Memorandum by the European Information
and Communications Technology Industry Association (EICTA)
EICTA is the European Information and Communications
Technology Industry Associationbringing together 22 national
ICT associations from 16 European countries and 26 large ICT corporations
with major operations in Europe. EICTA has been operational since
1 January 2000, combining those activities that were previously
vested in ECTEL and EUROBIT. It represents more than 3,000 European
ICT companies generating an annual turnover of over 200 billion
Euro. More about EICTA can be found at: www.eicta.org.
"eEuropeAn Information Society
for All" announced by Mr Prodi last December is a welcome
demonstration of the Commission's willingness to put political
weight behind the vision of an Information Society and thus the
modernisation of the European economy as well as strengthening
social and regional cohesion. We strongly share the President's
wish to modernise the European economy and our comments are intended
to support this objective.
Each of the 10 priority action points is worthwhile
in itself. Taken together and effectively implemented, these 10
priority actions could initiate a positive process of change in
the European Union; however even these actions are not sufficient
to tip the balance decisively in favour of the creation of an
Information Societya modern societyin Europe.
In addition to the 10 priorities, we would like
to emphasize the importance of R&D as a key driver of industry
competitiveness worldwide. In terms of R&D investments, Europe
is lagging behind both the US and Japan; and is generally less
focused on ICT related fields thereby hindering the competitiveness
of European ICT industries. EICTA suggests that the eEurope initiative
lead to a joint action with industry to improve European R&D
in ICT relevant fields. These actions could focus on basic technologies,
software and various applications, which could benefit both manufacturing
and service industries.
In our opinion however, the main obstacle to
building "an entrepreneurial culture ready to finance and
develop new ideas", is the fact that Europe's economic progress
in the digital age is being hampered by the maintenance (by European
governments) of a regulatory environment that is in some cases
more relevant to the steam age. European entrepreneurs are already
voting with their feet. Some emigrate from one Member State to
another, in order to gain access to venture capital, skills and
a more "business-friendly" tax and regulatory environment;
this, at least, keeps European entrepreneurs within Europe. The
implementation of the raft of EU social legislation across the
Unionin the name of a level playing field, creates an excessively
high level of regulation in all Member States which has already
resulted in driving some of our best entrepreneurs offshore. As
it is, the existing cost of compliance to social and other regulation
in Europe has long been recognised as one of the main inhibitors
to high tech start-ups and their success.
Unless the Union has the political will and
drive to confront the negative effect of increasingly costly regulatory
compliance, there is little chance of building an entrepreneurial
culture which could be expected to compete successfully with our
main global trading partners, particularly the US.
We perceive eEurope to be a step in the right
direction; a broad initiative which aims at achieving specific
objectives in order to facilitate the overall development of the
Information Society. However, we hope that these action areas
will encourage a general shift to modernise and streamline the
European regulatory infrastructure, making it more flexible and
responsive to today's needs. Achieving this broader goal will
be the key to success and increased competitiveness in the digital
The purpose of this paper is therefore to provide
preliminary remarks on what we believe are the key issues for
several of the priority areas identified in eEurope, to be used
as a basis for further initiatives and discussions aimed at achieving
our commonly held goals. In doing so, however, we would like to
emphasise that we have reservations about certain time-lines suggested
in the proposal and encourage the Commission to further discuss
these with the relevant stakeholders. EICTA is interested in actively
contributing to these discussions.
The Commission recognises, education will be
the cornerstone of social and economic progress in the knowledge
based Information Society. We would like to emphasise that through
our members' experience in partnerships with governments and educational
institutions, we have found that while ensuring access to information
technologies and the Internet is indispensable, teacher training
and culturally relevant quality educational content are crucial
to the success and use of such initiatives. Training teachers
from the beginning can help "buy in" to these new programs.
Although it is important that access and intelligent use of the
Web be taught, by fostering the development of European interactive
(or immersive) educational software for use in the classroom the
Commission would ensure the success of its initiative.
Additionally, the demand for people having information
and communication technology (ICT) related skills has increased
rapidly around the world, resulting in a skills shortage, which
is creating major barriers both to economic growth and job creation
in most industrialised countries. In Europe alone the current
estimates indicate that there are half a million unfilled vacancies
in the ICT field. Without rapid and determined measures to develop
the education in these fields the shortage in Europe is expected
to increase to 1.6 million by 2002. EICTA believes that the eEurope
initiative should lead to concrete actions to address this issue.
Deployment of broadband and rapid access to
competing services and infrastructures in Europe is currently
stifled. While former incumbents continue to control local loop
access to telecommunications infrastructure, competing telecommunications
and other broadband services or infrastructures will not develop.
We support and are encouraged by the Commission's latest Recommendation
on Leased Lines and Interconnections which finally addresses this
issue. However we stress that without quick and cost effective
access to both essential facilities (the central office and the
Local Loop), neither competition nor broadband deployment will
occur. We believe that urgent action must be taken in order to
mandate full local loop Unbundling in all Member States by mid2000
and not by the end of 2000; there are no reasons for further delay.
Additionally, we encourage the Commission to
consider possible actions to support and encourage the development
of commercially viable flat rate (non-metered) Internet and broadband
access. We are moving towards a 24 hour a day, seven day a week
connected economy which necessitates cheap, non-metered Internet
access. Although both broadband and dial-up Internet access costs
may be reduced by supporting the development of competing infrastructures
and services, as long as time spent online is metered, the growth
of Internet use in Europe will be restrained.
The Commission's proposals could accelerate
the development of e-commerce, particularly by providing a stable
legislative environment which the successful development of any
new economic phenomenon necessitates. More specifically, however,
issues such as legal jurisdiction and taxation will need to be
addressed in co-operation with relevant stakeholders. Throughout
these discussions, we urge the Commission to bear in mind the
global nature of these issues and ensure co-ordination with similar
international deliberations to avoid isolation. Finally, we agree
that overall regulation should be minimised. The competitiveness
of the industry and the economy necessitate flexible approaches
to resolving issues. Use of existing legislation, self-regulation
and co-operation between governments and industry should be considered
as an important alternative approach to traditional legislation.
We appreciate and encourage the Commission's
interest to increase consumer confidence in electronic transactions.
Without security and trust, commercial and financial transactions,
or even accessing Government services on the Internet will not
develop. Therefore, we fully support this Commission's enthusiasm
for smart cards in so far as it does not aim at blocking the development
of future competing technologies. Government focus on specific
technologies (or their applications) can discourage innovation,
thereby distorting the market and potentially harming consumers
through lack of choice, poorer quality and higher prices. Instead,
the Commission's efforts should be focused on ensuring and promoting
interoperability and openness among market driven offers, while
supporting the development of industry-led pan-European security/authentication
We fully support the Commission's recognition
of the importance of an industry-led "trust" infrastructure,
which relies on a network of interoperating PKIs. Our companies
are already involved in the definition of the necessary conditions
for such a framework. The goal is to achieve global solutions
by focusing on the development of industry standards which aim
to provide interoperability and compliance to regulation.
However, certain conditions are necessary to
achieve a competitive European TSP (Trust Service Providers) industry.
Member States should co-ordinate and keep national trust regulation
to a minimum while ensuring the free circulation of encryption
products and solutions within the EU.
The proposal to address the lack of risk capital
for high-tech SMEs illustrate the Commission's intention to tackle
this issue which is currently stifling the growth of the European
IT industry. We would like to stress, however, that barriers to
the development of SMEs are not limited to entrepreneur's access
to capital. Taxation of stock options and lack of tax incentives
for private investors also contribute to the slow growth of these
new companies. Although taxation is not within the scope of the
Commission's mandate, benchmarking different Member States' practices
could potentially facilitate and encourage change.
Although there have been improvements (notably
in France), stock options in Europe are generally taxed excessively.
Due largely to the tax penalty on stock options, experienced leaders
are difficult to attract to new start-ups as they are not able
to reap the benefits of the risk they take in joining a new venture.
As a result, start-ups find it harder to attract venture capital,
which often depends on the start-up's ability to recruit an experienced
leader and staff. Legislation should allow and encourage entrepreneurs
to benefit from the risks and investments they make in starting
new companies. Certain Member State regimes do not allow employees
in start-ups to take advantage of stock options. In some cases
where options are allowed, they are taxable at grant, leading
to a tax bill before any gain has been made.
Additionally, very few tax incentives are available
to encourage potential private investors (the few tax incentives
which exist generally do not allow private contributors to invest
significant amounts). Fiscal policies to encourage the investment
of sums necessary to support start-ups need to be developed.
In many countries the high cost of social security
which must be paid to government even in start-up phase is another
deterrent to entrepreneurs unless they have access to a relatively
large pool of capital. Governments should consider possibilities
to develop an incremental program to support start-ups. Finally,
balanced tax incentives should also become part of government
priorities to stimulate the consolidation of an entrepreneurial
The Commission's proposal to use digital technologies
for overcoming barriers for people with disabilities illustrate
the promising potential that Internet can bring to all, thus creating
a true e-Society. However, we would like to stress that although
standards will be important in ensuring products to be "disabled
friendly", this should not lead to the creation of unnecessary
standards or procedures which may stifle the prime benefit of
such digital technologies thus discouraging future investments.
Rather, existing market-driven "disabled-friendly" standards
already available in Member States and/or other regions should
be used in order to avoid any duplication and/or conflicting standards.
All initiatives whereby governments can increase
their use of the Internet, in our view, will encourage wider use
by all its citizens. We encourage the Commission to continue working
with Member States to fully develop this potential.
We would like to point out that some Member
States have already been leading the way in areas like paying
taxes online (such as Italy, Spain and Austria). Likewise some
Member States have already set up information systems on legislation
and other initiatives. Applications and solutions like these are
only one part of the government online challenge. Reforming and
reorganising the administrative processes as such, is an important
task for both the EU as well as each Member State government,
one which will help ensure government's ability to cope with the
challenges of increasing citizens, demands and fewer resources.
There are several examples of processes, such as public procurement,
building permissions, or applying for funds and/or assistance,
which need to be redesigned for online access. Large corporations
have already proven the benefits of such reorganisations: by restructuring
procurement processes, reducing purchase-order processing time,
decreasing the size of the average contracts and increasing customer
satisfaction with procurement.
To achieve these goals, the Commission and Member
States will need to develop clear action guidelines for their
government online program and their own internal reorganisation
processes etc. The Commission can help streamline and integrate
services for Member States and citizens and save costs at the
same time, as has been shown in the evaluation of the Commission's
SIMAP (Système d'Information pour le Marché Public)
pilot project (http://www.simap.eu.int). The Commission can also
give guidance and set the right priorities for R&D funds by
investing in state-of-the-art projects in this area. Governments
can also try to speed up the government online process, by finding
new ways of entering into public/private partnerships, through
R&D or for example by outsourcing projects. Finally, the Commission,
Member States and industry should join forces to create knowledge
pools on industry and government best practices.
eEurope is a step in the right direction. We
propose to use this as a basis from which to engage in a dialogue
with the Commission and work together to develop a more practical
approach towards making these priorities a reality. We are ready
to commit energy and resources to help achieve this objective.
1 February 2000