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Europe’s Connectivity Plans Risk Data Clogging

Last week, European governments committed to spend recovery funding to strengthen connectivity infrastructures within the EU and with the rest of the world. The plans, led by the Portuguese government, reflect a forward-looking vision of a continent seeking to remain a “world-class data hub” in the global digital economy. But inward-looking data policies inadvertently risk clogging the very pipes governments want to build.

Europe has big plans to transform its economy and boost its digital competitiveness on the global stage. By 2030, the European Commission wants to acquire Europe’s first quantum computer; roll-out 5G for every citizen, company and public organization; and strengthen Europe’s own cloud infrastructure and capacities.

But in its quest to become a world-class data hub EU leaders must prioritise both ensuring global connectivity and enabling the free flow of data with the rest of the world. 

The first of these “missing pillars” — as Member States put it — is ensuring connectivity across and outside Europe. Fortunately, Portugal, currently at the helm of the EU Council Presidency, has rallied 26 other European governments in committing to strengthen Europe’s international and domestic connectivity infrastructures. This is good news. After all, a robust, well-integrated and international connectivity infrastructure is the backbone for driving innovation and efficiencies across the private and public sector. 

To be clear, Europe has nothing to shy away in terms of connectivity: with a capacity of 400,000 gigabytes per second, Europe is currently leading the global connectivity race. To put things in perspective, that is the equivalent of 28,000 two-hour long, 4K definition movies for every second. These figures dwarf Asia and North America, with a little over 10,500 and 9,500 movies per second respectively. Europe is also home to one of the top 3 submarine cable suppliers in the world. 

In hindsight, Europe’s leadership in connectivity is the result of the liberalization of International Gateways in the early 2000s, not their control through a protectionist approach. The free flow of telecom traffic between countries enabled competition and price decreases, which in turn drove more demand and investments in submarine cables.

And while last week’s Declaration on the European Data Gateways goes in the right direction, Europe’s connectivity strategy should venture beyond public infrastructure by complementing it with the private sector’s expertise in creating robust connectivity and attracting private investments, with a clear commitment to public-private collaboration. Similarly, Member States should make sure that any designation of submarine cables as critical infrastructures takes a balanced approach, considers the international dimension of such infrastructures, and ultimately does not result in inconsistent or contradictory obligations with existing EU security and incident notification rules, creating unnecessary burdens that can disincentivize investments in this space or increase price to consumers.

Given the ambition to develop robust connectivity to global infrastructure, international cooperation should also be a central part of the strategy, clearly supported and incentivized. For the EU to become a leading data-agile economy globally, the external connectivity aspect is as important as the internal one.

But more importantly, whatever pipes Europe intends to build will only be useful if data can actually flow through them. It’s therefore rather odd that some EU decision-makers are advocating in favour of European data localisation. In fact, the European Commission has already gone beyond the rhetoric and has tabled draft rules to restrict data flows outside the European Union, including, for the first time, restrictions on non-personal data. 

Data localisation, and similar undue data transfer restrictions, raise practical and geopolitical challenges, and it undermines the EU’s connectivity plans and its aspirations to become a global data hub. 

First of all, data flows aren’t unidirectional, and in practice a Portuguese company operating in Brazil needs data to flow both ways for its daily internal and business operations with vendors and customers. 

Secondly, data flow restrictions simply invite reciprocal protectionism from one’s trading partners. The European Commission is already offering its trading partners a carte blanche to introduce protectionist data localisations requirements. It should beware of making it an actual data localisation sales pitch.

The EU will need to prioritise both connectivity and data flows with the rest of the world to become a global digital leader. And while last week’s Declaration has served as a helpful wake-up call from Member States on EU’s connectivity, it should also prompt a more profound debate on the coherence of EU policies and Europe’s role in defending global data flows.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.