I took the early morning Schnellzug to Cologne. With over an hour to kill, I put my bags into a locker and checked out the bar and cafe.
It was 8:00 A.M., but the bar was standing room only—there were no chairs but lots of men standing around drinking their pretrain beers. In the cafe, there were eight of us and five had cigarettes going, all crammed into a space smaller than a Manhattan studio apartment. I went back to the bar.
Two minutes before departure, I went up to the track just as the train to Brussels pulled in. I boarded and spent a dreamy two hours staring at sleepy villages and isolated farm houses, built of stone and sitting precariously on hills in the middle of black fields.
We entered Brussels, the center of the densest train network in Europe. Our track joined others and soon we were picking our way through a yard dozens of tracks wide. Then, suddenly, we were inside the cavernous central train station.
I spent the weekend catching up on my reading and looking for open restaurants in a city where it seemed like even the red light district closed on weekends. Brussels prides itself on being at the geographic center of Europe, and thinks of itself as the logical capital of the European Community, home to the Commission. I think of it more as the Indianapolis of Europe.
After the sleepy calm of the weekend, I figured my two days trying to find out about the infamous Directorate Generale 13 (DG XIII) would be relatively simple and might even yield useful information.
This optimistic mood was soon to change. The weather got even colder, the food got toxic, the taxi drivers started getting into accidents, and, worst of all, I entered the bureaucratic swamp of the European Commission.
Monday morning, I walked over to the European parliament building and up the Rue du Loi, past huge monoliths filled with functionaries, to the Rue de Trèvres, home to a portion of DG XIII. The European Commission security system requires visitors to leave their passports as identification, but since I had a fax from a DG XIII PR officer I was allowed through. Security didn’t even look at the fax to make sure that the letter wasn’t a request to have me permanently barred from Europe.
On the second floor, I was ushered into the office of Peter Johnston, an official of the F Directorate of the 13th Directorate-General of the Commission of the European Communities. We were soon joined by another official, also named Peter. There was one seat free on my side of the little conference table, but Peter 2 took great pains to clear off a chair and align himself with Peter 1 on the other side.
With both Peters in place, they began an interchangeable litany of platitudes, trying to explain everything the Commission was doing from promoting networking to ensuring the future of international trade. I had heard about things like COSINE, RACE, PACE, RISE, and the European Nervous System and naively asked if perhaps one of the Peters could explain these pieces, perhaps starting with the RACE project.
There was my first mistake. You see, RACE is a program, not a project.
“No, no, no,” Peter 1 chided me, explaining how, in the context of the third framework there were a series of programs such as RACE, each of which was made up of dozens and dozens of projects. RACE was no mere project, thank you.
I learned little of substance in my briefings, but later, digging through over 20 pounds of documents I had amassed, I was able to put together a cursory picture of the programs and projects and themes and frameworks that the Peters were so unable to articulate.
DG XIII is the portion of the bureaucracy of the Commission charged with looking after the areas of telecommunications, information technology, and innovation. DG XIII has taken an active role in industrial policy, funding a great deal of research and development, and also handling some regulation.
The reason for DG XIII is that Europe has traditionally been a stronghold of the PTTs, monopoly service providers of postal services, telecommunications, telegraph, and even, in many cases, banking and other sundry services. Although the size of the European economy is about the same as the U.S., fragmentation of telecommunications has led to conflicting standards, closed markets, and inefficient service providers.
The Commission was taking a variety of steps as a regulatory body to try and open up telecommunications, including requiring PTTs to relax their procurement policies so all European suppliers could compete. Other regulatory steps included requiring a single 112 emergency phone number for all of Europe and a single standard for mobile radiotelephony, replacing the 6 different standards that had sprung up in the 12 EC member states.
In all this regulation, DG XIII worked with the existing PTTs, trying to get them to change their practices. The Commission was less than enthusiastic about taking steps that might lead to the PTTs demise. In fact, the second prong of the Commission’s strategy was to couple regulation with a very strong industrial policy, trying to keep the industry competitive.
This was no minor research program, either. In the fields of information technology and communications, the Commission was funding R&D to the tune of ECU 2.221 billion from the period 1990 to 1994. (The ECU was worth roughly U.S. $1.25 in 1992).
To understand the Commission, it is best to defer the natural inclination to ask where the money was spent and what resulted and instead focus on the process.
The quintessential model for an EC program was Esprit. Started in February 1984, DG XIII bills Esprit as “the key to reviving European technology.” The premise behind Esprit was matching funds. The Commission would put up half the money for a research project, the participants would put up the other half.
Rather than have researchers suggest some interesting research, the Commission would issue a call for proposals. To respond, a group had to have at least two industrial partners from at least two EC countries. Typically, a successful group would have up to a half-dozen members, including research institutions, consulting firms, telecommunications companies, and computer companies.
Esprit shelled out ECU 1.5 billion and involved 3,000 researchers in the first phase from 1984 to 1988. From 1988 to 1992, Esprit shelled out another ECU 3.2 billion, involving almost 6,000 researchers.
Probably the best known result of Esprit is the transputer, an example of which is the T800 chip, a 10-MIP, 32-bit, RISC processor useful as a building block for parallel computers or signal processing units. Of course, there are several other chips that the transputer must compete against, such as those from Motorola, Intel, and the Sparc consortium.
Other projects helped train engineers in VLSI design or developed opto-electrical equipment for video reception at medium distances without amplification. Esprit officials categorize these as “major results” and point to “over 500 major results” in the Esprit program.
I examined the list of major results through the end of 1989. There were 343 major results, and it is interesting that 43 of these were in the category of having made a “substantial contribution to the preparation of international standards.” If prestandardization activities got their own category and were counted as major results, it was obvious that all this money was certainly not going to develop new technology or to conduct real research.
Though the bulk of Esprit money went to things like high definition TV standards, a substantial sum was devoted to an area of research projects known as the “Information Exchange System.” Best known of these projects was COSINE and its IXI backbone. IXI, connecting 20 different X.25 networks in 17 countries, was listed as the key infrastructure for Information Exchange.
A COSINE brochure proudly stated that IXI was transferring 25 Gbytes of data per month by the Spring of 1991. The fact that IXI was several years late in coming was not mentioned, nor was the fact that 25 Gbytes per month is not a tremendous amount of data. The German DFN X.25 network, for example, was transferring over 70 Gbytes per month of TCP/IP data over X.25, not to mention substantial traffic from other protocols such as SNA.
There were several other information exchange projects proudly trumpeted in the COSINE literature, but my favorite was ROSE, Research Open Systems for Europe. The project started in 1983 and ran for 60 months, involving five European vendors such as Bull, ICL, and Olivetti. ROSE had the novel goal to promote OSI and “reinforce standardization work by implementing the standards and demonstrating them.” At a gala demonstration at the Esprit 88 conference, the vendors all demonstrated OSI prototypes that included FTAM, X.400, and the X.28/X.29 PAD services.
With Esprit such a shining success, DG XIII used it as a model for other industrial policy programs. The STAR program, for example, was started to try and get the less developed portions of the telephone infrastructure jumpstarted. From 1986–91, the Commission pumped ECU 780 million into places like Northern Ireland, Portugal, and Greece, with matching funds coming from the member states.
These types of government intervention can be quite useful if the money is put into the right places. The program that really caught my attention was RACE, Research and Development in Advanced Communications Technologies for Europe. RACE was supposed to get a broadband ISDN network into Europe and if there was any place a massive infusion of help was needed, it was the European telephone system.
As the two Peters explained to me, RACE was focused on the area of integrated broadband communications (IBC) and was meant to avoid the problems that ISDN had encountered on its way to market.
According to Peter 1, ISDN had run into a few setbacks because the standards were too vague, leading to incompatible implementations. While the ISDN generation of technology was getting on its feet, it had taken a bit longer than anyone had planned.
In other words, ISDN was a fiasco, consumed huge amounts of resources, and produced few results (but did so consistently over a long period of time). RACE would make sure the next generation of technology had a smoother roll-out.
If the problem with ISDN had been vague standards, then RACE would make sure that all the downstream activities from standards, the implementation profiles, conformance specifications, feature subsets, and the like — were formulated in great detail, thus avoiding incompatibility.
DG XIII had set itself the highly ambitious goal of a B-ISDN network by 1995 and was investing heavily. Between mid-87 and mid-92, RACE would involve 294 organizations in 92 projects for a total outlay of ECU 1.2 billion (U.S. $1.47 billion), of which the Commission was pitching in ECU 550 million.
The RACE literature explained that by bringing all the European players together in one project, the risk of failure was reduced. Everybody would work together for a common goal. Putting all your assets into one investment was a strategy I had not learned in my class on portfolio analysis, but I was willing to hear the argument out.
RACE hoped to somehow speed up the standardization process, a “well-known bottleneck in the exploitation of high technology.” Rather than reduce the bottleneck by reducing the size of the stack of paper and focusing on implementation experience, RACE was going to try and increase the volume of paper produced.
The result would be the integrated broadband communications architecture, a pile of documents that would specify everything necessary for the network. This suite of documents would, of course, be adopted by the rest of the world, opening up the vast external market for European suppliers to exploit.
RACE, one of my glossy brochures exultantly proclaimed, was “the current focus of attention of all the intellectual and industrial work on advanced telecommunications in Europe.”
When you talked to the Peters, though, you got the idea that the real purpose of RACE was to reinforce the dominant position of the PTTs. ATM cell switching, the technology that forms the basis for most of RACE and B-ISDN, was to Peter 1 simply a means to eliminate “rate arbitrage.”
Rate arbitrage is one of those code words that summarizes all that is evil about those who insist on setting up their own networks. By this philosophy, the only reason that a value added network (i.e., anybody but the PTT) can exist is because entrepreneurs take advantage of differential tariffs for different speeds.
If the tariffs did not vary, the philosophy goes, everybody would buy their services from the underlying network provider, the PTT. The evil of the Valued-Added Network (VAN) is that these greedy businessmen skim the cream off the top, diverting funds away from the PTT that is trying to provide service to everybody. If the profitable business accounts go to the VAN, who takes care of the poor widow in the village?
This line of argument makes a lot of sense unless you ask a more fundamental question. Do the PTTs have the capability to do the work in the first place? If not, the cream-skimming argument breaks down at that first assumption. Stopping others from doing important work is not an effective strategy for building an infrastructure.
While I was mulling over the proper way to get highspeed fiber and ATM switches into place, the two Peters had left the now-boring details of the RACE program for their newest toy, a program so new it didn’t even have an acronym.
This new program was in the area of telematics, bureau-speak for applications that use networks. To the tune of ECU 376 million from 1990 to 94, the Commission was funding half of the projects in seven telematic areas, including transportation, health care, libraries, and government.
I had been wondering what the purpose of Peter 2 was, and I soon learned that he was heavily involved with the transportation portion of the telematics program. Peter 1 ceded the floor and Peter 2 began his presentation.
He talked for 10 minutes, at which point I started leafing back through my notes. During those 10 minutes, Peter 2 had not uttered one sentence that was evenly vaguely comprehensible. I understood the words, but was unable to parse any of the sentences, let alone extract any semantic content.
Evidently, there had been a separate program of research on intelligent road systems, known as Drive. Drive successfully completed a total of 71 projects in 1991, presumably with many major results and at a cost of ECU 60 million. Of course, overhead took 10 percent away, but this was still real money.
Peter 2 kept referring to the “road transport informatics in the context of the Drive 2 programme,” but I had a tough time understanding what that actually meant. Luckily, Peter 1 realized the problem and cut in.
“I must insist,” he said, arching his eyebrows, “there is no Drive 2 programme.” Rather, it was more appropriate to refer to the transportation “theme” within the larger context of the telematics program.
I still didn’t know what this theme/program/project cluster was actually doing, so I asked Peter 2 to give me an example of one of the pilot projects or some technology that was actually being used.
He couldn’t. He mumbled on about harmonization of standards and finally explained, as if talking to a small child, that it was “hard to pick out a particular report from Drive and say this was used here,” pointing to the table in front of him.
It was clear to them that I didn’t realize that I was in a room with policy makers, not some mundane road technician or highway analyst. Peter 1 gave me a lecture about the vast scope of DG XIII. It was as if I had asked the Chairman of the Board of EXXON to tell me how many gas stations he had in Lexington, Kentucky. (Of course, if you asked the Chairman of EXXON to name any one city in which he had a station, chances are he might be able to answer that question.)
I decided to try another tack. The Peters and 40 of their colleagues seemed to spend most of their time issuing contracts under various themes. Was the process computerized?
Peter 1 was insulted. Peter 2 sniffed.
“Of course we’re computerized,” Peter 1 said, waving vaguely in the direction of his desk, which bore an Olivetti PC and a Hewlett-Packard laser printer.
“What kind of network do you use?”
“Uh, Novell,” one mumbled uncertainly. The other one looked down and shuffled some papers.
“And what kind of DBMS do you use to manage your contract boilerplate library?” I wanted to know.
A look of panic crossed their faces. Peter 1 gave an exasperated sigh. Peter 2 seemed to think they were using Foxbase. Peter 1 rose and handed me some brochures. Peter 2 excused himself for an important meeting upstairs.
I took the subway out to the isolated suburb of Beaulieu, where DG XIII has office space, to meet Jurgen Rosenbaum, an information officer. We paid our mutual respects and lied about how much help we would be to each other. I collected another 10 pounds of paper, then left to try and find someplace to grab lunch in the hour before my next meeting.
Beaulieu has at least four huge office complexes and dozens more under construction, and is surrounded by modern looking apartment blocks. Yet, with all these people, there was not a single place to eat, or even get a newspaper. This was city planning at its best.
I got back on the subway and went a few stops into town, hurrying to find a lone Spanish restaurant down the street from the station. After a quick lunch of fish soup (preceded by a 25 minute wait), I hustled back to the subway to find my next bureaucrat.
Halfway through our audience on Esprit, I felt myself getting more and more nauseous. I realized with horror that this wasn’t caused by platitudes but that I was feeling the all too familiar onset of food poisoning from the fish.
As I rode into town, I felt worse and worse, just making it back to the warmth of my mediocre hotel before collapsing. I spent the entire next day in bed, trying to gather enough strength for Wednesday’s train ride to Paris.
I left Brussels puzzled by the European Commission. There is certainly a place for a strong industrial policy, as the Japanese demonstrated with their MITI program and as the U.S. Defense Advanced Research Projects Agency repeatedly showed with TCP/IP, UNLY, and a host of other successes. Yet in the one field I felt qualified to judge, the Commission appeared to have been a total failure. The European Internet was coming into being, but only after fighting active opposition from DG XIII.