Supplement Report on Europe and the global Bulletin …aei.pitt.edu/1199/1/info_society_bangeman_report.pdf · Bulletin of the European Union Supplement 2/94 Growth , competitiveness

Bulletinof the European Union

Supplement 2/94

Growth, competitiveness and employmentWhite Paper follow-up

Report on Europeand the global information society

Interim report on trans-European networks

Progress report on employment

Extracts of the conclusions of the Presidencyof the Corfu European Council

This document reproduces the infonnation societyreport on pages 5-39 and the Presidency conclusions onpages 126-134. The other two reports are available asseparate documents on AEI-EU.

Blank page not reproduced: 8

European Commission

Cataloguing data can be found at the end of this publication

Luxembourg: Office for Official Publications of the European Communities, 1994

ISBN 92-826-8547-

(Q ECSC-EC-EAEC, Brussels. Luxembourg, 1994

Reproduction is authorized , except for commercial purposes , provided the source isacknowledged

Printed in Germany

General contents

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Europe and the global information society

Recommendations of the high-level group on the information society to theCorfu European Council (Bangemann group)

Trans-European networks

Interim report of the chairman of the group of personal representatives of theHeads of State or Government to the Corfu European Council(Christophersen group)


Results of Mr Flynn s tour of capitals

Extracts of the conclusions of the Presidency of the Corfu European Council(24 and 25 June 1994)

103

125

Europe and the global information societyRecommendations of the high-level group

on the information society to the Corfu European Council(Bangemann group)

In its Brussels meeting of December 1993 , the European Council requested that areport be prepared for its meeting on 24 and 25 June 1994 in Corfu by a group ofprominent persons on the specific measures to be taken into consideration by theCommunity and the Member States for the infrastructures in the sphere ofinformation. On the basis of this report, the Council will adopt an operationalprogramme defining precise procedures for action and the necessary means.

The following were members of the group chaired by Mr Martin BangemannMember of the Commission:

Peter L. Bonfield (Chairman and Chief Executive, ICL), Enrico Cabral da Fonseca(Presidente Companhia Comunica~aoes nacionais), Etienne Davignon (presidentSGB), Peter J. Davis (Chairman, Reed Elsevier), Jean-Marie Descarpentries(President Bull), Carlo De Benedetti (Presidente Amministratore Delegato, Ol-ivetti), Brian Ennis (Managing Director, IMS), Pehr G. Gyllenhammer (formerExecutive Chairman, AB Volvo), Hans Olaf Henkel (Chairman and Chief Execu-tive Officer, IBM Europe), Anders Knutsen (Administrerende Direktor, Bang &Olufsen), Pierre Lescure (President Directeur, General Canal +), ConstantinMakropoulos (former Managing Director ELSYP (Hellenic Information Sys-tems)), Pascual Maragall (Alcalde de Barcelona, Vicepresidente de .POLIS), LotharHunsel (designierter Vorsitzender der Geschiiftsfiihrung DeTeMobilfunk GmbH),Romano Prodi (Presidente Direttore Generale, IRI), Gaston Egroont Thorn (Presi-dent du Conseil d' administration du CLT), Jan D. Timmer (Voorzitter, PhilipsElectronics), Candido Velazquez Gastelu (presidente, Telef6nica), Hein~ich vonPierer (Vorsitzender des Vorstandes, Siemens AG).

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Contents

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Chapter 1: The information society ~ new ways of living and workingtogether

A revolutionary challenge to decision makersPartnership for jobsIf we seize the opportunityA common creation or a still fragmented Europe?What we can expect for. . .The social challengeTime to press onAn action planNew markets in Europe s information society

Chapter 2: A market-driven revolution

A break with the pastEnding monopolyEnabling the marketTowards a positive outcome

Chapter 3: Completing the agenda

Protection of intellectual property rights (IPR)PrivacyElectronic protection (encryption), legal protection and securityMedia ownershipThe role of competition policyTechnology

Chapter 4: The building blocks of the information society

The opportunity for the Union strengthening its existing networks andaccelerating the creation of new onesNew basic services are neededBlazing the trail ten applications to launch the information society

Chapter 5: Financing the information society - a task for the private sector

Chapter 6: Follow-up

An action plan - summary of recommendations

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This report urges the European Union to put its faith in market mechanisms as themotive power to carry us into the information age.

This means that actions must be taken at the European level and by Member Statesto strike down entrenched positions which put Europe at a competitive disadvan-tage:

0 it means fostering an entrepreneurial mentality to enable the emergence of newdynamic sectors of the economy

0 it means developing a common regulatory approach to bring forth a competi-tive, Europe-wide, market for information services

0 it does NOT mean more public money, financial assistance, subsidies di-rigisme, or protectionism.

In addition ot its specific recommendations, the group proposes an action plan ofconcrete initiatives based on a partnership between the private and public sectorsto carry Europe forward into the information society.

Chapter 1: The information society new ways of living and working tog.ether

A revolutionary challenge to decision ma.kersThroughout the world, information and commu-nication technologies are generating a new in-dustrial revolution already as significant andfar-reaching as those of the past.

It is a revolution based on information, itself theexpression of human knowledge. Technologicalprogress now enables us to process, store, re~trieve and communicate information in whateverform it may take, whether oral, written or visualunconstrained by distance, time and volume.

Partnership for jobsEurope s ability to participate, to adapt and toexploit the new technologies and the opportuni-ties they create, will require partnership betweenindividuals, employers, unions and governmentsdedicated to managing change. If we manage thechanges before us with determination and under~

standing of the social implications, we shall allgain in the long run.

If we seize the opportunityAll revolutions generate uncertainty, discontinu-ity and opportunity. Today s is no exception.

How we respond and how we turn currentopportunities into real benefits, will depend onhow quickly we can enter the European infor-mation society.

This revolution adds huge new capacities tohuman intelligence and constitutes a resourcewhich changes the way we both work and livetogether.

Europe is already participating in this revolutionbut with an approach which is still too fragmen-tary and which could reduce ~xpected benefits.An information society is a means to achieve somany of the Union s objectives. We have to getit right, and get it right now.

Our work has been sustained by the convictionexpressed in the Commission s White Paper,Growth, Competitiveness and Employment'

that' ... the enormous potential for new servicesrelating to production, consumption, culture andleisure activities will create large numbers ofnew jobs.. .'. Yet nothing will happen automati-cally. We have to act to ensure that these jobs arecreated here, and soon. And that means publicand private sectors acting together.

In the face of quite remarkable technologicaldevelopments and economic opportunities, all

the leading global industrial players are reassess-ing their strategies and their options.

A common creation or a still fragmented Europe?The first countries to enter the informationsociety will reap the greatest rewards. They willset the agenda for all who must follow. Bycontrast, countries which temporize, or favourhalf-hearted solutions, could, in less than a

decade, face disastrous declines in investment

and a squeeze on jobs.

Given its history, we can be sure that Europe willtake the opportunity. It will create the informa-

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tion society. The only question is whether thiswill be a strategic creation for the whole Unionor a more fragmented and much less effective

What we can expect for.

. .

0 Europe s citizens and consumers:A more caring European society with a signifi-cantly higher quality of life and a wider choiceof services and entertainment.

0 The content creators:New ways to exercise their creativity as theinformation society welcomes new products andservices.

0 Europe s regions:New opportunities to express their cultural tra-ditions and identities and, for those standing onthe geographical periphery of the Union, a mini-mizing of distance and remoteness.

Governments and administrations:More efficient, transparent and responsive publicservices, closer to the citizen and at lower cost.

The social challengeThe widespread availability of new informationtools and services will present fresh opportuni-

ties to build a more equal and balanced societyand to foster individual accomplishment. Theinformation society has the potential to improvethe quality of life .of Europe s citizens, the

efficiency of our social and economic organi-zation and to reinforce cohesion.

The information revolution prompts profoundchanges in the way we view our societies andalso in their organization and structure. Thispresents us with a major challenge: either wegrasp the opportunities before us and master the

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amalgam of individual initiatives by MemberStates with repercussions on every policy areafrom the single market to cohesion.

European business and small and medium~sized enterprises:More effective management and organization,access to training and other services, data linkswith customers and suppliers generating greatercompetitiveness.

0 Europe s telecommunications operators:The capacity to supply an ever wider range ofnew high value-added services.

0 The equipment and software suppliers; thecomputer and consumer electronics industries.New and strongly-growing markets for theirproducts at home and abroad.

risks, or we bow to them, together with all theuncertainties this may entail.

The main risk lies in the creation of a two-tiersociety of have and have-nots, in which only apart of the population has access to the newtechnology, is comfortable using it and can fullyenjoy its benefits. There is a danger that indi-viduals will reject the new information cultureand its instruments.

Such a risk is inherent in the process of structuralchange. We must confront it by convincingpeople that the new technologies hold out the


prospect of a major step forward towards a

European society less subject to such constraintsas rigidity, inertia and compartmentalization. Bypooling resources that have traditionally beenseparate, and indeed distant, the informationinfrastructure unleashes unlimited potential foracquiring knowledge, innovation and creativity.

Mastering risks, maximizingbenefits

Thus, we have to find ways to master the risksand maximize the benefits. This places respon-sibilities on public authorities to establish safe-guards and to ensure the cohesion of the newsociety. Fair access to the infrastructure willhave to be guaranteed to all, as will provision ofuniversal service, the definition of which mustevolve in line with the technology.

A great deal of effort must be put into securingwidespread public acceptance and actual use ofthe new technology. Preparing Europeans forthe advent of the information society is .priority task. Education, training and promo-tion will necessarily playa central role. TheWhite Paper s goal of giving European citizensthe right to life-long education and training here

Time to press onWhy the urgency? Because competitive suppli-ers of networks and services from outside Eu-rope are increasingly active in our markets. Theyare convinced, as we must be, that if Europearrives late our suppliers of technologies andservices will lack the commercial muscle to wina share of the enormous global opportunities

which lie ahead. Our companies will migrate tomore attractive locations to do business. Ourexport markets will evaporate. We have to provethem wrong.

Tide waits for no man, and this is a revolutionarytide, sweeping through economic and social life.We must press on. At least we do not have theusual European worry about catching up. Insome areas we are well placed, in others we do

finds its full justification. In order best to raiseawareness, regional and local initiatives, whetherpublic or private should be encouraged.

The arrival of the information society comes intandem with changes in labour legislation andthe rise of new professions and skills. Continu-ous dialogue between the social partners will beextremely important if we are to anticipate andto manage the irnrninent transformation of theworkplace. This concerted effort should reflectnew relationships at the workplace induced bythe changing environment.

More detailed consideration of these issues ex-ceeds the scope of this report. The group wishesto .stress that Europe is bound to change, and thatit is in our interest to seize this opportunity. Theinformation infrastructure can prOve an extraor-dinary instrument for serving the people of

Europe and improving our society by fullyreflecting the original and often unique valueswhich underpin and give meaning to our lives.

At the end of the day, the added value brought bythe new tools, and the overall success of theinformation society, will depend on the inputmade by our people, both individually and inworking together. We are convinced that Euro-peans will meet this challenge.

need to do more. However this is also true for therest of the world' s trading nations.

The importance of the sector was made evidentby its prominence during the Uruguay Round ofGATT negotiations. This importance is destinedto increase.

We should not be sceptical of our possibilitiesfor success. We have major technological, entre-preneurial and creative capabilities. Howeverthe diffusion of, information is still too restrictedand too expensive. This can be tackled quickly

through regulatory reforms.

Public awareness of the technologies has hith-erto been too limited. This must change. Politi-cal attention is too intermittent. The privatesector expects a new signal.

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An action plan

This report outlines our vision of the informationsociety and the benefits it will deliver to ourcitizens and to economic operators. It points toareas in which action is needed now so we canstart out on the market-led passage to the newage, as well as to the agents which can drive usthere.

As requested in the Council's mandate, weadvocate an action plan based on specific initia-tives involving partnerships linking public andprivate sectors. Their objective is to stimulate

markets so that they can rapidly attain criticalmass.

In this sector, private investment will be thedriving force. Monopolistic, anticompetitive en-vironments are the real roadblocks to such in-volvement. The situation here is completely

different from that of other infrastructural invest-ments where public funds are still crucial, suchas transport.

This sector is in rapid evolution. The market willdrive it will decide on winners and losers. Giventhe power and pervasiveness of the technology,this market is global.

The prime task of government is to safeguardcompetitive forces and ensure a strong andlasting political welcome for the informationsociety, so that demand-pull can finance growthhere as elsewhere.

By sharing our vision, and appreciating its ur-gency, Europe s decision-makers can make theprospects for our renewed economic and socialdevelopment infinitely brighter.

New markets in Europe s information society

Information has a multiplier effect which will Markets for businessenergize every economic sector. With marketdriven tariffs, there will be a vast array of novelinformation services and applications:

from high-cost services, whose premiumprices are justified by the value of benefitsdelivered, to budget price products designed formass consumption;

from services to the business community,which can be tailored to the needs of a specificcustomer, to standardized packages which willsell in high volumes at low prices;

from services and applications which employexisting infrastructure, peripherals and equip-ment (telephone and cable TV networks, broad-casting systems, personal computers, CD playersand ordinary TV sets) to those which will becarried via new technologies, such as integratedbroadband, as these are installed.

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Large and small companies and professionalusers are already leading the way in exploitingthe new technologies to raise the efficiency oftheir management and production systems. Andmore radical changes to business organizationand methods are on the way.

Business awareness of these trends and oppor-tunities is still lower in Europe compared to theUS. Companies are not yet fully exploiting thepotential for internal reorganization and foradapting relationships with suppliers, contrac-

tors and customers. We have a lot of pent updemand to fill.

In the business markets, teleconferencing is onegood example of a business application worthpromoting, while much effort is also beingdedicated worldwide to the perfection oftelecommerce and electronic document inter-change (ED I).


Both offer such cost and time advantages over

traditional methods that, once applied, electronicprocedures rapidly become the preferred way ofdoing business. According to some estimates thehandling of an electronic requisition is one tenthof the cost of handling its paper equivalent

while an electronic mail (E-mail) message isfaster, more reliable .and can save 95% of thecost of a fax.

Electronic payments systems are already usher-ing in the cashless society in some parts ofEurope. We have a sizeable lead over the rest ofthe world in smart-card technology and applica~

tions. This is an area of global market potential.

Markets for small andmedium-sized enterprises

Though Europe s 12 million SMEs are rightlyregarded as the backbone of the European

economy, they do need to manage both informa-tion and managerial resources better.

They need to be linked to easy access, cost-effective networks providing information on

. production and market openings. The competi-tiveness of the whole industrial fabric would besharpened if their relationships with large com-panies were based on the new technologies.

Networked relationships with universities, re-search institutes and laboratories would boosttheir prospects even more by helping to remedychronic R&D deficiencies. Networking will alsodiminish the isolation of SMEs in Europe s less

advantaged regions, helping them to upgradetheir products and find wider markets.

Markets for consumers

These are expected to be richly populated withservices, from home banking and teleshoppingto a near-limitless choice of entertainment ondemand.

In Europe, like the United States, mass consumermarkets may emerge as one of the principaldriving forces for the information society.

American experience already shows that thedevelopment markets encounter a number ofobstacles and uncertainties.

Given the initial high cost of new pay-as-you-view entertainment services, and of the relatedequipment, as well as the high cost of bringingfibre optics to the home, a large mass consumermarket will develop more easily if entertainmentservices are part of a broader package. Thiscould also include information data, cultural

programming, sporting events, as well astelemarketing and teleshopping. Pay-as-you-view for on-line services, as well as advertising,will both be necessary as a source of revenue. Tosome extent, existing satellite and telephoneinfrastructure can help to serve the consumermarket in the initial phase.

At the moment, this market is still only embry-onic in Europe and is likely to take longer togrow than in the United States. There, more than60% of households are tapped by cable TVsystems which could .also carry text and dataservices. In Europe, only 25% are similarlyequipped, and this figure masks great differencesbetween countries, e.g. Belgium (92%) andGreece (1 to 2%).

Another statistic: in the United States there are34 PCs per hundred citizens. The Europeanfigure overall is 10 per hundred, though the UK,for instance, at 22 per hundred, is closer to theUS level of computer penetration.

Lack of available information services and poorcomputer awareness could therefore provehandicaps in Europe. Telecommunication net-works are, however, comparable in size and

cover, but lag behind in terms of utilization.These networks, therefore, can act as the basicport of access for the initial services, but stimu-lation of user applications is still going to benecessary.

Such structur~l weaknesses need not haltprogress. Europe s technological success with

CD-ROM and CD-I could be the basis for a raftof non-networked applications and services dur-ing the early formative years of the informationsociety. These services on disk have consider-able export potential if Europe s audio-visual

industry succeeds in countering current USdominance in titles.

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In terms of the market, France MinUel networkalready offers an encouraging example that Eu-ropean consumers are prepared to buy informa~tion and transaction services on screen, if the

access price is right. It reaches nearly 30 millionprivate and business subscribers through sixmillion small terminals and carries about 15 000different services. Minitel has created many newjobs, directly and indirectly, through boostingbusiness efficiency and competitiveness. .

In the UK, the success of the Community-sponsored 'Homestead' programme, using CD-is indicative, as is the highly successful launch ofa dedicated (American) cable teleshopping chan~nel.

Meanwhile in the US, where the consumermarket is more advanced, video-on-demand andhome shopping could emerge as the most popu-lar services.

Audio-visual markets

Our biggest structural problem is the financialand organizational weakness of the Europeanprogramme industry. Despite the enormous rich-ness of the European heritage, and the potential

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of our creators, most of the programmes andmost of the stocks of acquired rights are not inEuropean hands. A fast growing European homemarket can provide European industry with anopportunity to develop a home base and toexploit increased possibilities for exports.

Linguistic fragmentation of the market has longbeen seen as a disadvantage for Europe s enter-tainment and audio-visual industry, especiallywith English having an overwhelming domi~nance in the global market ~ a reflection of theUS lead in production and, importantly,in distribution. This lead, which begins withcinema and continues with television, is likely tobe extended to the new audio-visual areas. How-ever once products can be easily accessible toconsumers, there will be more opportunities forexpression of the multiplicity of cultures andlanguages in which Europe abounds.

Europe s audio-visual industry is also burdenedwith regulations. Some of these will soon berendered obsolete by the development of newtechnologies, hampering the development of adynamic European market.

As a first step to stimulating debate on the newchallenges, the Commission has produced aGreen Paper on the audiovisual industry.

Chapter 2: A market-driven revolution

break with the past

The group is convinced that technologicalprogress and the evolution of the market meanthat Europe must make a break from policiesbased on principles which belong to a timebefore the advent of the information revolution.

The key issue for the emergence of new marketsis the need for a new regulatory environmentallowing full competition. This will be a prereq-uisite for mobilizing the private capital neces-sary for innovation, growth and development.

In order to function properly, the new marketrequires that all actors are equipped to partici-pate successfully, or at least that they do not startwith significant handicaps. All should be able tooperate according to clear rules, within a singlefair and competitive framework.

Ending monopoly

This is as true for the telecommunications op-erators (Tas) as for others. It is now generallyrecognized as both necessary and desirable thatthe political burdens on them should be re-moved, their tariffs adjusted and a proper regu-latory framework created. Even the operations ofthose TOs whose status has already evolved overrecent years are not fully in line.

It is possible to end monopoly. In future, alllicensed public operators should assume theirshare of public service responsibilities (e.g. uni-versal service obligation and the provision ofequal access to networks and services).

A competitive environment requires the follow-ing:

0 TOs relieved of political constraints, such as:

subsidizing public functions;

external R&D activities;contributions to land planning and managementobjectives;the burden to carry alone the responsibility ofuniversal service;

0 a proper regulatory framework designed toachieve:

market regulation to enable and to protect com-petition;

a predictable environment to make possible stra-tegic planning and investment;

adjustment of tariffs.

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Enabling the market

In order for the market to operate successfully,the group has identified the following objectivesand recommendations:

Evolution in the regulatorydomain

Identify and establish the minimum of regulationneeded, at the European level, to ensure the rapidemergence of efficient European informationinfrastructures and services. The terms of refer-ence of the authority which will be responsible

for the enforcement of this regulation is a ques~tion that will require prompt attention.

The urgency of the matter is in direct relation tothe prevailing market conditions. A clear re-quirement exists for the new ' rules of the gameto be outlined as soon as possible. The market-place will then be in a position to anticipate theforthcoming framework, and the opportunitywill exist for those wishing to move rapidly tobenefit from these efforts.

The authority will need to address:

the regulation of those operations whichbecause of their Community-wide nature, needto be addressed at European level, such aslicensing, network interconnection when andwhere necessary, management of shared scarceresources (e.g. radio-frequency allocation, sub-

scriber numbering) and advice to MemberStates ' regulatory authorities on general issues.

0 a single regulatory framework valid for alloperators, which would imply lifting unequalconditions for market access. It would alsoensure that the conditions for network access and

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service use would be guided by the principles oftransparency and non-discrimination, comple-mented by practical rules for dispute resolutionand speedy remedy against abuse dominance.

Interconnectionand interoperability

Two features are essential to the deployment ofthe information infrastructure needed by theinformation society: one is a seamless intercon-nection of networks and the other that theservices and applications which build on themshould be able to work together (interoperabil-ity).

In the past the political will to interconnectnational telephone networks resulted in hundredsof millions of subscriber connections world~

wide. Similar political determination and corre~sponding effort are required to set up the con~siderably more complex information infrastruc-tures.

The challenge is to provide interconnections fora variety of networking conditions (e.g. fixedand new type of networks, such as mobile andsatellite) and basic services (e.g. integrated ser-vice digital network (ISDN)). Currently, thepositions of monopoly operators are beingeroded in these fast-developing areas.

Joint commercial decisions must be taken by theTOs without delay to ensure rapid extension ofEuropean basic services beyond telephony. Thiswould improve their competitive position vis-vis non-European players in their own markets.


The European information society is emergingfrom many different angles. European infrastruc-ture is evolving into an ever tighter web ofnetworks, generic services, applications andequipment, the development, distribution andmaintenance of which occupy a multitude ofsources worldwide.

In an efficient and expanding information infra-structure, such components should. work to-gether.

Assembling the various pieces of this complexsystem to meet the challenge of interoperabilitywould be impossible without clear conventions.Standards ' are such conventions.

Open ' systems standards ' will play an essentialrole in building a European information infra~structure.

Standards institutes have an honourable recordin producing European standards, but the stan-dardization process as it stands today raises a

number of concerns about fitness for purposelack of interoperability, and priority setting thatis not sufficiently market -driven.

. Action is required at three different levels:

at the level of operators, public procure-ment and investors:

Following the successful example of GSM digi-tal mobile telephony, market players (industry,TOs, users) could establish memoranda of un-derstanding (MoU) to set the specifications re-quirements for specific application objectives.These requirements would then provide input tothe competent standardization body. This type ofmechanism would adequately respond to marketneeds.

Operators, public procurement and investorsshould adopt unified open standard~based solu-tions for the provision and the procurement ofinformation services in order to achieve global

interoperability.

at the level of the European standardsbodies:

These should be encouraged to establish priori-ties based on market requirements and to iden-tify publicly available specifications, originatedby the market, which are suitable for rapid

transformation into standards (e.g. through fast-track procedures).

at the le-v-el .of the Union:

European standardization policy should be re~

viewed in the light of the above. When themarket is not providing acceptable technicalsolutions to achieve one of the EuropeanUnion s objectives, a mechanism should be

sought to select or generate suitable technolo-

gies.

World-wide interoperability should be promotedand secured.

Urgent action to adjusttariffs

Reduction in international, long distance andleased-line tariffs will trigger expansion in theusage of infrastructures, generating additionalrevenues, and simultaneously giving a majorboost to generic services and innovative appli-cations.

In most cases, the current unsatisfactory tariffsituation results from the TOs ' monopoly statusand a variety of associated political constraints.

The introducti'on of competitive provision services and infrastructures implies that TOswould be able to adjust their tariffs in line withmarket conditions. Rebalancing of internationaland long-distance tariffs against local tariffs is acritical step in this process.

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Two elements should accompany the process:

0 TOs released from politically imposed bud-getary constraints;

0 a fair and equitable sharing of the burden ofproviding universal services between all licensedoperators.

Fostering critical mass

Market segments based on the new informationinfrastructures cannot provide an adequate returnon investment without a certain level of demand.In most cases, competition alone will not pro-vide such a mass, or it will provide it too slowly.

A number of measures should be taken in orderto reach this goal:

cooperation should be encouraged amongcompetitors so as to create the required size andmomentum in particular market areas. The al-ready mentioned GSM MoU is an archetypalexample of how positive this approach can be.

agreement between public administrations toachieve common requirements and specifica-tions and a commitment to use these in procure-ment at national and European levels.

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extensive promotion and use of existing andforthcoming European networks and services.

awareness campaigns, notably directed atpublic administrations SMEs and educationalinstitutions.

In addition, everyone involved in building up theinformation society must be ina position toadapt strategies and forge alliances to enablethem to contribute to, and benefit from, overallgrowth in the field.

Secure the world-widedimension

Since information infrastructures are borderlessin an open market environment, the informationsociety has an essentially global dimension.

The actions advocated in this report will lead toa truly open environment, where access is pro-vided to all players. This openness should findits counterpart in markets and networks of otherregions of the world. It is obviously of para-

mount importance for Europe that adequate stepsare taken to guarant~e equal access.


Towards a positive outcomeThe responses outlined above to the challengesposed by the deployment of the information

society will be positive for all involved in itscreation and use.

Telecommunications, cable and satellite opera-tors will be in a position to take full advantage ofmarket opportunities as they see fit, and toexpand their market share.

The service provider and content industries willbe able to offer innovative products at attractiveprices.

Citizens and users will benefit from a broaderrange of competing services.

Telecommunication equipment and softwaresuppliers will see an expanding market.

Those countries that have already opted forfaster liberalization, are experiencing rapidlyexpanding domestic markets that provide new

opportunities for TOs, service providers andindustry. For the others, the price to pay for aslower pace of liberalization will be a stifferchallenge from more dynamic foreign competi-tors and a smaller domestic market. Time isrunning out. If action is not accelerated, manybenefits will arrive late, or never.

It is an essential recommendation of the groupthat governments support accelerated liberaliza-tion by drawing up clear timetables and dead-lines with practical measures to obtain this goal.

In this context, the 1993 Council Resolution

remains a useful point of reference. Evenbefore the specified d4tes, governments shouldtake best advantage of its built-in flexibility toseize the opportunities offered by a burgeoningcompetitive market. They should speed up theopening to competition of infrastructures andof those services that are still in the monopolyarea, as well as remove political burdens im-posed on their national TOs.

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Chapter Completing the agenda

Several policy issues have to be faced in parallelwith actions needed to create an open, competi-tive and market-driven information society. Dis~parate national regulatory reactions carry a veryreal threat of fragmentation to the internal mar-ket.

Here there are two different sets of issues andproblems: one relating to the business commu-nity, the other more to individuals and theinformation society, with specific reference toprivacy.

As we move into the information society, aregulatory response in key areas such as intel~lectual property, privacy and media ownership isrequired at the European level in order to maxi-mize the benefits of the single market for allplayers. Only the scale of the internal market is

sufficient to justify and attract the requiredfinancing of high performance trans-Europeaninformation networks.

Therefore, applying the single market principleof freedom of movement of all goods andservices, to the benefit of Europeans every-where, must be our key objective.

Protection of intellectual property rights (IPR)While there is a great deal of information that isin the public domain, there is also information

containing added value which is proprietary andneeds protection via the enforcement of intellec-tual property rights. IPRs are an important factorin developing a competitive European industry,both in the area of information technology andmore generally across a wide variety of indus-trial and cultural sectors.

Creativity and innovation are two of the Unionmost important assets. Their protection mustcontinue to be a high priority, on the basis ofbalanced solutions which do not impede theoperation of market forces.

The global nature of the services that will beprovided through the information networks

means that the Union will have to be party tointernational action to protect intellectual prop-erty. Otherwise, serious difficulties will arise ifregulatory systems in different areas of the worldare operating on incompatible principles whichpermit circumvention or create jurisdictionaluncertainties.

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In this global information market-place, com-mon rules must be agreed and enforced byeveryone. Europe has a vested interest in .ensur-ing that protection of IPRs receives full attentionand that a high level of protection is maintained.Moreover, as the technology advances, regularworld-wide consultation with all interested par-ties, both the suppliers and the user communi-ties, will be required.

Initiatives already under way within Europesuch as the proposed Directive on the legalprotection of electronic databases, should be

completed as a matter of priority.


Meanwhile, in order to stimulate the develop-ment of new multimedia products and servicesexisting legal regimes both national and

Union will have to be reexamined to see

whether they are appropriate to the new infor-mation society. Where necessary, adjustmentswill have to be made.

PrivacyThe demand for the protection of privacy willrightly increase as the potential of the newtechnologies to secure (even across nationalfrontiers) and to manipulate detailed informationon individuals from data, voice and imagesources is realized. Without the legal security ofa Union~wide approach, lack of consumer con-fidence will certainly undermine rapid develop-ment of the information society.

Europe leads the world in the protection of thefundamental rights of the individual with regardto personal data processing. The application ofnew technologies potentially affects highly sen-sitive areas such as those dealing with theimages of individuals, their communication

. their movements and their behaviour. With thisin mind, it is quite possible that most MemberStates will react to these developments by adopt-ing protection, including trans-frontier control ofnew technologies and services.

In particular, the ease with which digitizedinformation can be transmitted, manipulated andadapted requires solutions protecting the contentproviders. But, at the same time, flexibility andefficiency in obtaining authorization for theexploitation of works will be a prerequisite for adynamic European multimedia industry.

Disparities in the level of protection of suchprivacy rules create the risk that national authori-ties might restrict free circulation of a widerange of new services between Member States inorder to protect personal dat~.

Electronic protection (encryption), legal protectionand securityEncryption is going to become increasingly im-portant in assuring the development of the payservices. Encryption will ensure that only thosewho pay will receive the service. It will alsoprovide protection against personal data fallinginto the public domain.

International harmonization would assist themarket if it were to lead to a standard system ofscrambling. Conditional access should ensure

fair and open competition in the interests ofconsumers and service providers.

Encryption is particularly important for tele-commerce, which requires absolute guarantees

in areas such as the integrity of signatures and

text, irrevocable time and date-stamping andinternational legal recognition.

However, the ,increased use of encryption andthe development of a single encryption systemwill increase the returns from hacking into thesystem to avoid payment or privacy restrictions.Without a legal framework that would secureservice providers against piracy of their encryp-tion system, there is the risk that they will not getinvolved in the development of these new ser-vices.

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On the other hand, governments may need pow-ers to override encryption for the purposes

fighting against crime and protecting nationalsecurity.

An answer given at a national level to this and tothe hacking issue will inevitably prove to be

Media ownershipIn addition to ownership controls to prevent

monopoly abuse, most countries have rules onmedia and cross media ownership to preservepluralism and freedom of expression.

In practice, these rules are a patchwork inconsistency which tend to distort and fragmentthe market. They impede companies from takingadvantage of the opportunities offered by theinternal market, especially in multimedia, andcould put them in jeopardy vis-a.-vis non-Euro~pean competitors.

In current circumstances, there is a risk of eachMember State adopting purely national legisla-tion in response to the new problems and chal-lenges posed by the information society. Urgentattention has to be given to the question of howwe can avoid such an undermining of the inter-

insufficient because communications reach be-yond national frontiers and because the prin-ciples of the internal market prohibit measuressuch as import bans on decoding equipment.

Therefore, a solution at the European level iseded which provides a global answer to the

problem of protection .of encrypted signals andsecurity. Based on the principles of the internalmarket it would create parity of conditions forthe protection of encrypted services as well asthe legal framework for the development ofthese new services.

nal market and ensure effective rules whichprotect pluralism and competition.

Rules at the European level are going to becrucial, given the universality of the informationsociety and its inherently transborder nature. TheUnion will have to lead the way in heading offdeeper regulatory disparity. In so doing it willreinforce the legal security that is vital for theglobal competitiveness of Europe s media indus-try.

The role of competition policyCompetition policy is a key element in Unionstrategy. It is especially important for consoli-dating the single market and for attracting theprivate capital necessary for the growth of thetrans-European information infrast):Ucture.

Areas of the information society are beset byintense globalizing pressures. These affect bothEuropean and non-European companies operat-ing inside the Union. If appropriate, the notion

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of a global, rather than a Union-wide, marketshould now be used in assessing European com-petition issues such market power, joint venturesand alliances.

The aim should not be to freeze any set ofregulations, but rather to establish proceduresand policies through which the exploding dyna-mism of the sector can be translated into greateropportunities for wealth and job creation.


Like other commercial players, companies in-volved in the supply of technologies and servicesmust be in a position to adapt their strategies andto forge alliances to enable them to contribute toand to benefit from, overall growth in the sectorin the framework of competition policy.

TechnologyThe technological base in Europe today is suffi-cient, to launch the applications proposed in thisreport without delay. They must focus on realis~tic systems on a sufficient scale to explore thevalue of the services offered to the user, and toevaluate the economic feasibility of the newinformation systems.

However, new technologies do still have to bedeveloped for their full-scale introduction fol-lowing these demonstrations. In particular, the

usability and cost-effectiveness of the systemslIlust be improved, and the consequences ofmass use further investigated.

The research programmes of the Union and ofMember States, in particular the Fourth Frame-work Programme, should be implemented insuch a way as to take into account marketrequirements. Technical targets and the timing ofprojects must be defined with appropriate user

involvement.

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Chapter 4: The building blocksof the information society

Communications systems combined with ad-vanced information technologies are keys to theinformation society. The constraints of time anddistance have been removed by networks (e.telephone, satellites, cables) which carry the

information, basic services (e.g. electronic mailinteractive video) which allow people to use thenetworks and applications (e.g. distance learn-ing, teleworking) which offer dedicated solu-tions for user groups.

The opportunity for the Union strengthening itsexisting networks and accelerating the creationof new ones

ISDN: a first stepThe traditional telephone network is changing itscharacter. Having been built as a universal car-rier for voice, it now has to meet the communi-cation requirements of a modem economy goingfar beyond simple telephone calls.

One important development is the integratedservice digital network ISDN. This offers theopportunity to send not only voice, but also dataand even moving images through telephonelines.

ISDN is particularly suited for the communica-tions needs of small and medium-sized enter-prises. It permits, for example, direct PC to PCcommunication, for the instant, low-cost trans-mission of documents. Teleworking using ISDNservices can be attractive to a wide range ofbusinesses. ISDN is also an ideal support fordistance learning.

EURO-ISDN, based on common standardsstarted at the end of 1993. A number of Europeancountries have a leading position which shouldbe exploited.

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Broadband: the path tomultimediaISDN is only the first step. New multimediaservices , for instance high-quality video commu-nications, require even more performance. ISDNis showing the way, and the next technologicalwave aims for the multimedia-world. This isintegrated broadband communications, provid-ing an opportunity to combine all media in aflexible way. The lead technology to implementthis is called asynchronous transfer mode(ATM).

European industry and telecoms operators are atthe forefront of these technological develop-

ments and should reap the benefits.

Europe needs to develop an ATM broadbandinfrastructure as the backbone of the informationsociety. Multimedia services offered throughthese networks will support the work and leisureactivities of all our citizens.

In many European. countries, highly developedbroadband distribution already exists in the formof cable and satellite networks, or is beingdeployed. The application of currently availablesophisticated digital techniques, such as picturecompression and digital signal transmission, willeasily enable these networks to fulfil mainstreamdemands for interactive individual informationand leisure uses.


The present situation is mainly characterized bynational and regional initiatives. The first trialsof transnational networks have only recentlytaken place.

Mobile communication:a growing field

. Mobile communication is growing at breathtak-ing speed. The number of mobile telephonesubscribers has doubled over the past three yearsto 8 million. At current growth rates of 30 to40%, the Union will soon have 40 million users.

Europe is becoming an important leader inmobile communications through adoptionaround the world of its standards for digitalcommunications. In particular, GSM is an excel-lent demonstration of how a common Europe-wide public/private initiative can be successfullytransformed into a market driven, job-creatingoperation.

In Germany, the country where GSM is currentlyhaving most success, about 30 000 new jobshave been created. On similar assumptionsEurope-wide introduction on the same scalewould generate more than 100 000 new jobs.

Satellites: widening thescope of communications

Satellites are mainly used for television broad-casting, Earth observation and telecommunica-tions. The crucial advantage of satellites is theirwide geographical coverage without the need forexpensive terrestrial networKs. Satellites havemany advantages for providing rural and remoteareas with advanced communications.

Full exploitation of satellites can only beachieved by a new phase in the Union s satellite

policy. The objective should be to develop trans-European networks.

New basic services are needed

New basic services such as E-mail, file transferand interactive multimedia are needed. The nec-essary technology is available. New networksare developing, such as ISDN, eliminating thepresent limitations of the telephone network.

Two basic elements are needed for such services:unambiguous standards and critical mass. Theattraction of a telecommunications service de-pends directly on the number of other compat-ible users. Thus, a new service cannot really take

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off until a certain number of customers havesubscribed to the service. Once this critical masshas been achieved, growth rates can increasedramatically, as in the case of Internet.

Internet is based on a world-wide network ofnetworks that is not centrally planned. In factnobody owns Internet. There are now some 20million users in more than 100 countries. Thenetwork offers electronic mail, discussion fo~rums, information exchange and much more.Internet is so big, and growing so fast, that itcannot be ignored. Nevertheless, it has flawsnotably serious security problems. Rather thanremaining merely clients, we in Europe shouldconsider following the evolution of Internetclosely, playing a more active role in the devel-opment of interlinkages.

Significant advantages for the whole economycould be realized quite quickly through exten-sion of Europe-wide compatible basic services.

Blazing the trail

.......

ten applicationsto launch the information society

Today technology is in search of applications. Atthe same time, societies are searching for solu-tions to problems based on intelligent informa-tion.

Tariff reductions will facilitate the creation ofnew .applications and so overcome the presentlow rate of capacity utilization. Voicelines oper-ate, for instance, an average of 20 minutes in 24hours, while some value-added network servicesare only working at 20% of capacity.

However, confident as we are of the necessity toliberate market forces, heightened competitionwill not produce by itself, or will produce tooslowly, the critical mass which has the power todrive investment in new networks and services.

We can only create a virtuous circle of supplyand demand if a significant number of markettesting applications based on information net-works and services can be launched acrossEurope to create critical mass.

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Demonstration function

Initiatives taking the form of experimental ap~plications are the most effective means of ad~

dressing the slow take-off of demand and supply.They have a demonstration function whichwould help to promote their wider use; theyprovide an early test bed for suppliers to fine-tune applications to customer requirements, andthey can stimulate advanced users, still relativelyfew in number in Europe as compared to the US.

It is necessary to involve local, metropolitan andregional administrations in their development.Cities can have an extremely important role ingenerating early demand .and also in promotingan awareness among their citizens of the advan-tages of the new services. In certain cases, localadministrations could demonstrate the benefitsby assuming the role of the first mass user.

To be truly effective, such applications need tobe launched in real commercial environmentspreferably on a large scale. These initiatives arenot pilot projects in the traditional sense. The


first objective is to test the value to the user, andthe second, the economic feasibility of the infor-mation systems.

As the examples on the following pages demon-strate, it is possible to identify initiatives whichwill rapidly develop new applications and mar-kets, while also having a positive impact on thecreation of new jobs and businesses.

The private sector is ready to embark on theinitiatives needed.

Priority applications can be divided into twomain blocks, according to final Users:

D the personal home market (interactive andtransaction applications related to teleshopping,telebanking, entertainment and leisure)

business and social applications.

Priority applications should also contribute to anumber of macroeconomic objectives:

strengthening industrial competitiveness andpromoting the creation of new jobs

promoting new forms of work organization

improving quality of life and the quality ofthe environment

responding to social needs and raising theefficiency and cost-effectiveness of public ser-vices.

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Application one

TELEWORKINGMore jobs, new jobs, for a mobile society

What should be done? Promote teleworking inhomes and satellite offices so that commuters nolonger need to travel long distances to work. Fromthere, they can connect electronically to whateverprofessional environment they need, irrespective ofthe system in use.

Who will do it? If the telecom operators makeavailable the required networks .at competitiveprices, the private sector will set up new servicecompanies to supply teleworking support.

Who gains? Companies (both large and SMEs) andpublic administrations will benefit from productiv-ity gains, increased flexibility and cost savings. Forthe general public, pollution levels, traffic conges-tion and energy consumption will be reduced. For

employees, more flexible working arrangementswill be particularly beneficial for all those tied tothe home, and for people in remote locations thenarrowing of distances will help cohesion.

Issues to watch? Problems arising from decreasedopportunities for social contact and promotion willhave to be .addressed. Impact on labour legislationand social security provision will need to be as-sessed.

What target? Create pilot teleworking centres in20 cities by end 1995 involving at least 20000workers. The aim is for 2% of white collar workersto be teleworkers by 1996; 10 million teleworkingjobs by the year 2000.

Application two

DISTANCE LEARNINGLifelong learning for a changing society

What should be done? Promote distance learningcentres providing courses, training and tuition ser-vices tailored for SMEs, large companies andpublic administrations. Extend advanced distancelearning techniques into schools and colleges.

Who will do it? Given the required network tariffsat competitive prices, industry will set up newservice-provider companies to supply distancelearning services for vocational training. The Euro-pean Commission should support quality standardsfor programmes and courses and help create afavourable environment. Private sector providersand public authorities will enter the distance edu~cation market, offering networked and CD-I andCD-ROM interactive disk based programming andcontent at affordable prices.

Who gains? Industry (specially SMEs) and publicadministrations, by cost reductions and optimiza~tion of the use of scarce training and education

resources. Employees needing to upgrade theirskills by taking advantage of lifelong learningprogrammes. People tied to the home and in remotelocations. Students accessing higher quality teach-ing.

Issues to watch? Need to engage in a major effortto train the trainers qnd expand computer literacyamong the teaching profession.

What target? Pilot projects in at least 5 countriesby 1995. Distance learning in use by 10% of SMEsand public administrations by 1996. Awarenesscampaigns among the professional associations andeducation authorities.

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Application three

A NETWORK FOR UNIVERSITIES ANDRESEARCH CENTRES

Networking Europe s brainpowe.

What should be done? Development ofa trans-European advanced network (high bandwidth, highdefinition, carrying interactive multiinedia ser-vices) linking universities and research centresacross Europe, with open access to their libraries.

Who will do it? Providing broadband networks .andhigh speed lines are available at competitive ratesuniversities and research centres will set up thenetworks. Private companies, large and small

could also link their laboratories with universitiesand research centres. A trans-European publiclibrary network can also be envisaged.

Who gains? The productivity of research pro-grammes through broader team creation leading tosynergies between institutions. Society in generalthrough more efficient diffusion of research find-ings and knowledge.

Issues to watch? Giving due consideration to IPRprotection as the accumulated stock of human

knowledge becomes more readily accessible.

What target? Thirty per cent of European univer-sities and research centres linked through advancedcommunications networks by 1997. Extension toother European countries as this becomes techno-logically feasible.

Application four

TELEMATIC SERVICES FOR SMEsRelaunching. amain engine for growth and

employment in EuropeWhat should be done? Promote the widest pos-sible use of telematic services (E-mail), file trans-fer, EDI, video conferencing, distance learning,etc.) by European SMEs, with links to publicauthorities, trade associations, customers and sup-pliers. Raise the awareness of value-added services,and communications in general, among SMEs.Increase access to trans-European data networks.

Who will do it? If the necessary ISDN networksare available at competitive rates, the private sectorwill provide trans-European value-added servicestailored for SMEs. Local government, chambers ofcommerce and trades associations linking SMEswill mount programmes for integrating information

networks at local and regional level, promotingawareness campaigns for the services available.

Who gains? SMEs will be able to compete on amore equal basis with larger companies and captivecontractor-supplier relationships will be weakened.They will be more competitive, will grow faster andcreate more jobs. Relationships with administra-

tions will be simpler and more productive. Thecategory will gain in public standing and influence.

What target? Access to trans-European telematicservices for SMEs available by end 1994-95. In all40% ofSMEs (firms with more than 50 employees)using telematic networks by 1996. SME links withadministration networks prioritized.

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Application five

ROAD TRAFFIC MANAGEMENTElectronic roads for better quality of life

What should be done? Establish telematic solu-tions on a European scale for advanced road trafficmanagement systems and other transport services(driver information, route guidance, fleet lllana.ge-ment, road pricing, etc.

Who will do it? European, national and regionaladministrations, user groups and traffic operatorswill create a steering committee and define acommon open-system architecture for advancedtelematic services with common user interfaces.

Who gains? Drivers , local communities (especiallYin heavily congested areas) and industry will ben-efit from reduction in traffic, increased road safety,lower environmental costs, energy and time saving.

What target? Implementation of telematic systemsfor road traffic managelllent in 10 metropolitanareas and 2000 km of motorway by 1996. Imple-mentation in 30 metropolitan areas and the trans-European motorway network by the year 2000.

Application six

AIR TRAFFIC CONTROLAn electronic airway for Europe

What should be done? Create a European airtraffic communication system providing ground toground connections between all European air trafficcontrol centres (ATe) and air to ground connec-tions between aeroplanes, ATC-centres across theEuropean Union and the European civil aviationconference, with the aim of achieving a unified

trans-European air traffic control system.

Who will do it? The European Council shouldpromote energetically the creation of a reducednumber of networked European air traffic centresas defined by Eurocontrol.

Who gains? The European air transport industry and its millions of passengers will benefit

from better air traffic management and significantlyreduced energy consumption. A safer system, withless congestion and subsequent reductions in timewasted, noise and fume pollution.

Issues to watch? There is a need to coordinateclosely with the defence sector.

What target? Set up a steering committee withrepresentatives of public authorities, civil and mili-tary aviation authorities, the air transport industry

and unions by end 1994. Definition of standards forcommunication procedures and the exchange of

data and voice messages between PJC-centres aswell as between PJC-centres and aeroplanes. Afunctioning trans-European system before the year2000.

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Application seven

HEALTHCARE NETWORKSLess costly and more effective healthcare systems

for Europe s citizens

What should be done? Create a direct communi-cation 'network of networks' based On commonstandards linking general practitioners, hospitals

and social centres on a European scale.

Who will do it? The private sector, insurancecompanies medical associations and Member Statehealthcare systems, with the European Union pro-moting standards and portable applications. Oncetelecom operators make available the required net-works .at reduced rates, the private sector will createcompetitively priced services at a European levelboosting the productivity and cost effectiveness ofthe whole healthcare sector.

Who gains? Citizens as patients will benefit from asubstantial improvement in healthcare (improve-

ment in diagnosis through on-line access to Euro-pean specialist$, on-line reservation of analysis andhospital services by practitioners extended on Eu-ropean scale, transplant matching, etc.). Taxpayersand public administrations will benefit from tightercost control and cost savings in healthcare spendingand a speeding up of reimbursement procedures.

Issues to watch? Privacy and the confidentiality medical records will need to be safeguarded.

What target? Major private sector health careproviders linked on a European scale. First-levelimplementation of networks in Member Stateslinking general practitioners , specialists and hospi-tals at a regional and national level by end 1995.

Application eight

ELECTRONIC TENDERINGMore effective administration at a lower cost

What should be done? Introduction of electronicprocedures for public procurement between publicadministrations and suppliers in Europe followedby the creation of a European electronic tenderingnetwork. This programme will function as a strongenabling mechanism for attaining critical mass inthe telematic services market in Europe.

Who will do it? European Council and MemberStates decide to agree on common standards and toint~oduce a mandatory commitment to electronichandling of information, bidding and paymentsrelated to public procurement. Telecom operatorsand service providers will enable users to access tothe European electronic tendering network:

Who gains? Public administrations will benefitfrom cost savings in replacing paper handling with

electronic handling and from the more competitiveenvironment between suppliers drawn from thewider internal market. Small and medium-sizedenterprises will benefit from participating in trans-European public procurement and from the diffu-sion of telematic services.

Issues to watch? Data security, the need to ensureopen access particularly for SMEs, to avoid elec-tronic procurement developing into a hidden formof protectionism. Take proper account of similarprogrammes developed in third countries, particu-larly the US (CALS).

What target? A critical mass of 10% of awardingauthorities using electronic procedures for theirprocurement needs could be attained in the nexttwo to three years.

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Application nineTRANS..EUROPEAN PUBLIC ADMINISTRATION NETWORK

Better government, cheaper governmentWhat should be doue? Interconnected networksbetween public administrations networks inEurope, aiming at providing an effective and lessexpensive (replacement of paper by electronicmeans) information interchange. Subsequently ex-tended to link public administrations and Europeancitizens.

Who will do it? European Union and MemberStates should strengthen and speed up the imple-mentation of the programme for interchange of databetween administrations (IDA). The private sectorwill increase its cooperation with the EuropeanUnion and Member States in defining technical

solutions for the provision of interoperable servicesand interconnectable networks, while supportingnational and local authorities in the testing andimplementation of networks and services for citi-zens.

Who gains? The unification process for the singlemarket, with general benefits in lower costs andbetter relations between public administrations andEuropean citizens.

What target? Implementation of interconnectednetworks allowing interchange in the tax, customsand excise, statistical, social security, health caredomains, etc. , by 1995-96.

Application ten

CITYINFORMA TION HIGHWAYSBringing the information society into the home

What should be doue? Set up networks providinghouseholds with a network access system and themeans of using on-line multimedia and entertain-ment services on a local, regional, national andinternational basis.

Who will do it? Groups of content and serviceproviders (broadcasters, publishers), network op-erators (telecoms organizations, cable), systemsuppliers/integrators (e.g. consumer electronic in-dustry). Local and regional authorities, citizensgroups and chambers of commerce and industry,will have very important roles to play.

Who gains? Consumers will enjoy early experi-ence of complex new services, particulary multi-media services, and will be able to express their

preferences in the fields of entertainment (video ondemand), transaction-oriented services (banking,home shopping etc.) as well as gaining access toinformation services and teleworking Or telelearning.

Public authorities will gain experience with issuessuch as privacy, IPR protection and standardizationwhich will be helpful in defining a single legal andregulatory environment.

Private sector participants will gain early hands-onexperience of consumer preferences for pro-grammes, software and services. User interfacescan be tested and improved in practice.

What target? Install and operate in up to fiveEuropean cities with up to 40 000 households percity by 1997.

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Chapter 5: Financing the information society

task for the private sector

It is neither possible nor necessary at this stageto be precise about the amount of investment thatwill be generated by the development of theinformation infrastructure and related servicesand applications. Analyses made of the USmarket remain highly questionable, althoughthere is no doubt that the total investment re-quired over the next 5 to 10 years will be

considerable.

The group believes the creation of the informa-tion society in Europe should be entrusted tothe private sector and to market forces.

Private capital will be available to fund newtelecoms services and infrastructures providingthat the different elements of this report's actionplan are implemented so that:

market liberalization is fast and crediblerules for interoperability and reciprocal ac-

cess are settariffs are adjustedthe regulatory framework is established.

There will be no need for public subsidiesbecause sufficient confidence will have beenestablished to attract the required investmentfrom private sources.

Ultimately, it is market growth that is perceivedas the real guarantee for private investors, ren-dering subsidies and monopolies superfluous.

Public investment will assume a role, but not byany increase in the general level of publicspending rather by a refocusing of existing

expenditure. Indeed, some of the investment thatpublic authorities will have to undertake todevelop applications in areas of their own re-sponsibility will generate productivity gains andan improvement in the quality of services thatshould, if properly handled, lead to savings.

In addition to some refocusing of expenditure onR&D, modest amounts of public money mayalso be useful to support awareness campaignsmainly directed at small and medium-sized busi-nesses and individual consumers.

The same is true for expenditure at the EuropeanUnion which can achieve important results by abetter focusing of existing resources, includingfinance available under both the Fourth Frame-work Programme funding R&D, and under theStructural Funds.

The Commission has also proposed limited sup-port for some of the services and applicationsincluded in the group s action plan from fundslinked to the promotion of trans-European net-works. These proposals deserve support.

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Chapter 6: Follow-up

With this report the group has completed itsmandate and provided recommendations for ac-tion. Our recommendations should be regardedas a coherent whole, the full benefits of whichcan only be reaped if action is taken in all areas.

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An action plan summary ofrecommendations

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Extracts of the conclusions of the Presidencyof the Corfu European Council

(24 and 25 June 1994)

Wh ite P ape r

In December 1993 the European Council inBrussels adopted a plan of action based on theCommission White Paper on a medium-termstrategy for growth, competitiveness and em-ployment. It underlined that a healthy and openeconomy as well as an economy geared tosolidarity were essential prerequisites for thesuccessful implementation of this plan.

Signs of economic recovery are now beingconfirmed and non~inflationary economicgrowth is returning. The European Council con-siders it essential that the improvement in theeconomic situation should not lead to a slacken-ing of efforts to promotes.tructural adjustment inEurope but should instead be exploited to speedup essential reforms, particularly in the field ofemployment, where the situation is still veryworrying.

The successful conclusion of the UruguayRound within the guidelines set out by theEuropean Council has created an internationaltrade policy environment which can provideeffective support for economic recovery and jobcreation. The European Council calls on theCommunity institutions and Member States todo everything necessary to complete ratificationin time to ensure the entry into force before 1

January 1995. The European Union will play anactive role in efforts to ensure that the newWorld Trade Organization can effectively carryout its task of ensuring observance of the rulesdrawn up jointly and promote progress in com-bating unfair trade conditions. Environmentaland social issues will also have to be discussedin this context.

The European Council on the basis of a reportfrom the President of the Commission had an indepth discussion on the different elements of theAction Plan decided in the Brussels EuropeanCouncil.

The European Council puts particular emphasison the following points which should give newimpetus in the follow-up debate on the WhitePaper.

(i) Encouragement of reforms in MemberStates intended to improve the efficiencyof the systems of employment.

(ii) Specific measures with regard to fullyexploiting the employment potential ofsmall and medium-sized enterprises.

(iii) Reinforced

policy.coordination research

(iv) Rapid implementation of high prioritytrans-European projects in tlw field oftransport and energy.

(v) Fully exploiting the possibilities and op-portunities offered by the information so-ciety.

(vi) Encouragement of the new model of sus-tainable development including the envi-ronmental dimension.

1. Improving the employment situationA sound macroeconomic environment is a sinequa non for success in the fight against unem-ployment (see point 5).

The resumption of economic growth will not ofitself suffice to settle the problem of unemploy-

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ment, which requires structural reforms both atthe level of Member States and of the Union.

The European Council considers that increasesin productivity for the rest of this century shouldbe dedicated primarily to investments and jobs.

This objective should be implemented in a spirit

127

Extracts of the conclusions of the Presidency of the Corfu European Council

of solidarity and taking special account of thosein society who are in the weakest position. TheEuropean Council stresses the need to maximizethe potential of human resources.

The European Council reviewed, on the basis ofa report from the Commission, the initiativesunder way in the Member States in accordancewith the general objectives defined in December1993. The European Council noted progress inthese areas but considered that the efforts under-taken so far, though appreciable, still fall a longway short of what is necessary. It encouragesMember States in order to win the battle for jobsto take further steps to implement the objectivesset out in December. In particular:

with regard to education and training, theEuropean Council concurs with the Commis-sion s recommendation that a more systematicand comprehensive approach will be needed inmany Member States, in particular with regard tocontinuing training. At the Community level theEuropean Council welcomes the agreement inprinciple by the Council on the two new educa-tion and training programmes (Leonardo andSocrates) and invites the Council and the Euro-pean Parliament to finalize the decisions on thisprogramme before the end of the year.

as regards measures to encourage employ-ment, the European Council notes the Commis-sion recommendation concerning the reductionof non-wage labour costs, mainly on the lessskilled. In this framework, the European Councilunderlines that further steps should be pursuedconsistent with the objective of budgetary con-solidation.

Accordingly, the European Council takes note ofthe discussion on the CO /energy tax issues andunderlines the need to ensure that environmentalcosts are better reflected throughout theeconomy.

as regards the promotion of economically

sound formulas for the organization of work, theEuropean Council notes the need to remove

128

obstacles to part-time work and in general topromote new forms of organization of work.

with regard to developing new employmentin connection with meeting new requirementslinked to the quality of life and protection of theenvironment, the European Council notes that anumber of initiatives have been taken but manyof the new areas of job growth that were identi-fied in the White Paper remain to be exploited.The European Council underlines the impor-tance of the study to be prepared by the Com-mission before the next European Council onthis subject.

D with regard to young people, the EuropeanCouncil considers that additional emphasisshould be given to those young people who arefacing the greatest difficulties. It attaches highimportance to ensuring as far as possible thatyoung people can move from education intowork; in this context it welcomes the Commis-sion s Youthstart programme.

To support these efforts the European Councilinvites the Social Affairs Council, the Ecofin

Council and the Commission, on the basis ofinformation collected by the Commission, to

keep progress in this area under constant review.The Council will report to the European Councilin Essen on national experiences which have hadpositive effects on employment, analysing thereasons for their success, and define appropriatepolicy recommendations for adapting currentpolicies.

Efforts to promote youth employment and tocombat long-term unemployment should begiven particular priority in the work of theCouncil.

Finally the European Council invites the Com-mission to renew its efforts towards assuring thenecessary social dialogue, making full use of thenew possibilities available in the Treaty onEuropean Union and in particular of the provi-sions of the protocol annexed to it.

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2. The internal market, competitiveness and sma.Il andmedium-sized enterprises

The smooth operation of the internal market isessential if the economy is to be competitive anddynamic. This means that the delays in transpos-ing certain important Directives on public con~

tracts, insurance, intellectual property and com~pany law at national level must be remedied.Furthermore, it is essential that the basic prin~ciples of the single market should be extended tothose areas, such as energy and telecommunica-tions, which are still only partly covered by itwhile ensuring that the public service and townand country requirements in these sectors arealso safeguarded.

The single market is implemented with dueregard to environmental problems. The safe-guard of important national environmental pro~

tection measures shall be secured in this context.

The single market is a fundamental aspect ofCommunity construction but it is not an end initself, as was already pointed out in the conclu-sions of the Rhodes European Council in 1988.It should be used to serve the welfare of all, inaccordance with the tradition of social progressestablished in the history of Europe. The policyof the Union, alongside the policies of the

Member States, should foster the affirmation ofthis social dimension. In the view of the MemberStates concerned, the recent agreement in theCouncil under the provisions of the Social Pro-tocol concerning information and consultation ofworkers in multinational enterprises constitutessignificant progress towards the realization ofthis objective. Further advances on the samebasis , including efforts aimed at avoiding socialexclusion, are essential in a society in rapidtransformation. The European Council also wel-comed the recent agreements in the Council onthe protection of young workers as well as thecreation of the agency for health and safety atwork.

Small and medium-sized enterprises make amajor contribution to growth and job creationand they should be able to benefit more from allthe opportunities offered by the single market.

The European Council welcomed the imp lemen-

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tation by the Council of its orientations concern-ing interest rate subsidies for SMEs and that theCommission has decided to devote ECU 1 bil-lion for the period 1994-99 for a Communityinitiative programme to help small and medium-sized enterprises adapt to the internal market andto the new competitive environment. It alsonoted with interest the recent Commission ini-tiative for an integrated programme in favour ofsmall and medium-sized enterprises, includingaction to simplify legislation and reduce admin-istrative burdens on such enterprises, and theinitiative of the Portuguese Prime Minister onthe local dimension of the internal market andthe initiatives taken by Ireland in the areas ofsocial partnership and local development. TheEuropean Council considers that local develop-ment initiatives offer considerable potential forreinforcing the economic and social fabric of theEuropean Union and for creating jobs. They arean essential element of the new model of devel-opment mentioned in the White Paper and willhelp to preserve cultural diversity within theUnion. The European Council notes the Com-mission s intention, within the framework of thereport on new potential sources of employmentto be submitted to the European Council

Essen, to draw up a detailed inventory of thevarious actions at Community level to fosterlocal development and local employment initia-tives, particularly those concerning microenter-prises and handicraft industries. This inventorywill be accompanied by the proposals deemednecessary to enhance the consistency and theeffectiveness of those actions.

Regarding scientific and technological researchthe European Council expects that the recentdecision on the ambitious 1994-99 frameworkprogramme, to which considerable funding hasbeen allocated, will be followed up withoutdelay by the rapid adoption of specific sectorprogrammes. In this context the information

sector and biotechnology are of particular impor-tance. It also invites the Council to pursue amore systematic coordination of Community andnational research policies and invites the Com-mission to take any useful initiatives to promotesuch coordination.

129


Lastly, the European Council expressed its con-viction that the elimination of unnecessary legaland administrative burdens on business andmaking Community and national legislation sim-pler are important aspects of improving the

competitiveness of the European economy. Itwelcomes the fact that the Commission is pur-suing its efforts to simplify existing Communitylegislation and will reinforce its cost/benefitexamination of proposed Comn:mnity legisla-tion. The Commission also intends to launch aprocess of examining the impact of existingCommunity and national legislation on employ-

ment and competitiveness. With regard to theselatter aspects the European Council welcomesthe establishment by the Commission of a groupcomposed of independent persons to assist it inthis task and attaches high importance to itswork.

As regards subsidiarity the Council welcomesthe progress made so far by the Commission inacting on the report of December 1993 and notesthe Commission s undertaking to give a fullreport to Essen.

3. Trans-European networks for transport, energy andenvironmental projects

The single market will produce all the expectedpositive effects to benefit citizens and firms onlyif it can rely on effective , trans-European net-works for transport and energy. The EuropeanCouncil welcomed the work achieved so far bythe group chaired by Mr Christophersen inaccordance with the mandate given last Decem-ber.

On the basis of the group s report, the EuropeanCouncil has agreed on a first priority list of major transport projects , set out in Annex I. Asfar as the energy sector is concerned the Euro-pean Council took note of the projects listed inAnnex II and requested the Christophersengroup to continue its work examining in particu-lar their economic viability. The Member Statesinvolved are asked to make every effort toensure that all the transport projects whosepreparation is sufficiently advanced are startedup immediately and that the others are started upas far as possible during 1996 at the latest byaccelerating administrative, regulatory and legalprocedures. The European Council invites theCommission to take all useful initiatives in thisrespect including the convening, where appro-priate, of project seminars aimed at coordinatingthe activities of all parties involved.

The European Council also attaches importanceto the other important transport projects whichare set out in the interim report.

130

The European Council calls on the Christo-phersen group together with the representativesof the acceding States to continue their work onthe basis of the mandate proposed in the groupreport studying further the extension of the

trans-European networks to neighbouring coun~tries (in particular to Central and East Europeancountries and to the Mediterranean Basin) and toprepare a final report to the European Council inEssen. It also asks the Christophersen group toexamine the question of relevant networks in thefield of the environment.

As regards financing of networks, the EuropeanCouncil confirms that measures will be taken, ifproved necessary, in order that priority projectsdo not run into financial obstacles which wouldjeopardize their implementation. .It noted theconclusions of the Ecofin Council and the stud-ies carried out by the Commission. This questionwill continue to be examined by the Christo-phersen group and in the Ecofin Council untilthe Essen European Council, taking account ofthe specific cha~acteristics of each project, theleading role of private funding and the judicioususe of existing Community resources.

The Council will be informed if it appears thatthe achievement of certain projects is threatenedfor financial reasons linked to insufficient prof-itability for example because of the length ofinvestments or environmental constraints. The

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Council will immediately consider with the

Commission and the EIB the appropriate re-

4. The information society

The European Council took note of the reportfrom the group of leading figures representingthe industry, operators and users who have beenexamining the various aspects of this questionunder the chairmanship of Mr Bangemann. TheEuropean Council considers that the currentunprecedented technological revolution in thearea of information opens up vast possibilitiesfor economic progress, employment and thequality of life, while simultaneously represent-ing a major challenge. It is primarily up to theprivate sector to respond to this challenge, byevaluating what is at stake and taking the nec-essary initiatives, notably in the matter of financ-ing. The European Council, like the Commis-sion, considers that the Community and itsMember States do however have an importantrole to play in backing up this development bygiving political impetus, creating a clear and

stable regulatory framework (notably as regardsaccess to markets, compatibility between net-works, intellectual property rights, data protec-tion and copyright) and by setting an example inareas which come under their aegis. The Euro-pean Council agreed in general with the areas ofapplication set out by the group (teleworking,distance learning, network for universities andresearch centres, telematic services for SMEsroad traffic management, air traffic controlhealth care networks, electronic tendering, ad-ministrative networks and city information high-

sponses, within the limits set by the financialperspectives.

ways). The importance of linguistic and culturalaspects of the information society was alsostressed by the European Council.

The European Council, having noted the find-ings of the Bangemann group, considers that theimportance and complexity of the issues raisedby the new information society justify the settingup of a permanent coordination instrument toensure that the various parties involved, bothpublic and private, are working along the samelines. This coordination instrument, to be set upas soon as possible, should be based on theappointment in each Member States of a personresponsible at ministerial level for coordinatingall aspects of the subject (political, financial andregulatory) with a view inter alia to ensuring acoordinated approach in the Council. The Com-mission will act similarly.

At the level of the Community, the necessaryregulatory framework has to be established assoon as possible. The European Council invitesthe Council and the European Pa,rliament toadopt before the end of the yea~measures in theareas already covered by ~Isting proposals. Italso invites the Commi~sion to establish as soonas possible a programme covering the remainingmeasures needed at the Community level.

The European Council will assess progress at itsmeeting in Essen.

5. The macroeconomic environment

Regarding major economic trends, the EuropeanCouncil notes first of all that the Member Stateshave broadly followed the guidelines laid downby the European Council in December 1993.Inflation, which is in the process of beingovercome, a return to exchange rate stability andan incipient reduction of public deficits are

S. 2/94

creating a sound basis for future growth andfavouring the convergence of economies to-wards the criteria laid down in the MaastrichtTreaty for the final stage of EMU. These effortsmust be continued in order to consolidate thefall in short-term interest rates and to reversethe recent upward trend of long-term interest

131


rates, all of which are essential conditions forstimulating investment and creating jobs.

For all these reasons the European Councilendorses the economic policy guidelines con-tained in the report submitted by the Ecofin

132

Council in accordance with Article 103 of theEC Treaty. It invites the Council to finalize theguidelines in the light of the conclusions of thisEuropean Council with regard to the implemen-tation of the White Paper in general.

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Annex I

List of high priority transport projectsadopted by the European Council

Projects Countries involved

High-speed train combined transport north-southBrenner axis Verona Munich Nuremberg Erfurt

HallelLeipzig Berlin

High-speed train Paris Brussels- Cologne -Amsterdam LondonThe following sections of the project are includedBelgium: FIB border Brussels Liege BID borderBrussels - B/NL borderUnited Kingdom: London Channel Tunnel AccessNetherlands: B/NL border Rotterdam- AmsterdamGermany: Aachen Cologne Rhine/Main

High-speed train southMadrid Barcelona Perpignan MontpellierMadrid Vitoria - Dax

High-speed train east

The following sections of the project are included2Paris Metz Strasbourg - Appenweier Karlsruhewith junctions to Metz Saarbrucken Mannheimand Metz Luxembourg

Betuwe line: Combined transport/conventional railRotterdam - NLID border Rhine/Ruhr1

High-speed train/combined transport France ItalyLyons Turin

Motorway Patras Greek/Bulgarian border/jointly with the west-east motorway corridor: Via EgnatiaIgoumenitsa Thessaloniki Alcxandroupolis Ormenio/Kipi

1/ AID

ElFElF

FIDFIDFIL

NLID

F!I

1 Ongoing construction support already provided at Community level.2 The extension to Frankfurt is already under construction; as regards the further extension to Berlin the maturity of the project is

not advanced enough.

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Motorway Lisbon Valladolid PIE

Cork Dublin Belfast Lame Stranraer rail link IRLIUK

Malpensa airport (Milan)

Fixed rail/road link between Denmark and Sweden(~resund fixed link)including access routes

DKiS

Annex II

List of energy projects which the EuropeanCouncil has given priority status

France Italy: electricity interconnection

Italy Greece: electricity interconnection (cable)

Denmark: east-west electricity connection (cable)(not eligible for Structural Funds)

Portugal: natural gas network

Greece: natural gas network

Spain Portugal: natural gas interconnections

Spain Portugal: electricity interconnections

Algeria Morocco European Union: gas pipeline

* * *

Russia Belarus - Poland European Union: gas pipeline

1 Including the introduction of natural gas in the Extremadura and Galicia regions of Spain.2 This project should also be shortlisted and studied although it has not yet reached the same stage as the other four gas schemes.

134 S. 2/94

European Commission

Growth, competitiveness and employmentWhite Paper follow-up

Report on Europe and the global information society

Interim report on trans-European networks



Supplement 2/94 Bull. EU

Luxembourg: Office for Official Publications of the" European Communities

1994 - 134 pp. - 17.6 x 25.0 cm

ISBN 92-826-8547-

Price (excluding VAT) in Luxembourg: ECU 7

Documents

Supplement Report on Europe and the global Bulletin …aei.pitt.edu/1199/1/info_society_bangeman_report.pdf · Bulletin of the European Union Supplement 2/94 Growth , competitiveness