Digital business is Europe’s best hope to get back to growth

Hearing at the European Parliament of Andrus Ansip, Vice-President designate of the EC, in charge of Digital Single Market. Mr Ansip is trying to listen and understand the translation of the parlamanterian’s comments and worries. Hopefully he will make it. (EC Audiovisual Services, 06/10/2014)

Digital market has received a lot of interest lately in Europe. Not only by the market players that have always lobbied more favourable or less regulation in general, but most importantly by the EU leadership.

New Commissioner, new priorities

Jean Claude Juncker, new President of the European Commission, seems to have ‘bet all his money’ on digital market. In his famous “priorities”, while he sets the return to growth and reduction of unemployment his primordial scope, he underlines that “the key ingredient is to create a digital single market for consumers and businesses-making use of the great opportunities of digital technologies which know no borders. To do so, we will need to have the courage to break down national silos in telecoms regulation, in copyright and data protection legislation, in the management of radio waves and in competition law.” Most importantly he states that “we can generate 500 billion Euro of additional growth in Europe in the course of the mandate of the next Commission, thereby creating hundreds of thousands of new jobs and a vibrant knowledge-based society. I will work on this from day one of being Commission President”.

If the President of the European Commission, claims as the top priority of his work, the liberalisation of the digital single market, that will bring half a trillion to the EU coffers in five years, this means basically two things: either he is too desperate or he knows very well the digital industry. Indeed digital business full potential is the most unexplored one in the Old Continent and the single market would unleash to a great extent this potential. However, from that point to the promise of generating a 500 billion business and hundreds of thousands of jobs, there is still a distance.

Why digital is our greatest hope

If someone reads all 5 priorities of Mr Juncker and pays attention to the ranking of importance, then she is able to understand more. Having as number 2 priority the “Energy Union”, number 3 TTIP, number 4 the monetary union, and number 5 the “answer to the British question”, one can justify why digital market is the only hope we have in Europe. The reason is ‘fourfold’:

1) The Energy Union is an important but rather ambitious project that most probably needs more than one Commission mandate to materialise.

2) TTIP is a massive trade agreement with the USA that would be completed in 2016/2017 and even though one can imagine a lot of exports and imports and thus business, nobody can really estimate at this point the true impact, positive and negative, it will have in our lives in Europe.

3) Monetary Union is indeed a too important topic always, but let’s face it there is so much written about it during the Barroso Commission and the dawn of the economic crisis that it just isn’t that sexy enough anymore for the EU citizen.

4) As for the “answer to the British question”, that should not be a top priority of any Commissioner. The answer to that question will be given next May in the UK by its citizens and not by Mr Juncker. Already most British businessmen with international horizons have an answer to it and it is a clear NO. In any case, the money the EU is looking for to get out of trouble is definitely not hidden behind the answer to this “question”.

Apparently the only priority that is pragmatic and result oriented is the first one, digital market, and this explains its ranking. That together with the fact that it is ‘trendy’ but also because the single digital market is a topic that the leaving Commissioner Kroes has already prepared the ground for generating substantial debates in the past years mostly with the side of the industry. Earlier this month in one of her last direct confrontations with the telecom sector, she said very openly that telecommunication companies have two options towards the new policy regulations to come: “adapt or die”.

Preparing the ground

Mrs Kroes, has always been supportive of a digital single market in the EU but did not omit to challenge every single time the players of the telecommunication industry on issues like the elimination of roaming charges in the EU or net neutrality. During a Brussels conference organised by ETNO, the powerful lobby group of operators like Deutsche Telekom, she addressed the following messages to telcos: “you can’t have consolidation on national markets without having a single regulatory framework contributing to a genuine single market.” Then she continued: “it’s all very well to talk about deregulation, but not if that’s a code word for keeping protected national markets”. Finally, she concluded  “the telecoms sector is its own worst enemy”, emphasising on how the sector resists strongly the proposed regulations to open up the market.

Seeing this fertile ground for digital business and growth Mr Juncker will have this time two and not one Commissioners replacing Mrs Kroes. Mr Gunther Oettinger, former Energy Commissioner, will be now Commissioner for Digital Economy and Society and Mr Andrus Ansip, former prime minister of Estonia, will be in charge of the Digital Internal Market. Obviously two is better than one. Indeed, Commissioner Juncker wanted an extra team of people to deal only with the digital single market per se to speed things up effectively. Time will judge the effectiveness of his strategic decision.

Bend it like Estonia

Apparently the choice of the former prime minister of Estonia was not random. Estonia has the reputation of being a role model of digital transformation and Mr Ansip knows better how this happened. As the ex prime minister said to the ‘Parlamentarians’ during the hearings, : “I had the opportunity to be at the forefront of a digital transformation of a country, which today excels in multiple areas of e-government, safe and secure private and public digital solutions, and which takes cyber security and data protection seriously.”

Further BBC wrote a story last year titled : “How Estonia became E-stonia”. What is more, even the American President Obama, when he visited the country said “I should have contacted the Estonians when we were setting up our healthcare website.” That on its own is quite a statement. Estonia is not only famous for its super-developed e-government and bullet-proof cyber-securityprotection. Instead, it is seen as a start-up nation, because it is one of the top EU countries with the most new businesses per capita (source World Bank).

One last digital chance

All in all, digital is what we trust and count on to make Europe grow to 2020 safe and big. It is the sector of the economy where there is room for a lot of innovation and also less regulation but more competition. It seems that the new Commission is getting ready for it because simply there is no space for delays or failure.

Our best card currently is digital and I am afraid, if we lose it, we lose the game too.