EU gives firms a launchpad to catch up in the global technology race

Date: 25/06/1998

By Peter Chapman

ANYONE who has followed the European Commission's most senior figures around in the past year or two will have been struck by their obsession with the information society.

They cannot get enough of it. In endless speeches, everyone from energy supremo Christos Papoutsis to social affairs chief Pádraig Flynn and anti-fraud fighter Anita Gradin have got in on the act.

No matter what their portfolios, the message is roughly the same: Europe must change old systems, update old rules and retrain its workforce. The figures bear this out, with the EU trailing the US and Japan in its use of IT and the Internet.

But behind the rhetoric there is a growing acceptance that the EU, and particularly the Commission, is not doing a bad job in its efforts to lay down the rules of the game and that, with this legal framework, Europe can catch up.

Forget the bit-part players. The Commission movers and shakers in the information society business are Mario Monti (single market), Martin Bangemann (industry), Sir Leon Brittan (trade) and Karel van Miert (competition).

The linchpin of the information society is copyright.

Here, Monti has introduced proposals for key legislation designed to balance the conflicting wishes of rights holders and content users, and the Internet service providers and telecoms operators which carry information through cyberspace. MEPs are currently debating the draft directive, set for final adoption before Christmas.

Such holders and network operators are now eagerly awaiting proposals for equally crucial legislation before the summer break which will spell out who is liable for what when breaches of copyright occur over electronic networks.

Monti is also overseeing the launch in October of rules designed to ensure data sent outside the EU is not improperly used. This data protection regime could see a ban on exports of data to third countries such as the US, and the Commissioner and his officials are bending over backwards to ensure foreign firms and governments are not caught out by the new rules.

Telecoms is one of the EU's big success stories, with the Commission leading from the front. It is true that the US has long enjoyed faster, cheaper and more advanced services - except in the mobile field where the EU is a true market leader. But this is changing thanks to the 1998 liberalisation package put together by Bangemann and Van Miert which, in theory at least, opened up Europe's old monopolised markets.

The jury is still out on how quickly competition will emerge in local networks, but international call charges are dropping like a stone.

The Commission recognised the need to act to foster competition, seen as vital for the emergence of innovative multimedia services, by launching plans to reform the cable TV market.

These networks can be updated to carry huge amounts of information at speed direct to customers' living rooms. Since they were largely owned by telecoms operators with their own networks, there was little incentive for these firms to make the extra investment to upgrade. Van Miert saw the danger and pushed through a directive to make telecoms operators hive off their broad-band cable networks into separate companies.

At the same time, Europe was justifiably upset when the US government announced draft plans to reform the Internet domain name system governing the suffixes which end addresses, without acknowledging that other countries might have an interest.

Previously dismissed as a technical irrelevance, domain names are now increasingly being seen as a policy issue. The number of businesses and individuals setting up websites is running at 100,000 a month, putting strain on the existing system.

The US wanted to add to the overstretched '.com', '.org' and '.co' generic top-level domain names currently handled by Network Solutions, the firm which obtained a monopoly from the government. But its proposal ignored earlier efforts by international industry and governments to reform the system. It also ignored a plan to enrol the Geneva-based World Intellectual Property Organisation (WIPO) to thrash out a copyright dispute procedure for firms with similar sounding names fighting over rights to specific addresses.

A stern letter from the Commission, signed by member states, put the record straight. Europe was concerned - and the US had better take it into account. Two months later, the White House duly obliged with a policy paper which took international concerns on board.

While the EU can take credit for what it has done, it equally deserves a pat on the back for what it has not done.

The days of blundering intervention are past. Monti has overseen the drafting of a key directive on 'transparency of information society services' which is designed to prevent a patchwork of national rules springing up across the EU.

This legislation, already agreed by single market ministers, will require member states to inform everyone else of their intentions to pass laws governing Internet services and electronic commerce.

Monti has also voiced his opposition to calls for a 'bit tax' on information passed across networks such as the Internet.

The emphasis is on a tax-neutral environment - in other words, no new taxes for the Internet.

On the global stage, Brittan has pushed for tariffs on information society goods and services to be lowered. The EU agrees with the US that goods which can be delivered online should be tariff-free.

Meanwhile, Bangemann has been urging the world's industry and governments to draw up a global information society charter. Although his idea was given a lukewarm welcome, many feel such a charter could boost coordination among the many different fora and government organisations which currently police the information society.

The EU is also increasingly unwilling to indulge in ill-fated subsidies to its IT and telecoms industries.

The Commission occasionally receives a rap on the knuckles from the Court of Auditors for isolated bouts of misspending on projects such as wide-screen TV.

But the professionalism of Commission project managers in the current Fourth Framework R&D Programme is well respected. Projects must pass tough selection criteria to qualify for Union funding and industry is generally happy with the way the cash is spent.

Member states and MEPs are currently arguing over the budget for the Fifth Framework Programme to run until 2002. There is a good chance the amount will remain unchanged when the EU embarks on a new 'user-friendly information society' policy which merges IT, telecoms and telematics R&D into one.

Messrs Monti, Bangemann, Van Miert and Brittan have done much to prepare the groundwork for the information society. The onus is now on EU business to take advantage of this legal framework.