Member of the European Commission responsible for Information Society and Media
A European Digital Agenda for t he New Digital Consumer
BEUC multi-stakeholder Forum on "Consumer Privacy and Online Marketing: Market Trends and Policy Perspectives"
Brussels , 12 November 2009
Ladies and Gentlemen,
Let me start by recalling several causes for celebration: the most important event took place this week on the 9 th of November when we commemorated the 20 th anniversary of the fall of the Berlin wall. A unique symbol of hope and optimism for Germany and for Europe. A signal to the world that history can move on to a better and more constructive future.
20 years later, the European Union has enlarged and, with its 500 million consumers, is now the biggest consumer market in the world.
This year, w e are also celebrating the 40th anniversary of the launch of the US research project in 1969 that gave birth to what today has become the internet. There have been incredibly fast technical, market and societal changes linked to the rapid development of ICTs and of the internet. In the beginning when we spoke of online business, we were only dealing with static websites where users mainly looked for information. Users have become main actors in the world of web 2.0 where they buy online, blog, chat, create and exchange content and participate in social networking. And now we are moving more and more towards mobile internet and M-commerce. Very exciting developments for Europe where mobile phone use is still increasing at a steady pace!
Another cause for celebration which I am particularly happy about , is the agreement on the EU telecoms reform that paves the way for stronger consumer rights in the digital environment.
So w hat better time to reflect on the place of consumers in the online world, on the changes to peoples' lives brought about by the internet and on the role Europe is playing to protect consumers' rights and make sure citizens benefit to the full from the advantages of these innovative technologies.
Europe has become a powerhouse but we have also had our setbacks, as had the whole world during the past year. The economic and financial crisis has hit us all. Now we have the common responsibility to put in our best efforts to emerge from this downturn with an ever stronger, more competitive and sustainable Europe.
This is why President Barroso and I have proposed a 'Digital Agenda for Europe' to make sure that Europe focuses on:
the industries and applications that have the potential to lift Europe's performance and
the prominent place and role of consumers in this new environment.
A t elecoms reform for the European consumer
Before I go further, please allow me to say a few words to highlight some of the elements of the agreed and soon to be adopted telecoms reform. This reform package is far reaching and will bring about a whole range of concrete and positive changes for consumers.
I know that BEUC has measured the distance that has been travelled and is satisfied that all parties have acknowledged that the fundamental rights of users have to be preserved in the digital environment.
The new rules state explicitly that fundamental rights and freedoms of citizens must be respected by Member States taking measures regarding use of services or applications via the telecoms networks. These measures must be appropriate, proportionate and necessary and in particular, they must respect the presumption of innocence and the right to privacy.
Let me list some of the concrete changes that will be introduced as a result of the reform.
A European consumer, while keeping the same number, will be able to change mobile operator within one day.
Under the new telecoms rules , consumers will receive better information to ensure that they understand the services they are subscribing to, what they can and cannot do and the corresponding contracts will have to be specific including reference to being listed in telephone directories.
The new rules will ensure that European consumers have an even greater choice of competing broadband service providers.
Net neutrality and net freedom as well new transparency requirements are part of the deal.
There will also be better protection against personal data breaches and spam.
A ccess to the European Single emergency number 112 will be improved by strengthening the obligation to pass information about caller location and improving awareness of the European emergency number.
In addition, various measures have been introduced that will improve and ensure fair competition for the benefit of all users.
Better management of the radio spectrum will improve broadband coverage .
With the unanimous agreement of the Parliament and of the Council, a strong signal was given to European citizens on internet freedom, consumer rights and consumer choice in the digital environment.
But let us not forget that these achievements cannot be preserved without addressing the issues of privacy and protection of personal data as well as of undesirable and sometimes unlawful online behaviour and practices.
Today y ou are discussing digital consumers and the marketing tools targeting them and I see some important topics on the agenda that address the specific challenges of the digital environment. We are witnessing the emergence of radically new business models, new commercial practices and new relationships between business and consumers in their respective roles.
I would like to share with you my thoughts and priorities for the New Digital Consumer, one of the main actors in the Digital Agenda for Europe.
I mentioned earlier Europe with its 500 million consumers, the world's biggest consumer market. It is our job to make sure that these millions of European consumers are really able to use digital services anywhere and any time in Europe and to address their concerns regarding their privacy and the use of their personal data.
Barriers to online commerce
W e still have not achieved in Europe a fully functioning single market for online services provided to the end-consumer.
The figures speak for themselves: only 7% of all transactions made by European consumers over the web are cross-border.
A wide ranging reality test , with 11,000 cross-border online transactions carried out over the whole of Europe, has shown that 60% of these transactions could not be completed by consumers because the trader did not ship the product to their country or did not offer adequate means for cross border payment. Yet, in more than half of Member States, 50% or more or the products could be found 10% cheaper (transport costs included) from a website in another country. So the consumer is losing out because of the absence of a real barrier-free online single market!
Privacy challenge: achieving confidence online
A digital single market cannot function without a framework for trustworthy online payments. This framework must include mobile payments, across Europe, and be built on reliable interoperable systems. The protection of personal data, which come about in such online transactions, and the ability to preserve private information are of major importance to guarantee trust in an online single market.
There is a growing concern of citizens about the risks to their personal data and their privacy. Our surveys, studies and also the letters we receive from citizens show that many consumers feel uncomfortable in the online environment. A large number of disadvantaged users are excluded from the knowledge society or their rights are not protected.
There are many factors creating uncertainty: intrusive business practices that use personal data without respecting the users' will or even without informing them; losses of personal data due to inappropriate security measures; malicious activities such as phishing and spyware, to name just a few.
We do not want to arrive at a point of crisis of consumers' trust in online services. If citizens have no confidence in the digital economy and refuse to participate, this could undermine all our efforts to make the societal and economic benefits of the information society become a reality.
Europe has clear principles concerning privacy and the protection of personal data. They are fundamental rights!
EU legislation includes very precise data protection rules for electronic communications services which are the backbone of the digital economy. And with the telecoms reform, we are improving and strengthening these rules even further. Better information on personal data breaches, clarified transparency requirements against spyware and malware, improved action against spammers and better enforcement of the rules. The European Parliament made it clear in the debate over the Telecoms Reform that we have to discuss issues such as notification of personal data breaches beyond the telecoms sector.
I believe the Commission should look closely at the emerging challenges for privacy and trust in the information society, with a particular emphasis on some of the outstanding issues which were raised during the discussions on the revision of the ePrivacy Directive, such as targeted advertising, convergence, the use of IP addresses and on-line identifiers.
Consumer–cent red initiatives
Let me illustrate with a few examples how the European Commission has acted up to now on this issue. How we have worked in order to establish confidence. As you know, the consumer has always been at the centre of my actions as Commissioner whether via the Roaming regulations, the .eu top level domain name or the 112 emergency number.
In order to improve the confidence of the consumer in the online environment, earlier this year, Commissioner Kuneva and I launched the eYouGuide. This online information tool explains to consumers their rights in the online environment.
The more ICTs are taken up by EU citizens, the more complex it can become to have a global understanding of one's rights and obligations in the digital environment. With the eYouGuide, we have given to the European Consumers a useful tool available in 10 languages and we plan to extend it further in the beginning of 2010. I would like to thank BEUC for its key collaboration on this important project. The guide has the potential to bring an added value in addressing the lack of confidence of users and consumers by highlighting the minimum information obligations and rights that consumers enjoy from various existing Directives as well as the means to obtain redress, take action or report illegal content.
Future Digital Agenda
I consider the eYouGuide as an important step in the direction of creating consumer awareness and providing the trust necessary to get fully involved online. When conceiving the eYouGuide, we realised that while some areas are covered by EU legislation, some other areas need further intervention.
In the framework of the "Digital Agenda for Europe", one issue that is getting my full attention is the protection of privacy and of personal data in the online environment.
I will cite three technological and commercial developments that have particular implications for privacy: social networking, behavioural advertisement and RFID "smart chips".
S ocial networking has a strong potential for a new form of communication and for bringing people together, wherever they are. But is every social networker really aware that all pictures and information uploaded on social networking profiles can be accessed and used by anyone on the web? Privacy must, in my view, be a high priority for social networking providers and for their users. I firmly believe that at least the profiles of minors must be private by default and unavailable to internet search engines. The European Commission has already called on social networking sites to deal with minors' profiles carefully, by means of self-regulation.
I am ready to follow this up with new rules if I have to. But only if there is no other way.
Another privacy concern repeatedly mentioned to the European Commission these days is behavioural advertisement: systems that monitor internet users' web browsing to better target them with advertisements. Now, European privacy rules are crystal clear: a person's information can only be used with their prior consent. Transparency and choice are key words in this debate. The Commission is closely monitoring the use of behavioural advertising to ensure respect for our privacy rights. I will not shy away from taking action where an EU country falls short of this duty. A first example is the infringement action the Commission has taken with regard to the United Kingdom in the Phorm case.
The latest technology trend that is a ffecting privacy is smart chips, the famous RFIDs. While they can make businesses more efficient and better organised, I am convinced they will only be welcomed in Europe if they are used by the consumers and not on the consumers. No European should carry a chip in one of their possessions without being informed precisely of what they are used for, with the choice to remove or switch it off at any time. The "Internet of Things" will only work if it is accepted by the people.
More trust in European websites
The Digital Europe strategy could also give a new impetus to the development of a self-regulatory system for European websites to build consumer trust. Consumer confidence can be built up through European trusted authorities or trustmarks that guarantee the reliability and quality of digital services. The success of the European top domain name dot .eu is significant in this respect because any firm registering in the .eu domain has to comply with European legislation. Looking out for .eu gives some form of basic protection and European firms with high standards could differentiate themselves by adopting .eu.
The issue of trustmarks has been on the agenda for a very long time and I see very little progress towards a European system. That is why industry and consumer associations, I am thinking of the BEUC in particular, must get together to establish a sustainable European trustmark which, I believe, could give our users the confidence needed to "surf abroad" and profit from our large market online. The Commission stands ready to act, if needed.
The Commission has used a broad set of instruments to protect consumers' privacy, and will continue to do so in the coming years. But it cannot solve all problems with legislative initiatives.
All parties involved have to live up to their responsibility:
Industry has to respe ct the rights of consumers: It has to apply clear principles, be transparent and adhere to the rules.
Public authorities have to commit sufficient resources to monitoring and enforcement.
Many of the privacy concerns have a global dimension: we have to work with our international partners to find common ground.
Last but not least, consumers must also play their part: they must be careful when disclosing their data, and inform themselves about the consequences of disclosing them. Consumer awareness is a key factor!
I am convinced that privacy and the protection of consumers' personal data will continue to rank high on the Commission's agenda in the coming years.
A digital single market designed around the rights of the users will be a driver for societal innovation. It will respond to structural challenges in society, such as the demographic ageing, by promoting efficient and trustworthy systems modernising the way social care and health care are delivered to Europeans with new service creation and new jobs.
T he single digital market I see is one without barriers; it is a digital market accessible and usable by all.
Let me end by congratulating BEUC for organising this event and by thanking all BEUC's Members for the excellent collaboration we enjoy.
I wish you all fruitful discussions!