Dispute over impact of IT on cohesion delays report

Date: 09/01/1997

By Mark Turner

A EUROPEAN Commission report on the impact of the information society on cohesion has been delayed because of differences between directorates-general over its content.

The report was originally due to be adopted in early December, but has now been postponed until the end of January.

The dispute centres on the degree to which the report should classify telecoms liberalisation as an anti-cohesive policy and suggest strategies to redress the balance.

An early draft of the document stressed that the information society was becoming increasingly important in determining the competitiveness of regions and said access to markets, customer groups and supplier contacts was considerably enhanced by the use of computer networks.

It also highlighted a growing gap between EU regions in the availability of such infrastructure, and demonstrated that small and medium-sized enterprises (SMEs) in peripheral regions were failing to benefit from it.

Most controversially, the draft pointed out that much of the information society's expansion had or would occur in a liberal environment, having some effects on Union cohesion which were a cause of concern. It warned that since investors tended to focus on high-demand low-cost areas, the EU's peripheral regions could be left behind unless adequate compensatory mechanisms were put in place.

Although this conclusion is similar to that drawn by the first Cohesion Report in November, the Commission's Directorate-General for telecoms (DGXIII) is wary of highlighting it.

It is particularly opposed to calls for a rethink of universal service obligations as telecoms liberalisation takes effect. Although the draft did not urge immediate action, it suggested there could be a review of these obligations at the end of 1997.

Officials from the Directorate-General for regional policy (DGXVI) believe that since telecoms liberalisation is no longer in doubt, it is necessary to admit that not all of its consequences will be beneficial and explore ways to alleviate those which are not.

But telecoms liberalisers fear that any pledge to re-examine universal service might put off potential investors, wary of entering a field which could suddenly be faced with extra costs.

The Directorate-General for competition (DGIV) has also queried whether infrastructural developments should be supported by EU structural funds.

Since much of the present infrastructure is in the hands of de facto monopolies, DGIV fears any grants or loans would amount to subsidies for incumbent firms, thereby damaging competition.