The Luxembourg TMT sector has evolved from being predominantly a provider of voice services into a diverse, competitive and interconnected industry using terrestrial, satellite and wireless transmission systems. Today, Luxembourg has first class infrastructure and telecommunication networks and is counted among the top locations for electronic communication services and infrastructure. In the 2016 edition of the Global Information Technology Report (GITR Report) published by the World Economic Forum, Luxembourg is listed ninth out of 139 countries with regard to innovation in the digital economy, and its steady upward trend relating to its overall score is recognised.

The ICT development index 2016, analysing the introduction of ICT and the potential for ICT-related development, ranked Luxembourg 11th out of 175 countries.2

Traditionally, the sector was limited to a very few players. Telecommunication and postal services were operated for several decades as a public monopoly of the state-owned Entreprise des Postes et Télécommunications (EPT).3 The radio and television sector was controlled and developed from its early years by a privately owned company. Indeed, the first radio broadcasting in Luxembourg was initiated by the founders of the current broadcaster, CLT-UFA. The privately held operator was ensured a leading role in the national and international development of the radio and television sector, and today RTL Group ranks as the top television and radio broadcaster in Europe. Luxembourg has also been a pioneer in non-terrestrial communication technology. SES-Astra, a Luxembourg-based company created in 1985, was Europe's first private satellite operator, and SES now has global standing.

The presence of important market players in the TMT and TMT-related sectors in Luxembourg and related know-how and experience have led the government to make efforts to maintain, create and further develop its electronic telecommunication technologies with the aims of being among the best places in Europe and abroad to do business within the sector and of being a hub for e-services in Europe. These aims have been continuously pursued and reaffirmed by the government since 2010 to date. To reach these aims, the government, together with a group of private investors, set up a fund dedicated to ICT4 start-ups: the Digital Tech Fund. The GITR Report confirms the success of these efforts, as Luxembourg is in first and second position, respectively, in relation to its political and regulatory environment regarding individual usage. Luxembourg is ranked fifth and sixth, respectively, in terms of the importance of ICT in the government vision's and governmental success in ICT promotion. According to the Digital Economy and Society Index of the European Commission, Luxembourg is ranked second among all European Union countries in regard to its connectivity and human capital.5

Luxembourg combines many features that are beneficial to the development of an ICT sector, including the diversity and multilingual skills of the population and workforce, a geographical location in the centre of Europe and an important financial industry in need of high-performance communication technologies. In addition, Luxembourg has gradually developed a state-of-the-art digital infrastructure, international telecommunication connections (offering fast and reliable connectivity to other European cities at very low latency rates), efficient national communication networks, performant data centres, a comprehensive, evolving and innovative legal framework, and cutting-edge research, safety and security, all of which contribute to Luxembourg's increasing attractiveness to technology organisations and electronic communication services, and also to financial institutions, companies active in biotechnology and medicine, and other e-businesses. Luxembourg figures among the top locations for ICT infrastructure (data centres, high speed connectivity and internet traffic, low latency internet), and it offers specialised expertise to keep data safe.

The presence of regulated ICT 'support' professionals of the financial sector (PSFs), who are subject to the same confidentiality obligation as banks, provides considerable comfort and security to clients in the financial sector in areas such as the outsourcing of IT functions.

More recently, Luxembourg has focused strongly on developing the FinTech industry, for which Luxembourg is very attractive as it combines a huge range and variety of financial services, performant and innovative technology, and open-minded regulators, public authorities, private players and associations who are ambitious to follow and develop a sector that is evolving rapidly and is omnipresent in the overall global economy.

The quality of the communication infrastructure has led numerous actors in the gaming (online video games) and gambling sectors to set up their headquarters in Luxembourg.6 Global brands in the media and internet world such as Amazon, eBay, PayPal, Vodafone Procurement, Intelsat, RTL Group, Milicom and Skype all have European headquarters or major operations in Luxembourg.

The presence of Level 3 in Luxembourg (one of the most important operators of telecommunication services at the level of the backbone internet) confirms Luxembourg as a centre of excellence in the internet sector. Luxembourg is also attractive to a number of e-payment and e-money services institutions and can be considered as Europe's e-payment hub, with brands including Digicash, Amazon Payments, Mercedes Pay SA, Yapital, Six Payment Services, Rakuten and Mangopay all based in Luxembourg. Several software giants, including Microsoft, Symantec and Open Text, also have places of business in Luxembourg. Luxembourg also has a strong reputation for service availability, security and data protection, and responsive and open-minded authorities.

The CSSF, Luxembourg's financial sector supervisory commission, has granted Bitstamp a payment institution licence, and has made the company the first nationally licensed bitcoin exchange. Many other companies active in the virtual currencies sector want to establish themselves in Luxembourg, and are currently trying to obtain a licence, once more confirming the attractiveness of Luxembourg for ICT businesses.

Luxembourg has a long-standing official policy of welcoming pan-European companies in addition to creating the appropriate framework for the development of local businesses, and offers multiple opportunities to start-ups by creating an environment that allows existing market players to come into contact with young entrepreneurs. For example, the House of Start-Ups will host the Luxembourg city incubator, a project conducted by the Luxembourg Chamber of Commerce, Lux Innovation and the Ministry of Economy that intends to accompany between 150 and 200 innovative start-ups in a variety of industry sectors.7

In 2016, the proportion of employees in the ICT sector in relation to the total of all employees was 4.6 per cent, constituting the fifth-highest proportion in the European Union, with an average of only 3.5 per cent in the European Union.8

Efforts are also being made in ICT research, with a focus on the security, reliability and trustworthiness of ICT systems and services.9 In the context of increasing the influence of digital technologies in every aspect of our lives and throughout all business areas, and with the further and constantly evolving development in cloud computing and e-archiving, digital security is a key element of the success of the digital economy. Important improvements are being made to the legislation in order to adapt the national legal framework to overcome barriers related to the use of new technologies.

Luxembourg is keen to join forces with other European countries. In 2016, for example, Luxembourg started planning, in cooperation with the European Commission, France, Spain and Italy, the creation of a European supercalculator, allowing private and public players to access top-notch software tools.10 The declaration of European cooperation in the context of 'high performance computing' (HPC) was signed by the Luxembourg Minister of Economy on 23 March 2017, which marked the official start of the collaboration between the signatory countries (Luxembourg, Germany, Spain, Italy, Portugal, France and the Netherlands). These countries will join forces to implement the strategy for a European HPC network, of which Luxembourg was the initiator.11

Luxembourg is highly present at European-level discussions and negotiations, and stout in its defence of its position in the global process of harmonisation and liberalisation while supporting the direction of European regulation. At a national level, research and development in the ICT sector is conducted by a number of government-promoted institutions.12 In developing its communication networks in the context of the investment realities and opportunities in the telecoms and media sector, the challenge is to direct investment in a way that ensures that the right type of network is built and that public investment works in cooperation with the private sector so as to promote a more competitive telecoms environment. The government has been very active in negotiating and defending the interests of Luxembourg in the adoption process of the European Telecoms Package. Similarly, the government has actively taken part in the discussions regarding the Data Protection Regulation (GDPR): adopted on 14 April 2016, it will be applicable from 28 May 2018.

The development of the information society is a key government priority. In addition to the aforementioned policies, it has created an action plan called 'e-Luxembourg' with the ultimate goal that Luxembourg administrations, corporations, education personnel and individuals may efficiently use and have access to electronic communication means to help improve their quality of life. Many filings, registrations and requests to public administrations (such as those of the tax, social security and energy sectors) can be made online. In 2015, 135,000 administrative procedures were transmitted electronically, representing an increase of 330 per cent compared to 2014.13 The government has adopted a GED system (electronic document management) and banned the use of paper with the aim of streamlining internal government structures so as to become more cost-effective. Luxembourg has also introduced electronic identity cards.

In 2014, the Council of Government announced the launch of a strategy called 'Digital Luxembourg'. The objective of this strategy is to strengthen and consolidate the position of Luxembourg in the ICT sector. The Digital Luxembourg platform aims to assemble private players and public institutions federating inter-sectoral and cross-sectoral interaction. Taking into account the constant need for a workforce with strong skills in IT, Luxembourg implemented the 'Digital (4) Education' strategy. The first WebForce3 school has been established, which aims to train people to become qualified for a developer or junior integrator job in three-and-a-half months.14 The school is part of the 'Fit4coding' initiative launched by the government and co-financed by the European Social Fund.

Luxembourg strongly encourages the development of a Digital Single Market, for instance through the eIDAS Regulation and the Directive on network and information security (NIS), as this will strengthen Luxembourg's position within the European area. In addition, the government is aware of the fact that the continuance of the success and competitiveness of Luxembourg's financial sector will depend on, inter alia, the availability of cutting-edge services based on FinTech.15 A FinTech working group has been established with representatives from different associations active in the financial and technological sectors with the aim to solve and answer specific problems and questions related to FinTech. The Luxembourg House of Financial Technology was officially launched on 25 April 2017, which is an initiative for finance. It is a public–private partnership aiming to establish Luxembourg as a European FinTech centre by offering start-up incubation and co-working spaces.16

In January 2017, the Secretary of State of the Economy presented the Creative Industries Cluster Luxembourg, which aims to support the economic development of the sector, and which includes activities such as architecture, crafts, visual arts, design, styling, the games industry, marketing and communication, literature, publishing, the performing arts and new media.

Convergence has been achieved by creating rules and regulations, regulatory authorities and consulting entities at the national, European and international level that embrace the diversity, interconnectivity and interrelatedness of the various industries and players. The increasing convergence between telecommunications, information technology and media has led to the adoption of the regulatory framework that was introduced into Luxembourg law by two laws of 27 February 2011 (Telecoms Package). The Telecoms Package is designed to provide for one set of rules for all electronic communication services and networks. The continuing development of the ICT sector constantly calls for adjustments to the current legislation and regulations at both national and European level (see Section II.ii).

As a result of convergence, it is extremely important that interconnectivity and free access to all operators and service providers within the TMT sector is ensured in an equal manner. The use of one infrastructure for different types of services is of particular importance, and it is crucial that the operators and owners of the infrastructure or networks make these available to the other participants in the TMT sector. This is particularly true in Luxembourg because of the small size of the market. Efforts are continually undertaken to ensure competitiveness among players in the TMT sector. Ensuring Luxembourg's international connectivity will be at the top of the political agenda in future with the aim of ensuring the lowest latency rates with major capitals, the lowest prices and the presence of the most important carriers.

Importantly, the government supports the principles of network neutrality (i.e., keeping a free architecture, open and non-discriminatory terms, guaranteed access without unjustified conditions on electronic communication networks) and pushed towards the adoption of EU Regulation 2015/2120, laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users' rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the European Union, which was finally adopted on 25 November 2015 during Luxembourg's presidency of the European Union Council. This Regulation is seen as a major achievement for the Digital Single Market.

Competition among incumbent operators and alternative operators remains an important element for e-industry players.

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1 Linda Funck is a partner at Elvinger Hoss Prussen.

2 http://www.luxembourg.public.lu/en/actualites/2016/12/06-rapportITU/index.html.

3 The new commercial name is 'Post Luxembourg'.

4 Information and communication technologies.

5 https://ec.europa.eu/digital-single-market/en/desi.

6 Big Fish Games, Bigpoint, Innova.

7 http://www.luxembourg.public.lu/en/actualites/2017/07/12-startup/index.html.

8 https://ec.europa.eu/digital-single-market/en/scoreboard/luxembourg.

9 Interdisciplinary Centre for Security, Reliability and Trust, Computer Science and Communication.

10 www.digital-luxembourg.public.lu/fr/actualites/promotion/2016/itwXavierBettel/index.html.

11 http://www.luxembourg.public.lu/en/actualites/2017/03/27-hpc/index.html.

12 For instance, the Luxembourg Institute of Science and Technology (LIST).

13 Rapport du Gouvernement 2015, p.11.

14 http://www.gouvernement.lu/5507489/08-ecole-webforce.

15 Financial sector-related technology.

16 https://www.wort.lu/en/luxembourg/FinTech-luxembourg-house-of-financial-technology-open- for-business-58ff0984a5e74263e13bcf3d.

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