12 December 2017
Abhishek Chatterjee

Abhi_Digital_Services

Abhishek Chatterjee - Gartner Inc.

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Single Digital EU Market - A Digitally energized Marketplace

21 May 2015  |  2967 views  |  0

Recent European commission's report stressed the need for single Digital market across EU states and how it will benefit consumers, SMEs and start-ups, creative sectors and industry at large. EU commission outlined the challenges & described a 3 year roadmap to move towards a single digital EU economy. And information & communication Technology (ICT) plays very critical role in realizing this vision. Below is the excerpt of recently published report and potential opportunities in this space.

Benefits for moving to single digital EU market

Digital economy in EU market is growing 7 times faster than rest of the economy. Only 15% shop online from another EU country; only 7% of SMEs sell cross-border; Clearly there is a great potential to improve this number further. 315 Million Europeans across 28 member states use internet every day and it is estimated that additional 415 Billion EURO can be contributed to the economy through the single Digital market.

Key Challenges & actions required to enable single Digital EU market

1. Lack of consistent EU rules on contracts and consumer protection Cross border e-commerce, whether it is physical goods like shoes or furniture; or digital content like e-books or apps. For example, Only 38% of people feel confident buying online from another EU country & Only 7% of SMEs in the EU sell cross-border

Action: Consumer Protection Cooperation (CPC) Regulation is being assessed & improvements will be suggested for level-playing field for businesses, boost consumer trust in online purchases.

2. Geo Blocking practice used for commercial reasons, consumers are denied access to a website based on their location, or re-route them to a local store with different prices

Action: Commission is planning to make legislative proposals in the first half of 2016 to end unjustified geo-blocking.

3. Potential antitrust competition issues in e-commerce sector (final report from EU commission is expected in the first quarter of 2017)

Action: the Commission has also launched a Competition Sector Inquiry to analyse the application of competition law in this area.

4. Old European copyright laws (established in 2001) don’t allow users who buy films, music or articles at home to enjoy them while travelling across Europe

Action: Copyright modernization proposal includes - portability of legally acquired content, better access to online services from other EU member states etc to nurture cultural diversity in the digital age.

5. Lack of single electronic registration and payment with a common VAT threshold

Action: Commission's legislative proposals to be published in 2016 includes - single audit of cross-border businesses, extending single electronic registration and payment mechanism to cross-border online sales of physical goods, reducing the VAT compliance costs for SMEs.

6. Require boosting of cross-border access to broadcasters' & on-demand services in Europe

Action: Review of the Audiovisual Media Services Directive (AVMSD) by 2016 to extend the scope of new services and players. Post further regulatory advice, an paper has been published on how access to content cross-border can only be advantageous for both users and creators.

7. Lack of effective spectrum coordination, and common EU-wide criteria for spectrum assignment and fast broadband access

Action: EU commission is reviewing 2009 telecom package and addressing issues like - tackle regulatory fragmentation to allow economies of scale for network operators, service providers and consumers, valuable revenues sharing across member states from the sale of spectrum rights, update rules for end-users benefit from competitive, affordable and high-quality connectivity. European Parliament and the Council of the European Union are also addressing the Roaming and net neutrality issues, which will further enable digital single market economy. While the private sector is investing in broadband infrastructure, under the European Regional Development Fund and Cohesion Fund (part of ESIF), over €20 billion are available for investments in ICT during the 2014-2020 funding period.

8. Lack of consistent online platforms (search engines, social media, app stores, etc.) in the market

Action: while the digital platforms have been proven to be innovators in digital economy, there are growing concerns round how these platforms control access to online markets, information they collect, about their relationship with their suppliers, or their pricing policies. To address these issues commission will therefore launch a comprehensive analysis of the role of online platforms. The e-Commerce Directive foresees that Internet intermediary service providers should not be liable for the content that they hold and transmit passively. At the same time when illegal content is identified, intermediaries should take effective action to remove it, whether it be information that is illegal (e.g. terrorism/child pornography) or information that infringes the property rights of others (e.g. copyright). Commission will examine the possibility of finding a common understanding by all interested parties through a co-regulatory approach.

9. No single EU COULD data centre framework, restricting location of the data and access of data

Action: While personal data is covered and protected by EU rules, there are no clear guidelines for other types of data. Large amounts of data are produced every second, created by people or generated by machines, such as sensors gathering climate information, satellite imagery, digital pictures and videos, purchase transaction records, or GPS signals. But data often remains stuck in national expensive data centres rather than flow through and the use in development of new promising technologies such as cloud computing and the Internet of Things. Commission will assess the different legal and technical obstacles and will then define measures to address them.

10. Lack of standards and interoperability in areas critical to the Digital Single Market, such as e-health, transport planning or energy (smart metering)

Action: The EU Rolling Plan for ICT Standardisation need to be continuously monitored and define missing technological standards that are essential for supporting the digitisation of our industrial and services sectors (e.g. Internet of Things, cybersecurity, big data and cloud computing). A integrated standardization plan will also be launched  to define key priorities for interoperable standards, with a focus on essential sectors such as health (telemedicine, m-health), transport (transport planning, e-freight), environment, and energy (smart metering).The Commission will set up a strategic forum for Member States and European Standard organisations to jointly discuss common priorities.

11. No EU wide EU data protection rules

Action: Modernisation of EU data protection rules is a key enabler. Data protection reform is currently being negotiated by the European Parliament and the Council of the European Union. It currently applies to providers such as traditional telecoms companies but not all market players are covered.

12. Lack of partnership with the industry on cybersecurity in the area of technologies and solutions for online network security

Action: EU's cybersecurity sector is fragmented and lagging behind. A Public-Private Partnership is suggested for structuring and coordinating digital security industrial resources in Europe. It will include a wide range of actors, from innovative SMEs and national security agencies to critical infrastructure operators and research institutes.  EU will allocate a fund for research and development in this space.

13. Too-high parcel delivery costs are a barrier. Often two to five times higher than domestic prices.

Action: These issues have already been identified in a Green Paper in 2012, followed up by a Roadmap in December 2013. Interim solution was agreed among postal operators  to introduce improvements(i.e. track-and-trace services for small parcels sent across borders, easy return procedures) in the area of quality of services. But the issues like excessive pricing, insufficient regulatory oversight requires all interested parties to come together and agree on the solution. EU commission is launching a public consultation to collect views from all the interested parties.

14. No Single citizen and business registration, ensure different national systems can work with each other, and ensure businesses and citizens only have to communicate their data once to public administrations.

Action: Internet had created 2.6 jobs for every one that was replaced by technology. latest forecast estimates up to 825,000 unfilled vacancies by 2020 if no decisive action is taken for training. Individual member state needs to train the workforce to fill the gap. 'Once Only Principle' adoption across people and businesses should be able to provide information to a public administration only once. Single Digital Gateway will be an online access point to all Single-Market related information, assistance, advice and problem-solving services for cross-border activities. The Commission plans to launch a pilot initiative with interested Member States in 2016.

Opportunities..

EU commission has taken a 3 year timeline to address the challenges mentioned above.

This is going to create opportunities for information & communication Technology (ICT) companies:-

  • Potential for a Digital learning and development - Potential opportunity for a EU based e-learning and virtual class for emerging skills ( point 14).
  • Potential for a innovation in cross border Supply Chain management. As cross border delivery cost is 5 times the domestic cost (point 13).
  • Potential for cybersecurity framework for EU member countries (point 12). (since EU will allocate fund, start-ups can thrive on it)
  • Standards and interoperability(point 10) specific cross border business models around health (telemedicine, m-health), transport (transport planning, e-freight), environment, and energy (smart metering).
  • New business models on content & service consumption based on differential charging structure across borders (Point 2,4,6,7).

While the objective of this initiative is to improve cross border Digital Business by removing all barriers, in my view it will play a far broader role on society as a whole in creating Digitally inclusive society. And it will be left to our imagination to build next multi-billion USD business out of Single Digital EU market.

TagsRisk & regulationInnovation

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Managing Partner FSI - EMEA - With experience in IT research, consulting, Digital Portfolio management, practice management, Pre-sales and solutioning, IT consulting, Architecture & strategy across In...

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