German Business Revs Up to Get on Information Highway
DAZZLED by growth prospects and earnings potential, German business is anxious to take a drive on the information superhighway.
While much of the necessary infrastructure is already in place, Germany has been slow to explore the possibilities that new computer and communications equipment offer. Last year, info-highway-related technology was a $1.3 trillion market worldwide. German business leaders say they must move now to grab a decent share of that market, otherwise Germany could find itself left behind.
''He who loses touch today, loses sight of tomorrow,'' says Hartwig Plath, an information technology specialist at the Hamburg Chamber of Commerce. ''We are at an important crossroads. No matter how these highways are used nobody will be not able to avoid new developments.... We must seize the opportunity.''
Led by media conglomerates Bertelsmann and the Kirch Group, big business in Germany is devoting more attention to the new technological era, concentrating at present on interactive television and on-line services.
For example, Bertelsmann, the world's second largest media empire after United States-based Time Warner, sealed a deal with America Online Inc. on March 1 to develop on-line computer services in Europe. The $100 million project hopes to attract more than 1 million subscribers and do about $690 million in business by 2000.
Other major German players are also looking for the highway's on-ramp. Deutsche Telekom, the phone monopoly now undergoing privatization, hopes to position itself as a global info-highway force. One move critical to Telekom's strategy is a multibillion-dollar deal, in tandem with France Telecom, to buy a 20 percent stake in US long-distance carrier Sprint Corporation. The deal awaits US government approval.
Industrial giants, such as Daimler-Benz and Siemens, also have info-highway plans. All the interest is easy to understand, considering that Germany's telecommunications market is projecting 8 percent annual growth for about the next decade.
But before large-scale projects can get off the ground, business must determine whether German consumers are ready for interactive technology. It is far from certain that the appetite is strong for video-on-demand and home-shopping services, Mr. Plath and others say.
Historically, Germany has been slow to embrace new technology, preferring to stick with tried-and-true ways until the forces for change have become overwhelming, according to consumer trend watchers.
''The whole attitude to television and shopping is different here in Germany than in the United States. Shopping is not as vital for entertainment in Europe, in general, and Germany, in particular, as it is in the United States,'' says Annette Busse, top information official at Otto Versand, a Hamburg-based mail-order retailer.
The bustling port of Hamburg, one of the wealthiest regions in Europe, is among several German regions planning info-highway experiments. Other states pursuing multimedia projects: Berlin, and, in the south, Baden-Wuerttemburg and Bavaria.
Most of the pilot projects, including Hamburg's, are relatively small in scale and behind in schedule.
About 1,000 Hamburg homes will be hooked up for mostly video-on-demand, according to Plath, with some also equipped for home-shopping. Otto, whose mail-order-oriented retailing business stands to benefit greatly from TV home-shopping, is a main financial backer of the Hamburg pilot project.
The service had planned to be operational this July, but the start-up date already has been indefinitely postponed. Plath now says things could be up and running by the end of the year.
The delay isn't such a great concern to planners. More important is making sure that it will be easy to use, and therefore appealing to consumers. If it's too complicated, potential users could be turned off, delaying the multimedia revolution in Germany, says Otto's Ms. Busse.
Emphasis, at least in the initial stages, should also be placed on entertainment, info-highway enthusiasts say.
''Entertainment must be number one in order to lure customers, otherwise it won't work,'' Plath said. More thought should be given to the question of how to finance the enormous start-up costs on a nationwide interactive TV network, he added.
The ability of Deutsche Telekom to adapt quickly to a competitive environment, after it loses its monopoly status, is another important factor that will determine how fast the info-highway takes hold in Germany.