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COM (83) 573 
 
 
 
Vol. 1983/0 217 
  
 
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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  
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COMMISSION OF THE EUROPEAN COMMUNITIES
C0HC83) 573 final  
29 September 1983 Brussels,
COMMUNICATION FROM THE COMMISSION  
TO THE COUNCIL ON TELECOMMUNICATIONS  
- LINES OF ACTION -
C0M(83) 573 final

TELECOMMUNICATIONS - AN IMPORTANT ECONOMIC SECTOR IN ITS OWN
RIGHT - IS DEVELOPING INTO A MAJOR INFRASTRUCTURE FOR THE  
COMMUNITY'S INDUSTRIES AND SERVICE SECTORS.
Telecommunications offers the key infrastructure for the  
development of the all pervasive New Information Technologies  
(IT). It will account world-wide for some 100 billion $ US of the  
1990 IT industry which will be well over 500 billion $ US in  
total ($ US 1980).In the Community, it currently buys 17% of  
micro-electronic components - the main IT technology. It is a  
vital medium for IT technologies in general, and it is the base  
for emerging markets for information and other services.
Over the period 1983-1993, the telecommunications equipment  
sector, together with telecommunications services, will become  
one of the largest industry sectors.
In June 1983, the Commission put forward a first communication on  
the urgent problems in the Community's telecommunications sector  
and on the need for a Community telecommunications policy  
(COM(83)329).
It further set out the role of telecommunications in the context  
of the new policies requested by the Stuttgart mandate in its  
communication on raising the industrial competitiveness of  
European enterprises put forward in September 1983 in preparation  
of the Athens European Council (COM (83)547) - a Community  
policy for telecommunications is both indispensable in its own  
right, and goes hand in hand with one of the two other major  
priorities proposed in the industrial field, the ESPRIT research  
programme in Information Technologies.
In this context, the importance of a new policy approach to  
telecommunications, at a Community level, has been confirmed in  
recent memoranda by Member States on priorities for the new  
Community policies.

- 3 -
The present communication is intended to set out first  
conclusions and to indicate main lines of proposed action.
?. THE COMMUNITY AND THE MEMBER STATES MUST CREATE THE ENVIRONMENT  
FOR COMMUNITY-WIDE TELECOMMUNICATIONS MARKETS WHICH ALLOW  
EUROPEAN ENTERPRISES TO ATTAIN COMPETITIVENESS.
Competitiveness must be based on profitability. Sufficient  
profitability and therefore long-term viability depends on home- 
markets of sufficient size and, under European conditions, these  
can only be provided by the Community as a whole.
Investment in telecommunications represents the major current  
public effort towards shaping future markets in the Community.  
Total investment in the telecommunications infrastructure,  
according to the present rhythm of investment in the Member  
States, is estimated for the next decade at well over 150  
billion $ U.S. (1980 $ U.S.).
It will be decisive for the Community's economic future whether  
this investment will lead to fragmented national markets and  
infrastructures in the Community, and to non-viable closed-off  
industrial structures; or generate Community-wide leading-edge  
markets which could drive the long-term economic revival of the  
Community■
4. The present situation and major problems in the key segments of  
the telecommunications market may be viewed as follows:
- the major telecommunications market - comprising switching,  
transmission and certain terminating equipment - is oriented 
largely towards its main application, i.e. telephone  
communication. Digitalisation of the network will be the major  
task during this decade and absorb the bulk of planned 
investment resources. 70-90% of this market is in the Community  
dominated by nationally oriented public procurement, resulting

- 4 -
in the fragmentation of this major part of the Community's  
telecommunications market into ten separate national markets.  
Several past Commission initiatives to address this problem via  
opening of the public markets have proved unsuccessful.
- the newly developing "telematics markets" comprising a wide  
range of new products represent vast markets with substantial  
growth potential - telematics terminals, private exchanges,  
new consumer electronics, office equipment and computer  
systems. Industrial expansion in these markets closely depends  
on the environment established by the network infrastructure.  
A critical problem is notably the rapid development of new  
services for the Community's enterprises at a multinational  
level - a problem of special relevance also to the
Community's small and medium-sized entreprises.
In this area, divergences in regulatory policies, in standards  
and acceptance procedures, and in the timing of the
availability of facilities have up-to-now prevented true  
Community wide markets. A major problem is early general
availability and precise timing of integrated voice and data  
network facilities up to transmission rates of 64 000 bit/s -  
facilities to be provided within concepts such as the ISDN.^  
Up-to-now, plans for ISDN in the Member States are widely  
-diverging. The resulting lack of market transparency at  
Community level threatens the competivity of the European  
telematics industry - confronted with mounting pressure from  
the US and Japan.
f '
^*ISDN Integrated Services Digital Network. In current narrow-band  
ISDN concepts, user access would be generally limited to 64 000 bit/s

s , '  -  - the future "wide-band networks" - networks suited for
4 ---------------------------------
video-comm
unications and television distribution - depend for
their development on public initiative for creating the
infrastructures required in a growth-oriented forward-looking
3
manner, and on early stimulation of the private user sector.  
While it seems generally acknowledged that the ultimate aim of  
telecommunications development should be a wide-band network  
integrating narrow-band ISDN and wide-band communication and  
distribution, the timing of the availability of such  
infrastructures at the European level, and the plans for  
services to be offered are currently widely diverging;
resulting in uncertainty for _____long-term planning and
develo
pments by European industry and by the Telecommunications  
Administrations,  given the very massive amounts of investments 
required and the general scarcity of means.
5. This fragmentation of the Community telecommunications market  
into national markets has led to:
*  .·=  ■ '* . ... -t i O f s  1  C S V  B
- insufficient investment, from a macro-economic point of view,  
concerning notably the establishment of ISDN-type facilities  
and the lack of effort towards an accelerated development of  
wide-band services, at a Community level - their early  
availability is indispensable for the Community-wide  
development of the telematics industry and the rapid take-off  
of new service industries.
transmission rates of and greater 2 Megabit/s, based on modern 
cable, micro-wave, and optical fibre techniques.
3
such as taking place by cooperation in the introduction of new 
services, as in the case of the shared experience on European
television programmes (pilot project EURIKON and its future  
extensions)

-  6 -
-  in
- insufficient industrial structure,  notably in the bulk
telecommunications segments of switching and transmission. In
Europe, nine different public switching systems have been
developed on a national market basis - in contrast to the  
bt
three projects in Japan and four United States projects, each  
llj
with access to a much larger home-market.
£ 5
- while the present bulk telecommunications market is fragmented
" j'V
into ten national markets and consequent negative effects  
currently become more and more evident in the perceptible  
decline of the Community's telecommunications export position,  
the planning divergences for narrow-band integrated services  
and the future integrated wide-band network threatens to sow  
the seed for future fragmentation in the two major growth  
areas - the new telematics markets and the new wide-band  
service markets.
- market fragmentation in the Community and the resulting  
orientation of enterprises towards national telecommunications  
policies of the Member States have led to an almost complete  
lack of spontaneous cooperation between European enterprises  
capable of providing a viable industrial structure in the  
longer term in this field. On the contrary, European firms, in  
order to attain viable shares of the world market, orient  
themselves more and more towards cooperation with US and  
Japanese firms, thus reinforcing the divergence of industrial  
policies and markets within the Community.
The divergence and uncertainty of telecommunications development
in the Community and the fragmentation of its markets contrast
with outside development:
- Japan has set up an overall planning framework with its $ 119  
billion INS project ("Information Network System").  Within the  
firm limits of economic viability and technical feasibility,  
-this gives a stable frame of reference to Japanese  
telecommunications infrastructure investment and devel· pments

- 7 -
for it 3 enterprises up to the year 2000. Japanese exports in  
advanced telecom are already now advancing at an astonishing 
rate ir major markets. >»,*.
- The new approaches to telecommunications policies in the United  
states ar.d the subsequent restructuring of ATT are leading in
this_are i  to a . acre active American export policy in this
se
cuor,  as shown both by US initiatives in international  
bodies concerning telecommunications markets and by first  
indications of a more restrictive policy regarding general 
availability of ATT research results.
6. A FORWARD-LOOKING APPROACH TO TELECOMMUNICATIONS MUST CREATE A  
COMMUNITY-WIDE TELECOMMUNICATIONS SPACE AND COMMUNITY-WIDE  
TELEMATICS MARKETS.
It must contribute towards industrial competivity in this sector,  
and must facilitate the multinational operations of the  
Community's enterprises - notably also of the smaller European  
information based companies depending on universal advanced  
public networks. It must lay the basis for the development of new 
markets and the new information and related services, and it must  
provide a major contribution to economic recovery and the  
creation of new employment.
Determined Community action towards these ends will be necessary,  
in the interest of all Member States. Such action ,  in order to  
be realistic and effective, must be sustained and should develop  
progressively. It should aim at:
- clearly defining Community-wide stable framework conditions
for the rapidly developing new markets in which private  
investment is either predominant or making major  
contributions: the telematics, and the future wide-band /
services, markets.

-  8 -
- allowing for the requirements for scale, notably in R&D,  
indispensable to develop the key technologies and systems,  
notably micro-electronics and opto-electronics,  and related  
transmission and switching systems.
- towards this purpose, stimulating the cooperation of European  
firms, where appropriate, and within the limits of healthy  
competition.
- strengthening Community solidarity in this field in defending  
its interests at world market level.
- finding a realistic approach towards the opening of the  
present bulk telecommunications markets, given the entrenched  
national interests in this field.
- basing the approach on the cooperation of those who have the
technological and management capability to master the vast and  
complex system telecommunications now represents: the PTT
Administrations of the Member States; and on the joint  
concertation of the Administrations, of industry, of national  
government, and of the Community.
7. In order to attain these objectives, and within the spirit of the  
Stuttgart mandate aiming at the development of new forward-  
looking Community policies, the COMMISSION PROPOSES, AT THE  
PRESENT STAGE, TO THE COUNCIL TO ADOPT SIX MAJOR LINES OF ACTION:
I. SETTING MEDIUM- AND LONG-TERM OBJECTIVES AT THE COMMUNITY  
LEVEL. Generating more planning certainty is the essential  
pre-condition for shaping Community-wide markets and  
stimulating public and in particular corporate and private  
investments.

- 9 -
The Community needs a common long-term objective, with  
appropriate phasing of development at Community level  
towards this end, providing a stable common framework,  
allowing the inventory of needs and their articulation in  
common, and stimulating convergence over time, according to  
special situations and requirements in the Member States.  
Setting medium- and long-term objectives must include the  
taking into account of the new macro-economic role of  
telecommunications for the Community as a whole. ^
Such a framework must be based on the cooperation of those
who have the responsibility to economically manage the
resources invested :  the PTT Administrations of the Member „-  j
States. It must draw on the experience and exchanges in the  
established international organizations in this field,  
notably the Conference of European Postal and
Telecommunications Administrations (CEPT) and the  
International Telegraph and Telephone Consultative Committee  
(CCITT); but, must also build on the firm framework of
common political will in the Community
Concertation conceived in this spirit, will also create, at  
Community level, the forum at which emerging problems can be  
identified and priorities can be discussed.
II COMMON ACTION ON RESEARCH AND DEVELOPMENT REGARDING THE KEY  
SEGMENTS OF FUTURE DEVELOPMENT,  in order to give a new  
stimulus to cooperation in research in this field, and to  
reach the economies of scale indispensable for the  
Community's future competitivity.
This concerns in particular cooperation of both industry and  
PTT research facilities on the development and engineering  
of the common projects proposed under IV, and on the

-10-
bs.Î
i fl'-ìfiiS-icritical bulk segments on which industrial competitivity  
depends - including cooperation on the development of  
switching and transmission facilities, and research on  
required micro-electronic components, user interfaces,  
opto-electronics and related local broadband networks  
which will be a major component of the markets of the  
nineties - markets in which small and medium-sized  
enterprises will also have an important role to play.
Cooperation of this type will also help to use fully the  
results of the broader pre-competitive research on IT base  
technologies, to be carried on in the context of the ESPRIT  
programme.
Ill COMMON ACTION AT COMMUNITY LEVEL TOWARDS THE DEVELOPMENT OF  
FIRM INTERFACE STANDARDS AND A DEFINED MARKETPLACE WITHIN  
THE COMMUNITY, AND DEVELOPMENT OF COMMUNITY SOLIDARITY  
TOWARDS THE OUTSIDE.  Community-wide defined interfaces  
between the public networks and the private telematics  
markets are needed in these new growth sectors by industry,  
private investment, and users. Building as far as possible  
on the work in CEPT and CCITT, the implementation of  
homogenous standards in those segments of the Community's  
telecommunications market where acute problems are posed at  
present, will also facilitate the development of acceptance  
procedures for equipment which correspond to the new  
requirements of speed and market development.
loReducing uncertainty for investors must also include a  
common position of the Community on the new international  
trade issues in telecommunications. Community solidarity  
can assure the effective defense of the Community's  
industrial and economic interests in the framework of the  
existing international bodies.

SUMMON DEVELOPMENT OF THE TRANSNATIONAL PART OF THE FUTURE
TELI-COMMUNICATIGNS INFRASTRUCTURE IN THE COMMUNITY,  in order  
\;c generate a pace-setter for development and concrete  
corowon projects on which actual solidarity can develop and  
future oriented cooperation of industrial firms can be  
probed.
In a first stage, developments should notably satisfy the  
need for the rapid build-up of services for the Community's  
enterprises. In particular the economic success of smaller  
European information-based companies will depend on rapid  
progress along the lines proposed, aiming at the accelerated  
availability of a general advanced public network at the  
Community level. This will thereby be a necessary complement  
to ether present Community initiatives aiming at the full  
use of the growth potential of small and medium-sized  
enterprises for the Community's economy.
Common development could draw on past and present  
experiences of cooperation in related fields. However, it  
should be backed by the more solid setting the Community can  
offer, notably Community financial support in both its
forms :  budget and lending instruments. „ .•* iv O n
The cooperation could have three major priorities, all of  
them central to the creation of Community-wide markets :
- Transnational development of voice and data integrated  
services facilities at the Community level,  with agreed  
timing for international availability in the Community,  
with agreed common interfaces for telematics equipment,  
and with flexibility respecting national extension of  
these facilities which remain the individual Member  
States' responsibility.

-  12 -
tàü
f c s »
XI
ni
Ik x'io
»7-
OJ.·
xJ- Development in common of intra-European terrestrial  
broad-band links for carrying voice, data, and, as needs  
develop, video services, based on the most advanced  
optical fibre techniques. This common project should  
provide for an advanced Community-wide market in one of  
the key technologies of the future where the Community may  
otherwise fall back with regard to Japan and United  
States. It should allow European enterprises to form  
consortia and to work together in the development of this  
new technology.
- Common development of broad-band services at a Community  
level using the satellite communications currently being  
established by Member States, EUTELSAT and the European  
Space Agency (ESA), with the intention of later transfer  
to the terrestrial broad-band network, as appropriate.  
This should allow the active market development of broad­
band services aimed particularly at the needs of the  
European business community, thus creating Community-wide  
markets for the new broad-band services, accelerating  
their introduction, diminishing uncertainty with regard to  
their market potential and pre-empting divergent  
developments in the Member States.
V USING FULLY THE MODERN TECHNIQUES OF THE NEW  
TELECOMMUNICATIONS FOR ADVANCING THE COMMUNITY'S LESSi x  i
~>v
FAVOURED REGIONS, AND DEVELOPING THEIR INFRASTRUCTURE, by  
continuing the large scale investments of Community  
financial instruments in this field, notably of the European  
Regional Development Fund (ERDF), the European Investment  
Bank (EIB) and the New Community Lending Instrument (NCI).
As regards the lending instruments (EIB and NCI),the  
Community interventions in telecommunications, in 1982, have  
by-passed 600 Mio ECU. The share of these investments with  
regard to the total activity of these two instruments is  
increasing and will attain 15% for the current year.

- 13 -
Thus, the telecommunications sector is provided with  
substantial support in financial terms. This support will be  
the more effective, the higher the percentage of advanced 
tecimology pi ts. It should be also noted that NCI III  
has now the possibility to finance large-scale investment in
industrial enterprises, when related to industrial
Vcooperation at a Community level, and to advanced
, £ > ■
technc logies. ‘?'.f
VI COMMON ACTION LEADING TO THE OPENING OF THOSE PARTS OF THE  
COMMUNITY COMMUNICATIONS EQUIPMENT MARKET DOMINATED BY
PUBLIC PROCUREMENT. V:v V
t ··>..
&
Setting the framework and undertaking the actions outlined 
above will create a new context and allow new approaches in  
this field, facilitating the working out of fair trade-offs  
for the parties involved. The courage to accept economic  
realities, and the development of Community solidarity  
towards the outside will be required. ,r ;
Progressive opening of the telecommunication bulk markets  
will be the indispensable condition for a viable Community  
telecommunication sector in the longer term.
8. The new telecommunications will be a base infrastructure for the  
Community's future economy. They present a chance to improve  
economic efficiency and to diminish the separations and  
divergencies within the Community caused by distance. They will  
allow the Community to contribute more effectively to the  
advancement of the infrastructures in developing countries,  
notably as regards the Community's partners within the Lomé  
Convention, and to provide them with the most modern  
technologies. They offer a new range of services enhancing  
freedom of choice and the quality of life for Community citizens.
•  '  ax
,  Tsev,

- 14 -
The Commission considers as indispensable, a firm commitment by  
the Council towards undertaking action along the lines proposed;  
in order to create conditions in the Community which will permit  
the problems posed in the telecommunications sector to be  
surmounted.
The Commission requests the agreement of the Council along these  
lines, in order to set into motion the more detailed definition
of options and procedures leading to _____the progressive
development o
f a common Community policy for telecommunications.!