Europe Meeting Some Digital Agenda Goals But Risks Falling Behind Rivals, Officials Say

Two years into its digital agenda program the EU has reached about a third of its goals, but progress remains mixed and regulatory divergences wide, the European Commission said Monday. There’s too much complacency, said Digital Agenda Commissioner Neelie Kroes. Europeans are hungry for digital technologies, but they're being held back by EU governments and industry, she said. There have been positive developments, such as nearly ubiquitous broadband across Europe, and booming mobile broadband take-up, the EC said. But the results so far spark worries that Europe won’t meet its 2015 goals and will fall behind competitors, Constantijn van Oranje, a member of Kroes’ cabinet, said at a press briefing.

The 2011 digital agenda scoreboard found that 95 percent of Europeans have access to fixed broadband connections, 50 percent at 30 Mbps or faster. The big story is how quickly consumers and businesses are shifting to the mobile Internet, where take-up jumped 62 percent since last year, it said. Fifteen million people connected to the Internet for the first time in 2011, but one in four Europeans has still never used it, it said. One interesting development is that use of e-government services picked up in Greece, Poland and Ireland, Europe’s most cash-strapped economies, it said. Another positive development in the last year was the free-up of a significant amount of spectrum for wireless services, it said.

But several troublesome areas remain, the EC said. Online shopping is still mostly national, as opposed to cross-border, and use of e-commerce by small and mid-sized organizations has stalled, it said. Telecom companies “continue to rip off consumers” with high mobile roaming prices, it said. Europeans are spending less on research and development than competitors, and half of the workforce lacks sufficient information and communication technologies skills, it said.

In the regulatory arena, four EU members still haven’t enacted the 2009 revised telecom rules into national law, the EC said. There are major variations in the cost of broadband access products such as the price alternative operators pay to use incumbents’ networks, it said. Up to 80 percent of the costs of rolling out high-speed broadband networks are related to civil engineering, a subject on which the EC is preparing a proposal for early next year, it said. Another key concern is that EU nations are taking different approaches to net neutrality and quality of services, slowing down the digital single market, it said.

Europeans are “shooting ourselves in the foot by under-investing,” Kroes said. Europe will be “flattened by its global competitors if we continue to be complacent,” she said. Asked to explain in what ways Europe is complacent, van Oranje said more could be done to speed implementation of the digital single market and to spur investment in high-speed broadband. Just because a company is doing well now in the EU context doesn’t mean it will be doing well in two years, Kroes spokesman Ryan Heath said at the briefing. Innovation and investment in the digital single market must be ongoing, because there are many others investing a lot more than Europe in that market, he said.

Asked if the EU is on track to meet its 2015 digital agenda targets, van Oranje said what the EC sees now isn’t a trend that makes it comfortable. The rate of high-speed broadband rollout now doesn’t look likely to meet the goals, he said.

The EC is readying a cloud computing strategy, van Oranje said. It will be an ambitious policy proposal because the cloud is key to connecting growth in mobile services and data consumption and could create two million jobs between now and 2015, Heath said. Coming up with a cloud computing plan is considered politically key in the EU bodies, he said. Cloud policy should be linked with the digital single market, said van Oranje. It should give EU countries confidence that a European approach is the way to go, he

In formulating cloud policy, the EU should look beyond its own borders, van Oranje said. The proposal will try to link as closely as possible into the global context, he said. But this is a complex area, and the EC wants the global strategy to have a European angle, he said. Europe must watch what regions such as China are doing, and be motivated to stay ahead, Heath said.

The scoreboard confirms that despite the demand for high-speed broadband services, investments in ultra-fast networks are either too slow or aren’t happening at all, the European Competitive Telecommunications Association said. To deliver on digital agenda targets, “we need to tackle the problem at its root,” said ECTA Chairman Tom Ruhan. Competitors are leading fiber rollout but are being starved of the cash they need to invest, he said. The EC must urgently ensure that incumbents’ excess profits from renting their legacy copper lines are plowed into open fiber networks, he said. An upcoming EC recommendation on wholesale charges in fixed telecom lines will be crucial, he said. ECTA stressed that its views on fiber costing, pricing and fiber-to-the-home technologies don’t reflect the views of its members with incumbent interests.

The scorecard shows the “profound changes in the industry which we believe have to result in changes to regulations,” said European Telecommunications Network Operators’ Association Executive Board Chairman Luigi Gambardella. Industry wants to invest but expects the EC and national regulators to review their policies to take into account current and foreseen market conditions, he said.

The 2020 target of 30 Mbps for all European households is challenging but could be reached in most EU member countries via a mix of technologies such as cable, fiber, fiber-to-the-cabinet/VDSL, LTE and satellite, ETNO said. But there must be a technology-neutral regulatory approach that gives a fair return on investment and encourages new business models, it said. Cutting the price of current copper networks won’t work, it said. Moreover, it said, demand is a major driver for next-generation access deployment and public policy should stress increasing actual take-up, expanding coverage in unserved areas and cutting civil works costs.