U.S., EU Urged to Resolve ‘Small Differences’ or Lose Out to Other Countries in the Digital Race

Europe and the U.S. should be thinking about a “transatlantic digital marketplace” instead of getting “hung up on our small differences,” U.S. Ambassador to the EU William Kennard, a former FCC chairman, said Monday at a Copenhagen EU Danish Presidency high level conference on the digital single market. He cited a book by Peter Baldwin, “The Narcissism of Minor Differences,” that describes the psychological tendency people have to seize on small differences and enlarge them, saying that although the EU and U.S. are the world’s largest trading partners, they get stuck on issues such as data privacy that are insignificant in the grand scheme of things. As Europe debates its digital single market and the U.S. updates its online rules, they should consider joining forces because China, Brazil, Russia and other countries aren’t going to wait for them to resolve their differences, he said on a webcast.

There are two “buckets” of challenges to the digital marketplace, Kennard said. The first is how to build out ubiquitous networks, he said. The infrastructure challenge is a wireless one because so much data are moving to the mobile environment, he said. The mushrooming demand for more bandwidth led U.S. policymakers to sound the alarm about the need for more spectrum, but Europe needs a “much greater sense of urgency,” he said. Europe led the world in GSM technology and powerful companies emerged in the wireless space, but it will lose its leadership if it doesn’t get a handle on spectrum management, he said.

The second group of digital challenges relates to legal issues such as cloud computing, intellectual property and privacy, Kennard said. The EU and U.S. are grappling with the same problems, such as updating privacy laws to deal with Internet use, he said. They're taking different approaches but the common goal is for users’ privacy not to suffer, he said. The U.S. is worried about talk of a “European” or “regional” cloud, he said, because bits don’t respect borders.

Policymakers talk about how to update laws within particular jurisdictions, but businesses think globally, Kennard said. The EU and U.S. must stop arguing and create a transatlantic digital market to stay ahead of other nations, he said.

Europe “must be as bold as possible,” said Ed Vaizey, U.K. minister for culture, communications and creative industries. Several areas must be addressed to advance the digital single market, he said: (1) Sustainable fixed and mobile infrastructure capable of delivering digital products and services. (2) Freeing up at least 500 MHz more spectrum. (3) Competitive markets. (4) Rules that give businesses and consumers confidence to engage in online trading, such as e-signatures and secure online payments. (5) Copyright management systems that don’t just benefit incumbents seeking to license territorially.

The U.K. is concerned about what the European Commission intends to do about net neutrality, because it sees no need for regulation if the market is competitive, Vaizey said. Britain also worries about possible EU heavy-handedness in the area of data protection, he said. A recently-published EC proposal for reform of the data protection directive contains some troublesome provisions, such as requiring explicit consent to deploy “cookies” and the “right to be forgotten,” he said.

Kennard’s talk of a close working relationship with the U.S. is “music to my ears,” said Vaizey. In a digital world in which companies often emerge and go global quickly, it seems right to align policies on privacy, intellectual property rights and child protection, he said. Europeans shouldn’t fear dialogue with the U.S., he said.

Despite its efforts, Europe is “far from achieving” a digital single market, said European Parliament member Catherine Trautmann, of France and the Socialist and Democrats Party, who authored the legislative response on the telecom reform package. Borders are “impossible to ignore” but European policymakers’ mindset is still “very national,” she said. The digital economy is growing, with promising potential, but nothing much really changes in the big picture, she said. Europe needs a strategy to secure its advantages, one of which is a strong Internet intermediary sector, she said.

There are three parallel tracks to pursue, Trautmann said: (1) Building a digital single market. (2) Empowering people to make full use of it. (3) Creating a narrative to flesh out the digital single ecosystem. Citizens must be made aware that the EU has to be cohesive in this area for rights to be protected, she said. Trautmann agreed with Kennard that this is an urgent situation, but blamed governments for seeing only their own national realities.

Europe started on the idea of more economic integration 20 years ago but missed the chance to set up a common institution for a digital market, said Luc Soete, director of the UNU Maastricht Economic and Social Research Institute on Innovation and Technology. It opted instead to let each country create its own regulatory framework for mobile telephony, the Internet and so forth, he said. This led directly to a series of “fights” over mobile roaming and other cross-border issues, he said. One question policymakers must now ask is whether they can recapture the lost opportunity, he said. Others are how to regulate Europe’s single digital market; what makes a specifically European digital market; and how such a market can create innovations that benefit the many rather than the few, he said.