29th Nov 2021

EU in race to digitise economy

  • The EU wants all citizens to have access to broadband internet by 2013 (Photo: Tambako the Jaguar)

The EU is trying to drag all of its member states into the digital age. In the not-too-distant future, all EU citizens should have internet access, most should routinely shop online, their medical records will be stored in a data cloud, they will plan trips using smart technology, access art and culture electronically and pay bills, return tax forms and interact with government all online.

The bid to see virtually all facets of life conducted electronically by the end of this decade is part of the EU's much-vaunted Digital Agenda. The ultimate economic aim is to make sure that the 27-nation bloc is still among those that count - along with China and the US - by 2020.

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"Digital technology ... will provide Europeans with a better quality of life through better health care, safer and more efficient transport solution, cleaner environment, new media opportunities and easier access to public services and cultural commitment," says the European Commission.

Digital agenda commissioner Neelie Kroes says that broadband internet access is a type of "digital oxygen essential for our prosperity and our wellbeing."

By 2013, all EU citizens should have broadband internet coverage. Two years later, half of them should be buying online (and 20 percent buying cross border online) while 50 percent should be partaking in e-government. Meanwhile, a series of public services such as 'e-justice' should be available across borders by 2015 and a single telecoms market should mean that there is almost no difference in price between making a mobile phone call at home and calling while in another EU country.

But while the targets are relatively straightforward on paper, the regulatory, societal, security and privacy implications are staggeringly complex.


The most basic issue is internet access. Some 25 percent of Europeans - mostly poorer and elderly - have never even used the internet. There are vast differences among member states. While Denmark has at 37.3 percent a broadband penetration rate that is amongst the highest in the world, according to 2008 figures, Bulgaria comes in bottom of the EU league table with 11 percent.

And Europe is a long way off in place ultra-fast fibre-based networks - 100 times faster than regular broadband - already at 15 percent penetration in world leader South Korea but languishing at just one percent in the EU.

On top of this, there is little interoperability in the digital market – common standards need to be set if all EU citizens are to equally benefit from such things as e-health, e-transport and e-government. The telecoms market is fragmented. Too few Europeans are skilled in ICT and member states are reluctant to raise R&D spending. This last fault is compounded by the sharp economic downturn across the bloc.

For consumers, a number of practical problems remain. They do not know what their rights are if they buy abroad and something goes amiss – that is if they are allowed to use their credit card at all. Electronic payments and e-invoicing still tends to stop at the physical border. A single European number for a company to deal with customer queries is a good idea, but a long way from reality.

In terms of online content, copyright remains as contentious an issue as ever. An online pan-European music store would have to deal with rights issues in 27 member states, for example, while it is not clear where the law stands on orphan works, whose copyright has expired. The borderless nature of the internet has raised profound questions for musicians and rights management agencies that collect royalties.

"When people start to treat the internet as something that is no longer limited by borders, this makes life difficult both for consumers and for companies," says Fabian Zuleeg, chief economist at the European Policy Centre.

A slew of proposals

The European Commission is due to publish a slew of proposals to tackle just this issue later this year. They include a review of the Intellectual Property Rights Enforcement Directive, legislation on orphan works and on collective rights management (the agencies that collect royalties for musicians). It is also evaluating the 2000 e-commerce law because of the slow-take up in shopping online among European consumers. Meanwhile the European Parliament recently agreed a new law that improve the rights of online buyers including setting down rules governing returns and digital downloads.

EU internal market Michel Barnier's diary is a good indication of the range of the scope of the issue. On a single day in March, he met the CEO of the online trading giant ebay, the presidents of the independent music association Impala and Naive, as well as the head of Kiala, a parcel business.

Aside from regulatory and spending issues, fundamental to the success of the EU's digital agenda is making citizens believe that carrying out more and more aspects of their daily lives online is safe.

"Trust comes by foot and leaves on horseback," remarked EU Council President Herman Van Rompuy explaining the difficulties of building up online confidence.

Fears about security issues already prevents many people from shopping online. According to EU statistics, over a third of people say they do not buy online because of payment security concerns. This fear is closely followed by privacy and trust concerns.

As activities such as e-voting or e-petitions or e-governance become more prevalent, the potential for abuse by authorities grows with it, while companies are keen to closely track consumers online moves so they can better target advertising.

A broader underlying issue for the Digital Agenda is funding. Mr Zuleeg notes that next-generation broadband and smart grids mean "huge investments."

"Public finances are very constrained. It is very difficult to see that this major push is going to come from the member states especially when we're talking about cross-border projects. The majority has to be done through private funding," suggests Mr Zuleeg.

The European Commission is already talking up public-private partnerships as a way to get around empty public coffers. European Commission President Jose Manuel Barroso emphasised the importance of the idea in his State of the Union speech last year.

It is also pushing the idea of EU 'project bonds' to help pull billions in investment needed for smart grids and other infrastructure.

Mr Zuleeg suggests that the Digitial Agenda programme is realistic but to succeed it will need "cross-sectoral" from all the relevant departments in the commission.

"The key issue is to have a coherent list of recommendation – a programme that cuts across a number of DGs jointly but at a very high level."

Read more in the EUobserver April FOCUS on Digital Agenda.

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