The European Union just released the 2014 Digital Scoreboard (0), which tracks member nations’ progress towards their digital goals and a digital single market, something the US already enjoys. Though some objectives have been achieved, the EU is still far from meeting its goals in two key areas: closing the digital skills gap and deploying next generation networks.
The EU reports that 90% of jobs require at least some digital skills but 39% of the workforce lacks those skills. Unsurprisingly, half of all EU companies have difficulty sourcing digitally skilled employees locally. Nearly 1 million vacancies in digital-related jobs are predicted by 2020. Indeed, 100 million Europeans have never used the Internet, according to the report. That’s about 20% of the region’s population.
Also troubling is that the use of e-government services has remained flat since 2008; only 54% of users take advantage of them. EU countries have many public sector services, and bringing down costs through digitization is essential, especially when budgets are under pressure from the lingering financial crisis.
In addition to ensuring the population has the skills it needs to take full advantage of the new digital age, the EU also has a long way to go to deploy next generation networks. Coverage of next generation broadband (fiber to the premises (FTTP), cable DOCSIS3, very fast DSL (VDSL), and 4G/LTE mobile broadband) is at best a patchwork (1). There are pockets of high speed networks in some places while large areas of major countries such as France, Germany, and Italy have little coverage of any next generation broadband technology.
The Europeans’ own description of their next generation networks does not match up with that of the US mainstream media, which seems to insist that the US is falling behind the EU and others in broadband. Not only does this assertion not stand up to critical analysis, but data increasingly shows US leadership on many important broadband measures.
The typical mistake made by journalists is to rely on an uncritical reading of OECD data. While the OECD Broadband Portal (2) has a lot of useful information, the price and speed data are usually only based upon prevailing broadband information in one major city within a country. One can have great coverage in Paris (which is what the OECD will report), but it’s a different story in the French countryside. The EU Digital Scoreboard data on broadband is more detailed as it looks at both urban and rural locations in all 28 member states.
To understand international broadband comparisons, one needs to investigate not only a few Internet service providers’ websites, but rather a variety of data sources including but not limited to, the OECD, ITU, FCC, NTIA, as well as the national telecom regulatory authorities of each nation. The Information Technology & Innovation Foundation (ITIF) has been documenting (3) American leadership in broadband and the many flaws of international broadband comparisons since as early as 2008. Previously with the ITIF, AEI’s Richard Bennett provided a holistic overview of broadband deployment, performance, price, and adoption in The Whole Picture: Where America’s Broadband Networks Really Stand (4) in 2013. Earlier this year, I published the EU Broadband Challenge (5), which reviews global broadband investment data. It demonstrates that the EU once accounted for more than a third of the world’s broadband investment. That amount has plummeted to less than one-fifth today on account of flawed regulatory policies. The paper shows that the US, which accounts for just 4% of the world’s population, has enjoyed nearly a quarter of the world’s broadband investment for a decade.
A new study (6) by Christopher Yoo at the University of Pennsylvania’s Center for Technology Innovation and Competition adds to the body of evidence. Yoo’s comparison of US and EU data is the most detailed to date and provides a number of European country level case studies, calling upon EU, FCC, NTIA, and data from national regulatory authorities. Yoo concludes that, in the US, 82% of the population has access to a next generation broadband network of some kind, compared to just 54% of the EU. Illustrations of the data are available on a helpful microsite (7).
Yoo’s paper is the strongest indictment yet of the danger of utility style broadband regulation, which has been applied in a number of European countries for some time. Essentially, requiring broadband providers to unbundle their networks to competitors is a deterrent to investment. Entrants are content to lease existing facilities at low rates rather than build their own networks, as has come to be the case in the EU. The end game is that the EU gets fewer next generation networks, lower quality broadband, and less coverage than the US.
To be sure, government mandated broadband targets are problematic. How can bureaucrats know what levels of broadband consumers will need in the future or what broadband innovations will evolve? But the effort to coordinate 28 countries has to rely on a common framework for measurement, however imperfect. In any case, it appears that the EU fails to look at its own Scoreboard when it comes to action items for the digital single market. The evidence clearly shows that utility style regulation is not working to promote next generation access and that Europeans are not prepared to participate in the digital economy. This should encourage EU leaders to shift their digital strategy to American-style facilities-based dynamic competition and refocus federal energies on education and career readiness.
To date, the European Parliament has produced little on the digital single market, except rules about net neutrality and roaming, two measures which “sound good” on the surface but do not support the overall goals of the digital single market: namely lowering unemployment, increasing productivity, and exiting the financial crisis. The Parliamentary proposals on net neutrality and roaming have to be approved by the EU Council (composed of the EU’s popularly elected heads of state) before becoming law; many prime ministers have expressed reservations, especially because the proposed net neutrality rules lack clear definitions; and regulators have indicated that they will be difficult to implement.
The recently concluded EU Parliamentary elections saw the addition of some 200 new members who might be described as having positions that turn away from federal authority in favor of states. Given the EU’s inability to reverse the impact of the financial crisis and the general dissatisfaction with EU leadership, it’s not surprising to see a swinging of opinion.
However, a central authority has advantages, especially when creating a digital single market – something that the US enjoys, partly due to the 1996 Telecommunications Act, which ensured a single federal standard over individual rules for each of the 50 states. Without this, the US might be floundering like the EU today, unable to get its digital act together. There is hope that a new set of leaders and EU Commissioners can get the continent back on track. Otherwise, the EU will continue marching down the path of digital oblivion (8) in the name of the public interest.