EU Countries See Digital Progress But Are Still Falling Behind, EC Study Finds

Europe has made progress in the digital arena since last year, but continues to lag behind the U.S. and some other countries, said Digital Economy and Society Commissioner Günther Oettinger at Thursday's webcast Brussels Digital4EU conference. The 2016 Digital Economy and Society Index (DESI), also released Thursday, measured 30 indicators in all 28 member states. Results showed that although there is forward movement in connectivity, digital skills, public services and other areas, the rate of progress is slowing. "We have to catch up; we're in a race," Oettinger said. Europe has some big players but, unlike the U.S. and some other nations, no clear strategies for developing new digital services, apps and smartphones, he said. The European Commission will publish its first report on digital progress in all 28 member nations in May, he said.

The EC plans to unveil a digital single market technologies package in early April, said DG Connect Director-General Roberto Viola. It will consider how to digitize industry, and its key element will be a European cloud initiative aimed at creating the ecosystem needed to extract knowledge from data, he said. It also will lay out policies on the IoT, the future of quantum technologies and other issues, he said. Before summer, the EC plans to propose legislation on unjustified geo-blocking that's holding back cross-border e-commerce, and to reform the audiovisual media services directive, Viola said. Copyright reform is also in the works, as is a revamp of telecom regulations.

The EC is also looking at possible online platform regulation. Viola said the EC is analyzing comments received in its consultation as well as its own data and will decide how to proceed. A wide range of interested parties opposes key planks of the commission proposal (see 1601110001) and there was little appetite at Digital4EU for more regulation. Speakers said many rules already deal with concerns raised by platforms and that better enforcement, rather than new regulation, is needed. A lot of existing consumer law governs platforms, but the question is whether the companies comply, said European Consumer Organisation Deputy Director General Ursula Pachl. Any regulations must focus on a platform's activities, said Digital Economy Professor Annabelle Gawer, co-director of the Surrey Centre for Digital Economy, University of Surrey. The deeper issue is whether regulation realistically has a role where markets are global but enforcement powers aren't, she added.

Telcos are heavily regulated under net neutrality and other measures, and if policymakers are serious about users being able to fully access the open Internet, they must determine if the same openness requirements should apply along the entire value chain, said Carlos Rodriguez, who heads Telefónica's Brussels office. He suggested the creation of principles to ensure that gatekeepers can't hamper competition or consumers. Any rules should state what the end result should be, for example how consumers should be informed, leaving it to individual platforms to decide how to comply, said Stefan Krawczyk, eBay associate general counsel and government relations head. The word "dominant" is used often with regard to platforms, but market dominance is the outcome of a strong demand for a particular product, Gawer said. She dismissed the "myth" that all platforms are dominant, and said that in competition law, only abuse of dominance is punishable.

The U.K. placed sixth in the DESI rankings, after leading digital economies Denmark, the Netherlands, Sweden, Finland and Belgium. Britain's communications landscape is "unrecognisable" from the one that existed in 2005, with much higher broadband speeds, a mushrooming use of smartphones and tablets, and soaring data speeds, the Office of Communications (Ofcom) said in initial conclusions of its 2015 digital communications review, also released Thursday. Nevertheless, too many businesses and people still don't benefit from the digital advances, with around 8 percent of all U.K. premises unable to access broadband speeds of 10 Mbps and many suffering from poor mobile coverage, it said.

Ofcom will require BT to give rivals more access to its network and could, if needed, force the telco to split its Openreach retail arm off entirely from its network. Internet Telephony Services Providers' Association Chairman Eli Katz said the regulator's review "has confirmed ITSPA members' views that Openreach has not delivered the performance that the communications industry or the U.K. needs." Ofcom must maintain constant scrutiny to ensure that BT meets its new obligations, he said. Vodafone also cheered Ofcom's stance, saying it showed the regulator's "recognition that BT can use its control of Openreach to discriminate against competitors and that the status quo cannot continue." Tightening up regulation and governance of Openreach through legal and possibly structural separation "is very welcome," the mobile operator said.

"Openreach is already subject to regulated service standards and we are happy to work with Ofcom to improve them," BT Chief Executive Gavin Patterson said in a statement. The telco wants to engage in large-scale investment but "that requires a high degree of regulatory clarity and certainty, something that is missing at present," he said. Ofcom says breaking up BT wouldn't lead to better service or more investment and that structural separation would be a last resort, he said. The company has proposed a new governance structure for Openreach and a clear commitment to investment, he said. Much of what Ofcom wants is already in place and a voluntary, binding settlement "is in everyone's interests," Patterson added.