Watch new members ‘leapfrog’ into the Info Age, says Liikanen

By Peter Chapman

Date: 29/04/04

The EU's ten new member states are ready, willing and smart enough to "leapfrog" a generation of communications technology, bringing citizens into the 21st century - and the digital age.

That's the verdict of outgoing Information Society Commissioner Erkki Liikanen, the man in charge of modernizing the Union's rulebook for the entire communications sector.

"I am sure that in the area of information society the new member states will do very well," Liikanen told European Voice.

"They have solid experience and skills in natural and applied sciences, as well as mathematics. And if there is one area in which leapfrogging is possible, it is in the internet world."

Underpinning the transformation of the industry is deregulation of the communications sector - once controlled by Stalin-era bureaucrats.

The Finn has voiced concerns in the run-up to enlargement that national regulators in the new member states may not be truly independent from governments and largely state-owned telecom operators.

Nevertheless, Liikanen - who is set to leave the Commission to head the Finnish Central Bank - claims the new countries have made sound progress in putting in place the Union's new communications sector rules.

These replace the 1998 liberalization regime designed to get rid of the legal monopolies of the dominant state-owned operators and to ensure that they opened-up their networks to potential rivals.

Under the new system the strictest rules are only meted out to operators present in a handful of "bottlenecks", where competition has yet to take hold.

"These countries appear to be on track. They will bring new competition and dynamism to the enlarged internal market," says Liikanen.

"It will be very important to ensure that electronic communications markets are competitive. This means having a clear and predictable legal framework by putting our new rules into place on time and correctly applying them."

A look at the raw statistics in the European Commission's February progress report for accession countries reveals a remarkably high take-up of mobile telephony - from just over 80 per hundred people in the Czech Republic and Slovenia, to just below 50 per hundred in Poland and Latvia.

Fixed network growth has slowed slightly, partly thanks to the mobile growth. However, many operators have digitized their networks, making them far more reliable - and capable, in theory, of carrying fast data services.

Liikanen said that most countries would also put national broadband strategies into place - echoing the political importance that EU leaders have attached to fast, capacious, internet access.

They may need to prioritize this area. Despite improvements in the quality of fixed lines, his department's report notes only a "disappointing" 13% of households with access to a broadband connection.

Partly to blame, the report concludes, is a lack of competition, for example from cable TV networks.

This is dissuading operators from investing in technology such as "digital subscriber loop" (DSL), which beef-ups "fixed" copper phone lines, designed to carry voice calls, so that they pulsate with rapid internet traffic.

But even if the right policies are in place to ensure telecom operators and internet service providers eventually offer fast internet access to the masses, another major factor could still hold back the digital economy in many of these countries: lack of spare cash. New member states - except Cyprus and Slovenia - are poor by Western standards.

The Commission's February progress report for accession countries reveals that the huge relative cost of a basic PC - currently the main device to access the internet - could be a decisive factor.

In Lithuania, for example, an internet-equipped computer costs the average citizen 366% of their monthly salary.

A PC is relatively cheaper elsewhere - 184% of salary in neighbouring Estonia and only 83% in Poland. But that is still a big chunk out of wages which are most likely devoted to more pressing needs, such as food, heat and renting an apartment.

That could mean many of the Union's newest citizens have to wait before they get to cruise down the information superhighway - at least until they find jobs that will pay enough to buy state-of-the-art-PCs, DSL subscriptions and smarter 3G handsets.

The outgoing European Commissioner for Enterprise and the Information Society, Erkki Liikanen, says that in the area of information society, new Member States will do very well. Article is part of a European Voice Special Report on EU Enlargement.