telecom’s history dates back to 2000, when Acesa Telecom (later Abertis Telecom) acquired a 52% stake in Tradia and merged with Abertis Telecom. The company went through many changes over the following years, until it was finally rebranded as Cellnex Telecom in 2015 in preparation for its IPO. Through its expansion and growth, Cellnex Telecom has become one of the key players in the European telecommunications infrastructure market. Cellnex Telecom focuses on four main business areas: providing services for telecommunications infrastructure, audiovisual broadcast network management, security and emergency services, and solutions for the smart management of urban infrastructures and services, such as smart city and Internet of Things (IoT).
Spain, which is one of the most developed telecommunications markets in Europe, offers a wide range of telephone services. Among the major players in this market are the three main operators, Movistar, Vodafone and Orange. In addition to the three major operators, there are also several smaller companies in the Spanish market, often offering more specialized or segment-focused services. For example, these include:
- Yoigo: Yoigo is a relatively new operator that has gained popularity for its competitive pricing and flexible service packages.
- MásMóvil: MásMóvil is an operator that has gained popularity for its attractive price offers and flexible service packages, focusing mainly on customers seeking value for money.
Summary
Spain’s telecommunications sector is constantly striving to improve service quality and accessibility for all citizens. Through technological innovation and continuous infrastructure development, Spain aspires to remain a leader in telecommunications in Europe.
However, despite achievements in the development of telecommunications infrastructure, there are still challenges to overcome. One of the main challenges is to ensure equal access to the Internet for all regions of the country, including rural and remote areas. In addition, it is also necessary to ensure digital security and the protection of personal data in an era of increasing numbers of connected devices and transmitted data.
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