Monthly Summary of Telecom news worldwide from Information Society Trends. Though most have been posted here earlier, there are still a few I'd not seen before.
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Information Society Trends
Issue number: 80 - (16.4.1998 - 13.5.1998)
EDITORIAL
Commission adopts landmark draft directive on electronic
signatures
On 13 May 1998, the European Commission adopted a proposal
for a directive aimed at establishing a legal framework for
electronic signatures in Europe. It would lay down rules
concerning security and liability, thus ensuring that
electronic signatures are legally recognised throughout the
European Union (EU). The setting up of an EU framework for
secure on-line transactions aims to stimulate investment in
electronic commerce, thus leading to benefits in terms of
growth, competitiveness and jobs. Since most EU Member
States have not yet adopted electronic signature laws, the
move would ensure a harmonious environment from the
outset. Electronic signatures are a cryptographic
technology that allow the recipient of data sent over
electronic networks such as the Internet to determine the
origin of the data (authentication) and to verify whether
the data has been tampered with (integrity). The data is
accompanied by a certificate issued by a certification
service provider which allows the recipient to check the
identity of the sender. The draft directive is
technology-neutral, thus taking into account the rapid pace
of technological change. Its scope is limited to the supply
of certificates to the public aimed at identifying the
sender of a message, and does not apply to closed user
groups such as corporate Intranets or banking systems,
where a trust relation already exists. Certification
services could be offered without prior authorisation, but
EU Member States would keep the option of setting up
voluntary accreditation schemes for service providers. The
directive would define essential requirements for
certificates and service provider, as well as establish
minimum liability rules for service providers, which would
be liable for a certificate's content. It would also ensure
that an electronic signature cannot be legally
discriminated on the grounds that it is in electronic
form. In order to facilitate electronic commerce at global
level, the proposal also includes mechanisms for
co-operation with third countries, in particular regarding
the mutual recognition of certificates on the basis of
bilateral and multilateral agreements. The proposed
Directive, to come into force by 1 January 2001, comes as a
follow up to the Commission's Communication on digital
signatures and encryption of October 1997
(http://www.ispo.cec.be/eif/policy/97503toc.html). It draws
upon input from the Copenhagen Hearing which was jointly
held by the Commission and the Danish government in April
1998 (http://www.fsk.dk/fsk/div/hearing/). (Available
on-line: ispo.cec.be
EUROPE
Trends: European trends are dominated by telecoms news
which reflect the intense level of business activity
triggered by the 1998 liberalisation. That includes a new
alliance between Telecom Italia and C&W, the emergence or
strengthening of new players such as Esprit Telecom,
Carrier 1, KDD, etc. On the computer front, Europe is
losing one of its last major PC maker with SNI's decision
to sell its PC plant to Acer.
MARKET AND COMPANIES
The Italian national telecoms operator Telecom Italia and
the UK telecoms group Cable and Wireless (C&W) said they
have agreed to form a global alliance. This would include
the setting up of joint venture which would be the world's
second largest international carrier after AT&T with over
1,400 multinational clients in over 200 cities. The
partnership would not be sealed by a direct stake swap, at
least for the time being, but Telecom Italia would acquire
C&W assets worth over 1.7 billion Ecu. This would include
C&W's 20% stake in the private French operator Bouygues
Telecom, in which Telecom Italia already owns 10.8%, 20% of
Cable and Wireless West Indies, and 5% of Cable and
Wireless Inc. in North America. Telecom Italia has also
agreed to integrate its 29% stake in the Cuban operator
Etecsa into C&W West Indies. The move could be a setback
for the pan-European joint venture AT&T-Unisource
Communications Services (AUCS), which has already been
dealt a serious blow in 1997 by the decision of the Spanish
incumbent operator Telefonica to quit the alliance and join
forces instead with Britain's BT and America's MCI. Indeed,
Telecom Italia was to take up a stake of up to 30% in AUCS,
a move that is now threatened.
*****
Esprit Telecom, a fast-growing European telecoms start-up,
said it has agreed to spend about 160 million Ecu on
purchasing PlusNet, the corporate telecoms services arm of
the German industrial conglomerate Thyssen. The move would
consolidate Esprit's operations in Germany, where it would
have 1,400 business customers. Esprit already has
operations in 19 European cities in eight countries, and is
building a pan-European broadband network connecting major
European cities. The move also suggests that Thyssen is
increasingly withdrawing from the German telecoms market.
*****
The German electronics giant Siemens has announced that its
computer subsidiary Siemens Nixdorf (SNI) would cease to
produce PCs and sell its Augsburg, Germany, PC
manufacturing plant to the Taiwanese computer maker Acer.
*****
A group of former executives from the pan-European telecoms
carrier Unisource has unveiled plans to set up a new
European telecoms operator, Carrier 1. The new company,
which would be based in Zurich, Switzerland, would launch
voice, Internet and broadband services in major European
markets on 1 August 1998.
*****
The Japanese telecoms operator Kokusai Denshin Denwa (KDD)
has said that it would spend 2.4 million Ecu on taking a
51% stake in Corporate Network & Services (Conos), a German
telecoms start-up established in 1994. The company would be
renamed KDD-Conos. The move would be part of KDD's efforts
to expand in Europe.
*****
The Scottish telecoms operator Scottish Telecom, a unit of
the energy utility Scottish Power, has agreed to spend 90
million Ecu on purchasing the leading UK Internet service
provider Demon Internet. The move would allow Scottish
Telecom to expand its business to the rest of Britain and
to the Netherlands, where Demon has operations.
*****
The incumbent Swiss telecoms operator SwissCom has agreed
to set up a regional telecoms venture, Estel, in the French
region of Alsace, with the local energy utility Electricit
de Strasbourg (EDS). This follows the setting up of similar
regional ventures in Germany, Tesion and Communications
Network Services (CNS). The strategy aims at combining the
private networks of the utilities with SwissCom's know-how.
In the case of Estel, SwissCom would also benefit from EDS'
cable TV operations.
*****
In a move to enter the Russian telecoms market, the US
media giant News Corp. has agreed to take at least a 38%
stake in PLD Telekom, a Nasdaq-listed fast-growing Russian
telecoms group with operations in the former Soviet Union.
The asset would be bought back from the UK operator Cable
and Wireless (C&W). News Corp. intends to sell half its
share in PLD to LogoVAZ, a major Russian industrial
conglomerate. On top of this, News Corp. would also buy
back C&W's 11% stake in PeterStar, a St. Petersburg-based
local and long distance operator owned by PLD.
LEGISLATION AND POLICIES
The European Union (EU) has called upon the World Trade
Organisation (WTO) to launch a debate on the removal of
obstacles to the rapid development of electronic commerce.
The EU suggested that international trade rules related to
electronic transactions should be clarified, and in some
cases revised, by December 1998. This concerns, for
instance, an agreement that no duties be imposed on the
import of on-line services and the effective protection of
the privacy of individuals.
*****
The European Commission has presented its proposals for
specific programmes implementing the forthcoming 5th
Framework Programme for research and technological
development (1998-2002). This concerns four thematic
programmes and three horizontal programmes for a total
amount of 16.3 billion Ecu
(http://www.cordis.lu/fifth/home.html).
*****
The European Commission has adopted a Communication aimed
at establishing European position for the forthcoming World
Radiocommunications Conference (WRC-99) to be held in the
second half of 1999. WRC-99 will address key issues such as
frequency requirements for global mass market
radiocommunications applications, including satellite
broadband services and third-generation mobile services.
(http://www.ispo.cec.be/infosoc/telecompolicy/en/comm-en.htm)
*****
The Greek government has announced plans to privatise, in
the fall of 1998, a further 10% to 15% of the country's
national telecoms operator OTE. An initial 18.7% of OTE was
sold-off in two steps in 1997.
*****
The Turkish government has decided to privatise the
country's mobile phone system. Two Turkish groups,
Turkcell and Telsim, have agreed to pay 420 million Ecu
each to the national state-owned operator Turk Telekom for
25-year GSM licenses.
NORTH AMERICA
Trends: Mega telecoms mergers are back on the US agenda,
this time involving SBC and Ameritech. Meanwhile, Boeing is
further strengthening its satellite communications
operations by joining in Ellipso. As for Lucent, it strikes
back in the networking market.
MARKET AND COMPANIES
The US regional telecoms operators SBC Communications and
Ameritech have unveiled a $62 billion worth merger plan,
the largest in telecoms history, thus dwarfing previous
mergers between US Baby Bells and the planned $37 billion
worth merger between WorldCom and MCI. While there were
still seven Baby Bells in 1996, the move would cut down
this number to four following the $25.5 billion and $16.5
billion worth mergers between Nynex and Bell Atlantic and
between SBC and Pacific Telesis Group. This shows that the
1996 US Telecoms Act has been more successful in triggering
consolidation of the US telecoms industry rather than
fostering competition. Taking into account SBC's recent
acquisition for $4.4 billion of the independent US carrier
Southern New England Telecoms (SNET), the merged company
would become the largest Baby Bell with annual revenues of
over $42.8 billion and one third of the 178 million access
lines existing in the USA. The venture would be completed
through a stake swap that would leave SBC and Ameritech
stakeholders with respectively 56% and 44% of the new
group. The two partners hope to finalise the deal in a
year, once it has been cleared by competition authorities
on both sides of the Atlantic. The move would not
revolutionise the US telecoms landscape as the new SBC
would continue to focus on the local market and would still
not have the possibility to offer long-distance services in
the markets it controls. But it would significantly extend
SBC's market reach beyond its core Western and Southwestern
regions. The only potential hurdle comes from SBC and
Ameritech's cellular rivalry in the St. Louis and Chicago
markets, where one of the partners would have to divest its
cellular interests. At international level, the deal would
give SBC a strong foothold into the European market, where
Ameritech has extensive operations. This includes a 42%
stake in the incumbent Danish telecoms operator Tele
Danmark, a 35% stake alongside Tele Danmark and Singapore
Telecom in the consortium that owns 49.9% of the incumbent
Belgian operator Belgacom, and a significant stake in the
Hungarian operator Matav.
*****
The US computer giant IBM and the world's leader in PC
chips, Intel, said they have agreed to team up to optimise
JavaOS for Business software, a new operating system for
network computing (NC) based on the Java platform. As part
of the accord, IBM would also integrate Intel chips in its
future lines of NCs instead of the PowerPC chip. The move
closely follows an agreement between IBM and its US
counterpart Sun Microsystems to jointly develop the JavaOS
software and release it to manufacturers by mid-1998. This
marked the first time the two computer rivals agree to team
up to develop a common product. As for Intel, which
originally opposed the concept of the NC, the deal
indicates that the chip maker has now find an option to
support NCs whilst preserving its interests. Both ventures
are 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 network environment.
*****
The US telecoms equipment giant Lucent Technologies said it
has agreed to spend $1 billion on buying Yurie Systems, a
US company specialised in high-capacity networks, in
particular the asynchronous transfer mode (ATM) technology.
The move seems aimed at allowing Lucent to mind the gap
with fast-growing networking companies such as Cisco
Systems, 3Com, Ascend or Bay Networks, which are emerging
as key players in the rapidly expanding market for
broadband communications systems.
INFRASTRUCTURE
The US aircraft and aerospace giant Boeing has been awarded
a $1.4 billion contract by the US telecoms group Mobile
Communications Holding (MCHI) to design, develop and deploy
the Ellipso global mobile phone and data satellite system.
Ellipso, in which Boeing would also take an equity stake,
would compete with two other US-led global telecoms
satellite systems, Iridium and Globalstar, which have a
head-start. However, Ellipso could benefit from the fact
that it would only be based on 17 satellites compared to 66
and 48 respectively for Iridium and Globalstar. This
entails lower equipment and launch costs, and could allow
for faster deployment and lower prices. The move amplifies
Boeing's diversification into communications following its
1997 decision to a 10% stake in Teledesic, a global
broadband satellite system sponsored by Microsoft chairman
Bill Gates and telecoms entrepreneur Graig McCaw. Boeing is
responsible for the conception and deployment of the
Teledesic network which is to be based on 840 low-earth
orbit satellites. Boeing's involvement increases the
credibility of both projects.
MULTIMEDIA SERVICES AND PRODUCTS
The US PC software giant Microsoft has agreed to purchase
the US Internet start-up Firefly Network, a leading
provider of technology that allows Internauts to control
exactly what personal information, for instance name,
address, age, credit card number, interests, etc., they
provide to any given Web site. The technology, to be
integrated in Microsoft's Explorer browser, meets the
Platform Privacy Preferences (P3P) privacy protocols agreed
by the World Wide Web Consortium (W3C).
TECHNOLOGY
The US chip maker National Semiconductor has announced the
release by mid-1999 of a technology allowing to integrate
all the functions of a PC on a single chip. National's "PC
on a chip" would come in different versions catering for
the needs of different market segments such as desktop
computers, notebooks, cars, consumer appliances, etc. The
PC on a chip is being built around a technology developed
by Cyrix, a US processor company with which National fully
merged in November 1997.
*****
The US PC software giant Microsoft and the Japanese
consumer electronics giant Sony said they have agreed to
join forces to develop a single standard that would link up
PCs and home appliances such as TV sets, camcorders or
VCRs.
ASIA AND PACIFIC
Trends: The highlight of Japanese news is the emphasis
placed on cryptography, both at regulatory level with the
adoption of a government report on certification and
authentication, and at market level with NTT's a new
public-key encryption system.
LEGISLATION AND POLICIES
The Japanese Ministry of Posts and Telecoms (MPT) has
unveiled plans to provide 1.4 billion Ecu in funding to
help the country's broadcasters to convert terrestrial TV
signals into digital ones. While the estimated 4.7 billion
Ecu worth investment required to switch to digital
broadcasting acts as a deterrent for industry, the MPT
hopes the stimulus package will allow to switch to digital
TV in Japan by the year 2000.
*****
The Japanese Ministry of Justice's Study Group on the Legal
System of Electronic Commerce has adopted a report that
sets the ground for the setting up, by 2001, of a legal
framework for electronic certification and authentication
services in Japan. The report says that legislation
securing electronic applications is needed to promote
electronic commerce. The report also calls for electronic
signature systems to be based on the existing Japanese
commercial registration and notarisation systems.
TECHNOLOGY
The Japanese incumbent telecoms operator Nippon Telegraph
and Telephone (NTT) has announced the development of
Efficient Probabilistic Public-Key Encryption (EPOC), a
public-key encryption system which it claims is more secure
than the most secure existing encryption schemes, including
the RSA, elliptic curve and Rabin encryption schemes. NTT
intends to incorporate EPOC in systems providing enhanced
on-line security on the Internet.
SOCIAL, SOCIETAL AND CULTURAL
The Japanese government plans to provide additional funding
to connect the country's schools to the Internet. The goal
would be to wire up 38,000 public schools with a 1.5
Gigabit network by the year 2000 instead of 2003.
Also available electronically:
ispo.cec.be
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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. |
