Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions regarding the information society and development: the role of the European Union'
Date: 1998-01-29
Institutions: European Economic and Social Committee
Subjects: EU action, cooperation policy, developing countries, information technology, telecommunications

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Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council, the European Parliament, the Economic and Social Committee and the
Committee of the Regions regarding the information society and development: the role of the
European Union’

(98/C 95/14)

On 16 July 1997 the Council decided to consult the Economic and Social Committee, under
Article 198 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for External Relations, Trade and Development Policy, which was responsible
for preparing the Committee’s work on the subject, adopted its opinion on 17 December 1997.
The rapporteur was Mr Lindmark.

At its 351st plenary session on 28 and 29 January 1998 (meeting of 29 January), the Economic
and Social Committee adopted the following opinion by 70 votes in favour, with 15 dissenting
votes and 20 abstentions.

1.

Introduction

1.1.
The Commission has presented a communication
concerning a programme of the role of the European
Union in the information society. The communication
is accompanied by a proposal for adopting a programme
of Community action in its relations with developing
countries. The Commission underlines that recent trends
towards the information society concern most human
activities, including learning, communication, work and
leisure. This applies equally to the developing countries.
The communication presents a number of guidelines
and mechanisms to encourage the participation of
developing countries in the information society, not
only as consumers but also in an active role.

1.2.
The Commission refers to the G7 Conference on
the information society held in Brussels in 1995 that
expressed concern about the need to avoid further
widening of the gap separating the industrial countries
from the developing countries and called for ‘a shared
vision of human enrichment’. ‘Our action must con-
tribute to the integration of all countries into a global
effort’. The conference on the information society and
development organized in Midrand in 1996 also focused
on the specific needs of the developing countries and
highlighted the potential of the new technologies.

1.3.
The EU has embarked upon redefining and
modernizing its relationship with each of the main
developing regions, providing an opportunity to take
account of the information society concept in relations
with them. The Community strives for coordination
with the activities of the Member States and of the
international organizations concerned. The Commission
stresses that the message for external partners should be
realistic and it should draw their attention to what is at
stake in the current upheavals and to the efforts they
have to make.

growth in the developing countries, these countries are
often mainly agricultural communities where rural
development is fundamental both to ensure food supply
and to alleviate strain on urban infrastructure, which
often leaves much to be desired. Infrastructure per se is
a priority area; here telecom infrastructure is one
component. Modern ICT provide broad scope for
improving telecommunications and should be chan-
nelled to promote overall development and to reduce,
rather than exacerbate, existing disparities.

1.5.
The Committee would point out that the very
scale of the task is clearly formidable. Already the
provision and modernizing of the basic telecommuni-
cations infrastructure call for investments on a scale
difficult to finance from government budgets alone.
Active commitment and financing from the business
community is often a sheer necessity. Moreover, it is a
crucial condition to ensure that the most cost-effective
solutions are put into the most productive use thereby
enabling the telecom sector to get into a positive spiral
of increasing degree of self-financing out of market
acceptance and current cash-flow derived. Accordingly,
in order to enable the necessary investments, it is of the
utmost importance that developing countries eliminate
any remaining barriers or limits to foreign ownership.
This is particularly necessary as the major developing
countries unfortunately cut back their aid from US$ 56
billion to US$ 41 billion between 1990 and 1996, while
private investment in the developing countries shot up
over the same period (though this investment was
undoubtedly spread in a very uneven fashion between
the countries in question).

1.4.
The Committee notes that development is a
complex process in which ICT play a key — but not
exclusive — role. Despite the rapid urban population

1.6.
The Economic and Social Committee thinks that
the report — rightfully — underlines the importance of
speedy and full implementation of the WTO agreement.

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Liberalization and the opening up of national as well as
international markets for telecom services are crucial
conditions if technological advances are to come into
productive use, enhancing quality of life and economic
growth by offering freedom of choice at all levels.

But freedom of choice implies financial resources, which
is precisely what most citizens in developing countries
lack. This means that, even after liberalization of the
markets, they will still be of no interest, economically
speaking. There is therefore a need for political initiat-
ives, along the lines of those implemented at European
level, to ensure the various regions within the developing
countries are provided with equal access.

The Committee underlines that the Commission’s fore-
most task is, on the one hand, to increase awareness
among developing countries of the benefits and the
necessity of being part of the information society and
on the other hand to convince European industry to be
a part of this development.

The Committee agrees with the Commission that com-
munity actions should be included in other programmes
already discussed in the Committee. The Committee
also notes that no further funds will be available and, if
necessary, existing funds will be reallocated.

1.7. However, technology per se does not constitute
an information society. Education is necessary in order
to make full and productive use of the new opportunities
and so is the freedom in providing information and
content. Many remaining restrictions have to be
reviewed if the full benefits are to be reaped.

1.8.
There are customs regulations in most countries
— not to forget the EU countries themselves. It is of
course crucial that liberalization of all EU markets, due
1 January 1998,
is rapidly and fully implemented.
Otherwise any worldwide mission such as implementing
the WTO agreement will not get the credibility needed.

offer

Fortunately,

new technologies

1.9.
the
developing countries important opportunities to leap-
frog into state-of-the-art levels. One example is that not
only satellites but also terrestrial radio systems can be
rapidly deployed providing coverage of large areas. The
costs for providing national infrastructures can hence
be kept far lower compared to traditional wire-bound
networks. On international routes optical fibre provides
dramatic capacity increases at rapidly falling costs.
Given the rate of dramatic technological progress, it is

no longer feasible to rely on traditional long-term plans
where deployment of network capacity was specified
years ahead. Rather, it has to be a market and customer-
led development where a number of operators and
entrepreneurs risk their investments to reach new cus-
tomers by launching new applications based on new
technologies.

1.10.
Sweden, and some of the other Scandinavian
countries, are cases in point. Competition between three,
and soon four nationwide mobile operators in Sweden
has led to a penetration above 30/100 pop, which
translates to about every household. What started as an
exclusive service for the business sector has rapidly
transformed into services within reach of most citizens.

1.11.
ization are:

Among the criteria used for measuring liberal-

— full liberalization of tele- and data services:

— full liberalization of mobile services (two or more

operators);

— use of alternative infrastructure to provide services

(railways, energy companies);

— independent regulation (clear separation from domi-

nant operators);

— licensing regime (clarity of rules,

licensing con-

ditions);

— rules on combined transport (clarity, licensing con-

ditions);

— access to markets,

including the dismantling of

barriers to foreign ownership;

— number portability;

— public service criteria taking heed of each country’s
specific economic, social, human and geographical
data; so as to ensure practical implementation of the
right to communication.

2. The

challenge of

integrating the developing

countries into the global information society

2.1.
Like the Commission, the Economic and Social
Committee emphasizes that the information society
profoundly alters the organization of work, education
and society at large. It presents a panoply of new tools
with unparalleled capacities enabling the developing
countries to make some great leaps forward in tech-

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nology by cutting out certain stages in development
through which the industrialized countries have gone.

European firms in developing countries should instead
focus on genuinely forward-looking cooperation aiming
to create and subsequently utilize local software and
technical know-how.

2.2.
The Economic and Social Committee shares the
view that countries that shut themselves off from these
changes isolating themselves from international trade
network and investment flows and from networks of
scientific and cultural creativity, would risk being
marginalized.

2.3.
The new information technology has caused
wide-ranging changes in the business world, both
nationally and internationally. It is like ‘starting all
over again’. Production, organization management and
stakeholders’ relations are being re-designed. Dramatic
changes are also happening among consumers. Com-
puters are entering the domestic domain. Some observers
claim that digitalization will give rise to changes that
are even more radical and visible than those in the
business world. Interactive technology, it is predicted,
will change the way we communicate or do our shopping,
how we manage our financial affairs and provide
information. The importance of being a part of the
information society is well documented in several of
the Commission reports, e.g. the report on electronic
commerce, as well as in earlier ESC comments.

3.

IT contribution to development

spreading throughout

In technological terms, the moves towards the
3.1.
information society mobilize a panoply of new tools
which are
the developing
countries. Many of
the new technologies are less
capital-intensive and better adapted to remote regions
and sparsely populated areas. The EU should support
activities that make new technologies available to the
developing countries.

3.2.
The Internet and WWW provide a platform for
integrating other technologies, including ISDN lines and
ATM servers. Teleports serve as ‘reception centres’ for
teleworking, in particular for highly labour-intensive
types of services such as statistics, accounting, software
production and airline reservation systems.

Industrial cooperation is one important strand
3.3.
in the drive to provide the developing countries with the
benefits of ICT in the context of action to promote
economic development.

Cooperation in such an advanced sector as information
technology and telecommunications should not be con-
fined to the traditional ‘outsourcing’ approach to local
production or subcontracting where the goal is to take
advantage of lower labour costs and cheaper local
services.

Dramatic advances in microelectronics bring in their
wake a steady decline in manual labour. The use of
sophisticated and efficient industrial robots in pro-
duction has cut manufacturing costs so radically that
developing countries find it hard to compete by offering
increased
their
involvement on other markets is heavily influenced
by firms’ attempts to secure advantageous terms of
competition on these markets. Obviously the EU as a
whole stands to benefit from the success of EU firms on
this front.

traditional cheap labour. Further,

4. Priority areas of action

4.1.
The Commission rightfully stresses the import-
ance that ICT have for the SMEs. Through information
society applications, new opportunities present them-
selves for the developing countries with advantages
comparable to those accruing in the industrialized
countries, e.g. more efficient management for SMEs and
access to economic information, training, interactive
user/server networks and international markets, and
also enhanced efficiency for governments and adminis-
trations.

The Committee underlines that the new tech-
4.2.
nologies for education and training (in particular dis-
tance learning), as an adjunct to traditional methods,
open up enormous possibilities for the developing
countries. Tele-education, which is increasingly used
within the business community enables employees to
use the new skills in the daily work and saves the need
to spend long periods away from the daily duties. The
Swedish experience is that this is especially important
for small- and medium-size companies as any absence
is particularly difficult for them to handle, irrespective
of being located in a remote area or not. This combines
learning and practical implementation.

4.3.
This is in line with the Commission’s report on
lifelong learning and has the support of the Committee,
which stresses the vital importance of human resources.
Relatively simple and cheap solutions, such as PC video
used in conjunction with the Internet could prove
effective for certain forms of access to the network.
Rapidly falling costs (for international transmission too)
will make the benefits — including access to international
experts — more widely available. The EU can support

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this in various ways, e.g. by making experts available and
by supporting demonstration projects, hence providing
active assistance in the shape of cooperation as opposed
to exploitation.

The Economic and Social Committee proposes
4.4.
that European governments move ahead with ambitious
and long-term programmes to bring the information
society revolution to the classrooms both within the EU
and in the developing countries. Governments and
industry should collaborate in providing educational
material and equipment. Governments should create
conditions conducive to ensuring close association of
industry with educational institutes so as to train up
experts in information technology.

4.5.
The Economic and Social Committee supports
the proposal from the European Ministerial Conference
held in Bonn on 6-8 July 1997 that European global
players together with governments and international
organizations should constitute a ‘Global Information
Superhighschool’ for global sustainability as a new
concept for education in the 21st century. The Com-
mission report should reflect this initiative.

4.6.
An important field that is not mentioned in the
Commission report is the possibilities ITC opens for
women to participate in cultural, social activities,
working life and education. The Committee calls for
this aspect to be heeded and highlighted — with
particular emphasis on an equal gender balance — as a
basic feature of an operational information society. ICT
can be a major component in the drive to end the
isolation of women, especially in rural areas.

4.7.
In the field of ‘telemedicine’, according to the
Commission report, ICT again play an almost revol-
utionary role dealing with all kinds of challenges in the
field of health care and medicine. ICT open up a large
range of possibilities for the industrialized countries to
assist developing countries via telemedicine. ICT provide
access to medical expertise through teleconsultation and
medical advice in connection with surgeries, etc.

is that security alarm systems enable patients to stay at
their own home with full access to acute treatment
should the need arise. The possibility of stressing the
humanitarian aspects of ICT use, not only in existing
hospital structures but also, and above all,
in the
promotion of primary health services and health protec-
tion should be considered by the Commission in its
programmes.

4.9.
In industry and international trade, ICT, as
indicated in the Commission report, play a decisive role
in improving competitiveness by raising production
quality or by integrating production in a complex process
and generally participating in commerce, especially in
public commerce as most public procurement will be
handled by electronic commerce in the near future.

4.10.
Like the Commission, the Committee believes
that ICT play an extremely important role in the domain
of research. In most fields ICT enable researchers in the
developing countries to have the necessary information
at their disposal and get access to documents only
available on electronic media.

4.11.
The Commission mentions — rightly, in the
Committee’s view — that the emergence in many
developing countries of a new independent press and
the explosive growth of the Internet contributes to
strengthening civilian society and consolidating the
democratization process.

4.12.
The Committee asks the Commission to assist
the developing countries in boosting consumer protec-
tion in the ICT sphere. Rules are needed to regulate
Internet and other transactions as regards matters of
close concern to consumers (contract validity, liability,
protection of human dignity).

The Committee feels that ICT constitute an
4.13.
essential tool for strengthening democracy in most parts
of the world provided that censorship is curbed. ICT
can also contribute in developing and fostering an
understanding of the multicultural society.

The Committee considers it important to under-
4.8.
stand that telemedicine can no longer be perceived as a
substitute for ‘the real thing’, or be of importance
in remote areas only. On the contrary, the Swedish
experience is that some of the more successful uses of
telemedicine can now be found in the major cities.
Among the cases in point are transmission of ECG and
other vital data by radio from the ambulances to the
hospital thereby greatly shortening the time needed for
treatment and hence also the longer-term consequences
of a heart-attack. Less dramatic, but equally important,

5.

ICT facilitate structural changes

5.1.
The Commission stresses that ICT are not
the sole instrument to give an impetus to structural
development. These instruments can only be used with
optimum efficiency if the societies where they are applied
manage to master them properly. The Committee
emphasizes that there must always be an understanding
of economic, social, cultural, and religious differences,
not only between developed and developing countries,
but also between developing countries.

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5.2.
The Committee believes that there is no need to
hide that the very transformation into the information
society, that is mentioned in the Commission report,
necessitates some difficult political decisions in every
country. In order to reap the full benefits of the market
mechanisms as well as of any aid programmes, it is
important for developing countries to deal with aid and
trade as separate matters. A case in point is given by the
rates for international telecom traffic, which should be
seen as a pure trade matter, not a vehicle for conveying
financial aid.

5.3. One example is that international telecommuni-
cation services have been priced far above costs in most
countries, whereas other parts of the network, especially
the local loop, have been underpriced or even heavily
subsidized. This was possible under monopoly con-
ditions, but will prove disastrous with the new tech-
nologies now being deployed. Prices not related to costs
of provisioning is an overgenerous invitation card for
competitors to cream-skim on the over-lucrative routes,
leaving lesser and lesser revenues left to pay subsidies in
other segments. With Internet soon carrying not only
data but voice, radically lower rates for long-haul and
international communications will be offered. That
distance no longer counts is good news, not only for the
business community, but for society at large.

5.4.
Still, the transition also proved difficult in many
EU Member States until all customers saw that their
total telecom bill had dropped. It is therefore important
that the Commission actively highlight the price savings
achieved in certain countries (e.g. the UK and Sweden)
due to the opening up of their markets.

6. The challenges facing the developing countries

According to the Commission report, the level
6.1.
of telecommunication infrastructure in the developing
countries is highly diverse, but mostly far behind from
that in the industrialized countries. Using teledensity as
an indicator (number of mainlines per 100 inhabitants),
the figure for the industrialized countries is over 48, that
for middle-income countries around 10 while the least
advanced countries are about 1,5 and the world average
is 11,5. The infrastructures fail to meet local demand
and cannot guarantee access to global communication
networks.

6.2. However, there are, in the Committee’s view, a
large number of growth factors. There is a significant
pent-up demand which manifests itself and in practice
is often covered by services that, in some countries, are
regarded as illegal. This explains why in many countries
there has been a sustained growth in telecommuni-
cations. The drop in the cost of technologies and

competition from new global operators using call-back
procedures and the like have led to a decrease in
traditional revenue from international communication
causing concern to the developing countries and raising
their awareness of current changes.

The Committee considers it

6.3.
that
governments and private operators cooperate to control
any irregularities in an appropriate way. There must be
agreements that revenues from international communi-
cations should be used for investments in ICT and not
used for irrelevant purposes.

important

7. PC density

7.1.
For the other information infrastructures, the
Commission report shows clearly that the PC ratio per
100 inhabitants reflects the informatics gap, ranging
from 18 for high-income countries, to 2,3 for medium-
income and 0,01 for low-income countries. In terms of
the market share in information technology, the United
States account for 35 %, Europe for 29 %, Japan for
15 % and the rest of the world only for 21 %. The PC
market is dynamic and could follow in the footsteps of
television which is now wide-spread in low-income
countries, with 46 % of homes having a TV set.
Considerable inequalities between countries still exist,
however, both in Europe and in the developing countries.

7.2.
The Committee believes that people’s desire and
need for communication even in the developing world
will increase. This need will be enhanced by the fact that
PCs will gradually become increasingly user-friendly,
inexpensive and available everywhere. This trend will
also facilitate realization of the Commission’s premise
that the PC market is following in the footsteps of TV
even if the differences between a ‘passive’ medium (TV)
and an active one (PC) should not be underestimated.
Internet will be a strong force. The Commission should
recognize and support this development.

8.

Investment demand

8.1.
According to the World Bank, the annual invest-
ment necessary for the growth of telecommunications
in the developing countries over the next five years
amounts to US $60 billion. Financing in the form of
international public aid would not exceed US$ 2,3 billion
and most countries cannot make up the difference. This
extensive demand necessitates a call for national and
foreign private investment and the establishment of
international cooperation.

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8.2.
In view of the pent-up demand, people’s desire
and need to be a part of the information society, the
Committee believes that the private sector will recognize
the market potential and also mobilize private investors.
Governments and international organizations must,
however, push for a legislative and regulatory framework
to enable such investments and establish stable, predict-
able and basis for rational economic decisions among
private investors. In the general interest, systems guaran-
teeing fair competition must also exist (for instance
along the lines of EU competition rules preventing abuse
of dominant position). Governments must also ensure
that all private persons and firms have access to adequate
and reasonably-priced communications services. The
developing countries must be convinced of the need for
a set of rules offering security and easy access to markets
to mobilize the private sector to participate in new costly
and risky investments. The Commission should convince
developing countries that this is in their best interest.

8.3.
The Committee wants the Union to push harder
and intensify its efforts for market access and regulatory
principles within the framework of the WTO nego-
tiations. Both by convincing more countries to join
WTO as members and by facilitating market access for
basic telecom services. Such activities will enhance
investors’ interest in these countries.

9. Human resources

9.1.
The Committee fully endorses the Commission’s
view that human resources are decisive in coping with
change. This includes technical staff in telecommuni-
cation and computing and, above all, in the software
sector, offering prospects for new jobs. This sector
is particularly well suited to cooperation between
developing and industrialized countries.

9.2.
The Committee asks for a concrete training
program for people in developing countries working
within the information field, from teachers to pro-
fessional managers. Experts’ working conditions in the
developing countries must also be taken into account.
The Committee finds it important to inform the public
that the information society does not only create new
opportunities and new jobs in the field of information
technology, but also in related service sectors. The right
environment will attract outsourcing.

COMMUNITY ACTION

10. The European Union’s contribution to promoting
the information society in the developing countries

10.1.
European Union action on cooperation in tele-
communications and information technologies has pro-
gressively increased over the years. New cooperation
agreements have been signed with developing non-
member countries including formal provisions on the
information society and associated technologies.

10.2.
Economic, financial and technical cooperation
has led to significant activities in the various partner
regions of the Union. The Commission lists different
activities including the Member States’ bilateral pro-
grammes.

11. Giving a new impetus to Community action for

developing countries

11.1.
The Commission thinks that there has been
increasing awareness in the Community and in the
recipient countries of the strategic character of the
integration of the developing countries in the infor-
mation society. The information society dimension
should, with the agreement of the partner countries, be
systematically incorporated in the existing programmes,
re-channelling the funds made available. Promoting the
establishment of an economic and regulatory framework
remains a first priority target, mobilizing local and
international capital to ensure access for the developing
countries to ICT for their benefit. The second target is
to put technology at the service of development.

11.2.
The Committee underlines that regulations
should be as light-handed and flexible as possible. Legal
rules applicable to global information networks and to
business transactions carried out on networks should
be consistent across the borders. Telecommunication
markets should be opened up rapidly to effective
competition thereby reducing national and cross border
telecommunication costs. Conditions must be created,
on the basis of which industry can have confidence in
the security, privacy, and the authenticity of transactions
to its consumers. There must be a pragmatical approach
to global technical standards. Discriminatory taxes
should not be imposed on the use of networks. A high
level of intellectual property protection is necessary for
the creation, storage and distribution of content and
software protection. Satisfactory regulation of personal
data is also needed so as,
for instance, to avoid
cross-border communication being impeded by discrep-
ancies in such rules. It is also important that oppor-

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tunities for becoming computer literate should be
available to people of all ages and from across the social
spectrum which makes education essential for the use
of global information networks.

11.3.
In order to account for the specific economic,
political and cultural characteristics of the developing
countries and their requirements, the action contem-
plated should be modulated according to the particular
features specific for each major region and the nature of
the dialogue the Community conducts with each one of
these.

12. Conclusions

12.1.
The overall task for the European Union is to
convince not only the less advanced countries, but also
Member States that the information society is here.
Everything we wish to do in the field of communications
is now technically feasible through modern electronics.
The only restrictions are of financial, legal and political

nature. Those countries wanting to participate in the
economic development must increase their awareness of
this development, otherwise the gap will widen further.
Considering the huge potential the developing countries
offer, the private sector must have the opportunity to
involve itself in the wide field of necessary actions
that information technology requires, bearing in mind
differences in economic, political, social, cultural and
religious development.

12.2.
The Committee emphasizes that the rapid access
to the information society requires specific actions, both
in the Union and the developing countries. Over the
past 12 to 18 months, the Commission has passed a
whole range of Directives aimed at achieving its 1998
objectives. However, merely passing the legislation is
not enough: enforcing it is the real
issue. For the
mutual benefit of both the developing countries and EU
countries, the Commission should emphasize the dual
challenge of bringing the developing countries into
the information society and promote participation of
European industry in this development.

Brussels, 29 January 1998.

The President

of the Economic and Social Committee

Tom JENKINS