Collaboration on Global Technical Standards: European Community Telecom Standardization and HDTV
By Frances Forde Plude and Boonchai Hongcharu
In October, 1991, the world watched another wall crumble as Israel and her Arab neighbors began the lengthy and painful negotiations for stability in their area. At exactly the same time, somewhat overshadowed by Middle East peace talks, a new world vision in Europe took a dramatic leap forward as the European Union (EU) and the seven nations of the European Free Trade Association (Efta) reached an historic agreement. One European newspaper noted that this is "a likely blueprint for expanding united Europe's frontiers to bring in Eastern Europe and at least parts of the Soviet Union." ("Deal starts rush to join European superpower," The European, October 25-31, 1991)
The EU/Efta agreement will create the largest, richest free trade zone, with a domestic market larger than the US or Japan -- accounting for more than 43 per cent of world trade.
These headlines echoed the comments of a Moscow University communications colleague who said to us recently that she expects to see "A United States of Europe."
This paper reports on two research projects examining several major components of this new mediated world order:
the collaborative structures of the EU;
technical standardization as a cornerstone of a collaborative telecom market in Europe; and
the advantages of similar standardization in high definition television (HDTV)
One author heads a research project which has interviewed telecommunications ministry and corporate officials in all twelve EU nations, exploring with them the mechanisms that promote collaboration in telecom markets. The second author reports on a survey to probe many aspects of high definition television, including the possibility of international cooperation on the HDTV production standard.
The Telecommunications Market
Michael Kennedy, an Arthur D. Little consultant, says corporate voice, data and teleconferencing traffic volume between countries is growing at an annual rate of 15% to 20%. "From $5 billion this year, international revenues from corporate traffic will grow by at least 12% annually, to $8 billion by 1995." By the end of this decade Kennedy expects such revenue to rise to $14 billion, out of a total world communications market of $750 billion. ("Spanning the Globe," Wall Street Journal, Oct. 4, 1991).
Figures like these led the European Union strategists to establish a special directorate in Brussels to coordinate telecom planning. Some EU staff in Brussels expect the telecommunications sector to provide 12% of the gross national product of the EC and to employ 61% of the EC workers.
These numbers could become even more dramatic if the under-developed telecom markets of Eastern Europe and the Soviet Union become part of the unified market of the EU. Germany is already moving to privatize 49% of its Telecom structure to provide capital for the vast communications investment in its eastern sector.
Headlines indicate the many collaborative (joint) ventures underway (Telecommunications Reports International, October 18, 1991):
"U S West, France Telecom Form U.S. Videotext Venture"
"Ameritech, France Telecom Join Polish PTT in Venture"
"European Carriers, AT&T Plan TransAtlantic Fiber System"
Clearly collaboration is in the air in Europe. And American firms and policymakers face new challenges (and unique opportunities) in forging collaborative structures and, indeed, institutionalizing policies of collaboration that will help to keep America competitive. One article urges: "Collaborate With Your Competitors and Win." (Harvard Business Review, January-February, 1989).
Research Designs
Each of the authors is associated with a different research project, but both studies examine the role of collaborative efforts in the communications sector. A portion of each study looks at the role of technical standards as a cornerstone of market growth and an example of collaborative efforts.
These selected research results are reported below. The premise is that guidelines discovered in the European Union study can be helpful in the difficult challenge of negotiating a world standard for HDTV. Even if a single HDTV global standard is not achieved, it is beneficial to minimize the number of different standards agreed upon.
The European Union study involves personal interviews with Telecom Ministry officials and some corporate leaders in all twelve EU nations. Over sixty hours of interviews were recorded on-site during March, April and May, 1991. Interviews were conducted in: Bonn, Berlin, London, Paris, Rome, Athens, Dublin, Copenhagen, Madrid, Lisbon, Den Haag, Brussels, and Luxembourg. These EU nations represent a population of 324 million, one of the largest consumer bases in the world.
Extensive interviews were also conducted with EU staff in Brussels. Officials at both DGXIII and DGIV (telecommunications and monopoly directorates) were interviewed.
In addition, interviews were conducted at three United Nations sites: the Peace Palace at The Hague; the communications department at UNESCO headquarters in Paris; and the International Telecommunications Union in Geneva.
A uniform format was used in structuring all interviews; the focus of interview questions and discussion was primarily the efforts underway to build collaborative structures among EU nations in the telecom arena. Both government policy and corporate activities were examined from the perspective of collaborative activity and institutionalized mechanisms to facilitate cooperation.
At all sites the individuals interviewed were notified that the research project plans to host a conference in Washington DC in order to aid American policymakers and corporate leaders to assess the significance of collaboration as a strategic planning tool in its telecommunications sector. Individuals were also invited to name associates whose input would be valuable to the study so follow-up contact can be made with this wider circle of individuals, thus providing additional insights.
A small Newsletter was mailed back to participants in Europe periodically -- to keep them informed about the project's development and to provide continuing opportunities for feedback from all those interviewed. Thus, nodes in this EU telecom network were established by the research project and continued to be nurtured by it. Several EU individuals expressed interest in participating in the Washington policy conference.
The Principal Investigator also visited Prague, interviewing the Deputy Minister of Telecommunications there, so the research project would have an established base in Eastern Europe. Hopefully a Czech representative will be able to attend the Washington Conference, further cementing collaboration between American telecom interests and the developing economies of Central Europe. Although the Soviet Union was not visited, a Moscow representative has indicated to the Principal Investigator that there would be a great deal of interest in having Soviet representation at the Conference also.
Much valuable data emerged from the interviews. This paper deals with one theme only: the collaborative techniques involved in setting unified telecom technical standards in the EU.
These ideas are presented here in conjunction with a research project of the second author, dealing with HDTV (including its technical standards issue).
In this second study, one thousand subjects were randomly selected from the mailing list of Video Systems magazine, a monthly journal of the video production industry. With nearly 40,000 subscribers and regular coverage of HDTV issues, the magazine's mailing list provided a reliable pool of nation-wide HDTV interests.
The mail survey probed general HDTV issues in various arenas: technology; government policy; markets; and collaboration among government agencies and industry. The survey data used here are only those that refer to the international production standard of HDTV. In the study, the subjects were asked to rate statements on a scale of 1-5 where 1 was "strongly agree," 2 "agree," 3 "no opinion," 4 "disagree," and 5 "strongly disagree." A total of 351 respondents (35.1%) returned the survey. A summary of survey results was sent to the respondents who asked for it.
"The European Community is a Process Not a Date"
The above statement, heard often in Europe, signifies that the construction of a common conceptual framework and a unified market is a process that will continue long after January 1, 1993 -- the actual date established for the EU's birth. A few thoughts about the EU vision should precede our review of guidelines for one specific corner of that vision -- technical standardization.
Telecommunications in Europe is a compilation by staff of the Telecommunications Directorate in the EU Commission in Brussels (Ungerer, 1990).
It is important to begin with an overview of the varied relationships among telecommunication technologies and users.
Another way of viewing advanced communications is to reflect on applications of the technologies. This view, from the RACE Workplan II document, views generic applications of advanced communications, along with both business sectors and business functions.
Armed with conceptual "maps" of the telecommunications sector, we can now review the vision of a united European economy, the role of technical standards in that economy, and the strategies employed by the EC to obtain standardization.
The European Union Vision
A series of research studies document the cost of "non-Europe" (or the price Europe would pay if the nations did not form a unified market). These data on the economics of integration cover arenas such as public sector procurement, business services, financial services, and the internal market for telecommunication services and equipment.
During the seventies, as telephone use expanded throughout the world and as the stage was set for communications/computer integration, the build-up of the telephone network was directed within individual European countries by the powerful PTTs -- national ministries directing post and telecommunication services. Planning was, thus, concentrated on each national market.
Several factors emerged which made this model impractical. A basic change was the move to digital transmission and the emergence of packet-switched public data networks. These network switching systems transmit in bursts (packets) of data, routing the traffic along pathways that are determined by the most economic use of free network capacity. This breakthrough in efficiency and economy is especially apparent over long distances, thus demonstrating the value of trans-border communications in Europe.
EU planners became aware quickly that a collection of individual national systems that could not interconnect easily would severely impede growth of a European Union information society. Wide variations in tariffs among European nations also threatened telecom growth in Europe preventing these nations from being competitive in a world market.
Similar "non-Europe" costs apply to other services and policies in telecommunications: videotext (like the French Teletel/Minitel); mobile communications; deregulation in the U.S. and Japan; the high cost of new-technology R & D; and the need for data protection, to name just a few.
By 1984 the European Commission put forward an action program for telecommunications. This included the creation of an EU market for telecom equipment and terminals (with a standardization policy, procedures for terminal type approval, and the opening of access to public telecom contracts). Also included were plans for improving the development of advanced telecommunications services and networks, more assistance and access for less favored regions of the EU, and better coordination of the international organizations dealing with telecommunications.
Future developments in telecommunications (and in the EU) include moving toward broadband communication "highways" that will allow voice, data, text and video communications to be integrated in digital networks. Here, too, standardization of the technology is vital and the development of the service market will help to keep the EU competitive in financial and data services, facsimile, call-waiting, audio conferencing, and image transmission, to name just a few.
Strategies for Standardization
Analysis of data in our Telecommunications Research Project, along with economic analysis currently available on the EU, indicate that five collaborative strategies are crucial in orchestrating technical standards cooperation among member nations of the Community. These strategies are discussed here in the hope that American policymakers and corporate players will absorb any appropriate lessons. The concepts also provide a context for the reflections below on the HDTV international standard challenge.
The first strategic issue is, quite simply, to recognize that "standards are the cornerstone." Ungerer cites the significance of the EU's standardization policy: it insures the integrity of the telecom infrastructure; it insures an open competitive market, and it promotes future inter-operability of telecom services (Ungerer, 1990). Quite clearly, differing technical standards fragment the market.
In our interview one ministry official explained how it worked before:
The network operators sort of got together and decided what standards were needed to support their business activities... but what it didn't do was do anything very quickly; the results were not binding, although they were probably to a large extent taken account of. Also, as the pace of change in technology speeded up, this mechanism was not able to keep up with it. Things were moving quickly and the standardization was beginning to splinter and markets were beginning to do things that weren't covered by European standards and the goal of the single European market was beginning to drift...
Clearly a critical strategy is to recognize the problem and see the possibility of collaboration in the standardization area.
A second move is to identify the key players (individually, nationally, and institutionally) who will play a major role in a technical standardization strategy.
One official who works primarily in the standardization area noted during his interview:
The European Commission came up with this idea to have a Standards Institute within the legal framework of the Union to deal with standards for telecommunications because telecommunications was seen as a priority area for the development of the single market... The European Telecommunications Standards Institute (ETSI) was established within the proper framework and it is a fully recognized body.
He continued:
ETSI is every economic player in telecommunications, coming from six categories: administrations; operators; manufacturers; users; service associations; and consultants. So that's all the economic players. In Europe consultants are important players in telecoms. All are able to go to any meeting -- a meeting determining high policy or one that is determining exactly where the stops go on the first draft of the most trivial document. And everything in between.
And he concluded:
This has completely changed the field of standards activity which used to be so cumbersome. I can remember when standards seemed the dead hand of regulation. It isn't like that now; standards now seem the key to opening up markets, the key to progress. The economic players are actually deciding what goes in and are putting their own resources in where they see it's a good idea to do it.
A third standardization strategy is to recognize the impact of long-term research and development planning. Here the European Union has demonstrated coordinated initiative in funding and conceptualizing R&D.
In June, 1987, the Commission of the European Union members issued its Green Paper on telecommunications. In this significant document the Commission refers to the realization of "a European Research and Technology Community" and it identifies research and technological development (R&TD) policy as critical to the development of telecommunications infrastructure and the advanced services necessary for attaining the objective of the internal market. The budget approved by the Council framework foresees "the allocation of 40% of total R&D expenditure to R&D in information technology and telecommunications.
A major thrust of R&D is the RACE program (Research and Development in Advanced Communications Technologies for Europe).
Ungerer cites two goals for RACE:
(i) to achieve the necessary Europe-wide agreement on fully-defined future broadband services, interfaces and network concepts; and
(ii) to mobilize, on the basis of Europe-wide collaboration between telecommunications firms and network operators, the enormous R&D resources necessary.
Another major R&D thrust is ESPRIT (the European Strategic Programme for Research and Development in Information Technology). "In the current first phase, more than 200 projects on advanced information technology are being carried out on a shared-cost basis, by transnational consortia of industrial enterprises, research laboratories and universities," according to Ungerer.
Virtually every minister or corporate official interviewed in our project referred, without any prodding, to the research and development projects underway in the EU. All see such projects as significant collaborative incentives as governments and industries move toward the vision of a single market in telecommunications.
An interesting concept mentioned was "precompetitive R&D." This refers to the long-range R&D projects allowing competitors to collaborate on research which -- when the products reach the manufacturing stage -- will become competitive once again. One official noted in his interview: "Collaboration and competition can be considered two sides of one coin."
Another strategy in the "harmonization" process in Europe is the series of "papers" issued by the Commission. The Green Paper was issued in June 1987 and calls for more competition in a Europe-wide market to develop the full potential of telecommunications. The Green Paper "pleads for strict requirements for standards for network infrastructure and major service providers to ensure EU-wide inter-operability and emphasizes the central role which the Commission allocates to standards, in order to guarantee a Europe-wide market and European inter-operability of services" (Ungerer, 1990).
However, the Green Paper (and other papers) represent much more than stated policies; they represent a process, and this is the fifth strategy that is critical in harmonizing technical standards and market policies. Before the principles appear in a Green Paper there are many, many consultations across many, many interest groups. Concepts and proposals are massaged, groups are listened to, and forums are coordinated. One Brussels official told us: "A major part of our work is to keep reminding people in these meetings of the vision -- a united Europe."
When the Green Paper appears, therefore, there are not too many surprises because much consultation has preceded it. The final decisions rest with Commission of the European communities and papers issued by the Commission are intended to continue the momentum and the debate of the harmonization process. One official told us that people will often ask: "When are you going to issue another paper to guide us?"
A final strategy in standardization to be mentioned here is the issue of accountability. The Commission has intervened when it determines that a country's action violates EU provisions. Such action can be challenged by individual countries before the European Court of Justice. Community case-law (for example a British Telecom judgment) seems to indicate that the Court would favor a narrow interpretation of monopoly rights.
There are five strategies for technical standardization that have been summarized here from our interview data:
to recognize the importance of technical standardization as a "cornerstone" of telecommunications growth;
to identify and coordinate major players;
to coordinate and fund long-range research and development projects which bring eventual competitors together to collaborate on precompetitive R&D;
to issue a series of "papers" representing consensual processing of policies; and
to have a system of accountability so parties (corporate and governmental) can be challenged if they do not cooperate
With these guidelines and the European Union experience in view, it is interesting to examine our second technical standards challenge: HDTV.
International Technical Standardization: HDTV
The problem of incompatibility of television standards has been a major concern for television and motion picture engineers, program producers and distributors and equipment manufacturers since the introduction of color television. The opportunity for a single world standard for television has returned with the invention of high definition television (HDTV).
High definition television is a new generation of television which promises high visual and audio quality, and increased width-to-height aspect ratio. The development of HDTV would require a complete change of television related products from production equipment to TV sets and home videocassette recorders.
The concern for a single world production standard began when the Japanese submitted a proposal to adopt its system as the world standard. The Japanese HDTV standard has 1,125 lines and 60 Hz field rate with the width-to-height aspect ratio of 16:9.
European nations then formed a consortium called Eureka-95 to propose a production standard that is more suitable to the 50Hz field rate currently in use for their television system. The European HDTV system doubled its PAL system of 625 lines to 1,250 lines using 50 Hz field rate and an aspect ratio of 16:9.
Thus, the only two proposed international HDTV production standards are the Japanese 1,125/60 and European 1,250/50 systems.
While the Japanese and Europeans are testing their HDTV transmission via satellites, proponents in the U.S. have advanced HDTV with the application of digital technology to their system. Digital technology provides a linkage between computer and communications technologies in HDTV. This provides a further step toward convergence of communications technologies: computer, cable, telephone, satellites and TV could be linked with one another.
The Significance of an International Production Standard
In the international arena, a production standard for HDTV is more significant than a transmission standard, because the production standard determines the design of production equipment and program material; it also affects the manufacture of production equipment and the distribution of television programs worldwide. It is likely that the transmission standard will follow the adopted production standard. (Iredale, 1989)
At present, there is no single world production standard. The exchange and distribution of television programs around the world uses the 35mm film format which is then converted to one of the three major television transmission standards. The three standards are NTSC, with 525 lines and 59.94 Hz field rate, mainly used in the Americas and the Far East; PAL, with 625 lines and 50 Hz field rate, mainly used in Europe, most of Asia and Africa; and SECAM, with 625 lines and 60 Hz field rate, used in France and Soviet Union.
The three different standards have caused many problems in program exchange and billions of dollars must be spent in program and equipment conversion. Cooperation already exists among European nations, and American corporate partners have collaborated in developing HDTV systems. It is worthwhile to investigate the possibility of further collaboration at the international level.
Although the International Radio Consultative Committee (CCIR) meeting in 1986 called for a study of a single world production standard for HDTV, there have been few developments toward reaching an agreement. It is widely believed that a worldwide production standard will not be reached. However, the CCIR was able to agree on the aspect ratio of 16:9 (SMPTE '89: HDTV and beyond, October 30, 1989) and colorimetry which sets the parameters for color reproduction. (Agreement reached on colorimetry for HDTV, April 2, 1990) Therefore, the only two differences remaining between Japanese and European HDTV standards are the scanning lines and the field rates.
Two alternatives that might help the two standards to reach more agreement are: the "common image" format on which the number of scanning lines can be agreed: and the "common data rate" format in which the rate information will be set digitally the same in all equipment. (Special Report, October 15, 1990) The real problem of the international production standard is the field rate which is set according to the electrical system in each part of the world. It is obvious here that the lack of cooperation in a system at any point in history can mean a loss as future developments occur.
The U.S. did not play an important role in the past CCIR meetings, partly because the development of U.S. HDTV systems had not begun and partly because there was a conflict among the responsibilities between the National Telecommunications and Information Administration (NTIA) and the State Department in representing the U.S. in the CCIR. However, the participation of the U.S. in setting the international production standard is inevitable, considering that the U.S. is the largest distributor of television and motion picture programs in the world.
The research project described above investigated the opinion of personnel in the U.S. telecommunications industries on the international production standard, the participation of the U.S. in the CCIR and the collaboration between Japan, Europe and the U.S. in setting an international production standard for HDTV.
International Collaboration Results
Most of the respondents agreed (mean = 2.63, mode = 2) that a worldwide HDTV production standard will not be settled. However, they agreed that the U.S. should participate more in setting an international HDTV production standard (mean = 1.61, mode = 1), and that Japan, Europe and the U.S. should collaborate more in setting a worldwide production standard (mean = 1.47, mode = 1).
-------------------------------------------------------------
INTERNATIONAL COLLABORATION (N) Mean Mode S.D.
(1=strongly agree, 5=strongly disagree)
-------------------------------------------------------------
A worldwide HDTV production (348) 2.63 2 1.17
standard will not be settled.
The U.S. should participate more in (351) 1.61 1 0.82
setting an international HDTV production
standard.
Japan, Europe and the U.S. should be more (351) 1.47 1 0.82
collaborative in setting a worldwide HDTV
production standard.
------------------------------------------------------------
Respondents seemed to agree that a worldwide HDTV production standard will probably not be settled. At present, there is almost no cooperative effort by the CCIR to establish the international standard. The differences of scanning lines and field rates for the two proposed standards are still unresolved. The respondents indicated the seriousness of the problem of standardization if the CCIR participants do not work together to reach the agreement.
Nevertheless, the respondents agreed that the U.S. should participate more in setting an international HDTV production standard. Representative Edward Markey (D-MA), Chairman of the House Telecommunications Subcommittee, planned to introduce a bill that would transfer the responsibility for negotiating the international production standard of HDTV from the State Department to the National Telecommunications and Information Agency (NTIA). This would enable NTIA to have a leading role in this policy development. (Telecomsubcom clarification, March 26, 1990) This factor may have prompted the respondents' attention to the U.S role in establishing an international production standard. In addition, the leading edge of the U.S. on digital technology would be able to revolutionize the development of the international production standard. The U.S. participation may help the CCIR to reach an agreement on this issue.
There was strong agreement on the collaboration issue. Respondents felt that Japan, Europe and the U.S. should collaborate more in setting a worldwide production standard. One of the reasons this international collaboration is so essential is that as the predominant participants in the current HDTV development, Japan, Europe and the United States, could work together during this time to eliminate the problem of different international production standards for HDTV in the future.
It should be noted that the respondents agreed with both items concerning the collaboration for a single world production standard: more participation by the U.S. and collaboration between Japan, Europe and the U.S. This implies that the respondents felt that the doors of collaboration on this matter are still wide open and each nation should collaborate more. The television and motion picture engineers around the world have been plagued with the problems of incompatibility of color television and the high cost of system conversion for decades. They hope that HDTV will provide the opportunity to solve these problems and to settle on a single world production standard as a base for development in this area.
The five strategies mentioned above to encourage standardization in the European Union would also seem to fit aspects of the HDTV standardization problem. First, the survey of telecommunications personnel in the U.S. indicated the respondents recognized the need for more collaboration in reaching an agreement on the international HDTV production standard. So they clearly recognize that "standards are a cornerstone."
The second strategy, identifying and coordinating major players seems to apply to HDTV also. The U.S. has a totally competitive economic system and this makes it somewhat uneasy for government and industry to cooperate closely. However, it would be helpful if the government would coordinate resources of its agencies in representing the U.S. industries for international standardization. Cooperation between government and corporate sectors seems inevitable: corporations own digital technology and the government should be able to represent the need of the industries in the international arena.
The third strategy relates to long-range R&D projects. The problem of technology is usually a major obstacle for standardization. However, competitors can work together in the precompetitive research and development stage to solve many problems. Long-range R&D projects for an international production standard among Japan, Europe and the U.S. might have facilitated the establishment of an international production standard for HDTV. This could save billions of dollars in conversion costs.
The fourth strategy is the use of forums and official "papers" representing consensual processing of policies. In HDTV standardization, we can see several levels of cooperation: Japan has a national mechanism for government-industry assistance; Europe exemplifies regional cooperation by the Eureka-95 project for European HDTV development. However, there is no genuine international forum for HDTV standard-setting. Presently the U.S. seems to be leapfrogging with digital HDTV technology. Lack of a legitimate forum for technical potential seems costly.
Finally, there is the strategy of accountability. Such accountability on a national or regional level strengthens the collaborative process. However, there are only limited attempts to institutionalize such a system on the international level (for standards) despite the fact that international cooperation for the HDTV production standard would result in a long-term benefit for all participants. To prevent technical impasses, some systems of accountability ought to be institutionalized.
Conclusion
Two different research studies described here are tracking the potential for collaborative efforts in telecommunications. Technologies are changing so rapidly and the entrepreneurial opportunities are vast. The competition from regional markets like the European Union or strong competitors like Japan might seem to indicate that a "protectionist" stance would be helpful. However, as walls fall down throughout the world, and as management experts speak of more participative forums, global mechanisms for collaborative strategies probably represent the most practical approach to meeting the extraordinary challenges we face in the telecommunications sector.
Specific strategies examined here seem to be working well in the European Union. These concepts may well help us meet the challenge of high definition television -- through collaborative strategic planning.
References
Agreement reached on colorimetry for HDTV (1990, April 2). Broadcasting p. 145
Commission of the European Communities (1990) Research and Development in Advanced Communications Technologies in Europe, RACE II Workplan
Commission of the European Communities (1990, November 20) Towards Europe-wide systems and services - Green Paper on a common approach in the field of satellite communications in the European Community
Hamel, Gary. “Collaborate with Your Competitors and Win”, Harvard Business Review (1989, January-February)
Iredale R.J. (1989). HD-PRO: A new global high-definition video production format, SMPTE Journal pp. 439-443
Keller, John J. (1991, October 4) Spanning the Globe The Wall Street Journal p R1
SMPTE '89: HDTV and beyond (1989, October 30). Broadcasting pp. 49-52
Special Report, State of the Art: Television Technology (1990, October 15) Broadcasting pp. 42-52
Telecomsubcom clarification (1990, March 26) Broadcasting p. 128
Ungerer, Herbert (1990). Telecommunications in Europe. Brussels: European Perspectives
Walker, Lucy. (1991, October 25-31) Deal starts rush to join European superpower The European p. 1