Technical Static Adds Fuzz to Europe’s Telecom Networks : Communications: Hurdles are many--everything from developing standards to differing electric plugs--in move to link the many countries.

With today’s modems and telephone networks, sending data via telephone from a conference in Germany to your London office should be child’s play, right?

Wrong.

Electric plugs differ from place to place. So do telephone connectors, dial tones and the latest transmission standards. As business travelers can attest, a thicket of technical, regulatory and other hurdles must be cleared before Europe becomes a “plug-and-play” $160-billion telecommunications market, as promised, by 1998.

It will have to be in place before doctors in Belgium and Germany can confer about a heart patient while looking at the same on-line X-ray, or school students in Britain can download images of the deforestation around the Aswan dam in Egypt from France’s Spot Image satellite system.

“We cannot have borders anymore, neither in the business environment nor in technology,” said Volker Jung, a management board member at Siemens AG, the German electronics concern.

Linking Europe with technologies that speak the same language has a multibillion-dollar price tag. Standardizing plugs, sockets and such minor equipment alone will cost about $4.5 billion, estimates Ronnie Dallal, an analyst with BIS Strategic Decisions of Luton, England, a technology-market research firm.

Problems with standards abound in Europe. There are no standards, for example, on ATM--asynchronous transfer mode--an emerging technology to shuttle video and data streams on phone lines at high speed. It isn’t clear how ATM switches will talk to each other when routing calls across Europe.

Some multinational companies are moving vast amounts of data and images on dedicated high-volume communications lines, but at great expense. For the most part, the seamless network “hasn’t happened yet,” said Neil Barton, a Merrill Lynch analyst in London.

That’s partly because there are cheaper alternatives, such as faxes, analysts said. Inter-company faxes account for more than 67% of the faxes sent, according to BIS.

Even though European telephone markets are scheduled to open to outside competition Jan. 1, 1998, telephone companies, most state-owned, consider “each other as each other’s potential worst enemy,” said Bernt Ostergaard, an Denmark-based analyst with Meta Group, a market research firm.

“They’ve become more secretive and less open about specifications and details on what (ATM standards) they’ll plan on using,” he said.

The European Union’s communication committee met in Corfu in June to devise a plan to create what it called the information society in Europe. A workshop in November focused on consensual standards, which is expected to initiate action later this year. The going’s been very slow, though.

The technical difficulties and disputes over standards are slowing creation of products.

“European industry has not grasped that throwing out money to those (technologies) that have not been successful is not the way to go,” said Jorma Ollila, chairman of Nokia AB, the Finnish telecommunications company.

That may leave Europeans with de facto standards foisted on them from the United States.

“Europeans are much more careful about the introduction of a new technology,” Siemens’ Jung said. “Europeans take too much time for standards; Americans build defective standards and then we’re all stuck with them.”

Some people worry that U.S. technology powerhouses such as Microsoft Corp. may dominate the world market for services as they did with the personal computer market. Microsoft’s operating system is the language of more than 80% of the world’s PCs.

Already, technology for moving data using ATM on local area networks (LANs)--which are within national borders--”is all American,” Ostergaard said.

With multimedia programs and data traffic poised to soar--by about 1999, there’s going to be as much data traffic as voice traffic on phone lines--fixing an ATM standard in Europe is crucial. Still, the standards issue is unlikely to be resolved before 1999, Ostergaard said.

As a result, equipment makers have become standard-setters.

With no clear messages from telephone operators, equipment makers--France’s Alcatel Althsom SA, Sweden’s Ericsson AB, Siemens, the U.S.’s AT&T; Corp. and Japan’s NTT Corp.--are investing in switches of multiple configurations. They hope one of them will be the standard, analysts said.

“Equipment makers have to go by the best guesstimate,” Ostergaard said. That increased investment costs, and hurt profits.

The European triumph in standard creation has been GSM, or global system for mobile technologies, which is a Europe-wide standard for mobile-phone technology. GSM is an example of the concerted effort by Europeans that’s slowly emerging as the world mobile communications standard.

Other problems stem from the two-speed embracing of new technologies. For sending data in addition to voice on telephone lines, some countries use older technology, while others have graduated to newer ones. That makes some basic services across borders difficult.

“Conflicting and competing technologies aren’t really an issue,” said Trevor Brignall, senior partner at BIS. “The issue is that some countries will be using new technologies while the others will be with older technologies.”

Nowhere is that more prevalent than in Eastern Europe, where telephone plugs can vary from apartment to apartment in the same building.

Governments across the former East bloc are trying to introduce modern services, but the more pressing issue of installing fixed telephone lines and setting up public telephone booths has taken precedence.

Regulations in many European countries keep phone tariffs high, putting several new services beyond the reach of most people, and stifle development of technologies and companies. Other regulations shut out technologies and products in some countries.

France’s Groupe Bull’s Zenith Data System unit, for example, sells an electronic note pad to link office workers by radio to their personal computer files in another part of the building. The system is sold in the United States but not in France. The French military predominantly controls radio frequencies, making the product unsalable in France.

“The breakup of AT&T; started up an enormous spectrum of new companies in the” United States, said Terry Matthews, chairman of Newbridge Networks, a Canadian equipment company. “That just does not happen in Europe.”

Seven local operating companies were hived off AT&T;, each spending $2 billion a year on equipment. This has spawned the formation of many small but very profitable suppliers.

Europe has a long way to go before that starts to happen.