Traffic jams are not only exasperating, they also cost Europe dear in terms of productivity. Bottlenecks and missing links in the infrastructure fabric; lack of interoperability between modes and systems; non-communication between too many closed and scattered telecommunications circuits. Networks are the arteries of the single market. They are the lifeblood of competitiveness, and their malfunction is reflected in lost opportunities to create new markets and hence in a level of job creation that falls short of our potential.
The establishment of networks of the highest quality throughout the whole Community and beyond its frontiers is a priority task. It will require a joint, massive and sustained effort on the part of the authorities at all levels and of private operators. The potential to create jobs is substantial, both directly in the short term by initiating the large-scale projects proposed and through the beneficial effect in the long term on production conditions in Europe.
The Commission's analysis shows that the overall volume of direct investment to be mobilized by 1999 could amount to ECU 400 billion, of which ECU 220 billion would go to transport, ECU 150 billion to telecommunications and ECU 13 billion to energy transport. The sums involved are therefore fairly substantial. However, the possible gains in terms of employment creation, economic cohesion and as an aid to regional planning are no less considerable.
The message has not gone unheard. The new Title XII of the Treaty on European Union sets the framework. The objective of developing trans-European networks is to enable citizens, economic operators and regional and local communities to derive full benefit from the setting up of an area without internal frontiers and to link the peripheral regions with the centre. The political impetus was subsequently given by the Copenhagen European Council: it called on the Commission and the Council to speed up the adoption of master plans in the field of transport, energy and telecommunications and the examination of the Commission's proposals on telematic networks; it also extended the duration and amount of the Edinburgh facility, so that in some cases Community financing might amount to 90%; furthermore, projects awarded a declaration of Community interest are to be given privileged access to Community financial instruments. The European Council, meeting in Brussels on 29 October, extended the scope of the Edinburgh lending facility to cover transport infrastructures.
Four master plans for transport and the plan relating to telematic systems are now in place. Discussions are already in progress in the Council on some of the plans, and the Commission intends to present the other draft plans shortly. Major obstacles persist, which are holding up implementation of the objectives of Article 129b of the Treaty within the stipulated framework of "a system of open and competitive markets".
It is necessary to step up the pace again. Networks can - and in the present economic context, must -provide fresh impetus. The Commission's analysis shows that the installation or completion of networks as a whole is progressing too slowly. There are many reasons for this, depending to a large extent on the specificities of each type of network concerned.
Low-cost, efficient infrastructures are generally regarded by the Member States as being essential to promoting competitiveness; by creating trans-European networks, it should be possible to derive greater benefit from the internal market. Several Member States consider that the efficiency of infrastructures depends on their interoperability at Community level and on greater competition, notably in the energy and telecommunications sectors. In the transport sector, several Member States indicate that priority should be given to congested areas and transit, links to peripheral areas, traffic management systems, combined transport and high-speed rail links.
With regard to promoting networks, some Member States stress the need to apply market-oriented solutions and to encourage private sector participation and financing. They are also keen to see rapid and optimum use of resources within the current budgetary constraints and with due regard to the subsidiarity principle.
Some Member States feel that account should be taken of links to the countries of Central and Eastern Europe in the planning of trans-European networks.
On a general level, four factors of key importance to the proposals have emerged from the analysis:
Consequently, the objective of the Commission's proposals must be to attract private investment in networks by helping to create the conditions in which it will flourish, for example by removing the obstacles that persist, among others in the slowness of procedures at various levels, and by supplementing private investments with public funds where necessary. Stimulating the participation of private investors will have a direct effect on growth, competitiveness and employment in the Community, as it will advance projects which would otherwise not be implemented, however necessary and "ripe" they may be, or which would suffer unreasonable delay. The Commission therefore proposes a pragmatic approach involving integrated projects.
The three types of networks involved each have different characteristics and suffer from different problems requiring a response tailored to their own particular operating conditions. These responses are examined further on. They have some points in common which make it possible to pursue a pragmatic joint approach. On the basis of a broad consensus between political and economic circles on the need to establish such networks, a genuine partnership should be sought between all concerned: the public authorities at all appropriate levels, in accordance with the subsidiarity principle, network operators, users, service providers, financiers, and industrialists. The large number of parties involved in itself represents a challenge since it is necessary for them to be able to combine their interests and resolve any possible differences of opinion.
For each type of network, the nature of the partnership may vary according to the problems to be resolved and the objectives to be achieved. For example, to resolve transport infrastructure financing problems, emphasis should be placed on the pivotal role of players capable of mobilizing private investment. On the other hand, in the case of telecommunications there is a need for a partnership with the network users in order to enable the market to be developed in response to their expectations. Where energy is concerned, the partnership should involve players capable of optimizing network efficiency without diminishing the requisite level of competition in this sector.
This partnership is simply a modus operandi to be applied discerningly on a Community scale, or on an even wider scale if the networks are extended. Arriving at a consensus on the solutions to be implemented is not the least of the difficulties. There needs to be a willingness to find joint solutions involving measures at all decision-making levels: Community, national, regional, public authorities, economic operators, etc. A strong political signal would enable this partnership to be implemented with a view to addressing the problems identified as pragmatically as possible.
Their respective roles are complementary and, as far as the public authorities are concerned, clearly defined in the various legislative and administrative instruments existing in the Member States. At Community level, the new Title XII of the Treaty defines responsibilities and their limits in the light of subsidiarity. Coordination among Member States is one of these responsibilities, and there are numerous and powerful elements and support instruments available at Community level for this purpose.
The initiative must be taken to unite all the levels of responsibility concerned and the necessary powers, and to write together the score for each of the projects selected. The Commission proposes to act as a catalyst in this respect.
It will be essential to play an active role at Community level to unlock private investment in the new open, competitive climate of the single market. Although the financing and implementation of the specific projects will have to be agreed on a case-by-case basis, it is equally important to improve market conditions in general by means of a framework favourable to the involvement of institutional and private investors. Various factors could influence the conditions on the financial markets, such as an innovative approach to guarantees and insurance in the framework of the European Investment Fund, interest-rate subsidies for Community loans or tax incentives to attract long-term capital. Direct financing would be another possibility. The Commission will present proposals on this matter.
Also at Community level, attention must be focused on enhancing the role of the declaration of Community interest. If this declaration is to have the desired profile and impact on the availability of private capital, projects to which it has been awarded should have easier access to Community financial instruments and benefit from a binding timetable for completion of the requisite administrative procedures.
Financing problems are particularly apparent in relation to transport infrastructures, a sector with a major impact on employment in the construction industry.
By 1999, investment of ECU 220 billion will be necessary for trans-European transport networks alone, i.e. between 30 and 35 billion per annum. The Community could mobilize 90 billion of this, including the contributions from Member States. However, given the current state of Member States' finances, it is inconceivable that the remainder could be financed through the budget. Furthermore, the need for high-quality networks does not stop at the Community's external borders; it will be essential to extend the networks in particular within the boundaries of the European Economic Area and to the East. The magnitude of the deficit is both substantial and worrying. Although the level of savings is still high, it has proved difficult to mobilize private sector investments in this field. There are two reasons for this: firstly, and above all, any kind of risk inherent in a project dampens the enthusiasm of the private investor. This may concern feasibility, technical viability, authorizations, deadlines or competition from other modes. These elements need to be clarified, evaluated and conclusions drawn. The same response must be applied to the second disincentive, which is a natural follow-on from the first: uncertainty about the return on, and hence the profitability of, the investment.
The objective is therefore clear. In order to launch the process of reflection and preparation for the partnership immediately and effectively, an initial list of projects which are both of Community interest and have the potential to mobilize private economic operators must quickly be drawn up. To this end, the following selection criteria could be applied:
The Commission has drawn up an indicative list (see annex) of 26 major projects, representing an overall investment of the order of ECU 82 billion, on the basis of which it will initiate discussions as soon as possible with the authorities concerned and the relevant economic circles.
Each project on the list will be evaluated jointly with all the actors concerned, in accordance with the partnership principle defined above. The evaluation will focus above all on the inherent risks of the project and the possibilities for covering them under acceptable conditions. It will also be necessary to identify the public financing sources that can be mobilized and the nature of the instruments that could be used, to assess the expected revenue from the projected traffic and to consider the possible duration of the concession, the most appropriate legal formula for involving the interested parties, the management of the project, the administrative obstacles and the impact on the environment. The evaluation should lead to the presentation of an action plan for each project in the form which gives it the political profile necessary to speed it on its way and secure its financing.
The reliability and efficiency of energy supplies are key factors in the competitiveness of industry and in terms of their effect on the consumer's pocket. There are various reasons for this, but among them, the sub-optimum use of existing networks and brakes on their desired expansion are a major problem in the central parts of the Community in particular, and one which is closely bound up with the situation on the market for electricity and gas.
Unlike transport proper, planning of trans-European energy transport networks is not in the first instance a financing problem. Investments in energy networks are generally more lucrative and do not require the same degree of financial support from the public sector. There are only some peripheral regions of the Community where public aid to certain projects is both necessary and useful. In such cases, the Community's Regional and Structural Funds and the EIB provide a suitable framework and market conditions do not, strictly speaking, pose problems.
What tends to be the problem is that private sector investments are often hampered by administrative constraints. These constraints are above all the consequence of exclusive import and export rights, transport monopolies, limited possibilities to construct and operate gas pipelines and transmission lines.
Removal of these constraints is essential to the relaunch of investment and network planning. Furthermore, the opening up of markets and deregulation means greater competition and thus greater energy efficiency. The competitiveness of European industry would be generally strengthened as a result.
The development of energy networks also helps to protect the environment, by favouring the use of primary fuels with the least carbon dioxide emissions, and to intensify cooperation with non-Community countries in Europe and the Mediterranean region, the main suppliers in this area. Speeding up the development and more efficient use of networks is therefore vital. Gas consumption and imports are already increasing; in the case of electricity, interconnection and improvement of the management of electricity systems continent-wide falls short of what is considered essential to the proper functioning of the single market.
The slowness and complexity of administrative procedures are also an obstacle to energy networks. As with the other transport networks mentioned above, it would be worth examining giving more force to the declaration of Community interest.
In the light of estimates based on projects in progress, scheduled and planned by industry, the total amount of investment in trans-European electricity and natural gas networks could reach ECU 13 billion by the end of the decade, divided between eight major projects which are listed in the annex.
Until now, Community action to promote energy transport networks has essentially focused on financing. The European Council has also called on the EIB to step up this type of aid. A first series of loans under the new facility has already been decided. The Commission intends to give specific financial support to feasibility studies, as an incentive to carrying out the technical, economic and environmental studies necessary to determine projects and mobilize the various Funds and Community financial instruments and programmes, with a view to contributing to the financing of energy transport infrastructure projects whose implementation depends on such support.
However, on a more general level, the Community must remove the obstacles to speedy establishment of these networks. In view of the major obstacles already mentioned, the Commission is seeking the support of the European Council to ask the Council and European Parliament to bring their work on completing the internal energy market already proposed by the Commission to a rapid close. The Commission, for its part, will re-examine the proposal regarding third-party access to the network given the importance of removing national monopolies on imports and exports and on the establishment of lines and sales.
The establishment of trans-European telecommunications networks is a precondition for the creation of the "common information area". It is particularly important for the completion of the single market.
The social and economic stakes are high. Today, the telecommunications industries account for an annual market in terms of services of ECU 285 billion at world level and ECU 84 billion at Community level. The equipment market is worth ECU 82 billion at world level and ECU 26 billion at Community level. The expected annual growth rate until the year 2000 is 8% for services and 4% for the equipment market. It is estimated that this sector alone will account for 6% of GDP at the end of the century, not including the indirect effects on the economy as a whole of network installation and operation.
In the not too distant future, the telecommunications networks will be capable of instantly transporting and processing voice traffic, text and images between any locations, be they homes, offices or businesses, thanks to digitization techniques and electronic processing of information. These networks will therefore constitute the nervous system of the economy, and more generally of tomorrow's society.
With the aid of these new networks, it will be possible to transmit myriads of texts (commercial messages, newspapers, correspondence, training courses, catalogues, technical notices, etc.), images (films, medical images, graphics, etc.) and sound transmissions (voice traffic, music, etc.), stored and combined in databases, for use in the most diverse applications (leisure, education, medical care, tourism, manufacturing activity, etc.).
Although voice telephony networks and services are already international, the same is not true of other networks and services relating to information in text, data and image form. Such networks are currently developing at national level only.
If a common information area really is to be established, the digital national networks must, like the telephone network, be interconnected and managed in a coherent fashion in order to form trans-European networks which will provide access to a wide range of interactive services. Hence, the new telecommunications networks, themselves using different vectors (cables, terrestrial and satellite radio transmission, etc.) will have a beneficial effect on all economic activities and transform the way of life of Europe's citizens.
At present, this transition to interactive trans-European networks and services is being held up by the fragmentation of markets, by insufficient interconnection and interoperability and by the absence of mechanisms to ensure coherent management. Although these are obvious shortcomings, the problems concerning the telecommunications networks and services differ considerably from those of the other trans-European networks for the following reason: supply of services is inadequate and, where it does exist, too costly, with the result that demand is also too low as in this case it is supply which determines demand. As a result, demand is not manifesting itself, which in turn discourages the creation of a viable supply. This is a vicious circle. The general economic situation is aggravating this trend and the private sector will only invest in this area of services, which have been liberalized, if conditions are such as to limit the risks to an acceptable level.
To break this vicious circle and stimulate the creation of new markets, the Commission proposes to identify strategic trans-European projects in collaboration with all the various parties concerned. The aim will be to target our activities in order to identify potential new markets; to tackle obstacles to their development, be they of a financial, regulatory or standardization nature; and to define the specific details and functional characteristics of the services to be developed and the typology of potential suppliers. As in the case of transport networks, the national and Community authorities will restrict their financial involvement to a marginal, catalytic role.
This means that, taking account also of the conditions of competition on the world market, Community action will consist in removing obstacles of a general nature (problems of industrial property, security, training, protection of privacy, etc.), in providing R&D support to project implementation, in contributing to the performance of feasibility studies and in granting loan guarantees and interest rate subsidies.
The strategic projects would be carried out at each of the three interdependent "levels" that make up the telecommunications networks: the carrier networks for transmission of information, generic services and telematic applications.
With regard to the networks that serve to carry the information (voice, data, images), the objective would be to consolidate the integrated services digital network and to install the high-speed communications network using advanced transmission and switching techniques (asynchronous transfer mode: ATM), which will help digitized multimedia services to make a breakthrough.
With regard to the generic (universal) services, which form the common basis for all telematic applications, three areas would be considered:
Telematic applications are the third level, which concerns adapting the service to the specific needs of user groups. Public administration in connection with the single market is of particular interest here, as already discussed in chapter 2 B. Exchanges of data and the coordinated, accelerated introduction of an electronic mail network between administrations involved in the management of the single market should also enable businesses and citizens to have easy access to the administrative information they require. This objective is being pursued in the framework of the Community TNA-IDA project.
Distance learning is another area of considerable public interest which will help to improve skill levels in an on-going fashion without the need for costly infrastructures. The same applies to telemedicine which is designed in particular to give practitioners remote access to specialist centres of excellence, to provide diagnostic aids and a basis for deciding on treatment, and to contribute to exchanges of research results in the fight against serious illnesses such as cancer and AIDS. Finally, the application of telematics to transport (road, maritime, air) is now becoming an important aspect in transport infrastructures.
It is estimated that the volume of financing to be mustered by public and private investors in the areas currently identified as being favourable to the creation of new markets in services, will amount to ECU 150 billion from 1994 over a period of six to ten years. The priority projects proposed until 1999 would amount to ECU 67 billion.
ELECTRICITY NETWORKS(a) Connection of isolated electricity networks
a1 : Northern Ireland - Scotland
a2 : Ireland - United Kingdom
a3 : Germany : Connection to the new Länder
a4 : Greece - Italy
a5 : Greece : Connection of Crete
a6 : Spain : Connection of the Baleares
(b) Improvement of interconnections between Member States
b1 : Germany - Denmark
b2 : Germany - Netherlands
b3 : Germany - Belgim
b4 : France - Belgium
b5 : France - Germany
b6 : France - Italy
b7 : France - Spain
b8 : Belgium - Netherlands
b9 : Belgium - Luxembourg
b10 : Spain - Portugal
(c) Improvement of electricity networks within Member States in conjunction with improved interconnections between Member States or with non-Community countries
c1 : United Kingdom : Wales
c2 : Denmark : East-West link
c3 : Netherlands : North-East area
c4 : France : North-East area
c5 : Italy : North-South and East-West links
c6 : Spain : North-South link and lines along the coast
of the Mediterranean and the Cantabrian Sea
c7 : Portugal : Improvements regarding interconnection with Spain
c8 : Greece : East-West link
(d) Creation or improvement of electricity interconnections with non-Community countries
d1 : Germany - Sweden
d2 : Germany - Poland
d3 : Germany - Norway
d4 : Germany - Austria
d5 : Italy - Switzerland
d6 : Italy - Austria
d7 : Italy - Tunisia
d8 : Greece - Balkan countries
d9 : Greece - Turkey
d10 : United Kingdom - Norway
d11 : Netherlands - Norway
d12 : France - Switzerland
d13 : Spain - Morocco
GAS NETWORKS
(e) Introduction of natural gas in new regions
e1 : Northern Ireland
e2 : Germany : New Länder
e3 : Corsica and Sardinia
e4 : Spain : New regions
e5 : Portugal : Whole country
e6 : Greece : Whole country, including Crete
(f) Connection of isolated or separated gas networks
f1 : Ireland - Northern Ireland
f2 : Great Britain - Continent
f3 : Germany : connection of German network to gas
Belgium : pipelines coming from Zeebrugge
f4 : Germany : connections to the new Länder
f5 : Spain - France
f6 : Portugal - Spain
(g) Improvement of reception capacities/LNG storage and underground storage
g1 : Ireland : Construction of an LNG station
g2 : Germany : Construction of an LNG station
g3 : France : Extension of LNG stations
g4 : Italy : Extension/construction of LNG stations
g5 : Spain : Extension of LNG stations
g6 : Germany : Creation of underground storage facilities
g7 : France : Creation of underground storage facilities
g8 : Spain : Creation of underground storage facilities
(h) New gas supply pipelines
h1 : Norway - Belgium or Netherlands: new project planned
h2 : Norway - Germany (Emden): EUROPIPE project
h3 : Norway - Denmark-Sweden: SCANPIPE project
h4 : Algeria - Morocco-Spain-France (Toulouse/Fos)
h5 : Algeria - Tunisia-Italy: capacity increase
h6 : Russia - Ukraine-EC: upgrading of existing gas pipeline system
h7 : Russia - Belarus-Poland-EC
h8 : Russia - Scandinavian countries-EC
h9 : Bulgaria - Greece
TRANS-EUROPEAN TELECOMMUNICATIONS NETWORKS: PROPOSALS
INFORMATION HIGHWAYS TARGET AREA FOR STRATEGIC INVESTMENT
PROJECTS REQUIRED 1994-99
(billion ecus)
Interconnected - establishment of high-speed 20
advanced networks communication network
- consolidation of integrated 15
services digital network
General electronic - electronic access to information 1
services - electronic mail 1
- electronic images: 10
interactive video services
Telematic applications - teleworking 3
- links between administrations 7
- teletraining 3
- telemedicine 7
TOTAL 67