Europe Goes On Internet Time

In Europe, the I-way is still under construction. While Americans create Web sites by the millions, download reams of data from the Net, and do billions of dollars' worth of E-business every day, many Europeans don't even have the means to surf. Except for Finland, much of Europe remains unplugged. But not for long.

As telephone, TV, and computer technologies gradually converge, Europe's $200 billion telecom market has become a battleground in which size matters less than speed. Giant national phone companies nurtured on state subsidies are watching their long-distance profits erode as upstarts move in with cutthroat prices. In the latest upset, Italy's Olivetti beat giant Deutsche Telekom for Telecom Italia.

With his sights set on developing Net services, Olivetti CEO Roberto Colaninno wanted access to the cash flow and infrastructure of Italy's national champion. To realize his vision of becoming a Europewide tech titan, he's willing to risk Rome's wrath by firing 20,000 overpaid Telecom Italia employees as he turns the ex-monopoly into an agent of the New Economy.

For Telecom Italia and the Italian government to choose the hostile bid of a smaller company over a friendly alliance with an entrenched German counterpart is testimony to how values on the Continent have been turned upside down. Never before has Europe seen such a deal.

Before it's here, it's on the Bloomberg Terminal.