Memorandum by the Centre for European
The Centre for European Reform is a think tank
on EU affairs based in London. It is a forum for people with ideas
from Britain and across the continent to discuss the many social,
political and economic challenges facing Europe.
The CER is pro-European but not uncritical.
It regards European integration as largely beneficial but recognises
that in many respects the Union does not work well. The CER therefore
aims to promote new ideas and policies for reforming the EU.
The CER is currently working on: next steps
in European defence; Commission reform; managing an enlarged EU;
transatlantic relations and Europe's common foreign policy; the
need for and obstacles to a single European stock exchange; and
building a European information society.
Other relevant experience of Felicity Ussher
includes two years' reporting on information technology for Dennis
Publishing and two years' broadcasting on business and technology
I am currently researching a European policy
pamphlet into the role the EU has in building an information society.
The research involves analysing the main commercial drivers and
speaking to people right across industry, regulators, social and
voluntary sectorsto get their ideas of whether we are heading
in the right direction. The pamphlet will explore ways in which
the EU might bridge the gap between the commercial trends and
the ideals of what an information society might be.
The research is at quite an early stage at presentwe're
aiming for publication this summer. But it has already shown that
even definitions of "information society" as voiced
by the European Union do not go far enough.
Commissioner Erkki Liikanen's action plan for
E-Europe is not over-ambitious, in my opinion. The advisory targets
that he sets out for all the member states are already commonly
accepted at a national levelwith the possible exception
of the transport section. It is useful to have his backing and
enthusiasm for the restthe education targets, the health
targets and so onbut they have already been identified
as priorities, certainly by the UK government.
More importantly, there are gaps in Liikanen's
vision for an E-Europe. He does not address socially excluded
peoplethe people who slip through the net of established
health and education services. He doesn't look at, say, the prison
sector; he doesn't look at people who rely entirely on cash. For
example, people living hand-to-mouthafter a day's or a
week's workwithout bank accounts. Or people whose livelihood
is based on small, one-off cash transactions, such as those working
in markets, or even buskers or beggars. I'm planning to propose,
in the CER pamphlet, a much broader shake-up of financial regulation
to help these people.
At present, VISA and MasterCard have an effective
monopoly on electronic commerce because it's only through their
payment mechanisms that you can buy goods online. This is changing
slowlybut not fast enough. Belgium, for example, is piloting
a scheme called Proton, which means you don't actually have to
have a bank account to pile cash onto your card from any public
terminal, and use it online. But for the most part, online transactions
rely on you having been deemed credit-worthy by private institutions
which are looking for the lowest possible risk-category of people
to lend money to. It doesn't seem quite fair, if your credit is
unstable, that you are effectively prevented from taking part
in electronic commerce.
So, what needs to be done to create confidence
and to stimulate e-commerce? There are some obvious and basic
things here. We need cheaper and faster Web access. I think most
people with office computers rely on them to do personal shopping
and research online, because it is simply too expensive to set
up at home. Even after 6 pm the charges are too high, and Web
sites take too long to load.
Things are improving, as Internet Service Providers
toy with the idea of flat rate pricing for phone calls as well
as Web access. In addition, Oftel has recently announced much
faster progress on unbundling the local loop. This will help things
a lot because it means that other telecom can start offering cheaper
and faster services between the hub and people's homes.
The EU has a role here to set targets and encourage
new technologies. But unfortunately, across all the EC documents
I've seen so far, there has not been sufficient mention of the
mobile platform, which is Europe's golden ticket to information
access for all. The next-generation of mobile phoneswhich
are beginning to come onto the Scandinavian market nowwill
build in Internet access. Most experts agree that the mobile platform
is not only Europe's main strength but that it is going to be
the main way for people to access the Internet remotely.
This is significant because mobile phones are
much more socially diverse than personal computers. They are used
by people working manually as much as people working in the City.
And although the price of an Internet-connected mobile phone is
currently prohibitive, prices will come down as they always do.
It is linked to the development of a new technology called WAPWireless
Application Protocolwhich is a way of delivering data without
all the cables.
Erkki Liikanen does give a token mention of
it. He recognises that the mobile phone, along with digital TV
is Europe's main competitive strength against the US. But he does
not actually say what difference it is going to make and how people
can start preparing for it.
I think the EU should be doing some proper research
into Internet access, not just looking at PC figures but looking
at the social overlap between users of mobiles, digital TV and
home and office PC. Once they have worked out which platform is
going to be the most accessible to all, they can focus on content
initiatives for it.
Stimulating electronic commerce is also a question
of creating consumer confidence in new brands and new processes.
Industry is doing a fairly good job of regulating itself on this,
with a number of kitemark schemes. Which Online offers a very
good one. The IMRGInteractive Media in Retail Groupoffers
another. Both these are backed by the authority of organisations
like Which, and then IMRG which is a massive consortium of corporations.
They have a lot of respect in the industry, as does TrustE which
is building an international data protection kitemark scheme that
incorporates the latest EU regulations on the subject. All three
groups play an important part in shaping online trading practices,
whenever disputes arise.
I do not think the EU needs to add its own code
of practice to the throng, especially as it lacks the commercial
experience of existing consortiums. The only weakness of industry
self-regulation schemes is that they do not have the authority
of law. But IMRG says it can solve most disputes just by recommending
to traders what should be done. It is such a new area that often
it is just a case of advising retailers that they should have
all their terms and conditions and payment mechanisms up front,
and not try to conceal distribution costs. However, I think it
might help if there were an open door between these kitemark schemes
and national regulators such as the Office of Fair Trading.
The weakest area of electronic commerce at the
moment is the distribution networks. When you buy something online,
you are looking for convenience. But a few days later, a note
appears on your door saying the parcel is waiting for you at the
Post Office depotoften a couple of miles away and only
open at specific times. It defeats the point of buying online
in the first place. What we need is a 24 hour network of local
pick-up points. It would make sense to use existing distribution
networks for this. People joke that Perfect Fried Chicken would
be the ideal parcel post depot, because their fast food outlets
have appeared on practically every high street in the past two
Corner newsagents might be a more viable alternative.
They are often open late evenings and early mornings, and they
already act as delivery points for London Underground travel cards.
They do this on the basis that people will buy a newspaper or
a snack while they're renewing their card. It might be that there's
a body representing these newsagents that would welcome an invitation
to act as e-commerce depots.
But of course that sort of thing can be sorted
in the commercial market place. There's not necessarily a role
for the EU. If a delivery service like DHL decides to team up
with some sort of federation of newsagents to offer a service
that's attractive to online buyers, they will sign up to it; and
it it will up the ante for other services.
I can't talk much about what sort of structural
changes the EU needs to go through to promote e-commerce. I'm
not familiar enough with their internal workings. I do think there's
a case for saying that e-commerce spreads so far across the different
director-generals that there should be a specific e-commerce team.
At the moment, it's difficult to find out who to ask for specific
information. But it looks like Erkki Liikanen, Commissioner for
Enterprise and Information Society has stepped forward as spear-leader
of electronic commerce. In a long interview last year, I found
him very clued up, and he promises to answer every email he is
sent. We'll find out if he's got what it takes at the end of March
when he gives some more detail on E-Europe.
One of the main proposals I'm going to make
in the pamphlet is that the EU should harness itself to the open
source movement, whereby software developers post computer code
they have written online, free of charge, so that other developers
can use it for their own purposes. Historically, open source predates
commercial activity online, and technical experts are still very
keen on it, because it enables the sharing of expertise. Open
source has also had some success in the commercial arena, mainly
thanks to Linus Torvaldsa Finnish compatriot of Erkki Liikanenwho
developed an open source operating system called Linux which rivals
Microsoft Windows. Linux is distributed by commercial organisations
such as Red Hat, which offer installation and technical support.
Red Hat persuaded a series of large corporations to migrate from
Windows to Linux last year.
It seems to me that open source would be a very
appropriate technical partner for the European Union in its efforts
to build an information society, because they share a similar
relationship with the commercial market. Both aim to stimulate
growth through the sharing of information, and at the same offer
a basic standard which everybody can access. If the EU backed
open source, it would also, I think, push commercial ventures
into being more competitive, because they would have to offer
something above this basic minimum.
The partnership could take a number of forms.
First, the EU should put a whole range of software on its Web
site for small businesses and charities to download free of charge.
This is what small organisations have been crying out for.
I've spoken to a lot of charities who really
need some very basic tools. For example, Prison Community Links,
which is trying to get a database together of all the voluntary
organisations in the prison sector. They want to set up an online
database where community groups and charities can post their details
and have them put into searchable format for other people to access.
All they need is a simple template and a scripting program that
will publish thembut they don't know how to get it. These
non-profit making organisations can't afford IT directors to work
out all their various needs.
Second, the EU should promote the need for free
content online. One of my concerns about the way the market is
moving now is that new payment mechanisms are turning up which
enable consumers to pay for online content in fractions of a pence,
via their credit cards. It is thought this business model will
start being used for a lot of online mediacharging consumers
by the word to read specific articles. I think the risk here is
that certain materials of educational value will stop being freely
available online. The EU could rectify this by sorting out some
of the copyright issues itself and building up an entire archive
full of useful material on their servers for schools and for citizens
to educate themselves, for free.
I know that Erkki Liikanen backs open source.
I've spoken to him about it. Although he would not go so far as
to say the EU would start regulating in favour of it, he did say
that when it came to best practice and its own internal systems,
the EU was extremely keen to promote open sources as the way forward.
I think a bit more leveraging might persuade him to commit himself
In summary, my opinion is that the EU's scope
for regulation lies in encouraging suitable development of the
mobile platform, and promoting open source as the key to information
for all. It should also re-evaluate the regulation of financial
institutions in the light of their growing power online; and boost
research into social exclusions.
19 February 2000