Innovation policy
In general yes, although EGDF supports a more open innovation strategy. Until now European innovation policies have relied purely on technological push, but this focus has not been as effective as the pure concentration on marketing and non-technological factors would have been. E.g. today business models interlink with technology and innovation is not necessarily technological. This means that technology in general follows the business model, not vice-versa.
Thus EGDF welcomes all efforts to extend the definition of innovation from purely technological innovations to innovations related to content, services and business models. An intelligent innovation strategy should be both flexible and a combination of different elements of innovation, in order to make the difference.
Therefore EGDF would like to see even more user driven approach from Commission when it comes to innovations. As Commission has concluded, non-technological aspects of the innovation process, such as design and marketing, are increasingly important to getting more innovative products and services in the marketplace. But beside design and marketing, also content and business models are crucial areas of innovation.
Consequently EGDF is pleased to note that Commission has now stated it to be necessary to better acknowledge the weight of services as an attribute of modern industrialised countries and their innovation potential for the economy and the society at large. Hence it should be one of the main priorities of Commission to better customise research and innovation support to the specific needs of services, as well as completing critical infrastructures and unlocking their potential with new services and applications. However, these maneuvers should be implemented in a non-discriminatory way in order to keep the level of competition high.
For example user driven technology (see also www.nem-initiative.org) can be seen in open combinations with different elements. E.g. game development studios are at the same time technological (R&D relevant) and creative (design relevant), but it shows often that the transition and the innovation do not follow these paths. Instead content and business models are real drivers of innovation on that area.
Another good example is the sector of online mobile music distribution. In this case innovation does not necessarily mean technological innovation network. Music downloaded from the Internet has made large parts of storage media (based on complicated technological standardisation procedures with strong European implications) obsolete. The real innovation lies not in the technology, but in the radical business model. This demonstrates how the relevance of content for the advancement of ICT technology has been underestimated in the current generation of ICT support.
Furthermore, as in digital age one does not need large companies to innovate, the most of the innovative business models, services and content are developed by small entities. Therefore EGDF supports strongly a SME approach to innovation, as it should be remembered that innovation cannot be produced; real innovations are usually hidden where one would less expect to find them.
EGDF is pleased to note that EU has introduced efforts to strengthen conditions for entrepreneurship and for growth of new ventures. Content and user driven SMEs like Europe’s game developer studios can really make the difference. But a SME approach needs not only to be preached, but also practised. This means that also in reality, not just in the level of political statements, SME’s have to be specifically taken care of, including that they are efficiently and successfully informed about their possibilities. Unfortunately so far this goal has been only partially reached.
Consequently innovations should not be supported isolated from markets e.g. by relaying too much on just technological breakthroughs. SMEs or other market actors are needed to create jobs and growth from them. Thus one should be careful not be blinded by focusing solely on innovations; one should always see innovations just one important part of the economy as a whole.
In addition, EGDF agrees with Commission that current economic recession is making fund-raising and the exit environment difficult for entrepreneurs. As there is currently no EU-funding program directed for the needs of the video came industry, preparations for setting up one for the new programme period 2014-2019 should be started as soon as possible. Meanwhile, as EGDF finds the Lead Market Initiative (LMI) especially successful tool for supporting innovation, EGDF calls Commission to start a LMI of digital content as soon as possible.
When it comes to Joint Technology Initiatives (JTI) EGDF stresses that some of JTI models used do not necessarily support the goal of strengthening collaboration among different innovation actors and supporting mutual policy learning between innovation policy makers and public innovation support bodies at different levels.
A successful implementation of JTIs, and the RTD policy of EU in general, requires strong involvement of relevant industry in the RTD framework. While engaging actors of the industry in the framework, it should be remembered that strong actions taken to support RTD of big well-established companies also create a serious risk of emerge of companies with dominant market position. In addition, it is in the interest of companies already having a dominant market position to do what ever is necessary to stop the emergence of rival companies. This kind of motive for co-operation clearly cannot be described as collaborative.
When the model of JTI ‘Clean sky’ is used, the core owners of the JTI are fixed to the limited amount of named companies. Thus this model clearly carries a high risk of dominant market players using a JTI to secure their dominant market position also in the future. Consequently the model of JTI ‘Artemis’ should be favoured over the JTI ‘Clean sky’, because such an initiative can only be successful, if all major stakeholders of the field of industry are successfully represented and the process is dynamic. This kind of openness should not only been preached, but practiced in the regulatory framework.
On the other hand it is true that large European technology or network driven companies should for one reason or another participate in such an activity. However they should rather consider themselves as “supporting members” than as “owners” of such an activity. Thus JTI ‘Artemis’, that is run by an open industry association, is possibly more open, transparent and dynamic and thus it carries much lover risk of being used to secure dominant market position by major economic players on the field.
EGDF would also like to point out that on the area of enhancing the governance of the EU innovation system EU should not place special focus just on best practice exchange with the US. Besides US, EU should substantially enhance the exchange of best practices with many Asian countries like Australia, South Korea and Japan that are currently raising more and more important role in global economy.
All in all EGDF underlines that EU should be very careful with new regulations considering digital services. As internal market for dematerialized goods and services is just emerging in Europe, it is currently at a very vulnerable state. Thus if EU wants to become the most competitive digital economy, it should pay special attention not give advantage to competing digital economies by over or under regulating its own markets. Thus at the moment all the regulation effecting on digital markets should be evaluated with extra care, as securing the competition in the markets is highly important.
For example, the basis of innovation in the media sector in Europe in recent years was the free and neutral Internet. Before the most of the distribution chains in media content were in the hands of overseas distribution giants. European content makers received not enough to live and too much to die. The free Internet is and was the historical chance for European content producers to overcome post-war distribution structures and to touch down directly to the consumer. For those, who were able to find users, this was usually also an economic success.
Few years ago network and Internet service providers had no systematic overview about the content in their network. Regulation did not allow a closer look. The separation of network infrastructure and online content was the man made “Holy Grail” of Internet regulation. But the situation changed: in the aftermath of homeland security policies of the Western world and the war on terrorism, providers started to install infrastructure to allow systematic scanning of content while being distributed. The legitimate fight against child pornography builds the second layer. Providers need to look even closer at the content in their sphere of responsibility. The next step seems to be the fight against piracy; this debate is still open.
From a content perspective very legitimate motivations in every single case sum up to a new Internet – very different to the Internet which has been known so far. As a whole, there is a danger to network neutrality, the basis of freedom and innovation at this new frontier. The regulatory efforts face themselves constitutional and legal problems in the member states, but much more they might lead to an abrupt ending of innovation in the sector.
There is a risk that infrastructure and service providers will try to leverage barriers-to-entry and key strategic positions into online distribution. This is a danger for content innovation. Providers might misuse exceptions and “hide” behind it to prioritize their preferred content in order to recoup their investments on the network. In the meantime network capacity becomes more relevant – and even more priority becomes an issue.
Thus easing up net neutrality raises a serious risk of dividing Europe based on national mobile and broadband networks, as network providers would have a possibility to slow down access to the virtual services competing with their own. Consequently this would also raise new boarders for the free movement of innovative services and knowledge inside EU.
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