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Viviane Reding

Member of the European Commission responsible for Information Society and Media

Digital Europe: the Internet Mega-trends that will Shape Tomorrow's Europe

European Internet Foundation Special Event "A view of the Digital World in 2025"
Brussels, 13 November 2008

Ladies and Gentlemen,

Thank you for inviting me here today and giving me this opportunity to present my view on the long term future of the digital Europe.

Let’s start by looking at the facts. ICT is the enabling technology of our age. It underpins the entire economy. According to a recent authoritative macro-economic analysis, ICT was responsible for 50% of overall productivity growth in the economy for the ten years up to 2004. The industry itself, which represents only about 6% of the economy, drove fully 20 % of the total productivity increase across the economy.

To the skeptics who tell me that ICT is a spent force, a mature technology that has run its course as a driver of productivity growth I say – watch this space. The ICT revolution that has been running according to Moore's Law for forty years has a long way yet to run.

My aim today is to explain to you not only why I believe that we are the start of a new phase of ICT driven innovation and growth, but also that Europe can be a key player in this next phase and what we have to do unleash this potential.

Let us be clear, we need to unlock this potential now more than ever. In these times of economic trouble, we need to apply two crucial lessons. First, to get out of the economic downturn we must now strengthen the real economy by stimulating solid and sustainable business growth in high value goods and services that respond to real market needs.

Second we must liberate the economic potential of the single market that is still locked up in our fragmented national markets. I do not have to spell out to you the risks that Member States would have faced if they had gone alone into the financial storm without the strength and stability that they get from the communitarian financial system – the ECB, the EIB, the Eurozone and the budgetary discipline of the stability and growth pact. This demonstrates once and for all – I hope – to the Euro skeptics that Europe is a club where membership pays off big time. This is a message we have to take back to our constituents and the European citizens.

Now let us look from the perspective of today to where we might be in 25 years time. What are "Megatrends" in this sector?

First Megatrend: a shift from "Web 2.0 for fun" to Web 2.0 for productivity and services. Web 2.0 is all about social networking, which so far has been low definition video and entertainment driven. But Web 2.0 is now being applied as a business tool and as a way of delivering government services. Properly channelled, Web 2.0 means connecting minds and creativity on a scale never before imagined.

For example, Web 2.0 social networking tools could be used very effectively to support R&D teams that are working in different locations around Europe or across the world. Integrated software tools that support messaging, chatting, twittering, blogging and videoblogging – supported by traditional business tools such as databases and virtual meeting rooms – could open up a new dimension to teamwork that substantially boosts traditional modes of interaction at work such as face to face meetings, bilateral phone calls or static broadcasted memos. These new modes of interaction will take time to filter through into business practice, but as today's Generation-Y move into management roles, in the coming 5 to 20 years, I believe we will see radical changes of how business gets done. The productivity gains could be startling.

Still on Web 2.0, during his campaign, President-elect Barack Obama used Web 2.0 technologies to give voice to millions of Americans who traditionally don't usually get heard: the results were surprising.

"Gov 2.0" as a form of e-democracy therefore could be an important way engaging citizens and especially young people through social networking into political life. This is not a replacement for representative democracy, but it is a means for getting messages out to the people and for people getting their messages and voices past the vested interests and to the attention of political decision makers.

Second Megatrend: a phase shift from Web 2.0 to Web 3.0. The coming years will see the Internet move beyond being a network to connect computers together to being an Internet that connects everything together: cars, machines of all sorts, household appliances, energy meters, windows, lights, whatever you can think of, it can be connected. There are two great implications of this new "Internet of Things". First, this new world wide web of "things that think" will create a sensory network that will allow a leap forward human knowledge about the world we live in. It will lend itself to all sorts of new applications such as energy efficiency, health and welfare services, efficient transport and so on.

If we do this well there will be a massive improvement in our quality of life and sustainability. Here Europe moving first will be a worldwide gain, because if we move first it will be our value systems of tolerance, openness and democracy that will define the form that the Internet of Things takes.

Second, all these new applications represent an almost bottomless well of new business opportunities which we could call the Internet of Services. There is enormous scope for developing applications and selling new services. We are at a fork in the road that leads towards wealth creation. We must take the right path forward.

Third Megatrend: the emergence of the wireless web. Already today applications of wireless technology are a major driver of economic value in the EU economy. These are estimated at 250bn€ or 2-3% of GDP and rising. Moreover it wireless is a lighthouse of European technological leadership. Early next year it is expected that 5bn or three quarters of the planet's population will have use of a mobile handset. This is an unprecedented technological development exceeding the diffusion rates of technologies such as television or even pen and paper not only in terms of penetration and use but in its speed of take-up.

Today, we are currently confronted with a once in a generation opportunity to make sure that Europe promotes and leads the next phase of wireless technology which will be the transition from voice and short text services to the wireless web.

Already today all network infrastructures that are being built are internet enabled, the current generation of smart phones and the next generation of low-cost handsets have at least some internet capacity. In the years that follow most handsets and all networks will be built to offer true wireless broadband (LTE or WiMAX) as well as RFID readers, GPS/location-based technologies, near field communications capacities, etc.

The result could be an explosion of new applications, once again, limited only by our imagination. Examples are easy to cite: industrial and commercial applications in the supply chain, nomadic services for mobile workers, remote environmental monitoring or disaster and security systems that save lives by putting essential information into the hands of first responders, health and education services. All this is in addition to the traditional uses of communication and entertainment.

There are two crucial triggers for the wireless web. First there must be a transition to an open-platform for mobile services. Today's GSM and 3G platforms are closed and operators are only now starting to realise that creating "walled gardens" that direct services towards themselves does not work because it leads to a fragmentation of the market in to "micro-nets" instead of unleashing the global brain of the internet.

Second we must make sure that the spectrum that will be released from the digital switch off in Television will be optimised for Europe's long-term future: the so-called digital dividend. This means, first, sufficiently large blocks of spectrum should be released to allow high speed internet services over wireless. Second, dividend spectrum should be released in a way promotes new competitors to enter and shake up the market, this will encourage an early shift from legacy and closed voice mobile to new and open wireless web services. Third, we need these bands to be allocated in a coordinated way across the EU so that the scale economies are quickly realised for equipment providers and operators, thus allowing users to benefit quickly from low prices. Spectrum policy should become open, market based and pro-competition and now is the time to do it, because now the window of opportunity is open.

Let me briefly mention some other megatrends in ICT innovation: there are many I could cite. For example, we will see a transition to cool-light based on photonics that could reduce lighting energy demands by 30%. There will be a crossover from micro to nanoelectronic devices that will transform manufacturing techniques. The result will drive manufacturing production facilities to migrate towards the best brain power not to the cheapest muscle power. This could be an opportunity for Europe if we can lead nano-electronic innovation. Another example, cars that communicate between each other could dramatically reduce the number of accidents and the levels of travel congestion. The list could – like the ICT revolution – just go on and on...

Now, here we come to the issues. What does all this mean for policy makers and for policy? I have three key messages.

The first is that the current crisis has to be seen as an opportunity. In these times of economic trouble, we must keep up the economic investments in key areas that are essential for our short to medium term recovery and our long term future. Cutting back on ICT research investments at this time would be the most tragic mistake. We would be cutting off our chances to gain from the ICT Megatrends that I have just illustrated. Thus my first message is that now is the time to intensify and, better still, to reinforce our ICT research, development and innovation efforts at EU level.

Second, we need to learn the lesson that Europe is only strong if it acts together. We cannot reap economies of scale in R&D and commercialisation if each country, even if each big country, goes it alone. We need European scale in terms of investments in research and innovation, in terms of opening up markets to stimulate commercialisation and terms of generating the benefits of ICT use for the businesses and citizens.

Let us remember that we have talent: we invented the GSM, the ADSL (that gives most of us broadband), the MP3, the Linux open source operating and the world wide web itself. We have world beating industry in telecommunications equipment and services, embedded computing systems, business software, photonics and industrial robotics.

At 32% of global ICT demand, Europe is also the world's largest ICT market.

But we are fragmenting these efforts into sub-critical national efforts in research and in market roll out. If want to build on the Megatrends, Europe should build on our strengths by creating open single markets for innovative goods and services and by going for innovation and change. We are doing this with the two first Joint Technology Initiatives (JTIs) on embedded systems (ARTEMIS) and nano-electronics (ENIAC). I am proud to announce that for the first time at the end of October 2008, the single European Research Area was finally put into place, with the approval by Member States, the Commission and Private players agreed a list of common projects to develop the next generation of technology to the level of nearly 500m€. This is a large step, but it's just a first step along the long road of making sure that Europe stays abreast of the Megatrend developments.

My third message, and this is absolutely crucial for all the other messages that I give today, is that if we are going to succeed on unlocking the Megatrends we must work to build internet enabled infrastructures that are high speed, open and at the service of the citizen.

High speed fixed and mobile broadband networks are the arteries of the emerging web-based economy. All the megatrends I have spoken about today, but particularly the first three, depend on having access to a seamless network infrastructure. Today our network provision stops at borders given national regulations for national telecom incumbents.

Let us be totally clear on this. If the businesses in your constituency want to do business on a Europe wide basis whether it be to buy, to sell or just work internally across borders they cannot today be sure to get the most basic of business requirements: a consistent Ethernet connection. This is not only a flagrant failure of the Single Market in telecommunications but in the light of the Megatrends I have outlined it is nothing short of a systematic failure of the single market concept in itself.

It is to address these sorts of problems that I continue to propose a European community body that would have the role of coordinating regulatory actions and to make sure that we can have the single market for communications services, so that we can Web 2.0 can deliver productivity for business, so that Web 3.0 services and innovation are unlocked and so that the Wireless Web takes to the air in Europe.

We must also make sure that the future internet is open. The key economic characteristic of the current internet has been that it has created an unprecedentedly open platform for innovation and development of new services. We must keep this characteristic of openness and extend it into the wireless world as we move forward towards the Internet of Services, the Internet of Things and the Wireless Web.

Attempts to foreclose the Internet of the Future will come from many sides from those claiming that there is a need to differentiation service quality, from those claiming that we need more security, from those claiming to combat piracy.

All of these arguments contain a grain of truth, but we must be very careful in assessing them because anti-competitive actions often dress themselves up as arguments in favour of protecting us from harm. But the greater harm would come from the foreclosure by vested interests and incumbents of the future of the internet as a force for innovation and change. That is our future because the open high speed internet is the driver of the Megatrends I have described today.


I have made a clear statement today of my belief that, especially in these days of economic uncertainty, we must continue to invest in our future and that our future lies in the web-based economy.

I am not alone – we here today are not alone – in believing ICT is an important part of the answer. Jacques Attali in his recent report to the French government called ICT "the digital revolution not-to-miss," President Sarkozy has launched his “plan numérique”, the "IKT 2020" initiative in Germany calls for higher investment to put these technologies to work, the newly appointed UK telecoms minister Lord Carter has just launched a Digital Britain campaign.

Let me then close by saying however – good as it is that our political peers see the importance of all things digital – that today we really do need a European approach, because a Digital Britain, or a Digital Germany or Digital France is simply not viable unless they are part of a Digital Europe.

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