Though the Internet is borderless by nature, the European digital economy continues to fall behind its Asian and American rivals. Consumers in Europe can access less content and fewer business models are being created due to fragmented rules for online business across the bloc.
As the EU points out in its 'Digital Agenda', most successful Internet businesses - including Google, eBay, Amazon and Facebook - originate outside of Europe.
However, it is not for lack of trying. Despite EU legislation on eCommerce, including eInvoicing and eSignatures, transactions in the digital environment are still too complex and their take-up is too slow across the bloc.
In addition, consumers are still not fully in the picture. In spite of its 15 or so years of popular existence, the Internet's consumer rules are still largely undefined and customers still want answers on how they can get refunds from websites in other countries or how their data is used.
The EU has recently undertaken a number of initiatives to simplify rules for businesses and consumers online in a bid to save them both time and money.
In a drive to save billions of euros per year for European businesses struggling with the economic crisis, the European Commission wants to make electronic invoices – eInvoicing – the norm across the EU by 2020. If paper invoices were to be replaced with electronic ones, Brussels estimates that annual savings of €40 billion would accrue across the bloc.
Different eInvoicing rules from one member state to another, such as advanced electronic signatures that go beyond common standards, create legal obstacles. This represents a serious disincentive to operate across borders, especially for small companies.
Easier international payments
In addition, a cross-border direct debit scheme is one of the cornerstones of the Single European Payment Area (SEPA), which should allow payments to be made with the same details across the bloc.
The new system is based on the use of international bank account numbers (IBANs) and bank identifier codes (BICs). The European Commission will soon announce a regulation setting binding deadlines for the total extinction of national systems, with a one-year window to adopt SEPA credit transfers and two years for direct-debit payments.
The European Payments Council (EPC), an organisation set up by the banking sector, developed the scheme.
Some argue that SEPA will damage business as it narrows the scope for innovation and competition in payment schemes.
The European Savings Banks Group argues that the EPC would be better off standardising how payments' cards across the bloc are authenticated, leaving room for new schemes to materialise.
Take-up of SEPA has been sluggish as businesses still await the end date of their legacy schemes, which has not yet been set by the European Commission.
In addition to new payment rules, online sales have not taken off in the EU as payments continue to fail and consumer trust is lacking.
On average, 57% of EU citizens ordered goods for parcel delivery using the Internet in 2010, according to Eurostat.
The eCommerce Directive, which regulates a broad swathe of Internet activity in the EU, is to be reviewed to provide businesses and consumers with greater legal certainty in a borderless online marketplace.
New rules should allow creators and artists, for example, to sell their work throughout Europe with a one-stop shop for authorisation.
eCommerce rules will take time to materialise as the institutions argue over consumer rights, privacy and copyright.
Mobile roaming prices heading for further cuts
An earlier – and undisputed – attempt by the European Commission to facilitate a single telecoms market sought to whittle down telephone roaming costs in a bid to save consumers from unjustified fees.
In June 2007, the Commission introduced a regulation placing a cap on prices of cross-border mobile calls in Europe, triggering furious reactions from mobile operators who branded the move "populist".
Consumers' reactions were positive, however, and a new regulation was adopted in 2009. The regulation took steps to gradually lower caps for voice roaming, together with guarantees against 'bill shocks' for data roaming.
But consumer organisations like Brussels-based BEUC want to see roaming charges disappear for good as they consider them excessive and non-transparent.
The European Commission launched a public consultation in 2010 on how to improve competition in mobile phone roaming services in the European Union, which will seek the views of consumers and businesses on how to cut the difference between roaming and national tariffs to zero by 2015.
In the meantime, mobile operators via the GSM Association have developed the Inter-Operator Tariff (IOT) system to guide the charging arrangements set down by operators when negotiating party-to-party agreements.
Interoperability and standards
The European Commission plans to rewrite ICT industry rules to make sure dominant technologies, like devices with always-on connectivity, do not lock consumers into supporting monopolies and hamper innovation.
Interoperability describes the ability of computers or digital systems to exchange and use information with one another. Lack of interoperability of Microsoft software and servers, for instance, was at the centre of an antitrust case brought forward by former EU Commissioner Mario Monti in 2004 when he was head of the Commission's competition department.
The EU executive recently announced the adoption of the European Interoperability Framework, which has been closely watched by big ICT firms and public administrations who want to know what kind of licences software should have - Fair Reasonable and Non-Discriminatory (FRAND) or royalty-free. The EIF proposal recognised both FRAND and royalty-free licensing as acceptable for open standards.
Interoprability not only affects consumers and consumer goods but also enterprise. The European Commission last June launched an antitrust investigation into IBM's mainframe business after two smaller companies complained that they could not use the companies operating system without buying costly IBM hardware.
Speaking to EurActiv in an interview, Kroes said interoperability will be at the heart of the Commission's digital agenda, with a yearly scorecard measuring the industry's progress. She said one of her main priorities will be ensuring that new market trends in digital consumer goods do not lock buyers into supporting monopolies.
"Under the Digital Agenda for Europe, we will examine the feasibility of introducing measures to make big market players license interoperability information," she said. The objective, she added, is to make sure that devices with always-on connectivity, like Apple's iPhone, don't lock consumers in to proprietary technology.
Commission initiatives in the area stem from a 2009 White Paper 'Modernising ICT Standardisation in the EU – The Way Forward'. The European Parliament has also published a non-legislative report on the future of European standardisation.
Trust and security
Consumer confidence is crucial for boosting the take-up of ICT in Europe. Fighting against cyber attacks and data retention issues are also key issues for the EU and national policymakers alike.
The European Commission is planning to a review of the Data Retention Directive, which could include legislative harmonisation and a reduction of the periods when public authorities can access citizens' private electronic data for security reasons.
The EU executive is preparing to publish, at the beginning of 2011, an evaluation report on the directive, which will likely lead to changes to tackle any shortfalls. For example, periods of retention are currently laid out in a vague manner.
The text says that personal data must be "retained for periods of not less than six months and not more than two years from the date of the communication". This wide window is the result of a complex balance of opposite interests.
On one side, law enforcement authorities are eager to keep private data for long periods as it helps them with their enquiries and provides evidence in trials. Internet businesses, like Google, also claim that longer data storage helps them improve their search algorithms.
As a consequence of the directive's lax wording, member states opted for different retention periods at national level. But the majority of member states have allowed retention periods of between 12 and 24 months. In Poland, however, some operators keep data for up to ten years.
European Data Protection Supervisor (EDPS) Peter Hustinx is piling pressure on the EU institutions to completely overhaul the directive. "The EDPS regards the directive as the most privacy invasive instrument ever adopted by the EU in terms of scale and the number of people it affects," Hustinx said, demanding tangible evidence that "it constitutes a necessary and proportionate measure".
According to a recent paper, the Commission is gearing up for a crackdown on how web companies, in particular social networking sites such as Facebook and online advertising firms, use citizens' private data.
Citizens should be kept informed of "what their rights are if they want to access, rectify or delete their data," according to the paper, entitled 'A comprehensive strategy on data protection in the European Union'.
Behavioural advertising, when an individual's browsing history is used to better match advertorial materials with consumers, is also highlighted as a practice that needs stricter rules.
Industry sources argue that cookies are instrumental in their business models and that the Commission should avoid inventing burdensome consent or privacy notices that could hamper their business practice.
Very fast Internet
The European Union has seen connection speeds double recently but still has a steep hill to climb to hit the targets set out in its Digital Agenda.
New research by the European Commission found that 29% of citizens had access speeds of 10 Megabits per second (Mbps), up from 15% in July 2009, but that regions faced a "long road" to reach even 5Mbps by 2013 and high-speed access by 2020.
The Commission is working on a number of initiatives to reach these targets (many of them are outlined in the Broadband Package published in September 2010). The package includes a long-awaited and highly contested Next Generation Access recommendation, which sets out non-binding guidelines for regulated access to networks now and in the future.
The package also includes a five-year programme to promote efficient radio spectrum use, encourages public and private investment in networks and proposes the inclusion of broadband in the EU's Universal Service requirements to increase its take-up.
In September, EU Commissioner Neelie Kroes, in charge of the dossier, presented a radio spectrum proposal to accelerate the roll-out of mobile broadband, especially where there is little wireline infrastructure.
The EU's spectrum policy tells member states to wind down analogue services in order to make way for more digital services, thus freeing up bandwidth for higher broadband penetration in rural areas, for example.
"Fast broadband is digital oxygen, essential for Europe's prosperity," Kroes said. "Take-up and available speeds are improving, but we need to do more". The Commission's Radio Spectrum Policy Programme (RSPP) is currently under scrutiny at the European Parliament and the member states.
Research and innovation
The way data is accessed and the amount of data that is used daily changes every day. Devices are changing beyond recognition as we start to write on electronic pads or move images with our fingers. These trends are important drivers of the ICT industry.
The Commission intends to step up investment in these trends. Raising investment in R&D to 3% of the EU's GDP is one of the five priorities of a draft ten-year economic plan unveiled by the European Commission in March, called 'Europe 2020'.
The Digital Agenda also outlines a number of key priorities in R&D, such as leveraging more private investment in pre-commercial procurement and public-private partnerships, using structural funds and targeting a 20% yearly increase in the ICT R&D budget, at least for the duration of the 7th Framework Programme for Research.
In Europe, while there is great excitement about innovative technologies such as cloud computing, almost 40% of Europeans do not have basic computer skills.
Acquiring those skills will be critical for European citizens if they want to raise their employment prospects and keep abreast of technological innovation.
In 2009, the International Data Corporation conducted a survey of 14 European countries as well as the CEOs of large companies and SMEs, who thought that in five years, 90% of all jobs would require at least basic e-skills.
The EU's 'New Skills for New Jobs' initiative was launched in December 2008. Its premise is that in order to provide job opportunities for all and create a more competitive and sustainable economy, Europe needs a highly-skilled workforce able to meet current and future challenges.
In-company training will be a key step towards realising the plan, according to EU Employment Commissioner László Andor. In November 2010, the commissioner published a set of proposals known as the 'Agenda for New Skills and Jobs'.
The Digital Agenda, meanwhile, points to a burgeoning female workforce between the ages of 15-24 which should be mobilised to upgrade digital literacy. It also sets out more effective ICT training and certification outside formal education systems, including the use of online tools and digital media for re-skilling employees.
Further plans were presented as part of the Europe 2020 flagship proposal to create an 'Innovation Union'.