It is high time to deliver on the promises of the Digital Single Market (DSM). It will fuel European economic growth, and a way to make the everyday life of businesses and consumers easier, writes Tomasz Poręba.
Tomasz Poręba is a Polish MEP (Law and Justice party, ECR group) and the president of New Direction, the Foundation for European Reform.
The European Commission’s Digital Single Market strategy turned one year old last week and so far, no single big step has been taken. We should bear in mind that the digital economy is today the single most important driver of innovation, competitiveness and growth. This year it is expected that almost half the world’s population – three billion people – will be connected to the internet. Deplorably, the European Commission is once again wasting time while other economies have already seized the importance of the DSM. For instance, in the last five years, the development of mobile applications alone created 500,000 jobs in the USA. It is crucial to take a leaf out of United States’ book.
In the EU, it is currently estimated that the digital economy is worth in excess of €400 billion annually, but only if the EU goes in the right direction. To that end, it is crucial that the European Commission makes life easier for businesses operating in the Digital Single Market.
As the digital economy expands, there are more and more opportunities for companies across Europe to grow, create jobs and help consumers to secure a better deal. But all too often these opportunities are stifled by burdensome regulations and differing national regimes. Without real coordination between member states, the Digital Single Market will never been achieved. The labour market will feel the impact first.
Therefore, my vision for the Digital Single Market is one which is digital by default, where it is even easier to operate online across Europe than it is to do things offline in a single state. Where online businesses go through administrative processes once, not 28 times, and where football fans can stream matches, they have already paid for wherever they go. It is extremely urgent to spread this information to all stakeholders, to ensure we do not miss this great opportunity.
As a result, we urgently need to see policy recommendations for the EU’s 2020 Digital Economy Agenda. It is perhaps the Brussels’ most ambitious economic goal since the launch of the euro in 2000, but this time we should turn it into a real success story.
Concretely what does it mean? Let’s take one recommendation on the regulatory framework: the telecom policy recommendations for the European Commission’s 2020 Digital Agenda underline the need to improve the institutional and regulatory framework and creative incentives for investment but unfortunately miss the importance of allowing market actors to organise. Without the opportunity for private actors to make the necessary investments, we will sadly drop the ball. The European Commission needs to pick up its pace.
Connectivity requires private sector investment in next generation access technologies that can deal with the volume of data that will be passing through these networks in the gigabit society – and at the speeds that will be expected. If we fail to facilitate access to the market, this strategy will have dramatic and damaging results for the European economy.
Companies must be allowed to take the business decisions necessary to make these investments and be able to achieve economies of scale across Europe.
I firmly believe that this requires two things. Firstly, a forward-looking approach to mergers and consolidation should be implemented. The EU must confront the challenges of the future rather than be caught up in the problems of the past. With new technologies and developments meaning that new operators compete with traditional telecoms providers, the old model concerning whether a market has three of four telecoms operators has become outdated. If we want truly pan-European companies, then we must first allow them to harness synergies at national level.
The second important goal would be to reduce the fragmentation of the market. US companies have the benefit of a single market, allowing them quick access to consumers across the country and the ability to quickly scale. European countries do not yet have this luxury in the EU market, which is divided in 28 directions and across many dimensions. With measures such as the upcoming free flow of data initiative, we must hope and insist that the Commission starts to deal with certain aspects of this fragmentation and with the barriers to the single market that we are seeing.
At the moment, we see European high speed broadband coverage lagging behind regions such as Japan and South Korea. We see black spots and regions where coverage simply does not reach. If we want to be a major economic actor, it is crucial for the European Commission to become more active in that sector.
Instead of just paying lip service, let’s emulate the countries that we have praised and truly embrace our telecoms and digital single market.
We have heard from the Commission that 2016 will be the year that it moves into delivery mode for the Digital Single Market. It is time to put this right by completing the Digital Single Market once and for all and unlocking the growth that this market could generate.