COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - COHESION AND THE INFORMATION SOCIETY
Date: 1997-01-22
Institutions: European Commission
Subjects: economic and social cohesion, information technology, liberalisation of the market, telecommunications, transmission network

~^l 

I  COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  22.01.97 
COM(97) 7  final 

COMMUNICATION  FROM THE  COMMISSION 

TO THE COUNCIL,  THE EUROPEAN PARLIAMENT, 
THE ECONOMIC  AND SOCIAL  COMMITTEE 
AND  THE COMMITTEE OF THE REGIONS 

COHESION AND THE INFORMATION SOCIETY 

TABLE OF CONTENT 

FOREWORD 

THE ISSUE 

THE CONTEXT 

•  THE REGULATORY FRAMEWORK 

•  THE ROLE OF THE STRUCTURAL FUNDS 

THE WAY FORWARD 

•  ADVANCING COHESION  THROUGH THE REGULATORY PROCESS, 

• 

...  COMPLETING THE NETWORK INFRASTRUCIURE  ... 

• 

...  AND STIMULATING DEMAND 

CONCLUSIONS 

STATISTICAL ANNEX 

EXPLANATORY NOTES 

FOREWORD 

The Commission has recently adopted its first Report on economic and social cohesion, under 
Art.  130b  of  the  Treaty.  This  Communication  forms  part  of  the  follow-up  to  the 
recommendations  and  analysis  of  the  Report  in  the  area  of  the  information  society.  It 
complements the Green Paper "Living and Working in the information  society - People  first", 
(which undertook an analysis of the issues related to social cohesion), notably by highlighting 
the regional aspects of the problem. 

In the context of the globalisation process and of the need to become more competitive at the 
world level, the opportunities offered by the emerging information society are huge: in terms of 
competitive gains to be grasped by firms and territories; more efficient  organisational  forms; 
new trading opportunities; new educational  and new employment  possibilities. Making these 
opportunities  available  throughout  Europe  is  one  of  the  central  objectives  of  the  gradual 
liberalisation  of telecommunication  markets. However,  not  all European  regions, citizens  or 
firms are equally well  equipped  to  enjoy  these benefits  because  of geographical,  social  and 
economic reasons, yet in a globalising environment, it is clear that they have to compete not 
just at EU level, but at a global level as well. 

Though the opening of telecommunications market and the harmonisation  measures should in 
principle reach out to the whole territory of the Union, the principal risk is that investments in 
some regions will be delayed. 

Thus, the development of the information society needs to be complemented, where necessary, 
by policy  action in order to  close the existing gaps  and  ensure that  the  information  society 
develops  at  the  desired  rate  throughout  the Union.  This  calls  for  the  participation  and  co 
ordination  of  regions, national  governments  and the  European  Institutions  so  as  to  aven  a 
polarisation between "information haves" and "information have-nots" as the new technologies 
spread. 

This document, having identified the need for action, indicates the issues, the context and the 
way forward  in the  areas  of  regulatory,  investment  and  demand  support  policies.  Coherent 
progress in these three areas will be important for harmonious regional development. 

THE ISSUE 

1) 

The information society is making possible profound economic, social and institutional 
transformation  across  all realms of  human activity1.  As  such, it  also  has  considerable 
potential  for  strengthening  economic  and  social  cohesion  within the  meaning  of  Art. 
130a by reinforcing  regions'  competitiveness.  The latter is increasingly  determined by 
the  ability  of  regions  to  integrate  the  new  technologies  made  available  by  the 
information society. 

Information and communication technologies (ICTs) can widen the efficient  locational 
choices  for firms so  that  they  can  take  advantage  of  differential  costs  of  operations 
and/or market opportunities.  They can help regions, both, retain a larger share of total 
value  added  and  attract  and  develop  new  activities  with  high  value  added.  The 
information  society  could  also  help  breakdown  the  barriers  to  location  of  business 
outside  urban  centres,  attracting  increased  investment  to  rural  areas  where  relative 
business-location costs are typically lower and which can offer  a high quality of life. 

2) 

The information  society also offers  a great potential for the development  of new  forms 
of  employment  and  high  skilled  jobs,  especially  by  providing  SMEs,  as  the  main 
dynamic  source  of  employment  creation,  growth  and  competitiveness,  with  the 
instruments to innovate and adapt to a rapidly changing economic environment. 

the  Commission2 

suggests 

liberalisation  of 
Research  undertaken  by 
telecommunication markets combined with a rapid adoption for ICTs will yield positive 
effects  in terms of employment, largely compensating for any job losses that  could take 
place in the telecommunication sector.  The problem, however,  is in managing the time 
lag  between  these  processes:  those  who  adapt  first  and  manage  to  anticipate  the 
emerging  products  and  services  are likely  to  gain  dynamic  "first  mover"  competitive 
advantages, while the inability to rapidly adopt these technologies will certainly  have  a 
negative effect on employment3. 

that 

From a socio-economic perspective, the information society opens up opportunities for 
new working schemes  such as teleworking, potentially  providing  wider  access to .jobs 
and  more  flexible  timing  of  work;  it  provides  a  basis  for  overcoming  mobility  and 
access  problems  arising,  for  example,  from  remoteness  and/or  poor 
transport 
infrastructure,  especially  in  rural  areas;  it  opens  up  new  opportunities  in the  areas  of 
education, health and caring activities; and provides for  increased  transparency  in the 
public administration - to mention but a few examples4. 

3) 

All these processes also have profound  spatial and social implications. Though ICTs are 
not, by themselves, bringing  about  or  determining  any particular  spatial  outcome, their 
up-take  affects  regions'  ability  to  exploit  and  develop  their  humar:  resources, 
infrastructures  and the like, thus determining  a region's  development  potential.  This is 
important, in particular,  for  SMEs which represent  the backbone  of regioD  I economic 
structures,  especially  in  LFRs.  At  the  same  time  if  all  citizens  are  not  offered  equal 
opportunities of access to the information  society, we risk the creation of new forms  of 
social exclusion. 

The quality of information and telecommunication infrastructure is a key determinant of 
the effective  capacity to  participate in the information  society.  Other actors include: 
the level of qualification  and the educational level so as to support the widespread use 
of  information  society  services;  a  pro-active  role  played  by  the  private  and  public 
sectors in promoting the information  society; organisational and investment  capacities 
for  pursuing  an  effective  information  society  strategy;  availability  of  the  technical 
support for facilitating the diffusion  of information society activities; and the creation of 
public awareness for the information society. 

H * : - .: «s 

4) 

For  the  opportunities  of  the  information  society  to  be  grasped  by  individuals, 
institutions and firms independent  of their location, these enabling factors  need to be 
put  in  place throughout  the  EU.  A  review  of  the  available  data  as  taken  up  in  the 
Statistical Annex to this document suggests that an important  gap still exists between 
the richest and  the  less  favoured  regions  (LFRs)  of  the  Union  at  the  level  of basic 
infrastructure  provision,  the  cost  and  reliability  of  services,  and  the  availability  of 
advanced services. 

For  example,  looking  at  the  proportion  of  all  households  passed  by  cable  network 
(which indicates the nature potential for rapid deployment of local loop competition and 
broad  band  services),  about  97% of  the  Belgian  population  and  84%  of  the  Dutch 
population  had  access  in  1993 to  cable  TV  networks  compared  to  0%  in  Italy  and 
Greece, 2% in Portugal and 8% in Spain. Another example concerns the cost of using 
information  society  services: at the beginning of  1996, the residential  installation  of a 
telephone line costs respectively on average 32.5% more in cohesion regions than in the 
European core; 65.0% more in Ireland and 76.0% more in Greece. 

Often,  averages hide the existence of major  differences  within  countries.  In Portugal, 
for example, 62 main telephone lines per hundred inhabitants were available in Lisbon 
against 29 in the rest of the country and  18 in the Acores; in Spain, Madrid  had 45.2 
lines against  36 in the  rest  of the country  and  22 in Estremadura; and  in Greece,  52 
lines were available in the Athens region against only 27 in Anatoliki Makedonia. 

Evidence also suggests that some particular groups or individuals may face problems of 
adaptation to the information society and that their needs should be addressed. 

The central issue is, therefore,  how to  combine  developments  in information  society 
and telecommunication policies with the role to be played by structural interventions in 
order to rapidly reduce these disparities and promote a cohesive information society. 

THE CONTEXT 

The regulatory  framework 

5) 

Recognising  the  need  to  accelerate  the  diffusion  of  telecommunication  networks,  to 
facilitate service and network innovation, and to bring down the costs of usage, leading 
to  further  innovation  and  the  development  of  new  applications,  the  European 
Commission  has  promoted  and  supported  the  liberalisation  of  teiecommunication 

v  markets. At the same time, Commission policy is based on the recognition that also in 
the  emerging  pro-competitive  environment  in  the field of  telecommunications,  it  is 
essential  to  ensure  the  provision  of  universal  service  and,  where  necessary,  the 
financing  through the creation of specific  mechanisms funded  by market  players. This 
regulatory approach has been chosen partly to avoid "cherry picking" by new entrants 
who are not themselves required to deliver universal service and who are likely to focus 
their activities on both business and residential  customers in and around  major cities5, 
but also to ensure that all citizens of the Union have access to certain services of high 
quality at prices they can afford.  As such, the concept of universal service is a central 
part  of the European  model of  society contributing to  solidarity  and  equal treatment, 
and an essential element of economic and social cohesion. The importance of universal 
service for cohesion has also been stressed in the First Report on Economic and Social 
Cohesion. 

6) 

It is often  said that  the forces  of liberalisation  and competition  will reach  out  to  the 
whole  territory  of  the  Union6.  Yet,  given  the  rapid  pace  of  technological  change, 
frequently,  there will be fresh rounds of investment, service innovation and competitive 
entry  in  the  core  regions  which,  if  not  reciprocated,  will  affect  development  and 
employment opportunities and sustain the relative gap between different  types of areas. 
Therefore,  from  a  cohesion  perspective,  there  is  a  need  to  keep  the  regulatory 
framework  and, more particularly, the scope of universal service, under review so as to 
ensure that all territories participate in the full range of benefits of liberalisation in terms 
of affordable  price, level of service and innovation. Targeted support, where necessary, 
for  investment  expenditures  to  spread  the  beneficial  effects  to  the  less  developed, 
peripheral and/or rural areas of the Union, in line with the competition  rules,  should 
complement the regulatory  framework. 

The role  of the Structural  Funds 

7) 

A recent  analysis7  of  European  Regional  Development  Fund  (ERDF)  and  European 
Social Fund (ESF)  interventions  suggests  that,  overall,  only a  surprisingly  small  part 
(about  2.0%)  of  expenditure  goes  to  investment  in  the  telecommunication  sector. 
Furthermore, the most  significant  part  of these investments  (about  1.5%)  is used  for 
upgrading and completing the information and communication infrastructure,  especially 
the basic telephony network.  A tiny portion (approximately 0.3% of total expenditure) 
of  the  Community  Support  Frameworks  (CSFs)  is  then  dedicated  to  demand-side 
measures. An analysis Objective by Objective  does not  reveal  substantial  differences. 
Hence, it is fair to say that, with few exceptions8 and despite having received increased 
attention under the current programming period, efforts  for  supporting the emergence 
of the information  society and preparing  regions to  grasp the  related  benefits  remain 
modest and  insufficient. 

TABLE 1 - TOTAL EXPENDITURE OF C S FS FOR OBJECTIVES 1,2,3,4  AND SBINTHE 
TaECOMMUNICATlON SECTOR  (1994-99) 

MECU 

MEMBER STATES 

EUROPEAN UNION 

TOTAL 

Telecom(iH) 

-Basic 
•Advanced 

Telematics <M 

TOTAL( v) 

Private  Public 

SFs  %(i) 

33 

0 
27 

2.005 

1.417 
524 

1.332 

39.5 

877 
369 

38,2 
40,1 

Value 

3.370 

2.295 
920 

%(ii) 

1,2 

0,8 
0,3 

46 

382 

437 

50,5 

865 

0,3 

81.504  85.087 

117.280 100.0 

283.871  100.0 

Percentage of the total  Community Support Frameworks (CSFs) on the Total Value of the line. 
(li) 
Percentage of the total budget for the item on the total budget allocated forthe CSFs (i.e  ECU 283.871 million). 
fui) 
Total  funds  allocated  to  axes,  measures  or  simple  actions  covering telecommunications  (infrastructures  and  service) 
mentioned in the Community Support Frameworks. A further distinction is made between Basic (provision and modernisation of basic 
telephony, including digitalisation  and optical  fibre  in national or regional  networks)  and Advanced  (implementation  of advanced 
infrastructures and services such as optical fibre in local access, satellite links, ISDN and broadband network) 
f,v) 
teleworking schemes, teleleaming and multimedia applications 
(v) 

Budget allocated to telematic applications in several fields like health, education, transport. This line include actions like 

This is me total of CSFs and not the sum of the hems above. 

8) 

The nature of the Commission's  initiatives  to support  and stimulate  a wider diffusion  of 
information  infrastructures  and  applications  in  LFRs  has  evolved  over  time  from  the 
STAR  programme9  with  a  strong  infrastructural  focus,  to  the  TELEMATIQUE 
programme10  which  stressed  the  stimulation  of demand  for telecommunication  services 
and  the  efficient  use  of  telecommunication  infrastructures  among  the  public  and  the 
private  sectors. 

TABLE 2  -  TOTAL EXPENDITURE OF COMMUNITY INITIATIVES IN THE 
TELECOMMUNICATION SECTOR(I> 

MECU 

MEMBER STATES 

EUROPEAN UNION 

TOTAL 

Telecom 

-Basic 
- Advanced 

Private  Public 

SFs 

% 

41 

0,7 
24 

41 

46,6 

0,7 
24 

50,0 
46,0 

Telematics 

66 

112 

166 

48,3 

87 

1,4 
52 

344 

0,7 

0,8 
0,4 

2,7 

TOTAL 

3.337  3.280 

5.910 

100.0 

12.527 

100,0 

(0 

The same footnotes of TaWe 1  apply to Table 2. 

The  European  Social  Fund  (ESF)11-,  through  its  interventions  under  the  different 
objectives  and  the  Community  Initiatives  EMPLOYMENT  and  ADAPT,  has  been 
particularly attentive in promoting training and supporting structures for jobs and skills 
related to the information society. In 1996 the ADAPT Initiative was reinforced with a 
new  set  of  actions,  ADAPT-BIS  (Building  the  Information  Society),  aimed  at 
promoting pro-active social policies facilitating the transition to the information society. 

The Structural Funds are also an important tool in seeking to address the risk that rural 
areas be left  behind by both financing provisions of ICT infrastructure to remote rural 
areas (particularly in Objective  1 regions) and by offering  help to rural areas to exploit 
new employment opportunities12. 

In  1994,  the  Commission  launched  the  Interregional  Information  Society  Initiative 
(IRISI), which aims to demonstrate a methodology based on subsidiarity and a bottom-
up  approach  for  creating  awareness  among  the  general  public  and  decision  makers, 
including the private sector. The objective here is to define information  society actions 
which  are  relevant  to  the  economic  fabric  of  the  region  and  to  develop  synergies 
between  regional  resources,  private  capital  and the  Structural Funds, and  to  provide 
inter-regional guidance and learning13. Based on the success of IRISI a new generation 
of innovative actions for the information  society (RISI) under Art. 10 of the ERDF and 
Art.6 of the ESF has been launched14. 

THE WAY FORWARD 

9) 

The debate and more policy initiatives relating to the information  society, which have 
initially  focused  on technological  and  supply-side  aspects,  are now  also  focusing  on 
social  and  demand  side  aspects.  The  pervasive  and  systemic  nature  of  the  changes 
brought about by the information society necessitate both the integration of all pertinent 
areas of action and the participation of all interested  actors at local, regional, national 
and EU level. 

Advancing  cohesion  through  the regulatory  process... 

10)  Taking into account the dynamic and evolutive nature of umversal service, which must 
be kept under continuous review, the Commission is due to report15, for the first time, 
on the scope, quality, level and affordability  of universal service by January 1st, 1998. It 
must  also examine and report  to the European Parliament  and to the Council on the 
functioning  of the Directive on the application of Open Network Provision  (ONP) to 
voice telephony and on universal service before December 31st, 199916. 

There  is  a  broad  recognition  that  universal  service  must  respond  to  technological 
evolution and changes in the needs and expectations of Europe's citizens. In the future, 
in  the  context  of  the  development  of  the  concept  of  universal  service  or  the 
development of public service obligations, different  levels of minimum service could be 
imaginable,  adapted  to  different  user  groups,  such  as  SMEs,  health  centres  or 
educational institutions.  Access to  more advanced  services and  subscriber  connection 
to digital switch might pave the way towards ISDN provision. 

Public  and  "community"  access,  involving  the  connection  of  schools,  colleges, 
hospitals, public offices,  libraries and other public access points may be of particular 
importance  to  LFfts  where  there  may  be  a  risk  of  delay  in  accessing  advanced 
telecommunications services if left to  market forces alone17. In that context, assessing 
periodically also the need for any reshaping of the concept of universal service and/or 
universal access at a European level will be part of the review exercise. 

Indeed, if all the population is to  share the benefits of the information  society, then a 
consensus must  be  achieved  around  the  shape universal  service  should  take  and  the 
ways to pay for it. 

Therefore,  in  order  to  aid  the  review  process,  the  Commission  urges  and  supports 
Member  States and regions to continue in the course of  1997, and thereafter,  a wide 
and  structured  consultation  on  universal  service  and  on  public  access  involving  the 
general  public,  SMEs,  community  organisations,  educational  institutions  and  local 
communities.  The  outcome  of  that  consultation  will  constitute  a  fundamental  and 
necessary input for the future shape of universal service and to the mandate of National 
Regulatory Authorities in each Member country. In this way, the full  transparency  of 
the review process will be ensured18. 

Complementary to  any evolution  in the  scope of umversal  service, developing  public 
access as part  of a demand  stimulation  strategy  is  an important  element  and  will be 
further discussed under point 13. 

11)  Member States have a key responsibility in rapidly adapting the regulatory  framework 
to the new competitive environment. The Commission recommends that they complete 
the liberalisation  process  as soon as  possible.  The  slow pace of regulatory  reform  in 
some countries is likely to be counter-productive in terms of cohesion since uncertainty 
in the regulatory environment may well deter new investments. The licences awarded to 
telecommunications operators represent  a powerful  cohesion instrument which, taking 
into account  the  proportionality  principle  and  the  necessity  of  open  and  competitive 
markets  in the  European  Union,  could  be  explored  in  view  of  integrating  coverage 
targets including less favoured  regions. Competition policy plays an important role and 
the Commission will continue to ensure that recently liberalised  markets and/or newly 
emerging markets are not foreclosed. 

... completing  the network 

infrastructure... 

12)  The  primary  responsibility  for  the  development  and  deployment  of  the  information 
society rests in the hands of private business, telecom operators and service providers. 
Even  within  LFRs,  investment  in  telecommunications  infrastructure  is  potentially 
profitable in many sub-regions. The digitalisation of trunk lines and local exchanges and 
the extension of GSM, to take a few examples, are likely to be profitable from the very 
outset in the most densely populated urban areas. 

Yet the investment gap in cohesion regions compared to the rest of the Union remains 
in  Objective  1  regions  (and,  more  in  general,  in 
significant.  In  addition, 

9 

poor/rural/peripheral areas) the cost of installing and operating new lines is often higher 
than in other areas and levels of GDP per capita tend to be lower. For example, the cost 
of digftahang the last 10% of the network in Greece, Ireland, Italy, Portugal and Spain 
has been estimated to be in the range of ECU 4 to 5 billion19. A truly universal digital 
network would thus require considerable extra investment. Furthermore, there may be a 
"time gap" concern which justifies  public interventions, whereby  support  is meant  to 
anticipate the diffusion  of a given infrastructure  or  service (as the  STAR Programme 
has amply demonstrated). As acknowledged in the First Report on economic and social 
cohesion,  the  cohesion  countries  may  require  accompanying  measures  to  help 
accelerate the development of networks under a liberalisation regime. 

The Commission invites Member States and the regions concerned to carefully  assess 
investment  decisions  (also  in  the  framework  of  the  current  ERDF  programming 
period),  identifying  the  link  between  investment  and  regional  performance,  and  to 
target investment on projects that optimise the contribution to cohesion and on areas 
where investment would not otherwise be forthcoming under market conditions. In the 
context of EU structural policies, the Commission, in partnership with Member States, 
will  strictly  evaluate  where  and  when  there  is  a  strong  case  for  public  support  for 
telecommunications investment in line with the competition rules. 

... ami stimulating  demand 

13)  The role of policy action for demand stimulation as a means to speed up and smoothen 
the  transition  to  the  information  society  has  been  emphasised,  for  example,  by  the 
Competitiveness Advisory Group20 and has been widely acknowledged21. 

Assessing  real  need  and  demand,  as  part  of  the  exercise  to  review  the  scope  of 
universal service, is particularly complicated in the information  society because services 
may require more up-front  resources, acting as barriers for many potential users, who 
cannot  experiment  the new services to  determine their utility22.  Supporting  the direct 
access of the public to  new information  services in institutions such as schools, public 
libraries and local development centres can provide a cost-effective  solution23. In these 
circumstances, the general public would be given access that would otherwise be denied 
them, but at a tiny fraction of the cost of providing the service to every home; training 
and support  can be offered  in a cost-effective  form;  and the utility and  popularity  of 
different  services can be tested. The feasibility of using the Structural Funds to provide 
assistance for such schemes will be explored. 

Currently, regional ICT programmes often  lack the adequate measures complementary 
to the development of new advanced infrastructures  and applications. Initiatives need to 
be  taken  to  integrate  ICT  programmes  with  ICT  training  and  awareness  schemes, 
regional structural economic support, project seed money and risk capital for users24. 

Also, LFRs are often  characterised  by traditional  organisational  structures and lack of 
intermediary  institutions, resulting in many cases in the inability of decision-makers to 
formulate  relevant  information  society  objectives  and  to  implement  effective  plans, 
Initiatives  should  be  launched  to  offer  training  courses  for  the  development  of 
organisational  and managerial  skills and to  support  the dissemination  of such  skills in 
the  region25.  In  addition,  stimulating  co-operation  between  enterprises  and  between 

10 

companies and knowledge resource centres seems an effective way to mobilise demand 
for new services and applications. 

Finally, lack  of experience  in using  ICTs  represents  a barrier  to  the  participation  of 
some LFRs  in  the  information  society.  Effective  use  of  advanced  ICT  applications 
requires  computer  literacy,  availability  of  appropriate  supporting  and  maintenance 
services, and language skills - to mention but a few. Therefore, initiatives are necessary 
to  reinforce  educational  programmes  on  ICTs,  to  support  the  ability  to  develop 
distance  working  relations,  to  promote  awareness  campaigns  and  training  and  re 
training schemes in communication and information inquiry26. 

15)  The  information  society  is  a  dynamic  concept.  As  the  IRISI  initiatives  have 
demonstrated, it is likely to take different  forms in different  contexts depending on the 
structure of local productive systems, local institutions, and the demand expressed by 
the population. For this reasons, the Commission has no ready-made solutions; it does, 
however,  have  a methodology to  propose  and the  instruments to  accompany  it.  The 
point of departure is the recognition that the regional level is the most appropriate for 
identifying the opportunities offered  to it by the information  society. Only an approach 
based on consensus, partnership  and dialogue  among users and ICT providers within 
the regional context can make the information  society a reality adapted to the needs of 
people  and firms rather  than  a  celebration  of  technology.  This  bottom-up  approach 
mirrors the approach of the territorial employment pacts as launched by the European 
Confidence  Pact  for  employment  and  supports  the  role  of  small  and  medium-sized 
enterprises as the driving force  for  regional  development  and employment  creation. It 
should contribute to realising the potentially powerful role of the information  society in 
building  European  awareness  of  indigenous  regional  potential,  identifying  and 
encouraging expanded cross-border trading possibilities and economic opportunities. 

The  regions  involved  in  the  IRISI  and  RISI  initiatives  exemplify  this  approach. 
Mainstreaming these types of actions through the use of the Structural Funds in close 
co-ordination with other financing mechanisms available at the EU level, in particular 
projects within the framework of the Information  Society Action Plan, will be one of 
the priorities27. 

The  Commission  will  carry  out  an  in-depth  assessment  of  the  information  society 
content of the new Obj.2 programmes and of Obj.l  programmes, both before and after 
the review due by mid-1997. This analysis will assist the Commission, Member  States 
and regions to identify opportunities for supporting information  society activities within 
existing programmes and to define their priorities for the future. 

Already,  the  Commission  has  recently  issued  guidelines  for  programmes  in  Obj.2 
regions for the programming period  1996-99 which affirm that the emphasis "should be 
on practical IT applications and services proven to be effective for  employment and 
business  creation and retention" with  particular  attention  to  awareness  and  training 
actions. With the same spirit, the Commission is preparing the new guidelines for Obj. 1 
regions  whose  programmes  are  due  for  revision  in  mid-1997.  Within  the  margins 
available, Obj 1, 5(b) and 6  regions and Member states are invited to explore how to 
increase the number of actions related to the information society. 

11 

Further to  operations in Obj.  1 and 2  regions, the Commission intends to  harness the 
possibilities  offered  by  operations  in  Obj.  3  and  4  to  support  the  provision  of 
information  society  skills training in favour  of those unemployed  and those  at risk  of 
being  unemployed.  In  particular,  the  development  of  preventive  approaches  in 
enterprises,  and  facilitating  the  introduction  and  adaptation  to  new  forms  of  work 
organisation  combined  with training  and retraining  of workers,  is  seen  as  essential  in 
the process of transition to the information society. 

16) 

The  participation  of  actors  from  LFRs  in  the  4th  Framework  Programme  already 
provides a basis for the take-up and diffusion of results, applications and best practices. 
The  preparation  of  the  5th  Framework  Programme  for  RTD  provides  a  further 
opportunity  for  better  integrating  the  cohesion  dimension  in  RTD  policy  and 
responding  to  users'  needs,  particularly  in  the  area  of  the  information  society.  The 
guidelines  proposed  by  the  Commission28  identify  the  creation  of  a  "user-friendly 
information society" as one of the priorities of the 5th Framework Programme. In order 
to  improve  the  complementarity  with  structural  policies,  the  active  participation  of 
regions in the implementation phase will need to be promoted. 

CONCLUSIONS 

17) 

Information is increasingly recognised as a key resource on which the world  economy 
depends.  Progress  in  ICTs  has  the  potential  to  reduce  the  economic  significance  of 
distance,  potentially  affording  firms  and  households  with  access  to  vital  information 
location.  By  uniting  traditionally  separate  sectors  (i.e. 
independent  of  their 
telecommunications,  computers  and  media)  it  has  created  vast  possibilities  for  the 
emergence  of  new  activities,  services  and  jobs.  Yet,  the  capacity  to  access  and 
effectively use the information society is unevenly distributed across European regions. 

18)  Aiming at reducing these disparities and improving economic  and social  cohesion, this 
Communication  attempts  to  lay  down  some  key  working  principles  in  the  area  of 
regulation, infrastructure investment and demand stimulation. 

•  Member  states  should  ensure  appropriate  development  of  their  regulatory 

framework.  In particular they should: 

=> continue the debate on the scope of universal  service and on the concept  of 
public  access  in the  information  society  in order to  contribute  towards the 
future  development  of  the  regulatory  framework  involving  individuals, 
SMEs,  community  organisations,  educational  institutions,  regions  and local 
communities; 

=> provide for early completion of the liberalisation process; 

=> explore  licensing  regimes  with  a  view  of  integrating  coverage  targets 
including  less  favoured  regions,  taking  account  of  the  proportionality 

12 

principle and the development of open and competitive markets throughout 
the European Union. 

•  It is recommended that Member states should: 

=> give  priority  to  the  completion  and  upgrading  of  the  telecom  networks, 
identifying the link between investment and regional performance.  Given the 
existing  budgetary 
targeted  on 
télécommunication infrastructure  investments that optimise the  contribution 
to economic and social cohesion and which do not distort competition in the 
new environment; 

should  be 

constraints, 

support 

=> adopt  a  strategic  and  integrated  approach  to  the  information  society  in 
partnership with regional and local authorities, social partners, infrastructure 
and service providers and other relevant actors; 

=> establish  public/private partnerships,  where  necessary,  so  as to  involve  the 
private sector thus ensuring the selection of suitable projects,  their  effective 
implementation and their long-term economic sustainability. 

=> launch  a  range  of  initiatives  (including  within  the.  framework  of  the 
Structural Funds) in the areas of education, training and work  organisation 
as  already  proposed  in  the  Commission  action  plan  "Learning  in  the 
information  society"  and  the  Green  Paper  "living  and  working  in  the 
information society - People first". Increasingly, efforts  must concentrate on 
education and training; 

•  The Commission intends to: 

=> take into account the  results of the consultation  carried out  at the Member 
state  level  (see  above)  when  developing  further  its  policy  on  universal 
service in the context  of its legislative initiative and in view, particularly,  of 
the report on the Directive on the application of ONP to voice telephony and 
on universal service due by 31 December 1999; 

=> increase the coherence of its actions in the field of the information society; in 
particular, in the relation between the 4th Framework Programme for  RTD 
and the Structural Funds. It will also intensify its efforts  for  mobilisation and 
awareness  raising  and  ensure  that  the  needs  of  users  continue  to  be  truly 
represented in the 5th Framework Programme for RTD; 

=> prepare for  spring  1997 a communication  describing the  set of actions to  be 
undertaken  as  a  follow-up  to  the  consultation  and  debate  process  on  the 
Green  paper  "Living  and  working  in  the  Information  Society". .This  will 
develop a focused  "People first" approach to social policy in the  information 
society that responds to the demand for practically oriented  activities; 

=> grant technical  assistance  to Member  States  and  regions  for  promoting  new 
ICTs  including  electronic  commerce,  and  increase,  in  the  framework  of  its 

13 

enterprise  policy,  the  access  of  SMEs  to  the  opportunities  granted  by  the 
information society, both considering their specific needs and reinforcing the 
information efforts as regards these opportunities; 

=> accompany  and  continuously  support  the  actions  of  Member  states  and 
regions in the framework of the  Structural Funds, in particular,  in order  to 
dévise  integrated  and  strategic  approaches  to  the  information  society,  to 
enhance  regional  capacity  building  at  all  levels.  The  Commission  will  also 
carry out an in-depth assessment of the information society content of Obj. 1 
and Obj.2 programmes; highlight  the importance  of the information  society 
in the new guidelines for Obj.l  regions and harness the possibilities  offered 
in the framework of Objectives 3 and 4 and ADAPT-BIS. 

14 

STATISTICAL ANNEX 
GENERAL TELECOMMUNICATION/INFORMATION SOCIETY INDICATORS29 

1.1 

Access indicators 

The  first  prerequisite  for  active  participation  in  the  information  society  is  for  firms and 
households to have ready access to the underlying networks and devices. Though converging in 
many aspects, significant geographical variations remain in the European Union in terms of the 
time a subscriber may have to wait for the installation of a line; the quality of the service on 
that line and the range of services which mat line can support. 

NETWORKOR SERVICE 

PSTN 
- Faults per 100 Main Lines '94 
- Digital lines (%) '94 
ISDN (Primary  Rate) 
- Geographic coverage 1994 
- Projected Coverage 1996 
Public On-line  services 
- CompuServe nodes per 1M *95 
- Dial-up numbers per 1M '95 

CORE 
AVERAGE® 

COHESION 
AVERAGE 

COHESION 
DIVERGENCE 
(%) 

11,3 
71,2 

85,0 
100,0 

0,54 
1,94 

32,6 
60,6 

32,3<fi) 
80,0 

0,05 
0,36 

+ 188.0 
-15,0 

-62,0 
-20,0 

-91,0 
-81,0 

® The European core, as defined in the NEXUS study, includes all EU Member states except the 
cohesion countries (Ireland, Greece, Spain and Portugal) and the cohesion regions in Italy. 

<U) At the end of 1993, the Spanish Operator Telefonica claimed a full geographical coverage either 
directly from an ISDN exchange or by using remote links.  Similarly, Portugal Telecom declared  a 
virtually 100% coverage (including Atlantic islands like Madeira). The  installation time is typically 
4 weeks, in many areas it is much shorter, but in remote regions operations take up to 8 weeks. 

For  example,  in  1995, the actual  time  for  being  connected  to  the  network  amounts  to  20 
working  days  in the German  Western  Lander,  to  8 working  days  in the  UK and in  France 
compared to 80 days in Greece. 

Similarly,  the quality  and reliability  of  Public  Switched  Telephone  Networks  (PSTN)  lines 
vary quite considerably both between  Member States and between different  regions.  In 1994, 
for example, Greece had on average 53.0 faults per 100 main telephone  lines compared to an 
average of the European core of 11.3 faults (an almost fourfold  difference). 

A  further  indicator  of  accessibility  relates  to  Integrated  Service  Digital  Network  (ISDN)30 
provision:  almost  85% of the territory of the  European  core was covered  by  ISDN  in  1994 
against only 32.3% in the cohesion regions. 

Another  indicator  for the different  national  and  regional  levels  of  access  to the  information 
society can be derived from the prevalence of commercial on-line services. In 1995, there were 
180  dial-up  numbers  to  on-line  services  (1  every  320.000  inhabitants)  in  the  UK,  63  in 
Germany (1 every  1.150.000 inhabitants), 3 in Portugal (1 every 3.200.000  inhabitants) and 6 
in Spain (1 every  6.600.000). 

Ih 

1.2 

Aflbidability indicators 

The physical accessibility of networks and services is a necessary but not sufficient  condition: 
firms  and households should be able to afford to use mem. Again, important differences emerge 
between countries when tariff structures31 are compared. 

For example, in 1994, the cost of a residential subscription to the telephone (as a percentage of 
GDP) was two times more expensive in the cohesion  regions (3  and 2,5  times  so  in Portugal 
and Ireland respectively). 

SERVICE COST 

CORE 
AVERAGE 

COHESION 
AVERAGE 

COHESION 
DIVERGENCE 
(%) 

PSTN (ECUs) 
- Residential installation 
- Residential subscr. (bimonthly) 
- Local call (peak 5 minutes) 
Cellular Mobile costs (1994 US$) 
-Connection 
- Monthly subscription 
- Local Call (3 minutes) 
Leased line tariffs 
- Connection (ECU) 
- Monthly Reniai 50km (ECU) 
- Monthly Rental 250km (ECU) 

107.5 
21.7 
0.22 

64.6 
42.7 
1.4 

502.2 
353.0 
844.0 

142.4 
18.4 
0.16 

83.8 
29.6 
1.73 

396.6 
429.0 
829.0 

+32,46 
-15,44 
-26,45 

+ 29,7 
-30,7 
+ 23.6 

-21,0 
+21,4 
-1,8 

Moreover, the ongoing process of tariff  rebalancing32 tends to  modify  tariff  structures  in the 
sense  of  a  faster  increase  of the  residential  component  of  fixed  charges  and  of  an  absolute 
increase  of  local  call  charges  and a  decrease  in the  price  of  long-distance  and  international 
calls.  According  to  an  OECD  study33,  between  1990  and  1994,  the  average  monthly 
subscription for business users rose by 5.5% in real terms, and the average residential monthly 
subscription rose  15.5% in real terms. The same study indicates that between  1990 and  1994 
local charges increased by  37.3%, while long-distance and international  charges decreased by 
24% and 25.5% respectively. 

1.3 

Uptake indicators 

Affordable  access, however,  does not guarantee that people will  use the  services,  and uptake 
indicators  are  also  a  central  feature  in  any  attempt  to  measure  the  cohesion  gap  and  its 
implications.  A  common  indicator  used  for  measuring  the  uptake  of  basic  telephony  is  the 
number of main lines per 100 inhabitants. In 1995, on average, there were 54.3 main  lines  for 
every 100 inhabitants in the core regions against 40.2 in the cohesion regions. 

Though  voice  telephony  represents  the  main  form  of  communication  for  most  firms  and 
households, the advent of an information  society presupposes  an  increasing use of other  forms 
of electronic communication  such  as text,  images  and  other forms  of data.  An indicator  of the 
capacity  of regions and  countries to participate  in the  information  society  is, for  exemple, the 
number of Internet hosts. On  average,  in  1995, there was  1 Internet host  every  200  people  in 
the core regions compared to  1 every 1300 in the cohesion regions. 

((* 

UPTAKE OF USAGE INDICATOR 

Teledensity «95 
- Main lines per  100 inhabitants 
Mobile telephony  '95 
- Cellular terminals per  100 
Cable  television 
- % of cabled households  '95 
- % of satellite households  '95 
Data  Communications 
- Packet switched subscrip. per k 
- Videotex subscrip. per  k 
- ISDN subscrip. per  k 
Internet 
- Internet Hosts per  1000  ('95) 

Core 
average 

Cohesion 
Average 

Cohesion 
Divergence 
(%) 

54,3 

40,2 

-26,0 

9,1 

51,4 
13,8 

1,5 
32,5 
2,4 

5,3 

3,7 

8,0 
4,4 

1,3 
6,3 
0,2 

0,6 

-59,4 

-84,4 
-68,1 

-13,3 
-80,6 
-91,7 

-88,7 

An  additional  mdicator  is  the  telecom  mvestment  per  head  of  population:  on  average,  the 
cohesion  regions  invested  40% less  than  the  core  regions  in  the  telecommunication  sector. 
Especially startling are the figures concerning the penetration of PCs, the indispensable tool for 
entering the information  society: in  1995, there were  15.2 PCs per  100 population  in the core 
regions against 3.1 in Greece, 8.6 in Spain, 6 in Portugal and 8.9 in Italy. 

/? 

EXPLANATORY NOTES 

"Without any  doubt, new ICTs provide  tremendous opportunities for  new growth and 

1 
employment creation;  for a more efficient use of inputs f... J; for higher income  and more  broadly 
higher welfare; for  more decentralised organisations forms  [...]; for more consistent regional  and 
urban development patterns; for  individual enrichment as well as more democratic decision making. 
All  of these opportunities for  higher economic productivity growth  crucially depend on  congruence 
between the  technological, economic and  social  dimensions. "  CEC,  "Building  the  European 
Information  Society  for  Us All  -  First  reflection  of  the  High  Level  Group  of  Expert",  p.  iii, 
Interim Report, January 1996. 

The study "Effects on employment of the liberalisation of the telecommunication sector", 

2 
undertaken on behalf of the Commission by BIPE Conseil, IFO and LENTIC in 1996, has examined 
the impact of the liberalisation of telecommunications under different  scenarios of liberalisation and 
dimision  of  technologies.  All  scenarios  examined  in  the  study  suggest  that  the  liberalisation  of 
telecommunications  should  lead  to  an  accelerated  diffusion  of  telecommunications  and  price 
reductions. These should have indirect positive effects on the economy as a whole, largely  offsetting 
the negative effects of the liberalisation of telecommunications on employment at public operators. In 
a scenario of rapid liberalisation and rapid technological  diffusion  there could be a net creation or 
maintenance of  1.3  million jobs throughout Europe by  2005, of  which  93.000 jobs  will  be  in  the 
telecommunications  sector  itself.  The  latter  figure  is  explained  by  the  fact  that  the  employment 
creation  induced  by  liberalisation  in  new  telecom  service  providers,  equipment  manufacturers, 
distributors of telecom equipment and direct suppliers of operators will more than offset  the losses for 
the traditional telecom operators. 

"It is  essential and urgent for  companies and organisations  of  all  sizes  to  adapt  their 

3 
organisations and structures.  Until this process is well underway,  the Information Society looks likely 
to destroy more jobs than it creates." "Networks for People and their Communities - Making the 
Most of the Information Society in the European Union", Information Society Forum, First Annual 
Report, Executive summary, 1996. 

4 
See, for a comprehensive debate on these aspects, the Green Paper "Living and working in 
the  information  society:  people  first",  CEC  July  1996.  The  social  cohesion  aspects  of  the 
information society will be further developed in the forthcoming action plan that the Commission is 
preparing as a follow-up to the Green Paper. 

"Because of  their social  and  industrial composition, effective  use  varies widely  across 

5 
different types of regions.  [...]. The geographical gradient of demand declines more or less smoothly 
outward from the central business districts of so-called world cities, rising here and there where there 
are concentrations of business users and falling away more rapidly in sparsely settled  or particularly 
poor regions. [...]. At the same time, and no less importantly,  there is also a characteristic geography 
to the cost of providing telecommunications services which, in general, inverts the pattern of effective 
demand  On this side of  the equation, costs are generally lower in areas which are more  densely 
settled [...]."  NEXUS et al.  "An assessment  of the  social  and economic  cohesion  aspects of the 
development of the Information  Society in Europe'1, January  1996, Vol.IV, p.9. The Commission 
has fully recognised this problem by elaborating a range of policy and regulatory documents defining 
the  place  of  universal  service  in  its  telecommunication  policy.  See,  for  example,  the  Directive 
90/388/EEC on the "Implementation of full competition in telecommunications markets" (OJ 22/3/96) 
which define universal service principles and explains how the net cost of universal  service shall be 
shared and, more recently, COM(96)608 of 27 November  1996 on the "Criteria for the assessment of 
national schemes for the costing and financing of universal service and guidelines for the operation of 
such  schemes".  Moreover,  COM(96)73  of  13  March  1996  on  "Universal  service  for 
telecommunications  in  the  perspective  of  a  fully  liberalised  environment"  provides  the  definition, 
scope,  and  revision  mechanisms  for  universal  service  highlighting  its  dynamic  and  evolutive 
character. 

It 

6 
The British experience, however, suggests some caution.  "In the  United Kingdom,  which  has 
one of the most  liberal  telecommunications  regimes  in  the  EU,  the  landscape  of  telecommunications 
provision  is  highly  differentiated.  In  the  City  of  London,  firms  are  confronted  with  a  host  of 
competing  suppliers  and  the most  advanced  services.  In  the  central  business  districts  of other  major 
cities,  and  on  business  parks  and  other  concentrations  of  business  activities,  firms  have  a  range  of 
potential  suppliers  and  access  to most  advanced  services.  In  the remaining  urban areas  firms  have  a 
more  restricted  choice  of  supplier,  with  direct  connections  only  usually  available  from  the  former 
PTT and, where infrastructures  have  been  built,  from  the  local  cable  operator.  In  many  small  towns 
and  rural  areas  customers  are  confronted  with  a  de  facto  monopoly  supplier  in  the  former  PTT. 
Indeed,  in  a  number  of  areas,  mainly  rural,  customers  do  not  even  have  direct  access  to  digital 
exchanges  capable  of providing  services  as  basic  rate  ISDN. "  See  "Regional  Development  in  the 
Information  Society: A Review of Analysis", p. 23, CURDS  1996, paper  prepared for  the  European 
High  Level  Expert  Group  on  the  Social  and  Societal  Aspects  of  the  Information  Society.  In  this 
respect,  the  Commission  intends  to  examine  existing  experiences  of  liberalisation  (e.g.  UK,  USA, 
Finland, Sweden and New Zealand). 

7 
CEC  internal  working  document,  "Telecommunications,  Postai  and  RTD  aspects  of 
structural  interventions  plans  for  1994-1999",  Brussels  1996.  The  cross-sector  and  pervasive 
character of the information  society on the one hand; the nature of the  Structural  Funds  programming 
procedure,  the  different  approaches  of  Member  States  in  structuring  their  plans,  and  their  different 
the  figures  derived  from  this 
timetables  on  the  other;  call  for  caution  in  interpreting  and  using 
analysis. Information  society related expenditures are often  extrapolated from  aggregate figures  which 
are associated with other  domains  such as industry  and R&D. Nevertheless,  they provide  a good  idea 
of the importance of the information  society in Member  States' policy agendas. 

8 
For  example,  Sweden  and  Finland  do  have  a  comprehensive  approach  to  the  information 
society.  These  two  countries  not  only  allocate  a  bigger  chunk  of  the  available  funds  to  information 
society-related measures but also concentrate their efforts  on improving the conditions of the demand, 
e.g.  by improving  the  information  society-related  skills of the  workforce,  providing  schools  with  the 
necessary  connections,  and  developing  appropriate  services  and  applications.  From  the  outset,  the 
strategy  of  the  Swedish  single  programming  document  (SPD)  for  Obj .6  identifies  one  of  the 
horizontal  criteria  for  assessing  the quality of specific  actions  as "making  the  best  use of  information 
technology  in  all  areas  of socio-economic  activity".  Thus,  a  central  characteristic  of the  information 
society - its cross-sectoral, pervasive nature -  is immediately  recognised.  Then,  "the  increased  use  of 
information  technology  applications  and  the  acquisition  of  information 
technology  skills  and 
expertise"  is  set  as  one  of  the  general  targets  of  the  SPD  paving  the  way  for  creating  new  jobs,  the 
central  objective  of the  Swedish plan.  Moreover,  the  information  society  appears as a key element  for 
developing  all  the  five  priorities  set  in  the  SPD  and  is  recognised  as  a  key  tool  in  virtually  all  subr 
themes. 

9 
The  Special  Telecommunications  Action  for  Regional  Development  (STAR)  provided, 
between  1987  and  1991,  780  million  ECUs  of  funding  from  the  European  Regional  Development 
Funds  (ERDF)  in  order  to  "break  the  cycle  by  which  demand  for  advanced 
telecommunications 
sendees  (ATS) is too low to justify  supply  on commercial  grounds,  in which case  lack of awareness  of 
the  benefits  of ATS  depresses  demand  still further" 
in  the  LFRs  of  seven  Member  States.  Although 
the  STAR programme  included  measures  to  stimulate  demand  (e.g.,  the development  and  promotion 
of  databases  and  videotext  services  for  SMEs),  80%  of  the  budget  was  spent  on  improving 
infrastructures  with  the  main  thrust  being  towards  network  digitalisation,  public  data  networks  and 
cellular  mobile.  The  programme  was  successful  in  bringing  forward  the  investment  plans  of  the 
public  telecom  operators,  including  accelerating  network  digitalisation  in  Greece  by  two  years  and 
bringing  forward  the  launch  of  the  cellular  radio  network  in  Portugal,  again  try  two  years.  See 
Ewbank Preece Ltd, "STAR - Community  level  evaluation",  Final  report, Executive  summary,  CEC, 
1993. 

10 
The  TELEMATIQUE  programme,  which  took  over  from  STAR  in  1991  with  a  budget  of 
about  233  million  ECUs, sought  to step up the  introduction  and  use of advanced  telecommunications 
services,  especially  data  services,  within  SMEs  and  national  administrations.  The  approach  was  at 
once  distinct  from  and  complementary  to  STAR,  involving  stimulation  of  demand  for  practical 

fi 

applications in various sectors of activity so as to promote the development of one or more regions. A 
parallel aim was to enable these regions to benefit from the services opened up to competition by 
Community  law.  Thus,  the TELEMATIQUE programme  reflected  a  new  priority  for  Community 
measures favouring applications and the telematics services capable of supporting them. 

11 
ESF  interventions  through  the  different  Objectives  intended  to  support  human  resources 
development directly related to the information  society have been roughly estimated to amount to 4 
MECUs for the 1994-99 programming period. 

12 
The Commission  is already  co-financing  some actions, e.g.  for  setting  up tele-cottages  in 
rural  areas,  under  Objectives  1,  5(b)  and  6,  and  local  telematics  projects  under  the  Community 
Initiative LEADER  II. For  example, under  a  5(b)  programme  in  Finland,  the  South-West  and  the 
Archipelago  region  of  Finland  has  a  project  to  develop  a  network  to  promote  tele-working  and 
training  in telematics.  Clearly, there are many other  Community  actions  related to the  information 
society. For example, stimulating the use of electronic commerce among SMEs in LFRs was the task 
of the WOLF pilot  projects.  Seven regions collaborate  with  the  Commission  to  identify  the social, 
the  deployment  of  telecommunication  services  in 
economic  and  technical  factors  affecting 
disadvantaged regions. WOLF, with a budget of 530 000 ECUs, is financed under the Article  10 of 
the  ERDF.  Other  examples  are  represented  by  the  IMPLACE  initiative  to  stimulate  the  use  of 
advanced ICTs by manufacturing  SMEs in LFRs and the MARSOURCE initiative to favour the use of 
electronic trade systems for  fishery  products thereby contributing  to overcome  the disadvantages of 
remote areas. 

13 
The innovative aspect of the IRISI approach rests on the institutional  mechanisms by which 
the  strategy  has been  developed,  i.e.  a  partnership between  regional  and  local  institutions  and  the 
business  associations  plus  representatives  from  training  and  education  institutions,  trade  unions, 
chambers of commerce, the  co-operative  movement  and the  voluntary  sector.  The  six  participating 
regions - Saxony (D), Northwest England (UK), Nord-Pas de Calais (F), Piemonte (I), Valencia (E) 
and Central Makedonia (EL) - had to outline a strategy for the information  society by analysing the 
base-line  situation  and  assessing  the  opportunities  for  building  the  information  society,  through  a 
concerted effort bringing together all the relevant regional actors. 

14 
With a budget of 6 million ECUs, the RISI1 projects concerns 23 regions across Europe. This 
means  that,  overall,  nearly  25% of  all  eligible  regions  under  the  Structural  Funds  are  currently 
engaged in this process of strategy building and of its translation into an action plan. Moreover, the 
Commission is planning to launch  10 pluri-regional pilot applications under Art. 10 of the ERDF and 
Art.6 of the ESF, with a budget of  15 million ECUs, for demonstrating best practice in the regional 
deployment of the information society (RISI2). 

15 
perspective of a fully liberalised environment". 

See COM(96)73 of  13 March  1996 on "Universal  service for telecommunications in the 

16 
See COM(96)419 of  11 September  1996, proposal  for  a European  Parliament  and Council 
Directive  on  the  "Application  of  open  network  provision  (ONP)  to  voice  telephony,  and  on 
universal  service  for  telecommunications  in  a  competitive  environment"  (replacing  European 
Parliament and Council Directive 95/62/EC). 

17 
See the section on "Public access to information  society services" of COM(96)73 of 13 March 
1996  on  "Universal  service  for  telecommunications  in  the  perspective  of  a  fully  liberalised 
environment", section IV, p. 19. 

"The way we develop the information  society, the most fundamental change of our  time, 

18 
must reflect the ideas and values upon which the European  Union is shaped.  These ideas and values 
should be  transparent  in  order to gain  and  deserve the  broad support of  European citizens''''  in 
"Living  and  working  in the  information  society:  people first",  Green Paper,  Executive summary, 
July  1996. Furthermore,  any evolution of universal  service must also be consistent  with  the general 
approach to general interest services in Europe. See, in particular, COM(96)443 final of 11 September 
1996 on "General interest service in Europe". 

2Jb 

19 

20 

See NEXUS et al., vol.11, pp.20-21. 

See the First Report of the Advisory Group on Competitiveness, June 1995, p. 17. 

21 
(CEC, November 1996), chapter 4, pp.78-81. 

See, among other, the recently-published  First  Report on Economic  and  Social  Cohesion 

22 
Insufficient  income and consumption capacity may indeed constitute important barriers. The 
1995 US Department of Commerce's  Survey "Falling" through the net: a  survey of the have nots of 
rural  and  urban  America",  shows  a  clear  positive  correlation  between  the  level  of  income  of 
households and the availability of a computer at home: between 4.5 and 8.1% of the households in the 
lowest income bracket (less than  10 000 US$) have a computer at home, whereas between 59.6 and 
64.4% of the households in the upper bracket (75 000 US$ or more) have one. Similar data are not 
available for the Community. 

23 
See  COM(96)73  of  13  March  1996.  This  view  is  supported,  among  others,  by  the 
Information  Society Forum which indicates the "creation  of local access points at public  libraries, 
schools and other community meeting places" as a way to minimise the dangers of a two-tier society. 
In  addition,  it  is  worthwhile  to  mention  here  the  High  Level  Expert  Group  which,  in  its  interim 
report,  stresses  the  need  to  investigate  the  notion  of  "universal  community  services",  extending 
universal  service  provision  to  incorporate  a  basic  level  of  access  to  new  information  service,  but 
limited  in  scope  to  educational,  cultural,  medical,  social  or  economic  institutions  in  local 
communities. Similarly, the First Report on Economic and Social Cohesion indicates the provision of 
"broader  access to  the Information  Society  to, for  example, schools, hospitals and libraries" an 
option to be considered by policy-makers. 

24 
It is also necessary to encourage the  implementation  of  ICTs by public administration  (i.e. 
the IDA programme at Community level) which can have a catalyst effect  for the region and trigger 
many private sector initiatives. 

25 
July 19%. 

See tiie Green Paper "Living and working  in the information  society: people first",  CEC 

26 
information  society  the  Commission  Action  Plan  "Learning 
COM(96)471 of September 1996. 

See  for  a  comprehensive  approach  to  the  question  of  education  and  training  in  the 
in  the  information  society" 

27 
It is, for example, already co-financing training in telematics applications, for setting up telé-
cottages in rural areas under Obj.l,  5(b) and 6, and  local telematics projects  under the Community 
Initiative LEADER II. 

28 
See COM(96)332 final of 10 July 19% on "Inventing tomorrow - Europe's research  at the 
service of its people" and COM(96)595 final of 20 November  19% on "Additional  elements to the 
guidelines for the 5th Community RTD Framework Programme". 

29 
Some data can be found  in the study "An  assessment of the  social and economic cohesion 
aspects of the development  of the  Information  Society in  Europe" prepared by NEXUS et al. for 
the Commission and concluded in December  1995. Although an attempt has been made in this annex 
to  provide  more  updated  data,  some  caution  is  warranted  because  the  evolution  in  the 
telecommunication  sector  is very  fast.  The  reader  must  be  aware that  the  evolution  of  information 
society in the less favoured regions is far from being a linear, statistically predictable phenomena. For 
example, the number of mobile subscribers in Spain grew from 230.000 to more than a million during 
1996; ISDN coverage in cohesion countries evolved from  nil  to almost full  coverage during the last 
three years; and more that 500.000 Internet users at the end of  1996 could be spotted in Spain by the 
end of  1996, while usage of Internet there was almost anecdotal  a few years ago. Moreover, current 
developments on digital satellite broadcasting (DSB) are likely to offer  an alternative to cable TV thus 
helping LFRs to catch up in this area. 

oil 

30 
ISDN  is  an  acronym  describing  the  provision  of  a  wide  range  of  existing  and  new 
telecommumcations services over digital network. ISDN removes barriers between speech, data, text 
and video services, integrating them into a single digital telecommumcations network. ISDN provides 
significant benefits to the customers in terms of availability of services and usage flexibility. 

31 
and usage (call) charges in the customer's total bill. 

The term  "tariff  structure" defines  the balance between fixed (installation and subscription) 

32 
tariffed service into balance with the prices charged. 

The process known as "tariff  rebalancing" is intended to bring the costs of providing each 

33 
No. 191, December 1994/January 1995. 

Y.Kato and S. Paltridge, "Telecom tariffs  and the move to markets", The OECD Observer, 

<& 

ISSN 0254-1475 

COM(97)  7  final 

DOCUMENTS 

EN 

13  05  15 

Catalogue  number  :  CB-CO-97-014-EN-C 

ISBN  92-78-15066-5 

Office  for Official  Publications of the European Communities 

L-2985  Luxembourg 

&