Playing Internet Catch-up

As they grappled in Lisbon with an ambitious program to modernize Europe's economy, European Union leaders recognized the need to embrace the Internet. But does that mean pursuing a "distinctive European way" into the global information society, as the European Commission's Information Society Forum insisted, dedicated to the principles of "liberty, equality, fraternity, solidarity and sustainability?" Or should the U.S. model prevail, in which the creative chaos of the market carves out the road ahead?

One way or another, Europe better get into the fast lane soon. According to a Morgan Stanley Dean Witter survey, 51% of Americans will have access to the Internet by the end of the year as against only 23% of Europeans. And a new report from consultants Booz Allen & Hamilton states that Europe has been steadily losing worldwide production share in crucial areas like transmission and switching equipment and software over the last three years. The only significant exception is in mobile phones, dominated by market leaders Ericsson and Nokia. With 200 million people logging on to the Internet via mobile phones by 2003, Europe is well ahead of the U.S. in the growing mobile commerce sector. But in the booming e-commerce sector Europe is still in the starting blocks. "A lot has been achieved," says Mark Melford, a Booz Allen & Hamilton manager, "but it has not been enough to reverse Europe's decline."

European Commissioner Erkki Liikanen, the E.U.'s point man on information technology, takes little solace in another recent study that found 80% of European managers expect to use e-commerce intensively by 2004. That, he fears, is just not soon enough. "It is worrying that Europe is not taking up e-commerce even faster," he said recently. Liikanen hopes the bad news will spur member states to act on his ambitious "eEurope" initiative, which aims to have Internet access in all schools by the end of 2001 and in every classroom a year later. He also wants open competition for local broadband connections, cheaper Internet access and, most ambitiously, action this year on thorny legal issues such as where and how Internet transactions are taxed and, when they go awry, arbitrated.

Government leaders appeared to get the message, pledging to push those laws and to "work toward" greater competition in local access networks by the end of this year. As well as endorsing Liikanen's goal of getting schools online, they agreed to allow the Commission to set benchmarks to gauge the member states' progress on information technology against one another and the world. That will give Liikanen and the European Commission the crucial means to name and shame Internet stragglers. Indeed, the Lisbon pronouncement to move "as rapidly as possible" to foster "eEurope" suggested a dawning realization in national capitals that the "European way" to the knowledge economy won't be as equitable or virtuous as its leaders would like unless they first get Europeans plugged into the technology and innovative thinking that powers it.

With reporting by Jennifer L. Schenker/Paris

For more on the Internet in Europe, watch for TIME's e-Europe special report in June