•k * 
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\ EUROPEISKA GEMENSKAPERNAS KOMMISSION 
Bryssel den 24.10.1995 
KOM(95) 492 sluUig 
RAPPORT FRÅN KOMMISSIONEN 
TILL RÅDET. EUROPAPARLAMENTET 
OCH EKONOMISKA OCH SOCIALA KOMMITTÉN 
om de huvudsakliga händelserna och utvecklingarna på informationsmarknaden 
1993-1994 
IMPACT-program 
(EG-program för upprättandet av en marknad för informationstjänster) 

SAMMANFATTNING 
Bland alla marknader, teknologier och utvecklingslinjer som diskuteras i denna rapport kan 
fyra nyckelfrågor betonas, vilka har uppstått under rapportens studieperiod. Det är frågor 
som kommer att ha en avgörande inverkan på utvecklingen inom informationsmarknaden. 
För det första bör uppkomsten av elektroniska motorvägar och debatten om 
informationssamhället som detta har gett upphov till belysas. Dessa tankar har fångat 
världens uppmärksamhet och för många människor presenterat begreppet elektroniska 
informationstjänster för första gången. Konvergens är ett annat ämne som kräver särskild 
uppmärksamhet. Det har ofta figurerat i diskussionerna om affärsvärlden och har redan haft 
ett markant inflytande vad gäller ompositionering av industrin. Den tredje frågan som 
behandlas i denna sammanfattning är skapandet av ett tydligt och stabilt regelverk. 
Slutligen bör CD-ROMs och multimedias dramatiska genombrott under den andra hälften 
av 1993 och den första hälften av 1994 uppmärksammas som ett tecken på den elektroniska 
förlagsverksamhetssektorns tilltagande styrka. 
Regeringar världen över blir alltmer övertygade om att utvecklingen av infrastrukturer för 
information är oumbärlig om företag, offentliga förvaltningar och enskilda skall ha nytta av 
den "digitala revolutionen". Det mesta av den politik och de åtgärder som kommer att 
behövas för att förverkliga visionen om ett globalt informationssamhälle har man helt 
nyligen börjat utforma. 
Det är nästan omöjligt att göra pålitliga förutsägelser vad beträffar ett 
informationssamhälles själva beskaffenhet, eller att antyda när det definitivt kommer att 
uppstå. Ändå är industrier och regeringar i de större industrialiserade länderna säkra på att 
deras samhällen kommer att förändras och att vinsterna kommer att bli betydande. Den 
exponentiella ökningen av Internet-användare under årets lopp (av Internet Society 
uppskattad till att ha nått 30 miljoner i juni 1993) och i antalet tillgängliga tillämpningar 
har gett oss en känsla för de möjligheter och den efterfrågan som vi kan förvänta oss. 
Länder liksom USA, Japan, Canada och Europeiska unionen lägger grunden för ett 
informationssamhälle. Europeiska unionen, som har hamnat efter USA och Japan i 
digitaliseringsprocessen, försöker nu att komma ikapp genom en rad initiativ, däribland Ett 
gemensamt europeiskt informationsområde, Vitboken om konkurrenskraft, tillväxt och 
sysselsättning, Bangemannrapporten och handlingsplanen om Europas väg till 
informationssamhället. Dessa initiativ är viktiga för Europa — de kommer att underlätta för 
unionen att inta sin plats bland de länder som bestämmer reglerna för ett globalt 
informationssamhälle. 
Liksom USA anser EU att det främst är den privata sektorn som måste anta 
informationsrevolutionens utmaningar. Privata investeringar borde vara den drivande 
kraften även för investeringar i infrastruktur. Gemenskapens och medlemsstaternas roll blir 
att stödja denna utveckling genom att ge politisk kraft, att samarbeta med den privata 
sektorn i experimentella tillämpningar och att skapa ett tydligt och stabilt regelverk. Det 
sistnämnda blir särskilt viktigt när det gäller tillgång till marknader, sammankoppling av 
nätverk och bastjänster, immateriella rättigheter och dataskydd. 
Sammenfatning 
Det återstår att se hur snabbt den privata sektorn kommer att generera den första 
investeringen som krävs. Det är dessutom svårt att bedöma den fullständiga innebörden 
och inverkan av ett informationssamhälle. Möjligheterna kommer säkert att bli betydande, 
men man oroar sig också för de socio-ekonomiska och kulturella effekter som en 
teknologisk revolution för med sig. 
Medan infrastrukturer för information håller på att upprättas, arbetas det med att utveckla 
informations- och underhållningstillämpningar att leverera via elektroniska motorvägar. 
Tillämpningar som utvecklas inom ramen för elektroniska motorvägar varierar från 
onlinespel och video-på-beställning till videokonferenser och åtkomst av 
multimediadatabaser, för att endast nämna några som behandlas i denna rapport. 
Tjänster som dessa kommer förmodligen att kräva olika former av teknologisk utveckling 
och olika nivåer av investering. De kommer också att kräva kompanjonskap mellan tidigare 
skilda industrisektorer, såsom hemelektronik- och IT-industrier, leverantörer av 
infrastruktur som telekommunikation, operatörer av kabel och satellit, liksom ägare av 
informations- och underhållningsinnehåll. Telekommunikations- och kabelföretag har redan 
börjat bygga upp den infrastruktur som är nödvändig. Mjukvarujättar och stora 
innehållsföretag samarbetar för att få ut produkter på marknaden. Detta för oss till den 
andra frågan som rör konvergens. 
Konvergens är en term som använts flitigt av pressen och av företagsanalytiker och kan 
definieras som utvecklingen av en gemensam teknologisk bas av industrier som delar en 
liknande målsättning: skapandet av en massmarknad för integrerad kommunikation, 
databehandling , informationsåtkomst och underhållningsprodukter. Ett bra exempel är CD-
ROM-tekniken, som nu återfinns i datorer, elektroniska speldatorer och multimediadatorer 
för TV-apparater. Standardiserade minneskort, intelligenta kort (smart cards) och 
modemkort förekommer i lådor för TV-apparater (set-top boxes), bärbara 
planeringskalendrar och personsökare, liksom i datorer. Men på en mer grundläggande nivå 
är konvergens resultatet av förmågan att konvertera allt möjligt innehåll — däribland text, 
bild och ljud ~ till ett gemensamt digitalt format som sedan kan hanteras och utnyttjas på 
ett antal plattformar. 
För informationssektorn är allt detta goda nyheter, på så sätt att det hjälper till att etablera 
en rad nya avsättningsområden för informationsprodukter och -tjänster, vilka likväl har 
många av de tekniska särdragen gemensamma med de elektroniska informationstjänster som 
redan, existerar. 
Konvergens har också lett till ompositionering av industrin. Behovet av att inrikta sig på 
globala marknader och att erbjuda integrerade informations-, underhållnings- och 
kommunikationstjänster har lett till en våg av sammanslagningar och förvärv samt ett 
växande antal strategiska nätverk och kompanjonskap. Vi ser således 
telekommunikationsföretag förena sig, och hårdvaru- och mjukvaruföretag köpa in sig hos 
konkurrenter och motparter världen över. Men vi ser också informationssektorn genom 
förvärv köpa in sig i närbesläktade nya marknader. US Wests förvärv av en andel på 25 
procent i Warner Entertainment, Pearsons köp av Softwork Toolworks och US Wests köp 
X 
Sammenfatning 
av Thomson Directories är exempel på sådana affärer den senaste tiden. 
Den ökade tillgängligheten på infrastruktur av hög kvalitet kommer att göra det nödvändigt 
med en massmarknad för informationsprodukter och -tjänster, som ett medel för att 
generera avkastning på investeringar och att säkerställa långsiktig kostnadseffektivitet. Som 
resultat kommer vikten och värdet av innehållsindustrin (inbegripet traditionell och 
elektronisk förlagsverksamhet, produktion av film, video, radio- och televisionsprogram) 
troligen att öka. Den ompositionering av informationsindustrin som sker för närvarande 
stöder denna uppfattning. 
Innehållsindustrin har nu mycket att leva upp till. Användarnas förväntningar har ökat och 
de kräver allt högre standard på informationsinnehåll och -presentation. ICT-industrier 
räknar med att sektorerna för informations- och underhållningstjänster skall förse dem med 
innehåll att använda på de datorer, hemelektronikvaror och nätverk som nu håller på att tas 
fram. Regeringar världen över räknar med att informationsindustrin som helhet skall skapa 
sysselsättning och stimulera ekonomisk tillväxt. 
Innehållsindustrins största utmaning när det gäller att tillmötesgå dessa förväntningar blir 
dess kapacitet att investera tid, arbete och finansiella resurser i utvecklandet av nyskapande 
informationsprodukter och -tjänster. En sådan investering är oundgänglig om europeiska 
innehållsföretag skall kunna konkurrera med sina motparter i USA och Japan och dela 
vinsterna av industritillväxten med ICT-industrier. 
Konvergensens oerhörda konsekvenser har betytt att frågor om lagar och förordningar har 
varit de mest framträdande i diskussionen, och de förekom flitigt i Bangemannrapporten 
om informationssamhället. Avreglering av telekommunikation och direktivet om 
tillhandahållande av öppna nätverk kommer att vara till hjälp när det gäller att göra det 
möjligt för europeiska telekommunikationsföretag att konkurrera internationellt, men det 
finns många andra regleringsfrågor som man fortfarande måste ta itu med, både på 
nationell och europeisk nivå. Inte minst vad beträffar äganderätt i olika medier och 
restriktioner som man kan tillämpa på telekommunikatons- och kabel-TV-företag när de går 
in i varandras marknader. 
Under tiden har debatten om de rättsliga frågor som är av central betydelse för den 
elektroniska innehållssektorn framskridit något under det senaste året, men mycket återstår 
att göra innan direktiv kan utfärdas och det förvirrade läget som för närvarande råder i 
Europa har lagt sig. Processen med att försöka uppnå europeiskt samförstånd om de större 
rättsliga frågorna, som rättsligt skydd av databaser och skydd av personliga data är på 
gång. Under tiden utvecklar industrin själv en självreglerande ram för gränsöverskridande 
audiotex- och videotextjänster och för informationsmäklare, och kan göra det på andra 
områden också. 
Det plötsliga intresset och upphetsningen som förknippas med elektroniska motorvägar och 
konvergens och föresatserna att klarlägga den rättsliga ramen har naturligtvis gjort detta till 
en mycket intressant tid för industrin för elektroniska informationstjänster. Men de har 
ännu inte medfört några direkta marknadsmöjligheter. Till och med Internet, som nu står i 
centrum för forskning och experimentering på många informationsföretag, har än så länge 
ui 
Sammenfatning 
bara inbringat en knapp behållning till den kommersiella informationsindustrin. 
Under omständigheter som dessa är det inte förvånande att finna att många innehållsföretag 
är motvilliga att göra stora satsningar på att utveckla tillämpningar för de elektroniska 
motorvägarna. Den europeiska innehållsindustrin står inför en speciell utmaning då den 
utgörs av ett stort antal mindre företag, som är mindre vertikalt integrerade och mer 
nationellt fokuserade än motsvarande amerikanska företag. För att dra nytta av de globala 
möjligheter som ligger framför oss kommer de europeiska innehållsindustrierna att ofta 
behöva ingå samarbetsavtal och bilda nätverk med företag i andra regioner. Samtidigt 
kommer det att krävas politik på nationell och europisk nivå för att garantera den fortsatta 
tillgången på ett varierat och mångkulturellt informationsinnehåll och stärka 
konkurrenskraften hos små europeiska företag. 
Genom att grunda sig på resultaten av IMPACT-programmet kommer Europeiska 
kommissionen att betänka sätt att stimulera skapandet av gynnsamma förhållanden så att de 
som tillhandahåller information kan anpassa sina färdigheter och produkter till en miljö i 
förändring och att stimulera ökad användning. 
Medan debatterna har fortgått om elektroniska motorvägar, konvergens, 
informationslagstiftning och europeisk konkurrenskraft har det skett ett dramatiskt 
genombrott inom CD-ROM- och multimedia-CD-industrin. CD-ROM-läsare, som tidigare 
varit ett sällsynt fenomen på kontor och nästan okänt i hemmen, har blivit en vardaglig 
företeelse. Antalet installerade CD-ROM-läsare uppskattas ha ökat med 155 procent under 
1993 vilket ger en världsomfattande totalsumma på 11,4 miljoner. Nästan 5 400 CD-ROM-
titlar var i omlopp i början av 1994 och de totala intäkterna på CD-ROM-titlar för 
kommersiellt och internt bruk har uppskattats till 8,25 miljarder ecu. Enbart kommersiella 
CD-ROM-titlar förväntas ta in en vinst på nästan 35 miljarder ecu till 1996. Försäljningen 
av multimedia-CD-ROM-ar genom återförsäljare ökade avsevärt i USA under den senare 
delen av 1993, och samma utveckling börjar att få faste i Europa. 
Onlineindustrin dominerar dock fortfarande den yrkesmässiga marknaden för elektroniska 
informationstjänster i Europa. Den yrkesmässiga onlinesektorn har presterat bra, speciellt 
med tanke på det ekonomiska klimatet, och hade en omsättning på 3,6 miljarder ecu under 
1992. Det är en tillväxt på omkring 17 miljarder ecu sedan året dessförinnan. 
Onlineindustrin kommer att dra nytta av den ökande medvetenheten om elektroniska 
informationstjänster i affärsvärlden och bland allmänheten. I Europa har medvetenheten 
varit låg i jämförelse med USA, men tycks nu stadigt öka. Detta argument stöds av 
resultaten av fallstudier av transport-, försäkrings- och biotekniksektorn som IMO 
genomförde 1993. 
Inom onlinemarknaden har finansiella informationstjänster varit särskilt starka. 
Trycksaksframställning och skapande av innehåll är andra områden där Europa anses ha en 
stark konkurrensposition. Den övergripande europeiska informationssektorn (inbegripet 
tillverkning av hårdvara och mjukvara, hemelektronik, leverans av tjänster och 
innehållsindustri) uppskattades 1992 vara värd cirka 370 miljarder ecu, av vilket innehåll 
utgjorde mer än en tredjedel. I jämförelse med USA verkar det emellertid som att det finns 
ett stort utrymme för expansion på innehållsmarknader. 
-v: 
Sammenfatning 
Industrin för elektroniska informationstjänster har ett högt förädlingsvärde och en stark 
tillväxtmöjlighet, men den europeiska marknaden för informationstjänster är fortfarande 
splittrad. Inom de finansiella och akademiska sektorerna existerar det en alleuropeisk 
marknad i högre grad. På andra håll finns det fortfarande många barriärer som hindrar 
uppkomsten av en europeisk marknad för informationstjänster, inte minst vad gäller språk. 
Det görs fortsatta försök med att finna en teknisk lösning på språkbarriärerna, och 
Europeiska kommissionens språktekniska program kommer att bidra till detta arbete. 
Men enbart teknologi kommer inte att lösa alla problem. För att kunna ta itu med 
fundamentala problem, som den ökande dominansen av några språk över de andra, kommer 
det att krävas att politikerna, den offentliga sektorn och allmänheten kommer till insikt och 
agerar. Vi kommer i synnerhet att behöva större förståelse för språkanvändning i det 
framväxande informationssamhället och av förhållandet mellan marknadsstorlek och 
språköversättning av informationsprodukter. I detta syfte förbereder kommissionen ett nytt 
strategidokument för rådet och Europaparlamentet med arbetstiteln "Språk och 
informationssamhälle". 
Den ojämna utbredningen av informationsteknologi och infrastruktur i Europa utgör också 
en barriär för utvecklingen av en europeisk marknad för informationstjänster, och en 
kombination av rättsliga och politiska barriärer hindrar fortfarande utvecklingen av 
alleuropeiska förbindelser av videotex och audiotex. Men kommunikationen och samarbetet 
mellan europeiska nätverksoperatörer har varit bättre, och man har gjort nya försök att 
knyta samman såväl europeiska forskningsnätverk, som nationella audiotex-och 
videotexsystem. 
Förverkligandet av det informationssamhälle som beskrivs i Bangemannrapporten och i 
kommissionens handlingsplan kommer till stor del att vara beroende av 
informationsindustriernas förmåga att ta initiativet till att inrikta sig på nya marknader och 
omfatta ny teknik. De nationella regeringarna och Europeiska kommissionen kommer också 
att spela en viss roll. Slutligen kommer informationssamhällets medborgare att behöva 
anpassa sig till den digitala miljön om de fullt skall kunna utnyttja de nya möjligheter som 
den kommer att ge sysselsättning, fritid och utbildning. 

CONTENTS 
INTRODUCTION 9 
EXECUTIVE SUMMARY 11 
1 BUILDING THE INFORMATION INFRASTRUCTURE 17 
1.1 The Common European Information Area 17 
1.2 The US National Information Infrastructure 22 
1.3 Developments in Japan 24 
1.4 Singapore: A Case Study in Information Infrastructure Development 25 
1.5 The Internet 26 
1.6 Uncertainty 28 
2 THE INFORMATION SECTOR IN THE EUROPEAN ECONOMY 29 
2.1 The Convergence Phenomenon 29 
2.1.1 The Composition of the Converging Information Sector 30 
2.1.2 The Scale of the Converging Information Sector 31 
2.2 The Component Sectors 34 
2.2.1 The Content Sector: Changing Roles and Opportunities 34 
2.2.2 The Delivery Sector: Telecommunications, Cable and Satellite 36 
2.2.3 The Handling Sector: Hardware, Software and IT 41 
2.3 Industry Repositioning 44 
2.3.1 Mergers and Acquisitions 45 
2.3.2 Cross-Media Ownership and Media Concentration 48 
2.4 The Role of the Advertising Industry 49 
3 RELATIVE STRENGTHS AND WEAKNESSES 51 
3.1 The Relative Position 51 
3.2 The European Union 52 
3.3 Electronic Information Services in the US 54 
3.4 Electronic Information Services in Japan 56 
3.5 Conclusions 57 
4 THE FUTURE DEMAND FOR INFORMATION 61 
4.1 The Growing Use of Electronic Communication Facilities 62 
4.1.1 Electronic Data Interchange 62 
4.1.2 Electronic Mail 63 
4.2 Information Use Within Selected European Industrial Sectors 64 
n 
4.2.1 Transport 65 
4.2.2 Insurance 66 
4.2.3 Biotechnology 68 
4.3 Employment. Education and Training Implications 69 
5 RESEARCH AND TECHNOLOGICAL DEVELOPMENT (RTD) 71 
5.1 Telematic applications of common interest 72 
5.2 Information Technologies 73 
5.3 Advanced Communication Technologies 73 
5.4 Socio-Economic Research 74 
5.5 RTD in the fields of information and language engineering and libraries 74 
5.5.1 Information Engineering 74 
5.5.2 Language Engineering 76 
5.5.3 Libraries Programme 76 
6 KEY LEGAL AND REGULATORY ISSUES 79 
6.1 Copyright and Intellectual Property Rights 80 
6.1.1 Illegal Copying 81 
6.1.2 Copyright Clearance 82 
6.1.3 Author Rights 82 
6.2 Legal Protection of Databases 83 
6.3 Data Protection 84 
6.4 Access to information held by government bodies 85 
7 DEVELOPMENTS IN THE EUROPEAN INFORMATION 
CONTENT SECTOR IN 1993 87 
7.1 On-line Databases 87 
7.1.1 The On-line Market 88 
7.1.2 Availability and Use of On-line Databases 92 
7.2 Optical Information Media 93 
7.2.1 Platforms 93 
7.2.2 Installed Base of Readers 94 
7.2.3 Availability of Titles 95 
.7.2.4 Markets, Sales and Pricing 96 
7.3 Multimedia , 97 
7.4 Videotex 99 
7.5 Audiotex 101 
7.6 Fax-Based Information Services 103 
7.7 Electronic Information Services in the Home 105 
7.8 Emerging Media and Markets 107 
7.8.1 The Networks 107 
7.8.2 Handheld Reference Products and Personal Communicators 110 
7.8.3 Video on Demand and Interactive TV 112 
7.9 Audio-Visual 114 
7.9.1 Television, Cinema and Video *,.... 116 
7.9.2 Audio 118 
7.10 Print Publishing 120 
8 CONCLUSIONS 123 
ANNEXA.. 127 
ANNEX B 133 
ANNEX C 136 

LIST OF TABLES 
No. Title Page 
1.1 Strategic Projects for the Common Information Area 20 
2.1 The Composition of the Wider Information Industry 32 
2.2 Key Figures from the Information Sector, 1992 33 
2.3 Breakdown of the EU Information Sector, 1992 34 
2.4 Geographical Distribution of the World Market for 
Telecommunications Services, 1992 37 
2.5 Breakdown of the EU Telecommunications Services 
Market by Activity, 1991-1992 37 
2.6 Telecommunications Infrastructure in 1992 38 
2.7 Top Ten Public Telecommunications Operators, 1992 40 
2.8 Cable and Satellite Penetration in Europe, 1993 41 
2.9 Percentage IT Market Growth by Region, 1990-1994 42 
2.10 Percentage European IT Market Growth by Product Grouping, 1990-1994 43 
2.11 European Hardware, Software and Home Electronics Markets, 1992-1995 ....44 
2.12 A Selection of Mergers and Acquisitions Involving 
European Information Companies, 1993/1994 46 
3.1 Relative Sizes of the European, US and Japanese Electronic 
Information Services Sectors 52 
3.2 Perceived Strengths and Weaknesses of the European Union 
Electronic Information Services Sector 54 
3.3 Perceived Strengths and Weaknesses of the US Electronic 
Information Services Sector 55 
3.4 Perceived Strengths and Weaknesses of the Japanese 
Electronic Information Services Sector 56 
4.1 Views on the Influence of Information on Competitiveness 65 
4.2 Transport Organisations Reporting Use of Electronic 
Media in 1993 and Expected Use in 1998 66 
4.3 Insurance Organisations Reporting Use of Electronic 
Media in 1993 and Expected Use in 1998 67 
4.4 Biotechnology Organisations Reporting Use of 
Electronic Media in 1993 and Expected Use in 1998 68 
7.1 Professional EU On-line Revenues, (Including Videotex) 1989-1992 88 
7.2 Geographical Analysis of On-line Revenues (Excluding Videotex) 89 
7.3 Real-Time/Non-Real-Time Revenue Breakdowns 90 
7.4 Subject Analysis of EU Electronic Information Revenues, 1990-1992 91 
7.5 Subject Analysis of Worldwide On-line Revenues, 1988-1992 91 
7.6 Worldwide On-line Service Sales Forecast 92 
7.7 Databases by Subject Area, 1992 93 
7.8 Worldwide CD-ROM Drjve Installed Base and Sales, 1993-1999 94 
7.9 Top Ten Subject Areas for CD-ROM by Number of Titles, 1994 95 
7.10 Origin of CD-ROM and Multimedia CD Companies and Titles, 1994 96 
7.11 European Market Forecast for CD-i Titles Sales 99 
7.12 Installed Base Penetration of Videotex Terminals, 1993 100 
7.13 Videotex in Europe 100 
7.14 Breakdown of European Premium Rate Markets, Launch Dates 
and DTMF Penetration.. 102 
7.15 Breakdown of Organisations in France Offering Premium Rate 
Services and Percentage of Lines Controlled 102 
7.16 Penetration of Technology into European and US Homes, 1992 105 
7.17 Penetration of Technology per Thousand Inhabitants, 1993 106 
7.18 Internet Hosts Worldwide 108 
7.19 Research Networks in Europe 110 
7.20 Sales of EB Players Worldwide 112 
7.21 Selection of Companies Working on Video on Demand and Interactive TV ... 114 
7.22 World Audio-visual Spending, 1992 115 
7.23 Revenues of Top 50 Audio-visual Groups by Area of Origin 115 
7.24 Top Fifteen European Media Owners Ranked by Media Revenues ...116 
7.25 EC Audio-visual Trade Deficit with the US, 1990-1992 116 
7.26 US Television Programming Market Estimates, 1992 117 
7.27 Breakdown of World Television Revenues, 1992........ 118 
7.28 World Music Market - Global Safes and Forecasts 1991 -2000 119 
7.29 Top Five Markets for Music Sales, 2000 : 119 
7.30 EC's Top Ranking Publishers by 1992 Turnover 121 
7.31 EU Publishing Market, 1991 121 
INTRODUCTION 
This report is a communication of the Commission to the Council, the Economic and Social 
Committee and the European Parliament. Hence, it addresses key policy makers. The report 
also addresses decision makers in the industries concerned with and related to the subject, and 
all people who have an interest in information market issues. These issues are increasingly 
raising political attention and were widely discussed during the reference period of this report. 
The strategic value of information is now generally recognised. The Commission's White 
Paper, Growth, Competitiveness, Employment - the challenges and ways forward into the 21st 
century, stresses that information and communication technologies have the potential to 
promote steady and sustainable growth, to increase competitiveness, to create new job 
opportunities and to improve the quality of life of all Europeans. 
The report reviews the main developments in the European information services market since 
the completion of the previous report in this series in July 1993. These reports originate from 
the European Commission's Information Market Observatory, the aim of which is to improve 
the understanding of the information market. The annual reports are just one aspect of the 
work of the Information Market Observatory, which also publishes Working Papers, 
commissions research into specific market issues and organises workshops and meetings which 
provide a platform for the presentation and discussion of recent findings. The Information 
Market Observatory is part of the European Commission's IMPACT (Information Market 
Policy Actions) programme. 
This report includes information collected during the second half of 1993 and the first half of 
1994. The content is not exclusively concerned with developments in the EU; wherever 
possible, data and analysis have been included on the EFTA countries, on the US and Japan. 
This reflects the increasingly global nature of the information industry, as well as the need for 
international comparisons in order to assess the competitive position of European information 
companies in world markets. 
Previously, the Information Market Observatory and its annual reports have concentrated on a 
relatively narrow industry: namely the professional electronic information services sector and 
its .classical' ASCII on-line database services, videotex and CD-ROM publishing activities and 
closely related areas such as audiotex and fax-based services. During 1993 and 1994, the 
focus of the Information Market Observatory's work has been widened to take into account the 
wider context in which the information services industry now operates. It reflects the 
convergence of a number of information-related sectors, including the hardware and software 
industries, telecommunications, cable and satellite industries, as well as those industries 
concerned with information content, such as film, television, music, print publishing and, of 
course, the electronic information services sector. All of these industries now appear to be 
converging in their market aspirations and in common technology developments. 
IMO Annual Report J993 - 1994 Introduction 
As a result of this extended focus, the following report covers a wider range of issues and 
market sectors than its predecessors. As far as possible, it takes into account such diverse 
topics as telecommunications infrastructure development, multimedia and Video on Demand 
markets, take-up of applications such as electronic data interchange (EDI) and electronic mail 
by industry, and the effects of convergence on the information content industry. Inevitably, 
this means that there has not been space to cover all subjects in exhaustive detail. However, 
the report should provide a fairly comprehensive overview of the forces at work in the wider 
information sector and of current and future information markets. 
10 
EXECUTIVE SUMMARY 
From among all markets, technologies and trends discussed in this report, four key issues can 
be emphasised which have emerged during the study period of this report. These are issues 
which will have a crucial impact on future developments in the information market. 
Firstly, the emergence of electronic superhighways, and the debate which this has stimulated 
on the Information Society, should be highlighted. These ideas have captured the attention of 
the world and brought the concept of electronic information services to many people for the 
first time. Convergence is also a theme which requires special attention. It has featured 
strongly in the discussions of the business community and has already had a marked impact in 
terms of industry repositioning. The third issue dealt with in this summary is the creation of a 
clear and stable regulatory framework. Finally, the dramatic take-off of CD-ROM and 
multimedia during the second half of 1993 and first half of 1994 should be highlighted as an 
indicator of the growing strength of the electronic publishing sector. 
Governments around the world are increasingly convinced that the development ofinformation 
infrastructures is essential if businesses, public administrations and individuals are to benefit 
from the 'digital revolution'. Most of the policies and actions which will be required in order 
to realise the vision of a global information society are only just being formulated. 
It is almost impossible to make sound predictions as to the exact nature of an information 
society, or to suggest when it might finally emerge. Yet the industries and governments of the 
major industrialised countries are confident that their societies will be transformed and that the 
benefits will be substantial. Exponential growth in Internet users over the course of the year, 
(estimated by the Internet Society in June 1994 to have reached 30 million), and in the number 
of applications available, has given us a feeling for the level of opportunities and demand we 
can expect. 
Countries such as the USA, Japan, Canada and the European Union are laying the foundations 
for an information society. The European Union, which has lagged behind the USA and Japan 
in the digitisation process, is now trying to make up lost ground with a bundle of initiatives 
including the Common European Information Area, the White Paper on Growth, 
Competitiveness and Employment, the Bangemann Report and the Action Plan on Europe's 
Way to the Information Society. These initiatives are important for Europe: they will help the 
Union to take its place amongst those countries setting the ground rules for the global 
information society. 
Like the USA, the European Union considers that it is primarily the private sector which must 
rise to the challenge of the information revolution. Private investment should be the driving 
force even for investment in infrastructure. The role of the Community and the Member States 
will be to back up this development by giving political impetus, co-operating with the private 
sector in experimental applications, and creating a clear and stable regulatory framework. The 
11 
IMO Annual Report 1993 - 1994 Executive Summary 
latter will be particularly important in relation to access to markets, interoperability of 
networks and basic services, intellectual property rights and data protection. 
It remains to be seen how readily the private sector will generate the initial investment 
required. Furthermore, the full implications and impact of an information society are difficult 
to assess. There will certainly be significant opportunities, but there are also concerns over the 
socio-economic and cultural effects which accompany technological revolution. 
While information infrastructures are being established, work is taking place to develop 
information and entertainment applications to be delivered via the superhighways. 
Applications which are being developed in the context of electronic superhighways range from 
on-line games and Video on Demand, to video conferencing and multimedia database access, 
to name but a few dealt with in this report. 
Services such as these are likely to require different forms of technology development and 
different levels of investment. They will also require partnerships between previously diverse 
industry sectors, such as consumer electronics and IT industries, infrastructure providers such 
as telecommunications, cable and satellite operators, as well as information and entertainment 
content owners. Telecommunications and cable companies are already beginning to build the 
necessary infrastructure. Software giants and major content companies are collaborating in 
order to bring products to the market. This leads us to the second issue of convergence. 
Convergence is a term which has been widely used by the press and by business analysts, and 
can be defined in terms of the development of a common technology base by industries sharing 
a similar objective: the creation of a mass market for integrated communications, computing, 
information access and entertainment products. A good example is CD-ROM technology, 
which can now be found in computers, electronic games players and multimedia players for 
television sets. Standardised memory cards, smart cards and modem cards feature in set-top 
boxes for televisions, handheld organisers and communicators as well as computers. But at a 
more fundamental level, convergence is the result of the ability to convert all kinds of content -
including text, images and sound into a common digital format which can then be manipulated 
and exploited across a number of platforms. 
All of this is good news for the information sector in so far as it helps to build a range of new 
outlets for information products and services, which nevertheless share many of the technology 
characteristics of existing electronic information services. 
Convergence has also led to a certain amount of industry repositioning. The need to address 
global markets and to offer integrated information, entertainment and communications services 
has led to a wave of merger and acquisition activity and a growing number of strategic 
alliances and partnerships. Hence we see telecommunications companies joining forces, and 
hardware and software companies buying into their competitors and counterparts throughout 
the world. But we also see information sector companies buying into related new markets 
through acquisition. The purchase of a 25 per cent stake in Time Warner Entertainment by US 
West, Pearson's acquisition of Software Toolworks and the purchase of Thomson Directories 
by US West are all recent examples of such deals. 
12 
IMO Annual Report 1993 - 1994 Executive Summary 
The increasing availability of high quality infrastructure will necessitate a mass market for 
information products and services as a means of generating return on investment and ensuring 
long-term cost effectiveness. The importance and value of the content industry (including print 
and electronic publishing, films, video, audio and television programme production) is likely to 
increase as a result. The current repositioning of the information industry supports this view. 
The content industry now has a great deal to live up to. The expectations of users have been 
raised and they are demanding increasingly high standards of information content and 
presentation. ICT industries look to the information and entertainment services sectors to 
provide content for running on the computers, consumer electronics goods and networks 
which are now being developed. Governments around the world are looking at the 
information industries as a whole to generate employment and stimulate economic growth. 
The biggest challenge to the content industry in meeting these expectations will be its ability to 
invest time, labour and financial resources in the development of innovative information 
products and services. Such investment will be essential if European content companies are to 
compete with their counterparts in the USA and Japan, and share the rewards of industry 
growth with ICT industries. 
The enormous implications of convergence have meant that legal and regulatory issues have 
come into the foreground of discussion, and featured strongly in the Bangemann report on the 
Information Society. Deregulation of telecommunications and the directive on Open Network 
Provision will be instrumental in allowing European telecommunications companies to compete 
internationally, but there are many other regulatory issues which still need to be addressed, 
both at a national and European level. Not least of these is cross-media ownership and the 
restrictions which may apply to telecommunications and cable TV companies in entering each 
others' markets. 
The process of trying to reach a European consensus on major legal issues such as the legal 
protection of databases and personal data protection is underway. Meanwhile, the industry 
itself is developing a self-regulatory framework for cross-border audiotex and videotex 
services and for information brokers, and may do so in other areas as well. 
The flurry of interest and excitement associated with electronic superhighways and 
convergence, and the prospect of clarification of the legal framework has, of course, made this 
a very interesting time for the electronic information services industry. But they have not yet 
brought immediate market opportunities. Even the Internet, which is now firmly at the centre 
of research and experimentation for many information companies, has so far brought limited 
rewards for the commercial information industry. 
Under these circumstances, it is not surprising to find that many content companies are 
reluctant to invest heavily in developing electronic superhighway applications. The European 
content industry is faced with particular challenges in that it is made up of a greater number of 
smaller, less vertically integrated, and more nationally focused companies than its US 
counterpart. To take advantage of the global opportunities which lie ahead, European content 
13 
IMO Annual Report 1993 - 1994 Executive Summary 
companies will often need to enter joint ventures andalliances with companies in other regions. 
At the same time, policies at a national and European level will be required in order to 
guarantee the continued availability of a diverse, multi-cultural information content and to 
strengthen the competitiveness of small European companies. 
Building on the results of the IMPACT programme, the European Commission will reflect on 
ways to stimulate the creation of favourable conditions for information providers to adapt their 
skills and products to the changing environment and to stimulate increased usage. 
As debates have continued over electronic superhighways, convergence, information 
legislation, and European competitiveness, a dramatic take-off has occurred in the CD-ROM 
and multimedia CD industry. CD-ROM drives, once a rare sight in offices and almost unheard 
of in homes, have become commonplace.. The installed base of CD-ROM drives is estimated 
to have grown by 155 per cent during 1993, bringing the worldwide total to around 11.4 
million. Nearly 5,400 CD-ROM titles were in circulation at the beginning of 1994, and overall 
revenues for CD-ROM commercial and in-house titles have been estimated at ECU 8.25bn. 
Commercial CD-ROM titles alone are expected to bring in revenues of nearly ECU 35bn by 
1996. Sales of multimedia CD-ROMs through retail outlets increased enormously in the US 
during the second half of 1993, and the same trend is beginning to take hold in Europe. 
The on-line industry, however, still dominates the professional electronic information services 
market in Europe. The professional on-line sector has performed well, especially considering 
the economic climate and had a turnover of more than ECU 3.6bn in 1992. This represents 
growth of around 17 per cent since the previous year. The on-line industry will benefit from 
the growing awareness of electronic information services within the business community and 
amongst the general public. In Europe, awareness has in the past been low in comparison with 
the US, but now appears to be increasing steadily. This argument is supported by the results 
of case studies in the transport, insurance and biotechnology sectors which were undertaken by 
the IMO in 1993. 
Within the European on-line market, financial information services are particularly strong. 
Print publishing and content creation are also areas where Europe is considered to be in a 
strong competitive position. The overall European information sector (comprising hardware 
and software manufacturing, consumer electronics, service delivery and content industry) was 
estimated to be worth approximately ECU 370bn in 1992, of which content accounted for 
more than a third. When compared with the US, however, it seems that there is still plenty of 
room for expansion in content markets. 
The electronic information services industry has high added-value and strong growth potential, 
but the European market for information services is still fragmented. In the financial and 
academic sectors, a pan-European market does exist to a greater extent. Elsewhere, a number 
of barriers still exist to the emergence of a European market for information services, not least 
of which is language. Efforts continue to seek a technological solution to language barriers, 
and the European Commission's Language Engineering programme will contribute to this 
work. 
14 
IMO Annual Report 1993 - 1994 Executive Summary 
But technology alone will not solve all of the problems. In order to address fundamental 
problems, such as the increasing dominance of a few languages over others, there will be a 
need for awareness and action on the part of politicians, the public sector and the general 
public. In particular, we will need a greater understanding of language use in the evolving 
information society and of the relationship between market size and language versioning for 
information products. To this end, the Commission is preparing a new strategy document for 
the Council and the European Parliament with the working title "Language and the Information 
Society'. 
The uneven penetration ofinformation technology and infrastructure in Europe also presents a 
barrier to the development of a European information services market, and a combination of 
legal and political barriers still impedes the development of pan-European videotex and 
audiotex interconnections. But there has been greater communication and collaboration 
between European network operators and new efforts have been made to create links between 
European research networks, as well as bi-lateral interconnections between national audiotex 
and videotex systems. The legal barriers are also being addressed. 
The realisation of the information society described by the Bangemann report and the 
Commission's Action Plan will depend to a large extent upon the ability of the information 
industries to take the initiative in addressing new markets and adopting new technologies. 
National governments and the European Commission will also have a role to play. Finally, 
citizens of the information society will need to adapt themselves to the digital environment if 
they are to take full advantage of the new opportunities it will offer in employment, leisure, 
education and training. 
15 

1 BUILDING THE INFORMATION INFRASTRUCTURE 
1993 was a significant year for the information services sector. In both the European Union 
and the United States major infrastructure investment programmes were launched and, in the 
years to come, they will greatly stimulate the supply of, and the demand for, information. 
These infrastructure programmes mark a recognition of the fact that information is an 
important resource in a modern society. Effective communication and use of information can 
contribute to increased productivity and competitiveness in industry and commerce; it can 
make a valuable contribution to public services like education and healthcare; it can give effect 
to the rights of citizens; it can change employment and working patterns and create new jobs, 
and it can open up new opportunities and markets for leisure and recreation. 
What the developments in Europe and in the United States have done is to acknowledge that 
large-scale investment in communications networks is needed to make these things possible. 
These network investments need to be supported by the development of standards, regulations 
and protocols and by the creation ofinformation content services. 
In the European Union, the United States and in Japan, the creation of the information 
infrastructure is being stimulated by government policy but is reliant on the investment impetus 
of the private sector. 
1.1 The Common European Information Area 
The aim of the Common Information Area is to create within the European Union an 
environment within which information is widely and easily communicated and used as a 
resource to promote growth; to increase competitiveness; and to expand employment. 
The plans for development are set out in the European Commission's White Paper, Growth, 
competitiveness and employment: the challenges and way s forward into the 21st century. 
A system ofinformation highways for the Community that will allow the best means to create, 
manage, transfer and access information. It involves: 
• the creation of infrastructures (cable and land or satellite-based broadcast communication), 
including integrated digital networks; 
• the development of services (electronic images, databases, electronic mail); 
• promoting applications (teleworking, teletraining, telemedicine and linked 
administrations).' 
17 
IMO Annual Report 1993 - 1994 Section 1 
The plan for a Common Information Area is part of-a wider strategy to develop and improve 
European transport, energy and communications networks. 
The idea for network improvement to stimulate growth and employment was first set out at the 
Edinburgh meeting of the European Council in December 1992. It was developed further at 
the Copenhagen Summit in June 1993 and the full plans were embodied in the White Paper 
that was agreed at the Brussels Summit in December 1993. The discussion was continued in 
1994, with the presentation of a report entitled Europe and the global information society; 
recommendations to the European Council, presented at the Corfu Summit. Finally, it has 
resulted in a Communication from the Commission to Council and Parliament entitled Europe's 
Way to the Information Society - An Action Plan. 
The proposals for the Common Information Area involve much more than the creation of the 
telecommunications networks. The White Paper emphasises the importance of developing 
services and applications that will stimulate demand for the networks. The action plan is based 
on five priorities: 
1 Promote the use ofinformation technologies 
• Launch European projects on applications and public service and strengthen co-operation 
between administrations. 
• Promote teleworking. 
• Ensure closer involvement of users in the drafting and implementation of technology 
policies. 
2 Provide basic trans-European services 
• Develop the basic ISDN and broadband networks. 
• Ensure network interoperability. 
• Ensure closer co-operation between telecommunications policies and aid from the 
Structural Funds. 
3 Create an appropriate regulatory framework 
• End distortions of competition. 
• Guarantee a universal service. 
• Speed up standardisation. 
• Protect privacy and ensure the security ofinformation and communication systems. 
• Extend intellectual property law. 
18 
MO Annual Report 1993 - 1994 Section 1 
4 Develop training on new technologies 
• Encourage acquisition of the basic knowledge required to use the new technologies and to 
exploit their potential. 
• Ensure widespread use of new technologies in teaching and training. 
• Adapt the training for engineers and researchers. 
5 Improve industrial and technological performance 
• Increase the RTD effort and adapt it to the new market conditions. 
• Promote industry and technology watch. 
• Take up the results of RTD in industrial applications. 
• Negotiate equitable conditions of access to the competitive market at world level. 
To achieve these goals the White Paper sets out nine strategic projects that are planned to take 
place between 1994 and 1999. These projects are listed in Table 1.1. 
Table 1.1 shows that the strategic projects will require an investment of ECU 67bn. This is 
only part of a total investment of ECU 150bn that is estimated to be needed over the next six 
to ten years. Most of this investment will come from the private sector. The Member States 
and the European Union will play a marginal role to provide the incentive for private investors. 
ECU 5bn could be contributed from the Union's Structural Funds and from the Fourth 
Framework Programme. It is clear, however, that the main cost of creating the Common 
Information Area will fall to the private investors. The role of the European Union will be: 
• To act as a catalyst in providing a financial contribution for feasibility studies, pilot 
projects, developing common standards, etc. 
• To promote co-operation and co-ordination between operators. 
• To create platforms to bring together customers, industry and operators with a common 
goal of interconnectivity and interoperability. 
• To reduce uncertainty by creating a stable regulatory framework and by studying market 
demand. 
19 
MO Annual Report 1993 - 1994 Section 1 
Table 1.1 Strategic Projects for the Common Information Area 
Network elements Strategic projects Investment 
required 
1994-1999 
(BECU) 
Interconnected advanced Establishment of high-speed 20 
networks communication network 
Consolidation of integrated 15 
services digital network 
General electronic Electronic access to information 1 
services 
Electronic mail 1 
Electronic images: interactive video 10 
services 
Telematic applications Teleworking 3 
Links between administrations 7 
Teletraining 3 
[ Telemedicine 7_ 
Total 67 
To take forward the White Paper recommendations a Task Force on European Information 
Infrastructures was established with a direct mandate from the European Council. The Task 
Force was Chaired by Martin Bangemann, Commissioner for Industry and 
Telecommunications. The Task Force established two working groups. One, headed by Carlo 
de Benedetti of Olivetti, examined the economic and technical aspects. The other, lead by 
Etienne Davignon of the Société Générale de Belgique, considered the regulatory and political 
aspects. The Task Force was responsible for the submission of a report entitled Europe and 
the global information society; recommendations to the European Council at the Corfu 
Summit in June 1994. 
The Bangemann report stressed that the creation of an information society was an inevitable 
result of the technological revolution currently underway, and that it was therefore essential for 
government and industry to develop strategies for the exploitation of new opportunities. The 
strategy proposed for Europe was based upon the opening up of markets to competition and 
the deregulation of those infrastructures and services which are still under monopoly. The 
objective of such action would be to stimulate information infrastructure and service markets, 
so that they rapidly achieve a critical mass. 
The report's main recommendations to Member States were to: 
• accelerate the continuing process of liberalisation of the telecommunications sector; 
20 
MO Annual Report 1993 - 1994 Section 1 
• implement interconnection and interoperability of information infrastructures and 
services; 
• review the European standardisation process so as to increase its speed and 
responsiveness to markets; 
• adjust tariffs in order to bring them into line with rates in other advanced industrialised 
regions; 
• establish a common and agreed regulatory framework for the protection of intellectual 
property rights, privacy and security; 
• make a swift decision on the Commission's proposed Directive on data protection; 
• pay attention to the adverse effects of national media ownership rules with a view to 
harmonisation. 
• ensure an efficient application of competition rules to allow for market forces to drive 
innovation and development of the new markers. 
The report stressed the need to strengthen the network infrastructure, and special priority was 
given to the extension of Euro-ISDN and broadband infrastructure. The need for reduction of 
mobile and satellite network tariffs and the promotion of global systems in Europe and 
internationally was also discussed. Immediate applications for the new infrastructure would 
need to be demonstrated, and the report suggested ten priority areas: teleworking; distance 
learning; a network for universities and research centres; telematics services for SMEs; road 
traffic management; air traffic control; healthcare networks; electronic tendering; trans-
European public administration networks and city information highways. The investment 
required for infrastructure development should come from the private sector, although the 
public sector would have a role in refocussing existing expenditure. 
Following the European Council's discussion of the report, the Greek Presidency concluded 
that *the current unprecedented technological revolution in the area ofinformation opens up 
vast possibilities for employment and the quality of life while simultaneously representing a 
major challenge'. Member State governments would have an important role to play in backing 
up technology developments, giving political impetus and providing a clear regulatory 
framework. They would also need to set an example in the ten application areas recommended 
by the report. 
Given the complexity of the issues at stake, it was suggested that a permanent co-ordination 
instrument was set up to ensure all parties involved were working along the same lines. It was 
also suggested that each Member State should appoint a person at ministerial level to co­
ordinate political, financial and regulatory aspects and to ensure a co-ordinated approach in the 
Council. 
21 
MO Annual Report 1993 - 1994 Section 1 
In response to the Bangemann report and the discussions held at the Corfu Summit, a 
Communication from the Commission was presented to the Council and the European 
Parliament on Europe's Way to the Information Society - An Action Plan. 
The Communication embraced the principles of the Bangemann report and focused in 
particular on the legal and regulatory framework, the need for liberalisation of networks and 
provision of basic services, applications and content, social and cultural implications, and the 
Commission's promotional activities. For each area, a timetable was provided, outlining 
targets for adoption of directives, implementation of research and development programmes 
and the submission of Commission proposals on future action. 
1.2 The US National Information Infrastructure 
The election of the Clinton Administration in the United States marked the beginning of a 
programme of investment in the information infrastructure. The goal is very similar to that of 
the Common Information Area: 
to create 'a seamless web of communications networks, computers, databases and 
consumer electronics that will put vast amounts of information at users' fingertips. 
- Development of the National Information Infrastructure can help to unleash an information 
revolution that will change forever the way people live, work and interact with each other.' 
(The National Information Infrastructure: Agenda for Action 1993.) 
The programme is the culmination of a number of initiatives taken by the US Congress in 
recent years and it is closely associated with Vice-President Al Gore who, for example, 
introduced the high performance computing and communications initiative in 1991 when he 
was a Senator. Many commentators have drawn the analogy between the National 
Information Infrastructure programme and the creation of the inter-state highway network in 
the 1950s following the initiative of President Eisenhower. 
The expected scale of the development is considerable. John Scully, Chairman of the Apple 
Corporation is quoted as having estimated that by the beginning of the next century, the 
information infrastructure will be generating annual revenues that are equivalent to half of the 
current US GNP. Such revenues will not, however, be possible without major investment. 
The US Government has estimated that a total investment of over ECU 86bn will be required 
between 1994 and 1997. ECU 52bn of this had been announced by the end of 1993. Just as in 
Europe, however, the private sector was the main contributor with the government 
contributing only ECU 4.3bn over the period from 1993 to 1997. 
The expected role of the US Government is quite clear: its prime purpose is to create the 
conditions that will stimulate private sector investment. To do this it will implement a 
programme of deregulation, create tax and other incentives and undertake direct investment 
through grants for public-sector projects. These direct grants are expected to ensure that 
public services like schools, research institutes, libraries and healthcare services benefit fully 
from the programme. 
22 
MO Annual Report 1993 - 1994 Section 1 
During 1993 the process of deregulation began. For example, the 1984 Cable Act was 
amended to remove the cross-ownership restriction. This enables telephone companies to offer 
cable television. In exchange, the telephone companies are required to make their networks 
available to independent providers of telephone and cable services. Another barrier removed 
during the year was the regulation that prevented local telephone companies competing with 
AT&T and MCI for long-distance traffic. 
Encouraged by these deregulatory measures, there has been a flurry of mergers and joint 
venture deals. One of the most widely reported was the Nvnex/Viacom/Paramount deal, which 
reflected the converging interests of telecommunications, cable and content industries. The 
largest of the deals announced in 1993 was the proposed ECU 28bn merger of the Bell 
Atlantic corporation and Tele-Communications Inc. This would have been the biggest 
corporate merger ever. Although the deal was called off early in 1994, the companies are 
continuing to work together on joint ventures and the failure of the merger is seen by many to 
be a temporary halt in a general trend towards merger and corporate acquisition. Other deals 
that were successfully completed, such as that between US West and Time Warner, brought 
together information infrastructure and information content services to take advantage of the 
opportunities offered by the National Information Infrastructure. (See Section 2.3.1.) 
There is considerable debate about the technological nature of the development. Some people 
argue that the goal should be a full optical fibre network. Others claim that to connect all US 
homes and businesses with optical fibres would cost ECU 345bn and would take over 20 
years. They argue instead for optical fibres to be used for the main trunk routes and long­
distance lines but for the local connections to be by means of coaxial copper cable that has a 
similar capacity over distances of up to 0.5 kilometres. Some influential commentators, like 
Mitchell Kapor from the Electronic Frontier Foundation, argue that an ISDN network would 
be sufficient to meet foreseeable needs, while others criticise this approach arguing that it can 
only ever be an interim solution. It is clear that there is still a long way to go before the 
operational parameters of the infrastructure are decided upon. 1993 saw the terms of the 
debate being more clearly defined. 
To carry through the development, the US Government has established an Information 
Infrastructure Task Force chaired by Secretary of Commerce Ron Brown. This will work 
through a series of four committees and an advisory council. 
In September 1993 the Task Force published its Agenda for action. This sets out the basic 
principles and objectives that will shape future developments. The principles and objectives are 
to: . 
• promote private sector investment through appropriate tax and regulatory policies; 
• extend the 'universal service' concept to ensure that the information resources are available 
to all at affordable prices; 
• act as a catalyst to promote technological innovation and new applications; 
23 
MO Annual Report 1993 - 1994 Section 1 
• promote seamless, interactive, user-driven operation of the National Information 
Infrastructure; 
• ensure information security and network reliability; 
• improve management of the radio frequency spectrum; 
• protect intellectual property rights; 
• co-ordinate with other levels of government and with other nations; 
• provide access to government information and to improve government procurement. 
It is clear that there is a great deal to be achieved before the National Information 
Infrastructure becomes a reality. There are also obvious parallels between the drive towards a 
National Information Infrastructure and the European Union's Common Information Area. 
Currently the US has a significant lead in developments. The existing networks are better 
established and there are fewer barriers than in Europe where national borders and cultural and 
linguistic differences complicate the development of trans-European networks. There also 
appears to be a greater public awareness of, and enthusiasm for, the development of 
information networks in the US than there is within Europe. 
1.3 Developments in Japan 
The Japanese Government has also identified the need to develop information networks and 
information services to stimulate growth and to improve further the productivity of Japanese 
industry and commerce. There are, however, significant differences in the way they have 
approached the development. 
The first point to note is the fact that the approach has been gradual and has been taking place 
over a number of years. The Japanese Government also plays a more significant role in 
stimulating and in meeting the cost of the development. 
The initial emphasis in Japanese information policy was firmly directed towards scientific 
information. In the mid-eighties, however, the scope of policies broadened and became more 
concerned with the use of information as an industrial and commercial resource to improve the 
overall level of productivity within the Japanese economy. There have been a range of policies 
to stimulate the computer industry, the telecommunications network and the information 
services and content sectors. 1993 saw the advancement of the Japanese information sector on 
all these fronts. 
The Japanese Government has been investing heavily in the telecommunications infrastructure 
for many years. Recently, two programmes have been launched to increase the carrying 
capacity of the network. The government has announced plans for a ECU 24m high-speed 
network linking academic and research communities through a series of national institutes. 
24 
MO Annual Report 1993 - 1994 Section 1 
This will provide access to database services and to computing resources. The network should 
be complete by 1997. 
In May 1994, MITI's Industrial Structure Council issued a report entitled Program for a 
Communication Infrastructure which dealt with the diversification of Japan's information 
infrastructure strategy, covering the need for optical fibre networks and multimedia 
applications. At the same time, the Telecommunications Council of the Ministry of Posts and 
Telecommunications produced a report on Reforms to Build an Intellectually Intensive Society 
Towards the 21st Century. According to this report, multimedia industries will overtake the 
automobile industry in economic significance and job creation. The report forecasts that by 
2010 a market worth over Y 123,000bn (ECU 820bn) will have been created, thanks to the 
availability of high capacity network infrastructure. It also forecasts 2.4 million jobs by the 
same year, with 75 million people having access to interactive and multimedia services via 
optical fibre. Investment of Y 128,000bn (ECU 850bn) will be required for the installation of 
Tibre to the pavement' and 'fibre to the home', with private enterprise playing a central role. 
Meanwhile, Japan has signed an agreement with South Korea to create links between the two 
countries' information infrastructures. The South Korean Minister of Communications recently 
announced that a high speed information network would be completed by 2015 - a project of 
some US$ 55bn (ECU 47.3bn). Investment money will come partly from the sale of Korea 
Telecom shares by the government. 
A number of other developments have taken place in Japan which are linked to its network 
strategy. The government has done much to stimulate the development of the Japanese 
database industry. It is estimated that in 1993, the government spent in excess of ECU 400m 
on direct activities to stimulate the database industry and the use of electronic information 
services. In addition to these direct activities, the Ministry of International Trade and Industry 
has initiated a wide range of measures to strengthen the Japanese database industry, including 
tax concessions to cover the cost of compiling databases. Initially these were aimed at 
strengthening the internal Japanese electronic information services market. In recent years the 
emphasis appears to be shifting towards globalisation and exporting. 
Japan has not identified an overall goal to compare with the Common Information Area or the 
National Information Infrastructure. What it has is a range of policy initiatives, some of which 
began ten or 15 years ago, that are backed by substantial levels of public investment. The 
outcome, however, is likely to be similar to that which is planned for Europe and the US: an 
information-intensive society. 
1.4 Singapore: A Case Study in Information Infrastructure 
Development 
The country that has gone furthest in developing an information society is Singapore. The 
scope for expanding its economy is limited by the size of the country and, in particular, by the 
necessary constraint on population growth. To achieve higher levels of prosperity, the 
government embarked in the early 1980s on a programme of economic development aimed at 
25 
MO Annual Report 1993 - 1994 Section 1 
increasing the value-added per worker in Singapore. The means of achieving this was the 
creation of an information-intensive society or, as they put it, the creation of an intelligent 
island. 
The overall strategy involved a combination of strong government and free market-forces, 
linked to a growth plan that emphasised both the supply side and the demand side of the 
information technology sector, coupled with the importation of technology and the 
development of an indigenous information technology industry. 
The first phase of development was aimed at stimulating the use of computers in government. 
From 1980 to 1985 the government invested heavily in the education and training of computer 
professionals and worked to stimulate the demand for information technology by introducing 
computing throughout the public service. It established the National Computer Board to 
oversee the work. 
From 1985 to 1989 the emphasis shifted to the extension of computing use throughout the 
country, linked to the development of telecommunications networks. The island now has the 
world's most sophisticated telecommunications system offering high speed and high capacity at 
very low cost. To stimulate use of the networks, the government launched a number of key 
applications like Electronic Data Interchange to handle administrative transactions in the Port 
of Singapore. This alone brought about net savings estimated at over ECU 850m a year. 
The third phase, running from 1989 to 2007 is the creation of a fully intelligent island. In this 
phase the emphasis has shifted from computing and telecommunications to information 
content. Further efforts are being made to introduce electronic applications and information 
services to make full use of the capacity of the system. Support is also given to the creation of 
information content services like the educational programmes that are being made available 
through the Singapore videotex service. 
Throughout, the development has been firmly led by the Singapore Government and the 
creation of the information infrastructure has been seen as a key element in the overall national 
economic strategy. It has set out its overall aims and objectives in clear policy documents and 
has taken the lead in developing products and services and in stimulating take-up by the private 
sector. It has also invested heavily in education and training at all levels and has sought to 
ensure that all parts of the public sector make full use of the electronic information 
opportunities that exist. 
The result is the emergence of a significant nodal point in the global information system - an 
information-rich society that is proving to be an attractive location for multi-national 
companies. More significantly, the process of development has been associated with 
consistently high annual rates of growth of GNP. In 1993 the GNP increased by 9.7 per cent. 
1.5 The Internet 
The Internet provides an example of what could happen if the information infrastructure 
developments take off. In the US, the Internet is expected to represent a major focus for 
26 
IMO Annual Report 1993 - 1994 Section 1 
infrastructure development, at least in the short term. (The development and use of the 
Internet is considered in greater detail in Section 7.8.1.) 
During 1993 use of the Internet has grown exponentially. In June 1994 the Internet Society 
said that 3.2 million host computers were connected, linking 45,000 networks and 30 million 
users in over 100 countries. The number of users and the volume of traffic has grown so 
quickly that the network is slowing down, but for the moment this does not appear to have 
deterred new users from joining. Slow response times do, however, represent an annoyance to 
frequent users. 
The Internet originated in a telecommunications network developed for military and civil 
defence purposes by the US Government. In 1983 the non-military functions were separated 
out into Arpanet, a public access network mainly for the support of communication between 
academics and researchers, with the National Science Foundation as the co-ordinating body. 
Since then it has grown beyond recognition. 
It is misleading to describe it as a network. In reality it is a federation of computer networks 
throughout the world, linked by a set of protocols known as TCP/IP. These protocols were 
widely adopted by universities in the US and in the late 1980s spread worldwide through their 
incorporation into the UNIX operating system. Within Europe an attempt was made to adhere 
to the ISO/CCITT standards but these have, to a great extent, been overtaken by TCP/IP. The 
system was easy to operate and the access that it provided was very cheap. The Internet took 
off first among the academic community and, more recently, within industry and commerce. 
Three applications dominate Internet use: electronic mail, interactive access and file transfer. 
Together they are encouraging people to make much more use of information as a resource. 
Users are also encouraged by the fact that they do not require dedicated contracts and 
passwords for information access. 
There are, however, problems. The quantity of information available through the Internet is so 
vast that users experience significant difficulties navigating their way around the system. 
Software of varying degrees of sophistication, such as the World-Wide-Web and Mosaic, has 
been introduced to reduce the navigational problems but they have not been fully overcome. It 
is also easy to become over-loaded with information through participation in electronic bulletin 
boards and other services. Other problems concern the quality of the information. The lack of 
any editorial control means that there will always be doubts about the accuracy and currency of 
the information contained in the system. 
Users have to subscribe to an agency that provides connections to the Internet. In some cases 
these connection agencies are themselves networks linking institutions together, like EARN, 
the European Academic Research Network or EUnet the European Network that links 
companies and institutions. Other connections are provided by specialist agencies like 
DEMON. In some cases the connection agencies provide a range of added value services. 
Until now the Internet has made relatively little impact on most conventional commercial on­
line database services. Many users do, however, access databases, mainly those aimed at 
academic markets, through the Internet and it is likely that this form of use will increase 
27 
MO Annual Report 1993 - 1994 Section 1 
significantly in the future. Commercial hosts, publishers and information providers are 
beginning to explore the opportunities and there is likely to be a gradual emergence of a range 
of new information services on the networks. The extent to which the Internet is used to 
access commercial information services will depend on the establishment of procedures and 
practices to deal with issues such as pricing, copyright and usage metering. Some progress has 
been made in this area, and CommerceNet is an interesting recent example of an attempt to 
create a commercial 'space' on the Internet where business can be transacted. 
Above all else, the Internet provides some form of confirmation that the increased capacity that 
will be offered by the Common Information Area or the National Information Infrastructure 
will be taken up. 
1.6 Uncertainty 
Many confident forecasts have been made in support of these large-scale information 
infrastructure development plans. Commentators have drawn analogies with the creation of 
the railway and road networks and have argued that the information super-highways will make 
a major contribution to future economic success. Yet, despite all this confidence and 
enthusiasm, there is still a considerable amount of uncertainty about the viability of the plans 
and a degree of scepticism about the return on the investments involved. 
The uncertainty is, in part, due to the confusion that surrounds the plans: confusion about the 
appropriateness of the technologies; confusion about the scale and the nature of the demand; 
confusion about the measures that will be needed to trigger use of the networks; and confusion 
about the respective roles of the public and private sectors. 
The current pace of change is such that infrastructure policy formulation is inevitably 
somewhat tentative at this stage. The plans being developed in Europe, the USA and in Japan 
represent positive first moves which can be built upon as the technology and market 
environment settles down. Clarification of legal issues should bring some stability, as will the 
co-ordinating activities of governments and the widespread introduction of public sector 
applications. 
28 
2 THE INFORMATION SECTOR IN THE EUROPEAN ECONOMY 
There is a general consensus amongst industrialists, technologists and politicians that the dawn 
of the Information Age is upon us. Information, and access to electronic information delivery 
channels, is expected to have a fundamental impact on the way in which we work, learn and 
spend our leisure time. The increased demand for electronic information and entertainment 
will have implications for all companies involved in these industries, whether they supply the 
networks, computers, televisions or other consumer electronics. In anticipation of this 
demand, companies in IT and communications are investing in new technologies from fibre 
optic networks to intelligent set-top boxes for televisions. 
The expected growth in demand for electronic information and entertainment will stimulate 
investment in technology development, and the information sector is likely to take on a greater 
overall importance in the European economy. If the predictions are correct, then the sector 
will grow significantly in terms of revenues and employment. It also seems likely that the 
various different elements of the information sector, previously represented by a number of 
disparate industries, will come together to work on projects of mutual interest. In the longer 
term, these alliances will be formalised through mergers and acquisitions - indeed, we are 
seeing the beginnings of this process (see section 2.3.1). This phenomenon is one of the 
factors which has led to an almost obsessive discussion of 'convergence' in the information 
sector, encompassing the information content and media industries, network providers, 
software industry, computer and consumer electronics manufacturers. 
2.1 The Convergence Phenomenon 
Traditionally, the electronic information services industry has been considered to be made up 
of the providers of information services and, to a lesser extent, the organisations involved in 
providing the means of distribution and processing of such services. Thus, within its traditional 
boundaries, the major stakeholders of the industry were the on-line database providers and 
vendors, the real-time information service providers, the CD-ROM publishers and so on. As 
such, the electronic information industry was an innovative, fast-growing, but nevertheless 
small concern. 
However, the range of organisations now wishing to claim a stake in the industry is far wider. 
In particular, the organisations which provide the distribution infrastructure and the equipment 
which we use to access information services are consciously moving towards a position where 
they form an integral part of the information industry, rather than acting as providers of 
products or services to that industry. At the same time, the traditional electronic information 
services industry, (and in particular, those who provide the information content), have 
recognised the importance of making alliances with the companies which provide the means of 
access to their services. These trends, together with technology developments across the 
29 
MO Annual Report 1993 - 1994 Section 2 
content, delivery and processing sectors, are increasingly being discussed under the umbrella 
term - convergence. 
The advent of multimedia and the promise of new markets in the provision of interactive 
information and entertainment to consumers has perhaps been the decisive element in bringing 
about these trends. Without the promise of interactive TV, CD-based multimedia and the like, 
the opportunities offered by the traditional information industry would perhaps have been 
insufficient to draw the interest or participation of media giants such as film and cable 
companies and that of politicians. 
The fact that the film, cable and telecommunications industries are gearing themselves up to 
participate in the future of electronic information and entertainment services has meant that 
general awareness of the electronic information world has been significantly raised. For the 
first time, the concept of an information industry is beginning to take on meaning for a much 
wider range of sectors and for the public in general. Governments have also recognised the 
strategic importance of information infrastructures, as highlighted in the first section of this 
report. 
Convergence is also a feature of technology change. In one sense, this can be seen in the 
movement of consumer electronics and computing manufacturers towards a common 
technology base. In broad terms, a computer was previously for processing text and figures 
and a television was for viewing images - these distinctions are now being broken down and 
computers and television sets are likely to resemble each other more and more in terms of 
technology components. 
In a wider sense, technology convergence can be seen in movements towards the creation of 
the all-in-one information machine, incorporating a range of elements such as voice and fax 
communication, word processing, access to local and remote data sets through portable 
storage media and data networks and, of course, video, film and television viewing. A machine 
capable of all of these functions is still a long way off, but during 1993 it became clear that it 
was technically possible to integrate three or four of them quite successfully. At an even more 
fundamental level, technology convergence is about the ability to store all kinds of data in a 
digital format, and to exploit that data across a range of delivery channels. 
2.1.1 The Composition of the Converging Information Sector 
It is becoming increasingly difficult to scope and define the composition of the wider 
information sector because so many organisations are moving beyond their traditional areas of 
activity and operating across the full range of information-related industries. A symptom of 
this trend is the growing number of cross-industry mergers, acquisitions and strategic alliances, 
and the extent to which companies are making major investments in order to enter related 
industry sectors. Nevertheless, Table 2.1 provides a broad view of the main components of the 
consolidated information industries. The three broad groupings used in this table consist of: 
information content - the intellectual property which forms the basis of an information 
service, whether this be a piece of text, a collection of photographs, a film or a piece of music; 
30 
IMO Annv'.dR,:n.)rt 1993 - 1994 Section 2 
information delivery - electronic communications channels (such as telecommunications, 
cable and satellite), or off-line distribution channels which are used by information content 
providers to distribute their services, and by users to access these services; 
information processing - the hardware, software and communications equipment required by 
users in order to view and process information and entertainment services, and by information 
content producers in order to develop and design their services. 
It is generally considered that the highest level of value resides with the information content. 
After all, the delivery and processing sectors are there to fulfil the demand for information (and 
to stimulate that demand), but are of little value without the content itself. Some 
manufacturers and network providers now seem to be moving along the value chain towards 
information content. Companies like Microsoft, as well as many of the public 
telecommunications operators, are buying into content as a way of ensuring that they have a 
role in the high-value end of the market. Again, this is dealt with in greater detail in the section 
on Mergers and Acquisitions below. 
Table 2.1 is by no means intended to be exhaustive in the primary and secondary industry 
elements it includes, but provides an indicator of the breadth of products and services which 
can be placed within the information sector grouping. 
These elements form three very different industries, each with its own structure and value-
added service elements, and the differences between them in terms of scale and revenues are 
enormous. And yet, these three industries are finding that, without a high level of co­
operation, they will be unable to take full advantage of the information future. Without 
alliances and, in some cases, investment in, the channels of delivery and viewing/receiving 
equipment, information content producers have little hope of getting their services to the users. 
Equally, the hardware manufacturers are finding that their products will not sell unless their 
potential customers have a range of suitable content applications from which to choose. For 
the carrier companies, multimedia, interactive TV and Video on Demand all offer good 
prospects for major traffic increase. It is therefore in their interests to ensure that there is a 
lively content industry .to stimulate demand and network traffic. It may also be in their interest 
to become content originators or suppliers themselves. 
2.1.2 The Scale of the Converging Information Sector 
There are, of course, dangers in over-stressing the convergence factor, and it would be foolish 
lo suggest at this stage that a coherent industry will arise incorporating electronics, information 
technology, carrier, entertainment and information businesses. Neither, in the first instance, 
will the amalgamated turnovers, competitive strengths and employment capacities of each 
sector be combined to form a super-industry with a huge influence upon the rest of economy 
and society. 
31 
Table 2.1 The Composition of the Wider Information Industry 
to r * INFORMATION I INFORMATION I INFORMATION 
CONTENT DELIVERY PROCESSING 
PRIMARY PRODUCERS PRIMARY INFRASTRUCTURE PRIMARY EQUIPMENT 
IPrint, electronic and multimedia Public telecommunications Computer & peripherals manuf. 
publishing (PSTN) 
Processor manufacturing 
Film, video and TV programme Fibre optic networks 
production/publishing Consumer electronics 
Cable networks 
Audio production/publishing Telecoms/satellite receiving 
Satellite networks equipment 
I" Radiowave, cellular and Operating software 
mobile networks 
Applications software 
SECONDARY AGENTS SECONDARY SECONDARY PRODUCTS/SERVICES 
& SERVICES INFRASTRUCTURE 
Trade, retail and specialist TV/radio broadcast channels Distribution, bundling and 
distribution replication 
Value-added network services 
Design, specialist production Specialist programming/ 
and replication Intelligent 'superhighways' interface design 
Rights brokerage and clearance | | Software production tools 
Source: Policy Studies Institute 
MO Annual Report 1993 -1994 Section 2 
Whilst keeping this proviso in mind, it is useful to look at the comparative sizes of the 
industries likely to play a role in the wider information sector. In particular, employment in 
this sector is the subject of close attention, largely because the EC White Paper on Growth, 
competitiveness and employment looks to the development of an information infrastructure 
and an information society as one of the key opportunities for employment growth. (Sec also 
section 1.1.) 
Table 2.2 Key Figures from the Information Sector, 1992 
1 ' • • 
Print Pub. 
Electronic Pub. 
Audio-visual* * 
Telecom 
IT • • i . 
Consumer Elec. Employees 
, (Thousands) 
EU 
885.5 
43.5 
313.2 
1,231.8 
670.0 
110.0 US 
1,500.0 
1,210.0 
1,048.1 
78.0 Market Size I 
(BECU) | 
EU 
93.4. 
8.4 
35.6 
118.0 
95.0 
21.0 US I 
128.0 
12,8 
54.1 
145.0 
120.0 
17.0 
Source: Key Indicators of the Information Industry 1992, 
IDATE 
*# Excludes the music industry ! 
One of the dangers of devising comparative tables such as these is the difficulty in reconciling 
discrepancies between market figures for the various sectors. IDATE's figures on print 
publishing, for instance, vary from those of Consulting Trust quoted in section 7.10 of this 
report. Neither is it particularly easy to make a comparative judgement of IDATEls audio­
visual figures against those of OMSYC provided in section 7.9. Such discrepancies can only 
partly be explained by the slightly different time periods referred to. Whilst accepting that 
these figures are not necessarily definitive, they do enable a preliminary comparison of the 
various industry elements. 
Placing all of these elements together, IDATE has estimated that the EU information sector 
was worth some ECU 371bn in 1992 and around ECU 477bn in the US. Table 2.3 indicates 
that the content sector as a whole makes up over a third of this total. 
33 
MO Annual Report 1993 - 1994 Section 2 
Table 2.3 Breakdown of the EU Information-Sector, 1992 
Audiovisua 
10% 
Consumer electronics 
6% 
IT equipment 
10% 
IT services 
15% 
Telecom eqpt 
6% Print publishing 
25% 
Electronic pub'g 
2% 
Telecom services 
26% 
Source: IDATE 
2.2 The Component Sectors 
Having assessed the scale of the wider information sector as a whole, it is worth looking in 
closer detail at the sizes and key trends in the component sectors: content, delivery and 
processing. 
2.2.1 The Content Sector: Changing Roles and Opportunities 
Within this great scheme of things, the traditional electronic information services sector begins 
to look very small and insignificant. Certainly, there can be little comparison between the 
combined turnovers of database producers, CD-ROM and multimedia publishers, and those of 
the IT and telecommunications giants. Even within the sector we have called information 
content, the electronic publishing sector is dwarfed by the film and music businesses. IDATE's 
calculations show electronic publishing to represent a mere 2 per cent of the total information 
sector. (Detailed information about the size of the content markets is provided in section 7 of 
this report.) 
On the other hand, the perceived value of information content is rising rapidly. In particular, 
the value of data sets from which individual data elements can be retrieved for interactive 
searching (as opposed to linear data resources such as films) are becoming increasingly sought-
34 
MO Annual Report 1993 - 1994 Section 2 
after. The early signs are that this will manifest itself in a spate of acquisitions, industry 
flotations and investments in content companies in the immediate future, pushing up the market 
value of the content business. 
Certain elements of the electronic information services sector are likely to become closely 
allied with, and structurally similar to, the applications software, games software and video and 
audio industries. This will be particularly true of CD-ROM and other portable media, 
including high-capacity floppy disks. Consumer and general interest CD-ROM publishers are 
making use of distribution mechanisms already established in the mainstream software, games 
and audio sectors, such as bundling of'free' software with hardware, mail order and specialist 
retail. As the market grows in terms of volume sales, such distribution methods are likely to 
become more widely used by the information industry, beginning in the consumer sector and 
spreading to the business sector. The information industry in turn will almost certainly be 
influenced by the pricing and deal structures for rights and distribution which have become 
established in other software industries. 
The trends towards convergence discussed here represent both a threat and an opportunity to 
the electronic information services sector. The threat comes in the shape of the hardware, 
software and delivery giants, many of which look set to develop their own electronic content, 
avoiding expensive rights deals and taking greater control of their markets. Almost all of the 
companies involved in the development of multimedia hardware, for instance, have their own 
publishing programmes: Philips, Sony, 3DO, Apple and, of course Microsoft. Much of their 
publishing activity is still based on licensing materials produced by third parties, but it is likely 
that they will move towards content creation as well. 
Another threat comes in the form of the hundreds of small multimedia development companies 
which have sprung up over Europe. They started out as development houses for content 
publishers, but many now aspire to electronic publishing and rights ownership themselves. 
Franklin fore-shadowed this trend in the early 1990s by re-styling what was previously a small 
handheld electronics company into an electronic reference publisher in its own right - and, 
indeed, changing its name to Franklin Electronic Publishers. Similarly, moves by entertainment 
and telecommunications network operators to acquire or invest in content companies are a 
symptom of the desire to avoid dependence on the outside content industry. 
It is not suggested that convergence will sweep away the electronic information services 
sector. These trends will undoubtedly pass some electronic information companies by, just as 
electronic publishing has so far passed by some print publishing companies. Such companies 
will not necessarily collapse as a result, but their inability to adapt restricts the market 
opportunities open to them. 
So what opportunities are offered by the market forces which form the basis of convergence? 
Companies which own content, and which are able to present that content in a digital format 
for manipulation in a number of applications are in a strong position. In the short to medium 
term at least, there is likely to be greater network capacity than there is suitable content, 
placing such resources under considerable demand. This position will be re-inforced as 
industries are further deregulated and competition between operators of delivery channels and 
networks gets fiercer. 
35 
MO Annual Report 1993 - 1994 Section 2 
To exploit this opportunity, content companies will need to pursue alliances with the 
technology and network providers, or set up rights deals with electronic pubfishing partners for 
third-party development across a suitable range of sectors and technologies. It is likely to be 
some while before the high capacity networks are fully functional, and content companies 
therefore have a little time to develop their rights acquisition strategies, build up a portfolio of 
electronically manipulable products and foster expertise in software development. 
The CD-ROM, multimedia and on-line businesses which have been built up by publishing and 
information companies will not be destroyed by the availability of other forms of distribution or 
by the effects of convergence. The efforts of converging industries to create a mass market for 
electronic information and entertainment products can only help to raise awareness of, and 
demand for, such products, whether they be delivered on optical disc for computer use, down a 
telephone line or as part of a handheld reference device. 
The professional information sector is likely to be under less of a threat from the computing 
and network giants: their expertise and market penetration would be much harder to replicate 
than those in some of the entertainment sectors. Furthermore, the skills and expertise offered 
by the publishing industry in commissioning, editing, rights handling and distribution will 
continue to have a unique value in the new information world. 
2.2.2 The Delivery Sector: Telecommunications, Cable and Satellite 
The world market for telecommunications services (as opposed to services and equipment, 
indicated in Table 2.2) was worth ECU 328.7bn in 1992, according to research carried out by 
IDATE. Of this total, the EU accounted for an estimated ECU 91.9bn, or approximately 28 
per cent of the total, as indicated in Table 2.4 below. 
The breakdown of the EU market by service type shown in Table 2.5 indicates that data 
networks, value-added network services (VANS) and mobile services account for a relatively 
small proportion of the total, but are experiencing high growth rates. 
The penetration of PSTN lines per 100 inhabitants varies considerably throughout the EU, with 
only 27.3 lines per 100 inhabitants in Portugal by 1992, but 59.1 in Denmark. Similarly, the 
development of digital telephone networks in the local area (local loop) varies considerably. 
Table 2.6 shows that in Germany, the proportion of the local loop digitised was estimated at 
13 per cent in 1992, whilst in France it may have been as high as 83.2 per cent. 
36 
MO Annual Report 1993 - 1994 Section 2 
Table 2.4 Geographical Distribution of the World Market for 
Telecommunications Services, 1992 
North America 38% 
Japan 13% 
European Union 28% Oceania 2% 
EFTA 4% 
Devlp'g Countries 15% 
Source: IDATE 
Table 2.5 Breakdown of the EU Telecommunications Services Market by 
Activity, 1991-1992 
Services 1991 
BECU 1992 
BECU Annual 
Growth - % 
Basic services on the PSTN 
Telex, télétex and telegraph 
Data transmission 
Generic services and VANS 
Mobile telecomms services 71.7 
1.1 
6.8 
2.9 
4.2 74.6 
1.0 
7.8 
3.5 
5.0 + 4.1 
- 10.0 
+ 14.0 
+ 20.0 
+ 20.0 8 
Sources: Operators' Annual Reports, IDATE, CIT Research, Sagatel, ITU 
37 
MO Annual Report 1993 -1994 Section 2 
Table 2.6 Telecommunications Infrastructure in 1992 
Belgium 
Denmark 
Germany 
Ireland 
Spain 
France 
Greece 
Italy 
Luxembourg 
Netherlands 
Portugal 
UK 
Total/Average Main telephone 
lines in operation 
(millions) 
4.3 
3.0 
35.6 
1.1 
13.8 
30.1 
4.4 
23.7 
0.2 
7.4 
2.9 
26.1 
152.6 Penetration of 
PSTN lines per 
100 inhabitants 
42.3 
59.1 
44.8 
31.1 
35.7 
53.0 
43.7 
41.1 
50.6 
49.3 
27.3 
45.9 
44.3 Digitisation rate of 
the local loop 
(% estimates) 
52.0 
40.0 
13.0 
65.0 
36.4 
83.2 
20.0 
48.4 
56.0 
80.0 
50.0 
61.6 
49.0 
Source: ITU, BIS Strategic Decisions, IDATE 
The widespread availability of standard and digital telephone lines is an essential feature of the 
electronic information industry. Moreover, an even coverage of telecommunications 
infrastructure is fundamental to the concept of a Common Information Space. Policy-making 
and investment decisions (both public and private sector) will therefore need to be made in the 
light of these issues. Meanwhile, as deregulation gathers pace and further attention is paid to 
reducing and harmonising tariff structures, an increased demand for telecommunications 
services is expected, especially for international and mobile communications. 
Tariff reductions for mobile communications were recommended by the Bangemann report and 
Commission Action Plan, and the Green Paper on Mobile and Personal Communications 
proposed a number of deregulation and network interconnection activities. These 
developments, together with the prospect of an upsurge in demand, will encourage private 
sector initiatives to create global, mobile communications networks for a mass market. 
The Green Paper sets out four key objectives: 
• to allow the creation of an EU market for services, equipment and 
mobile terminals; 
• to establish common principles for the establishment of an 
infrastructure for mobile communications; 
• to promote the transformation or the market for mobile 
communications into a mass market for personal communications; 
38 
MO Annual Report 1993 - 1994 Section 2 
• to facilitate and promote the creation of pan-European networks and 
services and ensure that the sector develops according to the public 
interest. 
The support given to these principles by the Bangemann report and by the Action Plan 
produced by the Commission in response to the Bangemann report is likely to encourage rapid 
action. The target date set out in the Action Plan for adoption of the Green Paper on Mobile 
and Personal Communications by the Commission is the end of 1994 or early 1995. 
Meanwhile, deregulation in the US has led to a flurry of activity in the area of global satellite 
networks for mobile communications. During the spring of 1994, a number of 
communications giants put proposals into the US Federal Communications Commission for the 
development of such networks. 
Teledisc, for instance, is a Washington-based company with investment from McCaw Cellular 
and Microsoft. Teledisc's proposal involves launching 840 satellites and is intended to provide 
wireless access to data communications channels of all bandwidths and be available to users 
worldwide, regardless of the sophistication of national telecommunications infrastructure. 
Motorola's Iridium will use 66 sophisticated satellites to offer mobile services all over the 
world. Networks such as these will allow fast delivery of complex digital signals, enabling 
teleconferencing and access to multimedia services. They will therefore have a significant 
impact upon the creation of a mass market for such services and will not be constrained by the 
ability of national administrations and PTOs to invest heavily in fibre optic infrastructure. 
However, following the excitement surrounding the initial announcements, there has been 
some scepticism as to the actual implementation of these proposals. At this stage, it seems 
unlikely that high-bandwidth, mobile satellite networks will be fully functional much before the 
end of the century. Although there are some rather less ambitious projects which will bear 
fruit in the next couple of years (Orbcomm in Virginia, for example, hopes to have a 26 
satellite network in place by 1996 for simple digital message transmission), the impaa of 
mobile communications on the market for electronic information and entertainment services is 
likely to be relatively minor in the short term. Over a longer period, however, the signs are 
that they will have a fundamental effect on the transmission and use of multimedia services. 
According to the International Telecommunications Union (ITU) World Telecommunications 
Development Report published in March 1994, globalisation in telecommunications markets is 
a growing trend and structural changes in the market in response to the globalisation and 
deregulation processes will continue to take place. 
Liberalisation in European telecommunications policy has already served to encourage 
competition amongst operators and, indeed, to stimulate investment in Europe from US 
companies, in particular from AT&T, MCI, Sprint and the Regional Bell companies. US 
investment and joint venture projects are likely to play an important role in the development of 
an advanced information infrastructure in the EU, but there are concerns within the 
telecommunications industry that, in the longer term, this may result in European operators 
having less control over their home market. 
39 
IMO Annual Report 1993 -1994 Section 2 
European PTOs have tended to perform quite well against their counterparts worldwide, and in 
1992 accounted for four of the top ten. The US accounted for five and Japan one. (See Table 
2.7.) 
Table 2.7 Top Ten Public Telecommunications Operators, 1992 
Operator 
NTT 
AT&T 
DBP Telekom 
BT 
France Telecom 
SIP 
BellSouth 
Nynex 
GTE 
Bell Atlantic Country 
Japan 
USA 
Germany 
UK 
France 
Italy 
USA 
USA 
USA 
USA Revenues US$bn 
51.354 
39.580 
34.550 
23.379 
23.164 
17.492 
15.202 
13.155 
12.644 
12.093 Revenues BECU 
44 
34 
30 
20 
20 
15 
13 
11 
11 
10 
Source: International Telecommunications Union 
The cable and satellite sectors both grew substantially in 1993, mainly on the back of television 
services, but with a certain amount of penetration into the telecommunications sector and a 
promising outlook for satellite-based business services. According to Cable and Satellite 
Europe, there were at least 10.7 million satellite dishes installed in Europe in 1993, of which up 
to 64 per cent could be accounted for by Germany and the UK. Around 1.1 million dishes are 
thought to have been installed throughout Europe in 1993. Surprisingly, Poland emerged as 
Europe's third largest market, with conservative estimates putting the installed base at around 
750,000. The penetration of cable, which is likely to be a crucial factor in the early 
development of intelligent, interactive network services, also increased substantially during 
1993. (See Table 2.8.) 
The lion's share of cable and satellite industry revenues continues to be concentrated around 
consumer entertainment services, although there are signs that business markets are growing 
rapidly. The European market for satellite business services was estimated to have grown by 
nearly 27 per cent in 1992 from ECU 267m to ECU 339m (source: CIT Publications, 1994). 
Major European players in the provision of satellite communications for business include DBP 
Telekom and Maxat (a France Telecom / Cogecom subsidiary), as well as SIS, a private UK 
operator which also dominates the market for the distribution of racing data to betting shops in 
the UK. 
Business information services delivered by satellite constitute a small market and are mainly 
concentrated around financial and trading information. The use of satellite for video 
conferencing has grown insubstantially, possibly as a result of the wider availability of ISDN. 
In 1992, video conferencing service revenues amounted to around ECU 11m, a rise of ECU 
2m since the previous year. Meanwhile, one of the biggest growth areas in the satellite market 
is expected to be business television. 
40 
MO Annual Report 1993 - 1994 Section 2 
Table 2.8 Cable and Satellite Penetration in Europe, 1993 
Country 
Austria 
Belgium 
Denmark 
Finland 
France 
Germany 
Hungary 
Ireland 
Italy 
Luxembourg 
Netherlands 
Norway . 
Poland 
Portugal 
Spain 
Sweden 
Switzerland 
UK Cable Connections 
(000s) 
967 
3,725 
1,323 
780 
1,206 
13,116 
749 
400 
negl. 
117 
5,700 
643 
600 
10 
749 
1,931 
1,908 
504 
Source: Cable and Satellite Europe, Janu< 
* indicates per cent penetration into TV 
** rough estimates only Cable Penetration 
Per Cent* 
32.3 
98.0 
57.3 
36.3 
5.9 
39.3 
21.4 
40.0 
negl. 
81.4 
92.0 
36.6 
6.0 
0.3 
6.6 
50.3 
77.1 
2.3 
îry 1994 
homes Satellite Dishes 
(000s)** 
500 
10 
150 
15 
350 
4,200 
180 
50 
100 
2 
250 
160 
750 
100 
150 
325 
40 
2,662 
2.2.3 The Processing Sector: Hardware, Software and IT 
The European IT market has suffered alongside many others from the effects of recession. 
The hardware sector has faced considerable difficulties in adapting to a number of new market 
conditions: shrinking demand for mainframes, dramatic falls in PC prices and the emergence of 
a new form of demand from the small office and home office sectors. Meanwhile, price 
competition and battles between applications manufacturers for market domination have made 
this a challenging period for the software industry. Hardware and software growth rates 
during the last half of 1992 and first half of 1993 slowed considerably throughout most of 
Europe, although general economic recovery during 1994 was expected to prevent growth 
rates from falling further. Growth rates in double figures, however, are only expected in 
countries where IT market development started later, such as Greece and Portugal. Table 2.9 
shows growth rates between 1990 and 1994 in European countries. 
Lack of substantial growth in the IT sector can largely be accounted for by the decline in the 
hardware market, which has been particularly severe for multi-user systems, especially large 
and medium-scale computers. The European Information Technology Observatory (EITO) 
estimates that hardware revenues shrank by 3.1 per cent during 1993. Table 2.10 shows that, 
41 
MO Annual Report 1993 - 1994 Section 2 
in comparison, the software market has performed well, achieving growth rates of 8.2 per cent, 
expected to rise to 8.5 per cent during 1994. 
Table 2.9 Percentage IT Market Growth by Region, 1990-1994 
Austria 
Belgium 
Denmark 
Finland 
France 
Germany 
Greece 
Ireland 
Italy 
Netherlands 
Norway 
Portugal 
Spain 
Sweden 
Switzerland 
UK 
Western Europe 1990/1991 
1.4 
5.9 
3.0 
-2.4 
3.1 
7.7 
19.3 
5.0 
5.8 
4.2 
6.3 
20.6 
5.6 
2.0 
1.2 
1.2 
4.4 1991/1992 
4.1 
1.1 
-1.0 
-6.0 
1.7 
6.2 
16.6 
6.6 
2.0 
2.9 
-1.8 
18.5 
-1.2 
-5.7 
-0.6 
3.5 
2.5 1992/1993 
5.6 
3.0 
3.0 
0.2 
0.6 
2.0 
17.3 
5.2 
0.5 
1.5 
1.0 
16.3 
-0.2 
-0.7 
1.7 
2.4 
1.6 1993/1994 
6.2 
3.2 
3.0 
4.0 
3.2 
4.9 
19.0 
5.5 
2.4 
3.9 
1.4 
16.4 
2.0 
3.2 
3.2 
5.5 
4.2 
Source: EITO 
The home market is becoming increasingly important for the PC industry. A growing 
proportion of demand is generated by professionals using computers at home, self-employed 
professionals and small, home-based companies. Such demand is already thought to be out­
stripping traditional office demand in the US. In 1993, 5.3 million PCs were shipped for home 
use by professionals in the US, compared with 4.3 million for professional use at the place of 
work (source: Inteco). These figures are expected to rise to 9.5 million and 6.3 million 
respectively by 1997. The technology base in homes is dealt with more thoroughly in section 
7.7, Electronic Information Services in the Home. 
In the home market, expenditure on consumer entertainment media as a whole is expected to 
grow by some 7.9 per cent a year, but home electronics spending is likely to remain fairly 
stable, with stronger growth expected in the second part of the 1990s. Table 2.11 shows the 
relative sizes of the European software, hardware, IT and home electronics markets in 1992, 
with projections for 1995. 
42 
MO Annual Report 1993 - 1994 Section 2 
Table 2.10 Percentage European IT Market Growth by Product Grouping, 
1990-1994 
Large scale systems 
Medium scale systems 
Small scale systems 
Workstations 
Personal computers 
PC Printers 
LAN hardware 
Datacom equipment 
Office equipment 
- Total IT hardware 
- Software products 
Professional services 
Network/process servs. 
- Services 
- Support servs. 
Total IT market 1991/ 
1990 
-10.0 
-3.7 
1.2 
20.1 
-2.0 
9.0 
17.3 
9.0 
2.1 
-0.2 
12.6 
11.0 
6.7 
9.6 
4.2 
4.4 1992/ 
1991 
-5.8 
-9.0 
-2.5 
11.0 
-4.5 
-2.9 
29.1 
9.0 
2.3 
-1.9 
9.3 
7.6 
5.5 
7.0 
2.1 
2.5 1993/ 
1992 
-19.1 
-11.3 
0.7 
10.8 
-0.8 
-2.8 
15.3 
8.0 
-1.6 
-3.1 
8.2 
7.0 
5.6 
6.6 
0.4 
1.6 1994/ 
1993 
-15.0 
-9.0 
7.1 
13.3 
4.0 
0.0 
5.1 
-0.6 
-1.3 
0.0 
8.5 
8.2 
5.2 
7.8 
1.4 
4.2 
Source: EITO 
43 
IMO Annual Report 1993 - 1994 Section 2 
Table 2.11 European Hardware, Software and Home Electronics Markets, 
1992-1995 
BECU 
hardware Software 
products Home 
electronics 
1992 m 1995 
Source: EITO-BIS 
2.3 Industry Repositioning 
The globalisation of the information market and the trends in technology and industry 
convergence have already led to a certain amount of repositioning. Some of the trends noted 
in the convergence discussion are reflected in merger and acquisitions in information industries. 
Repositioning of this kind is expected to gather pace over the next few years, as companies 
seek to penetrate new geographical markets and to fulfil technology and content demand with 
an integrated product range. Where a range of content and delivery options are contained 
within a single company, cross-media ownership regulation tends to come into play. 
Companies from the same sector which merge in order to exploit local and global markets also 
run the risk of contravening media ownership regulations. The need to globalise and diversify 
may make differences in these laws (which seek to safeguard pluralism) become far more 
apparent than in the previous typically national market situations. It is because of this that 
regulators and the content and delivery industries are currently considering whether there is a 
need to harmonise these laws such that more effective market strategies could be undertaken 
whilst ensuring that pluralism is protected. 
44 
MO Annual Report 1993 - 1994 Section 2 
2.3.1 Mergers and Acquisitions 
The mergers and acquisitions which have taken place in the information sector in the last year 
or so can be placed in two categories: those which are intended to extend penetration in 
existing or new geographical markets, and those whose rationale is diversification into new, 
but related markets. Many of the headline deals have taken place in the US, although 
European activity is gathering pace. 
In their report Mergers and Acquisitions in European Information Technology Companies, 
Broadview Associates detailed 895 mergers and acquisitions in the European IT sector in 
1993, worth some US$ 14.3bn (ECU 12.3bn) in total. Almost half of these were accounted 
for by the information services sector, where the average deal size was US$ 1 lm (ECU 9.5m). 
An IMO Working Paper of May 1994 dealt with nearly 45 deals in the database and 
information services sector during the period 1993 to early 1994. It is impossible in a report of 
this size to describe the full range of merger and acquisition activity. The objective of this 
section is therefore to identify a selection of deals in key areas and examine emergent trends. 
The deals which have attracted most attention over the last year or so were the purchase of a 
25 per cent stake in Time Warner Entertainment by US West, the Viacom/Blockbuster merger 
and their joint purchase of Paramount and, of course, the proposed TCI/Bell Atlantic merger, 
called off in February 1994. These few deals, and the wranglings which took place before they 
finally went through, were the subject of countless newspaper column inches - most of which 
explained them in terms of convergence. Thus, US West is expanding from 
telecommunications into entertainment content, whilst Viacom and Blockbuster are 
strengthening their positions as distributors by combining their cable delivery and media 
retailing activities. Both are extending their control over content by their purchase of 
Paramount films. Such analyses are, of course, simplistic, but such deals indicate that 
convergence is more than a media myth. 
In Europe, a number of deals have taken place which have tended to be slightly smaller but 
which are no less interesting. From the vast number of mergers and acquisitions which have 
taken place over the last year or so, we have selected the sample presented in Table 2.12 
below. 
45 
MO Annual Report 1993 - 1994 Section 2 
Table 2.12 A Selection of Mergers and Acquisitions Involving European 
Information Companies, 1993/1994 
Year Target 
Company Nature of 
Business Acquirer Price / Comments 
1994 
1993 Thomson 
Directories (UK) 
Software 
Toolworks (US) 
Thames 
(UK) TV 
Official Airline 
Guide (US) 
InfoPro (US) 
Extel (UK) 
Quotron (US) 
Vamp Health 
(UK) 
Data-Star 
(Ch) 
Elsevier (NL) Telephone 
directories 
Multimedia 
software/ 
videogames 
TV 
broadcasting 
Airline data & 
reservations 
On-line host 
Financial data 
services 
Real-time 
financial data 
services 
Computer 
services for UK 
doctors 
On-line host 
Publisher US West (US) 
Pearson (UK) 
Pearson (UK) 
Reed/ Elsevier 
(UK/NL) 
Questel (FR) 
Financial 
Times (UK) 
Reuters (UK) 
Reuters (UK) 
Knight Ridder 
(US) 
Reed (UK) Buying into 
content/new 
market 
New market 
entry/expertise 
(US$ 460m) 
TV expansion 
(US$ 150m) 
Extending market 
share 
(US$ 417m) 
Buying market 
share (US$ 15m) 
Buying market 
share (US$ 
110m) 
Buying into US 
market share 
Expanding into 
medical sector 
(US$ 20m) 
Buying market 
share 
(US$ 25m) 
Merger 
Source: Mergers and Acquisitions in the Electronic Information Services Industry 
(IMO Working Paper 94/2) / Interactive Media International 
This is by no means a comprehensive list, but is intended to give an indication of the range of 
deals taking place. Microsoft's purchase of a stake in image content via Dorling Kindersley is 
now a widely quoted example of expansion into content by hardware and software companies. 
The deals listed also provide examples of delivery companies buying into content and content 
companies extending their product range and software capabilities. 
46 
MO Annual Report 1993 - 1994 Section 2 
Also worthy of specific mention is the purchase of a significant stake in the publishing and 
multimedia company Andromeda Interactive by the UK PTO, Mercury, and the proposed 
purchase of multimedia developer and publisher Broderbund by Electronic Arts. Broderbund's 
pull-out from the latter probably has much to do with its awareness of the increased potential 
value of the company as an established and respected software developer and publisher, 
especially in the light of the price paid by Pearson for Software Toolworks. 
Outside the information services and publishing sector, a number of related information sector 
deals have taken place involving European companies. In 1993, British Telecom bought a 20 
per cent stake in the US telecommunications company MCI, thereby expanding its international 
interests. In the same year, PolyGram bought Motown records, again expanding its interests 
into new geographical markets. 
Further merger and acquisition activity can be expected in Europe during 1994 and into 1995, 
and a number of companies have made no secret of the fact that they are on the acquisition 
trail. Philips, for instance, told the press in May 1994 that it intended to expand its media 
interests through acquisition. Thorn EMI has said that it will build upon its experience of 
copyright management in the music industry by expanding its book and CD-ROM publishing 
activities. Pearson's chairman Lord Blakenham, speaking in connection with the Software 
Toolworks bid, told The Times newspaper that he saw many opportunities ahead for Pearson's 
book and newspaper publishing activities, but that 'as the multi-media markets become a 
reality, we must grow the television and software capabilities that will be needed in the longer 
term to make the most of what we have'. Other publishing and information content companies 
which are in a position to do so would be wise to follow a similar course. 
In addition to formal merger and acquisition activity, Europe has seen many announcements of 
joint ventures in the information sector. Springer Verlag and AT&T have announced that they 
will collaborate in Europe to explore opportunities in the delivery of STM information. The 
Italian PTO, Stet and Bell Atlantic will work together in a joint venture to create Video on 
Demand and interactive information services in Italy and to upgrade Italy's copper wire 
network. Olivetti and Redgate Communications in the US will form a joint venture to exploit 
the European multimedia market. Meanwhile, French and German PTOs France Telecom and 
Deutsche Telekom are to enter a partnership with Sprint and are said to be seeking similar 
alliances in Japan. 
Strategic alliances and joint ventures in the US information sector have been even more 
numerous, with Microsoft and TCI to work together on interactive TV experiments (Microsoft 
is also said to be working with Japan's NTT on multimedia networks), and Paramount 
Publishing entering a joint venture with the multimedia software company Davidson & 
Associates, to name but two. Some of these ventures will no doubt turn out to be transient, as 
companies settle down to practical working relationships - Microsoft was quick to play down 
its role in developing operating software for Sega's Saturn CD-ROM games machine after 
collaboration between the two companies was widely reported in the press. 
Some of the deals which have taken place in the information sector have undoubtedly been 
opportunistic, and some reflect a consolidation process already well underway. Nevertheless, a 
significant proportion of deals reflect movement of information sector companies beyond their 
47 
IMO Annual Report 1993 - 1994 Section 2 
traditional boundaries of activity and their desire to penetrate international markets, bringing 
together content, software development and delivery capability in order to exploit new market 
opportunities. 
2.3.2 Cross-Media Ownership and Media Concentration 
Industry repositioning and the resultant mergers, acquisitions and joint ventures mentioned 
above have helped to bring cross-media ownership, media concentration, monopolies and 
related regulation to the forefront of discussion, especially in audio-visual and delivery 
industries. In particular, regulation dealing with the participation of companies in a range of 
media activities has come under scrutiny in Europe. 
Since the mid-1980's, the Member States have put in place (alongside their national 
competition law) specific rules on media ownership in order to prevent media concentration 
becoming a threat to pluralism. At the Community level, disparities between national rules on 
media ownership ceate a number of obstacles to the smooth operation of the internal market. 
Following the presentation of the Green Paper "Pluralism and media concentration in the 
internai market" and after more than a year of consultation with interested parties, the 
Commission adopted a communication on the follow-up to the Green Paper. The 
communication analyses the results of the consultations and concludes that (i) a Community 
initiative on media ownership might prove necessary; (ii) a second phase of the work is 
therefore going to be embarked upon in order to examine certain questions in more detail, in 
particular those concerning the content of a possible initiative; (iii) after this second phase, the 
Commission will adopt during 1995 a definitive position on the need and the content of a 
possible initiative. 
The Bangemann report on Europe and the Global Information Society highlighted media 
ownership as one of the areas of regulation requiring particular attention. According to the 
report, there is a risk that inconsistent national media ownership laws could impede companies 
from taking advantage of opportunities in Europe and could place them at a competitive 
disadvantage in world markets. The development of regulation at a European level will be 
essential in order to avoid undermining the single market and to ensure the competitiveness of 
Europe's media industry. 
At present, for example, the UK PTO British Telecom is not permitted to deliver entertainment 
services, although it has argued that the building of an optical fibre network in the UK will only 
become economically viable if it is permitted to participate in the ensuing content delivery 
market. Meanwhile, some of the alliances struck by European PTOs with their US 
counterparts are likely to attract the attention of US regulators. The proposed alliance 
between France Telecom, Deutsche Telekom and Sprint has already provoked fierce argument 
in the US, where AT&T has said that the alliance should be blocked unless France and 
Germany open their markets to competition before 1998. 
48 
IMO Annual Report 1993 - 1994 Section 2 
The complex regulatory environment has been blamed as one of the causes for the failure of 
the TCI/Bell Atlantic Merger. The proposed merger of Rogers Communications and Maclean 
Hunter, Canada's two largest cable television operators, has also suffered considerable delay as 
a result of investigation into media concentration. Regulation in media concentration and in 
cross-media ownership will need to adapt to allow companies to take full advantage of global 
markets and multimedia opportunities. The difficulty will be in finding a balance between the 
prevention of abuse in media ownership and the creation of an environment which fosters 
competition and diversification - and in reaching consensus on these issues at a European level. 
2.4 The Role of the Advertising Industry 
Advertising is a well-established form of revenue generation in the print and audio-visual media 
businesses, representing the biggest single source of income for many newspapers, consumer 
and business magazines, radio and television channels. The relationship between the 
advertising and electronic information industries, however, is only just being established, with 
some new media formats proving more suitable than others as advertisement carriers. 
Advertising on videotex and teletext, for instance, has a long history, but is rare in on-line 
services, at least in Europe, and is only just beginning to penetrate into CD-ROM. In the case 
of emergent services, the role of advertising is likely to vary from one format to another: 
interactive television, for instance, will offer significant opportunities, whereas there is little 
prospect for on-screen advertising on the Internet at present. 
The availability of mechanisms to monitor the retrieval of advertising information by service 
users will have a significant impact on the willingness of advertisers to use new media formats, 
as will the ability to deliver images and sound as part of an on-line advertisement. The reaction 
of users to advertisements embedded within the general content of services, and their ability to 
distinguish between an electronic advertisement and editorial material will need to be 
thoroughly tested. In this respect these advertising and other forms of commercial 
communication services must be able to circulate freely across borders, given the international 
dimension of the networks. In this respect the Commission's Green Paper on commercial 
communications will examine, on the basis of a recently completed extensive European survey 
undertaken by DG XV, the extent to which differing national regulations could prevent such 
services from circulating across the networks. 
Whatever direction new media advertising takes, it is certain that it will have a profound 
impact upon both the media and the advertising industries. The ability to include 
advertisements in electronic information products would encourage more publishers to develop 
electronic versions of their titles, and enable them to make them available more cheaply. On 
the other hand, the impact of such developments on advertising spend across other media is 
difficult to predict. The potential importance of advertising for the electronic information 
industry, and the wider significance for the advertising and media industries has been 
recognised by the European Commission. This is reflected in the preparation of the Green 
paper on Commercial Communications due to be published later this year and the more specific 
study initiated by the Information Market Observatory of DG XIII/E during 1994. 
49 

3 RELATIVE STRENGTHS AND WEAKNESSES 
Electronic information services are to a large extent traded on a global market. Within Europe 
much of the demand for electronic information is met by companies based outside Europe. 
Most of these companies come from the United States. Increasingly, however, Japanese 
information suppliers are perceived to be potential exporters of information to Europe. 
At the same time, European information suppliers are active in export markets and, in some 
cases, derive substantial proportions of their revenue from export sales outside the European 
Union. Clearly, in such circumstances the competitive position of the European information 
services sector relative to counterparts in the US and Japan is an important factor in 
determining the long-term viability of the industry. Not only must European suppliers compete 
successfully in home markets, they must also be able to compete globally. 
During 1993, the Information Market Observatory conducted a study of the relative strengths 
and weaknesses of the information services sectors in Europe, the US and Japan. The results 
of the study indicate that European information suppliers face a range of constraints that are 
not experienced by their counterparts in the US. In particular, economies of scale in the home 
market tend to give a competitive edge to US companies. Within Europe, language, cultural, 
administrative and technical barriers tend to fragment the market into a series of national sub-
markets, thus reducing the potential for scale economies and raising production and 
distribution costs, with the consequence that European firms are in a disadvantageous position 
compared to US competitors. Language barriers in Japan have tended to discourage Japanese 
suppliers from trading on global markets although there are signs that the government is 
encouraging Japanese database providers to enter export markets. 
The development of the Common Information Area in Europe and comparable developments 
in the US and in Japan are likely to increase the amount of global competition. 
3.1 The Relative Position 
At first glance, the European Union has a larger home market than either Japan or the US. 
The population of the European Union in 1993 was 344 million compared to 252 million in the 
US and 124 million in Japan. Despite this, the electronic information services sector is more 
than two and a half times bigger in revenue terms in the US than it is in Europe. 
51 
IMO Annual Report 1993 -1994 Section 3 
Table 3.1 Relative Sizes of the European, US and Japanese Electronic 
Information Services Sectors 
Electronic information service revenues (BECU) 
EU 
USA 
Japan 1988 
2.5 
5.0 
0.7 1989 
2.8 -
6.0 
1.0 1990 
3.1 
6.9 
1.2 1991 
3.3 
8.2 
1.3 1992 
3.6 
9.3 
1.3 
Source: Information Market Observatory 
The relatively large size of the US sector is mainly accounted for by the fact that some 30 per 
cent of revenues are derived from the export of information services, the European Union 
being the largest export market. 
The US is not just big in revenue terms. The US has almost twice as many database producers 
as the European Union and almost twice as many gateway services. Rates of growth have 
been higher than in Europe although in recent years these appear to have slowed, probably as a 
result of the recession. 
The European market is almost three times as big as the market in Japan but this corresponds 
to the relative population sizes. After rapid growth in the late 1980s the turnover of Japanese 
database suppliers actually decreased slightly at the beginning of the 1990s. Despite this, the 
Japanese electronic information services sector is strong, following a sustained period of 
support from the government. The Ministry of International Trade and Industry is actively 
encouraging Japanese information suppliers to be more active in global markets. 
3.2 The European Union 
It is difficult to identify a European market for electronic information services. For many of 
the information services, the demand generated within Europe forms part of a much broader 
global market. Other information services operate in a number of local, niche markets that are 
often delimited by national, language, cultural or regulatory boundaries. The market for such 
services remains strong and has considerable potential for development. 
The existence of local, niche markets presents the European information suppliers with both 
problems and opportunities. The small size of the markets prevents firms from benefiting from 
economies of scale in production and distribution. The fragmentation also hampers the 
creation of a truly common market for European Union information services. On the other 
hand, market fragmentation offers opportunities to some European firms because it makes it 
difficult for suppliers from outside the Union to compete - there is, for example, significant 
demand across all sectors for local services in the national language. 
Some non-European companies, particularly those based in the US, have formed strategic 
alliances with companies in Europe in order to take advantage of the niche market 
52 
IMO Annual Report 1993 -1994 Section 3 
opportunities and to overcome some of the problems that market fragmentation causes. There 
has also been a spate of acquisition activity, an important recent example being the acquisition 
during 1993 of Data-Star, one of Western Europe's leading distributors of on-line information 
services in the areas of business and biomedicine, by the US-owned Knight-Ridder Inc. 
Knight-Ridder is the owner of DIALOG Information Services against whom Data-Star had 
been struggling to compete and retain its market share. The acquisition doubled DIALOG'S 
presence in the European market. (Details of other mergers and acquisitions can be found in 
Section 2.3.) 
Concerns that such activity leads to increasing domination by US providers can be countered 
by arguments that this can actually improve the level of service offered to users and thereby 
enhance the overall efficiency (and competitiveness) of European enterprises. US partnership 
in R&D activities is also a real advantage to many European hosts, for whom there would 
otherwise be insufficient capital available. 
Collaboration seems to work particularly well for small and medium sized enterprises as it 
opens up additional distribution opportunities and spreads the cost of marketing. There is little 
evidence to show that a loss of ownership by European Union players inevitably leads to a loss 
of presence in the marketplace. This is largely because many of the functions of an information 
company are location-specific. Thus, even where an information provider is owned by a global 
player, control of distribution, marketing and personnel needs to take place at the local level. 
For example, one of the biggest world suppliers of corporate information, (Dun & Bradstreet), 
is a US company that derives 30 per cent of its total revenue from Europe and employs 3,500 
people within the European Union. 
On the supply side, the European Union electronic information service sector is characterised 
by a small number of large firms and many smaller firms who in general are less vertically 
integrated and more nationally oriented than their US counterparts. European Union 
information providers are nevertheless strong in certain sectors, such as chemicals, 
pharmaceutical and financial services. 
The competitiveness of European Union electronic information service providers depends on a 
number of key factors. These include: quality and reliability; reputation or brand image; 
product range; price; product differentiation; user friendliness; geographical or market spread; 
marketing and after-sales support, and exclusive distribution rights. 
The strengths and weaknesses of European Union players in the global market place for 
professional information services are set out in Table 3.2. 
53 
IMO Annual Report 1993 -1994 Section 3 
Table 3.2 Perceived Strengths and Weaknesses of the European Union 
Electronic Information Services Sector 
Strengths • Presence of world-ranking information and media 
conglomerates 
• Long publishing tradition and rich information content 
base 
• Large and established markets for professional electronic 
information in key industrial sectors 
• Wide availability of ISDN services and rapid migration to 
Euro-ISDN standards 
• European Commission's Fourth Framework programme's 
emphasis on ICT 
• Language diversity: an advantage for penetrating new 
markets 
Weaknesses • Market fragmentation 
• Perceived overpricing of services 
Cross-border transactions costs 
• Regulatory and infrastructural difficulties 
• Technical barriers, for example, the incompatibility of 
national standards 
• Restricted access to government-held information in some 
Member States 
• Relatively expensive telecommunications services | 
3.3 Electronic Information Services in the US 
The US electronic information industry is the largest in the world. It has developed over a 
longer period. It has benefited greatly from the existence of a large domestic market that has 
enabled firms to take advantage of economies of scale and, in particular, to spread the high 
compilation costs of databases over a large number of users. The strength of this home 
market, however, may have encouraged some companies to neglect the export potential of 
markets overseas even though the use of English language as a world language enables them to 
compete on favourable terms. 
US suppliers have also benefited from public support, both in the creation and development of 
databases within federal agencies and in the relative ease and freedom of access to government 
54 
IMO Annual Report 1993 -1994 Section 3 
information. The government actively supports the use of the private sector for the 
dissemination and exploitation of government information. 
Many US companies have used their competitive position to advantage on world markets. The 
US electronic information services sector generates about 30 per cent of its revenue overseas 
and a large proportion of this comes from sales in the European Union. 
The number of users of electronic information services in the US is increasing. In many 
organisations there is a shift towards direct use by end-users, partly stimulated by the take-off 
of publicly accessible information services, notably the Internet, which are increasing 
awareness and familiarity. The National Information Infrastructure proposals are likely to 
stimulate demand further. 
Despite these trends, the highest volumes of use are generated by large organisations. Small 
and medium-sized enterprises continue to make relatively low levels of use of electronic 
information services. 
Table 3.3 Perceived Strengths and Weaknesses of the US Electronic 
Information Services Sector 
Strengths 
Weaknesses Economies of scale in large domestic market 
English language provides access to export markets 
Economies of scope through major host services 
Mature information market 
Increasingly sophisticated user community 
Strong hardware and software industry 
Good general access to government information 
Market-driven investment in fibre-optic 
Slower domestic growth due possibly to maturity 
Relatively low use of information services by SMEs 
Relatively weak co-operation between government and 
private sector 
Need to focus more on real needs of export markets 
Relatively weak in consumer electronics 
55 
IMO Annual Report 1993-1994 Section 3 
3.4 Electronic Information Services in Japan 
The Japanese electronic information services sector has grown rapidly throughout the 1980s 
and has strong further potential, both at home and overseas. The Japanese Government has 
actively supported and encouraged the development of the sector through a range of measures. 
It supports, for example, the Database Promotion Centre and provides tax incentives and low-
interest loans to creators of databases. Through these and other measures a relatively strong 
Japanese electronic information sector has emerged. Japan's strengths and weaknesses are 
summarised in Table 3.4 below. 
Table 3.4 Perceived Strengths and Weaknesses of the Japanese Electronic 
Information Services Sector 
Strengths •Large potential domestic market 1 
• Considerable overseas market potential, especially in I 
South-East Asia 
• Strong in computers, consumer electronics and CD-ROM 
• Highly competitive telecommunications infrastructure 
• High investment in IT and IT-related R&D 
• Strong policy commitment to the development of the 
sector 
• Strong public sector vision of the information economy and 
society 
Weaknesses • Language barriers 
• Cultural barriers to information as a commodity 
• Immature information market 
• High production costs, poor profitability 
• Relatively weak in software 
• Relatively weak in database construction, quality and 
development 
• Weak in export markets 
Language remains the greatest issue in the development of the sector and it is expected that the 
focus will remain on the domestic market. With a population of over 120 million there is 
56 
MO Annual Report 1993 -1994 Section 3 
enough scope to realise economies of scale for database production and distribution. 
Furthermore, whilst language may have acted as a barrier for further development of the 
sector, it has also prevented foreign firms entering the domestic market and has thus provided 
Japanese companies with a breathing space in which to get established. In recent years, a great 
deal of research into machine translation has been funded and it is hoped that this will help 
reduce Japanese-English translation costs. 
There are signs, however, that the emphasis is shifting to export markets. The Ministry of 
International Trade and Industry has recently commissioned a study of the scope for 
internationalisation of Japanese databases and it seems likely that government policy will 
encourage firms to explore overseas markets more actively. The strongest potential for 
international sales may lie in the first instance in the South-East Asian market. 
3.5 Conclusions 
Compared with the US, the European electronic information services sector is weak and fairly 
uncompetitive. It is stronger than the sector in Japan but there are signs that the Japanese 
information suppliers are growing in strength and that European suppliers may well face 
significant competition from their Japanese counterparts, particularly in the markets of South 
East Asia. 
The relative position of the information services sectors in the US, the European Union and 
Japan can, to a great extent, be explained by the home market conditions within which the 
sectors have developed. US suppliers have been able to take advantage of a large and 
relatively mature home market. This has provided significant economies of scale. US 
information companies have also been well-placed by their use of the English language to 
compete on global markets. English is an international language and, increasingly, it is the 
common language of global business and commerce as well as science and technology. 
Japan also benefits from a relatively large home market which provides for economies of scale. 
It is, however, a market that is isolated by the Japanese language which makes it difficult for 
non-Japanese language information services to compete within Japan. The language also 
places a barrier on Japanese information suppliers wanting to export. It is likely that the 
Japanese information services sector will continue to expand and to strengthen without 
necessarily posing a significant threat to European suppliers either within Europe or in global 
markets. 
European suppliers are hampered by their lack of a large home market. Within Europe there 
are a number of local markets which are mostly defined by linguistic and cultural factors. 
Where markets for information services stretch across Europe they are, in fact, part of a larger 
global market. For example, there are few significant local markets for real-time financial 
services within Europe but there is not a distinctive pan-European market either. The market 
for such information is global. 
European suppliers are therefore in a position where they can aim to meet the needs of niche 
markets and local markets that are linguistically and culturally defined. In both cases the size 
57 
IMO Annual Report 1993 -1994 Section 3 
of the market does not permit any significant economies of scale. Alternatively, they can 
compete on the much larger global markets that do offer economies of scale. In such markets, 
however, they are competing directly with US suppliers which have been able to benefit from 
the economies of scale provided by their large home market in the States. Furthermore, other 
than suppliers in Britain and Eire, European suppliers face the added costs of producing 
information services in English if they are to compete globally. 
It seems likely that, with some exceptions, European information suppliers are destined to 
remain weak relative to those in the US. They will, however, be able to compete successfully 
in world markets against Japanese suppliers for some years. 
The emerging markets in central and eastern Europe or in Latin America offer a range of 
market opportunities for European suppliers. These markets could be thought of as extensions 
to the linguistic or niche markets that already exist within Europe. They offer attractive 
possibilities to information service suppliers that are used to working in German, Spanish and 
Portuguese. They also present opportunities to exploit further databases and other information 
resources that are held in these languages. It seems likely, however, that these markets will 
take some time to develop to a position where they generate significant flows of revenue. 
The markets within which information services companies compete are volatile. This offers 
opportunities to companies that can innovate and develop new products to take advantage of 
changed market requirements or new streams of demand. The rapidly expanding market for 
CD-ROM products is a case in point. If European suppliers can innovate successfully and 
bring new products and services to the market more rapidly than their US competitors they 
may be in a good position to capture a significant share of the market. 
Recent discussions on Europe's relative weakness in the information market have focused on 
the comparative availability of infrastructure and the extent to which this is exploited in the 
ËU. In a paper entitled Construire un Marché Européen de l'Information, René Mayer has 
argued that, in many ways, the European information sector as a whole is on a par with the 
US. Turnover and numbers of employees in the IT and telecommunications sectors are 
comparable, and although the US has tended to enjoy slightly higher revenues in these sectors 
than the EU, European growth has outstripped that of the US in recent years. In content 
sectors, however, the US is clearly way ahead of the EU in revenue and employment terms. 
According to Mayer, the comparative weakness of the EU electronic information services 
industry is not a result of the lack of necessary technology. The installed base of computers is 
similar, as is the overall availability of telephone lines. Expenditure on satellite equipment in 
1993 was about the same in Europe and the US, and in Europe US$ 784m (ECU 682m) was 
spent on fibre optic networks, compared with US$ 424m (ECU 369m) spent by the US. 
Where Europe falls far behind the US is in the actual use of telecommunications services and in 
the installed base of modems. Mayer takes this as being symptomatic of the fact that the EU, 
whilst enjoying a sound infrastructure base, has been slow to exploit these resources to the full. 
Thus, Europeans may be equipped with computers and have access to the relevant network 
infrastructure, but are much less likely to use them to search and retrieve the information 
services available to them. 
58 
IMO Annual Report 1993 -1994 Section 3 
This is largely a problem of awareness and education. The Common Information Area 
initiatives and the growing attention paid by the media to electronic information services 
should both help to improve awareness, as will the teaching of computer-aided research in 
European schools. 
59 

4 THE FUTURE DEMAND FOR INFORMATION 
An information society' is emerging where information is a valuable resource. Easy access to 
information, the quality of that information and speedy methods of exchange are essential 
elements of economic success. This was reflected in the announcements of major information 
infrastructure investment programmes made in 1993 by the European Union and the US 
Government. These acknowledge that mobility of, and access to, information have become 
key economic and social issues. In this climate the demand for information is likely to expand 
rapidly. 
The evidence is that those organisations which make good use of information in decision­
making, and which use new technologies to access, process and exchange information will be 
best placed to survive in increasingly competitive world markets. The extent to which 
information and information technology are being exploited varies widely between different 
sectors and particular regions within the EU. 
But prediction is never easy, and forecasting demand for information is no exception. It is 
particularly difficult in the absence of reliable data to describe the present situation. Later on in 
this section, some of the research which has taken place in assessing future growth in demand 
for information services will be reviewed in a range of sectors. Firstly, however, it is useful to 
take a preliminary view of the extent to which companies are using other IT-based 
applications, as this may provide a useful indicator of growth. 
It has been argued that growth in the use of electronic information services will be closely 
linked to the take-up of applications such as Electronic Data Interchange (EDI) and electronic 
mail. The gains in efficiency and competitive advantage offered by such applications are more 
immediately obvious and more easily quantifiable than those offered by use of electronic 
information services. Nevertheless, through the adoption of EDI and electronic mail, 
companies will acquire much of the technology required in order to access information 
services. Furthermore, they are increasingly likely to become aware of information services 
through their use of these applications. In using electronic mail, the availability of bulletin 
board information services may become apparent. Users of EDI networks are increasingly 
likely to come across electronic information services. Dunn & Bradstreet, for example, 
announced in 1994 that it would make its company information services available over EDI 
networks, and the insurance community is already served by news and information services 
delivered via trading networks. 
As a pointer to the potential growth in demand for electronic information services, the uptake 
of EDI and E-mail may therefore be significant. Whilst adoption of these facilities has been 
slower than originally anticipated, there are signs that they are now spreading more rapidly, 
especially in Europe. 
61 
IMO Annual Report 1993 -1994 Section 4 
4.1 The Growing Use of Electronic Communication Facilities 
Companies wishing to trade effectively are coming under increased pressure to adopt EDI and 
E-mail. Large organisations, particularly in the retail and automotive sectors, may insist that 
suppliers use EDI. Gradually this trend is spreading into other sectors. There are also moves 
to eliminate the one-sided nature of many EDI links between large organisations and their 
smaller suppliers, as this often leads to a situation where incoming EDI messages are printed 
out and re-keyed into the in-house system or processed manually by companies without fully 
integrated EDI facilities. This problem also presents a barrier to EDI communication between 
SMEs. Software houses are being lobbied to include EDI capability in standard business 
software, and this may also help to encourage wider implementation. 
The European Electronic Messaging Association (EEMA), promotes the use of all forms of 
electronic messaging, including EDI and E-mail, and the European Commission funds a 
programme entitled Trade Electronic Data Interchange Systems, (TEDIS), which aims to 
promote EDI and resolve the barriers currently hindering more widespread implementation. 
There are many other sector-specific and regional initiatives. In Italy, for instance, 
EDIFORUM is supporting a network of regional centres to promote EDI among small and 
medium sized enterprises. 
4.1.1 Electronic Data Interchange 
EDI originated as a means of exchanging trading information electronically, an answer to the 
' paper mountain', and a possible route to the paperless office. So far, the impact has been less 
dramatic with only 1 per cent of transactions in Europe taking place electronically. 
Within Europe, the UK is one of the leaders in terms of numbers of EDI users. However, 
despite somewhere in the region of 10,000 organisations at the end of 1993, most 
organisations make use of only two or three message types, typically those for ordering and 
invoicing. This confirms that even within those organisations which have adopted EDI, there 
is scope for greater exploitation of the facility. However, despite the slow start, expectations 
are that by the end of 1994 70 per cent of UK firms employing at least 2,000 people will be 
using EDI. 
There is no reason why non-trade-related information should not also be exchanged via EDI 
and indeed it is becoming increasingly common for administrative data to be circulated in this 
way. In the UK, for example, there are a growing number of educational establishments using 
EDI to exchange information. Another example is the EC sponsored, pan-European Frame 
project, which is intended to develop systems for monitoring and controlling the movement of 
hazardous goods. The construction industry, through EDICON, is exploring the use of EDI 
for the exchange of CAD drawings and project documentation. 
Electronic transfer of data has several attractive features: reduction in manual processing and 
avoidance of repeated data entry; reduction of errors and repetition of errors; time flexibility; 
permanent availability not constrained by time-zone barriers; and speedy processing for the 
exchange of up-to-date information. It is also useful in the implementation of just-in-time 
62 
MO Annual Report 1993 - 1994 Section 4 
ordering, warehousing and delivery procedures. These advantages can represent significant 
time and cost savings making organisations more productive and efficient. 
There are, however, issues of security and legality, which have to be addressed and resolved 
before EDI becomes a commonplace method of data exchange. Given that one of the major 
benefits of EDI is the ease of exchange irrespective of distance and national borders, any 
solutions to security and legal issues must also be applicable across national boundaries. These 
issues are being investigated as part of the EC TEDIS programme. 
The European Article Numbering Association International reports that among its membership 
(whose area of operation extends throughout Europe to South and Central America, Asia 
Pacific, and South Africa) the number of EDI end users of national EDI standards reached 
18,089 in 1993, an increase of 26.7 per cent on 1992. In 1994 this figure is expected to 
increase to 25,583 (although there may of course be other users not associated with the 
European Article Numbering Association). In addition, in 1993 there were 2,889 users of the 
EANCOM Electronic Data Interchange standard, a rise of 199 per cent with a 100 per cent 
increase projected for 1994. The EANCOM standard operates within the framework of the 
UN/EDIFACT standards and is intended to provide a multi-industry EDI communication 
standard. 
The potential importance of EDI as a contributor to competitive advantage in world markets 
has led the European Commission to try to ensure that all regions and all sectors are able to 
take advantage of EDI. In particular, it recognises the need to focus particularly on SMEs and 
the less favoured regions. Whilst the UK is one of the leading users of EDI, other countries, 
for example Spain, are only just beginning to participate in electronic trading networks. 
EDI has been given a boost in the US, with the Clinton Administration announcement that 
there will be ' government-wide implementation of electronic commerce for appropriate federal 
purchases by 1997'. Electronic tendering was also one of the ten areas where action was 
recommended by the Bangemann report to the Corfu Summit. 
4.1.2 Electronic Mail 
In 1993 there were estimated to be about 30 million electronic mail users worldwide. Annual 
growth rates in the order of 20-30 per cent are expected, so that by 1995 at least 50 million 
users are anticipated (source: Electronic Mail Association). 
Use of electronic mail by organisations is certainly increasing, particularly as an internal 
communication mechanism. Governments are also stepping forward to take advantage of the 
technology and to give a lead to encourage other organisations to do likewise. The General 
Secretariat of the Council of Ministers of the European Union is to be supplied with electronic 
mail software that will give access to 1,700 users across five sites in Brussels. The existing 
Commission electronic mail facility system is being replaced by an X.400 system which will 
eventually give access to over 60 sites. The Commission currently generates some 180,000 E-
mail messages a month (figures for June 1994), of which around 35,000 are external 
communications. About 13 000 of the public officials of the European Commission are already 
63 
IMO Annual Report 1993 -1994 Section 4 
equipped with E-mail facilities and about half of the -officials use it on a regular basis also with 
the 20-30% growth rate mentioned above. With the replacement of its in-house developed E-
mail system by a fully X.400 (88) conformant system, the Commission plans to have a 
homogeneous advanced system available at almost every workplace by the end of 1995. The 
choice of X.400 (88) in all European Institutions permits a high quality E-mail communication. 
Moreover, every E-mail work-place at the Commission can also exchange messages with 
INTERNET and has electronic access to telex and fax services. In the US it is possible to send 
E-mail direct to the President and Vice-President via several commercial services as well as the 
Internet. The UK Government has said that it will implement similar measures for 
communication with government ministers. 
The major European public electronic messaging services are now interconnected using the 
internationally recognised communications standard protocol, X.400. The European 
Electronic Messaging Association (EEMA), is promoting electronic mail communication, 
issuing a regularly updated matrix indicating which European ADministration Management 
Domains, (ADMDs), are connected to each other and to other ADMDs worldwide. As yet 
there is no equivalent for the X.500 standard protocol for electronic directory services. The 
X.500 standard is intended to make it easier to perform directory searches via an E-mail 
connection to networks such as the Internet. 
Öuring 1993 EEMA developed closer links with the Internet community and sponsored 
projects looking at the interworking between X.400 E-mail users and the Internet, recognising 
that overall growth in E-mail traffic is best promoted by co-operation across different delivery 
systems. 
E-mail is a popular facility in large, multi-site organisations where it is a cost-effective 
communications link between employees. Whilst smaller organisations have a less pressing 
need for internal communications mechanisms, the benefits which they can derive from E-mail 
for external communications are arguably greater for SMEs than for larger organisations. The 
full potential of E-mail is, as yet, nowhere near realised and there is scope for a much wider 
application of E-mail as a communication tool between organisations. 
4.2 Information Use within Selected European Industrial Sectors 
The European Commission has attempted to confront the problem of lack of accurate data on 
information demand through a series of research studies. The European Commission's 
Information Market Observatory has commissioned research to identify how organisations are 
using information, how this impacts on their competitiveness and how the situation will 
develop in the future. These studies are particularly interesting because they review the use of 
applications such as EDI and electronic mail as well as electronic information services. 
In 1993 studies of the transport, insurance and biotechnology sectors within Europe were 
undertaken. In addition, telephone surveys were carried out with 2,000 executives across 
Europe, 750 from each of the transport and insurance sectors and 500 from the biotechnology 
sector. The main aim of these surveys was to establish the significance of information in 
relation to competitiveness. Executives were questioned about a variety of information and 
64 
MO Annual Report 1993 - 1994 Section 4 
technology related issues and were specifically asked to comment on their organisation's 
current use of electronic media and expected use in the future. 
In the three sectors surveyed in 1993 there was a clear indication that information is thought to 
play an important role in competitiveness. This is represented in Table 4.1 below. 
Table 4.1 Views on the Influence of Information on Competitiveness 
Influence of 
information on 
competitiveness 
Strong 
Medium 
Low/unknown 
Total 
Sample size Sector 
Transport 
38% 
43% 
19% 
100% 
750 Insurance 
47% 
40% 
13% 
100% 
750 Biotechnology 
40% 
35% 
25% 
100% 
500 
Source: Impact of Information Usage on Companies' Performance, BIS 
Strategic Decisions 
Where organisations are coming to recognise the relationship between information and 
competitive advantage, the trend towards an increasing demand for reliable, timely and easily 
accessible information is likely to continue. This will certainly hold true if the European 
Commission's efforts to communicate the commercial advantages of information to small and 
medium sized enterprises succeed. At present the evidence is that smaller companies (less than 
50 employees) believe that information has a low influence on competitiveness. This 
emphasises the need for a continuing programme of education and support for SMEs. 
4.2.1 Transport 
The transport sector in Europe suffers from overcapacity and competition is intensifying with 
the additional pressure from eastern Europe. The evidence from the case studies is that the 
application of information technology can significantly improve the reliability and speed of 
delivery of transport mechanisms. Applications such as EDI are becoming more widely used. 
Within the larger organisations there is already a realisation that the choice may be EDI or 
die'. In small and medium sized enterprises the message has yet to be received. In a sector 
dominated by price and not by service quality and where SMEs are reluctant to invest in 
information technology which is perceived to be of primary benefit to the customer, there is 
clearly an urgent need for continuing education and awareness programmes. 
A further barrier to the flow of information in the transport sector is the lack of standardised 
messages and communication links. The European Commission is addressing this with 
activities such as supporting the standardisation project, International Forwarding and 
65 
IMO Annual Report 1993 -1994 Section 4 
Transporting Message Framework, IFTMR. This is necessarily a long and complex process, 
but is seen as an essential contribution to dismantling barriers to electronic trading and 
communication. 
The extent to which electronic media have penetrated the transport sector in 1993 is shown in 
Table 4.2 below along with the projections for use in 1998. 
Table 4.2 Transport Organisations Reporting Use of Electronic Media in 1993 
and Expected Use in 1998 
Per cent 
100 
Online Videotex CD-ROM E-Mail EDI Dedicated Video-Mobile 
databases networks conf comms sys 
1993 i2l998 
Sample size 750 
Source: Impact of Information Usage on Companies'" Performance, BIS Strategic 
Decisions. 
The anticipated increases in the use of CD-ROM (100 per cent), E-mail (55 per cent), videotex 
(24 per cent), EDI (23 per cent), and dedicated networks (22 per cent) and the continued 
popularity of on-line databases, expected to be in use in 14 per cent more organisations by 
1998, confirms that the message of the electronic information age is reaching a wider audience, 
and that these technologies are not in competition but are a complementary set of facilities in 
the new electronic business framework. 
4.2.2 Insurance 
The Insurance sector is also highly competitive, with high growth rates not only in the less 
developed markets such as Spain, Italy and Portugal but also in more mature markets, for 
66 
MO Annual Report 1993 - 1994 Section 4 
example, in Germany and the UK. As deregulation in Europe proceeds the pressure will 
increase for competitive products and premiums across Europe via international brokers. 
These developments will increase the need for speedy access to flexible electronic information 
services and communication links. 
Survey participants from the insurance industry were asked which electronic media were in use 
in their organisations in 1993 and which they expect to be using in 1998. Their responses are 
shown in Table 4.3 below. 
Table 4.3 Insurance Organisations Reporting Use of Electronic Media in 1993 
and Expected Use in 1998 
Per cent 
100 
Online Videotex CD-ROM E-Mail EDI Dedicated Video-
databases networks conf 
1993 ^ 1998 
Sample size 750 
Source: Impact of Information Usage on Companies' Performance, BIS Strategic 
Decisions. 
Insurance is a sector where many organisations, particularly the larger companies, have already 
seized upon the advantages which new technology, and particularly electronic information 
exchange, can convey. Therefore it is not surprising to find that 72 per cent of organisations 
are already using on-line databases and that by 1998 approximately 70 per cent also expect to 
be using EDI and E-mail. This despite the uncertainties about the legal status of electronic 
documents. 
The prime reason for adopting electronic media is the potential for time saving. In this sector, 
as for the others surveyed, cost savings are of less significance than access to a wider range of 
better quality information. 
67 
IMO Annual Report 1993 -1994 Section 4 
4.2.3 Biotechnology 
The case studies and telephone surveys suggest that, although this is a sector which is aware of 
the importance of access to information and the advantages which electronic storage media and 
networks can offer, there is still scope for significant growth in the use of new technology and 
the new sources ofinformation. 
At present, printed matter is the dominant form of exchange for both internal and external 
information. A third of organisations reported using E-mail though this was typically an 
internal mechanism, extending to multiple sites. The comments in the case studies suggest that 
even where E-mail is in use it is not yet being used to its full potential. A similar pattern 
emerges for EDI and dedicated networks. 
Table 4.4 illustrates how use of electronic media is expected to develop over the next five 
years, showing how many organisations were using each medium in 1993 and how many 
expect to be using them in 1998. It also seems likely that, in addition to the increase in the 
number of users, there will be more widespread use of existing E-mail facilities for external 
communications. 
table 4.4 Biotechnology Organisations Reporting Use of Electronic Media in 
1993 and Expected Use in 1998 
Per cent 
Online Videotex CD-ROM E-Mail 
databases EDI Dedicated Video-
networks conf 
1993 121998 
Sample size 500 
Source: Impact of Information Usage on Companies' Performance, BIS Strategic 
Decisions. 
68 
MO Annual Report 1993 - 1994 Section 4 
By 1998 over 50 per cent of organisations in the biotechnology sector expect to be using on­
line databases, EDI, E-mail, and videotex. Also 44 per cent of organisations will be using CD-
ROM and 41 per cent dedicated networks. There is less variation in the types of electronic 
media in use in biotechnology than in the other sectors where on-line, EDI and E-mail tend to 
dominate. 
4.3 Employment, Education and Training Implications 
The impact which the growing demand for information will have on employment, education 
and training is under consideration by European governments. For the success of the proposed 
European Common Information Area, and for Europe to realise the full potential of the coming 
information-age, it will be necessary to ensure that the population is well educated and trained 
in the skills demanded by the new technologies. There is a need for a commitment to 'life long 
learning'. Given that the required skills are subject to continual and rapid change, there must 
be access to training and development throughout life. It is highly desirable that all segments 
of the population have equal access to information and the ability to use it. Two documents 
published by the European Commission in 1993 discuss these issues. The White Paper, 
Growth, competitiveness, employment: the challenges and ways forward into the 21st century 
and the Green Paper, European social policy: options for the Union. 
The acquisition of a variety of information-related skills is likely to become essential for full 
participation in society for the individual. At work the growth in demand for information will 
be matched by a growth in demand for individuals who can access and interpret the 
information. In addition to increased opportunities for information specialists there will also be 
a need for other individuals to adjust to the new ways of working which the information-rich 
future will demand. It will be necessary to improve everyone's information-processing skills, 
such will be the extent of the permeation ofinformation technology applications into all aspects 
of life. 
69 

5 RESEARCH AND TECHNOLOGICAL DEVELOPMENT (RTD) 
For the European electronic information services sector to achieve its full potential there 
remain a number of barriers to be dismantled. The diversity of languages within Europe means 
that for companies to reach the pan-European market, products and services must be 
accessible in a variety of languages. Ease of access to the technology and retrieval of 
information is also critical. Individual organisations are investing in research programmes to 
address these issues. The European Commission is also providing support in this area. There 
is widespread acknowledgement that research and technological development (RTD) activity is 
critical to European economic performance, particularly in the less favoured regions, and that 
therefore RTD will be one of the critical factors in any economic recovery. 
The European Commission's proposals for RTD, under its Fourth Framework Programme, 
were completed on 16 June 1993 and have subsequently been accepted by the European 
Council, on 26 April 1994, and by the Parliament two weeks later. The programme follows 
the successful implementation of the three earlier programmes. Whilst the Fourth Framework 
Programme builds on the achievements of the Third Framework, there is a new emphasis. 
Earlier programmes focused on technology with little scope for practical application. The co­
ordination of research and dissemination of the results and the need for practical applications 
are now priorities. The transfer of results from the research laboratories to companies across 
different sectors is seen as a key element in the stimulation of innovation. 
The importance of private and national RTD activity is acknowledged and the programme aims 
to support and enable the fullest exploitation of these initiatives by facilitating co-operation 
between Member States and European firms. The intention is also to create the conditions for 
collaborative research efforts on a scale to compete with the US and Japan. 
In the current economic climate a high priority is attached to RTD activities which will sustain 
current employment and create new employment opportunities. The research will therefore be 
a contribution to strengthening the competitiveness of the European economy. There is high 
growth potential in new markets which could arise from successful telematics applications. 
There are opportunities in fields as diverse as distance learning and road traffic management 
and in creating opportunities which facilitate the independence of the elderly or disabled. 
The European electronic information industry is expected to generate new commercial 
opportunities for other sectors. By providing access to, adding value to, or making use of, the 
products and services of the electronic information industry, sectors such as education, health, 
leisure and manufacturing should achieve additional growth. For this to be possible, products 
and services have to meet the needs of the potential users and be easily accessible. 
The Fourth Framework Programme has been allocated ECU 12.3bn. Its objectives are to 
implement research and technological development (RTD) programmes and demonstration 
programmes by promoting co-operation with and between enterprises, research centres and 
71 
IMO Annual Report 1993 -1994 Section 5 
universities, to promote co-operation in the field of Community RTD and demonstration with 
third countries and international organisation; to disseminate and optimise the results of 
Community RTD and demonstration activities, and to stimulate the training and mobility of 
researchers in the Community. 
The scientific and technological objectives are built around four activities: 
- The first activity (ECU 9,432 million) covers research, technological development and 
demonstration programmes. For information and communications technologies ECU 
3,405 million has been allocated, for industrial technologies ECU 1,995 million, for 
environment ECU 1,080 million, for life sciences and technologies ECU 1,572 million, for 
non-nuclear energy, ECU 1,002 million, for research for a transport policy ECU 240 
million and for targeted socio-economic research ECU 138 million. 
- The second activity (ECU 540 million) covers the promotion of co-operation in the field of 
Community research, technological development and demonstration with third countries 
and international organisations. 
The third actvity (ECU 330 million) covers dissemination and optimisation of the results of 
activities in Community research, technological development and demonstration. 
- The fourth activity (ECU 774 million) will stimulate the training and mobility of 
researchers in the Community. 
Specific programmes relevant to the information industry and market are described briefly 
below. 
5.1 Telematic applications of common interest 
The specific programme of RTD and demonstration in the area of telematic applications of 
common interest 1994-1998 has a budget allocation of ECU 843 million. The objectives are to 
develop and technically validate telematics systems and services that are interoperable 
throughout the European Union. These should satisfy user requirements and, maximise the use 
of generic infrastructures and equipment to them as economically viable as possible. 
The programme is composed of five areas of activity: 
• telematics for services of public interest; 
• telematics for knowledge; 
• telematics for improving employment and the quality of life; 
• horizontal RTD activities; 
• horizontal actions. 
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MO Annual Report 1993 - 1994 Section 5 
5.2 Information Technologies 
The specific research and technological development programme in the field of information 
technologies 1994-1998 has a budget allocation of ECU 1,932 million. The objectives are to 
contribute towards the construction of a European information infrastructure in order to 
ensure the future competitiveness of European industry as a whole and to improve the quality 
of life. 
Programme activities are organised under three headings: 
• software technologies; 
• technologies for IT components and subsystems; 
• multimedia technologies. 
5.3 Advanced Communication Technologies 
The specific programme of RTD and demonstration in the area of advanced communications 
technologies and services 1994-1998 has a budget allocation of ECU 630 million. The 
programme objectives are to develop advanced communication systems and services for 
economic development and social cohesion in Europe, taking account of the rapid evolution in 
technologies, the changing regulatory situation and opportunities for the development of 
advanced trans-European networks and services. 
Advanced Communication Technologies are composed of six areas of activity: 
• interactive digital multimedia services; 
• photonic technologies; 
• high-speed networking; 
• mobility and personal communications networks; 
• -intelligence in networks and service engineering; 
• quality, security and safety of communication services and systems. 
A number of horizontal actions exist which include: consensus development and concertation 
of national and regional activities; international co-operation; dissemination and exploitation of 
results; and, professional training in advanced communications technologies and service 
management. 
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IMO Annual Report 1993 -1994 Section 5 
5.4 Socio-Economic Research 
The specific programme of targeted socio-economic research 1994-1998 has received a budget 
allocation of ECU 138 million. Its objectives are to elucidate decision-making at decentralised, 
national or Community level and lay the foundation for the sustainable development of 
Europe's economies, enabling them to withstand international competition and create jobs. 
The activities will concentrate on: 
• evaluation of science and technology policy options in Europe; 
• research on education and training; 
• research into social integration and social exclusion in Europe. 
5.5 RTD in the fields of information and language engineering and 
libraries 
The horizontal RTD activities, which include information engineering and language 
engineering, are those which impact across the boundaries of other research areas, and are of 
particular importance for the development of the electronic information services market and 
European competitiveness. Issues such as accessibility, ease of information retrieval and 
language barriers are addressed by the programmes outlined below. A brief description of the 
libraries programme ,which is also key to developing and meeting demand for electronic 
information, is also provided. 
5.5.1 Information Engineering 
Information Engineering (IE) is a new sphere of activity under the Telematics Applications 
area of the Commission's Fourth Framework R&D programme. The driving force is user 
involvement and the aim is to permit easier and more selective access to and better usability of 
information in all its forms. 
The primary activity will be the development of pilot applications covering the three main areas 
of the information chain 
• electronic publishing; 
• information dissemination; 
• information retrieval. 
Following a call for proposals for exploratory actions in multimedia publishing (ref. OJ 
C78/S51 of 15th March 1994), 22 feasibility projects were selected to run over a six-month 
74 
MO Annual Report 1993 - 1994 Section 5 
period. Their objective is to define and test the feasibility of pilot applications in the following 
areas: 
• asset trading; 
• technical services and documentation; 
• electronic newspapers and magazines; 
• multimedia catalogues; 
• scientific, technical and medical (STM) publishing. 
The results of the feasibility projects will contribute to the first call for proposals in IE under 
the 4th Framework programme, to be published on 15th March 1995. Other exploratory 
actions have also been undertaken, including studies in the following areas: 
Europe-wide high capacity network - what is available? 
information transactions; 
project organisation, structure and management; 
telepublishing survey; 
usability study; 
status review of non-text based information retrieval; 
information Engineering 2001 - identifying the influential technologies and their effects; 
corporate publishing. 
The studies will run in parallel with the feasibility projects, and the results will provide input 
into the call for pilot applications to run under the main phase of the Telematics Applications 
programme. IE pilot applications will be accompanied by supporting actions in the following 
areas: 
IE research centres network; 
IE academic connection; 
standards; 
usability test centres; 
international co-operation. 
75 
IMO Annual Report 1993 -1994 Section 5 
Work has already begun in two of these areas. A research panel has been established to 
develop links between the programme and the academic information science community, while 
the investigation of the feasibility of a pan-European network of IE research centres is the 
subject of a current study. 
5.5.2 Language Engineering 
With widespread use of information technology to access an increasing range of information 
services, both at work and in the home, the development of a strong European Information 
Services sector will in large part depend on how successful the industry is in overcoming 
language barriers in domestic and global markets. 
An important objective of the Language Engineering programme is to support the 
incorporation of language engineering techniques into telematic systems to ensure that access 
is not limited by language. This will allow the applications developed to play a two-fold role, 
broadening the base of participation in a society increasingly dominated by information, and 
ensuring that the potential market for these applications is sufficient to make these, and future 
projects, viable undertakings, particularly for SMEs. 
The language engineering research activities under the Third Framework generated significant 
scientific and technological results, and sought an opportunity for industrial impact. The need 
for practical applications is now a driving force behind RTD activities and projects will be 
undertaken in the following areas: 
• management systems for the life cycle of electronic documents in multiple languages; 
• transactional teleservices such as telebanking and electronic directories; 
• electronic mail and teleconferencing facilities; 
• , telematic translation services; 
• tools for language acquisition and use in an interactive and multimedia environment. 
RTD activities will enhance the linguistic infrastructure. Dictionaries and typical expressions 
are among the most important of the linguistic databases to which direct access will be 
required by any information system implying the use of written or spoken language. Progress 
will be made towards a fine-grained network of these linguistic tools accessible throughout 
Europe. 
5.5.3 Libraries Programme 
Developments within libraries will influence, and be influenced by, developments in the 
electronic information services market. By providing a point of access, and offering value-
76 
IMO Annual Report 1993 - 1994 Section 5 
added services, libraries have a role to play in the stimulation of demand for particular products 
and services. 
The long-term aim of the libraries programme is to assist in the creation of a modern libraries 
infrastructure in support of economic, social and cultural life in the European Union. Under 
the Fourth Framework Programme, the aim is to achieve further progress towards making the 
vast store ofinformation within European libraries accessible to a much wider audience, and to 
facilitate user access through libraries to the world of networked information. 
While ensuring continuity with current work, the new programme is more clearly focused on 
telematics priorities for libraries backed by stronger horizontal co-ordination. It consists of 
three action lines designed to enhance the role of libraries in providing services linking the 
more traditional collection-based resources with the evolving world of electronic information: 
• network-oriented internal library systems, designed to prepare individual libraries for 
entering the networking world; 
• telematics applications for interconnected library services, the key part of the programme, 
encouraging libraries to work in networked environments providing interconnections 
between libraries themselves as well as with their suppliers and end users; 
• library services for access to networked information services, catering for links with the 
evolving electronic information world at large. 
The general objective of the new work programme is thus to achieve systems integration based 
on an applications-oriented approach rather than one which is driven by technology. 
Special emphasis has been given to the reduction of disparities at various levels (types of 
library, degree of access to technology, regional and cultural differences), the development of 
human resources and skills and the need to achieve concrete practical results (e.g. through 
demonstrators). 
The new programme will therefore build on the achievements of the start-up programme 
(1990-1994) while allowing libraries to adapt their skills and expertise to better access-based 
services for a wide variety of users across Europe. Two calls are planned, the first for 15 
March 1995. 
77 

6 KEY LEGAL AND REGULATORY ISSUES 
Legislation and regulation are required in the information industry in order to protect the 
interests of the users of services and to preserve the rights of service producers and content 
owners. In theory, they should provide a framework within which information and 
communications industries can flourish. This section looks at a few of the most pressing legal 
issues faced by the industry today. 
At present, national and European law is under examination in the light of the development of 
the information society. This is partly because technologies are changing so rapidly and 
legislation in the Member States varies widely. This has proved to be a significant cause of 
delay for debates on data protection, copyright, the legal protection of databases and, more 
recently, media concentration law. In spite of these difficulties, it is recognised that efforts 
must continue to reach consensus if a truly European market is to be established for 
information and communications services. 
One of the key statements of the Bangemann report to the European Council on Europe and 
the global information society was that it was essential to develop 'a common regulatory 
approach to bring forth a competitive, Europe-wide, market for information services.' The 
report also acknowledged that ' disparate national regulatory reactions carry a very real threat 
of fragmentation to the internal market'. The areas which required priority attention were: 
protection of intellectual property rights; personal data protection and privacy; electronic 
protection (encryption), legal protection and security; media ownership and competition policy. 
The Commission's Communication on Europe's Way to the Information Society - An Action 
Plan also focused on the areas noted in the Bangemann report, and set out a timetable for 
adoption of legislation. The emphasis placed on legal and regulatory issues by both of these 
reports is likely to mean that legislation and regulation will be pushed forward more rapidly 
than would otherwise have been the case. 
Meanwhile, progress has already been made on harmonising copyright legislation in Europe. 
The following directives have been adopted with regard to: 
# the legal protection of comuter programs, 
. the rental and lending right and certain neighbouring rights, 
. the term of protection of copyright and neighbouring right, and 
. certain rules concerning copyright and neighbouring rights applicable to satellite 
broadcasting and cable retransmission. 
However, there are still many areas of law where harmonisation is a long way off, and this may 
contribute to barriers to trading outside national boundaries. Moreover, the degree of 
79 
IMO Annual Report 1993 - 1994 Section 6 
variation between national information-related legislation outside Europe makes it difficult for 
publishers and others to protect and manage their information services in export markets. 
During 1993 and 1994, the copyright debate took on another dimension with the investigation 
of the Financial Times by the UK Monopolies and Mergers Commission (MMC). The enquiry 
was into the FT Profile database and was sparked off by the FT's decision to discontinue 
licensing the database to other hosts. The rationale behind the MMC's enquiry was the 
question of whether the FT's management of its copyright materials constituted an abuse of 
monopoly power in the on-line historical news market. After a year-long investigation, during 
which the MMC heard evidence from the Financial Times, its competitors and trade 
associations active in the industry, the Financial Times was cleared of monopoly abuse - much 
to the relief of many other copyright holders, who feared that a contrary judgement would 
have marked a blow to the ability of major information companies to exploit market 
opportunities through justifiable copyright and licensing management. 
In other areas, progress has been made over the last year in self-regulation by the European 
information industry. This includes the submission of Guidelines for Cross-Border Control of 
Audiotex and Videotex by the European Information Industry Association in July 1993 and 
which is expected to be finalised by Autumn 1994. Although these Guidelines will not be 
incorporated into national statutes and are still to be fully agreed, they are expected to facilitate 
the development of cross-border markets in audiotex and videotex, where there is considerable 
variation in national regulation. A code of practice for information brokers was also drawn up 
in 1993 by EUSIDIC, EITA and EIRENE. Again, this does not have the force of law, but it is 
hoped that information brokers who subscribe to the code will be recognised by their clients as 
having sound business principles and a professional approach to their work. 
The issue of synergy between the public and private sector in the information market and the 
exploitation of government-owned information by the private sector was the subject of further 
study during 1993. The EC-funded PUBLAW 2 project examined the impact of Guidelines for 
public/private synergy originally drawn up in 1989. The study found that awareness and 
application of the Guidelines varied considerably amongst Member States, and a further study 
(PUBLAW 3) is due to take place to suggest ways forward on this issue. 
A great deal has already been published on the detail of legal developments in these and other 
information-related areas. The aim of following sections is therefore to place some of the key 
legal issues in a practical context, assess their impact on the information community and 
examine the possible solutions which have come to light. 
6.1 Copyright and Intellectual Property Rights 
Providing high levels of legal and technical protection of creative content will be one of the 
essential conditions to ensure the necessary climate for the investment needed for the 
development of the Information Society. Thus, there is a need for internationally recognised 
protection for the creators and providers of materials that will be disseminated over the Global 
Information Infrastructure as was agreed at the G-7 Conference on 25-26 February 1995 in 
Brussels. However, much of the copyright framework enshrined in national and EU legislation 
80 
IMO Annual Report 1993 - 1994 Section 6 
was originally developed in the context of print media, and there is a growing requirement for 
additional legislation for the protection of other forms of content, such as electronic databases. 
Practical copyright issues have manifested themselves in the form of several distinct problems. 
Those which have caused particular difficulties for the information industry are the prevention 
of illegal copying, management of copyright clearances and negotiation of authors' rights. 
6.1.1 Illegal Copying 
Electronic storage media are much better suited to quick and cheap copying than are print 
media - and here lies one of the problems which has faced the electronic information industry 
since its birth. More recently, this problem has been exacerbated by the growing ease with 
which multiple copies of electronic files can be distributed over networks such as the Internet. 
Unlike most forms of piracy, this kind of illegal copying can be carried out without the need 
for a physical distribution medium (such as a floppy disk), at minimal cost and, in many cases, 
leaving very little trace. The digital environment is well suited to extraction and manipulation 
ofinformation, and the temptations are strong. The fear of uncontrollable copying is probably 
the single biggest factor in discouraging information providers from making their services 
available over networks such as the Internet. 
As with most crime, prevention would be better than cure in the case of illegal copying. The 
best way of tackling the problem may be to make it so quick, easy and cost effective to obtain 
copies legally, that illegal copying on an individual or large scale basis becomes unnecessary. 
This may be an unrealistic dream at present, but research taking place into systems for taking 
on-line payments for information transactions, (such as the EC CITED project), is a step in the 
right direction. So too are moves on the part of information providers to make it easier for 
users to make legal copies. In Spring of 1994, for example, Dialog-DataStar announced that it 
would offer corporate users a service by which they could make legal copies within their 
organisation. For services such as electronic document delivery, it will be absolutely essential 
that a workable copyright framework is established, and this will require considerable 
discussion and negotiation between information providers and users. 
A very recent dimension to the copying problem is the question of liability for files illegally 
copied over bulletin boards. In the US, for instance, CompuServe is fighting a claim by the US 
National Music Publishers Association that it is liable for the illegal copying of MIDI music 
files over its bulletin boards. CompuServe says that it takes exhaustive steps to prevent illegal 
copying, and that as the distributor it is not liable for copyright infringements by users. The 
outcome of this and other bulletin board disputes will be watched closely by those in the 
electronic information business. 
Looking at other content industries, there is still a great deal to fear from piracy. The Business 
Software Alliance (BSA) has initiated a campaign in Europe to crack down on software theft. 
It recently found that, in 1993, the Spanish software industry lost £330m (ECU 256m) in 1993 
as a result of piracy, and that illegal copying in Italy costs software houses some £166.5m 
(ECU 129m) a year. However, the Software Directive passed by the Council in 1991 had to 
be implemented by 1 January 1993 nto national legislation and there are signs of improvement. 
81 
IMO Annual Report 1993 -1994 Section 6 
In Italy, for example, the proportion of software in use which is pirated dropped from 86 per 
cent in 1992 to 50 per cent in 1993, according to BSA. In the UK, business software piracy 
fell from almost 50 per cent in 1992 to 27 per cent in 1993. Meanwhile, the Software 
Publishers Association has estimated that in 1993, some £4.4bn (ECU 3.4bn) worth of PC 
software was stolen world-wide. 
6.1.2 Copyright Clearance 
The widespread development of multimedia applications will require the clearance of rights for 
small elements of text, images, video and sound. The publisher of a multimedia encyclopaedia, 
for example, might be faced with thousands, if not millions, of clearances. The cost of this 
process, (including a huge administrative cost as well as actual rights payments), could easily 
account for more of the total production bill than design and software development. 
Although a few fixed price databases of copyright cleared materials have been put together for 
developers to exploit (such as Andromeda's Resource Bank), the volume and range of 
materials they contain represent no more than a drop in the ocean. The cost and delay of 
copyright clearing for multimedia products is one of the biggest motivations behind the 
investment in content ownership by applications developers. In turn, these practical difficulties 
help to increase the perceived value of content rights and content companies. 
One of the possible solutions to the problem may be the establishment of a single electronic 
information copyright clearing house, which would co-ordinate functions handled by 
organisations like the UK's Copyright Licensing Agency and Performing Rights Society. This 
would enable developers to approach a single organisation for its clearances and with which to 
carry out transactions. This concept is already the subject of considerable debate within the 
industry, but a great deal more work will be needed to develop a workable solution. 
6.1.3 Author Rights 
Authors' interests do not always coincide with these of publishers seeking to maximise their 
revenues through electronic versioning and outside licensing of electronic rights, and tending 
to view author rights clearances as something which must be accomplished with the minimum 
cost and time outlay. Originators may be aware of the opportunities which electronic 
publishing affords, but are rarely in a position to judge the value of intellectual properties in a 
market of which they may have very sketchy knowledge and where standard author/publisher 
royalty relationships are yet to emerge. 
The very fact that publishers need to get permission from authors in order to create electronic 
versions of their works is becoming commonly known in the publishing community. 
So far, attempts to bring together publishers and originators in discussion over electronic rights 
have been less than productive. In the longer term, it is possible that standard rights formulas 
will be developed alongside those used in print publishing. In the meantime, authors, their 
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agents and the associations representing them-will need to inform themselves as to the nature 
of the opportunity. 
6.2 Legal Protection of Databases 
The proposed Directive for the legal protection of databases regulates the specific problems 
which arise as a result of the use of electronic data processing equipment for storage, 
processing and retrieval ofinformation. It addresses both the creative and economic aspects of 
the protection of databases to stimulate investment and to keep pace with the demand for on­
line information services. The proposed Directive sets out to harmonise copyright protection 
of compilations of data and other materials that fulfil common eligibility criteria for protection. 
One of the fundamental problems associated with copyright in databases is the notion of 
originality, which forms the basis for much of the national copyright legislation and which 
varies considerably from country to country. Telephone directories and other reference 
databases have been the subject of discussion in this context, partly because they do not fit into 
traditional interpretations of originality and represent a comprehensive dataset, rather than one 
which requires originality in the method of selection. At present, it is possible for a database to 
be copyright protected under the legislation of one country and not in another. 
In addition, the proposed Directive provides for a legal innovations by giving protection to the 
investment into a database. It is a sui generis right to prevent unauthorised extraction and/or 
reutlisation from the database that réfères to infringing acts committed by users of competitors. 
Unoriginal databases are not copyrightable. A posteriori protection against parasitic behaviour 
by competitors, is provided by unfair competition law only in some Member States but not in 
others. Sui generis right is therefore intended to create a common legal environment in which 
investment can be stimulated and protected against misappropriation. 
The initial proposal for.a Directive resulted in various amendments during the first reading in 
the European Parliament. An amended proposal (issued by the Commission in October 1993) 
attempted to clarify some of the issues. In the meantime, additional progress has been made 
and it is to be hoped that the legislative process will lead to adoption of the Directive without 
undue delay. It should be recalled that the Commission's Action Plan on Europe's Way to the 
Information Society indicates that the Council is invited to adopt the Directive on the legal 
protection of databases as a matter of urgency. 
The future Directive will be a cornerstone in the construction of the European Union's 
regulatory framework related to the intellectual property aspects of the Information Society. 
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6.3 Data Protection 
Since the Convention on Data Protection produced by the Council of Europe in 1981, the 
storage and use of data concerning individuals has been a significant issue for the industry in 
general and for the information industry in particular. Following the Convention, 
developments in legislation have taken place at a national, European and international level 
which are too numerous and complex to discuss in depth here. However, it is worth 
considering the key issues at stake and examining the possible implications of the EC's Draft 
Directive on Data Protection. 
Data protection legislation is intended to protect the fundamental rights and freedom of natural 
persons, and in particular their right to privacy. Depending on the stringency of the national 
jurisdiction, this might include any electronic file in which names of individuals are found and 
might even include manual records. Data protection therefore has major implications for the 
information industry: most obviously for companies involved in activities such as credit rating, 
list services and direct mail, but also for directory publishers, bibliographical database 
producers and, in some countries, the press. The problem faced by regulators and by industry 
at present is the degree to which national law varies, even within Europe. In this field, 
however, the European Union is ahead of all other regions in the world. 
Most European countries share a lowest common denominator of data protection 
requirements. This includes principles such as the fair and lawful processing of personal data. 
Moreover, a certain number of rights are granted to the persons whose personal data are 
processed (data subjects). For example, data subjects have the right to know what information 
is held about them, to inspect that information and to sue for damage caused by inaccurate 
data. Naturally, there are exceptions where national security and crime prevention are 
concerned, but in general, users of personal data must abide by certain general principles and 
must have systems in place to prevent unauthorised access, deletion or amendment of records. 
In addition, in some cases, personal data may be processed only if the data subject has given 
his/her consent. Some legislation also says that data subjects should know to whom 
information about them has been passed, and some extend all of their data protection 
legislation to print records. 
For the information services industry, where data collections are increasingly global in their 
coverage and target markets are often international, the degree of variation can present serious 
problems. Different media may attract different treatment; in the UK, Ireland and 
Luxembourg, for example, microfilm is not covered by data protection legislation, although it 
is in most other European countries. There are differences in the definition of data and of 
personal data which can lead to debates such as whether real-time or other transitory electronic 
data is subject to data protection.The problems extend to information users too. For example, 
buyers of CD-ROMs in some countries are liable tö data protection law (on the basis that they 
can download and manipulate the data if they so choose), although in others they are not (on 
the basis that the content of CD-ROMs cannot be amended). 
The wide variation in national legislation (to the extent that Greece and Italy have not yet 
ratified the 1981 Convention and even have no law at all) prompted the Commission to press 
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forward with a European Directive. The Council adopted its common position on the draft 
directive on the protection of individuals with regard to the processing of personal data and the 
free movement of such data on 20 February 1995 and final adoption after the second reading 
the European Parliament is expected at the beginning of 1996. Furthermore, discussion on the 
proposal for a directive concerning the protection of personal data and privacy in the context 
of digital telecommunications networks (ISDN) should continue in the Council with a view to 
adopting a common position. 
The general directive seeks to facilitate the free movement of personal data within the 
Community by affording individuals a high level of protection with regard to the processing of 
personal data. Harmonisation of the relevant national laws has proved necessary because of 
the wide divergence between them and of the increasing need to exchange data resulting from 
the completion of the internal market. The specific directive in the telecommunications field 
will adapt and complete the general principles in order to ensure protection in this specific 
environment and the free movement of telecommunications equipment and services in the 
Community. 
The protection of personal data and privacy is essential for the development of the Information 
Society and the information market at a global level. Therefore, work on the two proposals 
should be finished as soon as possible. International co-operation should be intensified with a 
view to establishing an international legal framework on personal data protection and privacy. 
6.4 Access to information held by government bodies 
One of the largest gatherers of information is government and the public sector, in its various 
forms. In the United States access to such information by the private sector for commercial 
purposes is expressly permitted by statute (at least as far as the activities of the Federal 
government and its agencies are concerned). The information service industry has benefited as 
a result. 
In many European countries, the right of business to use information collected by the public 
sector is much more restricted. As demonstrated in the PUBLAW study, the legal situation 
and government policies vary from Member State to Member State. Access to different types 
of information may be permitted by law, or there may be no general provisions. Commercial 
re-use of such information may be expressly forbidden. Some countries have restrictive legal 
conditions on free access, but aim to maximise financial returns. 
The PUBLAW 2 study examined the impact of the Guidelines for public/private sector synergy 
originally drawn up in 1989. The study showed that awareness and application of the 
Guidelines varied considerably amongst Member States. The North American situation was 
also examined in detail. A well-attended meeting in 1993 discussed these issues and showed 
that the private sector was dissatisfied with existing rules, while the public sector was not 
convinced of the need for Community intervention in the form of a directive. 
If the European information industry is to compete effectively in the global market place, 
considerable attention needs to be paid to practical ways of encouraging co-operation on fair 
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terms between the public and private sectors. The next step in this direction has been launched 
with the start of study PUBLAW 3. 
86 
7 DEVELOPMENTS IN THE EUROPEAN INFORMATION 
CONTENT SECTOR IN 1993 
The following section is intended to provide an overview of developments across the full range 
of the information industry over the last year, although it is inevitably impossible to cover all of 
the technologies and markets represented by the ever-growing information industries. The 
breadth of coverage in this section, (ranging from traditional on-line databases to music 
publishing and Video on Demand), reflects the widening context of the electronic information 
sector as discussed in section 2.1 of this report. 
The range of media and platforms available for information service delivery is growing rapidly. 
This makes it increasingly difficult for information providers to assess the potential of the 
various technologies for their target markets. The technologies themselves are changing so 
rapidly that publishers are often wary of developing electronic products because they fear that 
new technologies will supersede their chosen delivery media and that investment in electronic 
product development will therefore be wasted. 
In fact, it is becoming clear that the publishers and information providers which have most to 
gain from new media markets are those which maintain their data resources in standardised 
digital formats, which can then be exploited through as many or as few delivery media as 
appropriate. Furthermore, the emergence of a specialist electronic publishing and development 
sector means that information owners can exploit their resources through licensing to third 
parties, even if they are not yet ready to carry out electronic product development themselves'. 
The extent to which new technologies will supersede their older counterparts is a question 
which faces the industry at regular intervals. In the late eighties and early nineties, some 
forecasters warned that CD-ROM would be the deatn of on-line. The reality has been that 
some on-line business has migrated to CD-ROM, but that the two media have very different 
merits which allow them to co-exist. Indeed, CD-ROM has helped to expand the overall 
market rather than merely splitting it. In recent months, it has been suggested by some 
commentators that the Internet will be the agent which finally kills off the on-line business. 
This is unlikely to be the case, although those on-line companies which are able to exploit 
network opportunities in addition to their other businesses will be in a strong position. 
7.1 On-line Databases 
The on-line sector is the oldest and most established of the information businesses and, not 
surprisingly, it no longer enjoys the exponential growth rates seen in newer areas like CD-
ROM and multimedia. Nevertheless, on-line market growth in Europe was around 13 or 14 
per cent in the period 1989 to 1991, which is encouraging bearing in mind the overall 
economic climate. Figures for 1992 suggest that growth since the previous year may have 
87 
MO Annual Report 1993 - 1994 Section 7 
been as high as 20 per cent. Real-time information services still make up the biggest share of 
the European on-line market, and the bulk of sales continue to be generated by large 
corporations with on-line budgets and information professionals at their disposal. Meanwhile, 
growth in the number and range of databases available continues apace. 
7.1.1 The On-line Market 
Reliable and up-to-date figures for the on-line sector are still difficult to find. The joint 
EIIA/EC Co-ordinated Host Survey provides useful European data for the supply side up to 
1992, and a few market research reports have been published which cover the demand side, 
although these have varied in quality and accuracy. The Host Survey provide the most 
consistent overview of the European situation over a period of years. Table 7.1 shows on-line 
revenues between 1989 and 1992, and indicates that, in spite of general recession, the on-line 
industry sustained relatively high levels of growth between 1989 and 1991, and that during the 
period 1991 to 1992, revenues grew by nearly 17 per cent. 
Table 7.1 Professional EU On-line Revenues (Including Videotex), 1989-1992 
EU On-line Revenues Percentage Growth 
(MECU) 
1989 2,203.1 
1990 2,491.6 13.1 
1991 3,121.7 25.3 
1992 j 3,643.2 | 1^7 
Source: EIIA/EC Fourth Co-ordinated Survey 
(Figures re-stated at 1992 exchange rates) _========œ===aŒ=œ=^^ 
The EIIA/EC survey also breaks down these figures by origin of revenues (see Table 7.2). 
Interestingly enough, these suggest that the proportion of total revenues earned in export 
markets outside the EU fell slowly but steadily between 1989 and 1992, from 39 per cent to 32 
per cent. This may be partly accounted for by unfavourable exchange rates. The proportion of 
intra-EU sales also fell back slightly in 1992, whilst national sales grew substantially as a 
proportion of the total. The largest proportion of non-EU export sales continued to be 
generated in North America, where exports amounted to 288.2 MECU in 1992. Sales to the 
US represented 11.5 per cent of the total in 1992, compared with 14.9 per cent in 1989. 
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Table 7.2 Geographical Analysis of On-line Revenues (Excluding Videotex) 
% of total 
1989 1990 1991 1992 
BNational Sales ^Intra-EU Salas ÖExport Sales 
Source: EIIA/EC Fourth Co-ordinated Survey 
(Percentages re-stated using 1992 exchange rates) 
The Simba/Communications Trends 1993 Online Services report indicated that in 1992, 
Europe-based on-line companies generated revenues of US$ 3.24bn (ECU 2.79bn). According 
to Simba, Europe's overall share of the on-line market fell by three per cent during 1992, 
bringing it down to 32 per cent. Simba's figures for Europe appear quite low when compared 
with those produced by the ELLA/EC survey. This might be partly because they have not 
included independent subsidiary companies based in the EU but ultimately owned by US 
companies. 
In the US, the electronic information services market grew by 16 per cent in 1993, according 
to the 1994 US Industrial Outlook, reaching US$ 13.6bn (ECU 11.7bn). Around 65 per cent 
of this total (ie around ECU 7.6bn) was thought to be attributable to on-line revenues. The 
market for all electronic information services is expected to grow by a further 15 per cent 
during 1994, with revenues up to US$ 15.6bn (ECU 13.4bn). 
Real-time services continue to play a crucial role in the on-line industry, and still represented 
over half of total EU revenues (nearly 54 per cent) in 1992. Having said that, the proportion 
of real-time revenues has fallen steadily since 1990, when they accounted for 59 per cent. 
Falling growth rates in real-time services has partly been a result of general recession in 
financial and banking industries, but is also a sign of the comparative maturity of this sector. 
89 
MO Annual Report 1993 - 1994 Section 7 
Non-real-time services, on the other hand, enjoyed growth of nearly 27 per cent in the period 
between 1991 and 1992. 
Table 7.3 Real-Time / Non-Real-Time Revenue Breakdowns 
MECU 
2000 
1500 
1000 
500 h 1788.4 
1989 1990 
• Real-Time [H Non-Real-Time 1992 
Source: EIIA/EC Fourth Co-ordinated Survey 
(Figures re-stated at 1992 exchange rates) 
Reuters and Telekurs continue to dominate the European real-time market. In 1993, Reuters 
acquired Quotron, Citicorp's real-time news, equities analysis and stock price division. 
Although Quotron is widely considered to be a declining business in the US, it does give 
Reuters a lever into the US market. Reuters' results for 1993 indicated a turnover of £ 1,874m, 
(ECU 2,436m) representing an increase of 19.5 per cent since the previous year. Profit before 
tax was up 14.9 per cent on the previous year to £440m (ECU 572m). 
It is comparatively easy to split out real-time and non real-time revenues, but analysis of 
industry revenue by subject or sector is rather more difficult. The only subject analysis 
provided by the EIIA/EC survey relates to electronic information service revenues generally 
and not just on-line, and these are indicated in Table 7.4. 
90 
MO Annual Report 1993 - 1994 Section 7 
Table 7.4 Subject Analysis of EU Electronic Information Revenues, 1990-1992 
Finance 
Business 
Govt. 
STM 
Other 1990 
MECU 
1,815.6 
649.5 
41.7 
50.3 
15.9 % 
Total 
70.6 
25.2 
1.6 
2.0 
0.6 1991 
MECU 
- 1,841.7 
883.0 
178.6 
96.7 
60.8 % 
Total 
60.2 
28.8 
5.8 
3.2 
2.0 1992 
MECU 
1611.1 
993.4 
230.2 
104.4 
53.4 % 
Total 
60.2 
28.8 
5.8 
3.2 
2.0 
Source: EIIA/EC Fourth Co-ordinated Survey 
(Figures re-stated at 1992 exchange rates) 
Simba provides a more detailed breakdown of on-line markets by subject, (Table 7.5) although 
unfortunately, these are not broken down by region. 
Table 7.5 Subject Analysis of Worldwide On-line Revenues, 1988-1992 
1988 
(MECU) 1989 
(MECU) 1990 
(MECU) 1991 
(MECU) 1992 
(MECU) % of 
Total 
in 
1992 
Brokerage 
Credit 
Fin.News/Rch. 
Legal/Reg. 
Profssnl. 
End User 
Marketing 2,698.2 
1,405.2 
1,051.8 
399.0 
354.5 
90.3 
8.2 3,055.8 
1,468.9 
1,160.1 
509.7 
446.4 
123.8 
12.9 3,385.3 
1,493.8 
1,301.2 
577.5 
499.9 
205.3 
19.3 3,580.9 
1,521.8 
1,426.7 
611.5 
529.0 
295.5 
26.7 3,847.7 
1,633.6 
1,591.0 
649.7 
568.6 
398.5 
34.4 44 
19 
18 
7 
7 
5 
>1 
Source: Simba/Communications Trends, 1993 
Forecasting the on-line market becomes more and more difficult as new technologies emerge. 
The potential impact of the Internet on traditional on-line sales is particularly difficult to assess, 
and depends largely upon the ability of on-line companies to innovate and diversify in terms of 
delivery options. Simba have estimated that growth in on-line sales worldwide will be around 
8 tö 8.5 per cent in the period 1994 to 1997, bringing worldwide revenues up to 13 BECU at 
the end of that period. (See Table 7.6.) 
91 
MO Annual Report 1993 - 1994 Section 7 
Table 7.6 Worldwide On-line Service Sales Forecast 
Sales (BECU) 
14 13.09 
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 
Source: Simba/Communications Trends, 1993 
7.1.2 Availability and Use of On-line Databases 
Work carried out by Gale Research Inc. as part of their 1993 Directory of Databases indicates 
that the overall volume of on-line searches continues to grow rapidly, with an estimated 44.4 
million searches having taken place in 1992, excluding searches on transactional services. The 
previous year, the figure had been estimated at 34.5 million. The same directory listed a total 
of 7,907 databases in its 1993 edition (reflecting the position in 1992), up from 7,637 the 
previous year and 6,750 in 1990. It is unclear, however, what proportion of databases were 
available in portable formats (such as CD-ROM) as opposed to on-line. Furthermore, the Gale 
directory is very much geared towards the American market, although it claims to cover all 
regions. It nevertheless appears to be the most comprehensive of the on-line directories 
currently available and is therefore useful as a general indicator of trends. 
The breakdown of services by subject area in 1992 is indicated in Table 7.7. 
92 
MO Annual Report 1993 - 1994 Section 7 
Table 7.7 Databases by Subject Area, -1992 
Subject Number of Databases Percentage of Total 
Business 2,624 33 
Science/Technical/Engineering 1,492 19 
Law .885 11 
Health/Life Sciences 728 9 
General 700 9 
Social Sciences 447 6 
News 385 5 
Humanities 314 4 
Multidisciplinarv (Academic) | 296 | 4 
Source: Gale Directory of Databases, 1993 
According to Gale, the proportion of commercial database producers is still rising significantly, 
and reached 75 per cent in. 1992, up from 70 per cent the previous year. Meanwhile, the 
proportion of databases produced by government institutions and by not-for-profit 
organisations appears to be falling slowly, making up 15 per cent and 9 per cent respectively-in 
1992. The remainder is made up of databases published jointly by the public and private 
sectors. Within Europe, however, the proportion of public sector databases is higher, 
reflecting the more active role which governments tend to play in information provision. 
Details of the provision and use of on-line services in the home are contained in section 7.7 of 
this report. 
7.2 Optical Information Media 
Since the publication of the first CD-ROMs in the mid 1980's, industry commentators have 
been predicting an explosion in optical disc publishing. For many years it seemed as though 
the prediction was yet another instance of the widening gap between hype and reality which is 
typical of high-tech industries. 1993, however, will probably go down as the year that CD-
ROM really took off, in the sense that many more organisations actually started to make 
money out of CD-ROM publishing and that optical discs began to enter the consciousness of 
the general public. 1993 was also the year that many computer hardware manufacturers 
started including CD-ROM drives as standard on their top range computers, and low-cost 
multimedia upgrade kits became a common sight in generalist computer mail order catalogues 
and retail outlets. 
7.2.1 Platforms 
The availability of these kits and the growing installed base of multimedia-capable PCs has 
meant that multimedia publishing on the standard CD-ROM XA (extended architecture) format 
gained much wider acceptance, although the number of proprietary multimedia platforms based 
on the CD-ROM standard has continued to increase. By the end of 1993, these included not 
93 
MO Annual Report 1993 - 1994 Section 7 
only Philips' CD-i, Commodore's CD-TV, Tandy's VIS and Kodak's Photo CD, but also 3DO, 
Sony's MMCD and Commodore's CD32 games console, not to mention the Sega CD-based 
console, Saturn. Agreement was also reached on a standard for video publishing on CD 
(Video CD) towards the end of 1993. 
7.2.2 Installed Base of Readers 
According to the sixth edition of the Optical Publishing Industry Assessment (OPIA) report, 
(published by Infotech), the installed base of CD-ROM drives grew by 155 per cent in 1993, 
bringing the total base to a figure of around 11.4 million worldwide. The report suggests that 
this was mainly a result of bundling of drives and 'vigorous sales of aftermarket readers [ie 
drives purchased for connection to PCs already in use] especially in American and European 
markets'. The European installed base by mid-1994 is estimated at between 1.5 to 2 million, 
whilst the US is way ahead with an estimated installed base of over 7 million. The price of 
CD-ROM drives have been slower to fall in Europe than in the US, which partly accounts for 
the difference. Things are changing, though: in France for example, 80,000 drives were sold in 
1993 - a fourfold increase since 1992 when 20,000 were sold (source: EuroCD). 
Suggestions of growth at the level quoted in the OPIA report came as something of a surprise 
to the information industry, although Infotech claims that its previous estimates had erred on 
the side of caution, and that it had not anticipated such a take-off in 1993. At the beginning of 
1994, it was thought that over 10 per cent of desktop computers worldwide had CD-ROM 
drives, the expectation being that by 1999, almost every desktop PC will have access to either 
a standalone or networked CD-ROM reader. The report forecasts that the installed base of 
readers will more than double in 1994 to reach almost 24.9 million. 
These figures indicate a major take-off in CD-ROM over the past year and, according to a 
report published by Freeman Associates in California in May 1994, the current installed base of 
drives may be even greater than that estimated by OPIA, (see Table 7.8 below), although the 
rate of growth in terms ofinstalled base and shipments is likely to fall off after 1994, according 
to the Freeman report. 
Table 7.8 Worldwide CD-ROM Drive Installed Base and Sales, 1993-1999 
1993 
1994 
1995 
1996 
1997 
1998 
1999 Shipments (000s) 
8,322 
13,699 
18,600 
22,700 
25,600 
28,150 
29,600 % Growth Since 
Previous Year 
141 
63 
37 
22 
13 
10 
5 Installed Base at 
Year End (000s) 
12,997 
25,696 
42,141 
60,396 
78,245 
94,597 
108,050 
Source: Freeman Associates Inc. 
94 
MO Annual Report 1993 - 1994 Section 7 
OPIA, on the other hand, forecasts another rapid growth phase between 1997 and 1999, at the 
end of which the worldwide installed base of drives will be over 250 million. Of this total, 
OPIA forecasts that over 50 million will be made up of TV set-top drives. 
7.2.3 Availability of Titles 
The tremendous growth in the number of CD-ROM titles available continued throughout 
1993, with TFPL's figures indicating 3,597 published titles worldwide at the beginning of 
1993, rising to 4,731 by the middle of the year. TFPL's 1994 CD-ROM Directory (published 
in early January 1994 and therefore reflecting the position towards the end of 1993), showed 
another huge leap in numbers to 5,379. TFPL predicts that if the growth continues at the same 
rate, 3,000 new titles will be produced in 1994. 
The OPIA report indicates an even higher number of titles than that suggested by TFPL. 
OPIA gives a figure of 8,100 CD-ROM titles in print worldwide in 1993, although this figure 
includes nearly 3,600 titles produced in-house by companies for internal use, for applications 
such as in-house training and reference. Such titles are not counted in the TFPL directory. 
The OPIA report indicates growth of 54 per cent in the number of titles in print during 1992, 
and suggests that numbers of titles will reach around 10,700 during 1994 and around 13,000 
during 1995. 
The growing number of consumer and general interest CD-ROM titles is partly responsible for 
substantial growth in the number of titles available, although the number of arts and 
humanities, business and language titles all grew by over 60 per cent between 1993 and 1994 
according to TFPL. Table 7.9 shows the biggest subject areas for CD-ROM in terms of 
number of titles published. 
Table 7.9 Top Ten Subject Areas for CD-ROM by Number of Titles, 1994 
Subiect 
General Interest, Leisure 
Arts, Humanities 
Education, Training, Careers 
Computers, Computer Programmes 
Advertising, Design, Marketing 
Business and Company 
Languages, Linguistics 
Crime, Law, Legislation 
Science, Technology 
Maps, Geography Number of 
Titles 
1,043 
724 
631 
510 
429 
426 
417 
399 
386 
332 
Source: TFPL Publishing % of Total 
19.0 
13.2 
11.5 
9.3 
7.8 
7.7 
7.6 
7.3 
7.0 
6.0 % i Increase 
93/94 
73.8 
61.9 
48.8 
47.8 
53.2 
60.7 
61.6 
34.3 
37.8 
26.7 
95 
MO Annual Report 1993 - 1994 Section 7 
Compared with the US, Europe has a larger number of companies engaged in CD-ROM 
related activities, but this is a symptom of the fragmented nature of the market. Indeed, the 
difficulties of selling to the whole of the European market is reflected in the fact that there are 
almost twice as many distributors in Europe as there are in the US (829 in Europe and 449 in 
the US according to TFPL's 1994 CD-ROM Directory). The relative positions in the 
publishing of CD-ROM titles has remained fairly constant since 1990, with the US accounting 
for a little over 60 percent of titles and Europe around 30 per cent. The geographical 
breakdown of CD-ROM companies and titles is provided in Table 7.10. 
Table 7.10 Origin of CD-ROM and Multimedia CD Companies and Titles, 1994 
3500 3299 
84 " 32 13 6 6 
••a^ 1— Europa North/South Asia AustralaslaMiddle East Africa 
America 
I No. of Companies iaNo. of Titles 
Source: TFPL Publishing 
7.2.4 Markets, Sales and Pricing 
Worldwide revenues for CD-ROM titles in 1993 were estimated by OPIA to be US$ 9.6bn 
(ECU 8.25bn), although this figure includes in-house as well as publicly available discs. 
Combined revenues for titles and drives were estimated at US$ 12.2bn (ECU 10.5bn), and 
were expected to reach around US$ 22bn (ECU 18.9bn) by 1994 and around US$ 56bn (ECU 
48.2bn) by 1995. Revenues for commercial titles are forecast to reach nearly US$ 120bn 
(ECU 103.2bn) by 1999, up from around US$ 40bn (ECU 34.4bn) in 1996. However, these 
figures should be treated with a certain amount of caution. This is a very dynamic and young 
market and, although prospects for growth are good, it is difficult at this stage to quantify the 
96 
MO Annual Report 1993 - 1994 Section 7 
impact of developments in other areas, especially those taking place in the network 
environment. 
According to OPIA, the traditional CD-ROM sector, (namely professional, library corporate 
and government), continues to form the core of the market, largely because of the higher 
margins which can be achieved on products in this range. Average prices of professional and 
business CD-ROMs during 1993 were said to range between US$ 700 and US$ 900 (ECU 
600-775), whilst consumer multimedia titles, which accounted for a large proportion of unit 
sales, ranged from US$ 50-USS 125 (ECU 45-110). 
During the period 1991 to 1992, Europe may have accounted for only 20 per cent of the world 
CD-ROM market, although this is expected to have grown significantly by the end of 1994. 
Growth in revenues from professional CD-ROM titles in Europe has been dramatic in recent 
years. The EIIA/EC Fourth Co-ordinated Survey indicated that revenues grew by 173 per cent 
between 1990 and 1991 to ECU 79.3m, and by a further 93 per cent between 1991 and 1992 
to ECU 152.7m. 
Retail sales of CD-ROM are growing in Europe, as major retail outlets begin stocking games, 
entertainment and consumer reference titles. In mid-1993, the market research firm Gallup 
reported zero sales for retail CD-ROM in the UK, the amounts being negligible in comparison 
to other media. When Gallup reported again six months later, CD-ROM accounted for 4 per 
cent of the total. Admittedly, reference CD-ROMs made up a small part of this, with the 
greatest proportion of sales represented by games formats (1.4 per cent for CD32 titles and 1.6 
per cent for Sega titles). Nevertheless, CD-ROM is becoming firmly established in the retail 
market. 
7.3 Multimedia 
Despite the huge volume of material published about multimedia in 1993, in both the specialist 
and the newspaper press, there is still a great deal of confusion as to the meaning of the term. 
In its broadest sense, multimedia is an expression used to describe services where a number of 
media elements are combined and an interactive environment created. Such media elements 
might include searchable text, sound and still and moving images. Multimedia is frequently 
associated with CD-based products, although it is by no means confined to such media. 
The availability of broadband communications and compression technologies makes it possible 
to offer interactive multimedia services over networks, although in practical terms in the EU, 
this type of multimedia is at present largely confined to ISDN-based services for business. 
Two UK-based companies, On-Demand Information and Perfect Information have begun 
offering business information services via ISDN in the past year, and others are likely to 
follow, especially in the product information sector. Fully interactive, networked multimedia is 
unlikely to be a feature in the home until there has been significant further development of 
cable and ATM switching and of compression techniques. Meanwhile, developments such as 
interactive TV are also being described under the multimedia umbrella, although the level of 
interactivity offered by such services is likely to be restricted in the first instance. (See section 
7.8.3 for further discussion of interactive TV technologies and markets). 
97 
MO Annual Report 1993 -1994 Section 7 
Information Workstation Group in the US predicts that multimedia in its widest sense will be 
worth US$ 30bn (ECU 25.8bn) by 1998 in North America alone. Their report entitled 
Multimedia Opportunities suggests that the three biggest application areas will be 
entertainment, with US$ 9.1bn (ECU 7.8bn) multimedia-attributable revenues, the publishing 
process (multimedia production and publishing activities), US$ 4.7bn (ECU 4bn) and special 
effects US$ 3.5bn (ECU 3bn). Education and training applications are expected to generate 
multimedia-attributable revenues of US$ 3.3bn (ECU 2.8bn) by 1998. 
CD-based multimedia has captured the imagination of the public and of the press over the last 
year, although the European market for consumer multimedia is still small in comparison with 
the traditional CD-ROM market. The OPIA report suggests that consumer multimedia may 
account for as little as 20 per cent of overall CD-ROM revenues. 
However, a consumer boom in multimedia and games CDs was experienced in 1993, mainly 
during the last quarter of the year. The American Software Publishers Association said that 
sales of products from 62 major CD-ROM software publishers in 1993 amounted to US$ 
202m (ECU 173.7m) from eight million units sold. US$ 102m (ECU 87.72m) of this total 
came during the fourth quarter, when four million units were sold. Reference products such as 
encyclopaedias and dictionaries accounted for 40 per cent of sales, games and home 
entertainment 30 per cent and home education 24 per cent. Whether or not this can be 
replicated in Europe will depend partly on the willingness of bookshop chains, music and video 
stores, and consumer electronics retailers to stock CD-ROM products. 
Much of the activity surrounding the development of multimedia CD technology has been 
undertaken by hardware companies and consumer electronics manufacturers. Thus, companies 
like Philips, Commodore and Tandy have developed multimedia players based on proprietary 
architectures which often require application developers to pay a license fee or royalties for the 
right to publish titles for the platform. 
More recently, developments in compression standards on CD-ROM (especially the MPEG 
video standard), has made it possible to create multimedia applications on a standard CD-ROM 
with extended Architecture for audio-visual material (hence CD-ROM XA). CD-ROM XA is 
an industry standard and is not proprietary to any single manufacturer. Unlike platforms like 
CD-i or 3DO, it does not require users to buy dedicated hardware, although full multimedia on 
CD-ROM XA does require add-on equipment such as sound and video cards. The installed 
base of multimedia PCs appears to be growing enormously and developers of general reference 
and 'edutainment' titles may therefore decide to opt for CD-ROM XA rather than be tied to an 
individual manufacturer's platform. The growth in installed base of Windows PCs and the 
popularity of the Windows environment has led many CD-ROM XA publishers to choose this 
format. Distinct markets are likely to emerge for PC-based and television-based multimedia, 
and whilst CD-ROM XA and Windows may dominate in the former, the proprietary platforms 
will continue to play a strong role in the latter. 
Philips' multimedia CD player, CD-i, was first launched in the US in October 1991 and 
European launches began with the UK in April 1992. At the end of 1993, Philips announced 
that sales of their CD-i player had reached 300,000 worldwide, that there were some 150 titles 
already on the market and that 75 further titles were to be launched during 1994. They also 
98 
MO Annual Report 1993 - 1994 Section 7 
indicated that three million discs had been sold so far, which suggests an average 10 titles 
purchased per player. The number of retail outlets selling CD-i was said to have risen to 
13,000. 
Digital video upgrades for CD-i players were launched in the US and UK during the last 
quarter of 1993, and Philips signed a deal with MGM allowing films from their catalogue to be 
produced in CD-i format. Many industry commentators believe that the availability of feature 
films on disc will be the stimulus needed for a more widespread take-off of CD-i, and Philips is 
expected to launch a Digital Video campaign during 1994. A forecast of the market for CD-i 
titles is provided in Table 7.11. 
Table 7.11 European Forecast for CD-i Title Sales 
l Europe (MECU) I US (MECU) I 
1994 59.8 39.6 
1997 727.4 545.2 
2000 I 5,676.0 | 3,096.0 
Source: The Market for CD-i, Alan Barker 1993 
Commodore launched the first consumer multimedia player (CDTV) in April 1991, which was 
originally expected to compete head on with Philips' CD-i. However, it was later re-positioned 
as a games machine rather than a multimedia player and has since been superseded by CD32, a 
32-bit computer game platform. In the meantime, other proprietary multimedia platforms have 
continued to emerge, including 3DO. Announced at the end of 1992, 3DO was backed by 
Matsushita, AT&T and Electronic Arts, amongst others, and the first player was launched by 
Panasonic in 1993. 
7.4 Videotex 
Videotex has a very patchy history in Europe, with France's Télétel service as a showcase of 
government-led videotex initiatives, whilst other markets have shown minimal growth in recent 
years. By December 1993, 6.5 million videotex terminals were installed in France, and a 
further 500,000 computers with modems were being used for videotex access using Minitel 
emulation standards. Videotex services generated 112 million hours of connect time and 
brought in revenues of some FF 6.7bn (ECU lbn) during 1993. By contrast, the UK installed 
base of videotex terminals was just over 100,000 at the same period. 
France has the highest penetration of videotex terminals in the world, with Spain a very distant 
second. Table 7.12 below indicates that growth in the Spanish installed base of videotex 
terminals has been dramatic in recent years. Italy has experienced high growth, although 
99 
MO Annual Report 1993 - 1994 Section 7 
overall penetration remains comparatively low. More recently, penetration of videotex 
terminals in Germany has also grown substantially. 
Table 7.12 Installed Base and Penetration of Videotex Terminals, 1993 
Installed Base 
(000s) Penetration per 
1000 Inhabitants % Average Annual 
Penetration Growth, 
1988-1993 
Germany 
Canada 
Spain 
France 
Italy 
Japan 
UK 378 
105 
480 
6,540 
200 
128 
104 4.7 
3.7 
12.3 
113.3 
3.5 
1.0 
1.8 14.3 
63.8 
185.8 
8.4 
117.8 
15.1 
2.8 
Source: Les Chiffres Clés des Télécommunications Mondiales, OMSYC 
France has also been in the forefront of development of high-speed videotex services. This 
year, the Télétel Vitesse Rapide service will be put in place, allowing transmission at 9,600 bits 
per second, which will enable photographic images to be delivered to videotex terminals. The 
possibility of integrating credit card readers into the Minitel terminal is also being investigated. 
A comparative view of videotex elsewhere in Europe is provided in Table 7.13. 
Table 7.13 Videotex in Europe 
Country Name of 
Service Year of 
Launch Number of 
Calls per 
Month 
(000s) Number of 
Hours per 
Month 
(000s) Date of 
Update 
Austria 
Belgium 
Denmark 
Finland 
Germany 
Ireland 
Spain 
France 
Greece 
Italy 
Luxembourg 
Netherlands 
Norway 
Portugal 
Switzerland 
UK Bildschirmtex 
RTT Videotex 
Teledata 
Telesampo 
BTX 
Minitel 
Ibertex 
Télétel 
Hellastel 
Videotel 
Videotex 
Videotex NL 
Teledata 
SPV 
Videotex 
Prestel 1985 
1986 
1988 
1984 
1983 
1990 
1986 
1982 
1993 
1987 
1986 
1990 
1986 
1988 
1987 
1980 250 
25 
320 
9,000 
37 
620 
148,000 
540 
2 
2,200 
55 
1,500 30 
4 
33 
2,200 
7 
130 
9,200 
167 
<1 
200 
9 
200 01/92 
05/93 
12/91 
05/93 
08/93 
07/93 
12/92 
05/93 
05/93 
10/92 
02/92 
05/93 
02/92 
10/92 
07/93 
12/92 
Source: La Lettre de Télétel et d'Audîotel, France Télécom 
100 
MO Annual Report 1993 - 1994 Section 7 
7.5 Audiotex 
Audiotex was first introduced to Europe in 1986 in the UK and France. In the years between 
1987 and 1993, almost every other western European country launched either national or 
regional audiotex services, although in some countries these were later suspended. Audiotex is 
the term used to describe information and entertainment services delivered by the telephone. 
Such services are often made available over premium rate lines, although some are offered over 
standard telephone lines and are charged via credit card billings or subscriptions. Other types 
of services, such as those providing advertising or government information, might be offered 
over free phone lines. In Europe, however, most of the audiotex industry is concentrated 
around the premium rate market. 
A report published by Eurodata Foundation in autumn 1993 entitled Premium Rate Services 
suggests that the European premium rate services market will be worth US$ 2bn (ECU 
1.72bn) by 1995, up from US$ Ibn (ECU 0.86bn) in 1992. Eurodata's report argues that 
premium rate is becoming an increasingly acceptable way of accessing information services, 
and that it no longer has such a strong association in people's minds with N adult' entertainment. 
Eurodata's study included a survey of 1,400 people in 12 countries and, in particular, 
awareness, usage and willingness to pay premium rate tariffs were assessed. Across Europe, 
12 per cent of business people and 9 per cent of consumers had used premium rate telephone 
services, although in the Netherlands and the UK the figures were significantly higher (20 per 
cent of business people and 10 per cent of consumers in the UK; 38 per cent of business people 
and 31 per cent of consumers in the Netherlands). Willingness to pay premium rates for access 
to information services was found to be particularly high in France, where the market is well 
established and where widespread videotex usage has increased overall familiarity with the 
concept of paying for information. Business people seemed most willing to pay premium rates 
for government and public information, whilst consumers were more likely to be prepared to 
pay for advice lines and financial information. Table 7.14 shows the breakdown of European 
markets, launch dates and penetration of DTMF telephones. 
Although much of the revenues for premium rate services still comes from ' adult' services, the 
range of professional and business services available via audiotex has grown in Europe. The 
Fourth EIIA/EC. Host Survey indicated revenues of ECU 97.4m for professional audiotex 
services in 1992. This suggests that audiotex still plays a minor role in the professional 
electronic information services market, representing only 2.3 per cent of total revenues in 
1992. 
A study by Geste called Panorama de VEdition Audiotel provides a detailed picture of the 
range of services available in France and the nature of the organisations offering them. 
Informal indicators suggest that the European audiotex industry has a large number of small 
operators. The Geste report provides a detailed case study which appears to confirm that this 
is the case. Around 60 per cent of French service providers were found to have only one line, 
controlling 10 per cent of the total number of lines, whereas only 3 per cent of service 
providers had more than 20 lines, but together controlled 40 per cent of the total. The type of 
organisations offering audiotex services are broken down in Table 7.15. 
101 
MO Annual Report 1993 - 1994 Section 7 
Table 7.14 Breakdown of European Premium Rate Markets, Launch Dates and 
DTMF Penetration 
Belgium 
Denmark 
Germany 
Spain 
France 
Greece 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
UK Market Size 
(MECU) 
1992 
10.789 
24.773 
11.712 
54.062 
279.990 
6.503 
0.741 
99.587 
1.756 
346.707 1993 
15.413 
25.500 
53.678 
117.000 
348.355 
10.100 
8.750 
144.000 
1.000 
105.000 
15.600 
367.934 1995 
23.712 
30.600 
487.981 
139.018 
435.443 
20.200 
14.000 
290.223 
1.600 
127.731 
41.600 
424.540 Year of 
Launch 
1989 
1990 
1992 
1992 
1986 
1993 
1986 
1993 
1993 
1990 
1991 
1986 DTMF Line 
Pénétrât. 
1992 (%) 
55 
95 
10 
40 
62 
10 
60 
35 
77 
40 
10 
33 
Source: Overview of the Audiotex PRS Service Market, IMO Working Paper 
93/3, EPJournal 
Table 7.15 Breakdown of Organisations in France Offering Premium Rate 
Services and Percentage of Lines Controlled 
Independent 
Media Groups 
27% 
(18) 
Public Services 
8% 
(14) 
( ) = % of lines controlled 
Source: Panorama de l'Edition Audiotel, Geste 
102 
MO Annual Report 1993 - 1994 Section 7 
The more mature European audiotex markets, such as the UK and France, seem to be 
stabilising and becoming more established. However, in countries where audiotex has been 
introduced relatively recently, it is unfortunate that the same problems relating to adult and 
chatline services, and concern over premium rate bills, are still occurring. In Italy, national 
audiotex services were launched for the first time during 1993, but by the end of the year there 
had been so much public outrage over bills generated through use of Audiotel services that the 
Italian PTO decided to ban chatlines and live'services until July 1994, from which date an opt-
out facility for Audiotel 144 services will be available nationally. 
Spain, which had suffered similar problems in the early days of its audiotex industry and had all 
of its services closed down by the Spanish government in December 1992, re-opened audiotex 
lines to all service providers in December of 1993, but with the proviso that audiotex services 
are opt-in only, so that customers have to apply to the PTO, Telefonica for this facility. In 
addition to the 903 lines originally used for premium rate services, a new 906 prefix has been 
introduced for services which are non-profit making, including weather and stock market 
services. These are available to all telephone subscribers without an opt-in requirement. The 
Belgian market grew by over 180 per cent between 1991 and 1992, mainly as a result of adult 
services and chatlines, but there has now be a harsh regulatory clamp-down and growth has 
slowed considerably. 
Audiotex markets in Europe are almost entirely national, although bilateral talks between 
European PTOs have been taking place in order to establish mechanisms for cross-border 
activity. It has therefore been necessary to establish a Code of Practice for the provision of 
audiotex services across boundaries, and work has been carried out by the EEA on this front. 
(See also section 6.) 
7.6 Fax-Based Information Services 
Fax-based information services represent a niche sector and, whilst the number of information 
services delivered by fax has grown substantially over the past few years, it is still a small and 
specialist market. The most promising applications for fax as an information medium are those 
which offer access to specified sets ofinformation on demand (fax on demand). 
Fax on demand services are often operated over premium rate telephone lines, allowing users 
to select the documents they require using the touch tone keys on a telephone or fax machine. 
Typical applications are detailed weather information, share prices and currency rates, business 
summaries and company information. Another application which has proved very successful in 
the US and which is becoming common in Europe is on-demand access to reader enquiry 
information. A premium rate or free phone number is published along side an advertisement, 
which the reader can dial in order to receive by fax further details of the product or company 
advertised. This allows publishers to offer an additional service to advertisers, and to generate 
revenue through charging readers per call or by charging advertisers for storage and delivery of 
promotional information. 
One of the reasons why fax-based publishing has remained a fairly small concern is the 
inflexibility of the premium rate tariff structure. Tariffs vary from country to country, but even 
103 
MO Annual Report 1993 - 1994 Section 7 
in Member States where service providers are allowed to charge per call (rather than per 
minute), the rates are often too low to make the provision of high-value business information 
worthwhile. Consequently, some fax operators have turned to other methods of service 
delivery. An interesting example of fax on demand innovation is I-Fax, a service offered by a 
company of the same name originating in Nova Scotia, which opened a UK office during 1993. 
The company acts as a service developer and bureau, and uses technology based on pattern 
recognition. Users fill in a form by shading boxes' corresponding to letters and numbers, thus 
specifying the information they require, then fax the request to I-Fax. When the request is 
received by the I-Fax computer, it is automatically converted into a database search and the 
results faxed back in a matter of minutes. 
So far, the I-Fax system is being used by HPI, (the UK's motor vehicle registration database 
holder) for access to vehicle ownership and information, and by Infocheck for company reports 
and credit rating. In both cases, users are pre-registered and are provided with account and 
identification numbers, which they fill in on their information request forms. This type of 
system has the advantage of allowing information providers to choose their own pricing 
structure, and of allowing the user to specify requirements much more closely than is possible 
through touch tone or voice recognition. And, of course, it allows remote database searching 
without a computer and without formal searching skills. 
Fax on demand methods such as this one are likely to represent a greater opportunity for 
business information providers than premium rate, which requires significant call volumes 
before it becomes profitable. Fax on demand still makes up a small proportion of the total 
premium rate market (it is unlikely to represent more than 10 per cent, even in well established 
markets), although it is difficult to get an accurate picture of the fax-based information market 
as distinct from other service revenues. 
Fax delivery of paid-for information is likely to increase substantially as new forms of 
document delivery and Inter-Library Loans services become established. The number of 
electronic document delivery and CASIAS (Current Awareness Services with Individual 
Article Supply) services available on the networks is growing rapidly, and many of these offer 
fax as a delivery option. This is likely to be an area of substantial growth in terms of volume of 
traffic and number of transactions, although the long-term financial benefits to providers of 
these services are not yet clear. 
A report by Ovum entitled VANs Markets Europe suggests that value-added fax services will 
grow twelvefold by 1997, although the definition of value-added fax includes enhanced 
communications and messaging networks as well as information services. It also predicts that 
the Spanish market, where value-added fax suppliers have their own networks and can 
significantly undercut international PSTN rates, the market will be worth ECU 67m by 1997. 
The UK was said to have the most developed value-added fax market, accounting for 70 per 
cent of the total European market in 1992, followed by France, Italy, Germany and 
Switzerland. 
104 
MO Annual Report 1993 - 1994 Section 7 
1.1 Electronic Information Services in the Home 
It became evident in 1993 that the use of electronic entertainment and consumer information 
services in the home was becoming a fact of life in most European countries. However, a 
number of indicators also suggest that Europe is beginning to mirror the US in the trend 
towards work-related information access in the home. The single biggest factor in this 
development has been the growing base of computer technology in the home, resulting largely 
from the fall in price of office equipment and the marketing efforts of the equipment 
manufacturers, anxious to establish themselves in new markets before the growth of the office 
market slows too dramatically. In particular, growth has been significant in home PC and fax 
ownership (especially in low-cost combined telephone/fax machines) and modems. As on­
board modems drop in price and become standard on PCs, growth in the installed base of fax 
machines may be somewhat reduced. But either way, the ability of home users to 
communicate electronically is becoming an important consideration in information service 
delivery. 
It has proved very difficult to produce reliable figures on the installed base of technology in 
homes, but Table 7.16 provides an overview of the comparative position in the EU and US as 
regards the penetration of three indicator technologies: CD-ROM drives, video recorders and 
cellular telephones. 
Table 7.16 Penetration of Technology into European and US Homes, 1992 
CD-ROM Drives 
Video Recorders 
Cellular Phones* Percentage Population 
EU 
0.2 
20.5 
1.2 US 
1.2 
25.1 
4.0 Percentage Households 
EU 
0.5 
54.9 
3.2 US 
3.1 
68.3 
10.7 
Source: IDATE * Relates to subscriptions rather than handsets. 
OMS YC's figures on the penetration of fax machines, modems, pagers and mobile telephones 
per thousand inhabitants also provide an interesting view of technololgy take-up in EU 
countries, the US and Japan (see Table 7. IT below). Whilst they do not refer solely to 
technology in homes, they do appear to confirm the impression given by IDATE's figures that 
Europe is still lagging behind, especially on mobile telephone penetration. 
105 
MO Annual Report 1993 - 1994 Section 7 
Table 7.17 Penetration of Technology per Thousand Inhabitants, 1993 
Germany 
Canada 
Spain 
US 
France 
Italy 
Japan 
UK Fax Machines 
17.4 
20.6 
20.5 
48.6 
20.6 
27.2 
55.3 
19.7 Modems 
9.2 
28.0 
9.7 
76.0 
19.9 
10.0 
n.a. 
13.0 Pagers 
6.4 
17.8 
3.9 
61.9 
5.9 
4.1 
59.4 
12.2 Mobile 
Phones 
17.3 
42.9 
6.9 
52.8 
7.8 
17.3 
18.3 
27.7 
Source: Les Chiffres Clés des Télécommunications Mondiales, OMSYC 
Figures on the penetration of personal computers into homes have tended to be unreliable and 
misleading. However, there is a growing consensus that in the most advanced regions of 
Europe, between 20 and 25 per cent of homes in 1994 have personal computers. 
The widespread availability of technology in US homes has helped to stimulate a consumer 
market for electronic information services. In the US, consumer on-line is already well 
established, with Prodigy and CompuServe the biggest providers of on-line services to the 
general public and home-based workers. At the end of 1993, Prodigy had 2.1 million 
subscribers - a growth of just 5 per cent since the previous year - whilst CompuServe 
experienced growth of 41.6 per cent, bringing its total number of subscribers up to 1.6 million. 
America Online is much smaller than these two, although its subscriptions grew by 165 per 
cent during 1993 to 0.53 million. US consumer on-line is likely to grow substantially in the 
area of specialist computer information services. A number of on-line computer magazines 
already exist and Apple looks set to make a serious entry into this market with its own 
consumer service, eWorld. This will be launched during 1994 and, according to Apple, will 
attract millions of users over the next five years. At the end of 1993, Ziff Davis also 
announced that it would launch its own on-line service targeted at its 3.5 million computer 
magazine subscribers. Ziff Davis Interactive will be launched in the last quarter of 1994 and is 
expected to attract 185,000 subscribers in its first 12 to 18 months of operation. 
Until recently, consumer use of on-line services in Europe has been low, but CompuServe has 
begun to make in-roads into the European market, with 130,000 subscribers as at June 1994. 
CompuServe says that the number of European subscribers has doubled in each of the last 
three years and is expected to double again to over 250,000 during 1994/5. However, 
growing awareness and use of the Internet in Europe may make it harder for consumer on-line 
operators to establish themselves at this stage. CompuServe has addressed this problem by 
developing a full Internet connection, which it will make available during 1994. 
106 
IMO Annual Report 1993 - 1994 Section 7 
7.8 Emerging Media and Markets 
7.8.1 The Networks 
During 1993 and 1994, access to international data networks such as the Internet and national 
equivalents grew significantly, with huge increases in the number of users and services, and in 
the amount of information available over these networks. 
The background to the Internet has already been discussed in Chapter 1 of this report, but it is 
worth looking in a little more detail at recent Internet growth. In a report published in 1994, 
Infonortics gave the following indicators of Internet growth: 
• between July 1992 and July 1993, the number of networks linked into the Internet 
rose from 5,739 to 13,293, with new networks connecting to the Internet at an 
estimated rate of one every 10 minutes; 
• between July 1993 and October 1993, the number of Internet hosts rose from 
approximately 1.8 million to just over 2 million; 
• between February 1993 and December 1993, the number of articles posted on 
USENET rose from 35,000 to 43,000. 
It has become almost impossible to make accurate calculations of the number of Internet end-
users, but figures from the beginning of 1994 suggested a total of 25 million end-users in 137 
countries, using some 2.2 million host computers. The Internet Society's figures for June 1994 
suggested that the number of hosts had now risen to just over 3.3 million, (representing an 81 
per cent increase since the previous year), and that the number of users had grown to 30 
million. One million new hosts were added in the first sbc months of 1994 alone, with much of 
this growth attributable to countries outside the US (see table 7.18 below). SMEs and 
freelance individuals are thought to make up a growing proportion of users, although large 
companies are also heavily represented on the Internet. Digital Equipment Corp, for example, 
has over 31,000 computers linked to the Internet. 
107 
MO Annual Report 1993 - 1994 Section 7 
Table 7.18 Internet Hosts Worldwide 
Country Number of Hosts Percentage of Total Percentage Change 
Since Jan 1994 
US - educational 
US - commercial 
US - government 
US - defense 
US - non profit org. 
US - net operator 
US - local 856,234 
774,735 
169,248 
130,176 
66,459 
30,993 
16,556 27 
24 
5 
4 
2 
1 
1 41 
36 
31 
26 
31 
146 
153 
US - total 2,044,401 63 38 
UK 
Germany 
Canada 
Australia 
Japan 
France 
Netherlands 
Sweden 
Finland 
Switzerland 
Norway 
Italy 
Spain 
Austria 
South Africa 
New Zealand 
Denmark 
Belgium 
Poland 
Portugal 
Ireland 
Greece 
Luxembourg 155,706 
149,193 
127,516 
127,514 
72,409 
71,899 
59,729 
53,294 
49,598 
47,401 
38,759 
23,616 
21,147 
20,130 
15,595 
14,830 
12,107 
12,107 
7,392 
4,518 
3,308 
2,958 
420 5 
5 
4 
4 
2 
2 
2 
2 
2 
1 
1 
1 
1 
1 
<1 
<1 
<1 
<1 
<1 
<1 
<1 
<1 
<1 37 
51 
48 
42 
69 
117 
43 
40 
n.a. 
24 
22 
38 
79 
30 
42 
157 
175 
147 
55 
25 
103 
249 
37 
Source: Internet Society, July 1994 
According the Internet Society, if the number of users continues to grow at the same pace as 
that experienced during 1993, by 1995 there will be 38 million Internet users and 5 million 
Internet hosts. Other estimates suggest that by 1999, 100 million users a day will be logging 
onto the Internet to send E-mail messages. 
A huge variety of information services exists on the networks, ranging from obscure bulletin 
boards run by individuals in their backrooms, to business and academic databases made 
available by commercial publishers and information providers. In the US alone, there were 
thought to be over 50,000 'cottage-industry bulletin boards' at the end of 1993, with new ones 
being added at the rate of a few hundred a week (source: The Economist, December 1993). 
However, not all bulletin boards are amateur services made available free to users - and neither 
are they all in the business of disseminating reference material or providing a forum for serious 
108 
MO Annual Report 1993 - 1994 Section 7 
discussion. The US' biggest bulletin board, Event Horizons, has over 35,000 subscribers and 
an estimated turnover of US$ 3.5m (ECU 3.01m) per year. It offers hardcore pornography in 
the form of a catalogue of still and moving images which can be downloaded and viewed on a 
Windows PC. 
A growing number of European information companies are making their services available 
over the Internet and over national networks. Many more, however, are waiting until 
workable copyright and payment mechanisms are available, or are still confused about what the 
Internet actually is and what commercial opportunities it can offer. 
Those European companies which have ventured into network publishing have tended to be 
those offering academic and research information, or information aimed at librarians and 
information scientists. This is largely because national research networks are better established 
in the academic and library community, and in some cases because universities have joined 
together to negotiate flat-rate deals for database access. This has been the case in the UK, 
where Bath University has co-ordinated deals with information providers such as ISI and the 
British Library, whereby universities pay a flat fee and students and staff can access the 
databases, which are Tree at the point of use'. Many more information companies are starting 
to use the Internet to promote their services and support users (SilverPlatter, for example, 
offers the SPIN-L bulletin board for this purpose), and for providing advance information on 
forthcoming articles and publications. This type of activity allows information companies to 
experiment with the medium and offers new marketing opportunities. 
In Europe, Elsevier and Springer Verlag have both taken active roles in developing services for 
the Internet, as have many smaller publishers and academic societies, such as the Institute of 
Physics Publishing and Imperial Cancer Research Fund in the UK. Elsevier's Tulip project has 
brought 60 electronic journals to the Internet. Bibliographic databases, current awareness 
services (such as Springer's Journal Preview) and document delivery services (such as 
Blackwell's UnCover) are also making an impact in the European academic community. 
Although most of the media attention has been focused on the Internet, a great deal of 
development work has taken place at a regional and national level in Europe to create 
academic and research networks, which have later been extended to the commercial 
community (see Table 7.19). The French network, Renater (Réseau national de 
télécommunications pour la technologie, l'enseignement et la recherche) began as a connection 
between several regional networks and then expanded nationwide. It has recently been opened 
to the commercial world. National networks in Europe are connected by means of 
EuropaNET, and an agreement was signed by six network operators at the end of 1992 for the 
development of pilot ATM research network. Meanwhile, ATM and broadband network 
experiments continue to take place at a regional and national level. These networks are 
interconnected with the Internet, although access to some may be restricted to the academic 
community. 
109 
MO Annual Report 1993 - 1994 Section 7 
Table 7.19 Research Networks in Europe 
First Generation National Networks 
GARR 
JANET 
RCCN 
RedIRIS 
RENATER Italy 
UK 
Portugal 
Spain 
France 
Regional ATM Network Experiments 
BBA 
BREHAT 
EXPLOIT 
RECIBA 
RIA 
SGN 
SURFnet Belgium 
Paris, Rennes and Lannion 
Basle 
Madrid 
Aveiro 
Stockholm 
Netherlands 
National Broadband Networks 
BAT MAN 
DPN 
SUPERJanet 
Supernet Denmark 
Germany 
UK 
Norway 
Cross-Border Networks 
EuropaNET 
BETEL 
HPC-Vision 
ISABEL 
TIRONET Europe 
Greece/France/Switzerland 
France/Germany 
Spain/Portugal 
Northern/Southern Ireland 
Source: Les réseaux à large-bande en Europe: quel futur? J.P Euzen, EC 
Brussels 
7.8.2 Handheld Reference Products and Personal Communicators 
Since the introduction of the first calculator-like electronic dictionaries by the likes of Franklin 
and Selectronics in the 1980's, the handheld reference and communicator industry has 
mushroomed. Whilst a number of reference-only handheld products still play an important role 
in this market, they now have to compete with a new generation of handheld products which 
also offer data entry and communication facilities. Of these, the product which really broke 
new ground in 1993 in terms of media coverage and general awareness was Apple's Newton, 
the first of a new range of pen-based products which allow the user to handwrite messages on 
screen, convert these into ASCII text, and transmit them by way of fax modem, as well as 
offering diary and address book facilities and, of course, published data sets for reference and 
annotation. Portable, pen-based computing is not new (early pioneers of such technology were 
GO Corporation and EO Inc.), but this was the first serious attempt by a manufacturer to make 
an impact on the consumer market. 
A number of European manufacturers have become involved in the personal communicator 
market, although they have tended to do this through alliance with US-based companies rather 
than striking out on their own. Siemens, for instance, has an alliance with Apple and is 
110 
MO Annual Report 1993 - 1994 Section 7 
supporting Newton technology, whilst Philips has taken a stake in General Magic and Olivetti 
has bought a minor stake in EO Inc. AT&T meanwhile acquired a 51 per cent stake in EO, 
which itself had recently merged with the UK-based Active Book Company. 
The personal communicator and handheld reference market must be one of the most over-
hyped in the consumer electronics industry, with forecasts for the handheld computers and 
communicators market as high as US$ 7.4bn (ECU 6.7bn) worldwide in 1997 (source: 
Technologic Partners, New York). Olivetti predicts that in Europe alone, 40 million units will 
be in use by the end of 2000. Estimates released by Dataquest in March 1993 seem rather 
more reasonable, however, suggesting 11.5 million users by 1997. Dataquest suggests two 
possible scenarios for the development of the handheld computer/ communicator market. The 
first indicates that initial growth in Europe will be small, with take-off not occurring until 1996. 
Critical factors in this scenario are: 
• The point at which products reach an acceptable price level in Europe (around USS 
350/ECU 301 or under). 
• Further development of handwriting recognition. 
• Adoption of standards in mobile data communications technologies generally 
• Accustomisation by the market to the new technology. 
In Dataquest's second scenario, the take-off point occurs in 1994/5 and is followed by rapid 
growth. The vital factor here will be the establishment of de-facto standards across all 
personal communicators, allowing the market to develop more coherently. In addition to the 
points made by Dataquest, however, the issue of pan-European mobile communications 
networks and the availability of GSM is crucial in Europe. So far, progress has been slow and 
Dataquest's early take-off scenario therefore appears unlikely. Having said that, a great deal of 
emphasis has been placed on interconnection, deregulation and tariff reduction for pan-
European mobile networks by the Bangemann report and the Commission's Action Plan which 
followed. The combination of government action and new market opportunity is likely to 
stimulate intense activity in the mobile communications sector in the next couple of years. 
(See section 2.2.2 on telecommunications for a fuller discussion of mobile communications.) 
Since its launch in Japan in 1990, the proprietary Sony Electronic Book (EB) has been through 
a number of modifications in order to improve its functionality and make the platform more 
accessible to software producers and users. Towards the end of 1993, Sony announced that 
the caddy surrounding the EB disc would become removable and that users would now be able 
to play EBs on a CD-ROM drive attached to a PC. The EB is an 20cm CD-ROM which has a 
capacity of 200 MB, in other words around 100,000 pages of text, 32,000 graphics or 5.6 
hours of digital sound. 
Since the launch of the EB, Sony claims that over 300 software titles have been produced in 
eight languages, and that sales have expanded into 17 countries, with Panasonic, Sanyo and 
Sharp all having introduced their own EB players. European hardware companies have been 
less active in the EB market than their Japanese counterparts, although a few European 
111 
MO Annual Report 1993 -1994 Section 7 
publishers (such as Langenscheidt) have produced EB titles. The total number of EB players 
sold worldwide, according to Sony, was around 500,000 by the end of 1993, and sales during 
1994 are expected to reach between 200,000 and 300,000 (see Table 7.20). 
Table 7.20 Sales of EB Players Worldwide 
Source: Sony 
The bulk of these sales, however, are still taking place in Japan, with Japanese sales accounting 
for 65 per cent of the total in 1993 and expected to make up the same proportion in 1994. 
7.8.3 Video on Demand and Interactive TV 
Video on Demand (VOD) is likely to be one of the major applications for high capacity 
networks, or information super highways. In this sense, it is useful to examine Video on 
Demand within the context of emerging information markets, although it will also represent a 
significant development for the wider audio-visual sector discussed in section 7.9. 
The idea behind Video on Demand is that a film or video archive is made available over a 
network via the service provider's server, which can then be searched by users via their 
television sets and intelligent set-top boxes. A selection is then made and an electronic 
transaction carried out using a credit card or smart account card. De-encryption and 
decompression devices in the set-top box will then allow the user to download the film for 
viewing. In the future, it may also be possible to make a video CD recording of the film for an 
112 
MO Annual Report 1993 -1994 Section 7 
additional payment. The speed of development of Video on Demand will depend to a large 
extent on the availability of high-bandwidth telecommunications networks, and on the level of 
success achieved by US companies currently experimenting with simple interactive services. 
Full Video on Demand over ATM-switched, broadband networks is probably several years and 
a few billion ECUs of investment away. 
In spite of the excitement in the media industries, the potential market for Video on Demand is 
still an unknown quantity. For this reason, operators are experimenting with applications 
which can run on existing infrastructure. Satellite broadcasters, for example, are working on 
Near-Video on Demand, which will allow access to existing programme resources using 
infrastructure currently available. A number of films are broadcast continuously, so that the 
user makes his or her selection and then waits for the next broadcast of the film. Depending on 
the number of broadcast channels used and the number of films offered, this could be anything 
from every 10 minutes to every half hour. In this respect, it is similar to teletext broadcasting. 
Fully interactive television is a more distant prospect, partly because of the two-way 
communications requirement and partly because developing content for interactive searching as 
part of a film or television programme will be costly and time consuming. In the meantime, a 
certain amount of interactivity can be offered by linking a telephone set to a television via 
audiotex and teletext services. This technology is currently being used for applications such as 
tele-voting, games and shopping. 
Some of the companies already involved in providing services, initiating trials and carrying out 
development work are indicated in Table 7.21. 
The range and prominence of companies involved in Interactive TV and Video on Demand 
projects reflects the fact that this is expected to be a very lucrative market, both for the 
network providers and for the content owners. There is already strong competition for the 
supply of set-top boxes and the consumer electronics manufacturers look set to engage in a 
battle for market domination in this area. 
Beyond the hype, however, very little reliable data is available which puts a value on the 
interactive TV market or provides forecasts for the future. A 1993 report by Quadrature 
entitled Interactive Win Europe and the USA suggests that the US market was already worth 
some US$ lbn (ECU 0.86bn) in mid-1993. It also claims that more people in Europe have 
access to interactive TV services than in the US, mainly because European companies like 
Radio Television Luxembourg (RTL), Canal+ and News Corporation have begun 
experimenting by offering fairly simple interactive services, such as simple gaming and survey 
applications. Additional impetus for interactive service development is expected to come from 
US companies with European cable interests. 
113 
MO Annual Report 1993 - 1994 Section 7 
Table 7.21 Selection of Companies Working on Video on Demand and 
Interactive TV 
Company 
AT&T 
GTE 
Bell Atlantic 
Nynex 
Ameritech 
Microsoft 
TCI 
TV Answer 
Viacom 
Liberty Media 
Time Warner 
QVC 
BT 
France Telecom 
CLT 
Canal + 
France 2/3 Main Activity 
Telecoms 
Telecoms 
Telecoms 
Telecoms 
Telecoms 
Software 
Cable TV 
Radio Wave TV 
Satellite TV 
Cable 
Cable TV 
Cable TV 
Telecoms 
Telecoms 
Satellite TV 
TV 
TV Origin 
USA 
USA 
USA 
USA 
USA 
USA 
USA 
USA 
USA 
USA 
USA 
USA 
UK 
France 
Lux 
France 
France Key Partners 
News Corp, ComStream 
Philips, Discovery Chnl. 
Liberty Cable 
Intel, Gen. Instruments 
Hewlett-Packard 
Prodigy, X*Press 
AT&T, Gen. Instruments 
BSkyB 
IBM 
Lyonnaise Comms. 
News Corp 
Hachette, Virgin Megastore, 
3 Suisses 
Source: Quadrature / Delphic, 1993 
7.9 Audio-Visual 
The world audio-visual market, including hardware and software, was valued at US$ 289bn 
(ECU 248bn) in 1992 and, according to the International Observatory for Communication 
Svstems (OMSYC) in Paris, limited growth will occur in 1993/4 to bring the market up to US$ 
295bn (ECU 254bn) at the end of this year. Within this timescale, equipment revenues are 
expected to rise 1.7 per cent, whilst income for services will grow as little as 0.5 per cent. This 
continues the trend of low growth experienced in the early 1990s (overall growth was 0.6 per 
cent in the period 1990-1992) and marks a sharp contrast to the average annual growth rate of 
6.3 per cent calculated for the years 1985 to 1990. 
According to OMSYC's report Les Chiffres-Clés de l'Audiovisuel Mondial, published at the 
end of 1993, the market is broken down as follows in Table 7.22: 
114 
MO Annual Report 1993 - 1994 Section 7 
Table 7.22 World Audio-visual Spending, 1992 
AV Hardware* 
TV Revenues** 
Radio Advertising 
Cinema Box Office 
Pre-rec. Video Tapes 
Total ECUbn 
.114.3 
85.8 
10.7 
11.5 
26.5 
248.8 Percentage 
45.9 
34.5 
4.3 
4.6 
10.7 
100.0 Av. An. j 
Growth Since I 
1987 | 
5.4 | 
4.2 
0.5 
-1.5 
6.1 
4.4 I 
Source: OMSYC / Television Business International, January 1994 
* includes professional and consumer equipment 
* * includes broadcast and cable TV 
The same report indicates that the US represents the biggest audio-visual share, accounting for 
38.4 per cent of world spending, with Europe accounting for 26.4 per cent and Japan 16.8 per 
cent. However, Table 7.23 shows that there is a concentration of audio-visual giants in 
Europe, with 34.4 per cent of top audio-visual companies' revenues being generated in the in 
the EU in 1992. This represents a slight drop since the previous year, but a significant 
improvement on the position in 1988. 
Table 7.23 Revenues of Top 50 Audio-visual Groups by Area of Origin 
Region Percentage of Revenues Generated by Top 50 
1988 1991 1992 
US 
EU 
Japan 
Other 41.5 
29.4 
22.5 
6.7 36.8 
36.4 
23.2 
3.6 32.6 
34.4 
27.8 
5.2 
Source: IDATE 
A 1994 analysis of the Top Fifty European Media Owners by Zenith indicates that the top 
three rankings for 1992 remain the same as the previous year, with Reed/Elsevier, Fininvest 
and Bertelsmann at the top in terms of media revenues. Advertising on television, radio, 
newspapers, magazines, cinema and outdoor media are included in the definition of media 
revenues, but publishing and production activities unrelated to advertising (such as printing, 
book publishing and programme production) are excluded. 
In putting together their Top 50, Zenith concluded that commercial television was continuing 
to experience high growth, and that state-owned, terrestrial television was often suffering in 
direct proportion. Zenith also concluded that media companies had reacted to recession by 
cost-cutting, and that the disappointing performance of press titles in Europe (especially in 
France and Germany), had led many press owners to diversify further into broadcast media. 
115 
MO Annual Report 1993 - 1994 Section 7 
The effects of convergence and the emergence of multimedia markets were not discernible in 
Zenith's analysis, as these two phenomena had made little practical impact on the media 
industries during the period in question. Table 7.24 below shows an extract of the top 10 
media owners, their media revenues and their total revenues. 
Table 7.24 Top Fifteen European Media Owners Ranked by Media Revenues 
Ranking 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
| Sourc Company 
Reed/Elsevier 
Fininvest 
Bertelsmann 
Axel Springer 
CLT 
Havas 
Heinrich Bauer 
Matra/Hachette 
Hersant 
RCS Editori 
United Newspapers 
Canal Plus 
TF1 
News International 
Daily Mail and General Trust 1992 Media 
Revenues 
(MECU) 
3,198.3 
2,629.9 
2,067.4 
1,711.1 
1,606.3 
1,569.5 
1,483.5 
1,429.5 
1,397.1 
1,330.9 
1,170.8 
1,112.4 
1,028.3 
1,016.8 
975.5 1992 Total 
Revenues 
(MECU) 
9,453.1 
3,739.5 
9,453.1 
1,963.4 
1,680.3 
4,578.3 
1,584.9 
8,950.9 
1,397.1 
2,039.1 
1,263.4 
1,289.3 
1,207.6 
1,057.8 
1,008.4 
e: Top 50 European Media Owners 1994, Zenith Media Worldwide 
7.9.1 Television, Cinema and Video 
In terms of the EUs competitive position, it is clear from figures relating to 1990-1992 that 
there is a significant deficit in EU/US audio-visual trade. In 1990, US revenues in the EU for 
TV cinema and video were ECU 3,198m (ECU 3,150m in 1992), whereas EU revenues in the 
US amounted to only ECU 212m (ECU 248m in 1992). Whilst this reflects a very slight 
narrowing of the gap, the EU deficit in 1992 was still ECU 2,902m (see Table 7.25). 
Table 7.25 EC Audio-visual Trade Deficit with the US, 1990-1992 
US Receipts in the EU (MECU) 
1990 1992 EU Receipts in the US (MECU) 
1990 1992 
Cinema 
Television 
Video 
Total 975.2 
1,099.1 
1,124.0 
3,198.3 733.6 
1,417.3 
999.3 
3,150.2 43 
80.8 
88.6 
212.4 63.6 
81.7 
102.3 
247.6 
EC Deficit 2,985.9 2,902.9 
Source: IDATE 
116 
MO Annual Report 1993 - 1994 Section 7 
The European Commission has recognised that the European film and television industries will 
need a radical overhaul if they are to compete on international markets, but disagreements 
amongst Member States over proposed measures during the GATT negotiations have made it 
difficult to reach a position of consensus on audio-visual policy. In April 1994, a Green Paper 
on Strategy Options to Strengthen the European Programme Industry in the Context of 
Audio-visual Policy of the European Union was presented by the Commission. This was later 
discussed at the European Audio-visual Conference in Brussels in June/July 1994 and adopted 
by the EU. Further action in the audio-visual sector was recommended by the Bangemann 
report and subsequently by the Commission's Action Plan. The latter indicated that a revised 
Directive on Television without Frontiers should be adopted by the Commission during 1994, 
and that follow up to the Green Paper on Media Pluralism was currently underway. 
According to Frost & Sullivan, the world television programming market was worth US$ 80bn 
in 1993 (ECU 69bn), and is rising at a rate of 10 per cent a year. Meanwhile, ownership of 
television sets looks set to continue rising at 5 per cent a year until the year 2000; in spite of a 
saturated market, continued growth in television sales is largely thanks to replacement and 
second-set purchasing. The figures in Table 7.26, compiled by The Economist from Morgan 
Stanley and Frost & Sullivan, indicate that the US accounts for nearly 40 per cent of the 
programming market, and that pay-TV and home shopping services are now generating 
significant revenues. 
Table 7.26 US Television Programming Market Estimates, 1992 
BECU 
30 
25 M 25.8 
Broadcast Horn* *VI<Uo Boaie cobl* Prog Pay cobU Horn* Cobl* TV 
TV Advt'g video caisctl* network iol«» natworkt shoppingodvortising 
• Rentals & Sales 
Source: Morgan Stanley, Frost & Sullivan / The Economist, February 1994 
117 
MO Annual Report 1993 - 1994 Section 7 
The proportion of television revenues sourced from advertising seems to be increasing steadily, 
with cable advertising revenues growing particularly quickly. Table 7.27 below indicates that 
terrestrial advertising accounted for almost half of world television revenues in 1992. 
Table 7.27 Breakdown of World Television Revenues, 1992 
BECU 
Terrestrial 
Adv'ing 47.7 Terrestrial Subsp'tn 1.5 
Coble Advertising .3.2 
License 
Fee/Gov't 13.2 
Cable Subscription 20.3 
Source: OMSYC / Television Business International, January 1994 
Home video has continued to show higher rates of growth than either television or cinema, 
with annual growth of around 6.1 per cent since 1987, bringing worldwide revenues for rentals 
to ECU 14.4bn in 1992 and ECU 6.96bn for sell-through in the same year. The sell-through 
market is growing particularly quickly, (at an annual rate of 26 per cent according to 
OMSYC), mainly thanks to falling retail prices. In Europe, retail sales of videos amounted to 
over US$ 6bn (ECU 5.16bn), according to a report entitled Video Entertainment Europe 
published by Dodona Research. The same report indicates that in three years' time the market 
will be worth over 12 per cent more in real terms than it was in 1993, partly thanks to new 
forms of delivery such as Video on Demand. 
7.9.2 Audio 
An MBI World Report for 1994 suggests that the world market for music sales will reach US$ 
31.65bn (ECU 27.2bn) in 1994. This is an increase of 5 per cent since 1993, when the figure 
was US$ 31.14bn (ECU 26.8bn), and the market is expected to grow at between five and 
seven per cent a year to reach US$ 44.2bn (ECU 38bn) by 2000 (see Table 7.28). 
118 
IMO Annual Report 1993 - 1994 Section 7 
Table 7.28 World Music Market - Global Sales and Forecasts 1991-2000 
Music Sales (MECU) Percentage Annual Growth fl 
1992 
1993 
1994 
1995 
1996 
1997 
1998 
1999 
2000 24,686 
25,920 
27,216 
28,850 
30,292 
32,412 
34,681 
36,054 
38,015 8.0 
5.0 
5.0 
6.0 
5.0 
6.5 
7.0 
4.5 
5.5 
Source : MBI World Report, 1994 
The US is expected to remain well ahead in terms of the biggest share of the market, although 
Germany, the UK and France will continue to feature in the top five. Table 7.29 provides 
forecasts of geographical market shares in the year 2000. 
Table 7.29 Top Five Markets for Music Sales, 2000 
MECU 
USA 10797 
43% 
Japan 5827 
23% France 2626 
10% 
UK 2745 
Germany 3265 11% 
13% 
Source: MBI World Report, 1994 
119 
MO Annual Report 1993 - 1994 Section 7 
Compact dise sales have now exceeded those of cassettes and vinyl records in almost every 
national market. 
Across Europe, the British Phonographic Industry estimates that 230,000 people were 
employed in the music industry in 1992, with a high proportion of these employed in retailing. 
In the UK alone, 48,600 were employed in the music industry, some 30 per cent of which are 
involved in retail, 16 per cent as professional musicians and 8 per cent in record company 
administration and marketing. 
7.10 Print Publishing 
In February 1993, a report entitled New Opportunities or Publishers in the Information 
Services Market was published by the Information Market Observatory. The report was 
welcomed by print and electronic publishers alike as one of the first published studies to 
address systematically the impact of electronic information services upon the traditional 
publishing industry and to set out new opportunities as they relate to the print publishing 
sector. The report also provided useful background to the print publishing market itself and, 
although it has been summarised in an IMO Working Paper (93/4) and well publicised at the 
Frankfurt Bookfair, its findings are worth summarising here as they form a useful reference 
point. 
EU-based publishers were estimated to have generated revenues of 75.5 BECU in 1991 from 
newspapers (25 BECU), magazines (22 BECU), books (18.5 BECU) and corporate publishing 
(10 BECU). In the same year, production in the US was worth 39 per cent more than that of 
Europe, according to INTERGRAF and nearly double that of Japan. Whilst the volume of 
trade between the US and Europe remained low, the EUs export trade balance has remained 
positive since 1982, although according to Eurostat, the actual value of trade surplus fell 
slightly in 1991 to 2,104 MECU from 2,136 MECU the previous year. 
Europe continues to be a dominant force in world print publishing markets, especially in books 
and scholarly publishing. A ranking by Kagan World Media of the world's top 20 publishers by 
revenue included 10 EU-based publishing and media conglomerates, whose combined turnover 
in 1991 was 24.1 BECU. Table 7.30 shows the EUs top ranking publishers by 1992 turnover 
their ranking alongside a general Top 500 by turnover. 
120 
MO Annual Report 1993 - 1994 Section 7 
Table 7.30 EC's Top Ranking Publishers by 1992 Turnover 
Ranking Company Location of H Q Sales (MECU) 
89 
151 
252 
256 
309 
417 
422 
450 
464 
469 
473 
489 Bertelsmann 
Hachette 
Reed Int. 
Pearson 
Axel Springer* 
VNU 
United Newspapers4 
Wolters Kluwer* 
Elsevier* 
Mondadori* 
Groupe de la Cité 
Ply Mail/Gen Trust Germany 
France 
UK 
UK 
Germany 
Netherlands 
UK 
Netherlands 
Netherlands 
Italy 
France 
UK 7,042 
4,360 
2,319 
2,284 
1,795 
1,182 
1,160 
1,030 
982 
958 
951 
920 
Source: International Management, 1993 
* Includes printing operation 
Growth rates in EU publishing industry have slowed in the last couple of years from around 
3.8 per cent to 2 per cent. The market breakdown in Table 7.31 shows that newspapers have 
the largest share of the print publishing market, followed by magazines. 
Table 7.31 EU Publishing Market, 1992 
BECU 
Mogazmes 22 
29% Newspapers 25 
33% 
Corporate 10 
13% 
Books 18.5 
25% 
Source: Consulting Trust, 1993 
121 
IMO Annual Report 1993 - 1994 Section 7 
The publishing industry is highly concentrated across- Europe and in many countries the top ten 
publishing conglomerates control 50-70 per cent of the market. Altogether, there are 
estimated to be some 60,000 publishing companies in Europe, the majority of which are book 
publishers. By the year 2000, EU-based publishers are forecast by Consulting Trust to reach 
sales and advertising revenues of ECU 123.8bn, of which electronic publishing activities will 
contribute around ECU 12.1bn. 
122 
8 CONCLUSIONS 
1. The information society is on its way. Throughout the reference period of this report, the 
'digital revolution' has been a major topic of discussion. But one could argue that the 
digital revolution actually began in the information sector 25 years ago, with the 
emergence of electronic information services. Dramatic changes are now taking place in 
the telecommunications sector, with the uptake of ISDN and broadband networks in the 
European Union. On the other hand, with the exception of CD-Audio, digitisation is only 
just making an impact on the audio-visual sector. 
Although digitisation has enhanced many professional processes, it has not yet changed 
professional and private life dramatically. The full impact of the digital revolution is still to 
be felt and the pace of change will be difficult to predict. 
The digital revolution will be more or less complete when the following scenarios have 
become a practical reality: 
• open, direct and easy access to all publicly available information held anywhere in 
the world, (including text, sound, still and moving pictures), regardless of time 
and location, in the mother tongue, customised if necessary, and affordable by 
everyone; 
• affordable oral and visual telecommunications worldwide, available regardless of 
time, location and language; 
• easy to use transactional services available via electronic media from any location. 
We are already moving towards an environment where scenarios such as these are a 
possibility, thanks to technical developments and the activities of major information 
industry players. Several European Commission research and pilot projects are underway 
in support of these developments. The prospect of an information society has also 
captured the attention of political and entrepreneurial decision makers. 
2. Many countries are now laying the foundations for future development. Initiatives already 
undertaken in the major industrialised countries such as the USA, Japan, Canada and the 
European Union will pave the way towards an information society, and further initiatives 
will follow. A G7 conference will be organised early in 1995 in Brussels to discuss the 
development of an open, competitive and integrated worldwide information infrastructure. 
The European Union, which has lagged behind the USA and Japan in the digitisation 
process, is now trying to make up lost ground with a bundle of initiatives including the 
Common European Information Area, the White Paper on Growth Competitiveness and 
123 
IMO Annual Report 1993 - 1994 Conclusions 
Employment, the Bangemann Report and the Action Plan on Europe's Way to the 
Information Society. These initiatives are important for Europe: they will help the Union 
to take its place amongst those countries setting the ground rules for the global 
information society. 
3. However, the Bangemann report and the European Council response which followed 
emphasise the need for the private sector to take the initiative in addressing new markets 
and adopting new technologies. Having said that, there are a number of questions which 
still need to be answered: 
• How can the private and public sectors co-operate in building basic infrastructure, 
especially in those countries of the Union which are less advanced? 
• Once the infrastructure is in place, what kind of services and applications will be 
delivered? 
• What forces will drive the market for such services? 
• Who will dominate the European information society - is there a danger that non-
European media conglomerates will dominate? 
Equally, the likely socio-economic impact of the information society is as yet unclear: 
• What will be the impact on employment? 
• How will it affect regional development? 
• How will the social, societal and cultural environment be affected? 
The increasing availability of high quality infrastructure will necessitate a mass market for 
information products and services as a means of generating return on investment and long-
term cost effectiveness. The importance and value of the content industry (including print 
and electronic publishing, films, video, audio and television programme production) is 
likely to grow as a result. The current repositioning of the information industry, (evidence 
of which can be seen in the growing number of mergers and acquisitions), supports this 
view. 
Technology convergence, characterised by multifunctional equipment for users and 
multimedia products, has led to a re-grouping of IT, software, basic infrastructure and 
content industries, which are now coming together to exploit the new opportunities. This 
has helped to create headline news in the form of dramatic take-overs in the media 
industries and exciting announcements in areas such as Video on Demand. Widespread 
media coverage of such developments has helped to raise overall awareness of electronic 
information services within governments and companies and amongst consumers. 
124 
MO Annual Report 1993 - 1994 Conclusions 
The content industry now has a great deal to live up to. The expectations of users have 
been raised and they are demanding increasingly high standards of information content and 
presentation. ICT industries look to the information and entertainment services sectors to 
provide content for running on the computers, consumer electronics goods and networks 
which are now being developed. Governments across the world are looking to the 
information industries as a whole to generate employment and stimulate economic growth. 
The biggest challenge to the content industry in meeting these expectations will be its 
ability to invest time, labour and financial resources in the development of innovative 
information products and services. Such investment will be essential if European content 
companies are to compete with their counterparts in the USA and Japan, and share the 
rewards of industry growth with ICT industries. 
There is still uncertainty over future consumer behaviour and the level of market demand 
for electronic information services and a clear and stable regulatory framework is still 
lacking to a great extent. Under these circumstances, it is not surprising to find that 
content companies have been reluctant to invest heavily in developing electronic 
superhighway applications. 
The European content industry is faced with particular challenges in that it is made up of a 
greater number of smaller, less vertically integrated, and more nationally focused 
companies that its US counterpart. To take advantage of the opportunities which lie 
ahead, European content companies will often need to enter joint ventures and alliances 
with companies in other regions. At the same time, policies at a national and European 
level will be required in order to guarantee the continued availability of diverse, multi­
cultural information content, and to strengthen the competitiveness of small European 
companies. 
Building on the results of the IMPACT programme, the European Commission will reflect 
on ways to stimulate the creation of favourable conditions for information providers to 
adapt their skills and products to the changing environment and to stimulate increased 
usage. 
6. The electronic information services industry has high added-value and strong growth 
potential, but the European market is still fragmented. In the financial and academic 
. sectors, a pan-European market exists to an extent. Elsewhere, a number of barriers still 
exist to the creation of a European market for information services, not least of which is 
language. The penetration ofinformation technology and infrastructure varies from region 
to region and a combination of legal and political barriers exists to the development of 
pan-European videotex and audiotex interconnections. The overall legal and regulatory 
framework for the information services industry also varies considerably. 
A certain amount of progress has been made in eliminating these barriers. Efforts continue 
to seek a technological solution to language barriers, and the European Commission's 
Language Engineering programme will contribute to this work. There has been greater 
125 
IMO Annual Report 1993 - 1994 Conclusions 
communication and collaboration between European network operators. New efforts 
have been made to create links between European research networks and bi-lateral 
interconnections between national audiotex and videotex systems. IT equipment prices 
are falling rapidly and new media and products (like handheld reference devices, 
multimedia products and Video on Demand) are emerging. The process of trying to reach 
a European consensus on major legal issues such as the legal protection of databases is 
underway. All this may facilitate and encourage a greater number of individuals and 
organisations to participate actively in the emerging information society. 
126 
ANNEX A 
GLOSSARY AND DEFINITION OF TERMS 
ATM (Asynchronous Transfer Mode): 
A system for organising a digital signal in such a way as to allow very high speed transmission of 
the signal while making optimum use of the network's transmission capacity. A standard agreed for 
B-ISDN networks (see ISDN). 
AUDIOTEX: 
Audiotex is the term for telephone-based voice information services with applications both in 
consumer (home user) and business markets. Audiotex services are automated and are directly 
accessible by means of a suitable (Dual Tone Multi-Frequency or DTMF) telephone handset or 
voice recognition. 
BROADCAST SERVICES: 
Services where no interactivity is possible on the part of the customer in selecting what is sent by 
the service provider. 
BUNDLING: 
vFree' distribution of software as part of a hardware package. The hardware manufacturer buys the 
software (applications software, CD-ROM titles, games, etc.) in bulk from the producer and 
markets them as part of a package. 
COMMON INFORMATION AREA: 
Term used in the EC White Paper on Growth, Competitiveness and Employment to describe the 
combination of electronic information and applications, hardware and software, communications 
infrastructure and the user community. The combination of these elements in a Common 
Information Area is seen to be essential to the development of an Information Society. 
COMPRESSION: 
The technique of reducing the amount of data in a signal in order to reduce the amount of required 
transmission or storage capacity, the signal being reconstructed in its original form at the time of 
use. A device to do this is a s codec' (coder-decoder). 
CONTENT SECTOR: 
Industries supplying information or entertainment content, rather than hardware or network 
infrastructure, for example. The sector includes publishing and electronic information, films, 
music, games, TV programming, etc. 
CONVERGENCE: 
Term used to describe the coming together of IT, télécoms, content, and other related industries as 
a result of common technology developments and market aspirations. 
DATA SUBJECTS: 
Individuals whose names are held on file by third parties - term used in the context of Data 
Protection legislation. 
DATABASE PRODUCER: 
An organisation which holds the intellectual property rights relating to the content of electronic 
information products and services and which may licence host services or distributors to make 
'' 127 
MO Annual Report 1993 - 1994 Annex A 
available in electronically usable form. Usually the database producers perform the editorial tasks 
of collection and organisation of the information contained in electronic information services. 
DIGITAL TRANSMISSION: 
On a digital network, the original source is transformed into and transmitted as a series of digits in 
binary code (i.e. Os or Is). Voice, text, image or data are all equally capable of being coded as a 
digital signal, so that a single network can handle all four forms of transmission. The string of 
binary digits can be abbreviated and then re-expanded on arrival, thus economising transmission 
capacity (see Compression). Different strings of binary digits can be interleaved and transmitted 
together, thus permitting several separate conversations on a single line. The string of digits can be 
encrypted prior to transmission, to ensure a high level of information security and privacy (see 
Security). Through digital is ation, even a severely degraded transmission can be reconstructed to 
reproduce perfectly the original source. 
DISTRIBUTOR: 
An organisation which performs a function similar in nature to that of a host service, but in relation 
to unitised electronic information products (such as magnetic tapes or disks, or CD-ROMs) rather 
than information services delivered via telecommunications. 
ECONOMIES OF INTEGRATION. SCOPE AND SCALE: 
Digitisation and compression enable different infrastructures such as wire, radio, optical fibre and 
satellite to inter-operate, thus allowing for economies of integration. They also enable the same set 
of physical infrastructure to support a wide range of services, from traditional telephony to new 
interactive video services for entertainment, training and business, thus allowing for economies of 
scope. Extending these networks and services over a larger geographical area, that is making them 
trans-European, fosters economies of scale as large volumes of production and service provision 
reduces costs. 
EDI: 
Electronic Data Interchange, standard format for the exchange of trading data and transactions 
without manual intervention. 
ELECTRONIC MAIL (E-mail): 
A service which allows computer users to send electronic messages to other computer users. The 
use of sophisticated software ensures that the sent message will find its way along different 
networks until it reaches the addressee. 
GATEWAY SERVICE: 
A gateway operator provides specialised telecommunications links to on-line information services 
provided by third parties. xPure' gateway services are not hosts in their own right. 
HISTORICAL DATABASE SERVICES: 
On-line services which are not updated in real-time. 
HOST SERVICE: 
An organisation which offers its customers direct access to computer-held information via a 
telecommunications link. This definition includes services delivered in videotex mode. 
128 
MO Annual Report 1993 - 1994 Annex A 
INFORMATION SERVICES INDUSTRIES: -
The term "information services industries' embraces a range of commercial and non-commercial 
activities relating to the creation; publication; and distribution of information goods and services. 
In the context of this Report, the term carries a rather more precise meaning, relating solely to a 
subset of those industries which deliver information services to professional (i.e. non-consumer) 
markets on a commercial basis across a range of information media, from print-on-paper to optical 
disk. 
INTERCONNECTIVITY: 
Devices (computers, lines, application programmes, etc.) are interconnected when they can 
communicate with each other, that is send and receive data. They use the same communication 
protocols, for example OSI (Open Systems Interconnection). 
ISDN (Integrated Services Digital Network). N-ISDN. B-ISDN: 
A single network capable of carrying several different types of service - based on voice, text, data, 
still or moving image - by means of digital transmission techniques. The ISDN currently being 
deployed in Europe carries a communication of up to 2 Megabits per second (Narrowband ISDN). 
Future networks will carry higher speed communications (Broadband ISDN). 
JPEG. MPEG: 
Compression standards for still (JPEG) and moving pictures (MPEG). 
LOCAL LOOP: 
The section of the telephone transmission network between the local telephone exchange and the 
subscriber's premises, which currently consists of copper wiring. In the future, optical fibre or 
wireless will also be used. 
MAGNETIC MEDIA: 
Tapes and disks of various sizes and formats (including diskettes for personal computers) which use 
magnetic storage technology. 
MULTIMEDIA: 
The concept of closely combining voice, text, data, as well as still and moving image. A 
multimedia database, for example, might contain textual information, images, video clips, tables of 
data, all equally easy to access. A multimedia telecommunications service (such as B-ISDN) would 
permit the user to send or receive any of these forms of information. 
NETWORK. COMMUNICATIONS: 
Communications networks correspond to a complete system of communications between users' 
terminals. Networks may be "point to point' (the transmission goes from a fixed origin to a fixed 
destination), "switched' (the transmission is switched so as to reach a single destination out of 
many) or "broadcast' ( the transmission goes simultaneously to multiple destinations). Networks 
may be * public' (owned by an operator and open to any member of the public who subscribes) or 
"private' ( owned or leased by an individual or company or group of companies exclusively for its 
own use). A network may be "real' (physically separate from the public network) or "virtual' 
(using public network facilities, which revert to public use when no longer required in the private 
network). 
129 
MO Annual Report 1993 - 1994 Annex A 
NETWORK. DATA: 
A Data Network is specialised in the transmission of data rather than voice. Among such networks 
are Circuit Switched Data Networks (CSDN; which include the so-called X.21 networks), Packet 
Switched Data Networks (PSDN, X.25 networks), Frame Relay networks, Switched Multimegabit 
Data Services networks (SMDS). 
NETWORK. INTELLIGENT: 
An intelligent network (IN) includes sophisticated features superior to those of the ordinary 
telephone service, such as advanced software allowing the customisation of the services provided to 
individual customers. For example, it allows the called party to redirect calls intended to another 
terminal (e.g. from a home phone to an office phone during office hours). It allows calls to be 
billed wholly or in part to somebody other than the caller ("freephone' services). It also provides 
virtual private network services. 
NETWORK. OPTICAL FIBRE: 
Optical fibre networks are telecommunications networks based on fine glass fibres, down which 
signals may be sent by flashing a laser. Compared to earlier "multimode' networks, recent 
"monomode' networks have a much higher transmission capacity and rapidity. 
NETWORK. SPEED OF: 
"Speed' or "Flow rate,' when used of a digital network, refers to the number of bits per second it 
can carry, thus being ä measure of the network's capacity. To carry voice, Europe's industry has 
agreed on a standard speed of 64 Kilobits per second. Still images may also be transmitted 
adequately at this rate. Full-colour moving images require transmission speeds of the order of 150 
Megabits per second, though using various compression techniques moving images (though of less 
than normal TV quality) can be transmitted at 2 Megabits per second. Trunk connections, which 
carry many calls at once, require multiples of these speeds. 
ON-LINE ASCÏÏ DATABASES: 
The term "on-line' is deemed to cover all interactive information services delivered by hosts 
(directly or through gateways) via telecommunications links. Services delivered character by 
character, rather than page by page or screen-full by screen-full, are distinguished by reference to 
the internationally recognised ASCII convention for character coding. 
ONP (Open Network Provision): 
Principle of non-discriminatory opening of telecommunications networks to all télécoms operators 
and service providers on the basis of the harmonisation of access and usage conditions of 
telecommunication infrastructures with the view to develop a trans-European information market. 
The ONP is being applied to leased lines, packet switching transmission services and ISDN, and 
will be applied to voice telephony in 1998. 
OPTICAL MEDIA: 
Various types of disc which use optical storage technology, the most common format being CD-
ROM. 
ORIGINATOR: 
The original creator of content materials, for instance an author, composer, artist or photographer. 
130 
MO Annual Report 1993 - 1994 Annex A 
PDA (Personal Digital Assistant): 
A hand-held personal computer with advanced features and communications facilities, where text is 
introduced by handwriting on a screen (rather than conventionally via a keyboard), also referred to 
as "notepad' computer. 
PSTN (Public Switched Telephone Network): 
The everyday telephone network used for the transmission of voice conversations, fax images and 
for low speed data transmission. The basic voice service is also sometimes referred to as POTS 
(Plain Old Telephone Service). 
REAL-TIME INFORMATION SERVICES: 
On-line services which are updated immediately as new data becomes available. 
SECURITY (ofinformation and Systems): 
Security has three basic components: confidentiality, integrity and availability. Confidentiality 
refers to the protection of sensitive information from unauthorised disclosure. Integrity means 
safeguarding the accuracy and completeness of information and computer software. Availability 
relates to ensuring that information and vital services are available to users when required. 
TCP-IP: 
Set of protocols used on the Internet to ensure common communications standards. 
TELE-WORKING: 
The capability to carry out one's work at any location by means of telecommunications and 
computing facilities. 
TRANSACTION SERVICES: 
Services where the principal objective is a transaction rather than the delivery of information, such 
as EDI services. 
VALUE ADDED SERVICE (VAS). VALUE ADDED NETWORK SERVICE (VAN): 
In most countries certain basic telecommunications services have been defined and reserved as a 
monopoly for the national operator. This usually includes voice communication in real-time. 
Services other than this may be offered by other service suppliers which use the national network as 
the basic transmission medium but "add value' to the basic transmission facility (e.g. by storing and 
forwarding the transmission at a later date, by distributing it to multiple destinations, by processing 
the information contained in the transmission then forwarding the result, etc.). Therefore, what 
exactly comprise the notions of basic and value-added service depends on the regulatory situation of 
each country. 
VIDEOTEX: 
On-line services delivered page by page or screen-full by screen-full, rather than character by 
character. 
VIRTUAL REALITY (VR): 
A system whereby the user is supplied with computer-generated images and sounds giving the 
impression of reality. Virtual in this sense means "apparent', "seeming'. The user interacts with 
the artificial world by means of sensors which detect head and hand movements. Future work in 
VR is directed towards increasing the impression of reality, for example by means of 3D images, 
and transmitting VR "worlds' to users located remotely from the source computer. 
131 
IMO Annual Report 1993 - 1994 Annex A 
WHITE PAPER: 
European Commission paper on Growth, Competitiveness and Employment: the Challenges and 
Ways Forward into the 21st Century. The White Paper was agreed at the Brussels Summit in 
December 1993. 
132 
ANNEX B 
ACRONYMS AND ABBREVIATIONS 
ADMDs 
AIM 
ASCII 
AT&T 
ATM 
BAT MAN 
BBA 
BBC 
BREHAT 
BSA 
BT European ADministration Management Domains 
Advanced Informatics in Medicine 
American Standard Code for Information Interchange 
American Telephone & Telegraph 
Asynchronous Transfer-Mode 
Broadband ATM Access Network (Denmark) 
Belgian Broadband ATM 
British Broadcasting Corporation 
Brasseurs et REseau à Haut débit en ATM (France) 
Business Software Alliance 
British Telecom 
CAD 
CCITT 
CD 
CD-i 
CD-ROM 
CD-ROM/XA 
CDTV 
CITED 
DELTA 
DG-xm 
DRIVE 
DTMF 
EARN 
EB 
EBU 
EC 
ECU 
EDI 
EDICON 
EEMA 
EFTA 
EIIA 
EITO 
E-mail 
ESA/IRS 
ESPRIT 
EU 
Eusidic 
FCC Computer-Aided Design 
Comité Consultatif International Télégraphique et Téléphonique 
Compact dise 
Compact dise - Interactive 
Compact disc - Read Only Memory 
Compact dise - Read Only Memory/eXtended,Architecture 
Commodore Dynamic Total Vision 
Copyright in Transmitted Electronic Documents (EC Research Programme) 
Developing European Learning through Technical Advance 
EC Directorate-General for Information Technologies 
and Industries, and Telecommunications 
Dedicated Road Infrastructure for Vehicle safety in Europe 
Dual Tone Multi-Frequency 
European Academic Research Network 
Electronic Book 
European Broadcasting Union 
European Commission 
European Currency Unit (BECU = Billions of ECU, 
MECU = Millions of ECU) 
Electronic Data Interchange 
EDI in Construction 
European Electronic Messaging Association 
European Free Trade Association 
European Information Industry Association 
European Information Technology Observatory 
Electronic Mail 
European Space Agency/Information Retrieval Service 
European Strategic Programme for R&D in Information Technology 
European Union 
European Association of Information Services 
Federal Communications Commission (USA) 
133 
MO Annual Report 1993 -1994 Annex B 
GATT 
GSM 
IBM 
ICSTIS 
ICT 
IDC 
IE 
IFPI 
IFTMR 
IIA 
IMO 
IMPACT 
ISDN 
ISO 
IT 
ITU General Agreement on Tariffs and Trade 
Global System for Mobiles 
International Business Machines 
Independent Committee for the Supervision of Standards of 
Telephone Information Services (UK) 
Information and communication technologies 
International Data Corporation 
Information Engineering 
International Federation of Phonographic Industry 
International Forwarding and Transporting Message Framework 
Information Industry Association (USA) 
Information Market Observatory 
Information Market Policy ACTions 
Integrated Services Digital Network 
International Standards Organisation 
Information Technology 
International Telecommunications Union 
JANET 
JPEG Joint Academic NETwork (UK) 
Joint Photographic Expert Group (ISO) 
LAB 
LAN 
LFR Legal Advisory Board 
Local Area Network 
Less Favoured Regions 
M&A 
MIDI 
MMC 
MMCD 
MPEG Mergers and Acquisitions 
Musical Instrument Digital Interface 
Monopolies and Mergers Commission (UK) 
Multimedia CD (Sony) 
Motion Picture Expert Group (ISO) 
NREN 
NSF National Research and Education Network (USA) 
National Science Foundation (USA) 
OECD 
OMSYC 
ONP 
OPIA Organisation for Economic Co-operation and Development 
International Observatory for Communications Systems 
Open Network Provision 
Optical Publishing Industry Assessment 
PC 
PRS 
PSTN 
PTO 
RACE 
RBOC 
RENATER 
RTD Personal Computer 
Premium Rate Services 
Public Switched Telephone Network 
Public Telephone Operator 
Research & Development in Advanced Communications in Europe 
Regional Bell Operating Company 
Réseau National de Télécommunications pour la Technologie, 
l'Enseignement et la Recherche (France) 
Research and Technological Development 
134 
MO Annual Report 1993 - 1994 Annex B 
SDI Selective Dissemination of Information 
SGML Standard Generalised Markup Language 
SGN Stockholm Gigabit Network 
SMEs Small and Medium Enterprises 
STM Science, Technology and Medicine 
TEDIS Trade Electronic Data Interchange System 
TFPL Task Force Pro Libra 
Un Union Internationale des Telecommunications 
VADS Value Added Data Services 
VANS Value Added Network Services 
VAT Value Added Tax 
VIS Video Information System (Tandy) 
WAN Wide Area Network 
»s/ru/^V 
ANNEX C 
LIST OF PUBLICATIONS 
Amended Proposal for a Council Directive on the Legal Protection of Databases, EC Brussels, 
October 1993. 
Barker, Alan, The Market for CD-i, 1993. 
Cable and Satellite Europe [passim]. 
Case Studies in the Field ofinformation Economics, Biotechnology Seaor, prepared for IMPACT 2 
by HERTIS Information and Research, 1994. 
Case Studies in the Field ofinformation Economics, Insurance Sector, prepared for IMPACT 2 by 
Fuinca, 1993. 
Les Chiffres-Clés de l'Audiovisuel Mondial, OMSYC, 1993. 
Convergence in Europe: State of the Art, Report for IMO, EC DGXIII/E, Jean-Claude Burgelmann, 
February 1994. 
Directory of Online Databases, Gale Research Inc., 1993 and 1994. 
EAN International Annual Report 1993. 
The Economist, [passim]. 
EEMA Briefing, [passim]. 
EIIA/EC Third Co-ordinated Host Survey, IMO, EC DGXm/E, 1993. 
EIIA/EC Fourth Co-ordinated Host Survey, IMO, EC DGXHI/E, 1994. 
Electromc Books International, Conference Proceedings, Mecklermedia, March 1994. 
EP Journal, [passim]. 
Europe and the Global Information Society. Recommendations to the European Council, Report 
presented by the Bangemann group at the Corfu Summit, 24th - 25th June 1994. 
European Information Technology Observatory Update, EITO, October 1993. 
European Multimedia Yearbook, Interactive Media Publications, 1994. 
Europe's Way to the Information Society - An Action Plan. Communication from the Commission 
to the Council and the European Parliament, Brussels, July 1994. 
Facts and Figures of the CD-ROM Industry, TFPL 1994. 
Financial Times, [passim]. 
138 
IMO Annual Report 1993 -1994 Annex C 
Growth, competitiveness, employment. The challenges and ways forward into the 21st century. 
European Commission, 1993. 
Guidelines for Cross-Border control of Audiotex and Videotex, EIIA, July 1993. 
IDP Report, Simba [passim]. 
IDT - Marchés et Industries de l'Information, Conference Proceedings, l'Association des 
professionels de l'information et de la documentation, June 1994. 
The Impact ofinformation Technology Usage in the Transport Seaor, prepared for IMPACT 2 by 
SISNet, 1993. 
Impaa of Information Usage on Companies' Competitiveness, prepared for EC DGXIII/B, US 
Strategic Decisions, 1994. 
Interactive TV in Europe and the USA, Quadrature, July 1993. 
Interactive Media International, [passim]. 
Internet World and Document Delivery World International, Conference Proceedings, 
Mecklermedia, May 1994. 
Key Indicators of the Information Industry, 1992. IDATE, April 1994. 
Latest Internet Measurements Reveal Dramatic Growth in 1994. Internet Society press release, 4 
August 1994. 
Legal Advisory Board Files, working papers of the LAB, 1993/4. 
Legal Implications of Convergence Between Media and Telecommunications Industries, Centre de 
Recherches Informatique et Droit, February 1994. 
La Lettre de Télétel et d'Audiotel [passim]. 
Mayer, René, Construire un Marché Européen de l'Information, Paper presented at the IMPACT 
Information Day, May 1994. 
Le Marché Audiovisuel Européen - Audiovisuel et Industries Culturelles, IDATE, 1993. 
MBI World Report, MBI, 1994. 
Mergers and Acquisitions in the Elearonic Information Services Industry, Working Paper of the 
Information Market Observatory, IMO, EC DGXHI/E, May 1994. 
National Information Infrastructure: Agenda for Action. Information Infrastructure Task Force, 
1993. 
New Opportunities for Publishers in the Information Services Market, IMO, EC DGXIII, 1993. 
139 
MO Annual Report 1993 -1994 Annex C 
Online Services: 1993 Review, Trends à Forecast, Simba, 1994. 
Optical Publishing Industry Assessment, Infotech, 1994. 
An Overview of Print Publishing Markets in the European Community, Working Paper of the 
Information Market Observatory, EC DGXm/E, September 1993. 
Overview of the Audiotex PRS Market, Working Paper of the Information Market Observatory, 
IMO, EC DGXm, June 1994. 
Panorama de l'Edition Audiotel, Geste, 1994. 
Personal Communicators - Analysis of Industrial & Technological Evolutions, DGIH, EC Brussels, 
1993. 
Premium Rate Services, Eurodata Foundation, 1993. 
Rietbroek, John, EC initiatives on trans-European networks. Information Economics and Policy, 5 
(1993)287-294. 
RTD News, [passim]. 
\ 
i 
Television Business International [passim]'! 
Top Fifty European Media Owners, Zenith Media Worldwide, 1994. 
US Industrial Outlook, US Government, 1994. 
US Telecommunication Services in European Markets, Office of Technology Assessment, United 
States Congress, August 1993. 
Vers un environment de communications personnelles. Livre Vert sur une approche commune dans 
le domaine des communications mobiles et personelies au sein de l'Union Européene. 
EC Brussels, April 1994. 
World Telecommunications Report, International Telecommunications Union, March 1994. 
World Telemedia/Voice International [passim]. 
140 

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