CHAPTER 10

The information society: helping regulation serve innovation

1 - The stakes are becoming clearer and clearer

Most developed countries are now aware of the information society and have realised what is at stake.

The information society is a revolution in both technology and usage that is based on the convergence of several advances in telecommunications technology (digitalisation and compression of signals, and flexibility in switching and transmission). These developments are preparing the way for the emergence on high-speed interactive networks of new services in fields such as audiovisual services (television on demand), health care (remote diagnostics), and remote education and telecommunications (videophones).

The stakes are significant for education and health care policy, research (networking research centres), cultural endeavours (what will be the content of the new services), regional development (decentralisation of activities away from the capital) and employment.

This is why the highest public officials have taken up this subject, from the United States and Japan to Europe, where the European Council solicited a report from a group of prominent individuals, chaired by Commissioner Bangemann. In France, the Prime Minister asked Gérard Théry, former Director General of Telecommunications, for a report, which he delivered in September 1994.

Our country is not at all behind in the attention given to the information society; Thierry Breton's report has already been submitted on teleservices — which confirmed the great potential for market growth and job creation — as has the report by Gérard Théry to the Prime Minister. This latter document proposed an ambitious plan for developing fibre optics, and advocated state support for developing services. On the other hand, it is less forthcoming on regulatory questions and on overall strategy for Europe.

Two key factors for the successful development of the information society stand out in these reports, particularly the Théry report:

• the need to be based on the market itself and on the investment capacity of all of the players active on it, while still allowing the state to be a driving force in stimulating developments on the market through its public interest activities (health care, education);
• the importance of giving at least as much support to the development of services and applications as to the infrastructure.

2 - An ambition

The interministerial committee of 27 October 1994 chaired by the Prime Minister, was informed about the Théry report and recognized the need to develop an ambitious strategy for our country in this field, in order to rise to the social, technological and economic challenges posed by the development of the information society.

Hence, the government proclaimed the goal of setting up information highways and the corresponding services by 2015, a goal which, in order to preserve market dynamics, was not accompanied by any plans for the investments involved.

Furthermore, an interministerial committee on the information society was created in order to coordinate the government's work in the different areas involved.

This interministerial committee also decided to hold a call for proposals, under the supervision of the Ministry of Trade, Industry and Posts and Telecommunications, open to all the economic players concerned, so as to unleash their capacity for investment and innovation by means of large-scale commercial and technological tests of the new possibilities offered by the technology and the new services.

In addition to this call for proposals, the DGPT planned work in several areas following the interministerial committee meeting:

• preparations for the debate in Parliament (which took place on 13 December 1994) and for a seminar with other economic and social forces planned for the week beforehand, which met with great success;
• preparations for international deadlines: the European Union needs to adopt a well thought-out action and support plan during the French presidency; a G7 meeting took place on this subject on 25 and 26 February 1995;
• regulatory measures aimed at promoting investment: it is well known that the opening of the infrastructure market to competition will be an important stimulus to investment in developing the information society, hence the regulation of this market should help point investment to the market segments with the highest potential for creating added value. Regulatory planning should also be concerned with changes in the contours of the public service mission (which is currently limited basically to telephone service) and with coordinating this with audiovisual regulations, which are concerned more with the content of services than with regulating the carrier.

3 - The G7 summit on the information society

The DGPT was appointed to be the government body responsible for preparing for the G7 meeting on the information society. To accomplish this, it oversaw France's contribution, which was presented by our country in December 1994 and which laid out France's priorities for the G7 meeting.

three different events

The G7 meeting on the information society, which was organised by the European Commission on 25 and 26 February 1995 in Brussels, as provided for by the Naples summit, consisted of three different events:

• an exhibition of the most innovative developments from the information society, during which French know-how was highlighted by twenty projects (out of a total of 120 projects) prepared by companies, government departments (including the Ministries of Culture and Education) and French research institutes; the DGPT, which was in charge of seeing that French applications were prepared for this exhibition, was responsible for presenting the French projects to the European Commission as it went through the process of selecting projects;
• a manufacturers' round table, chaired by Jacques Delors, debated the implications of the information society for the world of business: four French CEOs took part: Marcel Roulet, Chairman of France Télécom; Pierre Lescure, Chairman of Canal Plus; Jean-Luc Lagardère, Chairman of Matra Hachette; and Jean-Marie Descarpentries, Chairman of Bull;
• the ministerial conference itself, opened by Jacques Santer, the new head of the European Commission, which was chaired by Commissioner Martin Bangemann, gathered the Ministers in charge of industry and telecommunications in each of the G7 countries; three sessions were held on different themes on important aspects of the information society:

• the first session, chaired by the German Minister of the Economy, Gunther Rexrodt, dealt with the matter of regulation and competition;
• the second session, chaired by José Rossi, French Minister for Trade, Industry and Posts and Telecommunications, was devoted to developing and accessing infrastructure and to applications;
• the final session, led by Martin Bangemann, looked at the social implications of these technological and regulatory developments.

launching 11 international pilot projects

The DGPT also represented France during preparatory negotiations which led to launching eleven international pilot projects, particularly in public interest areas (education, the environment, research, health care, etc.). For each of these projects, this approach made it possible to take into account France's priorities and the stakes for French players as well as to ensure that France would play a leading role in projects related to education, culture and health care.

These eleven projects will be part of a decentralised effort and are open to any private or public party in the field, including from outside the G7, and to international organisations. This result came about due to France's precise methodological proposals for setting up these projects.

Community policy in the field of trans-European telecommunications networks

The Mastricht treaty on European Union came into force on 1 November 1993. For the world of telecommunications, this was a turning point in building Europe, as, for the first time, it made an explicit reference to telecommunications in the basic text.

This reference takes the form of the introduction of a new Title (Title XII: "Pan-European networks"), which deals with transport, telecommunications and energy infrastructures.

New tools serving a new common policy

The aim is to encourage the development of large trans-European networks in order, first, to help construct an internal market without borders, and second, to allow all Community players (citizens of the Union, companies, territorial representatives) to benefit from this vast internal market. Network policy is thus recognized as having a structural impact both geographically and economically.

The policies adopted by the Community must of course be set within the framework of a market system that is open and competitive, and need to be aimed at encouraging the interconnection of different communications networks and the interoperability of the services provided on these networks.

Despite the urgency, initial action is still hesitant

Up to now, the call by Title XII to set up an overall policy has given rise to only two real steps, which, though important, are limited in scope: the Integrated Services Digital Network (ISDN) and intergovernmental networks.

In the first case, on 22 December 1994 the Council, acting on a Commission proposal, adopted a joint position on a series of guidelines for developing a harmonised ISDN (Euro-ISDN) on a Union-wide scale. These guidelines, in compliance with the provisions of Title XII, identify several projects and fields whose development would definitely be in the interest of the Community: access by SMEs to European telematics services using Euro-ISDN; access to image data bases; access to the ISDN to encourage teleworking; and the development of applications for the health care, education and cultural sectors, etc.

As for the networks for exchanging data between governmental bodies, the fact that a joint Council position was adopted on a legal basis other than Title XII does not call into question that they are part of the pan-European networks. The point is to facilitate the interconnection of existing networks so as to help government administration become more effective and to promote the free circulation of people, goods and capital.

Trans-European networks and the information society: a new horizon

These initial actions must henceforth be supported by a more determined and well thought-out policy based on the systematic identification of the often poorly understood needs of potential users of these networks. Policy on trans-European networks needs to be reinvigorated and given a new sweep, making use of the very rich debates that were held during 1994 on the information society.

The trans-European networks discussed in Title XII of the Treaty provide the first building blocks for Community strategy. The approach based on using development plans needs to be extended to the entire telecommunications sector, while seeking business and economic outlets for applications using the tremendous potential of the future very high speed interactive networks.

drawing up common principles that will form the foundation of the future information society

The DGPT took part in developing the summary of the conference's conclusions, which led in particular to drawing up common principles that should become the cornerstones for building the information society. These principles form a well balanced foundation, largely reflecting the French approach to this field, especially as concerns the need for balance between opening up to competition and the measures for regulating the market (universal service, policy on contents, security). The contribution France presented in December 1994 helped our partners understand our basic objectives and ensured that these objectives would be taken into account in the final conclusions of the conference.

Overall, the meeting was an undeniable success and a source of satisfaction for our country, as it made it possible to lay an international foundation for the strategy decided upon by the French government in this field and to consolidate the trial-based approach favoured by France, in terms of both the principles adopted and the projects selected by the G7 meeting.

4 - The examination of the call for proposals

The DGPT participated in the examination of the call for proposals made by the Ministry on 23 November 1994, which was organised by the Directorate General of Industrial Strategy (DGSI - Direction Générale des Stratégies Industrielles). The DGPT took part in every level of the examination and analysis of the proposals:

• Bruno Lasserre was a member of the 5-member advisory committee, which was chaired by Gérard Théry, who decided upon the results of the call for proposals;
• the DGPT had an on-going role in the work of examining the proposals, together with the DGSI, particularly through the Committee of Readers which went through the proposals and designated competent analysts as well as the other ministries that needed to be approached; this effort required six DGPT employees working full time for a month;
• the DGPT informed the Evaluating Committee of its analysis of the different applications, including the legal, technical, regulatory, tariff and international points; this analysis was retained in the report to the interministerial committee.

The call for proposals met with great success, as 635 responses were submitted to the Ministry, including a broad variety of projects in different sectors.

The interministerial committee meeting of 28 February 1995 decided to select 49 projects that could be implemented immediately, with 218 others held in abeyance until they were fully financed or fully in compliance with regulations.

5 - Regulatory and legal points related to the information society

Simultaneously with the examination of the call for proposals, the DGPT undertook an analysis of the regulatory and legal aspects of the development of the information society, which had only been outlined by the Théry report.

the need to adjust the current legal framework

As is noted in the Théry report and the summary of the conclusions of the interministerial committee meeting of 27 October 1994, creating a favourable regulatory and legal environment is essential for developing the information networks and services.

The current legal framework thus needs to be adjusted so as to meet three objectives:

• to allow trials to be set up within the framework of the calls for proposals which raise questions about compatibility with current regulations;
• to encourage investment in the new infrastructure and the new services, as rapidly as possible, so as to achieve the target for development set by the Government (coverage of the country by 2015);
• to adapt current legislation (intellectual property rights, protection of privacy, network security, etc.) to the problems posed by the new services.

developing telecommunications regulations

The most important changes needed involve regulations on telecommunications, where constraints must be rapidly lifted: on the one hand, the information society needs the injection of any possible investment likely to be made by one of the economic players, and on the other hand, the requirements of dynamic and fair competition imply that different operators should have equivalent, more extensive, opportunities. In addition, the expansion of the boundaries of public service, which need to be determined in accordance with changes in social needs, must not be prohibited by regulations, even though it may seem that it is difficult to foresee the exact nature of these new needs.

Telecommunications regulations: the changes needed

In order to implement the proposals that were the most interesting but which were incompatible with existing regulations (classified in category 2), the DGPT proposed changing the law on the regulation of telecommunications by creating experimental authorisation arrangements applicable before 1998 to areas that are still under monopoly control.

These arrangements would make it possible in particular:

• to carry out trials with fixed telephones on cable networks;
• to build teleports;
• to make more extensive use of large alternative networks (SNCF, RATP, EDF, etc.).

In addition to moving quickly to set up trials, a number of proposals emphasized the need to clarify the sector's operating principles after 1998, so that, in case their trials are successful, players will know what conditions they will face if they should try to continue or expand on these trials.

In conclusion, ensuring that there has been solid preparation for well regulated competition is another way of encouraging the development of the information society.

bringing audiovisual and telecommunications regulations into line while distinguishing regulation of content from regulation of the carrier

Due to the increasing convergence of the telecommunications and audiovisual sectors as well as of the technologies and related carrier, and the increasing overlap of the expertise involved, it will be increasingly difficult to keep the two regulatory systems separate, as they are now. It is necessary to work for greater co-ordination, while more carefully separating the regulation of content from the regulation of the carrier.

adapting legislation

Finally, after coordinating an interministerial effort on this subject, the DGPT has identified certain adjustments that need to be made to across-the-board legislation. Some of these need most of all to be applied more effectively to the new networks and services: copyright, for example by developing mechanisms for automatically handling these rights; and consumer protection, by safeguarding freedom of choice and regulating distance selling (e.g. mail order).

Other areas will undoubtedly see changes: the system for disseminating public data; the law on "computers and freedom", which will need to be revised according to a European directive that is in the process of being adopted; also, perhaps in the longer term, legislation on copyright and regulations on network security, depending upon the actual problems that are posed by the development of new services.

Chapter XI