Electronic democracy
Doc. 7454
11 January 1996
OPINION[1]
Rapporteur: Mr FIGEL, Slovakia, Group of the European People's Party
I. Introduction
I. The purpose of this opinion is to provide a picture of the current economic challenges faced by Europe in the field of communication technology. It constitutes a comment on the interesting report prepared for debate in the Assembly in January 1996, Document 7359 of 17 July 1995 on "Electronic Democracy", with Mr Masseret (France, Socialist Group) acting as Rapporteur on behalf of the Committee on Parliamen�tary and Public Relations.[2]
II. In its draft Resolution, the report on electronic democracy calls for a framework of regulations on the European level. However, before doing so, one should be aware of the two major forces that propel modern communication technology towards what some call an "information super-highway".
III. The first is the technological evolution in the three main areas of communica�tions operations: transmission (the introduction of optic-fibre cables, satellite technology and semiconductors); switching (electronically and digitally, instead of electromechanically); and terminals (notably computerisation). The second force is a rising demand from corporate (and private) service users, due to the increasingly global character of their operations.
IV. Neither force can be considered as ever coming under the control of national governments. The latters' only possibility would be to exclude their citizens from technological innovation, a measure which would have serious consequences for the economic development and international political stability. One key to future prosperity lies in being part of an evolving international community dependent on close and constructive interaction, whether in the private or the government sphere. The gradual weaving together of national economies has become one of the dominant features of the contemporary world economy. Technological progress can only favour this integration, by creating a "common information reservoir" that can be used to help economic development and lay the foundations for a more democratic world.
5. It is through the media and networks that nations and individuals around the world are made aware of undemocratic regimes and human rights violations, and that independent exchanges of views, political debates and public opinion battles can be conducted without borders. It is not through an "information embargo" that nations can make further progress towards democracy. Governments, therefore, should attempt to ensure that the same quality and amount of information would be available to the public throughout the world without any sort of discrimination. This cooperation may even lead to technological advancements being more equally shared among nations.
6. In the production field, technologies and equipment become obsolete more quickly and need to be replaced more frequently. In the information field, on the other hand, competition and rapid technological development create an environment where only well-organized and future-oriented media industries can survive. Development is usually driven by user/consumer demand. Modern communication technologies carry no benefit in themselves, but only derive it from the information it transmits from supplier to user. If information was always an advantage to those possessing it, this will be immeasurably more so in the future.
7. Any regulative framework must therefore consider what impact it will have on the underlying economic "product" or "service", in this case information. If information is valuable to society and the economy - and we shall see that it does constitute the new comparative advantage which successful economic agents could apply - then as few obstacles as possible should be placed on it.
8. The further presentation will distinguish between different aspects of the "information superhighway". Furthermore, not all Council of Europe member states or "Special Guest" countries have reached the same level of development in this field, and may as a result have different interests. While for some the information superhighway constitutes just another step forward, for others it offers the possibility to "jump" several intermediate stages and reach the latest state of technology.
II. Information - a new comparative advantage
9. Historically, the wealth of nations has depended on different things. Apart from wars to rob the enemy, it was first the abundance or absence of natural resources which contributed most to economic development. Nations less favoured by climate or geography had to develop special skills like weaving or iron processing in order to be able to trade goods across boundaries. With the growth of trade, nations and individuals relied on their "comparative advantages" to produce goods and services and then exchange them in return for others. As a consequence, transportation became a significant source of wealth.
10. Shipping had always been necessary to reach foreign trading partners, but was restricted in its ability to reach inland. The railways came into the breach to fill this gap. The cost of transporta�tion and the time required fell considerably, helping more remote regions to participate in economic life. Production factors other than energy and raw materials gained in importance, such as lower-cost labour.
11. Multinational companies started to dominate the production process as they set up plants in or close to their sales areas. At this point, a crucial part of the knowledge required for the production process had to come from skilled workers moving to plants abroad, or intermediate goods had to be transported to the final assembly plant.
12. To date, emerging small and medium-sized firms depend highly on a mobile labour force, which permits the production process to become more flexible. Several provide individuals, firms or authorities with information on all sorts of relevant issues like the development of the stock market, investment opportunities or currency movements. They all demand modern 'transportation' facilities and personal liberties which allow and enhance creativity, communication and a lucid presentation of ideas.
13. The inclusion of telecommunications and intellectual property in the General Agreement on Tariffs and Trade (GATT) and the new World Trade Organisation (WTO) -where they form part of a General Agreement on Trade in Services - is a sign of the significance of information as the "new comparative advantage".
14. Today, with overall low prices for natural resources (due inter alia to greater competition among producers and leaner products requiring less raw materials for their manufacture), the wealth of nations depends increasingly on knowledge about technologi�cal innovations and the demand for increasingly differentiated goods designed to meet diverse consumer needs. Moreover, this information must be available immediately, for competition is fierce. As recent studies point out, the lack of information and technology can be one of the major causes explaining sluggish economic development in some areas of the world. Not all information, however, may necessarily augment knowledge, or at least applicable knowledge - the latter is usually accumulated by direct communication. Governments have to provide appropriate infrastructures, a sound set of regulatory norms along with transportation and direct communication facilities.
15. The "information superhighway" seems exactly the kind of facility that economic agents need. So what does "the information highway" look like? It is necessary to broadly distinguish between two forms. There is, firstly, the "digital highway" which companies in telecommunication, cable television and computers are still planning to build ('telematics'). Secondly, there is what one might call the "accidental superhighway", or Internet, or the "Web", which has been defined as a "bottom-up information infrastructure".
16. Both of these superhighways have different suppliers and systems of operations, and they differ in the kind of supervisory authority that governments might have in mind to monitor them. However, they are quite comparable in their economic importance and commercial usefulness.
III. The economic importance of the digital communications market.
17. The telematics market is dominated by a few global corporations, which enter into strategic alliances with one another or merge. The major European telecommunication companies, such as the Dutch Philips, the German Siemens or the Finnish Nokia act globally, not least because of the limited size of their domestic markets. The telecommuni�cation authorities (PTTs), on the other hand, are for the most part national monopolies -at least until the European Union-imposed deregulation by 1999. The United Kingdom was the first to liberalise - that is, deregulate and privatise - thereby giving British Telecom a competitive advantage over its European rivals. National solutions are no longer sufficient. Multinational companies demand worldwide or local communication services of all kinds. The spectacular growth and rapid technological change in the worldwide telecommunications market require substantial investments, for which a single company will have neither the strategic overview nor the necessary funds if it is restricted to its national market alone. Meanwhile, less developed countries are starting to offer services and equipment at competitive prices with only minor quality deficiencies, due to the ease of technology transfer in this sector.
18. This pressure on, and potential of, the telematics market have brought together companies from seemingly less related sectors, such as the print media and the industries of broadcasting, computers and telecommunications. They pursue the common goal of building an 'integrated services digital network' (ISDNs), which can provide all kinds of communication and information in one single medium (computers and television) using optic-fibre cables, satellite broadcasting, microprocessors etc.
19. This development opens up new commercial opportunities for hardware and software providers, as well as for companies that wish to use this interactive network to advertise their products, buy and sell, draw up models for new products across frontiers, or hold video-conferences. European PTTs and telecommunications policy-makers still argue with their international partners, however, over such things as hardware standards or cable versus satellite, thereby delaying any rapid implementation of a worldwide communications system. Understandable though this is, it may also lead to a United States or Japanese market dominance, as has already happened in microelectronics.
20. The Internet certainly has the same commercial potential as telematics, only earlier in time. This market is less for hardware industries - although user-friendly terminals have still to be produced - because providers and hosts lease the already existing international telephone network. The United States alone has more than six hundred of these lessee firms, which reduces the job creation potential in this industry in Europe.
21. The real potential, on the other hand, lies in on-line commerce. To date, more than 80.000 companies and 1,4 million hosts are connected. A "critical mass" of users may therefore already be reached while we politicians and the PTTs are still dealing with the preliminaries of telematics. If decision-makers were to agree to build up data banks nearly for free in the Internet, they will certainly not choose to change to a more expensive telematics market. It is not without significance that some telecommunication companies started to actively participate in the Internet when they realised its competitive threat to the existing telecommunications industry and its likely future growth.
IV. Consequences for society
22. The draft resolution on electronic democracy, and also the Assembly's Resolution 937 (1990) on telecommunications, refer to the economic impact which the above developments undoubtedly will have on European society. The two dominant concerns relate to the labour market and competition. The developments in the telecommunications market, with corporations seeking 'synergies' with others, will, it is feared, leave jobs insecure and encourage corporate network users to shift labour to cheap labour regions without any loss in time, ease of communication, control or quality. Work teams can be designed around the world when their members communicate via Internet.
23. This may sound futuristic for the construction industry. But it is no less likely to happen as it already does in the case of the software industry. American firms do not engage expensive American experts, but rather ask Indian specialists to write their programmes. The latter can scarcely be expected to deliver their work via airmail ...
24. Public policy in this area faces the problem of reconciling, say, Article 10 of the European Convention of Human Rights (in this case the guaranteeing of free network access to share information), the prevention of monopolies, and the protection of public decency or safety by not letting in, say, obscene pornographic or terrorist information.[3] However, supervision is difficult from a technical point of view, especially for the Internet, and it runs a serious risk of being economically harmful if it curtails the system's openness. This openness is, however, also threatened by monopolies. The Internet's software and hardware markets are virtual monopolies. (Still it is doubtful whether this monopoly has to be broken up, since the special knowledge involved does not impose high entry barriers.)
25. The concentration in the nowadays combined media, telecommunications and computer markets is disturbing. There is the real danger of worldwide monopolies - the emergence of oligopolies with separated markets already being reality. Telecommunication authorities and 'identifiable' telecommunication companies have an advantage vis-�-vis the unknown private Internet users; for governments can easily regulate the former market by special laws and operation licences. It is doubtful, however, that the resulting telematic network will promote free speech and democracy, or that it will develop into precisely the 'Big Brother' system which the draft resolution presented by the Committee on Parliamentary and Public Relations wants to prevent.
26. It is the fortune of a network like Internet, that so many people use it that it cannot be dominated by media giants such as they exist in several European countries, or domesticated by officials or legislators at national or European level. Politicians do have their place in this digital world, but it is not to direct the market or remove competition. On the contrary, the easiest way to 'regulate' or to influence any market - the telematics and Internet market in particular - is to guarantee the freest possible access to new entrants, to encourage private households to use the network, or for would-be regulators to use it themselves.
V. Concluding remarks
27. Any legal framework for modern communication technology has to take into account its own limits and its implications for national competitiveness. Excessive regulation in the member states of the Council of Europe would only serve to isolate their industries - telecommunications and others wishing to use global communication networks - from further technological developments. The dynamics of the communications market already considerably affect the economies of Council of Europe member states. These dynamics are demand-driven and form an important basis for future economic development. If politicians were to regulate the market overly, especially after the recent and planned liberalisation in telecommunications, the consequences on the economic front could be serious, especially for employment.
28. In this context I would like to draw the reader's attention to the problem regarding the rigidity of the European labour market. If policy-makers were to decide to regulate the growing telecommunications sector in Europe, they would only hurt future employment opportunities. This is due to the fact that politicians can no longer affect business cycles, by determining which economic sectors should expand and thereby absorb labour force laid off by others that shrink. Therefore, governments should focus on the "rules of the game", which must be strictly observed by economic agents. Given the current unemployment level in Europe, we cannot take the risk of losing a concrete opportunity to reduce unemployment. Only by allowing the market forces to adjust more freely and rapidly to ever-changing consumer demands, will governments be able vigorously to pursue their battle against unemployment.
29. As regards the economic sector dealt with in this opinion, it would be by far preferable to try to reach an overall agreement at the level of the International Telecommunications Union (ITU), (a UN body which sets international technical standards for telecommunications, on which the whole world is represented, instead of creating a new "independent supreme authority" (what a scary term indeed!) at European level, as recommended in the report of the Committee on Parliamentary and Public Relations. Furthermore, any supervision of the Internet, if attempted at all, should be strictly 'minimalist', due to the network's private and atomistic structure.
30. The final resolution should also have made clear that 'Big Brother' society is far less likely to result from leaving the information superhighway to market forces, than from regulating it overly. The connections between both digital communication networks described above would ensure that citizens can be informed on political issues, provided politicians are willing to use this opportunity.
31. Finally, since the cost of using Internet is not very high, there is no real risk of separate access to information for rich and poor. Furthermore, the price of computers is steadily coming down (and capacity up), thus allowing ever more people to acquire them. There is no real difference between an electronically transmitted message from one continent to another, and Demosthenes addressing the people of Athens on the Agora, the printing of a newspaper or a conversation in a bar. Let us turn this new medium into a weapon in the service of freedom and diversity of opinion. (It is no coincidence that the rulers in Iran are banning the use of satellite receivers.)
32. In conclusion, since this Opinion is in such fundamental opposition to the report, draft resolution and draft recommendation contained in Doc. 7359, it is hardly worthwhile to make individual amendments, for they would be so numerous and imply so many deletions to the texts in question. The Rapporteur would therefore prefer that the report be referred back to committee. It appears that other committees seized for opinion share this view.
Reporting committee: Committee on Parliamentary and Public Relations (Doc. 7359).
Committee for opinion: Commission on Economic Affairs and Development.
Reference to committee: Doc. 7288 and Reference No. 2010 of 22 May 1995.
Opinion approved by the committee on 9 January 1996.
[1]. by the Committee on Economic Affairs and Development
[2]. The Opinion also takes into account several other Assembly texts of recent origin, such as its Recommendation 1228 (1994) on cable networks and local television stations and their importance for Greater Europe; Resolution 1046 (1994) on OECD activities in 1993; the Motion for a Recommendation (1992) on the protection of personal data in the use of telemarketing, telemetry, interactive media and sociogress; Recommendation 1147 (1991) on parliamentary responsibility for the democratic reform of broadcasting; and Resolution 937 (1990) on telecommunications and their implications for Europe.
[3]. However, every discussion on moral and prevention of crime should take into account that even today children can use sex telephone lines, and that television broadcasts criminal acts alongside news like that on the poison gas attack in Japan showing the vulnerability of subways and perhaps encouraging subsequent bomb attacks in Paris. Those who want terrorist information will be able to obtain it for free and effortlessly with or without the Internet.