Speech - Building a connected continent

European Commission

Neelie Kroes

Vice-President of the European Commission responsible for the Digital Agenda

Building a connected continent

Nueva Economia Forum /Madrid

10 October 2013

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Today we all worry about the economy. Every citizen and every politician.

We are facing the consequences of a severe economic crisis; one to which Spain has been particularly vulnerable.

We need to fix this. And doing so is not just an academic debate.

Outside, one in four Spanish people face unemployment; including over one half of young people who are not in education.

In the meantime, they're missing out on certainty about the future. They're missing out on homes and lives and families.

The question of how to resolve it often dissolves into a debate both over-simplified and sterile, characterised as austerity versus growth.

It's time to go beyond that. Because there is much we can do to prepare for the future. To identify and invest in tomorrow's growth.

I am in no doubt where that future opportunity lies: it lies online.

Even during the crisis, the European digital economy continues to grow faster than the Chinese economy.

It's familiar to most citizens, and increasingly dominates their lives.

But many businesses too increasingly rely on digital innovation.

From FON, an innovative way to access the internet through the world's largest WiFi network.

To digital startups successes like Tuenti.

To companies like Zara — that can use digital tools to boost returns, from the factory to the shop floor. All three Spanish companies that in their different fields can benefit from the digital revolution.

Meanwhile new tools on the horizon like widespread cloud computing offer cheap, flexible services for every kind of business. And a 15 to 20% cost saving for government services too.

From transport to tourism, from smarter homes to better healthcare. This offers a boost for every economic sector, and every part of society.

If you're looking to boost competitiveness, create jobs, and help governments do more for less: then you should be looking at digital.

None of these benefits can happen without connectivity, without broadband networks. Global competitors caught on to this long ago. But Europe, once an ICT leader, is now lagging behind.

Japan, South Korea and the USA combined have around the same population as the EU - but over 8 times more fixed fibre broadband, and almost 15 times more 4G. Here in Spain, over one in three households still do not have fast broadband coverage; while over one in four adults have never even used the Internet.

And that has a wider impact. The ICT sector includes some of the biggest companies in the world: yet of those global giants, none are from Europe. Not any more.

Here we have has so much talent and capacity. People who can use these tools, innovate with them and create jobs. I saw that only yesterday at the Startup and Investor Summit right here in Madrid.

But without the infrastructure to compete, we aren't going anywhere. We need 21st century telecommunications infrastructure to enable and support the digital revolution. The networks and services desperately needed by businesses of every size, from startups to multinationals. And by businesses in every economic sector.

Here are three ways we can support.

First, let's start with networks.

The recent Digital Agenda for Spain is a great step forward towards broadband for all. But we need to go further. And fast!

Today, telecoms providers cannot easily work as integrated single market operations. They are reduced to rent-seeking in protected national markets, blocking new ideas, and looking backwards to yesterday's cash cows. High debt and dated business models prevail, when they should be innovating and investing to face the future.

But that isn't sustainable. It isn't sustainable to build a business model on irritating your customers. It isn't sustainable that companies working across the single market don't have the communications to match. It isn't sustainable to frustrate the economy's need for connectivity and innovation.

Rather, we need investment in tomorrow's opportunities, plentiful fast broadband and innovative online services.

All together a single market in telecommunications could be worth 110 billion euros a year; that's around 0.8% of European GDP. And world-class digital infrastructure could boost productivity growth by 5%, by 2020.

It's time to bring down barriers within our single market. Give telecoms companies the chance to reach efficient scale, so they can think big and provide more broadband; give consumers a fairer deal, and a wider choice of better quality services. Then we can start to see even greater growth across this sector, stimulating growth across the entire digital economy.

Like making it easier for operators to work across borders. Giving them more consistent access to fixed networks in different countries. Better rules on spectrum, so more Europeans get fast wireless broadband. New rules on WiFi, giving more chances for citizens to connect; and giving a better, more certain legal base for innovative providers like FON.

Fairer prices - like for calling and texting across borders. An end to roaming in Europe, by encouraging new pan-European deals onto the market. An end to previously prevalent practices, like blocking and throttling online services. Allowing new specialised online services, only if they don't slow down the internet for everyone else.

Better consumer rights, like to ensure you get the internet speed and quality you pay for, and so switching providers doesn't involve hassle or high costs.

That is our proposed Regulation to create a genuine single market for telecoms. One that underpins the digital innovations of tomorrow, and powers 21st century growth.

Second, emerging from the crisis is about creating jobs.

Filling tomorrow's jobs needs people to have the right skills. Yet soon we could face a shortage of nearly one million skilled ICT workers.

Fixing that problem is the goal of our Grand Coalition for Digital Jobs. With companies and organisations pledging for new platforms, new partnerships and new programmes to plug Europe's skills gap.

I'm glad Spain is playing its part. Companies like Telefonica are pledging hundreds of internship projects just here in Spain, with support for startups, and with 10,000 people learning digital skills like coding. And I'm also very pleased to hear about a new national coalition for digital skills - in Spain as in many other member states.

That's a smart move. Boosting Spain's competitiveness as a site for digital companies.

And we need to support the tech start-up scene so they start and stay in Europe. With ideas like those in our Start-up Manifesto. Over 4000 people have signed up, I hope many more will do so.

And helping unemployment - especially among younger people, so afflicted by unemployment and yet so at home with digital technology.

And third, we need to take down the single market barriers that exist online.

The EU stands ready to agree a deal on the Connecting Europe Facility. New investment to make national public services work with each other. In key areas that underpin the single market, like electronic identification or invoicing.

But those barriers go beyond that. They are also found in areas like e-Commerce, online payments, cloud standards, and secure online transactions. Put those together, and they often mean it's harder to trade across borders online than in the real world.

The single market is Europe's crown jewel. Yet what does that mean, if we can't even achieve it on the internet, a place that knows no borders?

In a few weeks the European Council will meet to discuss these and other issues. They've already underlined how important the innovative digital sector is for growth. Now they stand ready to take significant decisions: on telecoms, on digital jobs, on the digital single market, and on a sound, forward-looking European innovation policy.

The most progressive, creative and dynamic in Europe can see this opportunity, and they are calling for change. To sail out of the crisis into secure growth, we need to invest in the future. I know many see that in Europe; I hope the EU's leaders see it too.

Thank you.