Bridging the Transatlantic Digital Divide

In early December 2000, a French judge agreed with a citizens’ group, and against the US based search engine company YAHOO, that the state had a legitimate right to restrict access to web sites with “objectionable” content. This decision raised howls among advocates of free speech in the United States, suggesting a transatlantic gap over this internet-related issue. But the problems between the United States and France, and by extension the European Union, go far deeper, and have created a veritable digital divide.

As the Internet becomes a global phenomenon, Europe and the United States are increasingly at odds over information policy. Recent clashes include European Union concerns over inadequate protection of data privacy by American corporations with respect to individuals, and recent French and German courts’ decisions in favor of civil society groups to restrict access by European surfers to American web sites. The new economy’s success in creating jobs and wealth in the United States is much envied in Europe. But it has been built on a uniquely American approach towards individual rights, entrepreneurship and social norms — a uniqueness that neither the United States government nor its firms sufficiently realize or appreciate, making clashes with Europe over information policy unnecessarily sharp.

Due to their lag in liberalizing domestic markets for information and communications technologies (ICT), and to stubbornly high telephone access charges, most European countries display a “digital deficit” compared to the United States and Canada, which is painfully clear in terms of internet penetration and usage by consumers and business. The permanence of this transatlantic digital divide — political, economic and commercial — will depend on the ability of European and American governments and firms to focus on shared principles and interests, and to build truly global partnerships in the information economy.

It is interesting to note that this digital divide is among the few topics that was left off the agenda of the EU-US summit held on December 18, 2000, in Washington, D.C. Middle East peace, the arms trade, and genetically modified foods were all discussed there — why not the digital issues that separate the sides? Such missed opportunities could have severe repercussions for the spread of the new economy among the industrial countries and, more poignantly, to the developing world. Many groups, such as the World Economic Forum, have spoken of a North-South digital divide, while others have mentioned the gap between the haves- and have-nots within industrial societies. But the transatlantic high-tech gap remains a taboo, as the two sides, locked in their doctrinaire reasoning, have failed to recognize the necessity of negotiation in the search for common ground.

In the new, information economy, internet access has become a key driver of economic performance. In fact, perhaps the most significant use of the internet from an economic standpoint is the one least visible to the public, and that is its role in business-to-business transactions. But the creation of an information economy begins at home and in schools, and here the difference between the United States and Europe is palpable. Whereas nearly one-half of North American homes are connected to the internet, the comparable figure is 15 percent in France and 22 percent in Germany. High connection costs to the local telephone network remain a significant barrier to greater internet use by Europeans, as the numbers make clear. Americans spend about 30 hours per month on-line; the French only 9 hours.

To be sure, linguistic and cultural factors are partly responsible for these differing approaches to the net; much of the information found on the web is still in English. But before stressing these sorts of factors, we should recall that the French were the pioneers of electronic commerce, placing the “Minitel” terminal in every French home, with which individuals now buy plane tickets, make theater reservations, and locate every manner of service. Why have the French been so slow to capitalize on that early Minitel advantage? One important reason emerges from the relationship between the internet (and the new economy more generally) and the “state” or central government. The decentralized nature of American political and economic power has been particularly conducive to many-but not all-of the technological, financial, and labor market developments associated with the new economy. The structure of American decision-making, which finds government actors in different states, in different branches (legislative, executive, judicial), and at different levels (federal, state) in competition with one another, provided a fertile environment for encouraging entrepreneurial activity in the IT sector, and for the subsequent diffusion of IT in both industry and the home.

The Minitel, in contrast, was the product of a public telephone monopoly, France Telecom, and the system remained closed. This made it secure from a transactions perspective, but limited as a platform for entrepreneurial activity. The internet adopted a different approach; it was decentralized from the outset, using an open architecture that made it ideal for new business development. Given that first mover advantage, France might have been home to the internet, but its dirigiste approach to technology policy precluded that development.

Where should the United States and Europe go from here? Bridging the transatlantic digital divide is crucial to both parties. The United States needs a dynamic Europe as an economic and security partner, and the last thing its companies (and its government) need are for European courts to block the use of emerging technologies. We perceive the internet as a wide open range, a common ground for the sharing of information, and European court actions represent efforts to fence-off that domain.

The forging of mutually beneficial policies will require a process of give-and-take on both sides, a process that has been largely absent from the political agenda in recent years, as the silence at the US-EU summit makes clear. Specifically, the Europeans must move boldly to promote greater internet access and use. Phone charges must be lowered, and competition among service providers encouraged. While all the legislation is in place at the European and international levels to promote such competition, especially for local telecommunications services, action is wanting as the public telephone monopolies seek to maintain their privileged position. France Telecom, for example, has simply refused to open its local loop network to competition, using the courts as a way of slowing down the liberalization process.

On the American side, it is imperative that the United States continue to demonstrate its openness to foreign investment in the information and communication industries. Recent efforts by the Congress to block such investment are contrary to the spirit of American commerce and, in many cases, the letter of international trade agreements. Indeed, just as the US Congress was threatening to halt European investment in the American telecommunications industry, the United States was calling upon Mexico to open up its markets to our firms! The United States must also endeavor to work with Europe on such issues as privacy and content. Agreements could be reached, for example, over the screening of racist and violent material, or a requirement that individuals who search for such material are, say, over 18 years of age. Similarly, the free flow of information about individuals across internet channels raises legitimate issues that should not be casually disregarded. Many Americans probably share these concerns. Seeking permission from individuals before personal information about them travels across electronic wires seems reasonable. With respect to information flows about individuals, and to objectionable content, the Europeans have shown their willingness to act decisively on behalf of citizens, and if the United States does not find common ground with the European Union then the internet will become increasingly Balkanized.

The European Union and the United States have a shared material and moral interest in advancing the new economy on the global plane. The problems that the two regions face pale in comparison with those facing billions of people around the world. America and Europe must work together to overcome that digital divide, but such action will require that we first overcome our own differences. It is likely that Europe will look particularly to French leadership on this issue, given the vociferousness of that country’s positions with respect to such issues as content and privacy. A bilateral US-French summit on information policy might be a good way of starting the process of resolving transatlantic differences.

Ethan B. Kapstein is Stassen Professor of International Peace at the University of Minnesota and Visiting Professor of Economic and Political Sciences at INSEAD; he is also a Visiting Scholar at the French Institute for International Relations (IFRI). He is the author, most recently, of Hegemony Wired: American Politics and the New Economy (Paris: IFRI, 2000).

Thomas Marten is Director of Government and Public Affairs at Worldcom France. A former foreign service officer with postings in Africa, Asia, and Western Europe, he is a specialist in telecommunications policy and the author of many articles on this topic.