How can we build a flexible single digital market in the EU?

EU should address mobility and data security as well as innovation through fair competition to expand digital growth, says UK report

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Over the next five years the EU should address mobility and data security as well as fair competition in order to expand digital growth across the union, according to a report setting out the UK government’s vision for the EU’s digital economy.

The report stressed the need for access to digital services, the promotion of innovative small businesses through fair competition, and the importance of data transparency and analytics in the drive towards a common EU digital economy.

Vince Cable, the business secretary, gave the report an extra push by addressing the Lisbon Council think-tank on a single digital market. “Digital is central to growth in the European Union,” he said.

Meanwhile, the prime minister, David Cameron, stressed how current legislation, regulation and lack of cross-country collaboration had left EU countries with little opportunity to grow digital businesses capable of expanding into the global marketplace.

“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,” Cameron said. “All too often, however, these opportunities are being stifled by burdensome regulations and differing national regimes.

“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.”

The report splits the approach into two areas: business and consumer.

How to help businesses

With some of the world’s most technologically advanced countries located within Europe, its digital space is constantly growing, but the EU’s legislative framework prevents flexibility within the marketplace.

Due to discrepancies in legislation and VAT rules across member states, it can be difficult for digital startups in the EU to develop to a point where they can reach consumers on a global scale.

To break down the barriers for startups wishing to enter the market and expand, and thereby promote innovation, the UK is proposing that digital businesses should be able to register online once rather than separately for each country.

The report declared: “We have to design rules that help new entrants by providing a level playing field, not an obstacle course that defeats many would-be online exporters at the first hurdle.”

It highlighted the investment already made by the European Commission in removing barriers to service provision around the EU, and called on it to take the same approach to digital.

Healthy competition in established markets is also encouraged, along the lines of the current moves in the UK payments space to promote healthy competition and increase innovation.

Digital is central to growth in the European Union

Vince Cable, secretary of state for business, innovation and skills

According to the report, competition should be promoted, not stifled, and operators prevented from blocking rival services.

But as always, speed is an issue. “As digital markets change rapidly, it should also conclude cases much more quickly,” said the report.

Finally the report proposed the use of anonymous data to search trends and build data sets to promote movement, as well as ensuring new technologies are readily available across borders to help established businesses to grow and innovate more quickly.

“Researchers and entrepreneurs can put open data to work, and the bigger the data sets, the better the results,” it said.

“Member states and the Commission should support data-driven creativity by adopting the Open Data Charter and guaranteeing common standards for the publication of government data.”

How to help consumers 

Customers are currently unable to access data services they’ve paid for, such as video streaming sites, outside their home country, leaving subscribers of digital services at a loss when travelling around the EU.

The report said EU consumers should be able to buy digital products and services and use them “wherever they are in the EU, just as they can with physical products”, with fair prices that do not change depending on where the customer is from.

The same goes for data, and the report proposed giving consumers the ability to control their data, with clear rules surrounding its use, as well as the ability to access the internet in any country as they would in their own.

Perhaps most interestingly was the suggestion that public services should be available online to free consumers from long-winded paper processes, something that is already being implemented in the UK.

With the UK currently working to promote its Government Digital Service (GDS) to move digital services to common, shared technology platforms and end the silo approach, enabling better delivery of public services, it’s clear this would not be impossible to implement.

“Consumers should be able to use their digital identity to prove they are who they say they are in a safe and secure way, confident that their data is protected when accessing online services in all member states,” said the report.

What can we see from previous attempts?

Many of the problems across the EU exist in individual countries, making development even more difficult.

The internet is changing the world around them, and if governments don’t adapt they will find themselves irrelevant, impotent and ignored

Mike Bracken, executive head of digital, the Cabinet Office

There has already been a push towards fairer data charges, after the European Parliament voted to end fees for mobile roaming across Europe.

Similarly from the beginning of January 2015, digital services providers pay VAT based on where a customer, rather than the business, is based.

In addition, in 2013 the EU announced a €15m fund to help IT entrepreneurs to grow and innovate; last year the EU funded three open data initiatives to help push innovation.

But these projects were short-sighted, according to the report, as barriers to external trade still exist for small digital firms: “Europe starts from a great position. But the continent's patchwork of national markets and outdated legislation looks increasingly anachronistic in this new world. Compared especially to the United States, it is still too hard to start, fund and scale up a digital business so that it can compete globally.”

Even if EU laws do change, many companies will probable still be unaware of the changes, as demonstrated by the General Data Protection Regulation (GDPR), which will come into effect in the next two years. The same lack of knowledge was found surrounding the VAT changes that came into force in January 2015.

It is clear that although an EU single digital economy may be possible, attempts to move in this direction will be hampered by cumbersome processes, and there may be a long wait before positive change occurs.

Mike Bracken, executive director of digital in the Cabinet Office, and head of the GDS said: “Governments aren’t usually very good at drastic, rapid change, but they need to be. The internet is changing the world around them, and if governments don’t adapt they will find themselves irrelevant, impotent and ignored.”

Online businesses should go through administrative processes once, not 28 times

UK vision for EU digital economy report

Whatever action it may take, the EU is still miles behind the US, which allows consumers and businesses greater freedom when moving and trading between states with different laws.

At the start of January 2015, the US president, Barack Obama, outlined in his State of the Union address the key priorities listed in BSA’s 2015 Legislative Agenda, including trade, innovation and the digital economy.

“We must avoid knee-jerk reactions to the risks that accompany change. These risks can be managed by establishing a clear, simple set of rules that safeguard the rights of all those legitimately taking advantage of the online economy,” said the report.

“Online businesses should go through administrative processes once, not 28 times, and football fans should be able to stream matches they've already paid for wherever they go.”

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