Sustainable Prosperity for Europe

Digital Single Market


Is Europe's future digital?

8 October 2013
Romain Pardo (Policy Analyst)



European leaders will discuss the digital economy, innovation and services at the upcoming European Council on 24-25 October. This offers an opportunity to emphasise the crucial role of the digital economy for Europe’s recovery. Digital technologies, being truly transformative and enabling, represent one of the best opportunities for sustainable growth and job creation. Although some progress has been made within the framework of the EU’s Digital Agenda, there is still much to be done in order to maximise the benefits from the further development of the digital economy.

Placing the Digital Single Market at the forefront of EU policies

A study commissioned by the European Policy Centre demonstrates that an integrated Digital Single Market would increase the EU’s GDP by more than 4% – amounting to €500 billion over a ten year period. The application of digital technologies has an important impact and transformative effect on all economic sectors and the Digital Single Market should be used as a tool to encourage and support Europe’s businesses to better exploit the potential of ICT. This would help to bridge the productivity gap between Europe and its competitors.

In the current challenging economic environment, such an opportunity cannot be missed. The EU has made a commitment to complete a fully functional Digital Single Market by 2015, but progress is still needed in many areas to ensure that consumers and businesses “live and experience” a borderless Digital Single Market on a daily basis.

It is important for policymakers to acknowledge that the Digital Single Market and the single market are interconnected and interdependent, as one cannot fully develop and thrive without the other. In its Communication on the Single Market Act II, the Commission stated that “the digital economy has the potential to take Single Market integration to a new level”. ICT has a great transformative power that can contribute to making public services more efficient and accessible, to greening the economy, including by reducing CO2 emissions, and to increasing labour market efficiency through digital mobility.

The completion of the Digital Single Market should continue to be one of the top priorities of the upcoming Commission.

Enhancing the use of ICT

The two main pillars of the digital economy are infrastructure and usage; the latter must not be neglected. For example, providing broadband access to citizens and businesses is insufficient if they do not have the incentive or skills to use it.

The development of long-term ICT skills and digital literacy policies has not yet advanced in all member states. There is a need to implement a pan–European long-term skills and digital literacy policy and reduce the skills gap for digital jobs. Workers should have sufficient skills to integrate ICT to their daily activities.

In the context of high unemployment rates, education is particularly important. Digital training and retraining could contribute to keeping people employable in the labour market, including in other sectors. There is also a need to scale up eLearning as the education sector is lagging behind regarding its use of ICT.

Building on data-driven innovation and the development of smart applications could play a role in incentivising people to use technology. For example, mobile phones have evolved to offer applications which go way beyond their primary function. Individuals increasingly rely on them to look for directions, find information that will facilitate their daily activities and provide them with entertainment.

With regards to the public sector, the adoption of eGovernment solutions could lead to substantial economic savings as well as to better access and quality of services for citizens.

Restoring and maintaining trust

In light of the recent spy scandal and controversies related to privacy, there is a need to restore trust and address the concerns of consumers and citizens. Consumer trust is indeed crucial for the development of e-Commerce.

Restoring trust is more a matter of correctly applying existing legislations and informing citizens of their rights than of creating new obligations.

There is a need to develop a better narrative, avoid a situation in which ICT is mainly seen as a threat, and explain how the use of data could benefit individuals. It would make sense to emphasise the health, environmental and social gains that could be delivered by these technologies.

Building on the cross border nature of digital technologies

Digital technologies and data information overcome borders and are internationally orientated. There is a need for legislation to be adapted accordingly.

The proposals for a single telecoms market is a step in the right direction. Nonetheless, the fact that implementation of common rules still varies across member states still has to be addressed.

According to the Digital Agenda scoreboard, the target of 20% of citizens shopping across borders online by 2015 will be missed. It is necessary to address the lack of cross border sales as this hampers competitiveness and fails to drive prices down and thus give consumers access to a wider range of products. The fact that some online traders refuse to accept orders from consumers living in other countries is problematic and shows that the road towards a fully functioning internal retail market is still long. With regards to trust, the recent EU regulation on online dispute resolution for consumer disputes is a step in the right direction which could be supplemented by a European certification scheme to be used by trusted e-traders.

Stimulating investments and innovation

The EU needs to take advantage of its sizeable domestic market and overcome national fragmentation. A large pan-European market would enable companies to grow and incentivise them to invest in digital technologies. This cannot be done without a full and consistent implementation of the Services Directive.

The Connecting Europe Facility will not be enough to finance pan-European digital infrastructure. There is a need to stimulate private investments and therefore to have a regulatory environment which brings certainty and predictability. The possibilities of Public Private Partnerships (PPPs) should also be explored more.

Modernising the EU’s copyright regime and facilitating licensing, including through the development of transnational licensing procedures, would encourage innovation.

Conclusion

At the upcoming October Council, European leaders should recognise the crucial role that digital technologies have to play in Europe’s future, consider that the application of these technologies can benefit all sectors of the economy and give a clear orientation towards the completion of a fully functional Digital Single Market by 2015. The time has also come for member states to take responsibility for achieving this objective by committing to implementing common rules and harmonising their national policies to adapt to the cross border nature of ICT.

Romain Pardo is a junior policy analyst at the European Policy Centre (EPC) in Brussels.

Disclaimer: The views expressed in this Commentary are the sole responsibility of the author.

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