The ICT industry as driver for competition, investment, growth and jobs if we make the right choices

Transcription

1 SPEECH/06/127 Viviane Reding Member of the European Commission responsible for Information Society and Media The ICT industry as driver for competition, investment, growth and jobs if we make the right choices Presentation of EITO 2006 Brussels, 23 February 2006

2 Introduction Ladies and gentlemen, It is my pleasure to welcome the launch of the 2006 EITO report. As in previous years, this report is very valuable and complete. Every issue provides useful statistics on the ICT sector as well as comprehensive studies and recent developments in strategic areas of the information society. As usual the choice you made this year is topical and in this case controversial: peer-to-peer issues are not easy to address. The technological description and the data provided on use are extremely interesting. I am pleased to have a confirmation from EITO that the sector is experiencing sustained growth: roughly three and half per cent in 2005, higher than the rate of growth of the European economy. As EITO tells us, in 2005 the European ICT market revenues represent 6.5% of GDP and 34% of the worldwide ICT market. IT and Communications are each responsible for roughly half of the European ICT market. The IT component is driving growth primarily because of the service and software sectors. Software in particular has experienced and will continue to experience rapid growth rates, approaching 6% next year. The area of telecommunications continues its positive performance, driven in particular by growth in advanced mobile and broadband services. These trends are of particular interest considering the impact of ICT on economic growth and against the background of i2010, my policy initiative for a European Information Society for growth and employment, which I will come back to later. The impact of ICT in the economy Many economists now agree that information and communication technologies explain a significant share of productivity gains in modern economies. The development and deployment of ICTs is the foundation of the resurgence of growth in the US in the past ten years. Since the 1990s, Europe has experienced a slowdown in productivity growth. The slowdown mainly emanates from inflexible industrial structures that have been slow in adapting to the challenges of globalisation and of rapid technological change. Even so, half of Europe s productivity gains are still explained by ICT. At the source of this impact are the speed of technological change, product improvements in semiconductors and the continuing decline in semiconductor prices. The reduction of semiconductor prices immediately has an effect on the cost of computers, consumer electronics and telecommunication equipment. This technology has also helped reducing the costs of aircrafts, automobile, scientific instruments and other products. ICT benefits have therefore spilled over to other innovative areas of the economy. ICTs generally affect growth in the economy in two waves: - Short term, ICT products are getting cheaper in real terms this stimulates productivity and investment; - Medium to long term, as the new technology is adopted throughout the economy, we get new markets, new industrial sectors and more modern and productive organisations. 2

3 These long-term benefits only come about when investments in ICT are combined with remodelled business processes and an up-skilled workforce. This takes time and these benefits have not yet fully materialised in Europe. A recent German study estimates that if these transformations could be achieved the German economy would grow by an extra 75billion in the next three years. The ICT sector The ICT sector is a driving sector of our economy. It represents less than 6% of value added, but in the past 10 years it has contributed more than one quarter of labour productivity growth. Its main contribution to growth stems from its research activities. The sector is responsible for 25% of research and development in the business sector. This is a significant share, although it is below the effort made by our main international competitors. In the United States, for example, R&D in ICT is 35% of R&D in the business sector. Research matters for growth. And it matters if we want Europe to continue enjoying industrial and technological leadership. Economies that invest in research in a particular technology are the ones that benefit the most from this technology and its progress. Those that rely on knowledge developed elsewhere are ultimately left behind. An indigenous research capacity is therefore essential to master and assimilate technologies that can be exploited to a country s social and economic advantage. That is why as we enter the negotiations for the EU research budget in the coming weeks we have to make sure that ICT research at least maintains its share. Not for the sake of Viviane Reding, but because the productivity gains that ICT is and will deliver is the motor of economic sustainability in face of the twin challenges of globalisation and ageing. The Commission recently adopted its first Annual Progress Report in the context of the renewed Lisbon strategy. The report clearly focuses on investment in knowledge and innovation as a main driver of growth and jobs. The Aho report published at the same time makes the same point and recommends the need for increased resources in R&D, in particular for the development of innovation-friendly markets that include key areas like e-health, digital content and security. After this session today I will go to launch a new initiative called intelligent Cars at the Autoworld Museum I invite you to attend. There you will see practical results of EU ICT investments. This is money well spent delivering concrete results for European industry and European people. I2010 and the ICT sector In June last year I launched the i2010 initiative a European Information Society strategy for growth and jobs. This initiative lays out a strategic framework for promoting a dynamic and competitive European digital economy. The main elements of the initiative are explained in the Introduction to this EITO edition. 3

4 Principally, i2010 addresses the challenges posed by digital convergence. Broadband is still growing fast. About 25% of European households are now subscribers. The market has achieved 53 million connections, up 20 million from last year. But there is no room for complacency. Europe must move up to higher bandwidth and advanced services. Where we see high take up of broadband, it is where we see competition working: in line with the competition rules based European regulatory framework. As you know, this year I am reviewing this framework, to see if it gives the right balance of incentives for investment and competition in high bandwidth networks and innovative convergent services. These are my questions: does the framework give clear and predictable rules that will encourage investment even while the rules of the game seem to be changing, does it strengthen the single market enough, is sufficiently light touch regulation, does it guard against misuse of control of excessive market power? A second key objective of i2010 is to foster investment in ICT research and development as well as innovation and e-business. As I have said research is essential and we are under investing in ICT research to a dramatic extent. Being realistic, I know that I will not get all the money I need for ICT research, which puts me under increased pressure to make the EU-level ICT research give the highest strategic contribution to innovation and growth. This is what we are trying to do. A good example of how we are raising the strategic profile of the research funds is through the six European technology platforms that have taken off in formed in areas of strategic importance to Europe, to create common visions, research agendas and technology roadmaps amongst all key industry and research actors. They make it easier for industry and academia to coordinate their research. They build links between the various elements of the innovation process R&D, standards, regulation and funding and they lead to greater certainty in planning and wider involvement and commitment of industry. In the light of what the EITO report says on the rapid growth rates of the software sector, it is particularly interesting to note the creation of a platform called the Networked European Software and Services Initiative (NESSI) that brings together the major players of the European software industry. This will help to consolidate the benefits we expect from software. It will draw up a strategic research agenda to respond to the growing demand for more reliable software, Grids and eservices, while seizing the huge opportunity for new breakthroughs in this area. Such initiatives create the partnerships needed to build a competitive European industry. Finally, i2010 aims at fostering an inclusive information society in three ways: by making sure that ICT benefits all citizens, makes public services better, more cost effective and more accessible and by improving quality of life. This will give new opportunities to the ICT sector to develop new services and solutions for the benefit of the citizens. 4

5 Conclusions The European Union looks at the ICT sector as one of the main contributors to European productivity growth. The EITO Report shows that Europe's ICT markets have an impressive growth potential and are in addition contributing strongly to macroeconomic growth in general, thanks to the horizontal importance of ICT for all sectors. For this to continue we need the policy support that creates incentives to invest firstly in innovative services and networks and secondly in the research and development needed to keep the information technology revolution rolling forward. Therefore, I call on all EU governments to support the Commission in its objective to ensure a dynamic, competition-oriented regulatory framework and a substantial increase in research spending in the field of ICT to help Europe catching-up with its competitors. For this reason I welcome the Commission welcomes the EITO publications and considers the monitoring of the ICT sector as crucial information to shape its own policy. I wish all the best to professor Lamborghini for the future editions. 5