EU Summit Sets Time Table for Closing E-Commerce Gap

LISBON – The EU economic summit held here last month laid out a 10-year program for making up the American lead in technology by liberalizing telecoms and making Internet access cheaper and easier.

Leaders of the 15 EU members agreed to move towards greater local telephone competition before the end of the year and to complete the liberalization process by the end of 2001.

While telco costs in Europe have been plunging for several years, they are still far higher than in the US. Local calls and Internet access typically are twice as expensive.

As a result the leaders expect the number of Europeans going on line to rise exponentially and to broaden the market for e-commerce – an opportunity American firms are better positioned to exploit.

In addition, the EU plans Internet access for all schools by 2001, and the summit adopted an “e-Europe Action Plan” that lays out goals for building cheap interconnected high-speed Internet and telecom networks in all the member states.

A statement issued at the end of the meeting said the EU should “become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion.”

Clearly, observers said, the EU believes that the Internet is the best place to find jobs for the 15 million unemployed and work-willing people in the EU. The summit target: 20 million new jobs by 2010.

The EU, however, has a long way to go. The average EU Internet penetration is less than half that of the US – 23 percent vs. 51 percent. Within the EU, however, there are steep differences.

Sweden and Finland are only a couple of percentage points behind the US, but the major European markets still lag badly. The UK has 29 percent penetration, Germany 27 percent, and France an anemic 15 percent.

Southern Europe isn’t even in the game yet. Italy and Spain are at 13 percent each, while Portugal holds at 9 percent and Greece at 6 percent.

Given those figures, many Internet leaders in Europe want faster action in liberalizing the telcos.

Liberalization, Matt Peacock of AOL Europe said, “is taking place on government time, not on Internet time. There is a tidal wave of consumer demand for simple, cost-effective Internet access.”

Equally important for US direct marketers is a decision to liberalize financial services by creating a single market for them with a target date of 2005.

Even though the date is five years off, this is the first time the EU has set a target for reforms that will make raising money in Europe easier and less costly.

“The development of the bond market is oiling the wheels of a revolution from the bottom up,” Salmon Smith Barney’s Graham Bishop told the Financial Times.

One problem the summit did not tackle is the expensive social safety net that makes if almost impossible to fire people and restructure the employment picture. On the plus side, observers said, was the introduction of a timetable and deadlines for each stage of the development plan. In addition, the EU will review progress at the top level every six months.

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