Superhighway across the sea: Andrew Marshall on Europe's plans to develop multimedia with US help

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EUROPE and the US should co-operate in building massive new telecommunications networks, Martin Bangemann, the European Union's industry commissioner, said yesterday.

Mr Bangemann has assembled a group of executives from the telecommunications, electronics and media industries charged with setting out guidelines for the new links, or 'information superhighways'. The idea was at the heart of a white paper on growth, competitiveness and employment put forward by Jacques Delors, President of the European Commission, last year and agreed by EU leaders.

Plans are much further advanced in the US than in Europe, whose politicians only started to get to grips with the subject last year. But Europe is drawing lessons from America on how to deal with the complex issues arising from the white paper. The first meeting of the Bangemann group, on Tuesday, took note of this and of the competitive challenge from the US. 'We wish to hold discussions with the relevant groups set up by the Americans,' Mr Bangemann said.

Industrial change is at the core of the new plan, bringing together the data processing, communications and media industries. Sophisticated new technologies permit much faster and easier communication, revolutionising virtually every service and manufacturing sector.

The committee has established two new working groups. One is headed by Carlo de Benedetti, chairman of Olivetti, and charged with examining the economic and technical aspects. The other is led by Etienne Davignon, chairman of Societe Generale de Belgique, and will look at regulatory and political aspects.

A previous EU technological initiative - on high-definition television - was stymied by the lack of attention to changes in the US. This time, standards will be better co-ordinated.

But the social aspect, Mr Bangemann said, will be no less important than the technological shift.

The Commission has already begun studies into the impact on labour practices and employment levels of deregulating telecommunications. More profound issues, such as the role of organised labour will also be addressed, Mr Bangemann said yesterday.

The third dimension will be corporate change. As the fight between Viacom and QVC for Paramount Communications showed, the boundaries between industries in multimedia are a new battleground. In Europe a new wave of mergers, joint ventures and acquisitions is also under way, posing stiff challenges for competition authorities.

At all three levels, Europe has much to learn from across the Atlantic. The move to co- operation with the US is underlined by the fact that the next meeting of the Bangemann group will be in America. Still to be determined is how far co-operation will be permitted or encouraged with Japan; the European Commission remains deeply suspicious of Japanese competitive practices.

The key to making the idea work, Mr Bangemann said, will be deregulation. The EU is already pressing ahead with plans to liberalise the voice telecommunications sector by 1998. But this will cause problems. Some countries want to go slower and there is likely to be debate about what sort of regulation should follow.

Some Commission officials are already talking about an EU-wide regulatory body, but this will be opposed by telecommunications operators.

Money is another key aspect. The cost of the work and methods of financing it are still to be determined. A separate working group under Henning Christophersen, the Finance Commissioner, is investigating aspects of this question - the most controversial part of the white paper when it was discussed at the Brussels summit last December.

Of the ecu67bn ( pounds 51.5bn) the white paper says is needed over the next five years for priority projects, only about ecu5bn is included in the existing EU budget. The rest will be covered mainly by private investors, the document says.

So the third vital aspect of the package is selling it - to member state governments, to companies, and to the citizens who will use the networks and in some cases pay for them through their taxes. Mr Bangemann has already made a start by bringing in industry.

But again, the US input will be important. Mr Bangemann referred specifically to the success of Americans in selling the idea of information superhighways as a kind of new frontier. 'The way in which the project was promoted was admired by everyone,' he said.

(Photograph omitted)