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Netherlands digital sector yearns for government recognition
The sector building and supporting the Netherlands’ digital infrastructure wants to be valued as highly as Schiphol airport and the port of Rotterdam are for the Dutch economy
The Netherlands’ digital infrastructure is an important driver for digitisation, jobs and economic growth, and in 2019 it generated about €15 in added value for the Dutch economy for every €1 of turnover, according to research.
But the sector that powers the country’s digital infrastructure feels it is being overlooked by the government, which underestimates its role.
According to a research report, the impact of the Netherlands’ digital infrastructure on the economy amounts to €460bn – 60% of the gross national product – and 3.3 million jobs. The added value was calculated using employment, efficiency and other data.
The research was carried out last year by PB7Research and METISfiles on behalf of the Dutch Hosting Providers Association (DHPA), the Dutch Data Center Association, AMS-IX, ISPConnect and SURF, with cooperation from financial institution Rabobank.
“This is the first report in a series – we intend to repeat this research annually,” said Ruud Alaerds, director at the DHPA. He noted that the Dutch government has little insight into the sector that keeps one of the country’s most vital infrastructures up and running.
“We are a sector that operates under the hood, which makes it less visible,” he said. “A waterway, the motorway, airports – these are all very visible infrastructures. The digital foundation of our society is much less visible, but no less crucial.”
One of the possible reasons why the Dutch government considers the digital sector to be less important may be that the companies in it are largely privately owned, and there is little government interference.
But the report warns that the strong position the Netherlands has built up over the past 30 years as a digital gateway to continental Europe is under serious threat. The country’s current digitisation strategy focuses strongly on 5G and lacks crucial components, such as the important role of international data lines, nodes, space for the growth of datacentres and cloud and hosting companies, it says.
“5G is regarded by our government as a solution to a lot of problems, but that’s not quite the case,” said Alaerds. “This technology will only thrive if it runs on a solid digital foundation. If you don’t invest in that, you can roll out all kinds of mobile technologies, but it will never deliver.”
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The Netherlands is being overtaken by countries around it because their governments are acting more decisively, said Alaerds. “We have mistakenly put our feet up. Take the sea cable, for example. For a long time, the Netherlands was the country where transatlantic sea cables landed, but now there are also connections to southern Europe and Scandinavia.
“The Netherlands is no longer an obvious hub to continental Europe. The fact that we once had a head start is no guarantee of permanently leading the way. That requires integrated government policy.”
And that is what the parties involved in the report want to achieve. The planned presentation of the study to the minister of economic affairs coincided with the Netherlands’ “intelligent lockdown”, so the presentation had to be postponed.
However, the coronavirus crisis provides a wonderful case for the sector to prove its point. The Netherlands’ digital infrastructure is still not classified as vital, while the port of Rotterdam and Schiphol airport are. “These [facilities] appeal to the imagination, whereas the digital foundation consists of datacentres, buildings and underground cables,” said Alaerds. “We lack a clear visual image.”
That is why the sector sought to come up with examples to reinforce its need for recognition by the government, he added. “Then the coronavirus crisis came and everyone suddenly had to work from home, at a distance from each other and yet together. Examples of the importance of our digital infrastructure are now mounting up in all sectors.”
Workplaces had to be adapted, services needed to be guaranteed, and capacity scaled up, said Alaerds. “It might sound a bit like chest-beating, but if our country hadn’t had such a strong digital foundation, people wouldn’t have been able to work online, video call each other and collaborate. The whole country would have been flat on its back.”
Harvard Business Review’s research into the robustness of digital platforms and infrastructures has also shown the Netherlands to be very successful. Only Singapore is doing better, apart from the online payment systems, which the Netherlands is better at.
For the Dutch economy, too, the digital infrastructure delivers more than Schiphol airport and the port of Rotterdam. The latter two have an annual growth rate of about 2%, whereas the digital infrastructure is growing by 6.5% a year. The digital sector is also important for employment, with the study calculating that for every employee in the country’s digital infrastructure, 33 jobs in other sectors are made possible.
That is why it is time for the Netherlands to develop a coherent, all-encompassing policy for its digital infrastructure, with a coordinating point of contact with which the digital sector can interact, and the sector is looking to cooperate on this with the government.
Alaerds said the government needs to recognise the importance of the Netherlands’ digital foundation. “We are doing well here, but we can’t put our feet up,” he said. “The government sees ICT as something that is difficult, which often gets them negative publicity, because projects fail or cost a lot of taxpayers’ money.
“This has given ICT a negative connotation, but our sector is flourishing and we are eager to work together with the government on the next step. That was the case before the crisis, and even more so after it.”
Collaboration with government
The national digital infrastructure policy that the sector wants so badly must offer a vision that sets out what the next steps should be in the Netherlands and how the digital world will develop. “The Netherlands lacks a coherent vision of its own digital infrastructure,” said Bram Semeijn of AMS-IX. “On the one hand, politicians praise the digital infrastructure, but on the other hand, little is being done to maintain our leading position. It’s time for the government to make choices and really support the sector.”
The report contains a number of recommendations from the sector to the government, with which the parties have been trying to gain a foothold for years.
“There is dialogue, but it’s more incidental and in terms of advice,” said Alaerds. “What we would like to see is this dialogue become structural and that we as a sector are not only allowed to give advice, but are also actually included in agreements, legislation and policy.”