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Frere Jacques, Dormez Vous? (Int'l Edition)


International -- Editorials

FRERE JACQUES, DORMEZ-VOUS? (int'l edition)

Newly elected French President Jacques Chirac has a lot of problems, among them the nation's 12% unemployment rate and the urgent need to privatize France Telecom in the face of strong union resistance. But he doesn't seem to realize that the latter is part of the answer to the former. France Telecom, the world's fourth-largest operator, is arguably one of Europe's strongest and healthiest monopolies. It's leaner than most. And its digital network is among the most modern in Europe. What it needs is a strategy overhaul. Privatizing France Telecom quickly and accelerating the pace of deregulation would set an economic dynamic in motion that would ultimately pay France dividends in the creation of new jobs.

Renewed competition would force tariffs down and spur growth, not only in the telecom sector but also in an array of converging technologies, from multimedia to advanced corporate networks. In Finland, where 150 telecom operators vie for a slice of the pie, employment grew at 13% between 1987 and 1994 in telecom and related industries while total employment fell by 16%, according to a recent study by Price Waterhouse. Delaying privatization and liberalization in France will only undercut the temporary lead that France Telecom now enjoys in Europe and cripple its efforts to become a global power. Without any doubt, such foot-dragging will delay approval of France Telecom's alliance with Deutsche Telekom and Sprint International and keep the trio in a straitjacket while rivals march into their markets. This would be very expensive.

France has a golden opportunity to develop real muscle in the 21st century's economy. Telecommunications is expected to surpass autos as the world's largest market around the year 2000. But to be a front-runner in the global game, France has to embrace a new mentality about markets and competition. The state's role in industrial policy is becoming more and more marginalized. State champions are irrelevant. Speed is of the essence. Companies must constantly adapt. The changes required to shift to the whims of international competition are so profound that a halfway solution may be as ineffective as doing nothing at all.

If Chirac can understand this, he may go down as one of Europe's visionary new leaders. If he doesn't, his problems--and France's--are bound to multiply.


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