Europe still weighed down by bureaucratic burden

Date: 16/03/2000

By Peter Chapman

Few companies' fortunes are as wrapped up in the fate of the Internet and e-commerce as chip-maker Intel.

For each new Internet surfer, there is inevitably a personal computer or a work station - and the chances are that the machine is powered by a chip manufactured by the US giant.

It is hardly surprising, then, that the firm which turned the anonymous microprocessor into a marketing bi-word when it launched its 'Intel inside' and Pentium campaigns has a lot to say to EU's policy makers about what they should be doing to kick start the information society.

The company's European managing director Rob Ecklemann claims the continent is on the brink of matching the US stride for stride, as long as it can rid itself of the bureaucratic burden weighing down its own would-be Bill Gates. "There is no mysterious brew that can only be created in central California. There are a set of straightforward policy conditions that must be met," he says.

Ecklemann says the Union has made tremendous strides in the telecoms field - vital for the Internet and e-commerce to thrive - by creating the regulatory conditions needed to foster competition. But, he insists, member states need to keep up the momentum.

A key stimulator for Internet growth will be to ensure the former monopoly operators offer rivals 'unbundled' access to their basic copper local networks or 'local loops' which run into households. These can be 'cranked up' by competitors to offer superfast Web access using new technology known as 'ADSL'.

Ecklemann says the Commission must also keep up the pressure on telecoms operators to lower the inflated price of the leased lines used by Internet service providers, and member states must encourage telecoms firms to offer US-style 'unmetered' calls for Internet access.

But he warns that the EU's general antipathy towards entrepreneurs remains a huge barrier. This is typified by the lack of harmonised Union tax rules governing share options - offered to bright executives as a lure to join growing companies with stock market potential in lieu of fat salaries.

Many member states, says Ecklemann, tax share options so highly that the executive has little left over at the end of the exercise. "The bottom line is that because of taxation on share options, you cannot attract the leading entrepreneurs to Europe," he warns.

Another gripe is Europe's draconian bankruptcy laws, which create an atmosphere where failure is feared and even the most enterprising, ambitious and innovative are vanquished.

"If you make failure fatal, then you risk stifling enterprise," says Ecklemann. "In the US there is one success for every three failures; 50% of all initial public offerings are not in business after a year. That figure drops to 20% after five years."

Intel is now far away from that start-up stage where bankruptcy is an everyday risk. But while its famous business partner, Microsoft, has been making enemies amongst anti-trust watchdogs the world over for its alleged monopoly practices, Intel has not attracted their gaze so far. That is largely thanks to renewed competition from rivals such as AMD which are matching it stride for stride in the race for ever-faster processors - such as the '1Gigahertz' chip.

Article forms part of a survey on the Information Society.