This article is part of our special report Innovation and the Digital Economy.
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, Neelie Kroes, EU commissioner for the Digital Agenda, told EURACTIV in an exclusive interview.
Neelie Kroes began her political career as a member of the Dutch parliament for the liberal VVD party before she became state secretary and minister of transport, public works and water management.
Her career in the EU began as competition commissioner (2004-2009) and continues as the current executive's commissioner for the Digital Agenda (2010-2014).
She was speaking to EURACTIV's Claire Davenport.
'Digital Agenda' sounds more technical than 'Information Society'. How will you make sure that citizens understand the value for them?
The name 'Digital Agenda' conveys the importance of living in a digitally driven society. Information and communication technologies (ICTs) are everywhere around us. They affect us in our daily lives and are growing in influence and importance: whether it is shopping, banking, socialising and interacting online or using ICT to help the elderly.
Thousands of ICT solutions, innovations and applications are being invented every day for the social and economic benefit of citizens. Through the Digital Agenda for Europe, the Commission's policy programme for the next five years, we will bring these solutions closer to people and enable citizens to enjoy the benefits that they offer.
It is crucial that we communicate our plans to citizens, since we need everyone to help implement our ambitions. The concrete actions will create a true digital Single Market, ensure faster Internet access, enhance digital literacy skills and apply ICT solutions to tackle challenges like protecting the environment. It will give people access to all the potential advantages of the digital society.
Your predecessor, Viviane Reding, was highly successful in leveraging the success of her 'roaming regulation' in the media. What will be 'your' roaming achievement?
In five years' time, I will not want to be judged on a single, headline-grabbing initiative, but rather on my overall record. My record in terms of exploiting the full potential of information and communications technologies to deliver the Digital Agenda's targets, boosting Europe's prosperity and improving people's daily lives. With at least 100 key actions in the Digital Agenda we have a lot of potential successes.
What Europe needs most in the next five years is a sustainable economic recovery – the combined effects of the Digital Agenda actions are the lynchpin to achieving that.
There is no other set of actions that has the potential to deliver so many positive impacts at once. Investing in ICTs creates growth by boosting productivity, it creates sustainable jobs by improving companies' competitiveness, it reduces deficits by saving taxpayers' money. It will give older Europeans the possibility to live a better life with more independence and dignity as we face a carer shortage; it gives us new ways to cut carbon emissions, for example by more efficient energy management and lighting technologies.
There are lots of smaller practical benefits too – having a true Digital Single Market will deliver many improvements to daily life. Easier shopping online (with access therefore to a much wider choice of goods and services), new markets for small businesses to reach, legal alternatives for music downloads and so on.
You moved from the competition portfolio to a regulatory portfolio. What are the differences in opportunities you identify when moving from one to the other?
There is a regulatory aspect to the Digital Agenda portfolio, but it is also a horizontal, creative and innovative portfolio, which involves cooperation with nearly all my Commission colleagues.
Getting every European digital won't happen through only a few regulations. It requires a massive partnership effort across all levels of government and industry. It requires a new business climate in Europe that encourages innovation and entrepreneurship. So I think the real challenge is not in delivering regulation where it is needed, but in mobilising this movement for action and managing the many component parts.
There is also a very strong long-term aspect to this portfolio. We are funding very long-term research and finding ways to deal with massive but slow-moving changes in demographics and climate, for example. Our work is about introducing people to new opportunities and helping them to feel comfortable with new lifestyles. So, I don't wish to minimise the need for regulation in telecoms, for example, but I have the chance and the obligation to do much more in this portfolio.
As competition commissioner, one of your most high-profile corporate battles related to interoperability issues with Microsoft. Interoperability is now listed as one of the priorities in your draft 'digital agenda' for Europe. Is Microsoft still the main concern?
This is not just about Microsoft or any big company like Apple, IBM or Intel. The main challenge is that consumers need choice when it comes to software or hardware products. Any kind of IT product should be able to communicate with any type of service in the future.
Interoperability of equipment used, of services provided and of data exchanged promotes an increase in user confidence, value and choice. It also promotes acceptance, success and take-up of new technologies and thus competition among providers. It empowers the user to make the best choice in terms of value for money and suitability without being locked-in to one specific company or brand.
Open standards are therefore vital to deploy interoperability between data, devices, services and networks. Internet is the best example of the power of interoperability. Its open architecture has given billions of people around the world access to devices and applications which talk to one another.
What emerging issues do you see?
The digital Single Market is prone to positive network effects, based on the growing value of a product or a service as more people use it, but it can also lead to customer lock-in and lead to dominant market positions. At the same time, innovation also depends on interoperability, meaning that devices and services offered by different companies can communicate with one another.
We therefore need to make sure that significant market players cannot just choose to deny interoperability with their product. This is particularly important in cases where standards don't exist or users are obliged to use a product in one way or another but there is no specification describing the de facto standards it uses. Complex ex- or post- anti-trust investigations followed by court proceedings are perhaps not the most efficient way to achieve this.
To achieve the right balance between the interests of different market players, we will need to better assess and balance the costs related to whether different products and services are interoperable or not. Under the Digital Agenda for Europe, we will examine the feasibility of introducing measures to make big market players license interoperability information.
I fully support new and innovative products and services, and I believe that any unnecessary intervention could potentially inhibit highly innovative companies and fledgling markets. Nevertheless, any company which holds a significant market position and acts against interoperability should know that the Commission is ready to act to defend the interests of European consumers.
Apple products (iPhone, iMacs, iPad) and software (iTunes) are becoming ever more popular and taking a growing market share. Is this raising concerns for the Commission, for example on the interoperability of applications used on iPhones?
This is just one particular example which illustrates the issues I mentioned. Today we are facing a shift from the PC era to an era where mobile devices with always-on Internet connectivity are becoming widespread. In this new and innovative market, interoperability is especially important.
User data is moving more and more into the "cloud" and people are getting their music, videos and applications digitally (for example, through iTunes or any other digital store), instead of buying them on physical media. Common standards are therefore very important in these Internet-based ecosystems for digital goods.
Today we have a big challenge and an even bigger opportunity. Software and services are moving to cloud infrastructures. We must ensure that businesses and authorities work together to create proper standards for all their aspects – security, portability, interoperability, governance.
EU ministers meeting in Granada, Spain, have adopted a declaration saying governments will support the 'systematic promotion of open standards and interoperable systems' in eGovernment. How does the Commission plan to translate this into practice?
Before the Granada Declaration (April 2010), in November 2009, all EU ministers responsible for eGovernment adopted the Malmö Ministerial Declaration on eGovernment. This Declaration identifies three key political priorities to be achieved by 2015:
- Citizens and businesses are empowered by eGovernment services designed around users' needs and developed in collaboration with third parties;
- Mobility in the Single Market is reinforced by seamless eGovernment services;
- Efficiency and effectiveness is enabled by a constant effort to use eGovernment to reduce the administrative burden, improve organisational processes and promote a sustainable low-carbon economy.
Interoperability is very important to achieve these priorities, as is open government. Public administrations across the EU should therefore strive to open up their data, exchange information with other administrations and help create a digital single market. We are pleased that the Granada Declaration picks up the spirit of the Malmö Declaration and that it also highlights the important role of interoperability and openness.
The Commission has set up several initiatives to foster eGovernment interoperability in the EU. These include pilot projects on electronic identity (eID), public procurement of services (eProcurement), online health records (eHealth). The Commission is encouraging member states to take up these services in order to boost cross-European interoperability.
For example, we are co-funding the STORK project (Secure Identity Across Borders Linked), to create a common platform which will allow citizens to use their national eID for cross-border services. In this way, they will be able to start a company, get a tax refund, or register in a school or a university without being physically present at the relevant administration desk abroad.
The European Commission is also implementing a programme to improve electronic cooperation among public administrations in EU member states, the so-called ISA (Interoperability Solutions for European Public Administrations).
An important part of this is the development of a European Interoperability Framework, a set of recommendations that countries should follow to improve the interoperability of their eGovernment services to the benefit of all European citizens.
I am working with Commission Vice-President Šef?ovi? to put in place a new version of this European Interoperability Framework to be adopted by the Commission later this year, laying down a pragmatic and operational set of principles that will help us all to move ahead.
This is work on eGovernment is an example of how the Digital Agenda for Europe has implications that go well beyond the European Commission. We are asking member states to commit and deliver the objectives of the Malmö and Granada Declarations.
Does proprietary software still have a role in eGovernment in the Commission’s view? Under what conditions?
Many public administrations chose to adopt proprietary software systems when they began to implement their ICT strategies. This of course is a legitimate choice. However, given the nature of the ICT world with its fast-changing developments and ever increasing possibilities, it is now possible to opt for other approaches which might be more suitable for their needs.
The Malmö Ministerial Declaration on eGovernment says that to achieve the political priorities for 2015, member states will pay close attention to the potential benefits of open specifications to deliver services in the most cost-effective way. This will help ensure that third parties can contribute to their design, production and delivery of online public services so that we have interoperable services across administrations and national boundaries.
The Declaration also guarantees a level-playing field where open competition can take place so that people get the best value for money and promote the development of new, innovative and open architectures.
A key performance target in the draft digital agenda is broadband penetration targets. How can investors be assured that they will see a return on money put into new high-speed networks? Will smaller operators have to pay a rent for using them?
Citizens and businesses around the world are increasingly in need of faster networks. The Digital Agenda for Europe calls for radical investment decisions and prompt deployment of high-speed broadband networks, including very high-speed next generation access (NGA) networks. In this way Europe could begin a process of catching-up with its counterparts in the rest of the world.
My team has been working for some time on a Recommendation on regulated access to NGA that will be released after the summer. The goal is to strike a balance between the need to promote efficient investment and innovation in new and enhanced infrastructures and ensuring competition to the benefit of European consumers.
The Recommendation will take due account of investment risk by means of a risk premium for regulated access prices. Co-investments and risk-sharing mechanisms will also be used. For example, some kind of price flexibility could be ensured through term and volume discounts, to promote early commitments by access seekers while safeguarding existing competition.
What kind of revenue-sharing do you see emerging for next generation networks?
It is not the job of the Commission to design commercial outcomes from Brussels. We just want to make sure that the game is fair for everybody. Various investment schemes are already being put into place across Europe. Only the markets and consumers can tell us which one will be the most successful.
What will the Commission do if (intermediary) targets are not met?
The Europe 2020 strategy set three broadband targets: by 2013, all Europeans should have access to broadband; by 2020, all Europeans should have access to much higher Internet speeds (30 Mbps or above) and 50% or more of European households should subscribe to Internet connections at a speed of above 100 Mbps.
We are working together with member states and the Digital Agenda focuses on helping member states to achieve these targets. We have proposed that member states develop national broadband plans and that they use structural and regional funds for ICT infrastructure.
We are clarifying the investment climate with the NGA Recommendation and we have already adopted guidelines on state aid for broadband. Our spectrum policy should also contribute to meeting the targets, fostering the deployment of wireless broadband. The Commission will monitor actions and will report on the achieved progress in an annual scoreboard.
The 'broadband for all' target should be achieved by a mix of technologies delivering fixed and wireless broadband access. Some member states are already very close to achieving 100% broadband coverage. Therefore, I am confident that we will meet this objective.
Do you envisage a universal service obligation for broadband?
It is first of all useful to make a distinction between the policy goal of achieving full, universal coverage of high-speed networks in Europe and the EU rules on universal service obligations.
In the first case, there are several EU and national tools that can be used to support network roll-out in remote areas, for example EU structural funds, state aid and radio spectrum policy. As for the EU telecoms rules, we are currently examining what role, if any, universal service should have in meeting the objective of 'broadband for all'.
A public consultation on this issue just closed in May. It attracted nearly 150 responses and showed a wide range of views. The results of the consultation will help the Commission analyse the different points of view and issues that are now on the table. I will report on the final outcome of the consultation in a Communication this autumn which will also identify the potential policy options for the way forward.
What will be the focus of the future 'digital scorecard'?
The toughest challenge is to actually implement the Digital Agenda for Europe so that we can show how we meet our objectives. That is why I intend to publish a yearly progress report on the Digital Agenda with a scoreboard on how we are doing in terms of implementation. This scoreboard will chart progress towards the key targets outlined in the Digital Agenda.
In its recent annual Single European Electronic Communications Market report, the Commission criticised telecoms firms for practicing high call rates, saying retail mobile prices in some member states differ by up to 20 eurocents per minute. At what point could the Commission envisage setting a price cap on retail mobile prices, as was done by your predecessor Viviane Reding for mobile roaming?
The Commission's intervention at EU level on roaming was an exceptional measure because national telecoms regulatory authorities could not solve the problem on their own. As far as mobile prices generally are concerned, EU laws give national telecoms regulators the tools to address such competition problems in their national markets.
Generally, most regulators have found that their markets are competitive and do not regulate mobile prices. However, the wide differences between the countries with the cheapest and the most expensive prices – for a national call, this varies from four cents per minute in Latvia to 24 cents in Malta – clearly demonstrate the lack of a single EU–wide telecoms market.
The different ways that national telecoms regulators were treating termination rates – the fees operators charge each other for connecting a call from a different network – creates distortions of competition and hinders the development of the Single Market. That is why last year the Commission adopted a Recommendation on termination rates that sets out a clear guidance on the cost-based method to be used when calculating termination rates. We can expect to see further reductions, which should have a knock-on effect on retail prices when national regulators implement the Recommendation by the end of 2012.
The Digital Agenda has set a target of 2015 for ensuring that the difference between roaming and national tariffs should approach zero by 2015. I will reflect over the coming year, in the light of how the markets develop, on the best way to reach this target.
Reding was also perceived as a champion of emerging companies, listening more to new operators rather than former national monopolies. Will it be your policy too?
It is not for me to pick winners in the market. I want competition to develop, whether that comes from big or small operators. I think the removal of barriers to the Single Market opens up opportunities for all players. The key issue is to ensure a level playing field and let the market work.
Consumers, businesses and the EU economy as a whole are currently denied the full economic benefits of a truly single and competitive EU-wide telecoms market because of inconsistent application of EU telecoms rules. Most member states' markets have become more competitive, but remain national in dimension – we still have 27 different national telecoms markets. Moreover, the level of competitiveness varies strongly between member states.
The revised regulatory framework gives us the tools to start to tackle this absence of a Single Market in telecoms. One of our key priorities therefore is to ensure swift and consistent implementation of the new EU telecoms rules which must be implemented into national law by May 2011. We will also prioritise guidance on key regulatory issues and we will leverage the expertise of BEREC – the Body of European Regulators for Electronic Communications – in tackling obstacles that prevent European businesses and citizens from fully using cross-border telecoms services.
I will reflect on further measures in the light of a study we are undertaking on the costs of the absence of a Single Market in telecoms due by 2011.