CEBIT Trade Show Winning the Digital Race

Digitalization is the buzzword at the CeBIT trade show in Hanover. Both Germany and the European Union are pushing for massive investments in digital infrastructure to keep up with global competitors.
German Economics Minsiter, Sigmar Gabriel, has big digital plans.

Germany's economy minister Sigmar Gabriel put himself at the heart of the country's digital strategy, presenting a report Monday at the CeBIT conference in Hanover that touched on everything from education to infrastructure.

At the heart of his plan to make Germany a digital leader by 2025 is a €100 billion ($111 billion) project to build a gigabit fiber-optic network. Some  €10 billion of that would come from tax payers and the rest from auctioning next-generation mobile frequencies.

The 60-page document also includes a proposal for an agency that would bring under one roof the government's many digital responsibilities. The proposed agency would serve as a think tank for the federal government, drafting and implementing policy positions on the digital economy.

Mr. Gabriel's ambitious proposal goes beyond his area of authority and risks stepping on his colleagues toes. Transportation Minister Alexander Dobrindt, who is responsible for Germany's networks, is currently focused on expanding the country's broadband network to 50 megabits per second by 2018.

Although Europe is the world's largest internal market, it's still a patchwork of different national rules when it comes to the digital economy. Karl-Heinz Streibich, CEO Software AG

But Mr. Gabriel's proposed thinktank idea has not been discussed with the other government ministers, and it's unclear whether or not it will become reality this legislative period.

According to Handelsblatt sources familiar with the matter, Mr. Gabriel plans over the short-term to expand the responsibilities of the Federal Network Agency, which currently regulates Germany's telecom networks.

The agency would set up new departments responsible for observing markets, identifying problems and seeing how different agencies react to those problems. Conclusions would then be drawn about where there's a need for regulation.

While Mr. Gabriel laid out his strategy for Germany, the European Union's digital economy commissioner, Günther Oettinger, held a speech before a packed crowd about the continent's need for a digital single market.

 

The European Commission estimates that a digital economic union would generate €415 billion annually and create hundreds of thousands of jobs.

 

Although Europe is the world's largest internal market, it's still a patchwork of different national rules when it comes to the digital economy. The inventor of a smartphone or tablet app needs 28 lawyers to comply with the 28 different data protection regimes in the member states.

"They'd rather go to the United States," Mr. Oettinger said.

Industry leaders also expressed concern that Europe still lags far behind its global competitors. Almost all of the successful software platforms in the future will come from the United States, said Karl-Heinz Streibich, head of the Germany company Software AG. In contrast to Europe, the United States has 350 million consumers who live in a unified market, he added.

"I believe in the ingenuity of European companies," Mr. Streibich said. "We can better utilize this ingenuity as soon as we have a homogeneous market."

The European Commission estimates that a digital economic union would generate €415 billion annually and create hundreds of thousands of jobs. To create such a union, Brussels wants to simplify copyright laws, increase access to digital services throughout the European Union and reform the rules governing the telecom market.

"We need to stop thinking about developments in periods of five to 10 years," said Hannes Ametsreiter, the head of Vodafone Germany. At that tempo, Europe won't be able to compete globally, he added.

For all the talk, European companies will have to wait to find out what a digital single market will look like. The European Commission plans to make its first concrete proposal in September.

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt's Berlin office. Dana Heide is a correspondent for Handelsblatt in Berlin, focusing on energy policies, small and medium-sized companies and innovation. Ina Karabasz is an editor at Handelsblatt's companies and markets team, covering telecommunications, IT and security. To contact the authors: [email protected], [email protected] and  [email protected]