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A North-South digital divide prevents the EU from becoming a global leader in ICT (Information and Communications Technologies) development. Whilst Scandinavia, the Netherlands, Germany and the UK lead EU ICT penetration, the Mediterranean countries are affected by significant entry costs and usage prices. However, the Digital Agenda for Europe aims to change this by 2015, benefitting consumers and businesses.

  • The EU had 350 million Internet users in 2010, which places it after China (419 million) but before the USA (248 million) in world rankings;
  • In 2010, Scandinavian countries and the Netherlands boasted close to 80% of households with a broadband Internet enabled computer – amongst the highest in the world. In Greece, Romania and Bulgaria this was only 39.9%, 32.9% and 30.5% respectively, the lowest in the EU;
  • Older, less educated and rural populations are most often excluded from the digital world. Countries with higher GDP and annual disposable incomes per capita have better penetration rates due to good ICT infrastructure, lower Internet usage costs as a share of disposable income and good ICT competency amongst the population.

Annual Disposable Income per Capita and Possession of Internet Enabled Computer by Households in Selected Countries: 2010

euro per capita and % of households

Euaims
Source: Euromonitor International from national statistics

Implications

The EU is still to tap into the full potential of ICT for economic growth and social inclusion. With large numbers of Internet users, Internet retailing offers many opportunities:

  • Internet commerce will provide consumers with more choice as well as benefitting businesses. According to Eurostat, 40.4% of the EU population had ordered goods and services online in 2010, as compared to 23.8% in 2005, marking this an area of future growth;
  • The total value of Internet retailing in Western Europe jumped from US$42.0 billion in 2005 to US$104.4 billion in 2010. The EU’s largest Internet retailing market in value terms in 2010 was the United Kingdom at US$35.8 billion, followed by Germany at US$20.4 billion and France at US$20.3 billion.

Retail Value of Internet Retailing in Selected Countries: 2005-2010

US$ millionTheeuaims2

Source: Euromonitor International from trade sources/national statisticsNote: Data from Passport Retailing – retail value excludes sales tax

In addition to reaching more consumers, businesses can also benefit from cutting costs by outsourcing and saving time through e-commerce and e-government:

  • In 2010, 89.4% of basic public services for enterprises in the EU were available online according to Eurostat;
  • The Internet can revolutionise business landscapes, creating innovative new products although threatening others (eg print media or traditional retail stores).

The Internet can also improve social inclusion by connecting remote areas, broadening access to information and offering distance learning:

  • However, 82.5% of the EU rural population had fixed broadband coverage in 2010, as compared to 95.3% of the total population, according to Eurostat. Fast broadband networks are often concentrated in a few high-density zones with significant entry costs and high prices discouraging investment elsewhere. WiMAX and mobile Internet could fill the gaps.

Prospects

The ambitious Digital Agenda for Europe 2011-2015 outlines ICT development in the EU:

  • The aim is to extend broadband coverage to the entire population by 2013, with 75% regular Internet users (percentage of population using the Internet at least once a week) up from 65% in 2010. Digital literacy and competences will be a priority for the European Social Fund between 2014 and 2020;
  • The biggest opportunities will exist in countries such as Poland, Bulgaria, Romania and Slovakia, where disposable incomes and Internet coverage are expanding fast, and which have relatively large consumer markets. Internet sales are also forecast to grow in Western Europe, with the value of Internet retailing reaching US$172.2 billion (constant 2010 prices, US$ fixed exchange rates) by 2015, up from US$104.4 billion in 2010;
  • Due to their large populations, Germany, UK, France, Italy and Spain will remain the EU’s biggest Internet user markets in 2020, accounting for 65% of all EU Internet users.

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