Regulating the Information Society in Europe

REGULATING THE INFORMATION SOCIETY IN EUROPE

Essay question:

"What was the main objective of the EU ICT regulation and what have been the results after the opening up of the ICT market in Europe?"

Introduction

This paper will answer the essay question in two parts: 1.0; what was the main objective of the EU ICT regulation and 2.0; what have been the results after the opening up of the ICT market in Europe?

First of all, to stress the relevance of the ICT sector, the EU commissioner for Information Society and Media made the following statement which underlines the importance this sector has within the community:

"The ICT sector, one of the most important in the European economy (8% of GNP), is a real motor of growth" (Reding 2004.)

According to Reding (2004), 40% of the increase in productivity in Europe since the mid-1990s is a direct cause of the use of ICTs exemplifying that a greater use of information technologies boosts productivity. Furthermore, there has been seen a rise in employment in these sectors, and the rise has been more intense than the average growth in employment in other sectors.

In attempting to answer the essay question the first part of the essay will be dedicated to the historical background of the ICT market in Europe, drawing a timeline up to the current situation.

Background

What characterized the ICT sector in Europe before liberalization were state-owned monopolies with focus on fulfilling public policy objectives rather than pursuing profits. These state-owned monopolies were accepted as they made up for market failures and therefore took the role as a natural alternative to these failures (Pauwels and Delaere 2007).

It was finally with the White Paper of 1985 that put the creation of a common market for broadcasting and telecommunications on EUs agenda. The motivation behind this was that an EU level playing field would increase competition and the opportunities for growth for the ICT sector, keyword here being competition. Consequently, the breaking down of the existing monopolies in the market began, which had given room to dominant players to enjoy and keep other players out.

According to Cincera and Sitter (2007) the European Union Competition Policy played a strong and direct role in the liberalization of telecommunications markets in the European Union. This is further emphasized by Pauwels and Delawaere (2007) in stating that it was primarily after the Commission's enforcement of its competition policy breaking up national monopolies that started the whole liberalization process.

Furthermore, the extension of this "playing field" could spill over on to other economic sectors leading to opportunities for growth in other sectors as well, thereby having the great potential of benefitting the EU economy as a whole, which confirms the statement by Reding (2004) referred to earlier.

Developments in the deregulation process

Pauwels and Delaere (2007) identify three significant periods within the timeframe 1985-2000, in regards to liberalizing the market for ICT sector:

1) The deregulatory period (1985-1999)

The period of deregulation describes a period of liberalization with standardization and harmonization initiatives. With the Commission's green paper in 1987 it marked the point of departure in regards to liberalization, the strategy being to apply a competition and liberalization policy, and not to use legislation to regulate the sector. This would, according to Pauwels and Delaere (2007), encourage harmonization of networks and equipment through the European Standardization institutions. Although the need for liberalization among member states was generally recognized, "as free as possible" being the mantra, the Commission met opposition from some of the more protectionist member states. According to Humphreys and Padgett (2006) the Commission would strategically use "coercive" instruments to "win" these countries over, or in the words of the authors "...to force the pace and extent of liberalization." The process of EU liberalization for this sector has been a gradual one, and with the use of coercive measures, perhaps a more effective one at that.

2) Competition and antitrust policies (1990-2000)

Describing words fitting the second period are "...being as big as possible vs generic antitrust policy..." (Pauwels and Delaere 2007) and indicate two conflicting tendencies that mark this period. This is the second significant period in terms of liberalizing the market for the ICT sector in Europe that overlaps with the first period. The difference in this period however, is the emergence of antitrust policies. Anti-trust policy was used as a means of taking care of national interests. One could say that this period highlights the influence and power certain Member States have in opposing the implementation of a supranational "device" for regulating the ICT sector, and not the least the uncertainty around the implementation of such a supranational regulation regime. A paradox as the EU Commissioner for Competition, Van Miert (1998), pointed out is that there will be more government control the more liberal the market is, underlining that regulation is needed for deregulation, which is a contradiction in itself.

3) "As rationale as possible" (1990)

Crucial in this period is the introduction of a number of remedies to the inefficiencies of former regulatory approaches, especially in the telecoms and broadcasting sector. The outcome of this period was according to Pauwels and Delaewere (2007) the balancing of overall competition policy and sector specific regulations on the one hand,