Slow steps on Europe's hi-tech highway

Liberalisation issues overlooked as conference turns into a media event, finds Andrew Marshall

This weekend the European Commission is hosting a special G7 meeting in Brussels on information technology. It is not getting off to a promising start.

A great deal of money and time has been devoted to making this high prestige event successful. It is the first time the Commission has hosted a G7 conference, composed of the US, Japan, Germany, Britain, France, Canada and Italy. But even officials in the Commission complain that the event is largely devoid of substance and they describe it as "just a media event". Many of those attending a meeting last Friday to set up the conference emerged disappointed and cynical about the whole exercise.

It is hard to know what a media event it will be given that the media are excluded from most of its aspects. There is a separate "media showcase" intended to demonstrate the marvels of new technology but this is not working well either. Belgacom, the Belgian telecommunications operator, has had problems providing the special lines needed to make the events work. The publicity material explaining what the showcase is has been delayed because of problems in the Commission. And the public relations firm hired to promote the event, Charles Barker in London, has enormous difficulty in explaining what the thing is all about.

Some of the companies exhibiting at the showcase are furious that they cannot get staff into the building to make exhibits work, or get the technology installed, or find out what the event is for. Some delegates have had huge trouble even getting their representatives accredited. Commission officials have said that details of accreditation cannot be finalised until the day before the meeting opens.

So the bureaucracy surrounding the event has been truly formidable but the substance is slim and the process is chaotic. Several different divisions of the Commission are involved in setting up the conference and some of them have enormous trouble in co-ordinating with others. And yet something will happen this week come what may.

The G7 meeting is probably not a bad metaphor for Europe's efforts to create a new infrastructure for information technology by breaking down existing national barriers and creating new regulations and systems. This is being done under the banner of the "information society" - the Commission's term for what the US calls the "information superhighway". It is unclear what the information society is and how it differs from the American idea, apart from the Commission's evident desire to make the whole thing sound a little bit more cuddly.

Theoretically this weekend will be used by the Americans and the Europeans to co-operate and co-ordinate over what vice president Al Gore calls the global information infrastructure. There is a declaration of core principles planned which includes:

q fair competition

q private investment and adaptable regulation

q open access to networks and universal provision of services

q equality of opportunity for citizens

q cultural and linguistic diversity, coupled with help for developing countries.

The US is way ahead of Europe in many aspects of information technology and the aims for the meeting look insubstantial. Building a "superhighway" in Europe is a vastly complicated affair because each EU state has its own regulations.

Commission efforts to liberalise have begun but considering that even basic legislation from the last decade has yet to be properly implemented it will clearly need a huge effort. The plan is to get all telecommunications services liberalised by 1998.

The process is being accelerated by the wave of mergers and corporate alliances which are already under way. Many of these involve link-ups between US and European telecommunications operators. The price of getting these arrangements agreed by the competition authorities in Washington and Brussels is likely to be faster liberalisation in Europe.

The European authorities say that without this, a strategic alliance between France Telecom and Deutsche Telecom may have anti-competitive implications. The US is also considering legislation that would open its market further to foreign investment in telecommunications but only on a reciprocal basis - again implying the need for further liberalisation in Europe.

The key battle ground is Germany. Martin Bangemann, the commissioner for information technology, said on Friday in Bonn that Germany should allow the use of alternative telephone networks ahead of the 1998 deadline. This would be a significant advance for liberalisation and is already being considered by the government. There are a range of players knocking on Germany's door to provide telecommunications services including Cable & Wireless and BT.

A key argument is that Deutsche Telecom and France Telecom are also involved in a strategic alliance with Sprint, the US telecomsoperator. AT&T and BT oppose this alliance because they argue that they cannot penetrate the French or German markets. But the Europeans also protest that there are restrictions in the US market.

Reciprocal market opening allied with liberalisation in Europe could help both sides. France is not entirely happy with this kind of bargain, fearing the implications for privatisation of France Telecom.

Britain, having already liberalised, wants Europe to press ahead faster. BT and MCI have already made a tie-up which has been cleared by the Commission.

The Commission itself is fully committed to liberalisation by 1998. Though there is dispute between different internal services over the route, there are signs that officials from the competition and industry sections are now co-operating more closely.

Officials say that US pressure this weekend on Europe to liberalise could be very useful -though they are keeping up their demands for access to the US market.

The role of the private sector and the telecoms operators as they face privatisation is helping to get the bandwagon rolling for liberalisation in Europe. So whatever the fine words and speeches this weekend, market pressures are increasingly forcing the US and Europe to co-operate on key issues.