Latest issue of Information Society Trends. A summary of global telecommunications and Internet issues:
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Information Society Trends
Issue number: 79 - (16.3.1998 - 15.4.1998)
EUROPE
Trends: Utilies' private networks remain a key target of
new entrants, as is illustrated by two new ventures: France
Telecom-Deutsche Telekom/Energis in the UK, and
Infostrada/Ferrovie dello Stato in Italy. Meanwhile,
consolidation is speeding up in the Internet access market
with two significant buys: Oleane by France Telecom, and
EUnet by Qwest. The latter also illustrates the growing
role of US players in this market.
INFRASTRUCTURE
The French and German incumbents telecoms operators France
Telecom and Deutsche Telekom said they have agreed with the
UK telecoms group Energis to set a joint venture,
Metroholdings. The new company would specialise in the
development of broadband networks in UK cities, beginning
with London, Birmingham and Manchester, to offer corporate
services. It would be owned 50% by Energis and 25% by each
of the two other partners. The move would also give France
Telecom and Deutsche Telekom access to Energis' existing
telecoms network, which is based on the nationwide
electricity infrastructure of the National Grid, which owns
a majority stake in Energis. But the partners would follow
separate strategies. France Telecom and Deutsche Telekom
for instance would use Metroholdings to increase the market
reach of Global One, the global telecoms venture they
jointly own with America's Sprint.
*****
The Italian private telecoms operator Infostrada, a joint
venture between Germany's Mannesmann and the former Italian
computer giant Olivetti, said it has agreed to spend 386
million Ecu over 14 years on purchasing the nationwide
private telecoms infrastructure of the Italian national
railway company, Ferrovie dello Stato (FS). Infostrada
plans to route more then 90% of its Italian traffic over
FS' network by the year 2000, thus allowing it to cut the
cost of leasing lines from the incumbent operator Telecom
Italia by 50% to 60%. Competing operators are already
enjoying the use of private networks: Wind, a company set
up by France Telecom and Deutsche Telekom, has joined
forces with the electricity utility Enel; as for Albacom,
which was created by BT, BNL and Mediaset, it has teamed up
with the oil and gas company Eni.
MULTIMEDIA SERVICES AND PRODUCTS
The French pay-TV giant Canal+ has launched a trial of
high-speed Internet access over the digital TV set-top box
with 200 suscribers to its digital satellite broadcasting
(DSB) service CanalSatellite. Commercial roll-out is
planned in the fall of 1998. This would also include
home-shopping services, for which customers would be able
to pay by inserting their credit card in the set-top box.
CanalSatellite's new digital channels would also be linked
to interactive services. The travel channel Voyage, for
instance, would provide access to an airline booking
service from July 1998.
MARKET AND COMPANIES
The incumbent French telecoms operator France Telecom has
agreed to buy a 67% stake in Oleane, a leading French
Internet service provider (ISP) for corporations. The
venture would strengthen France Telecom's Internet
operations. The move would also amplify the consolidation
of the French Internet market. Another major player is
Cegetel, France's largest private telecoms operator, which
has recently agreed to merge its French Internet activities
with those of the French pay-TV giant Canal+ and America
OnLine (AOL), the world's largest commercial on-line
service, and its partner, the German media giant
Bertelsmann. As for the US operator WorlCom, it purchased
100% of Internet- Way, the third-largest French ISP, back
in 1997, and also has a 20% stake in Oleane.
*****
The US long distance operator Qwest Communications
International said it would spend 133 million Ecu on buying
EUnet, a leading European Internet service provider (ISP)
which serves 60,000 primarily business customers in Europe.
Eunet has extensive operations in 13 European countries:
Austria, Belgium, the Czech Republic, Estonia, Finland,
France, Luxembourg, Norway, Portugal, Romania, Spain,
Sweden and Switzerland. Qwest would also finance the
purchase by EUnet of a 50% stake in the German ISP X-Link.
The move would give Qwest a strong foothold in Europe. It
would also reinforce the penetration of US companies into
the European on-line market alongside giants such as
WorldCom and America OnLine (AOL).
LEGISLATION AND POLICIES
The European Commission has decided to clear Nor.Web, a
joint venture between Norweb, a subsidiary of the UK water
and energy utility United Utilities and the Canadian
telecoms group Northern Telecom (Nortel), specialised in
the development, manufacturing and marketing of a new
telecoms technology, Direct Power Link (DPL). DPL allows
for high-speed Internet access over electric power lines.
The technology, which was unveiled in 1997, only works for
data transmitted in packets, which is typical of the
Internet, but not with a continued stream of data, such as
phone calls. As much as 10 electricity utilities from all
over the world, including Germany, Sweden and Singapore,
have already agreed to test DPL, and another 40 have
expressed interest.
*****
The European Commission has adopted a Notice on the
application of competition rules to access agreements in
the telecoms sector which aim to provide telecoms companies
and national regulatory and competition authorities with
guidance on the Commission'a approach in three areas:
access principles stemming from European Union competition
law; relationship between competition law and
sector-specific harmonisation legislation; and how
competition rules will be applied in a consistent way.
*****
The European Commission and the Danish government are
jointly organising a European Expert Hearing on
cryptography in Copenhagen on 23-24 April 1998. The aim of
the hearing is to clarify specific questions on the
development and use of digital signatures and encryption
and thereby to provide a basis for political
decision-making (http://www.fsk.dk/fsk/div/hearing/). The
hearing is a follow-up to the Communication on digital
signatures and encryption
(http://www.ispo.cec.be/eif/policy/97503toc.html).
*****
The German Telecoms Regulatory Authority has ruled that the
incumbent operator Deutsche Telekom cannot charge customers
for keeping their telephone number when switching to a
rival carrier. Telekom has also decided to cut the fees it
wanted to charge unfaithful customers as they faced almost
certain rejection from the telecoms watchdog.
*****
The Turkish government has approved plans to sell-off up to
49% of the national telecoms operator Turk Telecom,
probably in the last quarter of 1998. A 20% stake would go
to a strategic investor involving both a domestic firm and
a foreign carrier, 14% would be sold in a domestic and
foreign equity offering, 5% would go to company employees
and the remaining 10% to the Turkish postal service. In
early 1997, the Turkish Constitutional Court gave its green
light to government privatisation plans.
SOCIAL, SOCIETAL AND CULTURAL
The French government has approved plans by the incumbent
French telecoms operator France Telecom to provide French
schools with preferential communications tariffs for
Internet access over the next three years. Under the
scheme, schools anywhere in France would be charged a
annual flat rate for almost unlimited Internet use. The fee
would depend upon the amount of connected PCs.
*****
The UK telecoms and cable TV group Cable and Wireless
Communications (CWC) has announced that it would axe 12% of
its workforce or 1,500 jobs out of 13,000. The move is
aimed at cutting redundancies following the merger of
Mercury with the cable operators Bell Cablemedia, Nynex
CableComms and Videotron.
NORTH AMERICA
Trends: Sun's Java platform is likely to get a major boost
following the decision by IBM and Sun to jointly develop a
Java-based operating system for network computers, and a
federal judge decision that bars Microsoft to use the Java
logo. As for Netscape, it took a major step to strike back
at Microsoft by releasing for free the source code of its
Internet browser. Meanwhile, the US telecoms industry is
undergoing further consolidation with a new merger between
Qwest and LCI. Finally, the FCC endorsed the industry's
voluntary TV rating system and adopted technical
requirements for the V-chip.
MULTIMEDIA SERVICES AND PRODUCTS
The world's leading commercial on-line service America
OnLine (AOL) said it would launch a high-speed data
transmission using the DSL technology, which allows for
high-speed data transmission over regular phone lines for
multimedia applications, in collaboration with the US
regional telecoms operator GTE.
MARKET AND COMPANIES
The US long distance operators Qwest Communications
International and LCI International said they have agreed
to a $4.4 billion worth full merger under Qwest's control,
that would create the fourth largest US long-distance
operator after AT&T, MCI-WorldCom and Sprint, with revenues
of $2.3 billion and a 3% market share.
*****
The US computer groups IBM and Sun Microsystems have agreed
to join forces to develop JavaOS for Business software, a
new operating system for network computing on the Java
platform. The software would be released to manufacturers
by mid-1998. IBM said it plans to initially offer JavaOS
for Business on its high-end network computers. As for Sun,
it intends to migrate users of the JavaStation products to
the new JavaOS in the course of 1999. The move marks the
first time the two rivals agree to team up to develop a
common product. It is also likely to reinforce Sun in its
strive to impose Java as an industry standard. Java, a
programming language which allows any kinds of terminals to
easily work together, poses a threat to conventional
operating systems such as arch rival Microsoft's Windows,
which it could replace in the on-line environment.
LEGISLATION AND POLICIES
The US Federal Communications Commission (FCC) has adopted
an Order finding acceptable the video programming rating
system currently in voluntary use, the "TV Parental
Guidelines," which were designed by the National
Association of Broadcasters (NAB), the National Cable TV
Association (NCTA) and the Motion Picture Association of
America (MPAA). The FCC also adopted technical requirements
for TV sets with picture screens of 33 centimetres or more
to allow to block unwanted video programming. The so-called
"V-chip" technology will be introduced in two phases:
manufacturers will equip half their models by 1 January
1999 and all of them by 1 January 2000. These two actions
fulfil the requirements of the 1996 US Telecoms Act.
*****
A US Federal Judge in San Jose, California, has ruled that
the US PC software giant Microsoft cannot use the Java logo
of rival Sun Microsystems in any software package or Web
sites. The ruling is based on the fact that Microsoft's
version of the Java programming language differs slightly
from the original. The copyright issue settled by the San
Jose judge is only a first skirmish in the Sun-Microsoft
legal battle. It follows a suit for alleged breach of
contract filed by Sun against Microsoft in late 1997. Sun
claimed that Microsoft breached its licensing obligations
by reducing the interoperability of the Java software
embodied in its Explorer 4.0 browser and inserting secret
programmes that slow down Java on computers that do not run
its Windows operating system. Microsoft replied by
counter-suing Sun for breach of contract and unfair
dealing.
TECHNOLOGY
Netscape Communications, the world's leader in Internet
browsers, has put into the public domain the so-called
"source code," or fundamental programming instructions, of
its new Communicator 5.0 browser. The move is targeted at
the world's developer community, with the aim of
incorporating their best enhancement into the future
commercial versions of Netscape's software. The decision is
part of Netscape's strategy to fight back against
arch-rival Microsoft, which has rapidly eroded Netscape's
market share by giving away for free its own browser,
Explorer. As a first step, Netscape decided in January 1998
to also offer its Communicator for free. By releasing the
source code, Netscape aims at using developers as a
leverage to boost the development of the Communicator. This
is vital to Netscape's survival, as the market penetration
of the Communicator determines the company's ability to
sell its suite of corporate Web servers and network
products and software.
ASIA AND PACIFIC
Trends: Infrastructures top the news in Japan with a
government-led airship based project, Skynet, and the
launch by Japan Telecom's of a wireless local loop trial.
INFRASTRUCTURE
The Japanese government has unveiled plans to develop
Skynet, a nationwide wireless telecoms infrastructure based
on solar-powered airships placed into the stratosphere. The
network, which would cater for the growing need for
wireless broadband communications, would be a cheap
alternative to satellite-based communications. It would be
based on an initial 20 to 30 airships and could be upgraded
to a maximum of 200. Skynet, which would be operational in
2005, has received the support of leading Japanese
high-tech firms such as Hitachi, NEC and Mitsubishi.
*****
The Japanese telecoms operator Japan Telecom (JT) said it
would launch in April a trial of its wireless local loop
(WiLL), a technology that would allow it to bypass the
local loop of the dominant carrier Nippon Telegraph and
Telephone (NTT). It would connect corporations to JT's
long-distance network within a distance of 2 km of the
WiLL. Commercial roll-out is planned in July 1998. NTT too
is looking into a WiLL to wire up homes in isolated areas
such as Hokkaido by next summer.
WORLD-WIDE
LEGISLATION AND POLICIES
The International Telecoms Union's (ITU) 2nd World Telecoms
Development Conference closed with the adoption by 143
countries of the Valetta Declaration and Action Plan. The
Declaration recognises that in the context of convergence
and globalisation time is ripe to restructure the telecoms
sector to stimulate private investment and to accelerate
the expansion and modernisation of networks in developing
nations. It emphasise that adequate policies must be
adopted within the framework of a stable and transparent
environment aimed at promoting fair competition while
protecting network integrity and guaranteeing the rights of
users, operators and investors. As for the Action Plan
(1998-2002), it puts together six mutually reinforcing
programmes of action to achieve universal access, a special
programme for less-advanced nations, and a cooperation
programme for governments, industry and international
organisations.
European Commission, Directorate General XIII, Advisor's
Team. Supervisor: Detlef Eckert. Chief editor: Denis
Baresch. Editorial support: Christian Micas. The contents
of "IS Trends" are based on publicly available information,
in particular news articles and press releases, and do not
necessarily reflect the opinion of the European
Commission.
Also available electronically: ispo.cec.be
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