Europe’s digital challenge

Commission contribution to the European Council of 24-25 October 2013

Modern electronic communication and online services, including e-government, are major drivers of change for our economies and our societies. They help to promote growth and jobs, productivity, savings in public spending, consumer welfare and they offer new opportunities for personal expression. They are also important economic sectors in their own right. The digital economy can help European industry to grow, provide infrastructures for tomorrow’s companies and boost growth of new start-ups.

Even at a time of high unemployment, the internet creates five jobs for every two lost.1 By 2020, Europe could add 4% to its GDP by stimulating the fast development of the Digital Single Market and our public authorities could achieve 15-20% cost reductions by moving to e-Government2.

The single market and the digital economy reinforce each other. Buying goods and services is much easier online – but it is also easier to spot where the single market is not working and to see the cost of fragmentation.

Europe's telecoms market is not working as it should. Unlike the EU, the US and China have unified telecommunications markets of respectively 315 and 1350 million customers, served by 3 or 4 operators, acting within a single framework. In contrast, Europe's telecoms markets remain fragmented along national borders. European companies are not big players on the Internet. Non-European internet platforms such as Google, Apple, Amazon, Baidu are leaders in the Internet economy and they are also among the biggest companies in the world.

Europe has been a leader in the past and has a number of global Information and Communication Technology (ICT) industries. It has innovated in healthcare applications, smart city technologies, electronic public services and open data. Europe has so much potential to boost its growth and competitiveness but is now falling behind other world leaders in this field. Europe urgently needs decisive action to regain momentum in this crucially important sector.

The 2013 Spring European Council stressed the importance of the digital single market for growth and called for the Commission to present concrete measures to establish a Digital Single Market as early as possible. For this to become a reality, legislative measures need to be adopted before the end of this parliamentary mandate. The Commission has proposed a Regulation to remove many of the obstacles to the single market in telecommunications. Several other legislative proposals of direct relevance to the digital economy – from online payments services to data protection rules – are also awaiting decision by the co-legislators. These are listed in the Annex to this text.

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