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Digital Confidence: Key Takeaways 4

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Digital Confidence: Key Takeaways 4 Digital Confi dence Securing the Next Wave of Digital Growth POLICY SERIES Digital Confi dence Securing the Next Wave of Digital Growth DIGITAL CONFIDENCE: KEY TAKEAWAYS 4 I. EXECUTIVE SUMMARY 7 II. THE NEXT GROWTH WAVE IN DIGITAL LIFE: USAGE, 15 NOT THE NUMBER OF USERS, DRIVES GROWTH 1. Digital Life: Introduction ................................................................................................................................................................... 15 2. Digital Life: A Defi ning Force in Today’s Economy, Politics, Society, and Education ............................... 16 3. Revenue and Growth Drivers: Content and Advertising, Not Access ................................................................. 23 III. DIGITAL CONFIDENCE: SECURING THE FUTURE GROWTH OF DIGITAL LIFE 27 1. Threats to Digital Life .......................................................................................................................................................................... 27 2. Digital Confi dence: Concept and Overview .......................................................................................................................... 28 3. Network Integrity and Quality of Service .............................................................................................................................. 30 4. Privacy and Data Protection ............................................................................................................................................................ 36 5. Minors’ Protection .................................................................................................................................................................................. 38 6. Piracy and Theft Avoidance .............................................................................................................................................................. 39 7. Summary ........................................................................................................................................................................................................ 41 IV. TODAY’S APPROACH TO DIGITAL CONFIDENCE: SIGNIFICANT 45 ROOM FOR IMPROVEMENT 1. Case Studies: How to Get Digital Confi dence Right—Or Wrong .......................................................................... 45 2. The Regulators’ Agenda ...................................................................................................................................................................... 70 V. RISK/BENEFIT ANALYSIS: DIGITAL CONFIDENCE PAYS OFF 75 1. Financial Summary: Downside Risks of Digital Confi dence Outweigh Potential Benefi ts ................... 76 2. Digital Confi dence Scenarios—From Divergence to Convergence ........................................................................ 77 3. Key Financial Drivers: Advertising and Content Are Most Exposed to Digital Confi dence .................... 78 4. Conclusion .................................................................................................................................................................................................... 78 VI. FRAMEWORK FOR ACTION 81 1. Industry Needs to Develop Leadership in Digital Confi dence .................................................................................. 81 2. Network Operators and ISPs Need to Take a Clear Position on Digital Confi dence............................... 82 3. Network Operator Call for Action: The Five Key Initiatives for Digital Confi dence ............................... 83 4. Implications for Other Stakeholders .......................................................................................................................................... 85 5. Priorities for Regulators ...................................................................................................................................................................... 86 Booz & Company 3 DIGITAL CONFIDENCE – KEY TAKEAWAYS • The digital economy in Europe is expected top of the €436 billion base case. However, to grow by 18 percent per annum until 2012 the downside of a failure to enhance Digital to a volume of €436 billion from €236 billion Confi dence is greater: 18 percent (or €78 in 2008. billion) could be lost or signifi cantly delayed. • Until recently, growth in the digital economy • All players in the industry agree on the was largely driven by infrastructure rollout importance of building up Digital Confi dence and technology development, such as digital credentials and have launched a wide array of TV (DTV) migration and next-generation activities accordingly—yet, to date, there is a broadband technologies. clear lack of coherence and common focus, as most actions are ad hoc, having been triggered • Going forward, there will be a very by high-profi le incidents of trust or security signifi cant shift in value from access—though breaches and political pressure. still profi table and growing, albeit at single- digit rates—to electronic commerce, online • Legislation alone cannot keep up with the and digital content offers, and online speed and scope of challenges in this market. advertising. Hence, successful companies do more than just comply with legislation; they stay ahead of • Increased usage and spend per user will fuel the curve by adopting proactive policies and strong growth in the next 5 years: Specifi cally, practices to drive Digital Confi dence. content and advertising businesses will show double-digit growth. e-Commerce will remain • Digital Confi dence is built on four pillars, the biggest market in absolute terms. which, taken together, address the most vital areas of consumer and industry concern: • However, these growth drivers will have to prevail over major disruptive forces in the 1. Network Integrity and Quality of Service European Information Society such as Web (QoS). Focuses on providing secure and 2.0 services converging across platforms (i.e., resilient enabling technology platforms for online, DTV, mobile) and a new “born digital” digital life and providing an optimal customer consumer generation that is hyperconnected experience and participative but also highly assertive, 2. Privacy and Data Protection. Addresses the feeding into press and political action. security concerns of individuals with respect to their digital data • With the growth and success of digital life 3. Minors’ Protection. Seeks to defend the well- have come many concerns for consumers being of minors in the online world and enterprises relating to the security and 4. Piracy and Theft Avoidance. Seeks to provide integrity of the digital environment. a secure digital business environment for all stakeholders. • Therefore, enhancing Digital Confi dence, as a measure of how much consumers and • As owners of the client relationship, suppliers trust in digital and online services, network operators are challenged to put is becoming a key growth enabler—or in place policies and practices that fi nd inhibitor—for the digital economy. €124 general user acceptance, which goes beyond billion in market volume (2012) could be compliance with legal requirements or serving at risk, approximately 1 percent of GDP the interests of particular stakeholders. for the EU-27, with market value related to content and advertising being most exposed. • Therefore, policies and practices should The economic upside of being successful in not be driven by single issues (e.g., piracy) increasing confi dence and trust amounts to an but should refl ect a holistic view of all Digital extra 11-percent growth (or €46 billion) on Confi dence areas. The policy implications 4 Booz & Company of these different areas converge in practice • Digital Confi dence policies and practices and have shown to produce contradictory need to be embedded within the respective reactions from stakeholders. organisations by establishing internal protocols and governance structures to guide • Key lessons drawn from case studies around product and service roadmaps; choice and the world show that a “can-do” vision is deployment of network-based technologies realistic: With regard to enhancing Digital and security solutions; and communication Confi dence, network operators can go beyond to customers and other stakeholders (e.g., their traditional roles of “mere conduit” and industry peers, content owners, regulators). educator/teacher whilst observing guidelines for acceptable consumer practices and safeguarding legal safe harbours. • Based on the cases analysed, best practices from a consumer acceptance point of view take shape: • Consumers accept practices that are transparent and unobtrusive—network operators and content and platform players, jointly with the regulator, are required to drive such communication forward. • Consumers are concerned about how network operators manage and safeguard consumers’ digital data—clear statements and a consistent, reliable regulatory framework are key priorities. • Consumers require control over the risks to which they’re exposed—they seek access to the appropriate tools, opt-in/ opt-out mechanisms, and education. • Consumers accept measures that guarantee quality of service—if this requires active traffi c management, they are open to it, provided there are clearly communicated terms of service. • To ensure proportional levels of intervention, and to fi nd general user acceptance, when adopting more pro-active policies and practices, network operators should use a graded
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