Robert Madelin: EU ‘not putting its money where its mouth is’ on broadband
Europe is lagging behind on super-fast internet connections, warns Commission director general Robert Madelin, in charge of digital matters. In a broad interview with EurActiv, he also speaks about emerging issues for the incoming Juncker Commission.
Robert Madelin is director general of the European Commission’s Communications Networks, Content and Technology (CNECT) department. He spoke to EurActiv’s founder Christophe Leclercq and publisher Frédéric Simon.
Looking back at the Digital Agenda for Europe, what are the areas where you feel most progress has been achieved, and the ones where it’s been too slow?
When we launched the Digital Agenda in 2010, a lot of people thought it was going to be about research. Since 2011, we’ve really got a mainstreaming of the understanding that digital really is big.
The good news is the recognition that, if digital is big, then infrastructure spending globally is a problem and administrations need to modernise. And it also means radical economic transformation and controversies about the relationship between technological innovation and jobs.
So the good and the bad news is that digital is now understood to be mainstream: two thirds of the member states now have their national plans which they didn’t have before and digital is an ICT concentration objective in the structural funds for the next seven years which it wasn’t before. So the place of digital in everybody’s vocabulary and planning has got better.
What has also gone well is the basic low-speed connectivity – we’ve got to 100% penetration. The high-speed is a big problem. The Parliament and Council rejected the proposal for a 7 billion euro innovative financial instrument for connecting Europe with broadband, which the new Parliament now realises was a mistake. They realise that was a mistake because of President-elect Juncker’s very strong call for a 300 billion euro fund on infrastructure.
On high-speed broadband, the Commission’s latest digital agenda scorecard shows only a tiny proportion of households have a subscription of over 100 Megabytes per second (MBPS). Can the EU still meet its 2020 target of 50% households covered with super-fast internet?
We had three targets. The bread-and-butter one [< 30 MBPS] we met on time, the mid-range one [> 30 MBPS] is now the problem. And the 100 MBPS is beyond that.
So we take it step by step. Despite the fact that Council and Parliament said they liked the broadband goals, they didn’t put their money where their mouth was in the last period. We now have to see in the next year – and particularly with Juncker’s challenge of making 300 biilion euro investments – whether we can improve on that.
So the jury is still out. There is an investment infrastructure gap that needs to be fixed. And as of today, I think there are two problems. First, the public funding is underweight at the national and European level, and second, the innovative financial instruments are not yet being picked up, which could affect the budget mid-term review.
If high-speed connectivity and the 300 billion euro investment indeed becomes a priority for the Juncker Commission, how soon can it make an impact on the ground?
I would say within the next 18 months to 3 years. The process of running a cable along the electricity is relatively fast. The longer part is always the last mile. I believe the scope for people to dig their own cable at the local level is grossly underexploited and that’s where structural funds can help.
It can also make a difference simply in terms of emulation. In the UK for instance, the degree of focus is still perfectible and there a wide gaps in big towns and in peri-urban and rural areas. So if a country signs up to a big new package at European level, it will also impact rather quickly on regional governments and on potential private investors.
Is DG Connect preparing an update of the Digital Agenda considering the high-speed broadband objectives are not on track?
What we’re all working on is the ‘Europe 2020’ review, which is the main vehicle in the short term for working out what the Juncker Commission and the new Parliament will want to do in terms of the governance of much-needed structural reforms in Europe. So how you deal with the ‘Europe 2020’ flagship initiatives like the Digital Agenda will depend on that.
Commission reform: 'There is a human aspect to what we call silos'
Turning to the new Commission, do you believe DG Connect will stay on in its current form? And do you believe there should be an internal reorganisation at the Commission to break the silo structure currently in place?
In terms if structure, all the DG’s have made their contribution on what are the options and the Berlaymont will decide when they write the mandate letters for the new Commissioners.
On the question of silos, I believe that in big organisations, process dominates structure. You can restructure all you like, if you don’t change processes and culture, you don’t de-silo human brains.
And there is a very deep human aspect to what we call silos – it is the dark side of the fact that we like to be in teams with which we are familiar, sharing goals, values and having coffee from time to time. And so, you need to try and connect people through processes and new technology which can help irrespective of the structure. So my big bet would be on digital and other modernisation steps in the organisation, irrespective of the structural decisions.
Can you mention some internal tools you are considering?
One of the process principles that we lack here I think is genuine team work between sub-sets of commissioners or directors-general.
It can be done if the conditions are right. If you look at the research and innovation partnership on active and healthy ageing, three commissioners were really pushing for that. And it worked really well. But in other areas it worked less well so you need to take the best practice and make it the norm.
The other part of the solution is empowering every individual in our team – 35,000 officials – none of them are as fully exploited as they could be in terms of being creative. And here, social media techniques can be used to join people up and change processes, so that a bright idea can emerge immediately without going through seven layers of hierarchy. That could unleash a huge amount of much-needed energy.
Could such changes bring more efficiency at the Commission than the re-organisation of the College of Commissioners around so-called “clusters”?
The organisation of the College determines the organisation of the services and directorates, so it does have an impact. The jury is still out on the machinery of government at either level, so we’ll have to wait and see. I simply believe you can change structures within the College, services or both without a big impact, if you don’t also change the process.
eHealth: 'Either too much or not enough data being shared'
You spoke about eHealth and privacy in Parliament recently in Parliament. Do you believe there is a regulatory gap that needs to be addressed so that citizens can secure their privacy in an era where huge amounts of data are being shared?
One of the lines we’ve put in our briefing for the next Commission is that, as new technology comes enters the market, there are issues with securing privacy. This does not mean that, as an institution, we understand the challenges fully or that we can fix them.
So the answer is partly we don’t have a strategy yet – which is ok to say since Barack Obama said it – and we have to be conscious of that. We are working in an area which is emergent and human beings are funny things and society even funnier.
The second thing is that on personal data privacy, we are in the middle of a very complex and important legislative process and the new Parliament has yet to get to grips with it, although the Rapporteur is the same. We don’t therefore face a regulatory gap.
But eHealth is an area which is rather specific…
Yes, and in Article 5 of our proposal for a Data Protection Regulation, we deal with the special case of health. That was subject to first reading changes in the Parliament before the elections. And some health researchers say that the current form of that text is not fit for purpose for their research model in terms of online cancer registries, the massive crunching of individual genomic data to personalise medicine research.
So you are saying there is not enough personal health data being shared?
Well it’s either not enough or too much. So it’s not a regulatory gap, it is a question of the alignment of that particular article with the future-looking opportunities which data create for saving lives. And this is a very important issue to get right. But it’s not a regulatory gap, it is a regulatory dilemma.
Cyber-security: 'Clear and present danger'
What other emerging issues do you see for the Digital Agenda in the new Commission?
Running quickly through the Juncker 10-point plan, the infrastructure gap is already in the middle of our radar screen. Public sector modernisation is part of his pillar number ten about a more democratic and transparent society, and that’s also important. Then, the global and transatlantic angle is crucial for innovative and research-driven area such as digital. We are constantly cooperating with our partners on 5G, on the next generation of semi-conductors.
But that does not distract from the industrial base in the broader sense – it’s not just the car it’s also the software imbedded in the car –, the pillar there where Juncker is talking about re-industrialising through innovation, it’s absolutely what we’re trying to do. And all the public-private partnerships that we have – whether it’s the next generation of micro-electronics, data analytics, cyber security, that’s big as well.
Now, there are some issues currently bubbling under in 2014 which are going to become mainstream. And cyber-security is a big one.
Especially with Russia? There were attacks recently reported on some US banks which are believed to come from there…
Yes, but there are hundreds of attacks every day of the year. Knowing where they come from is one of the big problems.
Can Russia be considered a rogue state in that respect?
I don’t know. And the people who do know are not going to tell us, so I think we have to be a bit careful. But the volume of the threat is real, and growing. And I think that there, there is a regulatory gap.
We have made a proposal for stronger company-to-state and state-to-state cooperation around network information security threats. And so far, companies and many member states have said that this looks disproportionate with regards to the subsidiarity principle. There is a regulatory gap there, there isn’t enough cooperation, and that is a clear and present danger.
There is a clear and present opportunity as well. The European cyber-security industry has some really world class assets, but typically people think about non-European companies as the major players. Can we build that as one of the global winning industrial platforms that President Juncker is talking about?
'Copyright needs to be looked at again'
Turning now to the media industry and the internet, it seems Europe has been relatively good at solving the “pipe” issue, but less good on solving the content issue running through the pipes. Are digital copyrights currently holding back the development of a digital industry?
I’ll talk about copyright first and then address the media industry separately.
I’m right behind President Juncker when he says that copyright needs to be looked at again as part of the connected single market. There is a B to C part – why can’t consumers get all the stuff they have legal access to wherever they are? So that’s passive consumption in copyright terms, which would also unlock a real longtail market, which is currently prohibited because we want the world to go on being 19th century.
And the other part, which is not yet in the Juncker discourse, is text and data mining which is really huge. And that’s where the licences for Europe debate which Barnier and Kroes co-convened brought some movement. But it’s not total. And there is a question outstanding there whether you need to move from voluntary scope for exceptions to copyright law to something more formal. In the US you have ‘fair use’ which covers text and data mining for research and even for commercial purposes, I think. In Japan, you have a specific text and data mining clause in their copyright law. And in Europe, we don’t have either. So I would say these are the two areas which seem big issues in copyright form a digital perspective.
How far are we from pan-European licences?
Pan-European licences are available under current law. They probably don’t suit everything and therefore I don’t think they are a panacea. And therefore I don’t think the answer will ever be that you can only licence for the whole of Europe. I don’t think we will go to copyright exhaustion, this is a more complicated problem which requires a more complicated solution.
Are you thinking of football broadcasting rights for example, which need to stay territorial?
At the moment, all rights can be territorial and particularly with football because it is a segmentable market with real demand everywhere. Most of the time the people who own the rights want to segment the market.
And the result is sometimes perverse, because smaller markets may be cut out. What do we do about the Maltese consumer who can’t legally access the Premier League in real time and who either has to go through a VPN solution or just cry into their beer? That is an issue which Juncker speaks to – consumers should be able to have access to the good stuff as long as they are paying. So if passive consumption were legal, people in Valletta would pay and it would not be a breach of territorial licence.
So you believe passive consumption is something quickly achievable and relatively low-hanging?
Yes, that could be relatively low-hanging. But it may not be the choice. That in any case is a legislative question – whether you go for a big bang or not on copyright. Juncker has put the finger on it in his manifesto, and he has been elected, so it’s something he will now look at. It’s ambitious and it’s going to change the law – he said that. What we don’t know is the full detail.
Media sustainability: 'not only about subsidies but also innovation'
Moving on to the media, how can the EU accompany the transformation of the media sector? Is it via policies or through R&D funding for example?
In today’s climate, we have to approach with caution any particular call for intervention. It is very easy to say media pluralism and independence is important for democracy. But what we’ve learned from the Barroso period is that it is not evident that EU member states want the Commission to be the solution. So the question of where the guarantees come from is not trivial at all.
How about the issue of media sustainability instead of independence?
Independence is the start – you don’t want any old media to be sustainable. You want the right media to be sustainable. And some member states – there was a UK House of Lords report recently – are seriously looking into reassessing their public policy analytics of the competition policy and regulatory aspects of a sustainable and independent media.
But they don’t think that can be done outside a national context. And we should think seriously before we bring it all to a European level, because the European level may not get the traction it needs. So whatever is happening at the European level should be synergistic with the national level.
On business models, it is very delicate to stand for the sustainability of the actors you know against the innovation principle, which is not about laissez-faire but strongly in favour of allowing innovation into the market under monitoring to see what’s happening.
And too often in Europe – and I think Uber is very good test – you hear people say, ‘Oh dear, disruption is disruptive, let’s prohibit it’. But then you never find out whether it’s a good idea.
The best disruption succeeds. The motorcar had to proceed at walking pace behind a man with a red flag in the UK for a couple of decades, but we now have motorcars going at 120km/h.
With the digital economy, it probably leads to as much job destruction as job creation. How do we know whether the balance is still positive?
With innovation, you never know. As Einstein said, if we knew what the answer was it wouldn’t be research.
Again, we’re briefing our Commissioner to say that the balance of evidence is that digital innovation creates more jobs than it destroys.
And there is lots of evidence – from the OECD, McKinsey, the Boston Consulting group, etc.
Coming back to the difficulties faced by the media sector?
First, we have to be sure that the public shares the problem statement and that it’s not just journalists saying there is a problem. Secondly we have to be sure that there is a political will between national and EU actors.
And thirdly we need to find a way which is innovation-friendly to preserve the institutions in the media that we need. And that is a much more complex discussion than saying we need to guarantee plural, free media and lots of journalists.
And even the journalists agree because they do not want subsidies for journalism schools, they want to be independent.
An industrial policy is not only subsidies. Right now the majority of advertising revenue in Europe is going to California-based companies, and those companies do not pay very much tax in Europe. Is that an accepted outcome of the current policy mix?
I’m a globalist and I don’t believe we have much choice on the matter. You can either be North Korea or you can work to be a winning part of the internet economy.
A priori, Europe should be able to punch at its weight, and get its share of the global internet pie. So in the short term, I’m not so interested in stopping advertising revenue flowing to foreign countries. The question about the tax and the base-erosion profit shifting is a different one on which the EU states should come together in Brussels and be more proactive. But that’s a big, big question.
The more interesting question is how do you build a business model that survives within the different languages groups in Europe. And you’re right, it’s not only about subsidies, it can be about innovation. And it may well be about smart interventions that are not interventionist, or picking winners.
On innovation, the Horizon 2020 programme means innovators in online media can get together and get support in Europe. We don’t yet detect a huge willingness to do it, maybe because the biggest media companies already have very deep pockets for innovation.
European media will win by innovation and giving the customer what they need and that means being local everywhere. If in the past the sustainability of many print media houses came from having a big business in regional imprints, why is it harder to do that online than it was before? If small advertisement and social tools on the internet are so attractive, do they have to be disintermediated? Why would newspapers have Facebook ads climbing into their news articles rather than providing their own?
A real debate about strategy for news media is an important debate to have. But we mustn’t default too quickly into a corporatist vision or an Atlantic-phobia version, which is much too prevalent. I think Europe can win. This is a very complicated area, but we should talk about it.