From televisions to telephones, Europe moves toward unity
Pick up a phone, send a telex, mail a letter, or flip on the tube in Europe, and you are dealing with the government. State-owned and run PTTs (post, telephone, telecommunications authorities) and public broadcasters dominate the 12 nations of the European Community (EC). That makes 12 inefficient, government-protected telecommunications markets - 12 markets due for big change over the next four years.Skip to next paragraph
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Like most monopolies, PTT and state television are not terribly innovative or competitive. If they didn't enjoy protected markets, European analysts say, rivals from the United States and Japan would easily dominate them. Although EC countries have been running a surplus in telecommunications exports, this is mostly with small countries. The EC runs deficits with the United States and Japan.
``Even the larger EC member states have small [telecommunications] markets - compared to Japan, let alone the US,'' a recent EC telecommunications market synopsis says. ``Not surprisingly, European industry's competitivity is declining.''
But combining 12 little markets into one 325-million-person market could help. By 1992, the frontiers of the 12 EC nations will be removed, in effect, for trade purposes. Though no one expects European governments to bow out of the PTT or broadcasting business completely, a recent EC report says a fully competitive market in telecommunications is the goal.
``What we are after is an autonomous European base for telecommunications and computing,'' says Christopher Wilkonson, a specialist on telecommunications policy for the European Community. ``We are moving fast in the right direction.''
Europe already allows some private mail services such as Federal Express and DHL. Most nations have private TV stations. And British Telecom, Britain's old telephone monopoly, has been privatized. But a tradition of state control remains strong in Europe. Among other things, most governments see themselves as having an important role in ensuring universal service and preserving national languages and culture.
Moreover, as the biggest buyers of telecom equipment in France, West Germany, Italy, and elsewhere, PTTs and state TV are the bread and butter of local suppliers - companies that might not survive without government business. But when 12 governments choose 12 different standards, incompatibility is rife and economies of scale are lost. So in the run-up to 1992, Europe plans radical change:
Procurement. By 1992, if all goes according to plan, state-owned phone services will open much of their equipment purchases to nonnational companies. A British company, for example, could bid on French PTT jobs. An EC report headed by economist Paolo Cecchini figures that the efficiency of competitive bidding and of economies of scale could amount to almost $1 billion a year across Europe.
US officials in Brussels say they are lobbying to make sure that US companies are able to bid on this business, too, and that national favoritism isn't simply exchanged for European favoritism.
Harmonized standards. Making different equipment connectible and interchangeable could be worth another $6 billion, the Cecchini report says, depending on how much liberalization actually occurs by '92. And bringing telecommunication tariffs into line with costs could make European business and individual users more efficient.
Charles Ludolph, director of the US Commerce Department's office of European Affairs, expresses some concern about whether the process of devising standards in this and other industries will be an open one and whether US equipment makers will have input. He also worries about whether certification procedures might act as an invisible barrier to US telecom exports to Europe.
European TV. The EC's Wilkonson says the Community is making ``good progress at a technical level'' in developing a European broadcasting policy.
The EC has adopted the ``MAC'' standard for direct broadcast satellite TV. MAC will be phased in for ground-based and cable distribution as existing systems are phased out. In the nine-language EC, innovations like MAC are important. It can deliver several sound channels, which could be in different tongues, along with each vision channel.
The Europeans are also developing a high-definition TV standard that will be presented at a world-broadcasting session in October. This will be an alternative to one already developed by Japan's NHK network and Sony Corporation.
The EC estimates that up to 200 TV channels will exist in Europe by 1992. But copyright protection, content (pornography, violence), and advertising standards (amount of commercial time, acceptability of liquor ads) vary greatly from country to country. Broadcasts traveling around an open-border Europe would have to be regulated somehow.
Meanwhile, to prevent reruns of ``Dallas'' and ``The Love Boat'' from filling all the air time, the EC says it will support ``any pan-European television station'' with multilingual broadcasts, a multinational audience, and European program content. Such broadcasts, the EC says, would ``help to develop a people's Europe.''