Initiatives for further market liberalisation, for retraining Europe’s workforce and for boosting the competitiveness of its content creation industry are clearly the top priorities for the new European Commission, said a wide range of government and industry officials at the conference. The Networked Economy conference, which draws top decision makers from the telecommunications industry’s most prominent players, was held just two days after the G7 Summit meeting in Brussels that was dedicated to the Global Information Infrastructure or GII in Summit-speak. As a result, discussions focused largely on industry and government policies and trends. Jacques Santer, the new president of the European Union, proved true to his record as a free market champion. The GII will not happen without liberalised markets nor without a plugged in, flexible, innovative workforce, he said, evoking the two main themes of his telecommunications industry policy. Santer, who was instrumental in liberalising European regulations on satellite use, said the Commission is working on legislation to allow cable television companies to provide telephone service, as is currently the case in the UK We have said that Europe must be home to the drivers, designers, builders, content providers and financiers of the global information highway and not just hitchhikers. The choice for Europe is clear – to be in the lead or to be nowhere, he declared. The new president stressed that European governments will have to work with their trades unions if they intend to meet the established deadline for voice telephony liberalisation on January 1 1998, which some European nations have been agitating to advance. We have to involve the unions to show them that deregulation is not synonymous with job loss.
New skills
It has to be understood by the workers that they must take on the responsibility for acquiring new skills. Martin Bangemann, Commissioner for industrial policy and information technologies and telecommunications, noted that we have not limited operators to liberalising at that date, and we are inviting them to open up sooner. In the meantime, he added, the Commission has the option of liberalising alternative infrastructures within the framework of pilot projects. Industry executives reminded conference attendees of today’s reality in Europe and the obstacles that it creates to achieving the European Community’s objectives. Said Claude Lalanne, chief executive for SITA, which operates a global telecommunications network for the air transport industry: Although the EC has been active in deregulation, we still have obstacles in some countries, notably southern Europe. There, the freedom of choice doesn’t exist. Also, it is 10 times more expensive to lease lines in Europe than the US, so it is difficult to speak of free competition with such a situation in place. Things are no better for the nascent on-line services industry in Europe, said Gregoire Sentilhes, chief executive of Matra Hachette Multimedia On Line and vice-chairman of Europe Online. One of the effects of regulation in Europe is that Matra Hachette Multimedia’s on-line services will cost between 50% and 80% more than in the US, he noted. Josef Cornu, executive vice-president of business development, technical and operations at Alcatel NV, clearly identified the crux of the problem, which will be intractable. To the government, the public operators are a cash cow, they offer some kind of public service with its social obligations and they are a source of employment. If you asked any of the public operators here, ‘If you were to start with a green field could you lower your tariffs?’ the answer would be a resounding ‘yes.’ We are not in a purely economic environment and any changes in the terrain for the public telecommunications operators will have an effect on employment.
By Marsha Johnston
Santer is pushing a policy of worker retraining to minimise the negative effects of market deregulation, and of opposition to the change. Evidence has show
n that it will create new jobs; some 60% of new jobs in the US are in the information society. But they will be jobs requiring new skills. We must reflect in Europe, and reflect fast, on how to reorganise our educational system to be ready for the GII, he said. European Commissioner Edith Cresson noted that she has already launched a vocational training program called Leonardo and set up task forces for educational and edutainment software. Europe’s great intellectual capital must be made electronically accessible, she said. Both Santer and Bangemann favour more aggressive financial incentives rather than quotas to boost the production of culturally-specific content. Saying he does not believe there is any contradiction between market liberalisation and maintaining cultural diversity, Santer said, We must give priority to the provisions in the Maastricht Treaty, Article 92, that give all member states the opportunity to give fiscal incentives for local audiovisual production. Bangemann elaborated on the idea: The best cultural environment is to create the best economic opportunities for expression and leave the rest to culture itself. Rather than direct subsidies, it would be better to create a fund that would take 30% to 40% of the risk for small film-makers and leave the rest to the bank. He agrees with France on the need for measures to back Europe’s cultural identities and production, but I may differ on the ways to achieve it. Nicholas Sarkozy, France’s minister of budget and telecommunications, disputed the idea that France favors quotas per se. I will not plead for regulations that would protect our artists and producers from competition, but for those that would give others the same treatment they get. He noted that Americans certainly understand that the stakes are high in this game, since they have limited access to their [content] market. As a way of funding Europe-specific content creation, Mme Cresson has proposed a 60 cent telecommunications tax, which she says should be temporary and optional so that countries would have the choice to adopt it. She noted that the tax is a proposal Bill Gates has endorsed, and that it would have raised over $600m last year had it been in place. The conference clearly illustrated the trend of telephony operators moving into the realm of content creation, with both France Telecom and Nynex Corp having created such ventures in the last several months. An operator of two thirds of France’s cable network, France Telecom created France Telecom Multimedia in April 1994, to take non-exclusive, minority shares in developers of multimedia services. Nynex just recently set up a joint venture with Creative Artists Agency to license and produce content, putting network veteran Howard Stringer at the helm.
Airline industry
Agreement was widespread that the role of the regulator as it exists today will probably be unrecognisable in the next five years. Alcatel’s Cornu made an analogy to the airline industry: Aviation regulators don’t decide which passengers can take which plane, but that’s precisely what a lot of telecommunications regulation is doing – what kind of information can be provided on a certain network, etc. That’s why I believe that a lot of the regulation we have today is transitory. Conference speakers also agreed that standards providing network interoperability are of paramount importance. Said Ivan Seidenberg, president and chief executive for Nynex, The G7 meeting showed broad agreement on the need for interoperability and standards. In fact, it was more an issue of how to implement them than having to agree on the standards themselves. Matra Hachette’s Sentilhes noted that standards for user interfaces to on-line services may be trickier to master. I believe there will be a big battle over interfaces, partly because Europe Online will be structured along a decentralised model so that each country will have a national provider, he said. Cable network interoperability and access is an area where the Commission needs to remai
n vigilant as it deregulates, said John Birt, director general of the BBC. There are plainly some aspects of this revolution that should be closely watched, such as the price charged for access to consumers, he said. He added that the BBC’s concerns were not directed at any particular group such as rival Canal Plus.
