Global telecommunications' update:
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Information Society Trends
Issue number: 78 - (12.2.1997 - 15.3.1997)
EUROPE
Trends: The core European news are Telefonica's decision to
team up with WorldCom-MCI and the emergence of a converged
French industry pole around CGE.
MULTIMEDIA SERVICES AND PRODUCTS
The Finnish telecoms manufacturer Nokia said it has
licensed the Mosaic Web browser of the US Internet start-up
Spyglass to integrate it in its next-generation digital TV
set-top boxes. This would cater for the provision of
interactive TV services such as Internet access, e-mail,
home shopping and banking, video-on-demand and
pay-per-view.
*****
The German media and publishing giant Bertelsmann has
launched a German- language on-line bookstore, Boulevard
Online, with a catalogue of 290,000 titles.
****
Aplio, a French Internet start-up, has unveiled the
Aplio/Phone, a small appliance that allows to make Internet
phone calls without a PC. The device is to be sold in
France for about 285 Ecu or rented from Internet service
providers.
LEGISLATION AND POLICIES
The European Commission has adopted a draft Decision on the
coordinated introduction of the next generation of mobile
and wireless communications, the Universal Mobile Telecoms
System (UMTS), which would, in addition to mobile
telephony, offer wireless access to the Internet and other
multimedia services. The draft Decision aims to secure
pan-European roaming based on an harmonised licensing
environment and the coordinated allocation of frequencies
and European standards, so that UMTS users can enjoy the
same European Union-wide mobility as with GSM.
(http://www.ispo.cec.be/infosoc/telecompolicy/en/umts.html)
*****
The European Commission has launched an inquiry into
interconnection tariffs applied between fixed and mobile
telecoms operators. The investigation will also cover the
issue of prices of calls made from fixed networks to mobile
networks. The move is aimed at opening up mobile
communications to a larger number of European citizens.
*****
The European Commission has adopted a report on the state
of implementation of the European Union telecoms
liberalisation regulatory package which concludes that most
of it is in place and effectively applied at national level
under the supervision of Member State telecoms regulatory
authorities. Liberalisation measures are also producing
their intended effects in terms of improvement in levels
and quality of services and price reductions
(http://www.ispo.cec.be/infosoc/telecompolicy/en/comm-en.htm).
*****
The European Commission has adopted a monitoring report on
universal service in the telecoms sector which highlights
that the gap in phone penetration between European Union
Member States has narrowed, that prices have fallen and
that consumer protection has improved. The report says that
at this early stage of full telecoms liberalisation there
is no need to redefine the scope of universal service. As
regards the issue of Internet access for schools, the
Commission will request national telecoms regulatory
authorities to encourage operators, including dominant
ones, to offer special tariffs to schools
(http://www.ispo.cec.be/infosoc/telecompolicy/en/comm-en.htm).
*****
The European Commission has opened a detailed inquiry into
the planned merger between the US telecoms groups WorldCom
and MCI. It is particularly concerned about the companies'
combined market share in the supply of Internet backbone
services.
*****
The Anglo-Dutch publishing firms Reed Elsevier and Wolters
Kluwer have agreed to drop plans to merge in what would
have been the world's largest professional and scientific
publishing and information group with 42,000 workers and a
24.5 billion Ecu market capitalisation. The decision
follows an in-depth inquiry from the European Commission
that raised objections on competition grounds.
*****
The Greek public telecoms operator OTE has completed the
purchase of a 90% stake worth about 125 million Ecu in the
Armenian national telecoms operator ArmenTel.
MARKET AND COMPANIES
The incumbent Spanish telecoms operator Telefonica has
agreed to team up with the US long distance operators MCI
and WorldCom, which are due to complete a full merger by
mid-1998. The three partners have announced the setting up
of strategic business ventures covering the European, Latin
American and Hispanic markets.
The move means the death of the partnership between
Telefonica and the leading UK operator, BT, which had been
put into question by MCI's decision, in November 1997, to
merge with WorldCom instead of BT. The alliance also
questions BT's ties with the Portuguese national operator,
Portugal Telecom, which has agreed to open talks with
Telefonica, MCI and WorldCom to possibly join their
alliance.
In Europe, Telefonica would join as a distributor
WorldCom's corporate service business, which it supplies
over its own network in Belgium, Britain, Germany, France,
Ireland, Italy, the Netherlands, Sweden and Switzerland. It
would also have an option to take a 10% stake in a new
company that would be set up to manage WorldCom's European
operations as well as a 46% stake in a company that would
be set up to manage WorldCom's Italian operations. WorldCom
and Telefonica would also establish a joint venture owned
respectively 51% and 49% to target Eastern and Southern
Europe.
In Latin America, MCI would have an option to take at least
a 10% stake in Telefonica's overseas arm, Tisa. The two
firms already operate a joint venture,
Telefonica-Panamericana MCI (TPAM), owned 51% by Telefonica
and 49% by MCI.
TPAM plans to build a digital network that would
interconnect a dozen major leading business centres by the
year 2001. MCI and Telefonica would also set up a joint
venture owned respectively 70% and 30% and targeted at the
US and global Hispanic markets.
Meanwhile, Telefonica has agreed that Portugal Telecom, in
which it owns a 3.5% stake, could take a 5% stake in Tisa.
The two companies would also set up a joint venture
focusing on non-Spanish and non-Portuguese speaking
countries.
*****
The French telecoms, building and water group Compagnie
Generale des Eaux (CGE) has announced a full merger with
the French media group Havas, in which it has a majority
stake. The move would reinforce and integrate CGE's
communications activities, thus resulting into the creation
of France's first converged group. The merged company would
weight 32 billion Ecu, including 7.3 billion Ecu for
communications. CGE's communication pole would be
organised in three branches: Cegetel, France's leading
private telecoms group, which is 44% owned by CGE, the rest
being held by BT, Mannesmann and SBC; Havas, a 100%-owned
subsidiary in charge of multimedia (Havas Interactive),
press and publishing (Havas Publication Edition) and
advertising (Havas Advertising); audiovisual, with Havas'
34% in France's pay-TV giant Canal+, which will be directly
managed by CGE. Other companies concerned are UGC, Bac
Films and MK2, which operate in audiovisual production and
distribution.
*****
The Swedish and Norwegian state-owned telecoms operators
Telia and Telenor have dropped their full merger plans.
NORTH AMERICA
Trends: The US networking industry is undergoing further
consolidation with new merger plans by Cisco. As regards
multimedia, Kodak and Xerox too want to get on-line.
MULTIMEDIA SERVICES AND PRODUCTS
The US picture giant Eastam Kodak has agreed to take a 51%
stake in America's PictureVision, the leading provider of
digital imaging network services and solutions. Kodak
would integrate its Kodak picture network with
PictureVision's PhotoNet Internet-based imaging service.
The service allows customers to download digitised pictures
over the Internet, e-mail them and share them with other
people.
*****
America's Xerox, the world's leader in document processing
products and systems, has agreed to spent $415 on
purchasing XLConnect Solutions, a company specialised in
corporate network design and management, and its parent
company, Intelligent Electronics. The move is aimed at
boosting Xerox's networked document solutions, based on
XLConnect's US-wide service capability and applications. It
would allow to increase the integration of digital printers
and copiers into corporate computer networks instead of
having them as stand-alone office equipment.
LEGISLATION AND POLICIES
The US Federal Communications Commission (FCC) has adopted
an Order that clarifies "Customer Proprietary Network
Information" (CPNI) requirements under the 1996 US Telecoms
Act. Under the order, carriers are able to use customer
information without prior agreement only to market
offerings related to local or wireless services, but not
for long-distance services. For services outside the
customer's existing service relationship, carriers must
solicit and obtain customer approval.
MARKET AND COMPANIES
America's Cisco Systems, the world's leading networking
company, has agreed to purchase NetSpeed and Precept
Software for $3.7-4 billion and $84 million respectively.
NetSpeed specialises in DSL technology, which allows for
high-speed data transmission over regular phone lines for
multimedia applications. As for Precept, it has developed a
client/server application that allows to send digital video
and audio over Internet Protocol (IP)-based networks. The
move further amplifies the consolidation of the US
networking industry, which was marked in 1997 by a 6
billion worth merger between 3Com and US Robotics and a
$3.7 billion merger between Ascend of Cascade.
The consolidation process, which is led by the fast growth
of the Internet, started in 1996 with the purchase of
StrataCom by Cisco for $4 billion.
ASIA AND PACIFIC
Trends: In Japan, the MPT has awarded its first type I
license to a foreign carrier. Meanwhile, Hong Kong tends
to confirm its role of front-runner in interactive TV.
LEGISLATION AND POLICIES
The Japanese Ministry of Post and Telecoms (MPT) has
awarded its first "Type I" telecoms license to a foreign
telecoms operator, America's WorldCom. It gives WorldCom
the privileges of a public operator, including the right to
build its own network. The UK operator BT has applied for a
similar license.
*****
The Hong Kong government has awarded a video-on-demand
(VOD) license to the telecoms operator Hong Kong Telecoms
(HK Telecoms) and approved in principle a similar license
for Star Interactive Television (Star iTV), a unit of the
Internet and paging service provider Star Telecom
International Holding. HK Telecoms would launch its
interactive TV service, HK Telecom VOD, in March 1998 and
provide services such as pay-per-view (PPW), music videos
and home shopping. As for Star iTV, it intends to become
operational by mid-1998. It would offer high-speed Internet
access, home shopping and banking, as well as educational
content.
MARKET AND COMPANIES
The Japanese digital satellite broadcasting (DSB) systems
JSkyB and PerfecTV have agreed to an equal-footing merger
into a new DSB service, SkyPerfect TV, that would start
service on 1 May 1998. The five main shareholders with a
11.4% stake each are the US media giant News Corp. and
Japan's Fuji TV Network, Itochu, Softbank and Sony. It
would rival DirecTV Japan (DTVJ), a DSB service led by
America's Hughes Communications. Further competitors would
include Toei Channel, a DSB service which is expected to go
on air in July 1998, and a new service to be launched in
the year 2000 by Japan's national broadcaster NHK.
SOCIAL, SOCIETAL AND CULTURAL
The Telecoms Services Association of Japan has released a
list of voluntary guidelines governing Internet access
which aim in particular to protect children against
offensive on-line material while preserving freedom of
speech.
LATIN AMERICA
LEGISLATION AND POLICIES
The Guatemalan government has relaunched plans to sell-off
95% of the national telecoms operator Guatel. A first
attempt to privatise Guatel was stalled at the end of 1997
when the government rejected the only offer it received.
The bidder was the Mexican telecoms operator Telmex, which
had offered around 460 million Ecu, well below the
anticipated 600 million Ecu.
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European Commission, Directorate General XIII, Advisor's
Team. Supervisor: Detlef Eckert. Chief editor: Denis
Baresch. Editorial committee: Gerard Carat, Androulla
Kaminara, 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.
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