Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the EU action plan: satellite communications in the Information Society` (97/C 355/03)

On 17 March 1997 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 16 July 1997. The rapporteur was Mr Mobbs.

At its 348th plenary session (meeting of 1 October 1997), the Economic and Social Committee adopted the following opinion by 80 votes to one.

1. Introduction

1.1. European industry needs to take a more proactive and consistent approach in the satellite communication area and improve its role in the provision of global satellite communications services and applications.

1.2. New requirements emerging from the information society are demanding high performance access and back-bone infrastructures. Satellite infrastructures are increasingly meeting key user requirements such as personal mobility and access to powerful, high capacity, broadband connectivity. Global satellite infrastructures are thus becoming a critical part of the world's economic system. As a result, a strong and coherent satellite communications industry and services sector is of high economic and political importance.

1.3. US-led initiatives for satellite based communication systems of global coverage, particularly in the area of Satellite Personal Communications (S-PCS) and advanced broadband multimedia satellite systems are clearly emerging today. Should Europe not react in a coordinated manner, there is a high risk that it will not be in a position to benefit from opportunities in the most promising market segments (services and equipment).

1.4. Due to strong technological progress, deregulation and increasing convergence between the broadcasting and telecommunication sectors, development of satellite communications is of strategic and commercial importance for Europe.

1.5. The Commission communication expresses the view that Europe is not well placed to become and remain a major player in this sector. This view is expressed without any supporting evidence other than via footnote 4 which refers to a final report from the 'Industrial Research and Development Advisory Committee` (IRDAC) of the Working Group on Satellites (October 1996). This report contains some very telling comments on the present state of play, some of which are important to note.

1.5.1. The report of the working group addresses satellite communications (and satellite navigation); two areas associated with fast growing markets and a position of the European satellite industry which gives reasons for concern. For example, whilst the European industry has a technology base which in many fields is equivalent to that of the USA, it lacks critical mass compared with its main US competitors.

1.5.2. European government spending is decreasing and is becoming critically low for providing sufficient R& D basis for the communications satellite manufacturing industry. The decrease coincides with the streamlining of the European communication satellite manufacturing industry, implemented to cope with the fierce competition from US giants. The streamlining appears to have an adverse effect on government support for their disappearing 'national champions`.

1.5.3. The boom in new applications of satellite communications (personal mobile communications, interactive multimedia services, airborne communications, digital TV/video or audio broadcast, messaging and data collection) is creating a severe competitive environment in the market chain 'satellites . earth stations . services`, demanding drastic improvements in productivity and triggering new challenges in research and technology development.

1.5.4. A fair share in the future satellite market is of strategic economic importance since (i) it will give European industries early access to future derived markets, and (ii) absence of European industry would lead to de facto US monopoly in this sector.

1.5.5. The US satellite industry today is by far the strongest in the world as a result of a coherent interplay between US government and industry, an industrial policy aimed at dominance of the world market. There is no equivalent at European level.

1.6. As a result of various reports and meetings during the last twelve months or so and current assessments of the present situation, all of which indicate a need for positive European action to remedy an unsatisfactory situation, the Commission has submitted its Communication - EU Action Plan: satellite communications in the Information Society.

2. The Commission communication

2.1. The Commission proposed action plan makes a case for a more proactive and consistent European approach in the satellite telecommunications environment on the assertion that Europe is lagging behind (the USA) in terms of technology and a regulatory framework.

2.2. Revenues likely to be generated in the next ten years in the various market segments (satellite, terminals and services) by the innovative satellite personal communications systems and the advanced broadband satellite systems are expected to reach US dollars 400 billion.

2.3. The Objectives of the Action Plan (Section 2) present a set of actions aimed at completing the Internal Market, reinforcing Europe's industrial and political position internationally, and reinforcing research and development efforts. The Communication comprises three main areas for attention with sixteen specific actions falling under the following main headings.

2.3.1. Completion of the Internal Market in satellite communications (Section 3)

- Identification of the remaining barriers to the internal market,

- Review of effectiveness and timeliness of CEPT () measures and procedures,

- Review of effectiveness and timeliness of European standardization efforts and

- Review of future functioning of the ISOs ().

2.3.2. The reinforcement of the European position at international level (Section 4)

- Improve market access,

- Secure access to orbits and frequencies and

- Enhance the industrial position in the international markets.

2.3.3. Reinforcement of the European R & D Applications Developments (Section 5)

2.4. Conclusions (Section 6) which contains a time schedule for the actions presented, the majority of which should be concluded by the end of 1997.

3. General comments

3.1. The Committee shares the Commission's concern that Europe may be found to be lagging behind in satellite communications services. This is, in part, due to the lack of developed common Community defence and space policies which have adverse commercial effects in the satellite communications sector, as the IRDAC report states (see earlier point 1.5.5).

3.2. However the Committee considers that the Commission's prime objective should be to step up efforts to:

i) achieve full implementation of all existing EU legislation in areas covered by the Commission proposal, and review internal market access barriers;

ii) ensure compliance with international trade treaties and regulations in respect of satellite communications and reinforce Europe's position at international fora;

iii) improve and coordinate R& D and application developments in close consultation with the ESA ().

3.3. In its Opinion on Satellite Personal Communication Services (COM(95) 529) () the Committee expressed concern that the Commission was trying to become too involved in international organizations, such as with the ITU () and CEPT and the ISOs. The Committee is against any duplication of work in this sector. However, the Committee agrees that the Commission should strengthen EU cooperation and coordination with and within international bodies in the satellite communications field.

3.4. Whilst the Committee is pleased to note the revenues expected over the next ten years (point 2.2), it is regretted that the Commission is unable to give any indication as to the effect this will have on the market, industry and jobs. Since all forms of telecommunications are part of an expanding market, the Committee considers that the Commission should examine and advise on how and to what extent this may offset the effects on other declining markets and industries.

4. Specific comments

4.1. The Committee agrees with the Commission that action is needed to achieve greater market penetration of cross-border satellite technologies (services and applications) which remain significantly lower in the EU than in any other industrialized country. This is due to:

- the reluctance of several Member States to fully implement appropriate Directives, in particular, Satellite Equipment 93/97/EEC and Satellite Services 94/46/EEC.

- insufficient harmonization and absence of coordination of Member States authorization procedures ().

4.2. To item A1: The Committee fully supports the Commission's intention to increase efforts to achieve full implementation of all EU legislation relevant for satellite communications.

4.3. To item A2: The invitation to industry to identify regulatory barriers to the introduction of satellite communication systems and services is a commendable initiative. Appropriate regulatory action measures must be taken, where necessary, to abolish identified barriers. Certainly, Commission reports on the effectiveness of measures already taken are indispensable for identifying any measures that are ineffectual and have raised barriers to market entry.

4.4. To item A3: CEPT needs to speed up efforts in harmonization of authorization conditions and in harmonized use of frequency bands, increase efficiency of its regulatory decision-making procedures and their implementation. The Committee therefore welcomes the Decision (see footnote 1) setting a coordinated approach for authorizing the S-PCS. This decision, intended to facilitate the introduction of S-PCS in Europe, provides for granting a mandate to CEPT to harmonize the use of frequencies and the conditions for authorizing these services.

4.4.1. CEPT actions require a consensus amongst a membership much wider than just the EU which of course makes internal EU coordination most important.

4.5. To item A4: Due to technological development in personal and advanced multi-media services, ETSI's () standardization efforts should be focused increasingly on integrating satellite communications into the overall mobile communications sector, intelligent network activities and in the multi-media environment. The Commission should encourage ETSI to conduct its standardization efforts in accordance with these developments.

4.5.1. The Committee supports the Commission's request for ETSI to review its satellite communications work programme with the aim to ensure continued, efficient and appropriate development of standards which take account of market demands. Inappropriate regulatory processes which inhibit market-led development must be avoided.

4.6. To item A6: The Commission intends to review developments in the ISOs (Intelsat, Inmarsat and Eutelsat). However, Member States are already taking part in discussions about the restructuring of these organizations (to bring them in tune with the needs of a fast moving, liberalized and dynamic industry) which may lead to the establishment of commercial companies in the EU. Whilst the Commission has no legal standing in the ISOs, which are Treaty based organizations, the Commission should maintain close contact with the Member States to ensure these organizations comply with Community Law and Community competition rules.

4.6.1. The ITU works on the basis of 'first come first served` on the allocation of frequencies. There is a substantial risk that applications for frequencies can be made without national regulatory authority completion of due diligence tests (completion of full financial and technical submission) merely to be first in line. The WTO () operates on the basis of full commercial market fairness. The 'modus operandi` of these organizations appear to conflict. Thus this is an area for greater EU cooperation and coordination.

4.6.2. In particular there is an urgent need to establish a common position of the EU Member States to ensure effective representation at the World Radio Communication Conference (WRC-97) starting in October 1997. The closer involvement of the European Union is needed to this end.

4.7. To item A7: The Committee endorses the Commission's desire and proposed actions to reinforce Europe's position at international level within the competence of the common commercial policy and in particular in the WTO context.

4.8. To item A8/9: The Committee recognizes the Commission's concern that action should be taken to support the position of European industry. Cooperation between CEPT and the Commission is in the best interests of industry.

4.9. To item A13: The possible complementary actions with the ESA and others is likely to create expectations of future action and spending. Thus close attention must be given so that undue expectations are not created especially in view of the Commission desire to engage private initiatives and financing in the promotion of the satellite sector. The involvement with industry is welcomed but there is a need to avoid undue duplication of work in view of the fact that industry is already being consulted on the forthcoming Fifth R& D Framework Programme (COM(97) 47 final).

4.10. To item A14: The inclusion of R& D on satellite communication services is welcomed. The Committee would support research and development activity which would remain 'pre-competitive` and responsive to markets demands and technology developments. Work should focus on generic satellite technologies rather than include pilot networks which may be so close to the market that they might lead to 'selective` subsidies in a highly competitive marketplace.

4.11. Perhaps the EU could contribute to the ESA programmes, which should be commercially focused, alongside participating Member States. Any work on satellite technology, which was to be credible, could demand so much (possibly ECU 500 million at least) that it would unbalance the Fifth Framework Programme Information Society budget (which may be a maximum of ECU 4 billion).

4.12. The effects of developments in all telecommunication activities have very significant political and cultural effects. Telecommunications, in particular satellite communications, neither know nor acknowledge national borders. This also raises the question of the democratic control and the regulation of the media. Whoever owns the media could have a great influence over the daily life of citizens and even perhaps interfere with it. The Committee regrets that the Commission does not address this scenario in its communication.

5. Additional comment

5.1. The Commission Action Plan has failed to identify one practical issue facing the satellite industry in Europe: the availability of risk capital. The Committee considers that the Commission should consider and propose a strategy for facilitating the introduction of innovation in the financing of long-term leases of satellite transponder capacity with a view to increasing European satellite capacity.

Brussels, 1 October 1997.

The President of the Economic and Social Committee

Tom JENKINS

() CEPT = Conference of European Post and Telecommunications.

() ISO = International Satellite Organizations.

() ESA = European Space Agency.

() Opinion on the Proposal for a European Parliament and Council Decision on an Action at a Union Level in the Field of Satellite Personal Communications Services in the European Union - points 3.4.1. et seq. OJ C 204, 15. 4. 1996.

() ITU = International Telecommunications Union.

() See European Parliament and Council Decision 710/97/EC of 24 March 1997 on a Coordinated Authorization Approach in the field of Satellite Personal Communication Services in the Community; the European Parliament and Council Directive on a Common Framework for General Authorizations and Individual Licenses in the Field of Telecommunications (Directive 97/13/EC, 10. 4. 1997).

() ETSI = European Telecommunications Standards Institute.

() WTO = World Trade Organization.