In Europe, ‘5G’ means leapfrogging US web giants

25 February 2016. By Magnus Franklin.

The picture is a familiar one.

The Internet, as we know it today, amounts to a clutch of gigantic US platforms to which other web-based services cling. American online companies have dominated the second great wave of the web, allowing snaps of cute kittens to go viral and pundits to prattle in 140 characters or less.

Now EU policymakers think it’s time for a change of guard — time for the digital domain to be ruled by those who would tightly harness digital technology to the “real” economy.

Look at this week’s announcements from the European Commission, and the message is clear. Europe has one goal for 2020: to take the lead in how the web links up with industry in an age of Internet-connected machines.

US industry and government are also bent on being at the forefront of the “Internet of Things,” from self-driving cars to smart grids. But EU officials are hoping to use their current drive to build a “digital single market” to pull off the same trick as they did in the late 1990s, when their GSM standard led the mobile revolution.

For evidence, listen to what the EU’s digital-economy chief, Günther Oettinger, told the Mobile World Congress in Barcelona this week. The fifth generation of mobile technology — 5G — “is the essential network infrastructure,” he said, “for the digital transformation of our economy and society, for connected cars, the Internet of Things, e-health and many other real-life applications,” he told delegates at the planet’s biggest mobile-industry fair.

That might sound like wishy-washy grandstanding from a seasoned politician, but the broad strokes highlight the underlying thrust of EU digital policymaking today.

The aim is no longer to ensure that the next WhatsApp emerges from a garage somewhere in Europe. The goal is, rather, to leapfrog the Internet paradigm created by the likes of Google, Apple, Facebook and Amazon.com, with their heavy emphasis on entertainment, social networks and shopping. Policymakers in Brussels are seeking to reorient the web to bolster the industries Europe is known for — cars, healthcare, luxury goods and culture.

No business would be left untouched by this strategy. Oettinger’s rhetoric was coupled with a specific call to the five or six key industries that will lead the way to roll up their sleeves and help craft this new strategy. Cars will come first. Others will soon follow.

That’s not to say that innovation in the US has ground to a halt. The buzz around the industrial Internet is as loud there as it is in Europe. The challenge for policymakers on both sides is how to ensure the buzz translates into patent filings and new business models.

GAFA red herring

The strategy also explains why the EU has often looked schizophrenic during the debate surrounding online “platforms.”

EU officials have toned down their talk of regulations targeting the “GAFA” web giants — Google, Apple, Facebook and Amazon. Yet these same sites now face tighter rules through other means.

New privacy provisions impose fines for behavior considered normal by GAFA-type operators. New cybersecurity rules allow governments to include web giants among a class of companies that must take special precautions against hackers. And a bill in the making will stop web platforms from blocking users in another member state.

Is this two-faced policymaking? Perhaps — but only if the underlying assumption is that the EU wants to create platforms to match the US stars now in the limelight. And only if protectionism is seen as the way to help a French startup become the search engine of choice or help a Belgian social network rival Facebook.

But the policies are consistent if the aim is, rather, to create an entirely new web. Call it 5G to make it consistent with the message policymakers are sending. In that case, the aim of EU legislation is to align the operations of the US giants with EU principles: the single market, fundamental rights, security and peace.

GSM again

The lofty ambitions of Oettinger are also rooted in the logic of past technology cycles. Europe led the mobile revolution in the 1990s with the development of the GSM mobile standard, but got so caught up in its own success that its innovative capacity was sucked up by the research arms of companies such as Nokia, Ericsson and Alcatel.

That dynamic gave Silicon Valley time to nurse the Internet boom on which it now thrives. Google rose, Apple reinvented itself, and both made the web portable, helping foment the smartphone and app revolution. For them, the advent of mass-market smartphones was the equivalent of the GSM miracle in Europe. It unleashed a tsunami of new ideas that rippled around the world and continues to disrupt industries to this day. Think Uber, Airbnb and TaskRabbit.

Now, arguably, the same scenario may be playing out in reverse. Silicon Valley’s giants are devouring the innovative capacity of California. They are buying up emerging technologies and working to develop new services built around e-commerce, entertainment and virtual reality — much as Nokia and Ericsson thought they could evolve telephones with WAP “value-added services” such as ringtone downloads. Until Apple and Google turned the logic of phones upside down.

Meanwhile, Europe has an oversupply of new ideas and plenty of fertile ground on which they can take root.

This arrangement pumps money into technologies and services that have nothing to do with content, advertising, search or the like. The focus now is on energy, manufacturing, communications, travel and food. Americans, of course, won’t let the moment pass, and the technology press is busy trying to pick out the next US startup hotspot to steal the crown from Silicon Valley. As in Europe, the “Internet of Things” is the catchphrase among American investors.

This is the pendulum shift that European politicians such as Oettinger are seeking to exploit.

In speech after speech, the message grows more refined. And each time, it becomes a little clearer that Europe’s digital policy is no longer aspirational waffle: It’s now narrating the next wave of technological innovation — a wave that Europe is well-placed to catch.