The Malta Independent 29 June 2022, Wednesday

Value of EU data market set to double to €111bn by 2020

Kevin Schembri Orland Monday, 24 October 2016, 13:25 Last update: about 7 years ago

The value of the data market in the EU today is €50bn, but by 2020 it will rise to €111bn, European Commission Vice President Andrus Ansip told The Malta Independent on Sunday during an interview.

Commissioner Ansip, who holds overarching responsibility for the implementation of the Digital Single Market, declared himself against forced data localisation (storing user data in a data centre on the internet that is physically situated in the same country as the one in which the data originated.).

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“Around the world we can see that the number of different rules prohibiting free data flows is increasing. In the EU we now have more than 50 different rules dealing with forced data localisation in 20 different countries.

“Global digital economies are based on data. If a country with one law prohibits the free movement of data connected with public health, transportation, smart-metres, for example, then we can say they prohibit free movement of 90 per cent of all the possible data.

“Big companies would be able to deal with 28 sets of rules and able to create data centres in all member states”, he said, “but for start-ups and small companies it would be impossible.

“Data localisation for bigger companies is very costly and will create a lot of complications. Let’s take connected vehicles as an example. Scania was able to connect more than 200,000 trucks around the world, getting information from the trucks by the minute and, as a result, providing advice on maintenance and improving driving habits and, because they know the location of these trucks, and where they have to go, being able create road trains.

“If data localisation becomes a reality, does this mean that Scania will need data centres in every state? What will happen to the trucks when they cross borders?

“Let’s consider healthcare. In Estonia, healthcare records are owned by the patients, but in the majority of member states they are owned by hospitals and in some states patients don’t even have the right to copies of their personal health records. How can we talk about freedom of movement for patients when there are those who cannot even get copies of their own records? If we are talking about a rare condition, for example, a small country would perhaps have around five cases a year. We all know that today – and even more so in the future – healthcare data is helpful when it comes to identifying patterns and correlations. But if a country has only five cases a year, how can it find correlations?

“Turning to cloud services, if big companies have to keep data in all member states, then they can use different clouds, but having to use different clouds would be too costly for smaller companies”, he said. “When we are able to remove barriers on the restrictions of forced data localisation, then efficiency will improve and the EU will get an €8bn per year growth in GDP. In addition, removing restrictions will result in a nine per cent reduction in operating costs for data centres, and we will save €7.2bn over the next five years.

“Looking at the use of cloud services then, once again, the picture around Europe is different. Fifty-one per cent of companies in Finland use cloud services, but the figure is only eight per cent in Hungary. It is more financially efficient and safe to use cloud services than using your own server down in the basement. According to analysis, if companies have their own servers, then only 20 per cent of those capacities are really used. In clouds, 90 per cent of capacity is used, so if high speed is needed in some sectors, it is easy to switch to higher speed in a cloud, compared to changing a server in the basement, which is more complicated.

“Some people think that banks can be robbed, which is why they keep money at home, but everyone knows that it’s pretty dangerous to keep cash at home. I can see parallels with data, clouds and banks.”

On the idea of free mobile phone roaming services around the EU, and the complexities involved, Commissioner Ansip said: “When talking about roaming, we are talking about travellers. Permanent roaming is impossible, because the situation between one state and the next is very different. In southern member states, where tourism is popular, mobile phone operators have had to invest in providing services for visitors only during the summer months. This means they would not be able to get much revenue in the other months. I am, of course, over-simplifying the situation.

“Mobile operators in Scandinavian countries offer very generous packages, and prices are really affordable. Of course, we have to protect these innovative services-providers. Data prices in Europe are very difference. In Finland, for example, you get hundreds more kilobytes than you get for the same price in Hungary. The average consumption of data in Finland is 10 gigabytes a month, but the EU average is one gigabyte. If the wholesale price in Estonia is €1.4 per gigabyte between operators, and the wholesale price in the EU becomes €8.5 per gigabyte, it could create losses for operators of €7.1 per gigabyte.

“This is a complex issue. People might try buying SIM cards in Scandinavia, where they are cheap, and selling them in countries where they are more expensive. If a mobile operator needs to check the price differential - between the cheap price and where the cheap cards were consumed - they would need to decrease quality of services domestically, or ask for a derogation to stay out of the system”.

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