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In 1997 (ITO, 1997). Economic globalization is strongly linked to economic growth of the internet and global networks. As modernization of infrastructure is very costly there could be a tendency for myopic governments to provide insufficient infrastructure services. Private organizers of infrastructure provision, however, have in many cases adequate incentives to provide infrastructure in an efficient way. This assumes appropriate regulation which does not impair potential market entry, optimal use of capacity by time-varying user charges, and that there are no major external costs and benefits of the services derived from infrastructure, which certainly is a bold assumption.

Vertical integration as well as product differentiation raises, of course, the problem of cross-subsidization. It is doubtful that simple accounting separation - a potential requirement by the industry regulator - is sufficient to avoid cross-subsidizations and the inefficiencies associated with such practices. 2 Problems of Standardization and Interconnection With different operators of infrastructure in Europe (including the former CIS) it is important to ensure technical compatibility so that an open and seamless network can be created.

Modem railway technology allows the building of fast networks that could cause not only a revival of the railway for merchandise and passenger transport but also support the expansion of industries related to the railways system. Most railway systems in Europe are characterized by high debt loads and massive subsidies. In the EU subsidies are highest in Italy (see appendix). 5 bill. 8% of Community GDP. The top of the league was the Italian railway system which accounted for a debt load equivalent to 5% of the Italian GDP.

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