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Internet Entrepreneurship in Europe

Venture Failure and the Timing of Telecommunications Reform

Niko Marcel Waesche

From its launch in 1997, the Frankfurt technology stock exchange developed spectacularly as did other European technology exchanges. Many Europeans thought that a new age of entrepreneurship had dawned. Following the downturn, however, the search for blame began. Much of this blame was undifferentiated and subjective. Public policy lessons were not drawn. Written by a well-known commentator of the European venture capital community, this book analyses the rise and decline of European internet entrepreneurship. The effects of both the public promotion of venture capital investments as well as the timing of telecommunications reform are examined in detail in various European countries, in particular in Germany and Sweden. The book contains a wealth of unique data on the failure of European internet ventures and draws several technology and telecommunications policy conclusions.
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Chapter 5: Incumbent Telecommunications Operator Strategy and Internet Access

Niko Marcel Waesche


This study has already highlighted how growing home use of the internet and small business access had the potential to transform business in a wide range of industries. Through ubiquitous internet access, consumers and small firms could be integrated into electronic business networks, so-called business webs, connecting service firms, manufacturers and suppliers. In the previous chapter, diverse government activity to promote innovation and growth in data networking was discussed, from telecommunications liberalization, teletex, the promotion of research networks and financing initiatives. Yet, as the example of the German research network DFN showed, it is insufficient to study government intentions alone. Paradoxically, the direct role of government in the development of the nascent internet in Europe was far less significant than in the United States. The backbone service of the US research network NSFNET, for example, was in 1995 handed over to private enterprises, speeding up the commercialization of the internet and promoting competition for data service provision. As discussed in the previous chapter, government action taken in Germany to encourage the growth of commercial data networking through the research network DFN was ineffective and misguided. The DFN, although founded by the responsible government ministry as a separate entity, resisted commercialization and veered towards the sphere of influence of the public telecommunications operator (PTO). Rapid commercialization of the DFN, which would have enabled competition to the PTO, would have been resisted. This chapter, which delves into internet uptake in Germany, is based on the premise that the...

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