• what are, according to project promoters, the main obstacles facing the development and implementation of IS projects ;
• what are the key success factors for IS projects development, in other words what are the crucial elements of a favourable business environment for IS : what policies can be conducted ? Which incentive mechanisms could be launched in order to favour the emergence of IS projects ?

As we go on, I shall echo the description of trends as they emerge from the ESIS project.

Our preparation work for this presentation has combined several ESIS sources: the ESIS inventory of projects (as of January 1998), the analysis of basic facts and technology indicators, the promotion actions base and the regulatory development reports.

Costs issues are ranking first, be they related to development costs or infrastructure. It will not come as a major surprise but it is worth noting that development costs are today considered as more important that those of telecom infrastructure.

It is also interesting to note the importance of the Human Resource constraints. In that area, it is true that there may be a contextual factor because of the impact of the Year 2000 and Euro projects needs on the IT population. More globally, this barrier covers issues such as the lack of staff trained for multimedia development and design, and, generally speaking, many IS projects have difficulties in integrating different professional skills. Legal issues come in the 4th position: in this area, copyright issues seem to be one of the major obstacles that hinder the developing of IS, besides intellectual property and related product liability issues. Security issues follow, covering topics such as cryptology, transaction security, as well as standardisation issues. Finally, user resistance is considered as a main barrier by only 27% of respondents.

Faced to these critical barriers, what are the ingredients enabling the establishment of a more favourable environment for project initiatives and developments ?

Five key dimensions have been identified where it is possible to act, in order to contribute to a favourable development of the business environment for IS :

1. infrastructure and technologies
2. regulatory framework
3. creating/strengthening the demand
4. stimulating the emergence of projects
5. favouring partnerships and networking.

On the infrastructure and technologies side, there are 3 important requirements:

• availability
• affordable costs
• a dynamic R&D

On the availability of telecom infrastructure, the total number of telephone lines has shown an average growth of 7.5% per year between 94 and 97. On average, there has been a very high growth of mobile and ISDN and their shares in the total of lines have regularly increased. There are still important disparities between the different Member States, but there has been an important catch up effect from several so-called «less favoured countries».

The data on technologies used in the projects of the ESIS inventory are of particular relevance as the inventory shows that the use of standard telephone lines remains the most common form of project technology and that there is a substantial and growing number of projects also using ISDN.

Highest rate of penetration is observed in applications areas such as trade/commerce, consumer focused marketing and sales and social utility, i.e. domains where direct contact with consumers and individuals is easiest using basic and established technologies. Four application areas use the most advanced technologies and high bandwidth: consumer focused marketing and sales, transports/environmental development, Healthcare and Arts/culture/entertainment. In all four cases the rationale is no doubt the importance of transferring pictures. But in a nutshell, this shows that IS development is primarily based on «readily» available technologies.

As far as PCs are concerned, the average European equipment rate is 19 PCs per one hundred inhabitants. There is room for improvement, in particular when one considers that the highest country rate is one PC for 2 inhabitants. The least equipped country shows a rate of 5 PCs for 100 inhabitants, which represents a ratio of one to ten between the two extremes. Moreover the number of modem-equipped PCs is still globally low (1/3 in the Netherlands and in the UK, one out of four in Denmark, etc.)

Concerning the cost issue :

• The competition created through liberalisation has had and will have a very quick and strong impact on costs reduction for the end users.
• Interconnection tariffs are being revised in many countries
• New regulatory bodies have been created with the task, among others, of pricing control.

The third important requirement from a technological standpoint is a dynamic R&D. Many ESIS respondents stress the fact that both EC and public authorities should support measures and technologies allowing :

• to speed up transport of data and develop broadband network
• to focus on the development of encryption technologies
• to solve the European Multilingual problem using automatic translation

Moreover, it becomes more and more necessary to encourage a better co-operation between content providers and technical providers and to promote exchanges in order to avoid «reinventing the wheel».

However, if R&D remains important, a lot of project promoters ask that more attention be paid to socio-economics impacts/issues, user targeted applications and practical every day ICT usage. In other words, "more content and less techno/hardware or scientific research".

Creating a favourable business environment for IS projects also requires tuning the regulatory framework, with a combination of objectives :

• first, that regulatory constraints do not constitute an obstacle to the development of initiatives,
• but second, that regulation allows the protection of privacy,
• all dedicated action taking place in the context of international and Community guidelines.

An impressive number of laws and decrees have been adopted in 1996 and 1997:

• there are the «Big laws» which replace previous telecom legislation, for example in Austria, Germany, Finland or France: general objectives are to create a modern telecom infrastructure, secure a «level playing field» on all telecommunication markets, improve the position of alternative networks operators, provide nation-wide universal service, protect the final user from the possible abuse of market power, etc. In order to regulate this sector, a number of countries have created new dedicated and independent regulation authorities.
• there are also a number of «sectoral laws» or rules which are directly or indirecly related to telecommunications and IS, such as: Cable TV Act, Copyright Act, Consumer Protection Act, Personal data file Act, Criminal law
• other rules are currently being prepared, especially concerning electronic commerce, dealing with digital signature, electronic identification, money and transactions, or else concerning portability of numbers.

In summary, there is a major deregulation activity taking place, competition being a «guiding star», but also an important trend towards re-regulation, consumer protection being a «safeguard».

The next key-element concerns incentive action targeted directly at potential project promoters. These actions will be of a financial nature or of another type.

In fact, most projects included in the ESIS database receive public funding. Two-thirds of the projects present in the ESIS inventory have received funding from local/regional authorities or from the national government. A high proportion (37%) is also funded by the European Commission. Therefore, these figures reinforce the profile of a public encouraged information society.

As concerns projects cofinanced the European Commission, it is interesting to note that when one compares the statistics on the subset of projects cofinanced by the Commission and the subset of non EU-funded projects , it appears that two «less favoured sectors», i.e. transports/environmental and manufacturing application areas, are better represented among EU funded projects. In other words, the Commission is playing a balancing role in favour of the less spontaneously active sectors.

In short, IS projects need external money and public authorities play and will play a determining role.

The ESIS contractors have identified 127 calls for tender, calls for projects and various proposals aiming at stimulating the creation of new IS projects.

The great majority of these calls are launched at a national level. At the regional level can be found 17% of the calls for projects and some calls are launched at the scale of a province or a city. Only 5% of the calls have been launched at the international level is concerned, but it should be noted in that respect that it has not been a task of ESIS so far to include all calls launched by the Commission.

ESIS has surveyed other types of incentives:

• competitive awards: for example, the Austrian «Prix MultimediaArt» for online and offline multimedia productions, IS creativity Awards in the UK ; in the same spirit, launch of Contests for ideas, such as «Founder contest Multimedia» in Germany, etc Challenges and contests seem to have a significant impact on the emergence of projects as the success of the Bangemann challenge has shown. As a matter of fact, many respondents have suggested to launch a Bangemann challenge for middle and smalls towns and also to launch a challenge for teledemocracy projects.
• supply of dedicated expertise: Creation of expertise centres in order to encourage SMEs, by offering services, help-desk, training, coordination between companies and service providers, such as the Local support centres in the UK); or grants to help SMEs needing consulting services in ICT and applications.
• creation of start-up funds and development of venture capital companies: Action aimed at specifically helping SMEs specialising in multimedia, educational tools, etc. (France with the Government Action plan for ICTs development for high tech companies with 150 MECU)
• sponsorship by major companies: sponsorship by hardware manufacturers, software companies or telecom companies, in the framework of wide partnership with public authorities, in order to equip schools with PCs and Internet for example, or to help SMEs with skills or equipment.

The last key element is to create a favourable environment for the development of new partnerships, in particular of the public/private kind, and the development of networking between actors.

In this respect, the ESIS findings show that the Chambers of commerce and the professional and sectoral associations, although representing key potential partners for both public authorities and companies, still play a limited role: only 7% of projects are coordinated by chambers of commerce/industry and professional associations.

It also appears that the links between projects are still limited. Most projects are isolated whereas more co-operation would possibly facilitate the emergence of new projects.

To conclude, let us mention the fact that few projects are developed at the transregional level.

In fact, half of the projects are being developed at either local or regional level

There are only 17% projects which are developed at transregional level, resulting from a transregional cooperation between organisations, be they cross-border or even wider. As will be appreciated, many of these projects are actually co-financed by the Commission.