Supplementary memorandum by Felicity Ussher
on How can Europe Build a Socially-inclusive Information Economy?
At the Lisbon summit in March 2000, EU leaders
signed up to an ambitious set of proposals to make Europe's economy
more dynamic by embracing liberalisation of markets, promoting
entrepreneurship and exploiting new developments in information
and communication technologies. Europe now recognises that its
future prosperity will depend on its ability to compete in the
new knowledge economy, where a variety of information and services
are bought and sold online.
A successful knowledge economy will also need
to be a socially inclusive one. The EU is beginning to acknowledge
the value of the internet as a tool for generating higher employment
and better quality of life. This is a welcome shift in thinking:
until now the EU debate has focused on issues such as copyright
and electronic commerce regulations, thus viewing the potential
benefits of the internet in purely commercial terms. Now for the
first time, the unemployed have been identified as internet stakeholders
just as much as businesses and consumers. But Lisbon did not go
The summit remained bound to the notion that
internet access for all is what it takes to achieve social inclusion
online. This, sadly, is not the case. A socially-inclusive knowledge
economy requires a complete set of IT skills, the ability to use
at least one form of electronic currency, free software tools
and universal access to public services on the internet. These
are the core elements of electronic participation.
Reaching these goals will be more difficult
than fulfiling Lisbon's immediate target of cheap, fast Web access
for alla target which the market is, in any case, already
beginning to meet. The needs of Europe's poorest citizens for
bank accounts and credit resources are scarcely recognised by
governments or commercial suppliers, which tend to focus on the
more lucrative areas of business-to-business trading, high-income
consumers and the exploitation of third-generation mobile phone
The aim of this pamphlet is to identify new
forms of social discrimination that may be created in the internet
economy. What can the European Union do to ensure that the internet
offers equal opportunities to all consumers, employees and citizens?
How can governments, EU institutions and the private sector work
together to provide those peoplewho otherwide may be left
behind by the marketwith basic skills and resources?
A CER study should address the following:
Where are we now?
In the months leading up to Lisbon, the EC finalised
directives on copyright and electronic commerce to help protect
the privacy and intellectual property of consumers and businesses.
Pledges were made not to impose new taxes, although methods of
applying VAT to online sales are under consideration. The Lisbon
summit expanded this agenda to include the voluntary sector, and
set up targets for using IT to increase employment across all
sectors of society. Access to the Web and IT training were identified
as the key ways of achieving this. But were politicians just paying
lip service to the potential of the Web to achieve social inclusion?
If they believe there really is a link between the two, how do
they plan to strengthen it?
Regulatory and political concerns
A policy of ensuring Web access for all demonstrates
the dangers of slow-moving EU bureaucracy, because the market
is now offering subsidisedand in some cases, freeinternet
services of its own accord. It is likely that full e-participation,
as defined above, will always go against the grain of market trends
because it requires investment into high-risk, low-value customers.
So how should the public sector intervene?
Significance of new technology
Users of mobile phones and digital television
are more socially diverse than users of PCs, and the emerging
third generation of phones from Scandinavia promises broader and
cheaper access to the internet. This new form of Web access looks
set to penetrate lower-income sectors increasingly. Likewise,
the arrival of broadband data transmissions heralds faster access
and the potential for a wider range of services. These factors
point towards a market solution for Web access for all. But what
services will be offered across these new platforms? Will they
be of use to low-income as well as high-income consumers? What
content deals are being set up? How will Europe's wireless innovations
boost its competitiveness against the US?
New forms of discrimination
Online opportunities for employment and cheap
goods are emerging before everyone has access to the Web. How
much price discrepancy is acceptable between online and off-line
payment of services such as utilities and banking? Electronic
currency is the key to online participation. Do VISA and Mastercard
have too much market power, given that they prohibit people with
poor credit ratings from making online purchases? Should they
face stronger regulation, given that they now have near-exclusive
control over a new retail medium? Can emerging online models of
risk transfer, such as the Equifax e-commerce scheme, be adopted
off-line by European authorities? What is the feasibility of non-credit-based
card payment systems, such as the Belgium-based Proton scheme?
A familiar tool-kit?
The internet could be a useful tool in tackling
social exclusion. But for it to have a real impact, governments
cannot rely on IT policy alone. It will require a joined-up approach
from various government departments and Commission services. The
EU should address some issueslike universal access to e-currencythrough
legislation. But over-regulation could stifle growth, or it could
prove to be irrelevant if services move off-shore. In most areas,
the EU should therefore use "softer" methods to persuade
the member-states to adopt best practise: bench-marking, time-specific
targets and peer review, with the most innovative schemes championed
by the Commission. But in this fast-moving world of the internet,
should the EU intervene more directly in certain areas? For example,
how can it use more of its resources to improve the skills of
Europe's unemployed and socially excluded? Should the EU fund
basic free software tools training, here is free software and
e-currency for all, who else would do it?
Each week brings new models for online pricing
and there is no guarantee that information which is freely available
todaysuch as newspaper headlineswill be free in
a few years time. Even public sector broadcasters like the BBC
are currently considering whether to apply a licence fee to their
Web sites. Must we accept that information and services may not
always be free online? Or should the EU ensure that there will
always be basic educational content freely available? This initiative
would help implement Lisbon's recognition that the Internet is
an opportunity to raise Europe's basic level of skills and literacy.
Should such issues fall under the remit of competition authorities?
How might the emerging models of online trading change the nature
of competition policy?
Even with universal access and full e-participation,
can everyone gain directly from the internet economy? This is
the broadest issue of all for the EU to consider. There is an
increasing polarisation between dynamic, highly-educated individuals
who are starting potentially-lucrative internet companies, and
low-skilled workers who are forced by technology to boost their
efficiency for little reward. Gordon Brown's recent UK budget
favoured entrepreneurs by offering tax-free share schemes. He
is doing this in the interests of UK plc. But are governments
neglecting the needs of low-skilled employees? Should they provide
tax incentives for companies to employ people over the internet
to help resolve skills shortages and regional imbalances?
15 May 2000