This paper investigates the success of Nokia Mobile Phones (Nokia), and Ericsson Mobile Communications (Ericsson). Concentrating solely on both companies' consumer products of cellular phone handsets, this paper analyses and explains the global success of Nokia and Ericsson. The theory referenced is Michael Porter's competitive advantage of nations [13], which is analyzed within the context of European Union (EU) which is the home market of both Nokia and Ericsson. Porter's 'diamond' model [13] suggests that the determinants that create the context in which a nation's firms are born and in which they compete are Factor Conditions; Demand Conditions, Related and Supporting Industries; Firm Strategy, Structure and Rivalry; and Government. The interplay between the broad attributes of a nation shape the environment in which local firms compete and impede the creation of a competitive advantage. We use this model to explain the success of Nokia and Ericsson. It is suggested that the role of relatively early deregulation of the telecommunications markets in Finland and Sweden has contributed to the success of these companies. It is also suggested that the EU has played a significant role in defining the competitive situation in the mobile telephony industry in Europe and the competitiveness of Europe as a region. Our objective is to demonstrate in this paper that whilst the success of Nokia and Ericsson can be attributed on the sophistication of the company operations and strategy, the competitiveness in this industry depends heavily on the political, legal and macroeconomic environment.To answer the questions above and to conclude wider implications of the research results we reference a research study [17] of success factors in telecommunication industry. Based on descriptive and non-measurable qualitative data the competitiveness of Scandinavia as a region in the telecommunications industry has been systematically analyzed to conceptualize the phenomenon.