Europe plays innovation catch-up

In the face of an ageing population and strong competition from Asia, the future prosperity of the EU is becoming increasingly dependant on the ability to exploit the regions considerable research and development talent.

Manufacturing is increasingly being outsourced to developing markets where labour is cheaper which leaves European companies under pressure to remain relevant and necessary. Increasingly this means focusing on invention rather than production.

However, staying ahead of the competition requires increased investment which is currently lacking. ICT research in Europe stands at just E80 per capita, compared with E350 in the US and E400 in Japan.

To discover exactly how the European Commission intends to promote the development and use of new technology in Europe, ZDNet UK spoke with the EC's director of emerging technologies and infrastructures, Ulf Dahlsten.

Q: What do you see as the key emerging technologies over the next five years and what policy priorities have you set out to support them?
Overall you find them in multidisciplinary approaches where researchers are bringing together developments in intelligence, complexity and new materials: [these are] all areas that can build upon existing European strengths. Examples would be nanoelectronics, neuroinformatics, complex autonomous systems, quantum computing and advanced robotics.

We thus find them in areas where technology convergence is taking place and the new i2010 strategy to boost the digital economy, which the Commission launched in June, takes full account of the reality of convergence as a technological challenge, a regulatory test and source of growth.

Our first set of priorities here will be to adapt European rules to convergence in order to create a "single European information space". In particular the Commission aims to modernise the rules on European audiovisual content and to give content producers greater legal certainty by putting these rules into a single market framework.

We will be reviewing the regulatory framework for electronic communications to see how well our current rules are performing and whether they will equip us adequately for the next generation of high bandwidth services. We will also work on interoperability and security, because as these services become multi-platform, and ever more widely used, a safe, secure and seamless Web will become a priority.

Our second set of priorities concern enhancing the role of information and communication technology (ICT) as a motor of growth in Europe. In Europe, ICT accounts for 25 percent of economic growth and 40 percent of productivity increases. In other countries, such...

...as the USA, their impact is even more significant. Our second aim therefore is to stimulate investment in ICT research and innovation as the seedbed of Europe's future economic success.

The third set of priorities emphasises the role of ICT in delivering benefits to the citizen. A more socially inclusive European Information Society will also be a more efficient and productive one. ICT is crucial to improving health care, learning, government services, and environmental quality, among others

What measures is the Commission taking to promote the development and exploitation of these technologies by European companies?
What we are trying to do is increase the participation of industry in research with new initiatives such as the European Technology Platform (ETP). This is a link between industry and researchers, which works two ways by developing a strategic research agenda and helping us to define our strategic objectives and goals.

The next step is that the participants in the programmes find industrial and academic partners through the platforms and they develop relationships that are important for European projects. This leads to innovation because industry has been involved throughout.

What specific areas of European technology research are being funded by the European Commission?

The fundamental aims of all Community support for research and development are to strengthen industry's scientific and technological base, enhance its international competitiveness and promote research supporting other EU policies. These aims are realised via multi-annual research framework programmes.

In keeping with the EU's "Lisbon" strategy for growth and jobs, the Sixth Research Framework Programme brought new objectives and ambitions, particularly the creation of a European Research Area in which research was more coordinated across the EU.

The European Commission also has a number of broad initiatives, such as the recently launched "Digital Libraries" Initiative, which will support and promote the development and use of new technologies, especially in the ICT area. The Digital Libraries Initiative is a strategy to make Europe's written and audiovisual heritage available on the Internet. A strategy that will not only entail digitising of over 2.5 billion books, and millions of hours of film and audio, but will also involve developing grid computing technologies and solving the problems connected with long term digital preservation.

As a percentage of total R&D expenditure, ICT accounts for only 18 percent in Europe as opposed to 34 percent in US and 35 percent in Japan. What can the EC do to rectify this poor performance?
This is a really major concern for us. The Commission has proposed a substantial increase in research funding at European level and within the collaborative research programme that we administer, 30 percent is going to ICT, a much higher percentage than the average. If that had been accepted by EU member states it would have been a major step forward, but now we are now talking about a 25 percent increase, not a 100 percent one, because the EU budget has not been ratified. But it is still an increase and on a European level you can count upon a positive response, even if it is not as positive as we had hoped.

We need to follow the US lead and get more research investment in companies. Hopefully, by involving them more in our research programmes, we can encourage them to put more money into research since we will be financing 50 percent of it. This way we should get a much higher level of industrial research investment in Europe.

But this can only be done through national policies and we have a target that 3 percent of GDP should go to research and an even higher level on the ICT side. For that...

...to happen you need to have a national policy of support for companies that support this research, and this is true for a number of EU member states that are already above the 3 percent threshold, e.g. with Sweden up to 4 percent and Finland very close to that.

Other EU countries need to catch up, by instituting the right policies. This can be done in different ways of course, including tax incentives, and better cooperation between industry and academia. Studies have shown that cooperation between industry and academia is better in countries like the UK and the Nordic states than in, for example, Italy, or Greece.

One method that you have talked about in the past is the concept of "Innovation procurement" can you explain what you mean by this term?

There are a number of things that we have to get right in Europe, for innovation does not depend only on increasing the level of research in industry. You also need the first buyers so that the technology user is also involved in the research.

Historically, we have been very good at this in Europe. Companies like Siemens, Nokia and Alcatel would not have existed without the technology procurement from the old telecoms companies. But we have lost a little bit of that touch in Europe, and if you look at the Americans they are still doing so well on innovation because they have a lot of procurement from defence and space, something that we hardly have in Europe.

I think we should find our way back towards doing this, but doing it in a European way. We should also use the competition aspect of it, because technology procurement can be done at a European level as well as a national level. We see this as a way of helping companies take the first step from research to product, by sharing the risk with companies developing a new technology.

We now have a working group between the Directorate-General for Information Society and Media and EU member states. I chair this group and we will be producing a report in a couple of months that looks into the possibilities of innovation procurement. After all, we already have EU-wide procurement policies on defence with the establishment of European battle groups, so defence could be a promising area. Space can also play a role through the European Space Agency, but both are much smaller than the US. However, we also have other areas, such as security, health, education, and support for the elderly and disabled.

Risk capital is also very important for innovation and we would be helped if there were some sort of European NASDAQ that is large enough to enable investors to spread their risk.

Is the poor performance in European ICT R&D partly due to deficiencies in EU or national laws and regulations relating to intellectual property rights, should we be placing greater emphasis upon open source communities, and patent commons?
We are positive about open source, although it is not a requirement for participation in European programmes. We will benefit from having a lot of open source. It is good for Europe. If we go to the intellectual property rights (IPR) question the...

...Commission's view is that we should strengthen IPR in Europe. Many people say that patenting is too easy in America, but too difficult in Europe. We need to find the right balance.

It would help if it were easier to register European patents, but we also have to re-examine the whole IPR concept, to see where most existing approaches are more appropriate for mature industries than for new technologies. What makes this such a difficult problem to solve is that development in areas such as ICT is so rapid. Something that may be worth patenting today will probably be outdated in four or five years' time.

A European approach to the patent question will be helpful but we need to strike the balance between the American and European approaches, between protecting too much and too little. Industry is demanding more protection for being prepared to take the risks involved in developing new products and services.

Should the EC be backing moves towards the establishment of institutions fostering a more open market in intellectual property and thus facilitating the effective sharing of IP in a way that will add more value to an innovation?
The development of a market for intellectual property in Europe has been discussed but there is currently no proposal on the table. However, we are looking at ways of helping this, such as making companies licence a patent that they are not using. It is an important discussion and it is something that will be developed. We see too much of what might be called "defensive patenting" that is primarily aimed at preventing development rather than something that they want to use. That was never the intention with patents. They were intended to give the holder the opportunity to exploit the idea or discovery. It is a healthy debate but we have not yet come to a conclusion that we all agree upon.

Is the fact that there are too many different and often competing regimes within the EU governing the development of a technology in a national interest rather than a European one a problem?
Yes it is true, sometimes you have the feeling that people think that the single market is now complete and so they wonder why it does not actually deliver more than it does. The truth is that far less than half of GDP is open for competition. The rest is protected somehow and this has to be changed. We have made a start. For example, the other day we got an agreement to open up defence procurement all over Europe. This is still a voluntary thing, but the expectation is that virtually all countries will follow it.

The draft EU Directive on Services aims to open up some of these closed markets. There is some progress here, and it looks like there will be a compromise in the European Parliament that will allow us to move it forward — maybe not as far as the Commission would have liked, but at least a step in the right direction.

Is the EC making any moves towards promoting the development of EU-wide standards for new technology components and systems thus ensuring the existence of a sufficiently large market for them?
We will see a greater degree of European-inspired standardisation in new technology components and systems. We are already encouraging industry to create EU-wide bodies that can support standardisation.

Public technology procurement can also be used as a way of encouraging standardisation. If we can get this on a European level and buyers can agree on what they want, this can give rise to an automatic standardisation that would be extremely beneficial for a number of these areas. This is however something that is still being debated and that we are pushing for but we have yet to convince the various stakeholders. There is a growing consensus that this is important in creating an innovative advanced technology Europe.