Lives are being changed by the inexorable rise of information and communication technology. From social networking to filing tax returns online, the possibilities were almost unimaginable only a decade ago.

ICT affects much of EU policy – and not always in the most obvious ways. The European Commission’s ‘digital agenda’ aims to ensure that Europe does not get left behind in the ICT revolution. Internal market officials reconsider policy as the internet hauls down barriers. Competition experts deal with the largest anti-trust cases involving the world’s major technology companies.

Europe’s internal market, for so long the driving force behind European integration, is being transformed by ICT. Recent changes have forced policymakers to question traditional ways of doing things. Take online gambling, which is one of Europe’s fastest-growing industries yet is tightly controlled in many EU countries, even banned in some. New technology does not respect old boundaries. So if somebody in Belgium, where online gambling is illegal, wants to place money on a betting site in the UK, how can they be stopped? Should they be stopped? Who should police it? The Commission is planning to outline its thinking later this year.

The same complexities apply to access to music and video – an area where new technology clashes head-on with old certainties. Frustrated internet users find they are blocked from viewing or listening in one EU country, but allowed to in another, as licensing remains peculiarly national. As Neelie Kroes, the European commissioner for the digital agenda, says, this is a situation where many are demanding changes.

The issues extend far beyond the technical. Policymakers wrestle with the question of whether internet service providers should be able to restrict consumers’ access to some websites. Telecoms companies advocate charging differential rates in order to control internet traffic, but supporters of ‘net neutrality’ maintain that this goes against the spirit of the internet and could damage innovation. In a speech last week (19 April), Kroes said that she was “committed” to net neutrality, but that did not necessarily mean that all types of “targeted offers” should be banned. The Commission is to launch a consultation before the summer, but proposals are still a long way away.

Growth and jobs

Then there is the economy. Politicians are eager to harness the power of ICT as a driver of growth. With just 3.4% of retail trade conducted on the internet, there is abundant opportunity. ICT evangelists argue that technology should play a far greater role in healthcare, government services and energy efficiency. But that raises new questions about data protection and the exclusion of the less well-off and less educated who are not online.

It also means that many other aspects of public and private services need to improve. Consumer protection needs to be strengthened so that people can feel more confident that if they order goods online from another country they can get their money back if the goods are faulty.

And what about the old-fashioned postal services? There is little point encouraging e-commerce if goods do not get delivered reliably. The Commission is conducting a consultation on cross-border parcel delivery this year.

Payment is an issue too. The Commission sees its e-commerce action plan, launched earlier this year, as another opportunity to get to grips with the payment card industry, which it sees as fragmented and expensive. And ICT is having an impact on taxation thinking too. The complicated nature of 27 different VAT systems discourages companies from selling online across borders. What is more, VAT can penalise online services. Digital books, for example, have a higher rate of VAT than normal books. The Commission is considering changes.

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Need for investment

The growth in ICT as a force for good will become a reality only if the infrastructure is in place. Europe is already beginning to lag behind some other parts of the world in investing in new-generation high-speed broadband. The Commission is looking at ways of persuading incumbent telecoms companies to invest in the fibre networks needed for fast broadband. For their part, the companies baulk at the idea of restricting revenue on traditional copper networks to bring this about.

Policymakers cannot afford to ignore the social impacts of ICT. They must ensure they avoid a ‘digital divide’ in which only the educated benefit from e-government and e-health. They must work out how to crack down on child pornography – the subject of an EU directive adopted in December.

ICT is solving some problems but creating others. Its spread makes the case for the EU single market more strongly than ever, but highlights how many obstacles still remain. ICT could create growth and jobs – but only if there is investment in education and infrastructure. It could connect people or it could leave them lonelier than ever. It could help people get access to top-class services, or it could enable governments to behave like Big Brother and private companies to misuse people’s data. It could once more push Europe to the forefront of innovation, or it could banish it to the second division of the global economy for generations to come. The challenges are huge and the journey has barely begun.