22 years ago, the European Single Market became a reality. Today sees the launch of the European Commission’s Digital Single Market strategy, an ambitious plan, which aims to update Europe’s single market for the digital era. If fully completed, it promises to deliver €415 billion worth of growth.
Within its strategy, the Commission has identified the digitization of all economic sectors as a priority for maintaining Europe’s competitiveness. And with 75% of the digital economy’s added value deriving from traditional industries, it’s vital for European businesses to boost growth and innovation through the use of digital services such as big data, cloud computing and the Internet of Things.
National initiatives have already shown how the Internet of Things could revitalize conventional manufacturing processes. Germany’s “Industry 4.0” strategy is a high-tech approach to the computerization of manufacturing. By integrating digital infrastructure, software and data-based applications into traditional production lines, this strategy is expected to drive an additional value creation potential of €78 billion.
A recent report by the European Commission’s Strategic Policy Forum on Digital Entrepreneurship showed that the replication of such initiatives across the continent could grow European manufacturing by an additional 30% over the next decade and a half. Some European companies, such as KUKA Industries, a robotics manufacturer, have already successfully embraced the approach of combining their decades-old expertise with new digital solutions. With Europe’s traditional industries having lost ground to emerging economies, examples like this show that advanced digital technologies present an opportunity for Europe to once more take the lead.
How successfully a business adapts to the digital transformation will affect its future competitiveness. Every aspect of business will be impacted. Those who hesitate to embrace the opportunities of digitization today, risk being left behind tomorrow.
But to date, fewer than 60% of European companies have adopted any new digital solutions. This is no surprise when you consider the myriad of technical and legislative barriers still in place. Fragmented regulation and inadequate sector-specific rules risk hindering the deployment of cloud computing and the Internet of Things, which could quickly become a stumbling block for the global competitiveness of European industries.
To support the growth of the digital economy across all sectors, we must build a cohesive and competitive regulatory environment, which encompasses elements as diverse as international technical and commercial standards for interoperability and data protection, avoidance of sector-specific data localization requirements, connectivity, digital skills training, and trade.
Building confidence and trust in technology must be at the center of Europe’s digital transformation. Harmonized international security and privacy standards are vital to providing users with the utmost level of transparency and oversight over how their data is stored and used. Certifications such as the ISO/IEC 27018 standard – the world’s first international standard for cloud privacy – allow enterprises to benchmark different cloud and Internet of Things services in a uniform way and can encourage the uptake of those services.
Early adopters of IoT solutions in Europe have not raised concerns over the quality of connectivity. But their demand for bandwidth, in particular mobile bandwidth, have increased. Indeed, the quality of broadband in the EU matches if not exceeds that of other global regions, including the U.S. The up-take of cloud and Internet of Things solutions, however, further increases the demand for greater and more affordable access to broadband, requiring more investment in higher-bandwidth fiber-based networks. This clearly demonstrates the complementarity between networks and applications.
In the long-term, Europe would benefit from a broad approach to connectivity, encompassing not just technologies such as wired broadband and fiber but also interconnections, data centers and the wireless opportunities created by a variety of radio frequency spectrum access models. Promoting a more efficient utilization of network resources, such as network and spectrum sharing, will drive the necessary level of competition across the telecommunications industry for businesses to implement new digital applications and services at a competitive rate. Competition must be promoted at all levels in the value chain, including the underlying telecommunications infrastructure, in order to ensure that connectivity is affordable for businesses of all sizes and irrespective of their location.
The ICT market is by its nature based on international openness and cooperation. European businesses benefit from a wide variety of technology platforms and providers from other regions such as the U.S. and Asia. International standards allow European companies to tailor global solutions to their specific needs using local industry expertise. KUKA Industries’ reach, for instance, now extends into new sectors, including foodstuffs, plastics, metalworking, foundry, electronics, medical technology and the entertainment industry as well as new international markets.
Calls for European-only digital service providers overlook the fact that greater interdependence, not regional isolation, is the key to allowing as many businesses as possible to benefit from technological opportunities.
Whether Europe is helping to shape new transatlantic rules on data flows, or exporting home-grown expertise and products beyond national borders, an outward-facing, collaborative and interconnected approach to regulation is needed to build a strong digital economy. Only then will the Digital Single Market make a lasting impact on European growth, competitiveness and prosperity.
This article was first published on POLITICO.eu