Our economies are undergoing dramatic changes. The financial crisis and following recession have shifted the global business landscape and have put emerging markets into the spotlight while more developed economies are still suffering sluggish growth.
Against this backdrop, it is even more remarkable that the Digital Economy has emerged, through the recent years of crisis, as the new powerhouse of business and social transformation.
New technologies based on mobile connectivity, social media, cloud computing and Big Data are leading the way, driving innovation and greater effi ciency. Innovestment –investment and innovation– is the fuel of a new digital virtuous circle: attractive digital technologies drive consumer demand, create growth and jobs, and at the same time enable societies to use their resources more efficiently while making their economies more competitive and productive. Connectivity is the key to this Digital World and the Internet is its basis. Often
Internet is overseen what it consists of: globally connected physical networks, which enable the transfer of information from one point to another; resource elements, where data is stored; and the social elements, where human collaboration and networking takes place.
The Digital Revolution is driven by new high-speed Internet connectivity and innovative services, and Telefónica is a key enabler for both. And we have only seen the beginning: it is expected that the Digital Economy annual growth for the next five years will be 5% in the G-20 countries and as much as 18% year-on-year in developing markets.
This digitally-fuelled growth will happen across all nations and has the potential to improve people’s lives regardless of where they live and work.
Today two thirds of the world population is not connected to the Internet. And for the other third, infrastructure and network upgrades will be necessary to meet the massive growth in data traffic.
Such investments will need to come from the private sector, mainly communication and broadband providers. Despite the challenging economic environment Telefónica alone has invested nearly €50 billion over the last fi ve years.
Digital technology does not recognize physical boundaries or respect companies that have been successful in the past. The low barriers to entry, the minimal cost of innovation, and the speed with which customers adopt new products, have given the Digital Revolution an unstoppable momentum. Society and business will change whether we like it or not. Economies, societies and companies that embrace the change can prosper. It is those who stand still who will be left behind.
This Digital Revolution is the biggest period of economic, technological, and social change since the Industrial Revolution. It is natural that any tectonic shift of such scale also creates challenges for policy makers and regulators.
In this document, Telefónica highlights the policy issues and challenges that we believe deserve further debate between all stakeholders. It will be crucial that also policies and regulations reflect the ever changing digital realities, if we want to unleash the full potential of the Digital World for consumers and businesses and administrations.
There are no easy answers as competition in the Digital Economy and across the Internet Value Chain is complex and rapidly evolving. It is therefore vital that policymakers focus on the right issues: promoting investments, competition and innovation. We have to ensure that policy frameworks rooted in the 20th century do not hinder growth, innovation, or consumer’s protection in the 21st century. We recognise that policymaking struggles to move at the same speed as evolutions of technology and markets. So there needs to be close cooperation between the public and private sector, united by a common vision. Also regulation should only apply where a case-by-case application of competition law is not suffi cient. Adapting rules to the new Digital World does not mean creating more regulation. Often an outcome based policy approach can yield better results in a fast changing technology environment. It means creating smarter, more flexible, lighter regulation and fairer policy framework that apply the same rules for the same services. As a starting point, we have defined a Digital Manifesto of policy recommendations to improve the Internet experience of consumers and generate more investment in digital infrastructures.
The Digital Revolution has just started. We believe that technology should be open to everyone so that we can all be more. As a Digital Telco, Telefónica will drive these changes and help people to access and enjoy the best that technology can offer. It is amazing what technology allows us to achieve and how it improves people’s lives. We should all cooperate to unleash the full potential of the Digital Economy.
José María Álvarez-Pallete - Executive Chairman and Chief Executive Officer of Telefónica S.A.