Strategy and Policy for Trans-European Networks Debra Johnson and Colin Turner Strategy and Policy for Trans-European Networks This page intentionally left blank Strategy and Policy for Trans-European Networks Debra Johnson Senior Lecturer, Department of Marketing and Business Strategy, Hull University, UK Colin Turner Lecturer in International Business Strategy, Hull University, UK © D. Johnson, C. Turner 2007 Softcover reprint of the hardcover 1st edition 2007 978-1-4039-4283-8 All rights reserved. No reproduction, copying or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2007 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-52164-7 ISBN 978-0-230-21066-0 (eBook) DOI 10.1057/9780230210660 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources.Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Johnson, Debra, 1957- Strategy and policy for trans-European networks / Debra Johnson, Colin Turner. p. cm. Includes bibliographical references and index. 1. European cooperation. 2. Transportation–European Union countries– International cooperation. 3. Telecommunication–European Union countries–International cooperation. 4. Power resources–European Union countries–International cooperation. I. Turner, Colin, 1967- II. Title. JN30.J53 2007 388.094–dc22 2006051592 10 9 8 7 6 5 4 3 2 1 16 15 14 13 12 11 10 09 08 07 Contents List of Tables viii List of Graphs ix List of Figures x Preface xi Chapter 1 An Emerging Paradigm for Network Development 1 The emerging network economy and the internationalisation of infrastructure 3 Public policy and infrastructure 8 The shifting network environment: policy and corporate changes 13 A political economy framework for network development 17 Patterns of network development 20 Corporate 20 Control 21 Liberal 22 Strategic 23 Conclusion 25 Chapter 2 A Development Paradigm for Trans-European Networks 27 Control and fragmentation: the national development of European infrastructure 27 Internationalisation under control: an emerging infrastructure policy for the European Union 29 The emergence of modern TENs: from the Action Plan to the Treaty on European Union 21 The shifting paradigm of network development 34 Industrial policy and the competitive environment 38 The TENs programme and the Lisbon Agenda 40 Internationalisation and the shifting paradigm of infrastructure development in the EU 42 Conclusion 46 v vi Contents Chapter 3 Transport TENs 48 The emerging mobility gap and European transport trends 51 The evolution of transport TENs policy 56 Roads 67 Rail 71 Inland waterways 75 The maritime sector 80 Airports 83 Stakeholders and strategic responses to transport TENs 85 Public stakeholders: the European Union 87 Public stakeholders: the nation state 87 Public stakeholders: the regions and local authorities 89 Owners and operators of infrastructure 89 Transport and logistics companies 91 Customers and citizens 94 Conclusion 95 Chapter 4 Trans-European Telecommunication Networks 101 The European information Society 102 An emerging framework for the development of telecommunications infrastructure 104 The starting model 105 The regulatory model (1990–96) 106 Transitional model (1996–97) 106 The fully liberalised model (from 1998) 106 The electronic communications framework 108 Market-driven processes 110 The emergence of pan-European networks 112 The telecoms crisis in Europe 114 The telecoms crisis and the impact on TENs 115 The dilemma of the local loop 117 Mobile network development and the European information economy 119 The challenge to net neutrality 122 Public policy measures towards the development of trans-European telecommunications networks 124 National broadband strategies 127 Conclusion: towards a new framework for the emerging information society 130 Contents vii Chapter 5 Energy TENs 134 General characteristics of energy networks 135 Evolution of policy towards energy TENs 139 The electricity network 148 The gas network 153 The liberalisation-infrastructure nexus 156 The corporate response 163 Conclusion 174 Chapter 6 Themes in the Development of the European Network Economy 178 Reflections on the policy/strategy framework 179 Transport 179 Telecoms 181 Energy 183 Regime change in Europe’s network sectors: the shifting policy-strategy interface 186 Nodes 186 Services 188 Links 189 Strategic issues 191 Convergence – multi-utilities 191 Technological convergence 192 The rise of the virtual operator 193 Policy issues 194 The global dimension 196 Corporate 197 Policy 198 Conclusions 201 Notes 202 Index 207 List of Tables 1.1 Comparison of active and passive industrial policies 14 2.1 Pre-single market infrastructure policy 31 2.2 Regime shift within European Union infrastructure provision 38 3.1 Growth rates of main transport modes – EU-15 53 3.2 Christophersen priority projects (also known as ‘the Essen projects’) 60 3.3 Priority TEN transport axes and projects 65 3.4 Road-related TEN-T priority axes and projects 68 3.5 Mini-cases – emergence of pan-European logistics companies 92 3.6 Summary of frameworks in which transport sectors operate 96 4.1 State ownership and market power of incumbents (September 2005) 103 4.2 State of transposition of electronic communications directives (October 2004) 109 4.3 3G operators offering commercial services (September 2005) 122 4.4 Comparative broadband deployment 128 5.1 Energy priorities identified in 1990 TENs Action Programme 141 5.2 Trans-European energy networks – priority axes identified in 2003 guidelines 146 5.3 2004 EU gas imports by pipeline and LNG (billion cubic metres) 155 5.4 Evolution of rules governing Europe’s electricity markets 158 5.5 Degree of market concentration in Europe’s electricity sector 166 5.6 Market concentration in the wholesale gas market – 2004 168 6.1 Summary of policy stances in TENs sectors 196 viii List of Graphs 3.1 Modal performance of freight transport – EU-15 – bn tonne km 54 3.2 Modal performance of passenger transport – EU-15 – bn passenger km 54 3.3 Freight modal split by member state – 2002 (tonne-km) 55 3.4 Passenger modal split by member state – 2002 (passenger-km) 56 3.5 Inland waterways as % of freight by country 76 5.1 Electricity import capacity as a % of installed capacity 149 5.2 Imports and exports as % of electricity consumption in 2004 150 5.3 Gas import dependency by member state: 2004 154 5.4 Electricity – degree of market opening (2004) 161 5.5 Gas – degree of market opening (2004) 161 5.6 Share of available gas controlled by largest company 167 ix