eEurope - An Information Society for all - Progress report for the Special European Council on Employment, Economic reforms and social cohesion towards a Europe based on innovation and knowledge Lisbon, 23 and 24 March 2000
Date: 2000-03-08
Institutions: European Commission
Subjects: Europe, information network, information technology, innovation, new technology

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 8.3.2000
COM (2000) 130 final

eEurope
An Information Society For All

PROGRESS REPORT

For the Special European Council on Employment, Economic reforms and Social
Cohesion – Towards a Europe based on Innovation and Knowledge

Lisbon, 23 and 24 March 2000

Contents

Introduction

1. Feedback

2. Further analysis

3. The way forward

Annex 1. Progress since Helsinki

Annex 2 – The eEconomy

2

Introduction

The eEurope initiative was launched on 8th December 1999 with the adoption of the
Communication ‘eEurope – An Information Society for all’ by the European Commission1.
The initiative aims at accelerating the uptake of digital technologies across Europe and
ensuring that all Europeans have the necessary skills to use them. It plays a central role in the
agenda of economic and social renewal for Europe which the Commission has set out in
advance of the special meeting of the European Council in Lisbon.

The initiative was motivated by the growing realisation that
the application of digital
technologies has become the key factor for growth and employment. There is increasing
evidence that a ‘new economy’ or e-economy is emerging, mainly driven by the Internet. The
European response to these opportunities and challenges has been rather slow, partly because
the logic of the traditional industrial economy remains strong in Europe.

The Lisbon European Council could change this. By endorsing concrete policy actions it
could give a strong signal that European leaders are determined to transform Europe into a
dynamic and competitive economy. Much of the impetus for this transformation will come
from the market and from the private sector. But public policy matters, notably in establishing
a clear regulatory framework, a skilled population and an inclusive information society. No
less significantly, Europe needs strong leadership and firm commitment from the very top.

The eEurope initiative seeks to stimulate such a development. The initiative was welcomed
by the Helsinki European Council on the 10-11th December. The Heads of State and
Government invited the Commission, together with the Council, to prepare the eEurope
Action Plan for endorsement by the European Council in Feira in June and provide a progress
report to the Lisbon Special European Council.

This progress report is in response to this request. It is structured in three sections and two
annexes.

The first section briefly reviews the reactions to eEurope and the inputs received from
Member States, industry and other interested actors.

The second section summarises further analysis of the development of the new economy in
Europe

The third section sets out the ‘way forward’ towards an eEurope Action Plan.

Annex I addresses progress since the eEurope initiative was launched in December. It
provides details on current and planned initiatives which contribute towards achieving the
targets in eEurope and sets out what further actions are required.

1

http://europa.eu.int/comm/information_society/eeurope/index_en.htm.

3

Annex II contains an explanatory analysis of the ‘new economy’ or the e-economy, the
impact which it is having on Europe and the position of Europe in this development. This
analysis underpins the eEurope initiative and provides a strong argument for urgent action.

1. Feedback

The eEurope initiative has triggered quite a number of comments and suggestions from
various sources. They can be grouped together into reactions from European institutions, the
Member States and other interested parties.

1.1. European Institutions

The Council has been invited by the Helsinki European Council to work with the Commission
on the Progress Report and the eEurope Action Plan.

The European Parliament will adopt its report on eEurope during the plenary session of 13-
17th March.

1.2. Member States

An informal meeting between Member States and the Commission, on the invitation of the
Portuguese Presidency, was held on 31st January in Lisbon. Bilateral contacts have also
taken place with Member States.

In general, they have expressed interest and support for eEurope. Main points were:
(cid:1)

Several are keen to set priorities and agree some targets already in the Lisbon European
Council (e.g. cheaper Internet access and the e-commerce framework).

(cid:1)

(cid:1)

(cid:1)

(cid:1)

There are some differences of opinion in relation to the order of priorities and suggestions
for further priority actions (e.g. content, skills training).

All stress that they do not wish to see an additional ‘process’.

All expressed the wish for further details as to how the objectives of eEurope could be
achieved.

Most Member States are developing national initiatives in parallel with eEurope – e.g.
Germ@ny goes online2, UK initiative on ‘Information age government3, French initiative
on co-regulation of the Interne4.

1.3. Input from other actors

2

3

4

A private initiative of Deutsche Telecom in co-operation with the German government. See press
release, 11.02.00.
http://www.iagchampions.gov.uk/Strategy.htm.
http://www.internet.gouv.fr/francais/textesref/pagsi2/lsi/coregulation.htm.

4

The eEurope mailbox (eeurope@cec.eu.int) was set up to provide a mechanism for discussion
and feedback. A wide cross-section of just under 200 interest groups: industry; academia,
non-governmental organisations (NGOs), national, regional and local governments and
individuals sent inputs. A deadline of 1st February was set to enable inputs to be included in
this report. A more extensive analysis has been placed on the eEurope webpage:
http://europa.eu.int/comm/information_society/eeurope

In terms of the eEurope proposals, it was welcomed as a valuable effort to address what is
seen as a key issue for Europe’s future success. There was broad support for the action lines,
although different interest groups had differences in emphasis. For example industry stressed
the need for a legal framework for e-commerce, while NGOs representing disabled people
proposed the mainstreaming of access issues throughout the initiative. Additional issues were
also proposed for inclusion, for example access for elderly people and training in digital
skills.

Correspondents showed strong willingness to contribute towards furthering the aims of the
eEurope initiative. Several provided examples of current projects and programmes which
address some of the issues covered in the initiative. Some of the suggestions made have
already been taken into account in the development of the relevant action lines (e.g. skills
shortage, security).

In terms of criticisms of eEurope, the most common related to difficulties experienced in
accessing the documents, which were not in a format appropriate for visually-impaired people
to access .

2. Further Analysis

Since the publication of eEurope the level of interest in the impact of Internet and awareness
of the ‘new economy’ has increased significantly in Europe. There has been a remarkable
level of media attention in all Member States, while several reports and studies from the
private and public sector have further underlined the developments described in eEurope.

The Commission has undertaken further analysis of currently available data (see annex II)
which support the concept behind eEurope. The result of this analysis can be summarised as
follows:

• The Internet will increase the potential output of the European economy via increased
competition and productivity. It could therefore will be instrumental for a successful
economic policy in the EU

• Europe,

in spite of some strengths (e.g. mobile communication) is not sufficiently

realising the full potential of the Internet

• Europe needs dynamic European capital markets supporting new start-ups, a labour
market that supplies a skilled and flexible workforce and competitive product markets
which keep down prices.

• There are marked differences in uptake of the Internet between Member States. This
raises problems for social cohesion as well as economic growth potential, as in a
networked economy there are benefits to maximising the number of people connected.

5

This further analysis, together with input from the many different actors underlines the
importance that they attach to action in this area.

3. The Way Forward

This Progress Report should contribute, together with the Commission’s other inputs, to
the discussion at the Lisbon European Council on the objectives of eEurope and the
manner in which these can be realised.

In view of the urgency of the matter some progress should be made in Lisbon. Therefore, it
calls on Member States to agree on firm commitments to move towards these objectives. As
concluded by the Helsinki European Council in December a full Action Plan needs to be
adopted by June. The eEurope Action Plan should define concrete targets in all eEurope areas
and the means to achieve them.

In order to follow progress, major efforts will be needed to improve statistical data for the
new economy. The Commission will set up a Web page in order to track progress towards the
agreed targets which will provide up-to-date, comparative information on key indicators for
all Member States, together with international comparisons.

Speeding up progress in certain eEurope areas (e.g. education and research networks) also
means reassessing priorities. The Commission has already made some progress in two areas.
Priorities of eEurope feature prominently in the Work Programme for the IST Programme5, as
well as in the negotiating mandates with the Member States for the structural funds national
programmes (2000-2006). In the latter the Commission underlined those eEurope objectives
which would be eligible for co-financing under the structural funds.

The progression and direction of eEurope depends on the outcome of the Lisbon
European Council. Therefore, in order to move forward, agreement is needed on the
following:

a. The priority areas to be targeted, with timetables, in line with those proposed in the
Commission’s agenda for economic and social renewal, to promote the rapid emergence of
the new economy in Europe, strengthening and building on European values and diversity

b. The methodology and procedure to be established for the finalisation of the eEurope Action
Plan

5

Information Society Technologies Programme – part of the 5th Framework Programme for Research
and Technological development.

6

Annex I

Progress on the eEurope action lines since Helsinki

7

1. European youth into the digital age

eEurope Targets

By the end of 2001:

• All schools should have access to the Internet and multimedia resources.

•

Support services should be made available to all teachers and pupils.

• Access to Internet/multimedia in public centres made available, including in less-favoured areas.

By the end of 2002:

•

•

Teachers should be equipped and skilled in the use of Internet/multimedia

Pupils having access to Internet/multimedia resources in their classroom.

By the end of 2003:

• All pupils should be “digitally literate” by the time they leave school.

Progress made

In January 2000, the Commission published a call for a support service6, for a virtual
community and partnership in the area of multimedia educational tools, learning technologies,
content and services. An open consultation has been addressed to this community, to provide
ideas and contributions.

Consultative meetings have been arranged with industry and Member States with regard to
the activities stemming from both eEurope and the recent report: "Designing Tomorrow's
Education. Promoting Innovation with New Technologies"7. On this basis, Member States and
the Commission will define concrete actions and means to upgrade school connectivity and
access to high quality educational multimedia resources and ensure that the targets for digital
literacy can be reached.

'The School of Tomorrow' and 'The Learning Citizen' are key issues addressed within the IST
Programme. The Minerva action of the Socrates Programme is addressing these issues
strategically from an educational, pedagogical and organisational perspective.

Several feed-backs to eEurope consultation remarked that the lack of skilled workers to
support the growth of digital industries was a major problem in Europe. Ensuring adequate
access to skills training in education will contribute to reducing this skills gap, but other
initiatives outside the educational system are also required.
In this context the Commission
Communication on “Job Strategies in the Information Society”. deals with this issue in detail.
It also provides updated information on uptake and best practices in Internet in schools.

6

7

PROMOTEUS – PROmoting Multimedia access to Education and Training in the European Society.
COM (2000) 23 Final. Adopted by the Commission on 27.01.00.

8

Progress needed

Identification and promotion of best practice, including teacher training, teaching practice,
Internet integration, and services - should be carried out in a collaborative way. Existing co-
operation throughout Europe (e.g. EUN8) should be widened and strengthened. In particular
dialogue between industry, the educational sector and users should be stimulated to ensure
that technological solutions are made more user-friendly and cost-efficient.

National progress in adapting the learning process to the challenges of the information
Society will be monitored in the High Level Group on Employment and the Social Dimension
of the Information Society.

In co-operation with the Member States and on the basis of the current consultation process
an initiative will be adopted by the Commission this year in order to ensure that the eEurope
targets are reached and to promote the widespread introduction of innovation in education.
The development of benchmarking in the context of both designing tomorrow's education and
lifelong learning should contribute to this process.

The Community Support Framework within the structural funds should contribute to the
improvement of the level of connectivity and the effective use of Internet in education.

2. Cheaper Internet access

eEurope Targets

By the end of 2000:

•

•

•

Incumbents should offer unbundled local loops.

Leased lines tariffs should be significantly reduced.

Licence requirements should be lightened and replaced by general authorisations.

By the end of 2001:

• Allocation of frequencies for multimedia wireless systems should be established.

Progress made

On 1 January 2000 the telecommunications market in Portugal was fully liberalised, leaving
only Greece with a public monopoly (to be lifted at the latest 1 January 2001).

A Recommendation on leased line interconnection pricing has been adopted and the
Commission has launched a sector enquiry into this area based on competition law.

In January 2000 the Commission held a public hearing (about 550 participants) as part of its
review on the future regulatory framework for electronic communications.

8

European Schoolnet.

9

In February 2000,
loop
unbundling. A public hearing was held on 22 February, with a view to adopting a
Recommendation to Member States on provision of unbundled access to the local loop.

the Commission published a consultation document on local

The Commission has sent a questionnaire to Member States asking for detailed information
on fixed wireless access (spectrum availability, licensing conditions, etc.) On this basis a
strategy will be developed on freeing sufficient radio spectrum and the areas where a
harmonised approach at EU level is needed.

Progress needed

The Commission will publish a Communication on the result of the communications review
directives will be adopted, by the
consultation process. All subsequent proposals for
Commission in the first half of the year 2000. Council and European Parliament should deal
with these directives as a matter of urgency.

The Commission will monitor progress in Member States towards local loop unbundling and
publish the results on the eEurope Web site and in the annual
telecommunications
implementation reports.

The impact of the leased line Recommendation will be assessed by the Commission and, if
necessary, further regulatory measures will be taken to reduce these tariffs.

The public consultation on the telecommunications review showed broad consensus on the
proposal to drastically reduce licence obligations. Such measures would reduce “red tape”
and support the development of pan-European services.

The Commission will further specify its proposals for a future frequency policy, including
suggestions on frequencies for fixed wireless multimedia systems.

A decision to implement efficient institutional mechanisms for decisions on radio spectrum
related issues is required.

3. Accelerating e-commerce

eEurope Targets

By the end of 2000:

•

•

•

•

•

Ensure that the remaining e-commerce-related directives are in place.

Propose changes to the public procurement legislation to enable e-procurement.

Encourage alternative consumer redress mechanisms and online dispute settlement.

Launch a campaign to help SMEs “go digital.

Support the creation of a .eu top-level domain name

10

Progress made

There are four e-commerce-related Directives9 and two regulations10 pending in Council and
European Parliament. A Common Position has already been reached on the two Directives
relating to e-money and a legal framework for e-commerce in Europe.

On public procurement,
the Commission envisages proposing modifications to existing
directives, aimed at enabling and promoting the use of electronic means for information
exchange and tendering procedures, by the end of April.

The Commission services have begun work on the notions of self-regulation and co-
regulation. This work could result
in drawing up guidelines, on the basis of broad
consultation, which could serve as a reference for codes of conduct in e-commerce. They have
also begun work to link existing alternative dispute resolution schemes in a pan-European
network (European Extra-Judicial network – EEJ-net)

The Commission services are encouraging the establishment of a cross-border complaint
network which will cover on-line financial services. Two meetings have already been held
with national out-of-Court redress bodies for financial services.

Regarding the ‘go digital’ campaign to facilitate the transfer of technical know-how to SMEs,
two consultation meetings were held with Member State representatives to develop more
concrete proposals.

On February 2nd the Commission issued a consultation document on the creation of the .eu
Internet top level domain name http://www.ispo.cec.be/eif/InternetPoliciesSite .

Progress needed

Council and European Parliament, together with the Commission, should make every effort to
adopt above mentioned e-commerce related directives as a matter of urgency.

Member States should already start to work on their implementation (the success of a parallel
approach was demonstrated in the case of telecom liberalisation deadline in 1998). The
objective should be to rapidly create a true Internal Market and a favourable environment for
e-commerce in the European Union, especially for SMEs.

The Commission and the Member States need to strengthen consumer trust in e-commerce by
stimulating best business practice (by encouraging development of trustmarks, alternative
dispute resolution, codes of conduct and security). Urgent action is needed to encourage
appropriate on-line solutions.

Once proposed by the Commission, the legal framework for electronic procurement should be
rapidly adopted. Public administrations,
including the Commission should introduce e-
procurement as a matter of priority. The Commission will support the development of e-
procurement through the IST research programme e.g. through take-up measures.

9

10

Copyright and related rights, legal aspects of e-commerce, e-money, distance selling of financial
services.
Jurisdiction and the enforcement of judgements, dual use export control regime.

11

The Commission services are in the process of drafting legislative changes to the value added
tax (VAT) regime to ensure equitable treatment of e-commerce.

Regarding the .eu proposal, the Commission will report to the European Parliament and
Council, as a matter of urgency, on progress and the next steps proposed.

4. Fast Internet for researchers and students

eEurope Targets

By the end of 2000:

•

Internet infrastructure for researchers and students should be upgraded.

By the end of 2001:

• At least one university and one scientific research faculty per country should have a network supporting

multimedia communications, rapidly to extended all others.

•

Students should have access to on-line interactive multimedia lectures

Progress made

With regard to interconnection of national research and education networks a consultation
with a group of experts took place at the end of 1999. The Commission is currently drafting a
Commission Decision, based on the requirements document produced by the experts, to
launch the research networking activity under the 5th Framework Programme. At the national
level, several research and education networks (e.g. The Netherlands, Germany, France) have
launched tenders to upgrade their existing facilities to Gigabit/s.

In January 2000 the Commission published a Communication entitled “Towards a European
Research Area” in which a better use of electronic networks by European scientific
communities for research purposes and the creation of virtual centres of excellence are set as
strategic objectives.

Progress needed

The currently planned activity foresees to upgrade the interconnections between national
research and education networks to multiple Gigabit/s – to match the aggregated capacity of
national networks
cross-border
collaboration.

thereby eliminating bottlenecks which disadvantage

In addition to the trans-European research and education networks some of the national
networks and access to these networks also need upgrading. The Commission is examining
whether and how the Structural Funds could contribute to such an investment.

Fast Internet connections are a prerequisite for new applications for students and researchers.
They also provide an ideal test-bed for the development of new Internet tools. Progressively
campus networks would need to be upgraded to exploit both the faster networks and to offer
students and researchers advanced applications.

12

The Commission will support related projects through its research programmes, including the
IST programme. In addition every effort must be made to raise awareness among the diverse
scientific communities to ensure that they exploit the vast potential of the Internet.

Member States should review their funding possibilities to support high speed networking.
The Commission will also make every effort to support Member States investments through
the Structural Funds.

5. Smart cards for secure electronic access

eEurope Targets

By the end of 2000:

• Organise a “Smart Card Summit”.

• Agreement on common specifications for a generalised smart card infrastructure.

By the end of 2001:

• Begin implementation of the agreed common specifications

By the end of 2002:

•

Extend use to additional applications also needing security and/or mobile access.

Progress made

in co-operation with the Commission,

is in the process of
The Portuguese presidency,
finalising the agenda and attendance for the Smart Card Summit which will be held in Lisbon
(10-11 April 2000,
to the Ministerial Conference on the Information and
Knowledge Society). The summit will gather high level representatives of the main sectors of
activity concerned by smart cards from producers to consumers, including system operators
like banks or mass transport.

in parallel

The participants to the Summit should present a “Smart Card Charter” as an invitation to
work on commonalties for smart cards. Its endorsement by the whole European smart card
community would actually launch the action on smart cards. The Smart Card Charter is
currently in preparation.

Progress needed

Agreement needs to be sought on the outline of common specifications for a generalised smart
card infrastructure. The Commission will make every effort to support the work of industry
towards achieving these goals.

The Common Specifications should be finalised by end 2000. They will provide the
requirements for a basic set of reusable components necessary for most applications. They
will clarify the commonalties and the relationships between the applications, they will set
usability criteria, they will identify existing or new structures which will contribute to the
success of the initiative and they will contain a detailed workplan including a distribution of
responsibilities.

13

In 2001, the work will yield detailed specifications defining the implementation of the
components in a first set of “core” applications e.g. electronic commerce or mobile telephony.

The undertaking will conclude in 2002 with the extension of the detailed specifications to
additional applications.

6. Risk capital for high-tech SMEs

eEurope Targets

By March 2000:

• Have a policy review of available instruments to stimulate early stage financing.

By the end of 2000:

•

Propose innovative forms of capital raising.

By the end of 2003:

• Remove remaining obstacles to an integrated pan-European risk capital market.

•

Tripling of early stage finance in the European Union.

Progress made

Recent developments in financial markets indicate that the availability of risk capital and seed
capital is increasing in Europe. This progress should be encouraged.

The Commission has informally undertaken a preliminary review of its own existing
instruments which will form the basis of discussions with Member States on re-assessment
and re-orientation.

The Communication on Strategies for Jobs in the Information Society presented Member
State best practice in this area and suggested some indicators to monitor developments.

Progress needed

The results of the initial Commission review will be discussed with Member States in the run-
up to the Feira European Council.

In parallel, all the Community’s instruments should be evaluated against strict criteria by
September 2000 and on this basis, the possibility of merging, revamping or dismantling
existing schemes must be considered:

• Interfaces between the public research programmes and the financial community must be

strengthened

• Co-ordination within the Commission and with other institutions, e.g. EIB, EIF must be

improved.

• The Commission’s own management of risk capital schemes should be streamlined, e.g. a
one stop shop for all Community risk capital instruments should be set up. New ideas need

14

to be considered, for example micro-credits or supporting audiovisual and content
industries.

The main goal must be to improve the efficiency of the Internal Market and the interaction
between the various instruments.

7. eParticipation for people with disabilities

eEurope Targets

By the end of 2000:

• Review Information Society legislation and standards on accessibility.

• Recommendation to take account of people with disabilities in the public procurement of information and

communications products and services.

By the end of 2001:

•

commitment to make all public Web sites and their content accessible to people with disabilities.

By the end of 2002:

• Create centres of excellence in each Member State to develop an EU curriculum in Design-for-All.

Progress made

site

A dedicated Web
at
http://www.egroups.com/group/eeurope-pwd/ to discuss the eEurope initiative in the area of citizens
with disabilities. This Web site has received an enthusiastic response and discussion is on-
going.

the Portuguese Presidency

been

has

set

up

by

Some informal discussions have taken place with key actors in this field,
including
organisations of users and the High Level Group on Disability. Current work carried out by
CEN on Design-for-All standardisation will be linked to the eEurope initiative.

The Communication on Strategies for Jobs in the Information Society indicated opportunities
for disabled people to benefit from digital technologies and new ways of working.

Progress needed

A mechanism must be established to monitor relevant legislation and standards to ensure their
conformity with accessibility principles and to harmonise national action. By next June, the
Commission will propose a co-ordinated mechanism for monitoring, in consultation with
Member States.

The Commission will prepare a Communication on how public procurement instruments can
positively take account of the needs of people with disabilities in the procurement of digital
technology products and services.

The European Institutions and the Member States should endorse the existing Web
Accessibility Initiative (WAI) guidelines, making the design and content of all public Web

15

sites accessible to people with disabilities (www.w3.org/tr/wai-webcontent). Public-private
partnerships should be encouraged to ensure widespread web accessibility.

The Commission will set up a European network to optimise the interaction among national
centres of excellence (either physical or virtual) and encourage the development of curricula
in “Design-for-All” for designers and engineers.

8. Health online

eEurope Targets

By the end of 2000:

•

convincing cases and best practices of healthcare regional networks should be identified and priorities for
medical libraries-on-line set.

• Health care informatics standardisation priorities to be implemented by end 2000

By the end of 2003:

•

Implementation of informatics tools (health cards, health information and education networks) to facilitate
citizens active involvement in prevention and treatment of diseases

By the end of 2004:

• Health professionals and managers to be linked to a telematic health infrastructure

Progress made

A workshop on user
improved user
acceptance was held in Greece 10-12 December 1999. A workshop on collaborative on-line
libraries for health specialists will be held in Brussels on 28 March 2000.

friendliness of health telematic applications for

The development of on-line medical libraries, next generation smartcards for health and more
user-friendly infrastructures are included in the Work Programme for the IST programme
2000. This will lead to focused projects in these areas.

Progress needed

The Commission will encourage take-up of health information networks at Member State and
trans-national level and will take account of the work done under the Health Monitoring
Programme.

Member States should implement secure and efficient health telematics systems and services
based on standards and pre-standards as adopted by CEN.

The Commission will address the wider issues of the implementation of health telematics
systems and services, on which citizens have expressed concerns - such as confidentiality of
health data, quality of service and liability of service providers (including authenticity of
pharmaceutical supply and medical advice). To support
this work, research under the
Framework Programme should include the issue of info-ethics.

9. Intelligent transport

16

eEurope Targets

By the end of 2001:

•

Full access to and support for localised emergency 112 number calls.

By the end of 2002:

• New cars sold in Europe to be equipped with active safety-enhancing systems.

•

Traffic and travel planning information services to cover 50% of larger cities.

• Main European networks to have congestion information and management systems

By the end of 2004:

• Air routes to have infrastructure capable of reducing congestion.

Progress made

A Workshop was held with industry on deployment of pan-European Emergency Service and
a survey launched on the status of the112 number in the Member States.

A Recommendation to Member States and industry on ‘Safe and Efficient In-Vehicle
Information and Communications Systems’ was adopted on 22nd December 199911.

A Recommendation is being prepared on deployment of telematics travel
services, which promotes multimodal information services.

information

The IST Programme has launched a number of projects in the intelligent transport area
(especially in active-safety car systems and traffic/travel information domains). GNSS-2
(Galileo – the proposed European satellite navigation system); four definition phase studies
are underway sponsored by the Commission and one by the European Space Agency (ESA).

Progress needed

Member States should implement
Efficient In-Vehicle Information and Communication Systems.

the above-mentioned Recommendation on Safety and

The transport telematics High-Level Group should discuss and agree on actions to accelerate
the organisation of
location
determination and the deployment of travel information and incident management in larger
cities and European networks.

the introduction of wireless

the emergency services,

The European-wide introduction of wireless location determination for emergency calls (112)
and its standardisation and regulatory implications need to be defined with the Member States
and industry.

11

http://www.echo.lu/telematics/transp/transport.html.

17

10. Government online

eEurope Targets

By the end of 2000:

•

•

•

Ensure easy access to at least four essential types of public data in Europe:

Ensure consultation and feedback via the Internet on major political initiatives.

Ensure that citizens have electronic access to basic interactions

Progress made

The Commission has begun consultation with Member States to establish the current state of
access to public sector information and electronic interactions with
play in relation to
citizens. The consultation will consider developing a framework to assess progress on access
through qualitative and quantifiable criteria. This work will build on best practice examples
provided in the Communication on Strategies for Jobs in the Information Society.

Better access in practice is being demonstrated by the creation, in the coming weeks of a
register of the external correspondence of the Commission President to be made available on
the Internet. Additionally an on-line survey was launched with a view to improving the
Europa web server and better responding to users’ needs. The eEurope initiative itself was
made available for electronic consultation and feedback.

With the adoption on 15th February 2000 of the document « Dialogue on Europe », the
Commission has decided to open a public debate with citizens on the challenges of European
institutional reform. New technologies (Internet, videoconferencing) will enable members of
the
(see:
to
http://europa.eu.int/comm/igc2000/dialogue/index_en.htm).

dialogue

society

pursue

public

civil

this

and

Modifications to existing directives, aimed at enabling and promoting the use of electronic
means for information exchange and tendering procedures, will be proposed by the end of
April.

As part of the White Paper on its internal reform, the Commission decided on 1st March on a
set of actions to move towards the e-Commission. The Commission’s intention is to adapt and
up-grade its information and communication policy to provide better services for citizens by
maximising the use of Internet.

Progress needed

A High Level Group should be set up to advise on actions (regulatory and non-regulatory) to
be taken at European level
the Internet enables satisfactory access and
dissemination of public data. Such a group, which would form a key element of the follow-up
to the Green Paper on ‘Public Sector Information in the Information Society’, should
constitute a platform for exchange of information on best practice in that field.

to ensure that

Public authorities must reconsider their on-line strategy. The Commission will vigorously
pursue the actions towards the e-Commission. Building on the results of the above-mentioned

18

survey and best practice examples
approaches must be developed.

from elsewhere, more effective, citizen-friendly

19

Annex 2 – The eEconomy

This annex presents a first analysis of how digital technologies are transforming the old rules
that governed a predominantly industrial society to a new set of rules – those of the
Information Society.

The objective is to provide some elements showing that this transformation to the 'new
economy' or the e-economy will provide opportunities for economic growth through
exploitation of new activities and by the increased productivity of existing activities. The
analysis will highlight
the shortcomings of the European economy in grasping these
opportunities but also will demonstrate its strengths which can be built on to accelerate the
modernisation of the European economy.

What is the new economy?

The term new economy describes the transformation of economic activities that is taking
place as digital
information
increasingly cheaper and easier. The enormous volume of information is changing the way
markets operate, leading to restructuring of businesses and opening up opportunities to create
wealth through exploitation of available information.

technologies make accessing, processing and storage of

There is at present a debate on whether or not these changes are so radical as to merit the label
‘new economy’. This can now be seen every day in European media and policy statements
but was originally stimulated in the USA by the exceptional performance of the US economy:
8 years of continuous growth; expansion at over 4% per year in recent years; controlled
inflation below 2%; and unemployment less than 5%, in effect, full employment. Supporters
of the new economy argue that digital technologies represent a shift of equal importance to
the other major technological developments in the history of industrial societies: steam power,
electricity and the internal combustion engine. The more sceptical view accepts that
information and communication related industries are growing very quickly but not that the
same productivity growth is observable in other sectors. In general, the sceptical view is ‘not
proven’ rather than ‘not true’. It should be noted that amongst the supporters of the new
economy in the US, strong emphasis is put on the need for flexible markets.

The role of the Internet in the new economy

Digital technologies have been available for more than thirty years and businesses have
invested heavily in them over this period. Despite this, overall productivity (‘total factor
productivity’) has only recently begun to increase in the US and not yet done so in the EU.
Possibly this is because the benefits of technology are only realised when business
organisation is restructured to maximise technological advantages and this is necessarily a
long-run process.

Increased productivity growth in the US began around 1995, a date which coincides with the
beginning of the ‘world wide web’ which effectively marked the birth of the Internet as a
mass market medium. It has been suggested, although it is difficult to prove, that the Internet

20

allowed the decades of technological accumulation to finally generate higher productivity.
This assertion is supported by strong a proiri arguments that the Internet plays a key role in
lowering business costs, making markets more efficient and competitive and thereby
increasing productivity in the economy.

One of the most important features of the Internet and the reason why commentators consider
it be the driver of future prosperity is that it’s impact goes far beyond “high-tech” industries
and has been felt across all industries and services. Enterprises in all sectors have become
e-businesses. Indeed the most successful and fastest growing companies have been the ones
that have succeeded in incorporating the Internet throughout their production and distribution
chain. The extent to which the Internet can lower costs and increase productivity is shown in
the table below and is mainly the result of the following factors:

E-commerce reduces the cost of doing
business

Industry                                Estimated savings from

                                                business-to-business e-commerce

Aerospace machining

    Chemicals
    Coal
    Communications
    Computing
    Electronic components
    Food ingredients
    Forest products
    Freight transport
    Health care
    Life Sciences
    Machining (metals)
    Media and advertising
    Oil and gas
    Paper
    Steel

11%
10%
2%
5-15%
11-20%
29-39%
3-5%
15-25%
15-20%
5%
12-19%
22%
10-15%
5-15%
10%
11%

Source:GoldmanSachs

• Lower input prices: purchasing of intermediate products and services via the Internet
brings significant cost savings by reaching more suppliers and creating more competition
in tenders.

• Lower inventories: reorganisation of companies to incorporate the Internet into just-in-

time supply and distribution leads to lower inventories and hence lower costs.

• Reduced time to market:

the Internet enables companies to cut distribution time by

linking orders to production and utilising more efficient distribution services.

• Lower transaction costs: financial transactions are cheaper online; customers have wider
choice and better product information; corporate networks are increasingly used to cut
management costs and improve efficiency.

• Greater global reach: new wider markets are opened up from sales by Internet.

• Lower market entry costs: it is cheaper to establish a web site than to use traditional forms

of marketing.

21

An indicator of the key role of the Internet is the many recent announcements of leading
automobile manufacturers, airlines and banks to develop Internet e-commerce strategies and
to form alliances with internet service providers. The stock market confirms the benefits of
such strategies by increasing the share value of companies when they launch an Internet
strategy. There are many examples of new companies that have become world leaders in well
established industries such as book retailing or stock brokerage by using the Internet These
windows of opportunity are, however, short lived. Market entry soon becomes extremely
costly because of the strong branding of certain e-commerce services. Indeed this was one of
the motivations for launching the eEurope Initiative. This is a critical time to take
advantage of the opportunities offered by the Internet as the chance will soon be lost.

In addition to transforming existing businesses, the Internet has been creating new services
and hence new jobs in the economy. Electronic commerce, notably business to business e-
commerce, is booming and world-wide e-commerce sales are expected to grow 40 times
between 1998 and 2003 by which time they will become over 15% of all sales.12 Predictions
of market researchers, which often tend to be optimistic, have even been surpassed.

Digital indu stries dom inate the econom y

Market capitalisation - Top-100 EU/US companies
  €9,260 billion                                €5,094 billion

Info.
technology

 Telecoms 

Internet

info. tech.

 Telecoms 

Media

Other

Other

U SA

EU

Source: DG INFSO calculation based on FT stock listings (Dec. 99)

10 0%

9 0%

8 0%

7 0%

6 0%

5 0%

4 0%

3 0%

2 0%

1 0%

0%

The Internet and e-commerce are also leading to a surge in new company creation.
Confirmation of this can be found in the market capitalisation of Internet companies. The US
stock markets, especially the NASDAQ on which many ‘high-tech’ companies are quoted,
has experienced exceptional growth. Similar developments are taking place in Europe where
markets for fast growth companies have also been established – e.g. Neuer Markt, Nouveau
Marché, EASDAQ – although the number of companies listed and the volumes traded are still
relatively small compared to NASDAQ.

The above chart shows that information and communication companies now make up a
In Europe, these
significant part of the market capitalisation of Europe and the USA.
represent 35% of the market capitalisation of the top 100 European companies. In the USA,
the figure is already 50%. A striking difference is that European markets are dominated by
communications companies and lack the information technology and Internet stocks that are
top of the US rankings.

12

estimates from Electronic Commerce Observatory prepared by Gartner Consulting in co-operation with
EITO (European Information Technology Observatory) and the European Commission

22

Successful development of the Internet will inevitably mean transfers of activity both within
and between sectors. This has already been the case in sectors such as banking where jobs in
local branches have declined as online banking has grown. These transfers reinforce the
importance of developing new activities in Europe to ensure there is a net
increase in
employment. Europe must be strong in growing sectors to prevent jobs been transferred
outside the EU. A survey in the USA13 found that in 1999 there were an estimated 2.3 million
Internet-related jobs in the USA. European statistics are not available but the number of
Internet jobs is likely to be significantly lower. The Internet therefore provides policy makers
with a promising strategy to increase employment. In addition, the capacity of the Internet to
restructure the economy demonstrates the need to develop an Information Society for all, for
those in older sectors and activities as well as those in the new ones.

To summarise, network economies augment productivity which increases the potential output
of the economy i.e. the rate of growth that can be achieved without causing inflation. Higher
productivity could also lead to a short run decline in employment unless capital, labour and
product markets function efficiently and create new activities to turn potential output into
actual growth. What is needed is dynamic European capital markets supporting new start-
ups, a labour market that supplies a skilled and flexible workforce and competitive product
markets which keeps down prices.

Where does Europe Stand?

The previous section showed that the new economy is built around the Internet. Therefore
Europe’s standing in the new economy depends most on its Internet content and usage.

Internet Penetration

In Europe, 12% of households are connected to the Internet which represents around 20% of
the population with online access. Compared to the USA, a useful benchmark for Internet
usage, this is relatively low as their penetration rates are 2-3 times higher. Further, as shown
in the chart below, Europe is not catching up. There are some exceptions, notably the Nordic
countries some of which have higher achieved Internet penetration rates than the USA. The
challenge is to increase usage across the EU because the benefits of the new economy will
only materialise when the entire single market reaches a critical mass of Internet penetration.
Without this, there is a risk of a polarisation with benefits restricted mostly to the advanced
countries. Such differences would not only disadvantage those countries with low Internet
usage but all of Europe would lose out on the network economies of a large connected
population.

13

Center for Research in Electronic Commerce, University of Austin, October 1999.

23

Internet penetration in EU homes (%)
(October 1999)

EU average: 12%

B DK D EL E

F IRL

I

L NL A P FIN S UK US

Source: DG INFSO / Gallup / US DoC

Internet users per 1,000 people

North America

Western
Europe

Worldwide

60

50

40

30

20

10

0

800

700

600

500

400

300

200

100

0

1995

1998

2000

2005

Source: Computer Industry Almanac Inc.

Internet content

The off-line content market is a European strength but its position in on-line content is much
less satisfactory The number of European hosts – an indication of European web sites – is less
than a third the number in the US. Very few European sites appear in the the most frequently
visited rankings, the only exceptions being the sites of European internet service providers.

Shortage of venture capital in the EU means there are fewer European start-up companies and
fewer services and web sites oriented to the demands of European users. One reason is that
Europe has a higher proportion of capital held by institutions going for safe long term
investments whereas in the US individuals tend to have a greater say in their portfolios and
are more easily able to change the balance of funds and prepared to take risks. This impedes
the flourishing of new ideas and new companies that can benefit from the new economy.

Internet Access Price

The price of Internet access is the key determinant of usage. Country comparisons show that
there is a strong relationship between usage price and Internet penetration as shown in the
chart. A forthcoming study14 which analysed this relationship concluded “virtually all
countries with high access costs have low penetration.” Therefore, reducing prices through

14

ICT Benchmarking Study, Booz Allen & Hamilton.

24

€

increased competition is a priority. Europe has a dynamic fast growing telecommunication
238 bn. in 1999 - up 13.2% from 199815. Tariffs are falling,
industry that had revenues of
services are diversifying, customers are offered more choice. Despite these successes, a major
concern is to increase competition in the local loop, the last mile of the telephone network that
connects users to their local exchange. To let the market work through more competition is
preferable to a US style flat rate subsidised system as such price distortions discourage
in alternative forms of Internet access16. These alternatives, such as xDSL
investment
technology which gives ‘always-on’ connection or access via digital TV cables, promise must
faster access, which, in the long run may be even cheaper than a dial-up connection using a
PC and telephone modem.

Internet penetration vs. Access Cost

%
n

i

n
o
i
t
a
r
t
e
n
e
p
t
e
n
r
e
t
n

I

60

50

40

30

20

10

0

CAN

FIN

USA

SWE

DK

NL

UK

IRE

IT

CH

JAP

F

A

B

LUX

D

ESP

P

GR

0

20

40

60

80

100

Access Cost in US$

The Internet beyond the PC

Up to now, access to the Internet has mainly been by using a PC but this is about to change.
Technological developments are leading to wider and simpler access. Small mobile devices
are already on the market which can be connected quickly and allow information to be
available anywhere, anytime. These devices are just the start. The technology will permit a
wide range of new equipment to be linked to the Internet. Examples include in-car travel
information systems linked to central congestion data; medical devices that can monitor the
body and ‘report’ the results to doctors.

Recently, mobile communications have become increasingly important both for voice
telephony and as a means of accessing the Internet. The European standard for mobile, GSM,
has become a leading world standard. The number of subscribers in Europe is increasing
rapidly and is expected to reach 200 million by the end of this year. Mobile subscriptions in
Europe have now surpassed those of the USA. Europe also has the advantage of having a
digital system which has the potential to become a major platforms for Internet access. This

15

16

Market revenues for telecom services and equipment from EITO 2000.
US internet usage benefits from their flat rate local telephone pricing system which permits US users to
have access at zero marginal cost. This is only because of their very high cross-subsidies of local call by
long distance (the Commission estimates this subsidy to be worth $18bn. annually).

25

is demonstrated by progress in GSM technology, such as GPRS and EDGE, the roll out of
the 3rd generation of mobile communications and various wireless local loop technologies.

Mobile phone penetration

Million subscribers

EU mobile
liberalisation

EU

USA

1992 1993 1994 1995 1996 1997 1998 1999
Source:

FT Mobile Communications
USA: Cellular Telecoms Industry Association

Mobile subscribers per 100 inhabitants
(December 1999)

EU average

160

140

120

100

80

60

40

20

0

70

60

50

40

30

20

10

0

B

D K

D

E L

E

F

IR L

I

L

N L

A

P

FIN

S

U K U S A

Source:

FT Mobile Communications
USA: Cellular Telecoms Industry Association

Social inclusion and the new economy

The new economy is the key driver of economic growth and, therefore, social and regional
discrepancies in access cannot be ignored. Levels of PC penetration in homes ranged from
11% to 65% (average 33%) and Internet penetration from 3% to 51% (average 12%).
500, are
Similarly with income levels: penetration rates for those with an income of less than
respectively 10% for PCs and 3% for the Internet. At the other end of the spectrum, the
maximum figures, corresponding to an income of over
4,000, are 76% for PCs and 47% for
the Internet. Rural areas generally have significantly lower access to PCs and the Internet than
urban or metropolitan areas (city centres).

€

€

These wide differences in uptake of the Internet in Europe illustrate the challenges faced in
building an inclusive information society for all. However, low levels of Internet usage in
some parts of the EU are not just a problem of social cohesion, they also reduce the growth
potential of the economy. Network economies increase as the size of the network increases
and extending the new economy as widely as possible will increase the potential benefits that
can be obtained. Building an inclusive information society is an essential element to the
creation of a bigger market, higher incomes and greater potential for growth and wealth.

26

Mobile, PC and Internet penetration in EU homes (%)
according to degree of urbanisation

5 0

4 5

4 0

3 5

3 0

2 5

2 0

1 5

1 0

5

0

R u r a l
U r ba n
M e tr o p o lita n

m o b ile

P C

in te rn e t

Source: Commission survey by EOS Gallup

Mobile, PC and Internet penetration in EU homes (%)
according to income level

L o w in c o m e
M id - L o w
M id - H ig h
H ig h in c o m e

7 0

6 0

5 0

4 0

3 0

2 0

1 0

0

P C

I n te r n e t

m o b ile

Source: Commission survey by EOS Gallup

27