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Telecom Bombshell


Business Week International International Business

TELECOM BOMBSHELL

Its mission was to wake up Europe. In December, the European Union set up a task force of 19 technology and industry leaders to galvanize the Old World for the Information Society. But the group, headed by European Industry Commissioner Martin Bangemann, is about to create an even bigger stir. Its report, which was to be debated at an EU summit on the Greek island of Corfu June 24-25, plants the seeds for a radical new industrial policy.

The report urges European governments to cede their sovereignty over telecommunications and broadcast policy to a pan-European body as part of a plan to embrace competition rapidly--ahead of the 1998 deadline set last June. A European counterpart to the U.S.'s Federal Communications Commission, the new agency would rule on issues such as operator licenses, tariffs, and interconnection among networks. Piecemeal deregulation will hold Europe back, the report says: "Time is running out. If action is not accelerated, many benefits will arrive late or never."

GROWING NEED. Creation of a Europewide regulatory agency is bound to be controversial. "We're not convinced a new body of bureaucrats would speed deregulation. It might slow it down," argues one German official. Nonetheless, the logic for a Euro FCC is getting more compelling as transnational alliances overtax independent, national regulatory bodies. Case in point: the recently announced $4.2 billion alliance among Sprint, France Telecom, and Deutsche Bundespost Telekom to offer voice, data, and video services. "Europe needs a body that operates at a supranational level," says Keith Mallinson, research director for Yankee Group Europe in Watford, England.

Breaking down bureaucratic fiefdoms is never easy, but the Bangemann group has real influence. Members include the heads of Siemens, Philips Electronics, Olivetti, and IBM Europe. The best chance to create a Euro FCC will arise when the Maastricht Treaty on European economic and political integration comes up for review and amendment in 1996. Politicians may find themselves setting up a Euro FCC before they ever begin to tackle a common currency.Gail Edmondson in Paris


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