Speech: Why the digital economy matters

European Commission

[Check Against Delivery]

Neelie KROES

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

Why the digital economy matters

Handelsblatt Conference 'TK-Gipfel 2014'

Düsseldorf, 26 March 2014

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Let me explain (using this powerpoint presentation) what digital innovation means.

It starts with broadband. With the networks provided by a vibrant, healthy telecoms sector.

But it goes way beyond one sector.

It encompasses established software and hardware companies.

Companies working in electronics, designing new components.

A vibrant innovative startup ecosystem.

But ICT innovation doesn't stop there. It doesn't stop with the ICT sector.

It means connected cars. And connected devices, in the Internet of Things. It means factories of the future, able to customise and perform. Smart grids for the energy network. It means companies from finance to retail using big data. A new way to treat and deliver healthcare. It means a boost for every kind of company, of every size in every sector.

All of them. It means smaller businesses, better flexible cloud services. A helping hand for the Mittelstand.

In short, this matters for the whole economy.

All those companies, all Germany's economy, all Europe's economy is going digital.

Without digital, Germany stops working. With better networks and services, Germany will work better.

This is why Chancellor Merkel speaks of building a Digital Europe, and it is why I am standing beside her in support. This is also why the next President of the Commission must be a Digital President.

With digital you can sell more. Make products smarter.

You have a new way to communicate: with branches, partners, suppliers, customers. Fewer barriers, lower costs.

If I were telling this story 5 years ago it would be economic gloom. Now it is, fortunately, a bit brighter. But we cannot become complacent.

I remember dealing with all those banks - and some very delicate Landesbanken cases amongst them.

When you expect to make growth out of magic, without real investment and change, you need to expect trouble.

That is why I want a strong recovery based on real investment in networks and real digital transformation of how we organise our society and economy. |

ICT investments deliver half our productivity growth, but other parts of the world now this and are fighting hard. We have to use our best weapons to fight back.

The second point I'd like to make is about the opportunity we have. The single market is Europe's crown jewel.

Millions of Europeans enjoy those freedoms. They study, holiday or work abroad each year.

Companies with multiple sites are a significant part of our economy; They cross borders - or want to.

These days they can trade without a permit. Travel without a passport.

They can do all those things across borders - but they still can't communicate. Even today, in the age of information and communication. They can't use seamless cloud computing. Their mobile isn't mobile. Isn't that crazy?

1 in 4 find internet services blocked.

When they travel - one quarter of people turn their phones off, one half switch off mobile data.

What a waste - you may as well have packed a brick.

Businesses working across the single market must sign 28 different telecoms contracts with 28 separate suppliers.

The new services they use have to cope with all those different systems. No guarantee of quality, security, service. Not much good if you're considering a multi-million-euro investment in the cloud.

Meanwhile networks and systems are insecure and unprotected. Deutsche Telekom reports 800,000 attacks every day - and that is just one company.

Countries and companies that keep threats to themselves make the whole chain vulnerable. Companies who think this isn’t happening to them are very naïve, or lying.

New devices can't come onto the market. Faced with uncertainties. Will they have to pay roaming charges? Will they work under 28 different spectrum systems? From connected cars to the Internet of things, this is putting the brakes on our economy.

In fact, we increasingly rely on devices from elsewhere- which then don't work properly in Europe.

have been working for half a century to bring down national market barriers. I started with aviation in the 70s as a transport minister. Every civil servant, many companies and Prime Ministers wanted to keep the old cosy world. We fought those vested interests, and cut the cost of flights by 90%.

When it came to the banks in 2008 we were told the bankers would all run away to Switzerland or an island if we made them pay a price for the damage they caused.

Telecoms is not so different. Vested interests will always tell you that change will be the end of the world. And it never is.

I fought against the easy route in the the 70s. In 2008, and I am fighting it again in 2014.

If we want Europe to be in the drivers seat. We need to change. We need to invest. We need to grab the single market and use it.

I didn’t cut the cost of those flights, just for you to spend more on roaming than on your flight. Come on.

This is the age of information and communication: it's time our single market went online.

The third point I'd like to make is this.

In 1989, two walls came down.

One came down in Berlin. Uniting a people. Bringing freedom and democracy to millions; bringing countries from Cold War to a Union.

The second wall came down in Geneva.

Where Tim Berners-Lee came up with the world wide web, and the first website.

I am meeting Tim this afternoon in London. For me he is a real hero. Not just for his invention of the web, because he saw and he still sees how the power of information can bring a wider liberation and change. He sees beyond his own context, and that is the way to make change.

Tim’s invention brought down a wall, because he created a way to make distance irrelevant, to make borders meaningless.

A tool giving every European the chance to connect across the continent. Every European business the chance to work across borders. Without even leaving their desk.

It's there - if we want it. If we let them use it.

Bringing down borders is more than a sign.

It’s a guarantor of peace and prosperity.

It's is essential for developing democracy

It’s the extension of a European value, something the people in the Ukraine are fighting for, risking their lives for.

I don't want any kind of wall to go back up again.

No more walls. Online or off.

Neither within Europe, nor internationally.

And the highest wall, the hardest to overcome, is the wall in our minds. The belief that we have to be as we always were. The belief that we can't change, and shouldn't . The belief that tomorrow's solutions have to be the same as yesterday's.

As we enter the next digital age, I don't want to see this technology shatter into a set of national intranets.

No fragmented platforms. No divergent rules that don't talk to each other. No countries that go their own way. No networks that only support their own systems, their own services, their own clouds, but cannot relate to each other.

No.

We have the tools in our own hands. We must start with the networks. With the safeguards that keep them secure. With the model that governs the whole system.

We have to build the world of tomorrow, not cling to the past.

The internet demands borderless thinking, it demands a single market.

If you remember one thing from today - remember this: the biggest border is in our minds.

Let’s overcome that mental barrier. We can’t allow it to stop us from building a better Germany in a growing, digital Europe.

Thank you.