London, 26 September 2008 — Europe’s digital economy is expected to grow by 18% annually, reaching €436bn by 2012, with consumer confidence in the safety of digital markets being the most important driver for sustainable growth, according to a new study published by the global management consulting firm Booz & Company.
The study, commissioned by Liberty Global, Inc., the largest international cable operator and parent company of UPC Broadband and Telenet, found that the next phase of market growth value will increasingly shift from the access business to more advanced services such as e-commerce, content and advertising. Future growth therefore relies on internet users using new services and increasing their online spending. This brings with it significant industry challenges for network operators.
The report reveals that digital confidence is key to market growth. Using the analysis of cases of success and failure, a comprehensive analysis of consumer research and more than 50 expert interviews, the report concludes that the four areas key to building digital confidence are:
Assure network integrity and quality of service for consumers and related businesses to protect technology platforms and ensure connectivity
Protect privacy and personal data and prevent unauthorised access to consumers’ private electronic data
Protect minors from exposure to undesired content and exploitation
Prevent piracy and theft of copyrighted content
Thomas Künstner, partner at Booz & Company comments, “Negative headlines—such as recent violations of data privacy by telecommunication firms or the bullying of minors in forums and social networks—can very rapidly cloud the consumer’s present euphoria concerning the internet, and this will have an immediate impact on industry growth.”
In Europe, €124 billion of sales could be at risk without attention to digital confidence, and its successful implementation can generate additional sales volume of 11%, or €46 billion. "If that does not work, up to 18%—or €78 billion—in digital sales value could be at stake as compared to the base scenario of €436 billion,” adds Künstner. “This impressive difference highlights the risk facing infrastructure and service providers.”
Based on the cases analysed, best practices to gain consumer acceptance are:
1. Make practices transparent and unobtrusive. Network operators and content and platform players, jointly with the regulator, are required to drive such communication forward.
2. Clear statements and a consistent, reliable regulatory framework are key priorities. Consumers are concerned about how network operators and service providers manage and safeguard consumers’ digital data.
3. Allow consumers to control the risks to which they’re exposed with appropriate tools, such as opt-in/opt-out mechanisms, and education.
4. Guarantee quality of service. If this requires active traffic management, consumers are open to it, provided there are clearly communicated terms of service.
In addition to complying with existing regulations, the report found that organisations should adopt key principles to drive digital confidence. Providers must combine forces with regulators to keep pace with the speed and magnitude of the challenges.
Digital confidence policies and practices need to be embedded deeply within the respective organisations - by establishing internal protocols and governance structures to guide product and service roadmaps; allowing choice and deployment of network-based technologies and security solutions; and communicating with customers and other stakeholders (e.g. industry peers, content owners, and regulators). So that future growth can be sustainably assured, digital confidence and the security of the users must become integral elements in corporate strategy.