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Erkki LIIKANEN Member of the European Commission responsible for Enterprise and the Information Society "eEurope - An information society for all" Institute of European Affairs Dublin, 19 April 2001

European Commission - SPEECH/01/180   23/04/2001

Other available languages: none

SPEECH/01/180

Erkki LIIKANEN

Member of the European Commission responsible for Enterprise and the Information Society

"eEurope - An information society for all"

Institute of European Affairs

Dublin, 19 April 2001

Introduction

Ladies and gentlemen,

In March 2000, the EU Summit in Lisbon set a new frontier for Europe: become, in a decade, the world's most competitive and dynamic knowledge-based economy. To reach this goal, EU leaders asked the Commission to devise a comprehensive strategy: the eEurope Action Plan. One year later, the Stockholm Summit reiterated the commitments made in Lisbon and gave fresh impetus to eEurope.

The message is clear: Either we step into the information age, together, determinedly, now, or out future will be compromised. I'm thinking about sustainable growth, competitiveness, jobs, social cohesion, political influence.

I know that here in Ireland, you are well aware of the potential of the new economy for job creation and growth. Other European regions have benefited less from the potential of new technologies. Ireland sets a model in the sound use of the structural funds as a springboard for growth and economic development, especially in the high-tech sector.

I take this opportunity to thank my colleague and friend, Commissioner Barnier, for putting so much emphasis on the information society in the orientations of the structural funds. Three priority areas have been defined, which are totally in line with the key objectives of eEurope:

  • The stimulation of new services and innovative applications, in particular electronic commerce, on-line public services and teleworking.

  • The equipment of potential users, such as schools, public access centres, training facilities, universities and research centres.

  • Infrastructure development, but only under very strict conditions. The idea is to compensate the absence of private investment, and to thus close the competitive gap for disadvantaged regions.

Only renewed economic, scientific and intellectual excellence will give Europe a strong say in world affairs in the 21st century. The world is full of urgent issues where a Europe speaking with a single voice would make a difference: the environment, sustainable development, cooperation and development, peace and democracy, food safety, ethical issues, etc. But for that, we need to embrace the Internet and the technologies of today and tomorrow.

Europe doesn't start from scratch. The information society dimension was integrated into all relevant EU policies in the mid-90s. A major development with eEurope is that Member States have endorsed common goals to be implemented at national level. This includes areas where EU intervention is limited, for instance education and training. And what's more, Member States have asked the Commission to benchmark the progress they make in pursuing these objectives.

I will focus my intervention on eEurope's major themes:

  • First, the completion of the EU telecoms liberalisation process.

  • Second, the need for social inclusiveness in the information age.

  • Third, the development of on-line services in areas of public interest.

  • Fourth, the search for the right balance between regulation and self-regulation.

  • Finally, I will assess Europe's position in the information society.

1. Complete EU Telecoms Liberalisation

The launch of the EU policy telecoms policy dates back to a 1987 Green Paper. It exposed three core objectives which remain perfectly valid today:

  • First, liberalisation of the sectors under monopoly. From 1988 onwards, the EU gradually liberalised all segments of the telecoms market. This process culminated in 1998 with the full liberalisation of services and infrastructures.

  • Second, harmonisation of the European market. Common rules are needed to create a unified EU-wide telecoms market.

  • Third, application of EU competition rules to liberalised segments of the telecoms market. The aim is to prevent collusive agreements or abuse of dominant position, and to prevent the creation of dominant positions.

Thanks to liberalisation, telecoms services have become the fastest growing sector of the European economy, with an overall growth rate of 12.6% in 2000. Competition keeps intensifying, leading to lower prices, more choice and better quality of service. Liberalisation also has a positive impact on incumbent operators, turning them into innovative companies that expand internationally.

We have achieved a lot, but much remains to be done to create a level-playing field for all competitors. This is particularly the case in local communications, which are still largely dominated by former monopolies. Furthermore, the EU telecoms market remains fragmented along national lines. This was illustrated by incoherence in the licensing process for third-generation mobile services.

Therefore, our aim is to create a genuinely unified and coherent market, where rules are applied in a harmonised way all across the EU. Proposals for a new regulatory framework for electronic communications were tabled last summer:

  • The new telecoms package aims to streamline the existing framework, which is the result of a complex procedure over more than a decade.

  • It would also adapt the existing framework to the Internet-driven convergence between telecoms, computers and the media.

  • The telecoms framework would also incorporate a new area of responsibility: spectrum. Radio spectrum, which is for instance used for wireless telecoms or broadcasting, is of growing economic importance. But airwaves are a scarce resource. Their use must therefore be optimised. This requires a coordinated EU approach, both at Europe and international level.

The Stockholm Summit has asked that the telecoms package be adopted as early as possible in 2001, so that the new framework is in place by early 2002.

As a first step in this process, a major piece of legislation to unbundle the local loop already came into force in January 2001. Unbundling means that new entrants no longer have to duplicate the incumbent's local network to get access to the local market. The resulting competition will drive tariffs down and encourage innovation in Internet access. We expect, in particular, to rapidly see the emergence of competition in flat-fee, high-speed Internet based on ADSL a technology which allows for fast Internet access over regular telephone wires.

However, competition alone will not be enough to ensure widespread Internet take-up in Europe. It must be complemented by a high level of security and privacy on the Internet. The EU has already taken ambitious steps in this respect:

  • It has fully liberalised the trade of encryption technologies between Member States. These are key to securing confidentiality.

  • It has also adopted legislation to ensure the lawfulness and mutual recognition of electronic signatures between EU countries. These are key to securing the integrity and authentication of electronic data.

  • As a complementary action, the Stockholm Summit has asked the Commission to table a comprehensive strategy on the security of electronic networks. It should be submitted in time for next June's EU Summit in Göteborg.

2. An inclusive information society

Today, the information society is already a reality for the growing number of Europeans who use the Internet. However, there is a serious risk of exacerbating social discrepancies and creating new ones. Achieving inclusiveness for in the information age is therefore a top priority. But inclusiveness is more than a social objective: it is also a major competitive asset.

The number of people on-line is fundamental. The so-called Metcalfe's Law tells us that the value of the network goes up as the square of the number of users. Metcalfe's Law is more a rule of thumb than a law. It's common sense.

However, Paul Krugman argues that in building the network, one tends to do the most valuable connections first. Thus, the network effect can either increase or diminish returns. New network capabilities first attract the most prosperous and skilled people. Beyond the initial expansion to 25-35% of the population, the incremental value of further expansion decreases.

Continued expansion to near 100% of the population has diminishing economic returns. This, however, is not true for public services, where a large incremental value can be associated with full social inclusion. Achieving access for all calls for action at several levels:

  • First, we have to prevent the formation of the digital gap for the new generation. School must provide all young Europeans with the essential digital skills they need to live, work and be responsible citizens in the digital age.

  • Second, we need to ensure the employability of people already on the job market. Many of them need to adapt their skills or acquire new ones. This is exacerbated by two factors: the ageing of Europe's workforce, and the accelerated outdating of skills due to the fast pace of technology development. This calls for the promotion of life-long learning for all Europeans.

  • Third, we must mend the growing skill gap. EU industry is said to be short of about a million workers in the information technology sector alone. Life-long learning will help solving this issue. In parallel, we have to adapt higher education and encourage more young people to embrace scientific and technological carriers. And we need to be attractive to foreign talents.

  • Fourth, we have to mend the social gap. There is a risk of perpetuating, and even reinforcing, existing social discrepancies. However, on the positive side, many reports indicate that families with children, even with low income, are more likely to get on-line than couples with no children, even with high income. The multiplication of public access points will help achieving access for all.

  • Fifth, we have to fight all other sources of digital exclusion. I'm thinking in particular about sick, elderly or disabled people. Modern technology provides them with new opportunities to be better integrated in society. This, however, requires that we invest in developing adequate technologies.

3. Promote on-line public services

I have underlined before the benefit of having as many citizens on-line as possible. All the same, as the number of connected citizens grows, so will the incentive for government to offer efficient and diversified on-line public services.

Substantial progress has already been achieved regarding the use of the Internet by governments. Access to public documents and legislation is improving. This is good for openness and transparency. But it is only a first step. What is still missing is real interactivity, which is the essence of the Internet. It is all very well to find administrative forms on-line. But to have to print them out, fill them in, and then send them back by regular mail is not quite e-government.

The real change will be true interactivity in public services. A major reform of public services will then become possible: responsiveness, citizen-friendliness and quality of service will become new standards for public services. In parallel, government will become more competitive. Old and expensive service delivery methods will be replaced by more carefully tailored and targeted services with important cost-savings and increased efficiency.

Two other areas with huge potential are health and transport. Several steps have yet to be taken to maximise the potential of the Internet and digital technologies for e-health and intelligent transport systems. The stakes are paramount: public safety, security and quality of life.

The next generation of mobile services, which will be fast, multimedia and with full Internet access, will offer great potential for improved and more innovative public services. At the same time, European citizens will expect to get high-quality public services over their mobile terminals.

On-line public services will rapidly become dependent on third-generation mobiles. As for third-generation mobiles, the pace of their development will depend on the availability of new mobile contents and applications. These can for part be provided by public services. This is clearly a win-win situation.

4. How much do we need to regulate the internet?

I underlined before the positive impact of government intervention in liberalising the telecoms market. What about the Internet?

Originally, entrepreneurs tended to be in favour a government hands-off policy. They would argued that industry regulation, or self-regulation, would be sufficient to regulate the Internet, in particular e-commerce. Conversely, most policy makers would advocate government intervention. They would argue that the Internet is more than a trading zone, and that issues of public interest are at stake.

As so often, this is not a clear-cut issue. There's merit to both positions. My view is that government has a duty to upheld certain fundamental values and preserve the public interest, even in cyberspace.

But setting rules in cyberspace is complex: it is a realm that ignores border and is based on technology in constant evolution. Therefore, government should focus on essential issues such as personal data, privacy, copyrights, legal responsibility, illegal and harmful content, cybercrime, taxation, etc.

As for self-regulation, it should fill-in the gaps in regulation. It should apply mostly in the field of e-commerce, for instance through codes of good conduct or alternative dispute resolution mechanisms. Industry may also be in a better position to choose the most suitable technology to upheld certain rights.

Regulation and self-regulation are complementary. They must go hand in hand and not simply side by side. This implies real cooperation between government and industry, in each other's interest, leading to a kind of co-regulation.

Let me take an example: privacy. Its handling will largely determine the future of retail e-commerce. On-line retailers need to collect data about their consumers and track their purchasing patterns, to target their sales and sell this information to direct marketers. At the same time, they have to respond to growing consumer demands for control over their private data. Yet consumers may find it useful to receive targeted commercial information. Therefore, a trade-off can be found.

The EU approach could set an example. Based on a close collaboration with all parties, it secures important, yet balanced user rights, in a technology neutral way. EU legislation grants individuals the right to access and correct their personal data, and to opt out from their use for direct marketing. For sensitive data, such as race and religion, explicit consent is required. The new telecoms package would secure the confidentiality of communications, the right to determine what personal information can be included in a public directory, and prior consent to receive unsolicited commercial communications. It is up to industry to develop technological mechanisms to enforce these rights.

A further difficulty is linked to the global nature of the Internet. No individual government can regulate the Internet in isolation. At the same time, creating a consistent global framework will prove very difficult considering the diversity of political and cultural values. However, governments should at least agree on minimum rules at international level. To this end, and whenever possible, EU legislation embeds international cooperation mechanisms, for instance for the mutual recognition of electronic signatures.

5. Looking ahead

How is Europe doing in the information society? I'm glad to say that important progress has been achieved in the last months. Two key indicators reflect that:

  • Internet penetration is growing fast: 36% of the EU population is now using the Internet. The gap with the USA remains important, but a growing number of EU countries have similar or superior usage levels. Of greater concern are the important discrepancies that remain between EU countries. In this context, Ireland is above the average in terms of connectivity with 40% of the population using the Internet more than once a week.

  • Mobile phones penetration is also growing fast. There are now over 240 million mobile users in Europe. The number of subscriber increased from 36% to 60% of the population between 1999 and 2000. This compares to a 40% penetration rate in the USA, up from 31% the year before. As for the gap between EU countries, it is limited. Mobile communications could therefore be a factor of greater cohesion within the Union.

Regarding businesses, the evolution of high-tech stocks in the USA and Europe has raised some doubts about the new economy and has caused concerns in European regions, such as Ireland, which have become heavily dependent on it. This stock market readjustment had been predicted by many as "dot-coms" were increasingly overvalued. Investors have become more selective in funding start-ups, which is a sure sign of maturity. Good projects which build on significant technological innovation will still get access to venture capital. We have moved into a period of "search for quality".

While 2000 was the year of the dot.coms, it is likely that 2001 will be the year of the merger between the new and the old economy. Indeed, an ever increasing number of companies in all sector of the economy are taking-up the Internet and digital technologies to re-engineer their corporate structures. They build integrated resource systems on-line, from back office to front office, leading to genuine e-solutions. The real challenge is B2B take-up by SMEs.

The year 2001 will also be important for the mobile Internet and mobile e-commerce. The development of mobile communications in Europe is an amazing phenomenon. In less than a decade, mobile phones have conquered 65% of the EU population. This must be the fastest take-up of a new technology ever. Mobiles have really become part of our daily life and our culture.

We must build on this technological and industrial success to extend Europe's leadership to the next generation of mobile communications. The current upgrade of GSM networks with GPRS technology, which allows for faster transmission speed and always-on connections, will ease the transition to next generation mobiles. It will allow operators to develop new wireless applications and users to test them, and help manufacturers design the terminals of the future.

But inconsistencies in the attribution of third-generation mobile licenses, UMTS, have created uncertainty. What Europe needed is a clear political signal that things will happen quickly and smoothly. The Stockholm Summit did better: it built a bridge between today's and tomorrow's mobile landscape.

A commitment was made to adopt firm policy measures that will ensure faster and smoother deployment of third-generation mobile systems. Further commitments concern: the accelerated introduction of the new Internet Protocol, IPv6, that will enhance the diversity and quality of third-generation mobile services, and support to the development of European multilingual content for new mobile services.

Of course, the story doesn't end with 3G. Europe is already look beyond. Commitments have therefore been made in Stockholm to ensure greater coherence in the licensing process in the future. Furthermore, a high level of research efforts will be devoted to the development of future wireless communications systems.

I thank you for your attention.


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