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Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia Linda Randall, Louise Ormstrup Vestergård & Mari Wøien Meijer NORDREGIO REPORT 2020:4 nordregio report 2020:4 1
Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia Linda Randall, Louise Ormstrup Vestergård & Mari Wøien Meijer NORDREGIO REPORT 2020:4
Table of Contents Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia Nordregio Report 2020:4 ISBN 978-91-87295-89-8 (print) ISBN 978-91-87295-90-4 (PDF) ISSN 1403-2503 DOI: http://doi.org/10.6027/R2020:4.1403-2503 1. Introduction and background....................................................................................................... 7 © Nordregio 2020 Nordregio 2. Digitalisation in the Nordic-Baltic rural context........................................................ 10 P.O. Box 1658 2.1 The digital divide: Infrastructure......................................................................................................... 10 SE-111 86 Stockholm, Sweden nordregio@nordregio.org 2.2 The digital divide: Knowledge and skills............................................................................................ 23 www.nordregio.org www.norden.org 3. Digitalisation in key rural sectors........................................................................................... 32 Analyses and text: Linda Randall, Louise Ormstrup Vestergård & Mari Wøien 3.1 The digital revolution in the bioeconomy.......................................................................................... 32 Meijer 3.2 A potential blessing, a possible curse: Digitalisation and sustainable tourism....................36 Contributors: Linda Randall, Louise Ormstrup Vestergård, Mari Wøien Mei- 3.3 Getting started on the digital journey: Digital transformation in the manufacturing jer, Anna Berlina, Jukka Teräs, Laima Engere-Levina, Elin Slätmo, Hjördis Rut sector.......................................................................................................................................................... 39 Sigurjonsdottir, Pontus Arledal Thunell, Eeva Turunen & Jens Grelck Cover photo: Unsplashed Maps and data: Oskar Penje & Linda Randall 4. Supporting digitalisation of small rural enterprises in the Nordic Layout: Marija Zelenkauskė countries and Latvia......................................................................................................................... 44 Nordregio 4.1 Denmark..................................................................................................................................................... 45 is a leading Nordic and European research centre for regional development 4.2 Finland........................................................................................................................................................ 46 and planning, established by the Nordic Council of Ministers in 1997. We conduct solution-oriented and applied research, addressing current issues 4.3 Iceland.................................................................................................................................................. 47 from both a research perspective and the viewpoint of policymakers and 4.4 Norway.......................................................................................................................................................48 practitioners. Operating at the international, national, regional and local 4.5 Sweden...................................................................................................................................................... 49 levels, Nordregio’s research covers a wide geographic scope, with an 4.6 The Faroe Islands................................................................................................................................... 50 emphasis on the Nordic and Baltic Sea Regions, Europe and the Arctic. 4.7 Greenland...................................................................................................................................................51 The Nordic co-operation 4.8 Åland...........................................................................................................................................................51 Nordic co-operation is one of the world’s most extensive forms of regional 4.9 Latvia.......................................................................................................................................................... 52 collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and the Faroe Islands, Greenland, and Åland. Nordic co-operation has firm traditions in politics, the economy, and culture. It plays an important role in European 5. Conclusions and advice for policy makers....................................................................... 54 and international collaboration, and aims at creating a strong Nordic community in a strong Europe. Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the global community. Common References....................................................................................................................................................... 57 Nordic values help the region solidify its position as one of the world’s most innovative and competitive. The Nordic Council of Ministers is a forum of co-operation between the Nordic governments. The Nordic Council of Ministers implements Nordic co-operation. The prime ministers have the overall responsibility. Its activities are co-ordinated by the Nordic ministers for co-operation, the Nordic Committee for co-operation and portfolio ministers. Founded in 1971. The Nordic Council is a forum for co-operation between the Nordic parliaments and governments. The Council consists of 87 parliamentarians from the Nordic countries. The Nordic Council takes policy initiative s and monitors Nordic co-operation. Founded in 1952. Stockholm, Sweden, 2020 nordregio report 2020:4 5
1. Introduction and background List of Figures Figure 1. Digital Economy and Society Index, 2019....................................................................................... 7 Figure 2. Broadband network segments........................................................................................................ 11 Figure 3. Next Generation Access broadband coverage/availability in 2018 (as a % of households). .........................................................................................................................................13 In April of 2017, the Ministers responsible for availability of digital infrastructure and the Figure 4. Average municipal household coverage of fixed broadband by speed and municipality digital development in Norway, Sweden, Denmark, adoption of digital technologies. As such, this type....................................................................................................................................................... 20 Finland, Iceland, Faroe Islands, Greenland, Åland, project sought to provide a rural perspective on the Figure 5. People with basic or above basic digital skills, 2017.................................................................. 23 Estonia, Latvia, and Lithuania met in Oslo and second goal: Strengthening the competitiveness of Figure 6 Key indicators tracking digital progress, EU, 2018 (% enterprises)........................................ 25 set an ambitious agenda for digitalisation across our enterprises through digitalisation. Specifically, Figure 7. Pyramid of digital maturity.............................................................................................................. 25 the Nordic-Baltic Region. Their vision is to make it aimed to demonstrate how smart, sustainable the Nordic-Baltic Region a digital frontrunner by and inclusive approaches to digitalisation can be Figure 8. Digital transformation and maturity of companies step by step. pursuing the following policy goals (The Norwegian used as a tool to increase the competitiveness Source: REG LAB, 2018..................................................................................................................... 26 Ministry of Local Government and Modernisation and attractiveness of rural areas by exploring the Figure 9. Challenges and opportunities associated with digitalisation for small rural & Nordic Council of Ministers, 2017): challenges and opportunities for small enterprises enterprises............................................................................................................................................ 30 in rural and sparsely populated areas. The project 1. Strengthening the ability for digital trans- Figure 10. Applications of digitalisation in the bio-based circular economy........................................ 33 was funded by the Nordic Council of Ministers for formation of our governments and societies, Figure 11. The travel cycle. Source: Visit Sweden, 2019..............................................................................38 especially by creating a common area for cross- Digitalisation (MR-Digital), the Nordic Thematic Figure 12. Industrial Revolution......................................................................................................................... 39 border digital services in the public sector. Group for Innovative and Resilient Regions 2017- Figure 13. Omstillingsmotor - Project model.................................................................................................41 2. Strengthening the competitiveness of our 2020 and the North Atlantic Cooperation (NORA) Figure 14. SIA BALTMA - Digitisation process.............................................................................................. 42 enterprises through digitalisation. and included a baseline study, local workshops 3. Enhancing the digital single market in the and a webinar series. Its primary focus was the Nordic-Baltic Region. Nordic countries and Latvia; however, data is also provided for Estonia and Lithuania where possible. In fact, the Nordic countries are already at the The baseline study explored the nature of forefront of digitalisation in Europe (see Figure 1). digital transformation in rural areas and reflected List of Maps The Baltic States show a more mixed performance, on opportunities and challenges for small and but still score around or above average on the medium sized enterprises (SMEs) in rural areas Map 1. Next Generation Access Household coverage, 2018..................................................................... 14 European Commission’s annual measure of digital in each of the Nordic countries and in Latvia. The progress, the Digital Economy and Society Index study was developed through desk-based research Map 2. Next Generation Access Rural household coverage, 2018.......................................................... 15 (DESI). conducted by Nordregio and a report prepared Map 3. Household access to fixed broadband at download speeds >100 Mbps, 2018......................17 Despite this positive development overall, by Vidzeme Planning Region which detailed the Map 4. Household access to fixed broadband based on download speed available to >50% of disparities remain with respect to digital deve- Latvian context. It provided an overall context for households, 2018..................................................................................................................................... 19 lopment within countries; with rural and sparsely the digitalisation of SMEs in rural areas including populated areas often lagging behind on the sector-specific information on the bioeconomy, 1 Connectivity 2 Human Capital 3 Use of Internet 4 Integration of Digital Technology 5 Digital Public Services 80 70 60 50 40 30 20 10 0 FI SE NL DK NO UK LU IE EE BE MT ES DE AT EU LT FR SI LV CZ PT HR SK CY HU IT PL EL RO BG Figure 1: Digital Economy and Society Index, 2019. Data source: European Commission, 2019f. nordregio report 2020:4 6 nordregio report 2020:4 7
manufacturing and tourism sectors. It also pro- The webinar series brought together parti- vided an overview of the policy context in each of cipants from the local workshops to present their Workshop location and theme2 Regional characteristics3 Number of the Nordic countries and independent territories perspective to practitioners and policy makers. participants and in Latvia. The baseline study was designed to Episodes were presented weekly during March Ii Municipality, Finland Northern Ostrobothnia - 6 inform the local workshops and was circulated to 2020 and were based on the following topics: predominantly rural “Digital transformation in rural enterprises” all participants in advance. ■ Webinar 1: The digital divide Local workshops were held in rural locations ■ Webinar 2: Digitalisation in the manufacturing Trøndelag County, Norway Nord Trøndelag - 5 throughout the Nordic-Baltic Region, including the industry predominantly rural; Sør- “Digitalisation of rural SMEs” five Nordic countries, Latvia and the Faroe Islands.1 ■ Webinar 3: The digital revolution in the bio- Trøndelag - intermediate region The workshops were developed and promoted in economy partnership with local stakeholders and aimed to ■ Webinar 4: Digitalisation and sustainable Ísafjörður, Iceland Westfjords - predominantly 13 provide an opportunity for local capacity building tourism rural, remote “Digitalisation: From threat to opportunity” and networking as well as a source of data. Each workshop was organised in partnership with a local This Nordregio Report presents the results of Vesthimmerland Municipality, Denmark Region Nordjylland - 10 stakeholder and contained several presentations these activities. It builds on the original baseline predominantly rural “Digitalisation of rural SMEs4“ deemed to be of relevance to the audience. This study by including practical examples and insights from the local workshops and webinar Vingåker Municipality, Sweden Södermanland - intermediate 10 was followed by a discussion guided by a series of region questions: series to provide a genuine rural perspective on “Meet the challenge of rural farming with ■ How do you currently use digital solutions in digital innovation. The report is presented in four simple digital tools” your company? sections. The first section provides an introduction Tórshavn, The Faroe Islands The Faroe Islands - 11 ■ What opportunities do digital solutions present to digitalisation in the Nordic-Baltic rural context. predominantly rural, remote in your company / sector? It is structured around the two aspects of the “Digitalisation: what are the great ■ What are the main challenges for implementing urban-rural digital divide: digital infrastructure opportunities for Faroese businesses?” digital solutions and tools in your company and digital knowledge and skills. The section Līgatne, Latvia Vidzeme Region, predominantly 18 (e.g. skills, knowledge, access to finance, poor includes a series of maps illustrating the current rural, remote “Improving bioeconomy value chains through connectivity, regulations, lack of time)? situation with respect to broadband connectivity. digitalisation” ■ What kind of support do you need for increasing It also presents a broad introduction into the digitisation within your company / industry? challenges and opportunities that rural enterprises face in the context of digitalisation. The second Table 1: Nordic-Baltic workshop locations, themes and attendance. The tailored approach in each location resulted in a section discusses the effect of digitalisation on unique constellation of stakeholders attening each small rural enterprises, shining a spotlight on event. As such, we are cautious in our interpreta- three sectors deemed to be particularly relevant tion of the data and have avoided making cross- in the rural context: bioeconomy, sustainable country comparisons or drawing strong overall tourism and manufacturing. The third section conclusions about digitalisation practice in each addresses the support structures that are region. Instead the workshop data provides a expected to facilitate the digital transition rich series of practical examples and personal for rural enterprises. It presents the ideas for experiences from Nordic-Baltic rural areas that support raised by workshop participants before illustrate (and at times challenge) the findings of describing the support structures available in the desk-based research. This provides a strong each country and independent territory. The basis for future research and is an important first fourth and final section provides the overall step in highlighting the need to include rural areas conclusions from the project, along with advice in the conversation about digital innovation. The for policy makers about how to best support locations, themes and participant numbers from rural and sparsely populated areas to make the the workshops are shown in Table 1. most of the opportunities digitalisation offers. 2 The workshop titles listed here are translations. All workshops were promoted in the local language. With the exception of Iceland and Latvia, the quotes provided throughout the report are also translations as the workshops were held in the local languages. In Latvia the workshop event was held using a combination of Latvian and English, with simultaneous translation provided for both 1 The workshop in the Faroe Islands was made possible through additional funding from NORA (Nordic Atlantic Cooperation). This languages. funding was also intended to allow for a workshop in Greenland but unfortunately this workshop was cancelled due to the outbreak 3 Based on the Eurostat urban-rural typology. of Covid-19. As such it was not possible to include results from Greenland in this Report. Nordregio hopes that this workshop may 4 Due to limited registrations, study visits to three local companies were conducted in place of the workshop. The same questions still be conducted at some point in the future. were addressed in the study visit in the form of an informal interview. nordregio report 2020:4 8 nordregio report 2020:4 9
2. Digitalisation in the Box 1. Understanding digital infrastructure – how fast is DOCSIS 3.0, VDSL (Very high-speed Digital Subscriber Line) and other types of fast Nordic-Baltic rural context fast? The European Commission defines three cat- broadband (at least 30 Mbps download) (European Commission, 2015). The aim was that all Europeans should have access to egories of download speed (European Court 30 Mbps by 2020, however it is unlikely that of Auditors, 2018): this target will be reached (European Court ■ Basic broadband - speeds between of Auditors, 2018). In the Nordic countries, 144 Kbit/s and 30 Mbps; governments are increasingly striving for Digitalisation holds considerable potential for countries is unequal; with rural and sparsely ■ Fast broadband - speeds between 100 Mbps coverage for all households and rural areas. It allows us to overcome the challenges populated areas often lagging behind with 30 Mbps and 100 Mbps; businesses (see Box 2). associated with geographical distance, ensuring respect to the availability of digital infrastructure ■ Ultra-fast broadband - speeds above But what does all this mean from a equal opportunities regardless of where people and the adoption of digital technologies. These 100 Mbps practical perspective? Think of an internet live (Gillespie et al., 1994). This includes new modes urban/rural disparities are often referred to as connection as being like a pipe. Just as the of service provision through the emergence of the digital divide and are caused by shortcomings The upper limit of the connection speed diameter of the pipe determines how much is generally determined by the type of liquid can pass through at any given eHealth, distance learning and eGovernment with respect to supply (e.g. infrastructure) and infrastructure used (see Figure 2). Fixed-line moment, the speed of the internet solutions. It also relates to new ways of organising demand (e.g. lack of knowledge or skills to unlock infrastructure delivers the highest speeds (up infrastructure determines how much data work, for example, new business models that allow the opportunities associated with digitalisation) to 2.5 Gbps/1.2 Gbps (down/up) in the best can pass through in any given second. More a single entrepreneur to start a business with (Labrianidis & Kalogeressis, 2006). This section will case (fibre to the premises)) and wireless complex activities require more data and limited capital, opportunities for self-employment address both sides of the digital divide, beginning links deliver the lowest speeds (up to 60 thus a faster connection. For example, through the platform economy (e.g. renting with digital infrastructure before moving on to Mbps/10 Mbps (down/up) for terrestrial activities like general browsing of the out rooms though Airbnb), and remote working discuss digital knowledge and skills. wireless and 20 Mbps/8 Mbps (down/ internet or checking emails only require arrangements (OECD, 2017; Vironen & Kah, 2019). up) for satellite technology) (European about 1 Mbps, while a high-definition video Together, these developments are expected to 2.1 The digital divide: Infrastructure Court of Auditors, 2018, p. 11). Within the conference call requires at least 6 Mbps play a role in addressing many of the challenges Access to modern digital infrastructure and European Union, Next Generation Access (Federal Communications Commission, rural areas face, including population ageing, the services it facilitates is crucial for rural (NGA) is a commonly used indicator of 2020). If multiple people are using the same out-migration of young people, skills shortages, communities. This infrastructure is the foundation progress and is defined as including the connection at the same time, the capacity of following technologies: FTTH (Fibre to the the infrastructure is divided across the users accessibility challenges, and lack of labour-market for competitiveness, attractiveness, innovation, Home), FTTB (Fibre to the Building), Cable (Woodall, 2018). diversity (Interreg Europe, 2019a; Roberts et al., and economic growth (Interreg Europe, 2017; Vironen & Kah, 2019). 2019a). At the national level, the Nordic-Baltic Nordic rural communities are well placed to countries mostly perform well on measures of realise these potentials, as the region is generally digital connectivity. Taking, for example, Next considered to be at the forefront of digitalisation Generation Access (NGA) coverage, which is in a European and even global context (Alm et al, generally considered fast broadband (see Box 1), 2016; Chakravorti & Chaturvedi, 2017; European almost all countries had coverage that is better Commission, 2019c; 2019d). The Baltic States or equivalent to the EU average in 2019 (83%). show a more mixed performance, with Estonia Iceland (97%), Denmark (95%) and Latvia (93%) generally considered a frontrunner – particularly have the highest percentage of overall household in the context of eGovernance (European access followed by Sweden (86%), Norway (84%) Commission, 2019c; 2019d) – and Lithuania and and Estonia (84%). Finland (75%) and Lithuania Latvia performing around the European average (63%) are the only Nordic-Baltic countries in which (European Commission, 2019b). Despite this NGA coverage levels are below the EU average positive picture overall, digital development within (European Commission, 2019f). Figure 2: Broadband network segments. Source: European Court of Auditors, 2018. nordregio report 2020:4 10 nordregio report 2020:4 11
All households Rural households Malta Netherlands Iceland Luxembourg United Kingdom Belgium Ireland Portugal Latvia France Greece Germany Estonia Slovakia Hungary Denmark Cyprus Slovenia Czechia European Union Austria Norway Lithuania Photo: Andreas Dress / unsplash.com Romania Poland Spain A regional perspective on broadband coverage The maps that follow show the same two Italy The infrastructure accessibility figures cited above indicators from a regional perspective. Map 1 Croatia go someway to explaining the Nordic countries' shows NGA household coverage for all households Bulgaria reputation as digital frontrunners. It is important at the NUTS 3 level for the Nordic-Baltic Region. Sweden to note however that these figures are based on Map 2 shows the same indicator but includes Finland coverage for the population as a whole and, as only rural households. Here, rural households are such, hide the urban-rural divide. Once urban-rural defined as ‘households in square kilometres with a 0 10 20 30 40 50 60 70 80 90 100 differences are taken into account, we see that the population of less than one hundred’ (Point Topic, % of households Nordic countries actually perform fairly poorly in 2013, p. 17). This means that the map showing a European context. Using the same measure of rural household coverage only includes households NGA coverage (as a % of households) in 2018, for in areas with a density of less than one hundred Figure 3: Next Generation Access broadband coverage in 2018 (as a % of households). example, Finland and Sweden were the European houses per square kilometre. In some regions this Data source: European Commission. countries where the gap in access between rural is a very small proportion of households (e.g. Byen and urban households was the largest (see Figure København, Denmark = 0.1%), while in others it 3). Lithuania and Norway also performed below includes a substantial proportion of households the European average on this indicator. Iceland (e.g. Utenos apskritis, Lithuania = 62.4%). This and Latvia stand out as regional frontrunners is quite different to the approach that is often in this regard, both with high levels of coverage taken to urban rural comparisons, which involves overall and relatively small gaps between urban classifying a whole region or municipality as and rural households. “urban”, “rural” or “intermediate” (see for example Grunfelder et al., 2020). nordregio report 2020:4 12 nordregio report 2020:4 13
Map 1: Next Generation Access Household coverage, 2018. Map 2: Next Generation Access Rural household coverage, 2018. nordregio report 2020:4 14 nordregio report 2020:4 15
Considered together, Map 1 and Map 2 provide a clear demonstration of the digital divide from Box 2. National broadband the infrastructure perspective. Map 1 shows NGA targets in the Nordic-Baltic coverage for all households and presents a regional picture largely consistent with the national countries averages. Over 75% of households have access to Denmark: 100 Mbps download and 30 Mbps NGA coverage in most regions for most countries, upload accessible to all households and with the exception of Finland and Lithuania businesses by 2020 (Agency for Digitisation, 2016). where overall household coverage is below 75% in Finland: 100 Mbps providing 100 % coverage several regions. Map 2 shows the same indicator by 2025 (The Ministry for Transport and but only includes rural households and reveals a Communications of Finland, 2018). picture that is in stark contrast to the national Iceland: 99,9 % coverage of 100 Mbps for averages. In most of Finland and Lithuania, as households and businesses by 2023 (Icelandic well as many regions in Sweden, less than 35% of Parliament, 2019). rural households have access to NGA coverage. Norway: 90 % accessibility by 2020, with Norway performs somewhat better, with NGA access to at least 100 Mbps (The Norwegian access for 35-65% of rural households in most Ministry of Local Government and regions. Perhaps unsurprisingly, the countries with Modernisation, 2016) the highest level of connectivity overall – Iceland, Sweden: 100 Mbps covering 95 % of Latvia and Denmark – are also the countries with households and businesses by 2020 and a completely connected Sweden by 2025 the smallest urban-rural divides. (The Swedish Ministry of Enterprise and Innovation, 2017). A municipal perspective on broadband coverage Latvia & Lithuania: 50 % coverage of The urban-rural disparities described above can 100 Mbps by 2020 and 100 % coverage largely be explained by the market driven nature of at least 30 Mbps by 2020 (European of broadband development. Long distances Commission, 2019b). and low population density mean that, in Estonia: 60% coverage of 100 Mbps & many rural and sparsely populated areas, the 100% coverage of 30 Mbps by 2020 (The demand is insufficient to recoup the cost of the Estonian Ministry of Economic Affairs and infrastructure investment and thus broadband Communications). providers struggle to make a business case for rural expansion (Houzet, 2007; OECD, 2017). The ‘last mile’ of coverage is generally the most several municipalities where coverage drops challenging (see Box 1), but it often affects those below 60% of households (Skinnskatteberg, Berg, remote areas for whom digital access could be Strömsund, Torsås, Vansbro, Borgholm, Älvdalen, most transformative. Högsby & Nordanstig). The poorest coverage can The implications of this are best revealed by be found in Finland and parts of Norway. It should zooming in to the municipal level. Map 3 shows be noted that in some Norwegian regions, satellite the significant variation in the percentage of technology is used, as opposed to fixed broadband. households with access to a broadband connection As noted in Box 1, satellite technology is not of at least 100 Mbps. This speed has been chosen currently capable of reaching this speed so including as it is the national target in all Nordic countries this technology in the map would not affect the (see Box 2). Unfortunately, municipal level data is results. In Iceland, the poorest coverage can be not available for the Baltic States, so the map only found in the eastern part of the country and in the shows the Nordic countries. Westfjords. Outside of these areas the coverage As Map 3 demonstrates, a substantial pro- is relatively good, with at least 60% of households portion of households (>75%) have access to 100 having access to minimum download speeds of 100 Mbps in most Danish municipalities. Sweden also Mbps in many municipalities. It should be noted has relatively good fixed broadband coverage that, due to the limited availability of municipal across most of the country, though there are level data, figures for Iceland are from 2020. Map 3: Household access to fixed broadband at download speeds >100 Mbps, 2018. nordregio report 2020:4 16 nordregio report 2020:4 17
Åland has the highest percentage of high- broadband with minimum speeds of 30 Mbps, speed broadband availability among households in Map 4 shows the percentage of households who Finland, with 97% of all households having access have access to fixed broadband with minimum to fixed broadband with a minimum speed of 100 speeds of 10 Mbps (orange shading). Mbps. More remote municipalities fare worse, with The most striking finding in Map 4 is the small only 9% of the households in Föglö having access but significant portion of households in the Nordic to 100 Mbps and only 1% at Kökar. In the Faroe Region who do not have access to fixed broadband Islands the majority of the population (92%) have coverage with a minimum speed of even 10 Mbps. access to the internet from home and, even in the This suggests that there is substantial work to outlying islands, the connection is generally good be done if the Nordic countries are to reach the (Ministry of Foreign Affairs, Trade, and Industry broadband provision targets set out in Box 2. and Ministry of Finance, 2018). In Greenland, 83% With the exception of Samsø (Denmark, 82%), of the population have access to the internet from these municipalities are all in Finland and Norway. home (Epinion, 2018).5 In Norway, the most problematic regions appear It is important to acknowledge that fixed line to be Trøndelag (an intermediate region), and broadband of at least 100 Mbps is an ambitious the predominantly rural regions of Hedmark measure and that larger proportions of the and Oppland6 and Møre og Romsdal. In Finland, population in each municipality have access to municipalities with comparatively poor levels of some form of internet. To explore this, Map 4 coverage are scattered around the country. integrates speeds of 30 Mbps (for municipalities We compared the figures for “all technologies” where less than 50% of the population has in the Norwegian context to allow for the possibility access to speeds of 100 Mbps) and 10 Mbps that coverage in these municipalities improves (for municipalities where less than 50% of the substantially once satellite technology is taken population has access to speeds of 30 Mbps). into account. Using this method, there remains 86 Map 4 shows different speeds for municipalities municipalities where less than 50% of households based on the coverage accessible to the majority have access to minimum speeds of 30 Mbps. of households (>50%). In municipalities where over However, in all but one of these municipalities 50% of households have access to fixed broadband 100% of the population has access to 10 Mbps.7 with minimum speeds of 100 Mbps (blue shading), Notably, these figures are similar even once Map 4 presents much the same picture as Map 3. In satellite technology is removed from consideration, municipalities where less than 50% of households suggesting that the majority of these households have access to fixed broadband with minimum access these speeds using mobile technology. In speeds of 100 Mbps, Map 4 instead shows the Finland, mobile coverage is comparable to that percentage of households who have access to provided in Norway, with almost all households fixed broadband with minimum speeds of 30 Mbps having access to 4G (European Commission, (green shading). Finally, for municipalities where 2019a), suggesting that a similar result may be less than 50% of households have access to fixed obtained for Finland if the data was available. 5 Neither Greenland nor the Faroe Islands are included on the map due to difficulties in obtaining municipal level data. 6 Due to a regional reform which took effect on 1st January 2020, the regions of Hedmark and Oppland are now one region: Innlandet. Map 4: Household access to fixed broadband based on download speed available to >50% of 7 The only exception was Masfjorden where 99% of the population have access to minimum speeds of 10 Mbps. households, 2018. nordregio report 2020:4 18 nordregio report 2020:4 19
rural areas in recent years. While 63% of houses Applications are evaluated on the basis of the Urban Intermediate Rural and companies in rural municipalities had access following criteria: 1) Areas with no basic need; 2) to a fast connection in 2015, 81% had access in Areas with basic need, but without the need for 100 2018 (Energistyrelsen, 2018). This is compared a high-capacity broadband; 3) Cost-efficient 90 with 91% at the national level (Energistyrelsen, network development; 4) Local co-funding; 5) Plan 80 2018). Generally speaking, the companies we for sustainable operation after development, and visited in Denmark did not consider connectivity 6) Significance for local community development 70 a problem. One exception was companies which and value creation (Oslo Economics et al, 2017). 60 produce machinery for farms that are reliant on The total annual grants may differ and was in 50 access to store data in a cloud solution. Here, poor 2019 close to 250 MNOK following the increase of 40 connectivity was raised as an issue. 50 MNOK in the revised national budget in May 30 In Finland, state funded, targeted support 2019 (Norwegian Communications Authority, mechanisms aim to support rural municipalities to 2019). The upper limit of state aid for broadband 20 implement the optical fibre network. Through this development purposes are set in concordance 10 funding, the Municipality of Ii has implemented an with the GBER (general block regulations) set out 0 optical fibre network to secure broadband access by the European Commission and applies to the 10 Mbps 30 Mbps 100 Mbps across the town, including in remote localities. Just Norwegian case through the European Economic because such a network exists however, does not Area and the EFTA Surveillance Authority Figure 4: Average municipal household coverage of fixed broadband by speed and municipality type for guarantee its use, and, according to participants in (The Norwegian Ministry of Transport and Denmark, Finland, Norway and Sweden, 2018. the Nordic-Baltic workshop, uptake has been slow, Communication, 2019). Data source: National Public Telecom Agencies. particularly among older residents. Participants In Sweden, broadband development is largely also mentioned challenges for businesses when it characterised by a bottom-up approach with comes to the reliability of the network. local fibre networks operating in almost 200 In order to more clearly understand the timeframe has now been revised to 2023 (Icelandic In Norway, the Norwegian Communications municipalities and accounting for 60% of the distribution of speeds between urban and rural Parliament, 2019). Through the program, local Authority provides needs-based government total network (Svenska stadsnätsföreningen, municipalities, we looked at the average municipal governments can apply for state aid from the grants for the development of high-speed 2014). The Swedish Local Fibre Alliance (Svenska household coverage by municipality type for Telecommunications Fund. Around 5500 house- broadband. Counties and municipalities are the stadsnätsföreningen) supports local communities three speeds: 100, 30, and 10 Mbps (see Figure 4). holds and businesses had been connected in 2019, only ones eligible for funding and must go through to develop these networks, which are, in Average household coverage was substantially with approximately 1500 buildings in sparsely a public tendering process. Other public and private most cases, municipally owned and managed lower for rural municipalities than either populated areas still to be connected in order actors may participate in the planning processes. (see Box 3). intermediate or urban municipalities at all three to reach the targets. The project has a strong speeds. Perhaps unsurprisingly, the largest gaps emphasis on cost effectiveness, seeking synergies were found at the higher speeds. Intermediate with other utilities development projects wherever municipalities fell behind urban regions with Box 3. Vingåker Municipality a reliable, independent assessment of the possible (Government Offices of Iceland, 2019). reception that they then use in dialogue with respect to the two faster speeds, but a comparable Connectivity was not raised as issue in the Nordic- – One of Sweden’s smartest the operators to advocate for a more stable proportion of households have access to at least Baltic workshop held in Iceland. rural areas connection across the municipality. 10 Mbps. This suggests that, regardless of the Government policy has also played an Vingåker Municipality is proactively Vingåker is among few municipalities method of classification8, there is substantial important role in Denmark. In particular, the working towards the goal of access to fibre in Sweden that have installed a sensor evidence to support the existence of an urban- broadband fund which was a part of the strategy for all households and businesses in the network. This LoRa-WAN network covers rural divide when it comes to digital infrastructure “Growth and development in all of Denmark” municipality by 2020. It employs a standard the whole municipality and enables a vast in the Nordic Region. cost rate, ensuring affordable access to range of applications using the Internet (2016-2019) (Regeringen, 2015). Though deve- infrastructure regardless of where in the of Things. For example, the municipality lopment of digital infrastructure is principally municipality someone is located. Associations can monitor the moisture in the soil to A policy perspective on broadband coverage market-driven in Denmark, this state fund sought that own houses can apply for monetary ensure that plants are only watered when The relatively high levels of coverage in Iceland are to improve opportunities for development and compensation to connect to the fibre necessary. The investment in LoRa-WAN is largely a result of the Rural Fibre Project (Ísland growth for businesses and citizens everywhere expected to cut costs and transport needs without any extra cost. Over 300 persons ljóstengt), a Government program launched in in Denmark with an explicit focus on access in both within the public and private sectors. have participated in workshops about how 2016 which aims to provide ≥100 Mb/s internet to rural and sparsely populated areas where the to choose operators and to connect to the Vingåker participates in two regional 99.9% of households and businesses (Government telecommunication companies were not planning fibre infrastructure. WiFi-zones in the centre networks related to digitalisation. The first Offices of Iceland, 2019). The original goal was to expand (Erhvervsministeriet, 2018a). This has of Vingåker have also been installed. To is focused on municipal cooperation on to provide this coverage by 2020, however the significantly improved access to the internet in ensure good mobile-phone connectivity, the digital infrastructure (bredbandssamordnare municipality measure speeds using devices nätverk) and the second focused on attached to the garbage trucks. Through coordinating digitalisation work across 8 Figure 3 determines rurality by classifying whole municipalities as urban, intermediate or rural while Map 2 classifies individual households as rural based on the density of the surrounding area. this activity the municipality is able to make Region Södermanland. nordregio report 2020:4 20 nordregio report 2020:4 21
Alongside these municipally owned networks, and large-scale producers in the bioeconomy. 2.2 The digital divide: Knowledge and United Kingdom, Belgium, Malta and Switzerland, there are also over 1 000 associations representing Availability of Internet of things applications that skills people in cities were significantly more likely to community owned networks. In these cases, a are suitable for small-scale application is vital to Alongside the infrastructure shortcomings report having at least basic digital skills than lack of interest from both the market and the ensuring the benefits of digitalisation are shared described above, rural and sparsely populated people in rural areas or in towns and suburbs. state has resulted in communities installing equally between large-scale and capital-intensive areas also experience barriers when it comes to This relationship was evident across countries their own broadband infrastructure, either by agriculture and small-scale farms (The Swedish the knowledge and skills required to unlock the regardless of the overall level of digital skill. investing their own funds, seeking grant funding, Board of Agriculture, 2017). opportunities associated with digitalisation (ENRD, Perhaps unsurprisingly, the largest gaps among or a combination of the two. These associations A final consideration with respect to 2017; Labrianidis & Kalogeressis, 2006). Digital the Nordic-Baltic countries were evident in Finland can get support from the Village Internet Forum connectivity is that not all internet access is from competence is often found to be concentrated in and Lithuania, the countries found to have the (Byanätsforum), a national network consisting of a fixed line. In fact, mobile access is increasingly as the capital regions and other larger urban areas poorest infrastructure coverage in the previous over 400 community owned internet associations. important as household coverage and accelerating (Danmarks Erhvervsfremmebestyrelse, 2019). section. The smallest gap among the Nordic-Baltic The Swedish case is often used to illustrate the deployment of fifth-generation mobile Figure 5 is based on regional data collected countries was found in Sweden. The remainder of how the challenge of broadband expansion to systems (5G) in the Nordic countries is among as part of the European Commission’s Digital this section will consider the implications of this rural areas can be addressed through grass- the prioritised items on the Nordic Cooperation Economy and Society Index and shows the dimension of the digital divide in the context of roots action. While the work happening in agenda. The Letter of Intent from the Nordic percentage of people aged 16-74 years with basic small rural enterprises in the Nordic-Baltic Region, these communities is of course impressive, it is Prime Ministers on development of 5G in the or above basic digital skills, based on where they using the notion of “digital capital” to frame the important that the existence of such networks Nordic Region promotes the deployment of 5G live. With the exceptions of Luxembourg, the discussion (see Box 4). does not shift the focus from the responsibility technology in several sectors, including transport of the state to provide an equal level of service and energy, environment, agriculture and and infrastructure to all residents, regardless aquaculture. 5G is expected to provide considerably of where they live. Not all communities have the higher speeds than 4G, and has a theoretical resources and capacity to develop such networks maximum capacity for download speeds of up or make such investment, yet all have a right to be to 10 Gbps (European 5G Observatory, n.d.). connected. This is particularly relevant to farmers, Thus, 5G deployment has the potential to enable foresters and companies alike who may want to the development of new industries and services use sensor networks or cloud services. A study by beyond communications and provide better and the Swedish Board of Agriculture (2017) found faster connections for rural areas. At the same that unequal access to financing for new digital time, a lack of critical mass and high costs of a solutions has the potential to further exacerbate 5G system may limit its deployment to rural areas, the unbalanced power relations between small further widening the digital divide. Photo: Nicholas Doherty / unsplash.com Figure 5: People with basic or above basic digital skills, 2017. Source: Eurostat. nordregio report 2020:4 22 nordregio report 2020:4 23
more than 250 employees (The Norwegian Box 4. What is digital capital? Ministry of Local Government and Modernisation, SMEs Large enterprises One way of understanding digital knowledge 2019; Statistics Norway, 2020). Ensuring and skills is through the concept of digital that these enterprises have the capacity to Exploit B2C eCommerce capital (Ragnedda, 2018). Digital capital is embrace digitalisation is vital to ensuring the Buy medium‐high cloud‐computing services defined by Ragnedda (2018) as ‘the accumu- continued competitiveness of the Nordic-Baltic lation of digital competencies (information, Region in European and global markets. Sending eInvoices suitable for automated processing communication, safety, content-creation, According to the Digital Economy and Society and problem solving), and technology’ Index (European Commission, 2019f), SMEs fall Selling online (at least 1% of turnover) (p. 2367). behind large companies on all key indicators used Pay to advertise on the internet Digital capital is a useful concept, as it to track digital performance (see Figure 6). Several infers the potential for exponential growth. >20% of workers with portable devices for business use explanations for this have been suggested in the As with other types of capital (e.g. social, cultural, political), the more a person or literature, including: lack of knowledge about Fastest broadband connection is at least 30 mbit/s group has, the more likely they are to have digital opportunities and their benefits, low level opportunities to accumulate more (Putnam, of ICT skills, limited ability to adapt to rapidly >50% of persons employed use computers & internet 2000). Put another way, those with higher developing technologies and know-how, limited Website has reference to the enterprise's social media… levels of digital capital to begin with are more access to capital and finance, lack of appropriately likely to interact with digital tools in a way tailored support structures, lack of engagement Website has some interactive functionalities that further increases their digital capital. with support structures and limited capacity to Thus, investments in digital capital develop- Access to ICT specialist skills employ ICT specialists or professionals to direct ment may have benefits that go well beyond digital strategy or drive organisational change Enterprises having a website or homepage the initial support provided. To take a simple (European Commission, 2018, 2017d; European example, a municipality may engage with 0 10 20 30 40 50 60 70 80 90 100 Investment Bank, 2019; OECD, 2017; Interreg elderly residents for the purposes of teaching Europe, 2018). % of enterprises them to use eGovernment services. The skills acquired may in turn enable further digital Although these findings are not specific to interactions (e.g. skype with grandchildren), rural areas, the tendency for digital competence to Figure 6: Key indicators tracking digital progress, EU, 2018 (% enterprises). providing an additional boost to the person’s be concentrated in urban areas may result in SMEs Data source: European Commission. digital skills as well as generating other indi- in rural areas experiencing a double digital divide. rect benefits (e.g. decreasing social isolation) Challenges that have been highlighted in the (Forsman & Nordmyr, 2017). literature as particularly relevant to SMEs in rural areas include: lack of access to information about support instruments and funding possibilities, brain drain, and insufficient innovation potential Digital capital and small and medium sized of SMEs (Interreg Europe, 2018). enterprises Several tools have been developed that aim In 2017, about 93% of all EU enterprises were to support SMEs to engage successfully with micro-enterprises with less than 10 employees and digitalisation. Figure 7, for example, provides 5.8% were small enterprises with 10-49 employees a useful framework for assessing a company’s (European Commission, 2017a; Tillväxtverket, digital maturity. It contains six levels, ranging 2018). In Sweden, the corresponding figure from no digital engagement to a situation where was 94.7% and 4.4% respectively (European technology transforms the entire business model. Commission, 2017a), while in Denmark micro According to research by the Latvian IT cluster, enterprises accounted for 88.7% and small approximately half of Latvian SMEs sit at level 2 enterprises for 9.2% (European Commission, on the pyramid (Irmeja, 2020). The next largest 2017b). Over 99% of all enterprises in Norway are groups are at level 3 (25%), followed by level 0 considered small and medium sized enterprises (15%) and level 1 (10%). Only 5% of Latvian SMEs (SMEs), with only 0.1% of all enterprises having can be considered digitally transformed based on this model (Irmeja, 2020). Figure 7: Pyramid of digital maturity. Source: Irmeja, 2020 nordregio report 2020:4 24 nordregio report 2020:4 25
A similar model has been developed by A key distinction between the complexity levels is These models demonstrate that, much like capacity for digital innovation in rural areas. This REG LAB, in this case using the staircase as a the degree to which the business is transformed other forms of capital, the accumulation of includes building the digital capital of individuals metaphor (see Figure 8). This model is based on through the implementation of digital tools. digital capital is a gradual process. A business but can also be achieved by building digital capital research with Danish SMEs who have successfully The steps within the low complexity group may need to spend some time working at the in companies, organisations and even at a whole- undertaken a digital transformation process mostly involve the implementation of digital lower levels to generate the capital necessary of-community level (see Box 5). and aims to provide a deeper and more nuanced tools within the constructs of existing work to make the next step in their digital journey. For companies who took part in the Nordic- understanding of the key steps and drivers practices while the steps in the high complexity Further, companies may return to the lower levels Baltic workshops, a lack of knowledge about along the digital journey (REG LAB, 2018). group are more likely to require or enable with a new perspective further down the track digitalisation was a common challenge (see Figure Here the steps are grouped into high and low some form of organisational transformation (REG LAB, 2018). Such models can be useful for 9). Participants discussed feeling confused about categories based on the level of complexity. (REG LAB, 2018). companies who are not sure where to start and which solutions were best suited to their company, may also help authorities to determine the level at as well as uncertainty about how to get the best which to pitch capacity building activities (Irmeja, out of the solutions they already had access to. 2020). Although neither model is specific to rural Interestingly, some participants also spoke about areas, the notion of a step-by-step approach is a lack of knowledge in a much more fundamental quite relevant, as small rural enterprises may have way, struggling to relate to what this concept limited time and financial capital to invest in rapid of digitalisation actually means in the context digital development. of their company. Others talked about a need to change the mindsets of others as a first step Digital capital in Nordic-Baltic rural areas to truly embracing digitalisation. For example, The example of digital capital accumulation the perception that a digital meeting is a (less- given in Box 4 is, in many ways, indicative of the favourable) substitute for a physical meeting discourse surrounding digitalisation in rural rather than a genuine communication tool in its areas. Throughout the Nordic-Baltic Region, own right (see Box 6). rural populations are experiencing considerable challenges with respect to both the outmigration of young people and population ageing (Kull et I think when you say al, 2020; Stjernberg, 2020). In this context, rural communities are often positioned as receivers digital, you often think of technological solutions designed to improve about a smartphone, and then access to services for citizens while at the same some people might think, then time resulting in increased efficiency for providers digitalisation is not for me. But (Johnsen et al., 2018; Mergel, Edelmann & Haug, digitalisation is much more 2019). Where capacity building comes into focus, than that: it is about optimizing it is generally in the context of programs designed production. And that is something for those whose skills are most limited (e.g. the elderly, people with limited education), so that everybody wants. So I also they can access these digital services (Löfving, think it is about being better at Norlén & Heleniak, 2019). articulating what digitalisation Ensuring everybody has the skills required actually is. to access basic digital services is, of course, important. Equally important, however, is the Workshop participant, Vesthimmerland need for a broader focus that works to build the Municipality Figure 8: Digital transformation and maturity of companies step by step. Source: REG LAB, 2018 (translated to English by the authors). nordregio report 2020:4 26 nordregio report 2020:4 27
Box 5. Country #196 (Valsts To achieve this goal, the initiative Box 6. Rural actors lead the entrepreneurs the chance to spend some “Country#196” is engaging with Cēsis city in #196, in Latvian) two ways. First, they have worked with the way on eLearning and remote time working from the unique environment In the world today, there are currently 195 of the Arctic. In this respect, participants municipality on their data strategy, setting officially registered Nation States. Country working in the Isafjordur workshops discussed the up working groups with the view to opening #196 is thus a metaphor for the digital state, The Westfjords (Iceland) covers 22,271 km² opportunity to “sell” the simpler, cleaner up data on the city and using it in new and a country to which we all belong. This social and has a population of just 6 994, almost lifestyle of the Westfjords, in a context innovative ways. movement was founded a year ago and is an one third of whom live in Isafjordur, the where choosing this lifestyle does not Second, they are working with local initiative from international data technology region’s largest town (Statistics Iceland, necessarily mean being shut off from the business and society to improve their company “Squalio”. The initiative brings 2018). The remainder of the population is world or turning ones back on outside capacity to work with digital tools and data together researchers, national and local dispersed in a number of very small towns opportunities. The Westfjords Development management. This work began with a large government representatives, entrepreneurs and the region is characterised by limited Centre has staff located all over the region conference about digital awareness which and opinion leaders to develop knowledge accessiblity, particularly during the winter meaning that digital meetings between raised questions like: What is data? What is and tools that can be put into practice months. As a result, the people of the staff are commonplace. The team have digital identity? How can I survive and know so that change can take place now. The Westfjords are no strangers to eLearning developed several strategies to ensure this digital world? How can I benefit from Latvian IT cluster actively participates and remote working. the effectiveness of online collaboration this? Following on from this, they held a in and supports this movement with its In fact, distance learning first started in and make sure that those outside of the series of workshops and meet-ups with local knowledge, experience and resources. Cēsis, the Westfjords in 1998 when a trial program main office in Isafjordur feel included. For entrepreneurs about how they can make the which is home to just 18,300 people, was for training nurses was introduced by the example, if one meeting participant needs most of digital tools within their business. the first place in Latvia to get involved in University of Akureyri (Peer Review Group, to join via digital means, everyone joins Finally, Riga Technical University is the movement “Country#196” as pilot city. 2001). Today, communications technology individually via their computers – even if running the first vocational education course Through the movement, Cēsis Municipality is used in the region in a range of ways. they are sitting in the same building. This on data analytics for beginners in Cēsis. hopes to discover ways in which technology One third of the students in Isafjordur’s helps to even out the power dynamic and The intention was to start with one group can be used to develop a sustainable city. secondary school are distance learners avoids marginalising the person who is not of 14 students, however, after receiving While this “smart city” concept is by no from around the country and the Center for physically present. 135 applications, the program received means new, it does looks quite different in a Lifelong Learning offers online courses in The diverse ways in which the additional funding from the city and instead rural context. Here, sustainability goals are Icelandic for immigrants as well as working communities of the Westfjords are using started with two groups (28 students). The primarily related to addressing outmigration, to increase digital competence among the information and communications technology ambition is that, within 2 years, 1% of Cēsis particularly among young people. population. The University of the Westfjords highlights the need for a critical perspective residents will have undertaken this course. The idea is that, by increasing digital offers on-campus master programs (in when discussing the knowledge and skills The overarching idea is that, in this data literacy, people can have the opportunity to cooperation with the University of Akureyri) dimension of the digital divide. While there driven world, understanding data flows can stay in rural areas while at the same time as well as eLearning. The online courses may be an overall tendency for people in be a powerful tool to support citizens of taking advantage of global opportunities and benefit local students but can also be rural areas to have lower levels of digital “Country #196” to identify new opportunities markets. attractive to international students who competence than those in urban areas, the in their businesses, organisations and society might come to the Westfjords for only some very experience of remoteness may also (Irmeja, 2020). parts of their course. Here, digitalisation has necessitate digital skill development. Here, the potential to be a driver of population the concept of “digital skills” is less about the growth by both supporting young people technology itself, and instead relates more to stay in the region and attracting new- to the ability to derive value from online comers. interactions that is equivalent to that which Importantly, there was no evidence of a not always well suited to the specific needs of Actors in the Westfjords are also can be achieved face-to-face. lack of curiosity or competence as a barrier enterprises. In the Latvian workshop, lack of trust challenging traditional models of work. According to participants in the to engagement with digitalisation. Instead, also appeared to be a substantial barrier when Isafjordur workshop, the limited value The Blue Bank, offers accommodation limited time and lack of financial resources were considering a new investment. Opportunities to and access to a coworking space to people attributed to these skills outside of rural emphasised as the main barriers. When it came participate in the provision of public services is one from all around the world. It describes itself areas means that they are currently most to time, participants clearly appreciated the long- avenue through which to support the long-term as “ a community of ideas, at the service useful in connecting actors within the term efficiency benefits of digital technologies sustainability and financial security SMEs need of the village and the world” (Blue Bank region. Participants suggested that a fairly but were often simply too busy to invest in their to prioritise investments in digital development. CoWorking, 2020). The centre is part of dramatic mind-set shift is required if digital initial adoption. From a financial perspective, This requires more equitable access to public Arctic Digital Nomads, a project funded by tools are to have the same degree of success investments in technology were perceived as procurement processes which, according to the North Atlantic Cooperation that aims in facilitating urban-rural connections (e.g. high risk, particularly if there was a long pay- workshop participants in Norway, tend to favour to inspire micro-innovation by offering through “placeless jobs”). back time. Development of tailored solutions was larger companies. found to be expensive and existing solutions were nordregio report 2020:4 28 nordregio report 2020:4 29
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