Allow me to make a joke. It is not our intention to enter politics and therefore associate sovereignty with political movements. These two points get mixed up and sometimes they completely change the way you think. Before going into the technical details, perhaps it's better to simplify the concept further, because otherwise people have difficulty following, and this can no longer be a topic only for technicians or insiders, but it is a topic that involves everyone. The first point is that we have all been accustomed in recent years to working in a world that was a physical world, not a virtual world. A physical world has borders, and within these borders there are norms and laws. If you live in Italy, work in Italy, you comply with all Italian regulations, whether criminal, civil, corporate, or privacy. And so each of us, when competing or building, referred to that regulation. Over the years, a parallel dimension to the physical world, the real world, has progressively been created, which is the digital world. And in this digital world, it is as if a parallel world has been created within which norms no longer respond to the country, they respond to this virtual world. We have even come to have a virtual currency, a virtual coin. Cryptocurrencies are accepted almost everywhere.
What happened in this world? The indication of what the regulation is has been lost. Normally you have the application of regulation based on the customer who uses the service. I buy milk in Italy, sell milk in Italy, the milk in Italy must be sold according to Italian regulations and the consumer buys it following Italian regulations. With the digital world, everything has been reversed. You follow the rules of whoever provides the service. It's like saying that from tomorrow morning you buy milk in Italy and you buy it based on Chinese or American regulations. And this is not good, not because those regulations are wrong, but we have decision-making autonomy and we believe that in our country they must be respected. This is the problem that has been created over time.
That is, when you start using cloud services, you respond to American law because American law provides that American companies that provide services must respond to what? To American law, and therefore the US National Security can at any time request information on those elements, but paradoxically an Italian judge cannot. So we are at this type of paradox, and this type of paradox leads to one of the first problems, which is what we were talking about regarding sovereignty. Then we move on to the topic of competitiveness, but on this first problem, there is a question: which law are you subject to? Is it correct to be subject to a foreign law? And we don't use the term sovereignty, we use the term reciprocity.
The reverse also applies, right? So today more than ever, this is becoming a hot topic. At the beginning of June, the European Commission also began to give clear indications where it asks that all public administrations use services based on digital sovereignty, which therefore respond to European rules and not to the rules of third countries. In the private sector, they have not yet regulated, but they have invited states to be quite assertive in promoting the fact that companies in that country follow these rules. However, the digital issue is also becoming a competitive factor. Remember that most hyperscalers make 40% of their revenue in Europe, and yet all digital companies are all across the ocean, whether you look left or right, depending on whether we are talking about the Asian or American world. And this continues to be a problem. Can we imagine a world, a context in which Europe will not be able to manage one of the most important production factors for the future economy? Impossible. Today, anything, any activity involves the use of digital services. Can we depend on third parties? I need not recall Musk's tweet when he spoke about Ukraine and the use of the satellite, so there is also a question of the possibility of building a competitive path for the future. It is on this that we must, quote, wake up. What happened at the beginning of June at the European Commission level is already a starting point.
Well, you have rightly framed the situation, you have already anticipated what the risks might be, but if we were to concretely highlight what the actual risks are for the country system, speaking of these digital dependencies and independencies, and on the other hand, what economic game can Italy play? Today we are faced with the condition that, I repeat, the digital world will become one of the key production factors to be able to compete. And when we talk about production factors, digital also feeds heavily on energy. Today we read in newspapers about disputes and discussions regarding the competitive disadvantage that Italy has due to high energy costs. The high energy cost will also reflect on the entire digital issue, and so what happens is that we risk having these costs and production factors be higher. If, moreover, we do not incentivize these production factors to have local production, we risk that any type of industry will have a higher cost compared to what happens for the French company. In France, for example, today the public administration has chosen to migrate everything to their national systems, creating an ecosystem in France that will lead to developing technological independence and therefore a higher level of competitiveness compared to other European countries. On this, however, we must also be pragmatic.
No one here is proposing a model in which we can do without hyperscalers tomorrow morning. Quite the opposite, because these are all companies that have invested billions of dollars in technology per year. What happens is that you will have to develop a path in which initially you will have to ask these companies to respond to the regulations of the country in which the service is provided. For example, in Italy, the PSN, that is, the cloud services provided to public administration companies, are made in such a way that the encryption key, that is, the access key to this information, is managed by a national company so that in the event of a request for access to data by a foreign entity, this cannot happen because whoever manages the encryption key is an Italian company. So these are necessary intermediate solutions, but an important point is that today we are all getting passionate about digital, everyone is now talking about artificial intelligence, and I compare artificial intelligence to a beautiful penthouse on the 40th floor of a beautiful skyscraper, but to get to the 40th floor you need an elevator, a reception, a garage, and we are forgetting these other factors. Telecommunications networks are fundamental. Without an elevator, you don't get to the 40th floor. And today one of the problems in Italy and Europe is the telecommunications networks. The enabling factor.
What we are doing in Confindustria, first of all, is raising awareness on the issue. I always like to say that if there is no problem, there is no solution, and it seems that for years we have forgotten the problem, we haven't talked about it, and if there is no prize, there is no solution. So starting to put on the table the fact that Italy risks having an infrastructure gap that entrepreneurs will then pay for in terms of industrial competitiveness, because if in France or Germany entrepreneurs are able to access more performant telecommunications services that improve their productivity, there will be a competitive gap. So we must begin to have a more holistic vision. Here I am not asking entrepreneurs to do something, but together with Confindustria we are discussing with the government and the various regulators to explain this issue. But is it an Italian problem? No, we are, let's say, we can no longer say 'common misfortune, half joy', but it is a European problem. The choice made in Europe 30 years ago on the competition models has in fact greatly impoverished the telecommunications sector. In France, they are considering going from four to three operators. In Spain the same thing, in Germany the same thing. They are discussing how to give incentives, for example, in the case of frequencies, renewing frequencies at a non-onerous title addresses the fact that operators invest in higher performance networks. That is, they are trying to find a balance between the need to equip countries with more performant infrastructure and the need to define rules that facilitate this. What can entrepreneurs do? Support this logic by beginning to realize that in the next 3-5 years, what will change is that telecommunications will become a key competitive factor for their services.
It will no longer be possible, nor should it be, to make a choice based on purchasing the lowest cost, because any service will need priority and quality. Let's try a concrete example. Tomorrow, if an entrepreneur wanted to use glasses connected to the network to have simultaneous translation, to speak with a partner, a client, a supplier from China, India, or America, those glasses must work based on a lower latency connection. And this latency will not be something that all operators provide. We need to start changing the mindset. I understand that this example is more complex, but having in front of me an audience of people who also have children, the simplest and most trivial example is the following. All those here who have children know that their children, in most cases, play crowd gaming, that is, online games on the internet. Our children are much more demanding than us entrepreneurs about the quality of the connection because they know that if the quality of the connection is not good, their performance in the game degrades. Let's take this example and bring it to business productivity. That low quality reflects on business productivity. It will be slower to provide certain services. Trivially, tomorrow we will be, quote, full of drones that will have to interact with each other, robots. But trivially, there are numerous factories that are beginning to be interconnected with 5G because if you want to automate processes, you need a standalone 5G, excuse this brutal term, but telecommunications together with cloud and cybersecurity will become an enabling factor to increase productivity. If we don't like it, fine, we will decline in terms of competitiveness and our country will have a gap compared to other European countries. Europe, which already has a gap compared to America, the United States, Brazil, China, and India. Either we close this gap or we will be swept away.
