Industry Trend Analysis - Digital Single Market Needs Member-States Impetus - JULY 2017

BMI View: The mid-term review of the Digital Single Market highlights the inherent flaws of European regulation: the time it takes for a decision to be approved, and the need for consensus amongst stakeholders. Member states are ultimately driving what becomes full legislation or not, and the arrival of a tech-friendly and pro-EU French President in Emmanuel Macron could provide fresh impetus to achieving the EC's ambitions.

The European Commission (EC) has published the mid-term review of its Digital Single Market (DSM) strategy. The EC said it has delivered 35 legislative proposals on the 16 key measures it had earmarked two years ago (see table), but very few have managed to go through the entire European legislative process, involving both the European Parliament and the European Council. This gives further credence to our original view that the DSM, by being both under and over-ambitious, will be a disappointment, and that power lies not with the EC, but with its member states. With that in mind, the election of Emmanuel Macron in France could be positive in terms of achieving better digital policies within the bloc.

The EC has focused on five major achievements since 2015: the abolition of roaming charges, portability of content, new data protection and privacy rules, with the General Data Protection Regulation (GDPR), a common cybersecurity law, and coordination in the 700MHz band, to which we would add the net neutrality rules. It now wants to focus on three main areas following its mid-term review: the European Data Economy, cybersecurity challenges and the need for online platforms to become more responsible, a new attempt to level the playing field. However we believe these achievements also highlight the inherent weaknesses of European regulation, in the time required for rules to be adopted (roaming took over 10 years) and the need for consensus between the different stakeholders, which means that final rules tend to follow the lowest common denominator, with little impact on improving the market. We will use three particular policy areas as examples of these weaknesses:

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