Status Report 2004

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eNorway June 2004 Published by:

The Ministry of Trade and Industry P.O. Box 8004 Dep

NO-0030 Oslo www.enorge.org

More copies may be ordered from the Ministry of Trade and Industry

Telephone: +47 22 24 03 01 Telefax: +47 22 24 03 15 Email [email protected] Publication number K-0677 E

Design and translation: Mediatekst DA Printed by: Lobo Media AS

Status Report 2004

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p ^Preface

Norway is a world leader in the extent of its use of technology. At the same time, Norway faces the huge challenge of increasingly stiﬀ global competition. The challenge we all share is to convert our advantage into gains. Norway has a splendid starting point from which we can drive forward if we use IT for growth and innovation.

This is the third time that we have produced a status report based on the eNorway 2005 plan.

Its purpose is to provide an overview about the current position of the eNorway work. The implementation of the plan is what counts, and we are concerned in achieving our goals. eNorway must provide help and inspiration to progress, both for the authorities and for organisations and businesses. The status report must provide a picture of how far we have come, and which challenges we face.

Our vision for eNorway has been inspired by the EU’s work on eEurope. The strategy itself provides a common direction and some shared targets. There is also a common framework

for analysis and comparison. Our countries’

common goals, and this clariﬁcation of achie- vements, form the basis for our future work.

A short time ago, a mid-term evaluation of eEurope 2005 was presented. The main con- clusions, which also apply for Norway, are that progress must be made in the development of new services, common standards, and more and better content. Questions linked to digital rights must also be clariﬁed.

A status report should be a working document that promotes high levels of activity. The report continues the idea of looking more closely at one of the areas of commitment. Last time we looked at the educational sector. This time, we are going to review IT in healthcare and social services (chapter 5). This is a sector in which IT plays a particular role for promoting eﬃciency, renewal and for the provision of improved services to the population. We will look more closely at what the commitment has led to, what the current status is, and which goals we have in the road we follow.

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s ^Summary

Norway has reaped substantial rewards from the use of IT. Our nation is a global leader in use of new technologies. We will gain even greater benefits from our technological advantages in the future. In- ternational competition will not decrease, and our most important industries will require more IT skills in the future than before. It is, therefore, important to admit that there are deficiences in our ability to utilise technology, and it requires more than just being good consumers. The eNorway status report shows that the resources are present, but we must be better at exploiting them if we are to create new value in existing industries, to create new industries, to be more efficient, to create new cultures, to increase participation and make life richer for the population through well-considered and innovative use of information technology.

Norway has an excellent starting point for exploiting technology for value creation, increasing eﬃciency and participation

The population consists of advanced users Pages 7–10

Encouraging trends for content, eLear- ning, e-commerce and broadband Pages 7, 10, 16, 24–27

Parts of the public sector oﬀer important, popular and well-designed electronic services

Pages 10, 13

The public sector adapts framework conditions and regulations

Page 13

Norway is climbing up the rankings of countries’ IT maturity

Pages 8, 9

Norway enjoys high rates of use, and a well- developed IT infrastructure in comparison to other countries. The population takes into use advanced technology and new services at high rates of speed. IT is also central to Norwegian economic development at the macro level, and IT is central in the funds that are given to innovation and research by the authorities. The regulations are modern, and updated in order to achieve good framework conditions for users, research, entrepreneurs and established businesses. Content growth is high, and arguments can now be made for the Internet being the largest media channel in Norway during the day.

In several areas, more eﬀorts must be made to improve

The skills for taking technology into use, amongst other things for innovation and reorganisation are not good enough, especially at management level. There is too little research and development Pages 7–9, 12, 23

Many public services could be improved, and the potential for cooperation and visibility is huge. Electronic signatures/PKI is progressing too slowly

Page 19

Competition can be sharpened further, especially in content, software and infrastructure

Pages 15,16, 24, 26

We can achieve an improvement in our security culture, and do more to tackle undesirable content

Page 20

Large and important groups have practi- cal problems with use of IT in day-to-day life

Pages 7, 10

Norway still faces many challenges. We must be better at converting infrastructure and technical expertise into market innovations. There is too little research, especially in business and industry.

We need more knowledge at the highest and most innovative levels. We must introduce new services and products to the market, and we must sell them better. Management must be better at using technology to create better organisations, as well as better services and products.

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b ^Background

eNorway 2005 was issued in May 2002, and forms the Government’s overall policy. The Government has three high level IT policy targets:

Value creation in businesses

Development and use of information technology must contribute to value creation through increased innovation and competitive power in Norwegian industry.

Efficiency and quality in public sector Information technology must be used to make the public sector more efficient and offer new and improved services to users.

Participation and identity

Everyone should be able to exploit the opportunities oﬀered by information technology, and IT should contribute to protecting and developing our cultural heritage, identity and our languages.

eNorway focuses its efforts on achieving the overall goals (in the centre of the figure below) in five main directions:

The authorities must create good fram- ework conditions for eNorway through an updated set of regulations, satisfactory ﬁnancial schemes and providing the condi-

tions for increased innovation and research in the IT sector. The regulatory framework must be technology-neutral, and the authorities must prepare for eﬃcient competition.

Another important condition is accessibi- lity and security in information systems, services and networks. The authorities must be the prime mover in the development of broadband and electronic signatures. This also includes strengthening competition in the telecom market, access to basic telecommunication services throughout Norway and securing information systems.

As ever more social sectors begin to use electronic systems, security demands and the need for access will increase.

Skills are a basic condition for applying technology, both for business and industry, the public sector and individuals. This applies both for leading edge technology skills and user skills. The authorities must contribute in ensuring access to a skilled workforce. The authorities will contribute to increasing access to attractive content adapted to Norwegian conditions. Public sector electronic content must be more user-friendly and more easily available. The authorities have the responsibility for digi- talising and making available our common heritage and contribute to ﬁght illegal and harmful content.

Use of IT is an important contribution to the creation of a modern public sector that is cost-effective and offers new and improved services. The authorities are also a significant player in the market who can stimulate development and demand for IT-related products and services.

In what follows we use the chapter structure from eNorway 2005, and provide the status for the ﬁve main directions.

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c

Online banking is growing strongly among senior citizens, forms of payment remain stable 7 Norway emerges fairly well from international comparisons of e-maturity 8 Production and use of IT plays a signiﬁcant part in the economy 11 Use of electronic business methods – in a positive direction, although development is slow 11

Entrepreneurship – positive trends 12

The regulations are adapted to development and are continually updated 12 Applied IT research has been strengthened and the SkatteFUNN (taxation) scheme has doubled 13

Strong results from participation in European research 14

2 Availability and security 15

Norway has good access to telecommunication and broadcasting services 15

New players in the broadband market 18

Nordic comparisons 18

PKI and solutions for secure use 19

A culture for information security must be established 20

Very few cases of computer crime are reported to the police 20

3 Skills for change 21

Students use computers more at home than at school 21

Access to skilled labour 23

Businesses need high levels of IT education 23

4 Attractive content 24

Demand for content is high, but production of unique electronic content is limited 24

Rapid growth in the online advertisement market 26

The State is a considerable content provider 27

Children live their own lives online 27

Spam and extreme content on the Internet are on the increase 28

5 A modern public sector – IT in healthcare and social services 29

Previous IT plans 29

Status and results for the ”Si @!” [”Say @!”] plan and other IT initiatives 30

Future challenges – realisation of potential gains 32

Words and expressions 34

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100 90 80 70 60 50 40 30 20 10 0

2000 2001 2002 2003 2004

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100 90 80 70 60 50 40 30 20 10 0

2000 2001 2002 2003 2004

Desktop PC at home

Laptop PC at home

Internet access in total

Mobile phones Internet access

at home

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Figure 1 The population’s access to IT

Source: TNS Gallup F&M, 2000–2004, TNS Gallup Interbuss 2004, NTI 4^th Quarter 2004.

Figure 2 Percentage of population that used various mass media on an average day.

1995–2003. Per cent.

Source: Statistics Norway

Key ﬁgures

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Good regulatory framework ^for

eNorway

1 1

Targets:

- Electronic and traditional services must be given equal status, and the regulations must not pose unnecessary obstacles to electronic communication.

- The framework conditions must lead to our realising our potential for value creation by using IT to its full.

- Good framework conditions must stimulate to increased use of electronic business methods in and between companies.

- IT must have high priority in the escalation of Norwegian research, and the results must be commercialised as much as possible.

Norway enjoys a highly developed information economy. The framework conditions for further use and exploitation are mainly present. Norwegians are especially active users, and willing- to-pay demanders, of technology and services. The infrastructure is good. IT density in business and ﬁnance is high, and the Norwegian economy shows a high degree of coherence between IT maturity and improved productivity.

Norwegians are solid IT users, although there are still demographic differences The population of Norway has excellent access to Internet, and uses it actively.

With access rates of 97 percent for users up to 20 years of age, and 90 percent access for those under 40 years of age, there is reason to say that most age groups have access to the Internet. In

January 2004, 78 percent of the total population over 13 years of age had access to the Internet. 76 percent of Norwegian households own a home PC, and more than 1.3 million households have access to Internet at home. 59 percent of all people with access to the Internet use it on a daily basis, but there are still gender differences, age differences and geographic differences.¹ For example, only 37 percent of the population over 60 have access to the Internet, although that share is on the increase.

Consumer demand is high – e- commerce is increasing heavily Norwegian consumers’ demand for e-commerce is high. The value of e-commerce in Norway has increased from NOK 1.8 billion to 3.85 billion.²

Many people shop online because it is simple and convenient. Others use the Internet to compare prices and conditions, which in turn contributes to creating more aware consumers. The increase in e-commerce may be a result of more diverse and better goods on oﬀer, that trust and IT skills are on the increase, and that ever more suppli- ers of products and services use the Internet as a sales channel.

66 percent of Internet users have ordered products and services online at some time.³ Books, travel, IT equipment and clothing are still the best-selling products on the Internet, while ﬁlms, tickets and books are increasing fastest.

Air travel makes up 83 percent of travel that is booked online. According to SAS, the share of tickets that are sold online is increasing dramatically, now

making up around a quarter of the total number of tickets sold by SAS and Braathens in Norway.⁴ Many people interrupt their purchase part of the way through. Technical errors and compli- cated applications are quoted as the most common reasons for breaking oﬀ a purchase. This reﬂects the picture that many services still have a way to go to achieve friendliness of use and customer focus.

Online banking is growing strongly among senior citizens, forms of payment remain stable

The most common forms of payment above have remained stable, i.e. around 46 per cent pay by bankers giro or COD, around 36 per cent use their own credit

1 TNS Gallup, Intertrack 1 - 2004 2 Survey carried out by MMI for eForum 3 TNS Gallup, Interbuss 1/2004

4 SAS, March 2004. See also <http://pub.tv2.no/nettavi- sen/it/article195248.ece>

AND ENTREPRENEURS

NORWEGIANS ARE ACTIVE USERS OF TECHNOLOGY

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Norway emerges fairly well from international comparisons of e-maturity A number of surveys, both commercial and public, rank countries according to maturity in the information society. The quality and content of the surveys vary, but they have in common that most of them focus on a small, limited set of indicators, and are either built round expert comments, or brief interviews with management in business or the public sector. The rankings will vary to a certain extent, according to how they emphasise and distinguish between such factors as infrastructure, market trends, levels of education, cultural factors, public investment and the priorities between the various technologies. The surveys do, however, provide a signpost to trends. Norway is ranked higher this year on all counts, compared with last year:

a) The UN Global E-Government Report, 2003 (UNDESA/UNPAN) UNDESA/UNPAN has issued The World Public Sector Report 2003: E-government at the Crossroads.⁵ The publication covers the UN member states and is one of the most comprehensive surveys to be made publicly available.

The ranking is based on a number of sub-groups, including infrastructure, public Internet services, levels of participation and human capital. The report is built on established academic research and uses a large number of diﬀerent

5 http://www.unpan.org/dpepa_worldpareport.asp

statistical indicators, although still suﬀers from uncertainties and opportunities for conﬂicting interpretations.

b) World Economic Forum WEF- Global Information Technology Report 2003–2004

The World Economic Forum places Norway at 8th place among the world’s strong IT nations. Around 80 countries are ranked according to 64 variables and 9 sub-rankings, grouped around surroundings/climate, maturity and actual use of IT for economic growth.

Figure 3 Norway’s ranking in international surveys of eMaturity. The ﬁgures in brackets state Norway’s ranking the last time the surveys were taken.

FN (UNDESA) Global eGovernment Readiness Rankings 2003

WEF -Global Information Technology Report 2003- 2004

Accentures eGovernment survey 2004

Economist Business Intelligence Unit/IBM – eReadiness Index 2004

Taylor Nelson Sofres – Govern- ment Online 2003

ITU Digital Access Index 2003

1. USA USA Canada Denmark Denmark Sweden

2. Sweden Singapore Singapore United

Kingdom Norway (2) Denmark

3. Australia Finland USA Sweden Finland Iceland

4. Denmark Sweden Denmark Norway (7) Singapore South

Korea 5. United

Kingdom Denmark Australia Finland The Nether- lands

Norway

6. Canada Canada Finland USA Canada The Nether-

lands 7. Norway Switzerland Hong Kong,

China Singapore Faroe Islands Hong Kong, China 8. Switzerland Norway (17) United

Kingdom The Nether-

lands Australia Finland

9. Germany Australia … Hong Kong New Zealand Taiwan,

China 10. Finland Iceland 15. Norway

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Switzerland USA Canada

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The method is openly available and documented, and includes various statistics and estimates.⁶ It emphasises that the relationship between countries close to each other in the rankings is especially uncertain. This report was produced in collaboration with INSEAD.

c) Accenture global egovernment survey

The survey tested more than 200 public services in 22 countries, and is based on the level of development of the services. The countries are awarded a score, based on the maturity of the product and how advanced and user-friendly the services are regarded as being. The report is mainly built on telephone conversations with upper management in the public sector and business and industry, as well as their own experts. Norway is ranked in 15th place but there is actually little dif- ference compared with the foremost countries.⁷

d) Economist Business Intelligence Unit/IBM Institute for Business Value Norway rose from seventh to fourth place from 2003 to 2004 on The Econo- mist and IBM’s eReadiness ranking.

Norway scored lowest on such factors as access to investor ﬁnancing, greater state-run infrastructure investment and general IT knowledge in the population.

In general, Norway scored high in all areas, and is at its best in technology take-up by consumers and business and industry.⁸ The report covers a broad set of indicators, and quantiﬁes expert as- sessment from a broadly chosen expert group with speciﬁc national expertise.

The ﬁgures are collected from qualita- tive data (BNP etc.), oﬃcial statistics, forecasts by the Economist Intelligence Unit (2002 – 2006) and various other sources.

e) Taylor Nelson Sofres – Government Online 2003

The ”Government Online” survey shows

that Norway is one of the world’s leading countries for use of the Internet in contact between the population and the public sector. Compared with other countries, Norway is at the forefront of enabling oﬃcial forms to be down- loaded. In the other areas, Norway is in between second and fourth place.

The Government Online (GO) survey is carried out on an annual basis as a telephone survey among a represen- tative selection of the population in 32 countries.

f) ITU Digital Access Index

The International Telecommunications Union, ITU, ranks 178 countries according to a number of criteria. In addition to statistics linked to take-up, market and use, relative price levels and level of education are also taken into account.

The indicators are adapted to the UN millenium goals. The ﬁrst report was published in advance of the World Summit Meeting about the Information Society in Geneva (WSIS) in December 2003 and the work involved a major international process, with choice of limited, but global, comparable factors.⁹ There are, in addition, surveys that solely cover Europe, such as the Jupiter European Digital Life Index,¹⁰ and the EU indicator list of 20 basic services in the public sector.

6 Global Information Technology Report 2003-2004, < http://www.weforum.org/site/homepublic. nsf/

Content/Global+Competitiveness+Programme%5CGl obal+Information+Technology+Report >

7 < http://www.accenture.com/xd/xd.asp?it=enweb&xd=i ndustries\government\gove_capa_egov.xml >

8 The 2004 eReadiness rankings, Economist Business Intelligence Unit/IBM Institute for Business Value, April 2004

9 < http://www.itu.int/newsarchive/press_

releases/2003/30.html >

10 Norway is here ranked as number three in Europe.

10/4/04, < http://www.jup.com/ >, see also: < http://

reuters.com/newsArticle.jhtml?type=internetNews&st oryID=4877484&section=news >

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cards, and 15 per cent use their own bank cards (debit cards). Simplicity is the most important criteria when choosing a form of payment. Only 1 percent had experienced fraud online.

The share of the population using online banking increased between eight percentage points in 2003, and is now at 55 percent. The increase is particularly high among senior citizens, as more and more of them come online.

The proportion of online banking users among the over 60s increased from 16 to 24 percent in 2003.¹¹ If you transpose this share to those who are active users of the Internet, the age diﬀerences are small: While 62 per cent of all Internet users use online banking, 56 per cent of all Internet users over 60 years of age use online banking.¹² This increase in use of online banking also has a positive impact on competition in the market.

In October 2003, 26 per cent used more than one online bank, an increase of nine percentage points since February 2003.¹³

Norway’s population prefers to use the telephone and Internet in their contact with the authorities to an increasing extent. This use is still mainly conﬁned to simpler searches for information.

One good example of users also using the Internet for more than searching for information is submission of annual tax returns.

This year, 1,860,000 Norwegians, or 37 percent of all taxpayers, chose to submit their tax returns electronically. 675,000 submitted online. This is 131,000 more than last year. 293,000 submitted theirs over the phone, and 217,000 using text messaging. The share of text messaging has increased, while fewer select to submit over the phone. About twice as many Norwegian taxpayers submitted electronically as in Sweden. When you consider that not all of the items in the tax return can be changed electronically, these are large ﬁgures. Starting in 2005, the Directorate of Taxes will permit all items in the tax return to be corrected electronically online.

There are, even so, clear social and demographic diﬀerences in use of public sector electronic services. The upper age groups use electronic services far less than their younger compatriots.

Use of the services increases heavily in tune with income and education. Male users are also more heavily represented.

A survey from 2003¹⁴ concerning the Norwegian population’s PC problems, showed that almost half of Norwegian PC users (44.3%) have experienced so serious errors and faults with their equipment or software over the last six months that they have had to apply for help or have given up correcting the problems. Most of them looked for help from family or friends.

11 TNS Gallup for Sparebankforeningen, March 2004 12 TNS Gallup, Interbuss 3/2003

13 TNS Gallup, Norwegian Online Banking report October 2003

14 TNS Gallup October 2003, on behalf of the Ministry of Trade and Industry

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Figure 4 Electronic submission of income tax returns. Source: Directorate of Taxes

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Production and use of IT plays a signiﬁ- cant part in the economy

IT provides major financial gains to society. It is quite common in the international field to divide the gains into three main categories: Gains resulting from investment in IT, as a result of production of IT, as well as the gains in innovation and efficiency that result from use of IT. There are a number of different methods and models of

quantifying this. Even so, there is still uncertainty and lively debate around the results. One method that has been much discussed and debated in the media is the one employed by the Economist Intelligence Unit, based on various ﬁgures from the OECD. This model tries to provide a new contribution to connecting IT maturity with economic growth.

Figure 5 IT trends and GNP growth per person, Europe and USA 1996 – 2002.

Collated and corrected for special factors, including oil. Source: Economist Intel- ligence Unit/OECD

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The ﬁgure shows the relationship between the extent of IT services in the countries and its signiﬁcance for the GNP per person.

The horizontal IT axis in the ﬁgure shows the level of basic infrastructure, i.e. the use of landline telephony, mobile phones, PC and Internet use per 100 head of population. A number of variables, in addition to the IT index, have been used as complementary variables, including education levels, general framework conditions for companies and the degree of openness in the economy,

and separate correction variables for special factors. This is why this index provides different ﬁgures from other surveys that show the IT share of growth, built on other models.

INFORMATION TECHNOLOGY IS THE MOTIVE POWER FOR GROWTH, BUT BUSINESS AND THE PUBLIC SECTOR ARE CHANGING TO THE NEW FORMS OF WORK TOO SLOWLY

According to Statistics Norway productivity calculations, it is the development within provision of private services, especially within retailing and domestic travel, that has lifted the total factor productivity (TFP)¹⁵ growth in mainland Norway over the last decade.

Exploitation of new technology is one of the causes of this growth.¹⁶

According to the OECD, IT added 0.86 percentage points to the labour productivity¹⁷ in Norway in the years 1990 – 96 and 0.68 in the years 1996 – 2002.¹⁸ A total of 60 countries were measured, and Norway fell from ﬁrst place in terms of productivity growth in the ﬁrst period to second place in the second period. When you

control for other factors, including the oil economy, Norway shows the greatest link between IT development and growth in GNP of all countries measured.¹⁹

Use of electronic business methods – in a positive direction, although develop- ment is slow

There is still great potential in use of electronic business methods. There is a positive development, but development is not as rapid in Norway as in other countries, including Sweden, Finland and, to a certain extent, Denmark. This can be read from a Nordic survey about electronic business methods carried out by the consultants,

15 The part of production growth that is not a result of increased use of such resources as labour and capital is called growth in total factor productivity.

This is usually what is meant by productivity growth.

16 For more information, se the Status Report for eNorway, June 2003, www.enorge.org.

17 Labour productivity is the gross national product per working hour. In many people’s opinion, this is not a complete measurement of productivity growth as labour productivity will depend on the capital investment.

18 Quoted in “Reaping the Beneﬁts of ICT”, the Econo- mist Intelligence Unit, page 9, April 2004.

19 “Reaping the Beneﬁts of ICT”, the Economist Intel- ligence Unit, 15. April 2004

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PLS Rambøll. According to the survey, electronic procurement and sales, including marketing, were some of the areas in which Norway was not able to keep up with Sweden, Finland and Denmark. Small and medium sized businesses face greater challenges than large companies, this challenge is especially linked to knowledge.

Entrepreneurship – positive trends The survey ”Entrepreneurship in Norway/Global Entrepreneurship Monitor (GEM)²¹ for 2003, ranks Norway as no. 13 of 20 countries. In 2002, Norway lay in 14th place. The development over time can indicate that the negative trend has been broken, even if Norway is still below average. Finland is in last place in this ranking, and Norway is also higher than such countries as the United Kingdom, Sweden, the Nether- lands and Denmark. It is, however, positive that the opportunities for

Norway to cultivate innovative growing companies seem to be present. When it is all about the extent to which the new companies in each participating country represent something new in relation to existing businesses, Norway is ranked as number one. This may be a result of the high level of education in Norway, and that we are more open to taking new technology into use.

The auditors and consultants, Deloitte &

Touche have calculated that Norway has more companies among the 500 most rapidly growing technology companies in Europe than Sweden, Finland and Denmark put together. The Norwegian search engine company Fast Search and Transfer has been the second fastest growing company in Europe over the last ﬁve years.²²

The regulations are adapted to develop- ment and are continually updated Over the last few years, the regulations have been reviewed in order to remove legal obstacles to electronic communication. There is a lot that indicates that

eOperation on the Norwegian Continental Shelf – the third quantum efficiency leap?

One project from the Norwegian Oil Industry Association has assessed how eOperation can make petroleum extraction on the Norwegian Continental Shelf more efficient. From the 80s until the present day, there have been two leaps in efficiency linked to development of technology. The potential associated with implementation of eOperation is, in the project’s final report, considered to be so large that that there could be a new quantum leap in efficiency.

The properties of the developments and experience gained from pilot projects on the Norwegian Continental Shelf and in other countries indicate that eOperation may reduce the level of costs, accelerate production, increase degree of extraction and improve HES results to a significant degree. The challenge is to achieve sufficient extent, power and tempo in the implementation – and the work is critically timed, as there are several large fields that are in, or on the way into, the tail of their production phase.

Source: Oljeindustriens Landsforening [Norwegian Oil Industry Association], October 2003 ²⁰

Public sector e-commerce is going in the right direction, although more slowly than anticipated The marketplace ehandel.no – the public sector Marketplace – has been in operation since June 2002. Its focus has been to create security around e-commerce and the Marketplace, as well as informing about the opportunities created by using e-commerce. So far, the result has been that 25 publicly owned companies have subscribed for use of the Marketplace’s services, and more have decided to use the Marketplace, or are in the decision process. On the supplier side, more than 150 players are available at ehandel.no. The monthly sales have virtually doubled over the last year, with a turnover of around NOK 10 million at April 2004.

Development has been, however, slower that anticipated. It will still require investment of resources to ensure better expertise and higher levels of use in state-owned companies. Focus in future will be on developing the range of services offered by the Marketplace, and preparing for increased volumes from users so that the beneﬁts of e-commercial applications are realised.

20 < http://www.ntnu.no/gass/conferences/System_

seminar271003/OLF-rapport%20e-drift.pdf >

21 Global Entrepreneurship Monitor, Entrepreneurship in Norway 2003, Lars Kolvereid and Gry Agnete Alsos, Norwegian School of Management in Bodø 22 DeLoitte, European Technology Fast 500, December

2003.

Table 1 Labour factor productivity [GNP per working hour] and IT. Source OECD/ Economist Intelligence Unit

Growth in percentage points

1990–1995 1996–2002

Growth IT contri-

bution Growth IT contribution

Norway 3.11 0.85 1.71 0.68

Sweden 2.95 0.96 2.67 1.33

Finland 2.65 0.43 2.02 1.40

Ireland 2.39 0.68 3.76 1.90

USA 1.12 0.71 1.74 1.90

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the greatest challenge is now related to lack of knowledge of the changes that have been made in the legislative and regulatory system.²⁴

Important legislation for electronic commerce has been updated. The Copyright Act is under change, in line with the EU Directive concerning copyright in the information society. This implementation attempts to simplify clearing and reuse, and to maintain consumer rights, while at the same time protecting the directive’s requirement for technological protection. The e- Commerce Act, concerning services in the information society and especially e-commerce, is now in force, implemen- ting the EU e-Commerce Directive.

Applied IT research has been streng- thened and the SkatteFUNN (taxation) scheme has doubled

2004 is the second year of operation for eNorway’s Strategy for IT Research 2003-2004, which was published in January 2003. The strategy called for a prioritisation of user-controlled applied

IT research. This has been followed up in Norway’s 2004 National Budget, in which the Ministry of Trade and Industry’s grant to the Norwegian Research Council for user-controlled IT research has been increased to NOK 89 million (from 82.8 million in 2003). The grant to business-oriented strategic IT research is maintained at NOK 90 million (although with a transfer to 2005 of around NOK 8 million that may be a result of a proposed cut in the revised National Budget). There is also a signiﬁcant IT share in SkatteFUNN, the new tax deduction scheme for costs of research and development, primarily directed at small and medium-sized businesses. In 2002, 2,670 projects, with a total budget of NOK 4.5 billion, have

been approved by the scheme, of which NOK 760 million was calculated tax deductions. Around NOK 2,145 million was granted to IT and electronic/data research. In 2003, the total was doubled to around NOK 9.51 billion, NOK 1.6 billion of which was calculated tax deductions.²⁵

THE PUBLIC SECTOR IS ADAPTING TO THE CHANGES, SIMPLIFYING AND INCREASING DEVELOPMENT IN-

VESTMENTS, BUT CAN STILL DO MORE FASTER

ALTINN²³ - makes day to day life for companies easier, quicker and safer Altinn is a common channel for electronic reporting to the authorities. The target is to make reporting easier, to improve data quality and lower costs, both for the submitter and recipient of the reports. Pilot operation began in December 2003, and ordinary operation began in January. Returns that can be submitted via Altinn include VAT returns, annual accounts, wage and absenteeism statistics, company and self-employed tax returns including all annexed forms, period reports for employers’ contributions and tax deductions. 25 per cent of all VAT returns for the 1st period of 2004 were submitted through Altinn. This is a good result. Forms on Altinn shall have the same design, it will not be necessary to install any software and users are given their own archive of previously submitted forms.

Those who took the initiative for the Altinn project were the Brønnøysund Register Centre, the Directorate of Taxes and Statistics Norway. The project will now be continued in a permanent administration organisation, under the aegis of the Brønnøysund Register Centre. Altinn is a solution in which development is complete. Starting in the spring of 2004, the Competition Authority will take the application into use, and contact has been made with a number of other agencies.

519

379

179 92 53 126 86

495

490

248

209 182 113 140

21

22

16

6

11 5 8

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Figure 6 SkatteFUNN – Approved applications, seven largest industries Source: NFR (The Research Council)

23 www.altinn.no

24 Obstacles in the legislation can be reported to the following email address: [email protected].

25 The Research Council, May 2004; Skattefunn annual report 2002 http://jaguar.intrapoint.no/skattefunn_v2/

ﬁler/1054651362-aarsmelding.pdf >

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Funds for IT are now a very central part of those distributed by Innova- tion Norway. In total, IT funding was responsible for around 20 per cent of Innovation Norway’s total grants for innovation in 2002. IT is involved in over half of the funding for public-private contracts and incubators.

Strong results from participation in European research

Norwegian participation in European research collaboration is important for access to EU funding that Norway now ﬁnances through its participation in the 6th framework programme, and to ensure that Norwegian research communities hold a high international level. The interim results are mainly satisfactory, with the exception of eHealth, in which applications with a

major Norwegian participation were rejected relatively early into the evaluation process. Among the applications approved, there was only one with a marginal Norwegian participation.

Norway is therefore considering its own initiatives to strengthen Norwegian eHealth research.

The largest Norwegian players in European IT research are SINTEF, Telenor and NTNU, but there is also other signi- ﬁcant participation, not least from small and medium-sized businesses. Other educational institutions, including several colleges, are well-represented.

Collaboration between Norway and Nordic partners seems, on the other hand, to be under-represented: There are few cases of other heavy Nordic participation, in which Norwegian players themselves participate strongly.

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2 2

Targets:

- Norway shall have a robust, efﬁcient and generally available infrastructure for electronic communication based on competition that works.

- There must be good market offers of broadband services throughout Norway. During 2005, all primary schools, public libraries and municipal administrations should be offered broadband services at competitive prices.

- By the end of 2005, all conditions should have been met for general use of standardised electronic signatures.

- A security culture should have been built, linked to use and development of information systems and electronic communication.

- Important infrastructure for electronic communication must be robust and secure, and critical information systems must be secured in order to minimise the consequences of interruption to operations.

Availability and security

Norway has good access to telecommu- nication and broadcasting services As at 22 January 2004, the Norwegian Post and Telecommunication Authority registered a total of 92 providers of public telecommunication networks, public telephone services or data transfer capacity. There is a limited number of providers of their own infrastructure, i.e. players who primarily sell transfer capacity within one of the following two categories:

• Transport networks – the ”highways”

of the networks, consisting of hubs and the communication between them.

• Access networks (connection networks) – the ﬁnal part of the connection in the network between the individual end user (municipal administration, company, household) out to a hub with connection to one or more transport networks.

The most important access network technologies are the landline telecommunications network, satellite systems, cable networks, mobile systems and broadband radio systems. Most of the players are, however, pure service providers who relay and resell services.

These players depend on purchasing network capacity in order to provide their services. The obligation to provide access to existing network resources has been a precondition for new providers being able to establish themselves in the market and oﬀering services in competition with Telenor. Competing providers have currently access to the existing infrastructure via the permanent access network (local loop

unbundling), roaming, special network connection, the mobile communication network and transfer capacity (leased communication).

Telenor and Netcom have built nationwide network for public telecommunication. From 2002, both mobile networks support GPRS and high speed data for mobile Internet connection. In addition, the company Teletopia Mobile Communications AS also has a nationwide GSM concession. For the time being, this company only oﬀers commercial services from its own network in the Oslo region.

Despite liberalisation and increased competition, Telenor is still the largest player in all channels: mobile, landline telephony, Internet/ADSL, satellite TV and cable TV.²⁶ The trends do, however, show that the market shares for new players is on the increase.

A consequence evaluation from 2003 shows that the liberalisation of the telecommunication market has had different impact on diﬀerent user groups.²⁷ Telecommunication prices sank most before liberalisation, while a number of prices have increased following liberalisation, especially permanent charges and call start charges. It has become more expensive for consumers to own a telephone, but cheaper to use it. The usage pattern typical for higher income groups has become cheaper, while the pattern of use for lower income groups has become more expensive. Large companies have gained a lot from the changes in price structure in the wake of liberalisation, while small companies

26 Digi.no 17 February 2004

27 Eli Skogerbø/Tanja Storsul, ”Implementation and regulatory efﬁcienct of new telecommunication regimes”, SKIKT project, April/May 2003.

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A new and quicker mobile network across Norway – what is happening to 3G and UMTS?

UMTS will make it possible to send and receive photos, graphics, video on your mobile phone.

UMTS opens for receiving and sending video, in addition to the users being continually online.

This means that the user can read email or play interactive games at the same time as talking on their mobile phone. UMTS is one of the systems for third generation mobile telephony (3G) and should provide data capacity up to 2Mbit/s for stationary users (theoretically) and 384 kbps for users in motion.

At present, Norway has three UMTS concessions:

Netcom, Telenor and the company ”3”. Telenor and Netcom have held a licence since the ﬁrst round in 2000, while ”3” received its licence following the auction in 2003. At 1 March 2004 none of the licence holders are offering UMTS on a commercial basis, although Telenor and Netcom are in the process of rolling our their networks.

Telenor has given signals that it has plans to launch commercial UMTS services during 2004.

The Ministry of Transport has posted frequencies that are available for provision of 3G to large parts of the country.

The Nødnett project – A new shared emergency mobile communication network for the fire service, the police and the health service

At the moment, the emergency services have separate analogue radio communications. The police and health services each have their own nationwide infrastructure, while there are more than 200 small local systems in the municipal ﬁre services. The result is limited opportunity for communication between the emergency services and between the various geographical areas. The emergency services therefore use normal mobile phones to a great extent to compensate for weaknesses in the old radio communications. Today’s mobile phone system does not, however, satisfy the emergency services’ requirements for functionality and capacity. The central requirements for a new digital emergency network are linked to radio coverage, capacity, speech communication, alarm calls, communication centres and data transmission. Until now, the project has been through the consultation phase. A comprehensive pilot project was carried out in Trondheim from 2000 – 2003.

A common digital radio communication network will strengthen the cooperation between the emergency services and reduce vulnerability in society through better coordination in crisis situations. The possibility of sending text messages, photographs, positions and map sections will make the services more efﬁcient. A ﬁnal political decision has not been made on the realisation of a new emergency network in Norway.

and broadband users have played less of a part in this development.

There are around 840,000 subscribers to cable TV in Norway, around 58,000 of whom had broadband and around 23,500 had telephony delivered over the cable TV network. There are two large providers of digital satellite packages in Norway, and an estimated 73 – 98 per cent of the population currently have the technical option of receiving satellite digital TV. The Telenor-owned Canal Digital is the

major player in digital satellite and is estimated as having 11 percent of the Norwegian households as customers.²⁸ The other major player is ViaSat.

Developments in the broadband market are still strong. At 15 March, the market coverage was 77 per cent.

The number of local authorities without coverage has also been signiﬁcantly reduced. At the previous survey (May 2003) there were more than 200 municipalities that did not oﬀer coverage.

THE BROADBAND MARKET IS DEVELOPING QUICKLY –

90 PER CENT WILL BE ABLE TO CHOOSE BROADBAND IN 2005

Figure 7 Broadband coverage in Norwegian municipalities May 2003 and March 2004 Source: Teleplan February 2004

28 Post and Telecommunication Authority

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The Høykom programme - Successful modernisation with broadband Høykom is an important initiative in the Government’s IT policy. Modernisation of public services and forms of interaction shall stimulate increased development of broadband infrastructure and development of new applications and software solutions. So far, more than 350 projects have received support from the programme, with a total of NOK 288 million. Høykom possesses a unique experience base and there are now more than 200 specialist reports on the www.hoykom.

no website, and more are on the way. Høykom has now selected 10 lighthouse projects. These will function as leading lights, gaining experience for those who are to come.

The sub-programme Høykom Skole (Education) started in 2002, and is now included as one of the initiatives in the educational sector’s Programme for digital skills 2004–2008. Many educational uses that require broadband have seen the light of day, and several hundred schools have been connected to broadband through the scheme.

In January 2004, the new scheme Høykom Distrikt was announced for the ﬁrst time. So far, everything seems to indicate that the scheme has reached its target group, municipalities and county municipalities in regions where the market functions poorly.

Last calculations showed that this has now been reduced to 63. There are also now 357 municipalities with a coverage over 20 per cent, compared with 215 municipalities in the previous survey – a net increase of 142 municipalities.

Figure 7 shows a graphic comparison of broadband coverage from May 2003 until March 2004. Municipalities in white have no broadband coverage.

The stronger the colour, the higher the coverage in the municipality is.

Forecasts for broadband coverage in the future are promising. Teleplan now think that it is realistic to expect that around 90 per cent of the population will be offered market-based broadband during 2005. Telenor has also announced that it alone will have broadband coverage to at least 92-93 per cent of the population during 2006. In 2003, a forecast from Econ and Teleplan indicated that 59 Norwegian municipalities would not have broadband on offer in 2005. Telenor has, however, announced that the company will offer xDSL coverage at up to 10Mbit/s to all municipalities/municipal centres during 2005. Companies and households that are located close to the municipal

centre will also be oﬀered broadband.

The growth in broadband connection has also been large. The number of households with broadband connection has risen from 16 per cent in August 2003 to 19 per cent at the end of 2003. In the 4th quarter of 2003 the growth in new customers nearly reached 60,000. TNS Gallup’s measurements show an even higher share, and broadband is now the most common form of household Internet connection. The share of businesses connected to broadband rose in the same period from around 15 to 22 per cent. The ﬁgure on the left shows the number of households and companies connected at the end of 2003.

More public institutions are connected to broadband. For municipal administrations, the share of broadband connections increased from 69 percent to more than 83 per cent, for libraries the share increased from 62 per cent to around 76 per cent last year. The share of primary schools connected to broadband has remained constant, but capacity has increased.

The ﬁgures show progress in relation to the 2003 results. At the same time,

��

Figure 8 Share of households and com- panies that are connected to broadband Source: Norsk Telecom, January 2004

Figure 9 Public institutions’ connection speed to the Internet 2004 vs 2003 Source: Teleplan February 2004

0 % 20 % 40 % 60 % 80 % 100 %

Municipal administration 2004 Municipal administration 2003 Libraries 2004 Libraries 2003 Primary schools 2004

Primary schools 2003

More than 2 Mbps 1.99–0.512 Mbps 511–129 kbps 128–0 kbps

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telephone interviews carried out by Teleplan indicate that the upgrading continues, and very many municipalities have provided information about ongoing upgrading activities during 2004. Many municipalities have established various models of regional collaboration. Another interesting development is that many institutions that already had broadband connection now upgrade their connection to higher speeds.

New players in the broadband market A fresh survey carried out by Norsk Telecom AS, on behalf of NHD shows there were at least 150–160 broadband players in Norway at the end of 2003.

As we know, in the autumn of 2001 there were only around 50 Norwegian broadband players, this is equivalent to a growth of around 1 new broadband player per week over the last two years.

In other words, there is a very high level of activity in the Norwegian broadband market. Many of these initiatives are local and based on shared eﬀorts by municipalities, energy companies and businesses. These local ”collectives” are often started as a reaction to lacking or non-competitive oﬀers from the established broadband players.

Nordic comparison

Norway is made into a demanding

country to build broadband infrastructure in because of its low population and diﬃcult topography while Denmark, for obvious reasons, is fairly simple and reasonable to cover. Denmark is, therefore, the Nordic leader for broadband with a coverage of around 98 per cent and a connection rate of over 30 per cent at the end of 2003.²⁹ Sweden, in contrast to most other OECD countries, has chosen a development strategy in which the state has made huge public grants available for broadband development.

Despite this, Sweden does not have signiﬁcantly higher broadband coverage than Norway. At the end of 2003, Sweden had around 80 per cent coverage and 22 per cent connection. In comparison, in February 2004 Norway had around 77 per cent coverage and around 20 per cent connection. Norway also has had a percentagewise stronger increase in the number of broadband connections, compared with Sweden, both for 2002 and 2003. Broadband connection in Norway is growing faster than in Sweden.

According to Norsk Telecom, the number of connections in Norway increased by 6.2 per cent and 9.3 per cent in 2002 and 2003 respectively, while the equivalent ﬁgures for Sweden were 5.8 and 4.2 per cent, cf. the ﬁgure on the left.

The national health network was launched in March 2004, and consists of Figure 10 Growth in broadband coverage

2000 – 2004 (percentage points), for Norway, Sweden and Denmark Source: Norsk Telecom January 2004

The digital terrestrial television network - A digital television for all the population

Digital television transmissions will give viewers with free to air reception a new and improved television service in the form of more channels, improved sound and picture and a number of new services, in line with the services that those who are connected to cable networks and satellite dishes have been the only ones to enjoy until now.

This will also have a positive impact in the form of more efﬁcient exploitation of the frequencies, cheaper distribution for broadcasters and increased competition.

Even if the network will not have all of the properties of traditional broadband, it may carry relevance for broadband development because the network infrastructure will make it easier and cheaper to offer so-called DTT-IP with the return channel via other telecommunication networks (e.g. ISDN).

During debate round the white paper concerning the digital terrestrial television network in February 2004, the Norwegian parliament adopted the principles for distribution of licences to Norges Televisjon (NTV) for building and operation of a terrestrial digital network, including the criteria that must be met if NRK and TV 2 are to be allowed to turn off their analogue transmissions. The Ministry of Transport and the Ministry of Culture and Church Affairs, are now drawing up the actual licence conditions for NTV. They are aiming at awarding the licence in the autumn of 2004.

DAB - Digital Audio Broadcasting

DAB makes room for more channels than FM, improves sound quality, as well as providing signiﬁcantly better reception for car radios and other mobile radios. DAB also makes way for additional services with text and information. At present, the Norwegian DAB network covers around 50 per cent of the population. Sales of receivers are low because of their high price, but this seems to be on the turn.

29 Norsk Telecom AS

Status Report 2004

Status Report 2004

p Preface

s Summary

b Background

c

Contents

k

Key ﬁgures

Good regulatory framework for

eNorway

1 1

AND ENTREPRENEURS

NORWEGIANS ARE ACTIVE USERS OF TECHNOLOGY

INFORMATION TECHNOLOGY IS THE MOTIVE POWER FOR GROWTH, BUT BUSINESS AND THE PUBLIC SECTOR ARE CHANGING TO THE NEW FORMS OF WORK TOO SLOWLY

THE PUBLIC SECTOR IS ADAPTING TO THE CHANGES, SIMPLIFYING AND INCREASING DEVELOPMENT IN-

VESTMENTS, BUT CAN STILL DO MORE FASTER

2 2

Availability and security

THE BROADBAND MARKET IS DEVELOPING QUICKLY –

90 PER CENT WILL BE ABLE TO CHOOSE BROADBAND IN 2005

p ^Preface

s ^Summary

b ^Background

Good regulatory framework ^for