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Neelie Kroes

Vice President of the European Commission responsible for the Digital Agenda

Ingredients for ICT success in Italy

Italian Digital Agenda Annual Forum (Confindustria Digitale)

Rome, Italy, 11 April 2012

Investing in Information and Communications Technology pays off: ICT offers a bigger return than most other capital investment. No wonder it already represents half Europe's productivity growth.

And everywhere you look, people are finding new opportunities online. People use the Internet to connect with distant friends and family, to build up skills or look for work. Businesses use e-Commerce to develop new products and services, and sell into new markets. Governments provide citizens with online services that are cheaper, faster, and more effective.

Beyond that, I see a future where ever more applications and innovations are electronic. By 2016, online channels could account for over 10% of retail spending; over 25%of advertising. More and more devices will be connected – from your car to your house. And there will be new services like e-Health, which mean better outcomes, less disruptive methods, provided at lower cost.

To deliver the economic boost we need now and in the future, we must invest in ICT. Financially and politically. Here are three ways in particular.

First, we need digital skills.

Remember that our young people face horrific unemployment. Well, here's one sector where vacancies could soon outstrip supply: a talent shortage of around 700,000 ICT professionals by 2015. This is a huge opportunity for Italy – where the share of graduates studying computing is just a third of what it is in other big western European countries.

If we didn't do that, and weren’t ready to meet tomorrow's human capital needs, we would do a great disservice to our people and our economy.

And look at the other end of the skills spectrum, too. When so many things are best found online, you have to worry about the risk of a digital divide.

41% of Italian adults have never used the Internet. 41% of citizens missing out on all those online opportunities. That's two to three times the levels seen in France, Germany or the UK. What will happen to them?

So I say: invest in getting every Italian Digital. Then every Italian can benefit from those economic and social chances. Governments can save billions of euros through wider use of cheaper, easier e-Government services. And businesses can access new markets.

Second, we need to invest in a digital single market with high-speed broadband for all.

The Single Market is indeed Europe's crown jewel. And as Professor Monti himself put it, today we need it more than ever.

That includes the online world. If you're selling a product or service online, it should be just as easy to market it to people in Rome, Rotterdam, or Riga. But too often a complex web of different national arrangements stands in the way: whether it's rules on copyright, authorisation, payment, or whatever.

Such digital barriers shouldn't exist in the single market: they make it harder for consumers to buy what they want; they strangle business innovation by decimating economies of scale.

And a digital single market also needs high-speed broadband for all. Because the services of the future – from online films to virtual operating theatres – will use significant bandwidth. With internet traffic already growing exponentially, and doubling every 2 to 3 years, the pipes are going to get full pretty quickly.

We can't rely on decades-old infrastructure to solve this problem: we need new investment to remove those constraints and boost our economy.

And remember that here in Italy, fixed broadband coverage and penetration are both lagging behind. Broadband penetration is 10 percentage points behind French or German levels: that "broadband gap" is equivalent to missing out on 1 to 1½ % of GDP.

The third thing we need is to continue to invest in innovation. All the great benefits of ICT—new technologies enabling new tools and new techniques—have not come about by accident. But through research and innovation: the main drivers of future productivity and growth.

In future, we will need to continue that investment and continue that innovation.

Why do we need all this investment in ICT? Because in almost any sector, from transportation to tourism to television, our businesses are going digital. In the future, companies will want to set up only in a connected economy: with access to broadband; with a digitally literate talent pool; and with easy access to a single market with a single rulebook. Already, where these conditions aren't met, Europe's small businesses are feeling the squeeze. And already we need to fight to keep Europe an attractive place for multinationals to invest, against tough competition from Silicon Valley, India and elsewhere.

This is why I am delighted by the emphasis taken by the Italian government. I welcome the Italian Digital Agenda, taking further our European vision. I welcome the emphasis the government rightly places on the digital single market. And I welcome the investment Italy is making in new connected initiatives—like nearly a billion euros towards smart cities.

But from my perspective, there are four things we need watch out for in particular.

First, we need stable, European public funding for ICT research and innovation. Already Italy sees the benefit of significant EU ICT funding: nearly 1000 projects, over half a billion euros.

Our proposal for the next generation of EU research funding, Horizon 2020, would build on that, and ensure that we invest in the future – benefiting not just Italy, but all of Europe.

Our scientists would be able to model ever-more complex experiments on high-performance computers. Our manufacturers would get the super-fast, high-quality, zero-fault processes delivered by Photonics. And new e-Health services could help older people stay active and independent for longer. And bear in mind that this last is a hugely growing market: within 30 years, over one in three Italian adults is likely to be over 65.

With Horizon 2020, we could create a European Research Area the envy of the world. And we can ensure Europe doesn't miss a trick in the digital age.

Second, we need a sound telecoms market: a stable framework that promotes consumer choice, while providing the incentives for the private sector to invest, innovate and compete. Completing the internal market in electronic communications could boost the EU's economy by up to 0.8% of GDP: 110 billion euros.

But, remember, a key part of our consistent EU legal framework is that national regulators are independent and should have the powers and the discretion to take effective decisions. That is why I have concerns on the impact the recent Italian parliamentary amendment might have on the margin of discretion of the regulator's powers as envisaged in the Regulatory Framework. My Commission services have already written twice to the Italian authorities, raising questions about the drafts considered by the Chamber and the Senate. As this amendment has now been voted into law, I hope that we can find a swift means of resolving these concerns in a way that avoids ambiguity.

Third, sometimes the private sector seems unwilling to get involved in broadband projects. They see them as too risky, or too uncertain; especially in rural or suburban areas. Support from the EU's proposed Connecting Europe Facility could give that extra assurance that investing in high-speed broadband is safe and profitable.

This would be innovative financing. It's not just the EU writing cheques: it's making your euro work harder through equity, loans, and guarantees. It's about reducing perceived risk, to crowd in private finance. And not just from the "usual suspects" of telecom companies, but from anyone who, like me, realises that broadband is a sound investment in tomorrow's technology.

All together, it's about securing leverage so that just over €7 billion of EU money could fund over €50 billion of broadband investment across Europe. That's the kind of European added value we need from the EU Budget.

In addition, I fully share the views of the March European Council that we have to cut the cost of high-speed broadband infrastructure. I will soon launch an EU wide public consultation on what more can be done in this regard.

And fourth, for those not yet online, every EU country needs a digital champion – someone with the profile and persistence to ensure everyone gets online. An individual who can work with private, public and voluntary sectors to bring the digital revolution to every single citizen.

The digital champion model is one I've seen work in countries from the UK to Romania. And it’s a model that can work in Italy, too.

Those are my ingredients for ICT success: solid EU funding for innovation and research, a sound competitive market, the Connecting Europe Facility, and digital champions across Europe. Together, they can ensure our people have the tools to deliver opportunity. That our businesses have the networks and frameworks to stay ahead of the global pack. And that in the digital age, Europe stays the connected, competitive continent.

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