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UNCLAS SECTION 01 OF 04 BRUSSELS 001449 
 
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TAGS: ECPS ECIN EINV EINT ETRD ECON EUN
SUBJECT: SCENESETTER FR 2008 U.S.-EU INFORMATION 
SOCIETY DIALOGUE 
¶1.  (SBU) SUMMARY.  This yearQs annual U.S.-EU 
Information Society Dialogue (ISD) talks, on 
September 26, come after a busy period in Europe, 
with the European Parliament voting on a final 
scaled-back telecom reform package, the EU calling 
 
for negotiations to update the WTO Information 
Technology Agreement (ITA), InfoSociety Commissioner 
developing popular new roaming regulations, and the 
EU adopting decisions on mobile satellite services. 
The ISD will feature informal exchanges on these 
issues, as well as the digital TV transition, 
cybersecurity cooperation, and other issues.  This 
will be the last ISD for Director General Fabio 
Colasanti.  END SUMMARY. 
 
ISD OVERVIEW 
------------ 
 
¶2. (SBU) On September 26, the U.S. and EU will meet 
for our annual Information Society Dialogue (ISD), 
an informal exchange on respective market and policy 
developments in the two largest ICT markets in the 
world.  This yearQs ISD, the last for U.S. lead 
Ambassador David Gross (from EEB at State) and for 
European Commission lead Director-General Fabio 
Colasanti, will feature updates from the European 
Commission on the EU telecoms review, roaming 
regulations, and new selection system for mobile 
satellite services. 
 
¶3. (SBU) Both sides will discuss respective spectrum 
decisions, the digital television switchover, 
cybersecurity cooperation, telecom assistance 
programs in third countries, and other issues. 
Additional issues that may be discussed include the 
new EU proposal to update the WTO Information 
Technology Agreement (ITA), and a new Commission 
investigation of the Google-Yahoo advertising 
agreement.  The European Commission will be 
represented primarily at the ISD by officials from 
DG Information Society and Media (DG INFSO). 
 
¶4. (SBU) Just before the ISD, two transatlantic 
events on Radio Frequency Identification Devices 
(RFID) will be held in Washington; a U.S.-EU 
Symposium on Societal Benefits of RFID, cosponsored 
by DOC and DG INFSO, and a workshop on held by FTC 
on September 23.  The U.S. and EU are also launching 
government-to-government pilot projects on RFID. 
The first one of these will focus on the use of RFID 
to track the movements of radioactive isotopes in 
commerce.  The day prior to the ISD, the European 
American Business Council will hold its annual 
Digital Economy Workshop, to bring policymakers and 
industry together for discussions on ICT market and 
regulatory issues.  The entire week of ICT-related 
events will significantly advance U.S.-EU 
cooperation on ICT and innovation under the 
Transatlantic Economic Council (TEC). 
 
EU INFORMATION SOCIETY LEADERSHIP AND REGULATORY 
STRUCTURE 
--------------------------------------------- --- 
 
¶5. (SBU) Viviane Reding, Commissioner for the 
Information Society and Media, is a politician and 
former journalist whose populist initiatives to cut 
mobile phone roaming prices have made her among the 
most high-profile Commissioners.  Reding, Director 
General Fabio Colasanti, and DG INFSO, seek to 
promote development of a single, integrated 
information and communication technologies (ICT) 
market in Europe. 
 
¶6. (SBU) DG INFSO plays three key roles: 
establishing regulatory policy, supporting ICT 
research, and overseeing programs to promote wider 
use of and accessibility to ICT.  Reding and DG 
INFSO share competence over EU telecoms regulation 
with 27 National Regulatory Authorities (NRAs) and 
partly with the EU competition Directorate-General 
(DG COMP).  There is no EU-wide telecoms regulator 
 
BRUSSELS 00001449  002 OF 004 
 
 
and licenses are awarded nationally, so telecoms 
markets remain more fragmented than most other parts 
of the Single Market. 
 
¶7. (SBU) Director General Colasanti is an Italian 
economist and veteran of many European Commission 
jobs.  He is open and candid in discussing policy 
issues and concerns, and has built good rapport over 
the past few years with Ambassador Gross of State. 
Colasanti will depart DG INFSO shortly as part of a 
larger reshuffling of DGQs throughout the 
Commission. 
 
EU i2010 STRATEGY 
----------------- 
 
¶8. (U) The EU i2010 strategy, launched in June 2005, 
is the latest Commission attempt to develop a 
coherent policy framework for the era of convergent 
ICT services.  The i2010 strategy aims to complete 
integration of EU national ICT markets, reinforce 
innovation and investment in ICT, and promote 
information society inclusion, public services and 
quality of life.  A Commission mid-term review of 
the strategy in April 2008 lauded progress in 
broadband and Internet usage but noted the lack of 
an integrated market and a persistent digital divide 
across member states.  The reported noted that 
broadband penetration across the EU ranged in 
January 2008 from 36 percent in Denmark to only 
eight percent in Bulgaria. 
 
EU ICT MARKET AND POLICY FRAMEWORK 
---------------------------------- 
 
¶9. (U) The EUQs ICT market is one of the largest and 
most advanced in the world.  Total market size was 
about $913 billion in 2007 (versus $1.2 trillion in 
the U.S.).  The EU telecoms sector accounts for 
about $401 billion of this total, and is growing at 
two percent annually.  The computer and internet 
sector account for the remainder. 
 
U.S. FIRM PRESENCE IN EUROPE 
---------------------------- 
 
¶10. (SBU) All major U.S. ICT firms are invested in 
Europe; many of these are prominent in EU ICT 
associations.  AmCham EUQs Digital Economy Committee 
is large and active on policy issues here, as is the 
American Electronics AssociationQs European arm, AeA 
Europe.  Key players include AT&T, Intel, Microsoft, 
Google, eBay, SAS, GE, Symantec, IBM, Apple, Cisco 
and Qualcomm. 
 
EU TELECOMS REVIEW UPDATE 
------------------------- 
 
¶11. (SBU) The European Commission proposed in 
November 2007 a significant overhaul of the EUQs 
existing 2003 telecoms regulatory framework, to 
address persistent lack of competition, incumbent 
dominance and market fragmentation across Europe. 
Key European Parliament committees in July 2008 
passed heavily amended versions of the CommissionQs 
proposals.  The committees rejected Commission plans 
to establish an EU-wide telecoms regulatory 
authority or give the Commission a veto over 
national regulator remedies.  The EP committees also 
watered down proposals for greater EU-wide 
coordination of spectrum allocation, which U.S. 
industry had strongly supported. 
 
¶12. (SBU) The EP committees did vote to strengthen 
the existing group of national telecoms regulators, 
as the leading regulatory body; supported 
Qfunctional separationQ (forced sale of telecoms 
units in some cases) to promote competition; and 
backed many Commission proposals to strengthen 
consumer rights on transparency of pricing and 
contracts.  The Parliament debated the package 
September 2, with comments generally supporting the 
 
BRUSSELS 00001449  003 OF 004 
 
 
committee outcomes.  The Parliamentary vote (First 
Reading) on the package is planned the week of 
September 22, just before the ISD. 
 
¶13. (SBU) The Council (of EU Member States) was very 
negative about the initial Commission proposals, and 
has moved toward the EP position in opposing an EU- 
wide regulator, a Commission veto or much greater 
Commission powers over spectrum policy.  The French 
EU Presidency seeks a Member State agreement on the 
package at the November 27 Telecoms Council, leaving 
the Czech Presidency to guide the package through a 
second reading in Parliament by early next year. 
Council discussions have gone slowly, however, 
leaving some concern that time may be short to 
finalize the package before EP elections in May 
¶2009. 
 
ICANN REFORM 
------------ 
 
¶14. (SBU) Commission ISD participants may raise the 
question of revisiting internet governance 
arrangements.  Over the past few years, the European 
Commission has consistently pushed for reform of 
Internet governance.  The EU is uncomfortable with 
the existing contractual relationship between the 
Internet Corporation for Assigned Names and Numbers 
(ICANN), which supervises internet domain names, and 
the USG (DOC) in particular, and wants to see a 
system that includes Qinternational, governmental 
accountability.Q  The French have indicated to USEU 
that Internet governance is one of their EU 
Presidency priorities. 
 
COMMISSION PROPOSAL TO UPDATE THE ITA 
------------------------------------- 
 
¶15. (SBU) The issue of the EU proposal to update the 
Information Technology Agreement (ITA) may arise at 
the ISD as well.  USTR notes that ISD participants 
should not/not comment on the proposal, which will 
be addressed by the U.S. at the WTO.  On September 
15, the Commission sent to the WTO a proposal to 
initiate negotiations to update the 1996 ITA, which 
provides for duty-free treatment of certain 
information technology products.  The proposed 
negotiations would be to (1) review product coverage 
(implicitly, adding new products), (2) adding new 
parties (currently, 70 WTO Members are part of the 
ITA); (3) establish a mechanism for updating the 
Agreement to include newer technologies; and (4) 
address non-tariff barriers to trade, such as 
conformity assessment rules and standards. 
 
¶16. (SBU) The USG has not taken a position on this 
proposal yet (it would normally be discussed in a 
WTO ITA Committee meeting).  However, the initial 
reaction of USTR is that this proposal Q addressing 
the possible expansion of ITA obligations Q is 
separate from our WTO case, which addresses the U.S. 
view that the EU is failing to meet its current 
obligations under the ITA.  The WTO case also 
addresses the EU approach to the agreement as static 
rather than dynamic; the EU does not consider that 
it covers development of new converged products. 
 
NEW EU MOBILE SATELLITE SERVICES SELECTION PROCESS 
--------------------------------------------- ----- 
 
¶17.  (SBU) On August 7, the Commission launched a 
new single EU-wide selection and authorization 
procedure for Mobile Satellite Services (MSS) 
operators, with the goal of avoiding market 
fragmentation and creating a pan-EU market.  MSS are 
provided by a satellite system that communicates 
with portable ground terminals, and can include 
high-speed internet, mobile TV and radio, plus 
emergency or disaster relief.  The Cmmission 
proposed a decision in August 2007; this was 
approved by the Council and Parliament and entered 
into force on July 5.  Under the new procedure, 
 
BRUSSELS 00001449  004 OF 004 
 
 
which replaces 27 member state selection procedures, 
the Commission issued an open call for applications. 
Interested firms must apply by October 7. 
 
¶18. (SBU) The Commission will assess proposals for 
technical and commercial viability, efficiency and 
consumer benefits; systems will operate at the two 
Ghz band and must be able to reach at least 60 
percent of area and 50 percent of the population of 
all member states.  Selections are expected to occur 
by mid-2009; after this operators will need to be 
licensed at the national level.  Satellite and 
service launches may occur by late 2009-early 2010. 
(Comment: The system seems good on balance; though 
it seeks to improve the competitiveness of the 
European satellite industry, it appears technology 
neutral and should provide opportunities to U.S. 
firms.  End comment).  MSS will be the first truly 
single market for an EU telecom service. 
 
ROAMING REGULATION IN EUROPE 
---------------------------- 
 
¶19. (SBU) Commissioner Reding succeeded in 2007 in 
regulating the cost to EU subscribers of making and 
receiving mobile calls while in another EU country 
(roaming) to great popular acclaim, resulting in 
price drops to consumers of about 60 percent.  This 
year, she has turned her attention to the cost of 
sending SMS messages and other forms of data across 
borders via mobile phones and is moving towards 
action on mobile termination rates.  These are a 
feature of the current European Qcalling party pays 
business model, and that contribute significantly to 
the cost of mobile telephony in Europe. 
 
GROWING CONCERNS OVER COMMERCIAL DATA PRIVACY 
--------------------------------------------- 
 
¶20. (SBU) A trend to be aware of is the increased 
interest on the part of Commissioner Reding and DG 
INFSO in the area of commercial data protection. 
The CommissionQs privacy unit moved from DG Internal 
Markets to DG Justice, Law and Society in the wake 
of 9/11, but JLS has not led on the issue very 
forcefully, leaving room for INFSO and other DGs to 
get involved on specific issues (such as RFID). 
 
RFID COOPERATION 
---------------- 
 
¶21. (SBU) RFID cooperation is not formally on the 
ISD agenda, but is a very prominent area of U.S.-EU 
ICT cooperation.  Commissioner Reding has repeatedly 
expressed strong backing for RFID technology, but is 
determined to address the significant privacy 
concerns expressed by stakeholders in response to 
her 2007 public consultation.  DG INFSO is planning 
to issue a Recommendation to Member States and 
industry in September or later in 2008 on privacy 
and security in RFID.  Drafts were highly 
controversial, with fears from the USG and 
transatlantic industry that privacy protections 
could go too far, and kill use of the technology in 
the retail context.  An interagency group from the 
USG provided input on the draft text. Recent drafts 
seem more acceptable to industry, however. 
 
SILVERBERG