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COM (83) 329 
 
 
 
Vol. 1983/01 34 
  
 
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Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION OF THE  EUROPEAN  COMMUNITIES 
COM(83) 329 final 
Brussels,  9th June 1983 
TELECOMMUNICATIONS 
(Communication  from the Commission  to the  Council) 
COM(83) 329 final 

TELECOMMUNICATIONS 
1. In  its study  on the  information technologies,  the Commission 
pinpointed  telecommunications  as one of the  strengths  of European 
industry,  a fact which  is borne out by  Europe's  share of world 
production  f  eld, which  is disproportionate  to the 
importance  ' 'o^munity  market in general. 
A more thorough  analysis  of the  sector indicates,  however,  the 
unless nati ;a !  Community  policies  undergo  a change of 
direction,  e 1' be  cause for concern.  On the  other hand, 
it shows th : here is considerable potential for  growth  if th 
necessary  decisions  are adopted in time and at the  appropriate 
level. 
2. These  concerns  spring  from a number of observations  : 
(1) in the  first place, the volume of Community  exports  is 
undoubtedly  high; nevertheless,  they involve  an increasing 
proportion  of traditional  types of equipment,  frequently 
supplied  on markets  which were saturated several  years ago; 
(2) in the  second  place, the European  telecommunications  industry 
runs the risk of being in a weak position  when it comes to 
tackling  the technical  changes  characteristic  of the 
information technologies,  which are occurring  on an  ever 
larger scale and at an  ever increasing rate  : whereas  such 
changes can be  regarded  as an  asset by Europe's  competitors, 
for European  industry  itself  they are becoming  a handicap. 

- 2 -
In fact, the enormous  input,  in terms of investment and R&D, 
needed to cope  with this situation,  calls for economies on 
the scale  of the American and Japanese markets, which are 
impossible,  however,  given  the compartmentalized nature of 
the European market,  divided  as it is  into separate  national 
entities. 
(3) lastly,  at user  level,  i.e. at  that of the  terminals  and 
services  in what will be the  most dynamic  segment  of the 
market over the coming decade, the  potential  for growth remains 
largely  untapped as a  result  both of the  uncertainties  as 
to future  networks and the  constraints  of national  regulations, 
and of the  excessive  costs engendered by the  inherent  compart-
mentalization,  which have the  effect  of curbing  a growth 
in demand. 
3. Against  these weaknesses - the  common  denominator of which is 
the inadequacy, even the  lack of cooperation  between the  various 
countries,  at both  industry  and state  level - can be set the  truly 
considerable  growth  prospects  : the  world market in  tele­
communications equipment  will increase  at a rate of 8.1% in volume 
over the decade 1980-90, from USD 44 000  million  to USD 95 000 
million.  The Community  market,  characterized  essentially  by an 
increase  in quality  rather  than quantity,  will experience a 
slower growth  rate, from USD 8 000  million  to USD 14 000  million, 
i.e. 5.% per  year, unless  something is  done to alter the current 
course of events. 
The Commission takes the view  that a stimulus  can be  provided 
and that the existing  situation  can serve as a  springboard  for 
a new impetus for European  industry  and for the telecommunications 
services. 

- 3 -
4. Traditionally,  the telecommunications  sector  has been dominated 
by decisions  taken at  government  level : network  configuration 
and performance,  regulations  governing access,  obligatory  standards, 
costs of services  to the user  - all that has largely  been decided 
by the  state,  which is,  moreover,  the biggest customer of the 
telecommunications  industry  as such. 
Most of the States  have thus attempted to  reconcile  within  a 
national  framework  : 
- the development  - in terms of both  volume  and technology  -
of the national  industry,  the supplier  favoured by the posts 
and telecommunications  authorities; 
- user requirements; 
- the financial  constraints  of the posts and telecommunications 
authorities  (policies  governing investments and  tariff-fixing. 
Since, when all is  said and done,  any telecommunications network 
is international,  if not to say,  universal,  in character,  national 
regulations  and standards  must be coordinated and harmonized at 
international  level : two bodies are concerned with these aspects, 
on an advisory  basis and without any  legislative  power  - the 
European  Conference of  Postal  and Telecommunications Administrations 
(CEPT) and the  International  Telegraph and Telephone  Consultative 
Committee  (CCITT). In  addition,  the development  of the new  tele­
communications networks has  involved  increased  international 
cooperation,  either  in the form of bi- or  multilateral  agreements, 
or within  wider  specialized  frameworks  (e.g. in the case of 
satellites  with Eutelsat). 

- A -
The Community  has kept in the  background  of these  developments. 
It has on the one  hand,  exercised its general  competence^^  with 
regard to telecommunications in the  same way it  would have done in 
relation  to any other sector without reference to any precise 
political  orientation;  on the other  hand,  its attempts to intervene 
on a pragmatic,  specific  basis, for instance in the  case of opening 
up the public telecommunications  markets,  have fallen  short of 
the mark for the  same reason : they lacked a consistent  sense of 
direction,  a suitable  framework  and provision for gradual  development 
over a period of time. 
(1) This  competence  primarily  relates  to : 
- a common  commercial  policy : registrations  concerned  with the applica­
tion of the  GATT code in the public  procurement  of telecommunica­
tions equipment,  agreement  on standards and on technical  barriers  to 
interchange (TBT  agreement),  and the  international  commercial 
aspects of services 
- a policy  on competition: including public expediture on R & D, 
cooperation  between  companies  and unfair practice  between 
state-owned  and private  companies. 
- a policy  for internal  markets : problems  of standardization and free 
trade; 
- the development  of the  Community  market  for informatics: access to 
all data banks  of EURONET/DIANE  and its future extensions,  parti­
cularly APOLLO; 
- the specific  needs  of institutions 
- the Inter-Institutional  Information  System  (INSIS); 
- statistical  control of  customs  and agricultural  transactions 
(CADDIA) 
- more recent  initiative:  co-financing of pre-competitive R&D 
(ESPRIT)  and financy of a telecommunications  infrastructure 
(NIC-FEDER). 

- 5 -
5. The  efforts  made with regard  to harmonization  at international 
level have indeed  led gradually  to a very high degree  of reliability 
and compatibility  throughout  the telephone  system,  without  any 
intervention  by the  Community.  However,  when it comes to  ensuring 
thorough  compatibility  of far more  complex  and varied services 
and equipment,  a more  systematic,  more  effective  approach  is 
required. 
A. The  telecommunications  sector  is faced with a range of technical 
changes  occurring  in combination  and at a  growing  rate : 
- digitization  which is replacing  the analog  signal  of the 
telephone  by the  encoded  language  of the  computer,  thereby 
facilitating  the introduction  of new  computerized  tele­
communications  services, whilst  at the same  time creating 
new requirements  from the point of view of standardization. 
- optical fibres  and communications  satellites  offer far greater 
transmission capacities. 
Digitization  and new means of  transmission radically affect 
the economic  and technical  data involved  in long-distance 
transmission  and should make it possible  to introduce  new 
services  dependent  on the  availability  of wide transmission 
bands at low  cost. 
- microelectronics  which  allows  production  in miniature  and 
reduces  costs, whilst  calling  for fundamental  changes  in 
industrial  processes,  at both design  and production  level. 
B. This  technical  progress  opens the way for new  services  and 
equipment  : 
- remote  printing  of texts (teletex) 
- exchange  of files between  computers 
- interrogation  of databases  (videotex) 
- electronic  payments 
- remote  surveillance  of buildings 
- assistance  for the  isolated 
- digital  television (high definition  in the  interactive  mode) 
- teleconferencing 
- radio-telephony 
- satellite-link  aerials 

- 6 -
6. This  technical  progress  in telecommunications  and the new  services 
and equipment which it  makes possible  have certain  common  character­
istics : 
(1°) They  require  much investment  and R&D  expenditure.  Consequent­
ly, their implementation  in economic terms,  that is to say 
what brings  about  prices  which are attractive  for the user, 
requires  them to be  produced  in large series.  These are made 
possible  by a vast market  and by  increased  cooperation  between 
companies. 
One example  we can  cite is the  development  of a new  family 
of time division  switches:  their development  cost varies 
between  $700  million  and $1 300  million  according  to the 
manufacturer.  Knowing  that to provide  a reasonable  return  on 
development  costs of $ 1 000  million,  sales of 
$ 14 000  million  are necessary,  one wonders  how such a return 
could be obtained  on a telephone  switch of this sort given 
that the British  market  is worth $ V 200  million,  the French 
market $ 10 900  million  and the  German  market  $ 11 700  million 
(Forecasts  for the  current  decade)?  The lack of size of the 
national  markets remains  a fundamental handicap  especially 
when the whole of the  national  market  is always  reserved  for a 
"national  champion", which  prevents  the posts and telecommuni­
cations  authorities  from having  the advantages  of competition 
for their  supplies. 
(2°) They  require  medium-term  programming:  the period which 
separates  the decision  to develop  new equipment  and its 
appearance  on the  market at a reasonable  price and with a 
reasonable  degree  of reliability  is extremely  long. These 
periods are extended even  further  by the  complexity  of current 
harmonization  procedures. 
It has been calculated  that approximately  60 months are 
required  to develop equipment based  on new  specifications 
in Europe  while a similar  process  requires  only 24 months 
in North America. 

- 7 -
(3°) They are of no economic value unless they can be  installed 
in international  networks which are  sufficiently  extensive 
and uniform to  allow them to be used to the  maximum;  there 
is a risk today  that telecommunications in Europe  will be 
made up for  some time to  come of a heterogeneous assembly 
of incomplete and incompatible networks for  different  services 
which will remain  circumscribed  about  national  or regional 
sectors.  If the  interfaces  are not  available  as soon as the 
new services  are launched, the changes necessary  later on 
will be both  laborious  and costly. 
7. The requirements of dimension, time and  international  compatibility 
of the new networks and the new  services  in themselves  require 
a Community  approach. 
To these can be  added  four types of grounds : 
a) From  being European, the competition is becoming  more and 
more international,  including  that on the European market 
itself. 
This is being  stirred  up by : 
- the battle  of the  giants  which is being fought  between 
ATT and IBM on a "deregulated" American market and which 
will be continued on non-American markets and  including 
Europe; 
- the penetration  due to its progress in  microelectronics 
which will be afforded  to the Japanese  industry  which, 
on the  initiative  of the Japanese posts and telecommunica­
tions authorities,  will be installing  full-scale  networks 
and services  which are  still at the stage of  laboratory 
tests in Europe. 
Only the  mobilization  of our resources and in  particular 
in R & D and  better  cooperation  between  companies - combined 
with increased  competition  between  groups - can enable the 
European  industry  to face up to  outside  competition in a 
properly  internationally  competitive  state; 
• b) Telecommunications today  have a economic,  social,  cultural 
and naturally  strategic  importance which  mark them out for 
a large-scale  European  initiative. 

- 8 -
They represent  a typical  example  of a sector  for new impetus 
to productive investment  to such an extent  that a proper 
economic  cost/benefit  calculation  should  be carried  out for 
them to the  exclusion  of the  posts and telecommunications 
authority's  operating accounts;  what must be taken  into 
account with regard  to investments  by the  posts and telecom­
munications  authorities  and the R&D  expenditure  of companies 
is all the indirect  economic  fall-out  which  will accompany 
a major programme  of development  in telecommunications  in 
Europe:  jobs,  industrial  innovation,  improvements  of the 
productivity  of services,  the creation  of highly  productive 
small and medium  enterprises,  etc. 
c) In addition  to the  economic  factor,  telecommunications 
represent  a stake in society  for Europe.  From the moment 
that telecommunications  have a critical  role in the  overall 
performance  of our  economy  - it should  be remembered  that 
with a value added equivalent  of hardly 1% of the  Community 
GNP, they have a direct  effect  on 55% of the  total value 
added and 62% of  employment  - telecommunications  will 
condition  the whole of our  future:  it is our way of  life 
and our social  organization,  even our culture,  which are 
involved.  The Community  must therefore  establish  a design 
for Europe  in a sector  which is truly of vital interest  for 
it. 
d) By virtue of its specific  responsibilities  towards  the 
developing  countries  and,  particularly,  to its partners  in the 
Lome Convention,  the Commission  should  also consider all 
aspects of how  these  countries  can draw upon a European 
initiative  in Telecommunications.  By making  available  to them 
the most recent  technological  developments which  are 
particularly  adapted  to their needs  (user  dispersion, 
distance,  robustness  of equipment  and simplified  operation), 
they would  be able to economize  at the  intermediate stages  of 
progress  in telecommunications through  the experience already 
gained by the member  states. 
Telecommunications  is therefore indispensable  as a tool for 
the developing  countries  and opens up new  channels  by which 
the considerable  effort in R & D and the  investment  made by 
Community  industry  can be  redeemed. 

- 9 -
8. To establish the  importance  and the necessity of the  European 
dimension  is one thing. To turn it to  proper  account  is another. 
Telecommunications  has not  been a sector in  which  the role of 
government  and of regulations has  been  critical  so far, and the 
actions of industry  itself  would  suffice;  with a few additional 
Community  initiatives  here and there; for the unity and  fluidity 
of the European  market  to be achieved  progressively, as has  been 
the case for so  many other sectors since 1958. 
But the  problem  is precisely that it is up to the 10  Member  States, 
through  their  posts and  telecommunications  authorities, to deter­
mine in very direct fashion  what should be on offer in the  field 
of telecommunications  : what networks  and what services ? In  what 
quantity ? At  what cost ? How  soon ? 
If the Community  were to limit  itself  this time to intervening 
in a pragmatic  and ad hoc way, there  would  be strong fears that 
it would  be completely ineffectual as has  been the case in the 
past. 
The Community  must first fix an objective  which must take full 
account  of the  European  dimension.  This must include : 
- stimulating the production of  telecommunications  equipment  and 
telecommunications  services in  Europe  so as to create the condi­
tions for Community  industry to maintain its strong position 
on the European  market  and preserve  its place as the leading 
world exporter. 
- making  available to the  users  the most advanced  telecommunica­
tions equipment  and services and the conditions  which  ensure 
their international competitiveness. 
The recourse to the  European  dimension,  which  is recognized as a 
condition of success, implies a gradual transfer of  powers  and 
means to the  Community.  Such a transfer in no way implies any 
modification to the statute or  responsibilities  of the national 
PTT's.  Neither  does it affect the way in  which each member  state 
organizes the transfer of  financial  resources  between  PTT and 
governmental  budgets. 
(1) This latber  aspect  is linked to the  more general  problem  of financing 
the networks  and telecommunications  services  which  is not considered 
in the present  document. 

- 10 -
A Community  political  and legal framework, which is  clear and 
precise,  thus becomes  indispensible. 
The Community  must be able to indicate  the target  for joint action, 
to select  the objectives,  to decide  the ways and means,  to fix the 
procedures  and deadlines  in a framework which  will guarantee a 
capacity  to decide. 
Telecommunications,  which  constitute  a basis for information 
technologies  and, through the  latter,  support an  entire  European 
economy  based on  services,  are no  less essential  for the  future  of 
Europe than  coal and steel were at the  beginning  of the  fifties. 
Without  the salutary  discipline  of a suitable  legal framework, the 
necessary  progress  will not be  realized  within  the tight schedules 
imposed by  technology  and international  competition. 
A legal framework does not  imply,  however,  additional  constraints 
and bureaucracy; on the  contrary,  it will quickly  become  apparent 
that the gradual  transfer  of power and resources  to the  Community, 
if brought about as the Commission  envisages,  will be counter­
balanced  by a reduction  in regulations  and, moreover, a  more 
rational  utilization  of the  public  resources  allocated  to this 
sector. 
Being aware of the complex  nature  of the  subject,  the Commission 
does not expect the European  Council  to be  able to draw up final 
guidelines'at  this stage;  on the  other hand, it  requests  it clearly 
to acknowledge the need for a European approach to telecommunica­
tions and to approve the  objective  proposal  earlier.  The Commission 
would like to set up a  panel of senior  officials,  appointed  by 
Chefs of State and government  leaders;  who would be  able to commit 
their governments, to be  chaired  by the Commission,  with the task 
of studying  the problem  according  to terms of  reference  and 
schedule  below. 
1. An initial  set of  questions  relate  to specific  activities  to be 
conducted  : 

- 11 -
a) How can the  following  most strategic  technological options  in 
the telecommunications  field be decided  at Community  level : 
- network  configuration  and performance; 
- end-to-end  compatibility  of networks; 
- the range of services offered; 
- their  cost; 
- general  pricing  principles. 
b) How can  European  industry  be enabled  to cooperate  at the 
pre-competitive  R&D stage,  as the  electronics industry  is 
doing under the ESPRIT programme,  and how can  it be lead to 
mutual  reflection  on trends in the  sector and the  problems  posed 
by international  competition  ? 
c) How can we  ensure  that the post and telecommunications adminis­
trations  be given a free choice  of suppliers  and the  enlarged 
markets  for the  latter ? 
d) How can we  prevent  the stimulus given  to the  industry  from 
being impeded  by over-regulation,  and how can  terminals  and 
services  be given free access  to the  network  ? 
This would  mainly imply:  : 
- enabling  industrialists  freely  to connect  a wide range of 
terminals  and local systems  to these networks; 
- carrying  out the  standardization that  is strictly  necessary 
in order to make  this free access  effective  and economic; 
- ensuring that  the equipment  to be  connected  to the  network 
is approved  under  strict  conditions  as regards  objectivity, 
deadline  and cost. 
e) How can  space telecommunications  policy  be made the  subject  of 
reflection  at Community  level aimed at : 
- exploiting  what Europe  has achieved  in terms of space systems; 
- making  optimum  use, through  the adoption  of joint standards, 
of space  telecommunications  systems; 
- identifying  ways of anabling  the industry  concerned  more 
effectively  to take up the  challenge  of world competition; 
- facilitating  a joint position  within  the competent  internatio­
nal organizations that gives  due regard to the  Community's 
i nterests. 

- 12 -
2. The second  area of thought to be  assigned  to the  panel of 
senior  officials  relates  to the  setting-up  of a European 
telecommunications  body. 
Since the Commission does not  itself  possess the  necessary 
skills for bringing these tasks  to a satisfactory  conclusion, 
a specialized  Community  body could provide  a suitable structure 
for : 
- taking  Community  decisions; 
- negotiating  in international organizations  on the  basis 
of a joint  position; 
- facilitating  cooperation within  the Community  and even 
with neighbouring countries. 
Consequently,  for the powers  conferred  on the  Community  to be 
exercised  with the necessary expertise,  efficiency  and speed 
and so that the search  for a consensus does not  prevent questions 
from being  settled  when required,  it would be  appropriate  to 
consider  setting  up, in accordance  with the rules of the 
Treaty,  a specialized  Community  body placed  under the  authority 
of the Commission, to which the  Council  would  delegate  the 
necessary  powers. The  operating  exoenses for such a body would 
be allocated  to the  general  budget and its  responsibilities 
would increase  as the European telecommunications  policy is 
developed. 
3. The  panel of senior  officials  would be  instructed  to submit an 
initial  policy  report  by December  1983 and its  final conclusions 
by March 1984. 

- 13 -
9. The Commission  will for its part continue, with  the aid of  consultants 
and in close cooperation with  the industry, users  and trade unions, 
to study  the European  telecommunications  problem  and will thus fuel 
the discussions  of the  high-level think  tank. 
10. Lastly,  the Commission  will ensure  that the Community's  present 
powers are exercised  in the  light of the  objective assigned  by the 
European  Council  to the Community's  action  in the  telecommunications 
sector.