Political news website Politico has published leaked drafts of the European Commission’s upcoming Digital Single Market Strategy, and the supporting evidence file. In the strategy, Commissioner Andrus Ansip (pictured) proposes ‘ambitious steps’ that will greatly affect comms providers in Europe – and are likely to face resistance from many quarters. Ansip’s proposals have implications for everything from cybersecurity and copyright to taxation and government procurement. Here is a summary of eight changes that will impact the risk profile of comms providers.
1. More telecoms regulation
The Commission will prepare proposals for an ambitious overhaul of the telecoms regulatory framework.
Picking up where the European Council has stopped, in 2016 the Commission wants to go beyond the implementation of common rules for roaming and net neutrality. However, they are likely to face stubborn resistance from many nations, especially those where the state retains a vested interest in the incumbent comms provider.
The EU is looking to increasingly take responsibility away from National Regulatory Authorities (NRAs) in order to facilitate telcos running cross-border operations. This is what the leaked evidence file said on the matter:
The current framework is… premised on the implementation of rules by national authorities in 28 Member States. Experience shows… these rules tend to be implemented in different ways, making it burdensome for operators to invest in networks and related services on a cross-border basis, or to enter new markets on the basis of a mere extension of existing commercial and technical models.
Key goals include a common approach to promoting the rollout of broadband in rural areas, and ensuring the management of radio spectrum is more consistent across the EU. However, there is no intention to fight what would have been the most controversial battle; each nation will still run their own radio spectrum auctions, and keep the cash they raise.
2. New regulation of OTT services, search engines and other platforms
Our rules must… ensure a level-playing field between traditional telecoms companies and new Internet players where they compete in the same markets.
OTT providers of voice, like Skype and WhatsApp, will have to endure a long hard look at their affairs. It is likely they will be subjected to many additional obligations like those currently placed on telcos.
Search engines, app stories, social media providers, e-commerce enablers and price comparison websites will also be regulated more than before. Though nothing definitive has been proposed, Commissioner Ansip intends to look at the fees charged by these platforms and consumer awareness of the logic behind search results.
3. Easing the flow of data within Europe
Have you got tired of people talking about Big Data? If you believe what you hear, then everyone has it, does it, and is keen on it. Commissioner Ansip thinks differently.
European companies are not ready for Big Data.
The EU intends to set an example by (drum roll…)
[Making] mandatory interconnection of business registers a reality by early 2017.
However, Commissioner Ansip will stick his nose into places that some member states would rather he left alone. Currently some European nations have specific rules on where certain kinds of data may be transmitted or stored. This is politically sensitive in countries like Germany, which is protective of personal data and has a deep fear of surveillance. The strategy would take away the right for European countries to impose restrictions on where data can flow around Europe, stating that:
The opportunities that data technologies present can only be realized if we remove the technical and legislation barriers that currently hinder the free flow of data within the EU.
Many people get annoyed by having to supply the same personal data to lots of different branches of government. Ansip, former Prime Minister of Estonia, solved that problem in his homeland by forcing government departments to talk to each other instead. There will be too much resistance to deliver such radical change across the whole of Europe, but Ansip will try to market the benefits by implementing a large-scale pilot for businesses.
4. Stop ‘unjustified’ geo-blocking within the EU
Currently, many European media firms limit impose geographical limits on where their content is seen/heard/streamed. For example, an online subscriber to Sky Italia is only able to watch their shows in Italy, San Marino or Vatican City. The EC strategy is to make such content equally available everywhere within the EU.
For obvious reasons, the providers of content have reason to resist the reduction of controls over where content is made available. The aspiration to reduce geo-blocking will also be complicated by situations where a channel or distributor has secured the rights to supply content in one EU country but not more widely, begging the question of whether all European channels will be pushed towards securing EU-wide rights for the content they procure.
5. Stricter copyright enforcement
In exchange for the loosening of geo-blocking, Commissioner Ansip wants to help media firms by implementing tougher anti-piracy measures. A review of cross-border civil enforcement would seek to tackle large-scale commercial infringement of copyright.
The leaked evidence file also indicates that more could be done to develop consistent European-wide procedures for removing unlawful content from the web. One approach would be to copy the filtering techniques that some nations use to deal with porn and terrorism. Another approach would mandate ISPs, search engines and social media providers to do more to remove illegal content.
In one particularly interesting development – which some might call disturbing – the strategy compares the criminal distribution of child abuse imagery and terrorist propaganda with the unlawful sharing of copyrighted content. Whilst this signals a tougher line on copyright protection, it also risks a backlash from cyberliterate Europeans who enjoy pirated content but do not like being compared to pedophiles and terrorists. Trying to address these different problems with a common solution is also fraught with danger. The extent of copyright infringement that occurs on the internet dwarfs the amount of traffic associated with serious crimes like terrorism, and so a uniform response risks distracting attention from the chief priority: protecting people from physical harm.
The challenge for the European Commission is to appease rightsholders without upsetting lots of ordinary Europeans. Making it easier to enjoy content as people move around Europe will help with that, but may not be enough. There was very significant public hostility to the Anti-Counterfeiting Trade Agreement, which was backed by Ansip but ultimately abandoned by the EU. The European Parliament is currently engaged in a fierce internal debate prompted by German Pirate Party MEP Julia Reda’s proposal to loosen copyright rules whilst harmonizing them across Europe.
In addition to satisfying the public, there is a tension between communications providers and content owners over who pays for protecting copyright. Comms providers have every reason to resist demands that they carry a heavier compliance burden.
6. Improving and guiding interoperability
This is from the leaked evidence file:
There is an opportunity for Europe to have a stronger role to play in this area, taking profit of the fact that since 2013 the EU has put in place a new EU Standardisation framework…
Failing to act at EU level would mean to leave the status quo, which sees today a strong market push driven mainly by private interests and a weaker role for European and international standards…
The alternative would be to push for an EU strategic approach for ICT standardisation: to anticipate the market and give priority to strategic and achievable policy projects based on clear and concerted business cases.
This is interesting stuff. However, it is not clear how hard the EU would push. Settling on the GSM standard gave Europe a huge advantage in mobile telecommunications. However, the evidence file covers only the mundane example of lots of phones having different chargers.
Needless to say, if Europe wants to take a lead with setting global standards in ICT, then the US has plenty of reasons to safeguard its preeminent position.
7. Lots of concern about cybersecurity… but not a lot of new action
Commissioner Ansip understands why cybersecurity is key:
An ever smarter energy system and a more digital infrastructure come with the price of increased vulnerability to cyber-attacks and more concerns on data protection…
Ansip’s views are informed by experience. His homeland of Estonia suffered a major international cyber-attack in 2007, after the Russians over-reacted to a dispute about a statue. Ansip’s strategy document states:
Strong cyber security is also required to guarantee online privacy and data protection. Consumers are worried about the risk of data breaches and identity theft that are caused by cyber incidents. Member states have long acknowledged the need to protect our networks and respond effectively to cyber threats…
… though acknowledging something is not the same as doing anything useful. This whole area is a thorn in the side of the EU. If the EU serves any purpose, it should be protecting people from having their identities and personal data abused. I have written elsewhere that the EU promises more than it delivers, and so encourages a falsely optimistic picture of how well EU citizens are protected (the most recent example involves one Austrian’s legal challenge to the EU-US ‘safe harbor’ agreement). However, little is offered here except to reiterate the work already underway, such as that pursued by the European Security Agenda, and the push for a General Data Protection Regulation.
It says a lot about the Commission that the most useful elements of the strategy concentrate on addressing past failures. For example, the strategy recognizes that the e-Privacy Directive has not been consistently applied, and needs to be reviewed. One spectacularly pointless and wasteful obligation demands websites inform users about cookies. The natural inference from these leaked documents is that the cookie directive will be scrapped.
Ansip’s strategy does include one new security proposal: the establishment of a Cyber Security contractual Public-Private Partnership (whatever that means). Apparently this will boost online security in areas of strategic importance to Europe. The documents do not clarify how it will do this, or what it will do, but this does sound like it might be an opportunity for tech businesses to make some money from the EU.
8. Helping SMEs by fixing the messed-up attempt to harmonize VAT
The EU screwed up when changing how companies charged for VAT, when selling across borders. The additional administrative burden involved in charging VAT per the buyer’s country, as opposed to charging VAT in the seller’s country, has driven many small businesses out of the ‘digital single market’. Solutions proposed in the strategy include the definition of a single EU-wide VAT threshold for small businesses that sell goods and services across borders. However, this will still be a case of applying a sticker plaster after stabbing small businesses in the heart.
What is good for SMEs is good for comms providers: they both benefit from growing cross-border trade and interaction. Europe should do more to encourage SMEs to sell more widely via the internet. Ansip’s strategy states that small online businesses should be able to “start operating in just a click across the EU”, but as the EU usually excels at creating pointless burdens like the cookie directive, making a viable digital single market for SMEs would demand a lot more than Ansip can offer. Everyone knows that SMEs are burdened by too much bureaucracy. The following is taken from the leaked evidence file:
… in particuler for SMEs, lack of information about the rules which would apply to cross-border sales is already a major obstacle. The most recent Commission survey shows that the most often cited barrier stopping retailers who currently sell on line nationally from engaging in cross-border activities is lack of knowledge about the regulatory frameworks in other Member States.
In this particular area, there is a lot more talk about what the EU would like, than what the EU will do. However, comms providers should use their lobbying weight to support proposals that help SMEs do more business online. Comms providers profit when online markets take share from more traditional forms of shopping and trade.
Commissioner Ansip is an ambitious man, and he deserves his brief because of his track record in Estonia. However, a lot of the ambition in his Digital Single Market strategy is stated in vague terms. As might be expected, there is a lot of congratulation for the EU’s previous successes – even when they were terrible failures. Turning Europe into the United States of the Internet is a lofty goal, but many national politicians will resist it. Levelling playing fields is a noble aspiration, but only begs a question of what, exactly, is considered fair play. These documents give us a sense of where Europe is headed in general. Overall, the direction is the right one. But to manage the risks, it is also necessary to closely monitor the detailed course corrections that will occur en route.
You can obtain the leaked documents via this article by Politico.