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1 63((&+ (UNNL/,,.$1(1 Member of the European Commission responsible for Enterprise and the Information Society H(XURSH7KH:D\)RUZDUG Ministerial Meeting /LVERQ$SULO
2 H(8523($)7(5/,6%21 Ladies and gentlemen, Last December, the European Commission launched the eeurope Initiative. The goal of eeurope was to accelerate Europe s transition to the information society - thereby achieving greater economic progress and social cohesion. eeurope was launched in a context of mild indifference or lack of understanding, in Europe, of the stakes of the Internet. eeurope therefore aimed to act as a catalyst. Meeting in Lisbon in March, EU leaders expressed strong backing to the Commission s approach. The Lisbon Summit set a QHZ VWUDWHJLF JRDO for the EU for the next decade - let me quote the Summit Conclusions: EHFRPH WKH PRVW FRPSHWLWLYHDQGG\QDPLFNQRZOHGJHEDVHGHFRQRP\LQWKHZRUOG The Lisbon Summit added that reaching this goal requires an RYHUDOO VWUDWHJ\ aimed to - I quote again: UHJDLQWKHFRQGLWLRQVIRUIXOOHPSOR\PHQWDQGWRVWUHQJWKHQ VRFLDOFRKHVLRQ. eeurope will be at the centre of this strategy. It is a very powerful political message EU leaders have delivered. A message of hope and confidence. But a message with an acute sense of urgency: Time is running out. Europe must move fast. Having said that, I would like to wind up and go back to where we started: What is happening in the global economy? How does Europe position itself in this context? Where do we go after Lisbon? 7+(1(:(&2120< eeurope is based on a certain reading of recent economic and technological developments. Our analysis is that the combination of rapid progress in digital technologies and increasing economic globalisation is giving rise to a "New Economy". The Lisbon Summit calls it a "Knowledge-based Economy", but it really is the same. Digital technologies pervade corporate organisations in all sectors of the economy. They radically overhaul business structures, and even the nature of doing business. This is linked to two main developments: the exponential growth of the Internet, and the growing power of information. 7KH,QWHUQHW The Internet is truly the engine of the new economy. It both responds to the needs of economic actors in an increasingly globalised economy, and it further amplifies the trend toward globalisation - not only of the economy, but also of people and ideas. The Internet is a new platform for commerce. It transforms the patterns of commerce, giving rise to electronic commerce. There are two sides to e-commerce: business-to-business - B2B - and business-to-consumer -B2C. B2C is a mere "evolution" of existing consumer behaviours. The real e-commerce "revolution" is in B2B. B2B is the core of the e-commerce market, representing over 80% of the total. But e-commerce is not only about doing business on the Net. It revolutionises corporate structures - logistics, production, marketing, internal communications - turning companies into "e-businesses". 2
3 The estimated cost savings of B2B are 10% in purchasing and procurement. According to Goldman Sachs, these cost savings alone would bring a sustained extra economic growth of 0.25% per annum over the next 10 years. Beyond cost savings, B2B reduces time-to-market, improves quality and opens up new markets. It creates new functions, new revenue streams and new business models. With the Internet, the virtual company is no longer a myth. More and more, teams scattered all over the world work together on the same projects, towards common goals, as if they were located on the same premises. The only remaining limit is the time difference.,qirupdwlrq The second major development is the growing power of information. Information is the fuel of the new economy. One should understand information in its broad sense - you may want to call it knowledge, ideas, brain power. What does it mean? That the main added value of a product is increasingly in the knowledge required to design and market it, and in the services which come along. That intangible goods - mostly contents and software -, represent an ever growing share of the economy. That the most successful organisations - not only businesses but also public administrations - are those which operate on the basis of collective intelligence. This means cooperating efficiently, sharing information, generating new ideas, and developing the capacity to exploit them. Cooperative competition amongst individuals is at the core, as a major driver for innovation and creativity. There is an unlimited potential in digital technologies. Not only for growth, competitiveness and jobs. But also for societal progress. Economic development no longer needs to take place in highly developed and densely populated areas. Anybody, anywhere, can play an active role in the new economy. This means that economic activities can be better centred on the needs of individuals and communities. That outlying regions are no longer at a disadvantage. That economic development can respect the environment. Moreover, digital technologies open up new possibilities for the disabled, the elderly and healthcare. This, however, depends on fulfilling a few essential conditions: First, exploiting the full potential of the Internet requires a powerful and seamless FRPPXQLFDWLRQ LQIUDVWUXFWXUH. Those regions which are not connected will be left out of the digital age. Second, people need new skills to play an active role in the information society - what we call "'LJLWDO /LWHUDF\". A reform of educational systems and the promotion of life-long learning is a "must" to ensure that young people who come on the job market, and people already working, are digitally-literate Third - and this may be the most difficult to achieve - the digital age calls for a QHZVWDWHRIPLQGDQGQHZEHKDYLRXUV. In the past decades, we have all lived in a fairly static economy. Now the Internet opens up an era of intense creative thinking, with ideas competing against ideas. The digital age thus calls for dynamic and flexible minds, entrepreneurial and innovative spirits, openmindedness and vision. 3
4 (8523(,17+(1(:(&2120< With this in mind, let s see how Europe is doing in the new economy. 1. The telecommunications market is exploding. The 1998 liberalisation of telecoms in the EU has created a very dynamic market. The fastest-growing market segment is PRELOHFRPPXQLFDWLRQVwhich are expanding at exponential rate. There are already 140 million mobile users in Europe - that s over one third of the EU population. The growth rate last year was 30%. This makes Europe the undisputed world leader. 2. Furthermore, we are on the verge of a PDMRU TXDOLWDWLYH FKDQJH LQ PRELOH FRPPXQLFDWLRQV. Mobile networks are being upgraded with the GPRS technology, which boosts transmission speed and quality. New, innovative services are rapidly gaining momentum, in particular WAP services and mobile commerce. Soon, we will see the development of broadband communications through wireless local loops, for which licences are being attributed. This will rapidly be followed by broadband mobile communications. 3. 'LJLWDO 79 too is evolving very favourably. Europe has already closed the gap with the USA with 10 million subscribers, and the European market grows faster. This sets the ground for the development of Internet access and interactive services via the TV set. 4. In the last 18 months, Europe s situation in terms of YHQWXUH FDSLWDO has improved a lot. Venture capital is now readily available for fast-growing start-ups, which are now mushrooming in Europe, notably in the Internet and e-commerce markets. They are being created both by young people and experienced professionals. The leading start-ups already have market values in the several billion euros. 5. An increasing number of companies, in all sectors of the economy, are now DZDUH RI WKH LPSRUWDQFH RI HFRPPHUFH. According to Andersen Consulting, 80% of European top-managers recognise the importance of e-commerce for their competitive edge. Not only for marketing and sales, but also for purchasing and procurement. They expect to use e-commerce intensively by This may sound like great news. But 2004 is very late. My guess is: it is too late. 6. This may explain why Europe is currently behind the USA for HFRPPHUFH JURZWK. According to estimates, the EU represents only a third of the US e- commerce market. But still, things have started to change in Europe, and we are heading in the right direction. 7. On average,,qwhuqhw SHQHWUDWLRQ UDWHV in the EU remain lower than in the United States. In reality, the situation is very contrasted, with some EU countries doing just as well as the USA and others being well behind. But Internet penetration figures could soon become irrelevant in Europe. Why? Because they are based on the US model of Internet access via a computer. Internet access platforms in Europe will be more diversified. Mobile devices and interactive digital TV will play a crucial role in this respect. Soon, more people will be accessing the Internet via a mobile terminal than a PC. Europe is already stepping into the post-pc era. It is already clear that the Internet will be the most important economic development in Europe in the year It is therefore realistic to say that Europe is now en route to the digital age. 4
5 But many roadblocks remain. And Europe still suffers from major weaknesses: communications prices remain too high; the Internet services sector is still insufficiently developed; e-commerce growth is slower than in the USA; SMEs are slow to embrace digital technologies; regional discrepancies persist; and the digital skill gap is widening - which means that at a time when 15 million Europeans are still out of jobs, companies find it difficult to recruit IT skilled personnel. So, there is still a lot of work ahead us. 7+(H(8523($&7,213/$1 The Commission has played an active role in putting things into motion: 1. First, it has secured a favourable legal framework for telecommunications - and it is about to complete favourable legal conditions for e-commerce. 2. Second, it co-finances high-tech research projects with a European dimension - our budget is ELOOLRQ EHWZHHQ DQG :H KDYH IRU LQVWDQFH developed single, high-quality standards for mobile telephony and digital TV upon which European industry strives 3. Third, the Commission sets policy orientations at EU level. eeurope, and the way it has been supported by the Lisbon Summit, is the best illustration of that. After the Lisbon Summit, the time has come to gear up. The Commission s duty now is clear: we have to deliver. Commission services have already started to elaborate the eeurope Action Plan called for by the Lisbon Summit. The Summit Conclusions give us clear orientations, as well as a methodology: the benchmarking of national initiatives. They also list some concrete measures which will be integrated in the eeurope Action Plan. This list is not restrictive, and we will flesh it out as we feel necessary. It is premature to get into the details of the eeurope Action Plan. Still, I wish to give you an overview of our priorities. The prerequisite for the development of the information society in Europe is that all businesses and citizens have access to a low-cost, high-speed FRPPXQLFDWLRQV LQIUDVWUXFWXUH. This is the key to urban and regional development, and thus to achieving greater economic and social FRKHVLRQ throughout the EU. Reducing DFFHVV FRVWV plays a major role in this context. This can only be achieved by opening up the "last mile to competition. Hence the importance of the Lisbon Summit commitment to unbundle the local loop by the end of the year. Also essential is that GLJLWDOOLWHUDF\ becomes a basic educational requirement. This must be complemented by the promotion of life-long learning for all. This is the condition for giving Europeans the skills they need to live and work in the digital age - and to progressively mend the IT skill gap. But education and training should do more than that: they should also give Europeans the dynamism, the creativity and the combativeness on which entrepreneurship strives. 5
6 Cohesion and digital literacy will be the cement of VRFLDO LQFOXVLRQ. Avoiding info-exclusion is absolutely fundamental. Both to preserve the social fabric, and to leave-up to the high standards of the European social model - which we hold dear. Additional measures may be needed to prevent info-exclusion, for instance enabling all Europeans to access the Internet at public access points. We must also develop technologies and services needed by disabled people, the elderly and the sick to be full actors in the information society. But accessing the Internet is not an end in itself. It only makes sense if Europeans find valuable services and contents on the Net - and of course, if they find them in their own language. This presents the European FRQWHQW DQG ODQJXDJH industries with huge opportunities to exploit Europe s rich heritage and cultural diversity, and to create added value. A prerequisite to help new players exploit the potential of the Internet economy is to simplify the EXVLQHVVHQYLURQPHQW. In Europe today, it is still too expensive, difficult and time-consuming to create a start-up. In spite of the availability of venture capital, European start-ups remain at a disadvantage. We must further cut red tape. And of course, we must create the right legal conditions for HFRPPHUFH to flourish. Clear and predictable rules are key to securing business and consumer trust. It is therefore essential to complete the Internal Market for e-commerce by the end of Furthermore, the speed of technological change may require innovative and more flexible regulatory approaches. Industry self-regulation could play a major role in this respect. Economic success and social progress also depend on WHFKQRORJLFDO OHDGHUVKLS. Europe must therefore maintain its technological lead in key sectors such as mobiles communications. But Europe must go further, extending its leadership into new areas. This can only be achieved by pooling Europe s brain power. One element of this will be the creation, by the end of 2001, of a very-high speed trans-european research network. This will also contribute to attracting and retaining research talent in Europe. Finally, governments and SXEOLF DGPLQLVWUDWLRQV at all levels must exploit new technologies. Not only to make information as accessible as possible. Even more important is to bring government closer to citizens, to make government more transparent and to foster greater citizen participation. &21&/86,21 Ladies and gentlemen, When we launched eeurope last December, it was clear that Europe had great potential and numerous assets. But there was no sense of urgency. The Lisbon Summit is now showing us the way. EU leaders have identified the real issues, and they have made a strong commitment. If we act together, now, we can make it. Ladies and gentlemen, I thank you for your attention. 6
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