DRBC 2: Vienna, December 8, 9 and 10, 1999

DRBC 2 Results

Working Group 1: High Tech/Infrastructure

Conclusions

High Performance Infrastructure - The Foundation for High-Tech Industries Supporting Economic Growth and Prosperity

The role of infrastructure and the high-tech sector for economic prosperity is well understood. Business and households need a reliable and high-performing infrastructure that allows good quality Services. Deficits in infrastructure Services, particularly in the telecommunications and energy sector have adverse short and long term effects on economic development, particularly because of their central role in connecting people, markets and institutions.

The main problem in the countries represented at this Conference remains the lack of adequate infrastructure. While some areas, notably GSM telephone Services, have enjoyed spectacular investment and tremendous improvements, the Overall level of service continues to lag behind international Standards with regard to service availability, quality of service, technical reliability, customer service as well as environmental sustainability. It has become clear that the public sector is not in a position to overcome these shortcomings or cope with the demands of rapid technological change.

The changes necessary are twofold: First, privatisation of Services to alleviate the restrictions of limited public budgets and the limited ability to take up capital for infrastructure investment. Secondly, transition to fair regulation so the benefits of competition can be realised for consumers, business, and infrastructure service providers.

This demands rules stable enough to encourage private enterprise and flexible enough to adapt to changing market conditions. These rules must strike a balance between the new entrant's need for fair competitive terms and restructuring incumbents while at the same time not unnecessarily destroying their assets and market. In this context the regulatory environment for telecom, energy and transportation infrastructure and the general terms for direct investment are crucial. Even more so because the financial requirements are huge and the times to reach a break-even are long.

While the price for telecom and energy Service traditionally has been politically sensitive, governments must ensure that prices adequately cover costs. Investors must be able to calculate risks and must have the widest possible liberty to allocate funds where they deem necessary. Interference, in the form of restrictions on international activity, unbalanced licence obligations, undue delay in enforcing legal Claims or in other ways, dries up funds for Operation, maintenance, as well as future Investment and ultimately undermine Service and growth.

With regard to high-tech industries the Working Group established that access to knowledge and information media, training, state-of-the-art technology and international industrial partnerships makes a world of difference in bringing the countries of the Danube Region closer together and integrating their economies.

Recommendations

To establish fair, predictable, enforceable and efficient terms for infrastructure investment that encourage long-term private investment in the telecommunication and energy sector, allow maximum entrepreneurial flexibility, and keep regulations to a necessary minimum.
To encourage an entrepreneurial and customer focused spirit among regulators and infrastructure providers, and to demonstrate a public commitment towards the use of information technology as a tool for international Integration.
To foster access to knowledge and information media for business use and to support the use of state-of-the-art technology and to encourage the establishment of industrial partnerships based on an exchange of know-how, market expertise and the sharing of production capabilities.
To encourage and promote the transnational exchange of personnel and to promote participation in international research programs.
To identify short and long-term infrastructure needs in a dialogue with the business Community and to establish favourable conditions for fulfilling identified needs.