Presentation by Gerard Kleisterlee, President and CEO of Philips Electronics, at the Informal Telecoms Ministers Meeting, 21-23 Feb

February 25, 2002

Brussels, 22 February 2002

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Speech - Gerard Kleisterlee ­ President & CEO Royal Philips Electronics

Informal Meeting of Ministers for Telecommunications and the Information Society (21-23 February - Vitoria)

Good morning,

I would first like to thank the ministers for the invitation to join you here today.

I hope that over the course of the next few minutes that i can provide you with insight, not only into how, we at Philips, view the EU's progress on the eEurope action plan, but also as a representative of the European technology community.

The context for my comments today, is how we can work together to achieve the eEurope action plan's goals.

The eEurope action plan plays a key role in the process started at the Lisbon European Council in march 2000 to transform Europe, by 2010, into "the most competitive and dynamic knowledge-based economy in the world, able to sustain economic growth."

However, as we work towards this objective, the EU and the technology community face similar challenges;

global competitiveness
increasing productivity rates
reducing overhead burdens
increasing innovation
and developing the skills of our people

As we move forward together, our objective should be to address these challenges as quickly as possible.

The objectives of eEurope, once achieved, will advance the transformation of Europe into a dynamic, knowledge-based society.

A critical factor to this success will rest in Europe's ability to develop and digitally deliver information, entertainment, and services to its people.

However, technology, products, and services alone are not enough.

A prerequisite for reaching our objectives is a world class infrastructure.

For Europe to become a leading knowledge-based, high flexibility, high added value economy, we need to support the rollout and standardization of broadband enabling technologies.

So that knowledge workers, across the EU and across industries, can be empowered in terms of efficiency and reach.

Within the broadband context, the EU should strive to repeat the success of GSM, but in the world of digital television.

We believe that digital television will be the internet access device for the majority of Europeans.

Digital television and the services that it will deliver can help to bridge the current "digital divide" between those that have access to interactive services and the internet and those that do not.

PC penetration rates have leveled off over the past few years, reaching a level of 30-40% of households in the united states and western Europe.

While the television, as we all know, is in virtually every home.

For that reason, enabling digital tv is a necessary step in providing easy and affordable access to the internet.

In support of this goal the EU needs to move as quickly as possible to establish digital tv standards, especially for application program interfaces ­ APIs.

We, at Philips, believe that MHP could become the GSM of the digital world.

Just as the EU played an integral role in supporting the establishment of GSM as the standard for mobile telephony, first across Europe and then the world, so too can you play the same role with a standard for digital tv.

A fast rollout of an open and interoperable standard for digital tv, and the introduction of a common API, would provide the basis for a European-wide, globally competitive, content generation industry and a platform for the delivery of interactive digital television-based services of all kinds.

Interactive digital television could also provide EU governments with the means of interacting with their citizens in ways; which improve services, increase state sector efficiency, and also reduces costs.

One thought to keep in mind, as we discuss the potential future of broadband and its benefits,

Is the current state of the telecommunications and cable infrastructure across Europe.

Much of this infrastructure is not able to provide the minimum necessary functionality to deliver even the simplest of interactive services.

We are behind in this effort.

The united states is racing ahead with high-speed cable and dsl access to almost every home.

Many asian countries are bypassing the upgrading of their legacy infrastructure and going straight to all digital networks.

Only through the coordinated actions of the EU member states can we quickly address this fundamental issue and move forward. i would now like to transition, and take a few minutes to discuss the competitive landscape and the challenges we face.

The global technology marketplace is characterized by rapid change and a high rate of technological innovation.

To be successful today, a company must bring new products and services to market in the shortest possible time.

This can only be accomplished by increasing the efficiency and speed of the product creation process and facilitating synergies between the people driving that production.

To address this issue, Philips has decided to move many of our technology development activities to a central site on our campus in eindhoven. already one of the largest research facilities in Europe.

By 2005 over 8,000 people from throughout Europe, and beyond, will be working on a single state-of the-art silicon valley type campus for Philips.

This facility will cover almost one million square meters, and many of the projects they will be working on have been in part funded by the eu.

One of the features of the campus is the Philips homelab.

Four years ago we saw the need for a lab where we could effectively test how people interact with technology in their home environment.

Findings from our work, have been presented in our ambient intelligence initiative ­ now a central feature of the EU's IST fifth and sixth framework programs.

Philips investment of 650 million euros in this project underscores not only our ambition but also our commitment to technology development in Europe.

Our new high tech campus is at the heart of technology innovation at Philips.

However, staffing it has not been as easy as we had hoped.

We have many open positions for scientific and research personnel and the lack of qualified graduates intensifies this problem

If i look to the united states for a moment, many of today's leading technology innovations came from students:

the single board computer (wozniak & jobs)
public key encryption (diffie & hellman)
internet protocol (kahn, cerf, & joy)
the mosaic internet browser and the netscape browser (andresen)
and finally yahoo (yang & filo)

I would ask, on behalf of the European technology community, that the EU to look to measures that would stimulate the study of technology and science in Europe's universities.

In summary, we are encouraged by the Lisbon eEurope action plan, and hope that as you continue to follow through on the its objectives that you will strongly support the development of digital television.

This would include; the establishment of an open, interoperable standard, a push to further strengthen the underlying infrastructure, and finally supporting the development of innovative content and services.

From a broader perspective, the Lisbon agenda needs to be tackled with more urgency and commitment to implementation. for the technology community, we would support the recommendations recently put forward by the European round table:

eliminating the remaining barriers to the single market
liberalizing cross-border mergers and acquisitions
working to create more flexible labor markets and reducing the barriers to employment

establishing an EU patent office to facilitate the exploitation of technology and innovation

Both the EU and the technology community of Europe are facing similar challenges,

Transforming to meet the new competitive realities of a global market place.

I am confident, that through the concerted efforts of both industry and the eu, and with continued dialogue, like we are having today, we can together achieve our ambitions.

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The Spanish Presidency believes development of the Information Society is a task for everybody. Accordingly, it has invited six world experts, from business and academic backgrounds, to attend the meeting in Vitoria in order to contribute their thoughts on the future of the Information Society in Europe from a multidisciplinary perspective.

César Alierta, CEO of Telefónica, will be speaking to the European delegates about his vision of the future of telecommunications;

Gerard Kleisterlee, President and CEO of Philips, will be considering technological convergence;

Marjorie Scardino, CEO of the Pearson Group, will be looking at the use of the new technologies in education;

Eric Licoys, co-Chief Operating Officer of Vivendi Universal, will be setting out his view of the future of digital content;

José Antonio Tazón, CEO of Amadeus, will be focusing on electronic commerce; and

Manuel Castells, Professor at the University of California (Berkeley), will be presenting his vision of the way the Internet and the new technologies are transforming society.

Spanish Presidency Website http://www.eu2002.es

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