The Digital Agenda is one of the seven flagship initiatives in the ‘Europe 2020’ strategy to pull the Union out of the present crisis and prepare its economy for the challenges of the next decade. As the Digital Agenda Commissioner, Neelie Kroes, stresses: “Europe’s digital economy is crucial to economic growth and prosperity”.

But the Commission points to a major failing which is preventing Europe from realising its full potential: under-investment in ICT-related research and development. Comparisons with the US reveal the extent of the problem. Research and development in ICT in Europe is much smaller than in America as both a percentage of total R&D spend (17% compared to 29%) and in absolute terms (€37 billion as against €88billion), according to 2007 figures.

Given ICT’s importance in key sectors like automobiles, consumer appliances and health and medical care, the Commission warned, in May, that “the lack of investment in ICT R&D is a threat to the entire European manufacturing and service sectors”.

Three main reasons are given for this underperformance. The first is the low level of public support for R&D, with just €5.5 billion spent annually on ICT R&D. Secondly, market fragmentation and dispersion of financing is hindering business growth, especially among small and medium-sized companies. Finally, Europe is slow in the uptake of ICT-based innovations.

The Commission suggests various ways in which the current situation can be improved. It would like to see an increase and pooling of investments with greater emphasis on high-risk research and strengthened e-infrastructure through targeted development of innovation clusters in key fields.

More specifically, it is pressing for annual total public spending on ICT research and development to be doubled to €11 billion by 2020 – a commitment national governments have already made and will now be under pressure to honour despite the current pressure to cut back domestic budgets.

The strategic use of pre-commercial procurement and public-private partnerships, it adds, should be able to leverage an equivalent increase in private spending, from €35 billion to €70 billion.

ICT innovation, it believes, can be given a boost by fully exploiting the benefits of the single market. This will require a greater effort by public authorities and moves to ensure that regulation, certification and standards do not hinder, but encourage, innovation. The Commission is planning to simplify rules on access to EU research funding so that these reduce obstacles to small companies and young researchers. In addition, it emphasises the need for sufficient financial support for joint ICT research infrastructures and innovation clusters, helping to develop a wide e-infrastructure across the continent.

The industry itself is also being asked to make its contribution to this innovation drive by leading initiatives to devise standards and open platforms for new products and services. To encourage this trend, finance will be available from EU-funded programmes.

FUNDING

The importance that the EU attaches to ICT research can be seen by the fact that it receives the largest portion of funding from the current 7th Research Framework Programme, which runs until 2013: some €9 billion. In July, the Commission announced a major call for proposed projects to benefit from the funding.

Under this latest work programme, some €1.2 billion will be allocated to ICT research. Particular emphasis is being given to public-private partnerships. The Future Internet Partnership to develop infrastructure that will benefit health systems, energy grids and traffic management will be eligible for €90 million.

Next year, €20 million will be allocated to ICT research on energy-efficient buildings, €30 million on fully electric vehicles and €80 million to the partnership developing factories of the future. Another area to benefit will be research into future and emerging technologies, where the high risks involved and fears of market failures can deter the private sector from investing. The €84 million available next year could help develop new technologies, such as carbon-free ICT.

In the communication ‘A strategy for ICT R&D and innovation in Europe: Raising the game’ the Commission presented in March last year, it made clear where it sees Europe’s strengths lie.

It identified as recognised strongholds in ICT fields the following: telecoms equipment and services, enterprise software, robotics, security technologies and photonics. In ICT application markets, Europe is also a world leader in telemedicine and medical equipment, automotive and aerospace electronics and in embedded ICT underpinning all products and services. “These give us a pole position to master and shape ICT evolutions and seize the opportunities ahead,” it concluded.

It also pointed to areas where the EU should be at the forefront in the coming years as the next generation of ICT components and systems are developed. These include nanoelectronics, photonics, organic electronics and intelligent systems for markets, such as automotive and health.

OUTLOOK

Eighteen months ago, the Commission painted an optimistic landscape for the ICT sector by 2020, provided the EU stepped up its investments, pooled its resources and ensured competitive and innovation-friendly markets.

It suggested that if these major challenges were met, Europe could have doubled its private and public investment in ICT R&D, doubled venture capital investment in high-growth ICT small and medium-sized companies and tripled its use of pre-commercial procurement in ICT.

The EU would have nurtured an additional five ICT poles of world class excellence; have grown new innovative businesses in ICT so that one third of all business expenditure in ICT research would have been invested by companies created within the last two decades; and Europe’s ICT sector would have supplied at least the equivalent of its share of the global ICT market.

If that vision is to become a reality, then the seeds will have to be sown now.

EU-funded ICT breakthroughs

WOUNDMONITOR: A successful prototype helps medical experts to quickly identify harmful bacteria or fungus in the wounds of burn victims

ARRIVAL: The project has developed software that schedules trains more efficiently and handles disruptions as they occur

WORKPAD: This new software enables disaster emergency teams to coordinate and communicate with each other more efficiently