Memorandum by the Joint Honours Students,
Imperial College, London, on Supplier Issues
CREATING BUSINESS CONFIDENCE
We, the students of ICMS, have analysed the
evidence presented by the various industries with regard to promoting
growth in European E-Commerce. Below we summarise the key issues,
as seen from the perspective of businesses, which need to be addressed
so as to create confidence and utilise the full potential of the
new E-Commerce platform.
REGULATORY MEASURES
The case for government intervention:
— Small companies will benefit from
tax benefits, funding, sharing of relevant information, etc. (PwC)
— An appropriate legal framework can
promote growth. (BT Cellnet.) AOL believes that government intervention
is necessary to provide harmonised IPR rules, encryption rules,
a liberal trading environment and open and competitive access.
— Deceit, fraud and other malpractice
cannot be left to self-regulation. (BT Cellnet, The Consumer's
Association, IWF)
— A stable tax and regulatory environment
will keep entrepreneurs in the EU. (EICTA)
— Simplification and consistency of
rules across the EU is possible. (Italy country report, AOL)
— Cross-border consumer redress procedures
can be made statutory. (Consumer's Association)
— Suppliers and consumers will know
with clarity, their obligations and rights.
The case for Self-Regulation:
— Intervention will increase regulatory
risk. (BT) Businesses will move to regions of less regulatory
risk. (The Licensing Executive Society)
— Investment incentives may be lowered
by increased regulation. (BT)
— Over-regulation may damage business
opportunities. (PwC)
— Competitiveness is reduced through
increased costs due to regulation. (The Licensing Executives Society)
— Regulation slows down innovation.
(EICTA)
— Regulators can't keep up with the
pace of change. (Professor Angell, AOL)
Implications
— Some government intervention required
for certain issues such as fraud, taxation, intellectual property,
privacy, and criminal.
— A stable, legal, framework required
to promote business activities.
— Self-regulation is required to deal
with different national legislation and prevents discouragement
of growth.
There is a spectrum of views on the topic of
regulation. Consumer bodies advocate stringent regulation. (CEG,
CA) Business organisations promote self-regulation (Robert Shapiro).
Hence a trade-off between the encouragement of businesses into
e-commerce and the protection of the consumer must be found. Regulations
vary greatly across European Borders. (Clifford Chance Ltd) This
means that companies may move to less regulated EU countries to
avoid taxation, for example. Thus, there must be some consistency
between EU member nations. National and cultural differences may
prevent EU wide legislation. Laws can have different meanings
in different countries. (Computer Crime Working Group)
PRIVACY AND
DATA PROTECTION
The factors that were perceived to encourage
e-business regarding privacy and data protection:
— Legal protection of private internal
corporate information. (BT)
— Message encryption, eg SET. (People
Energy, TUC)
— Legal framework to protect intellectual
property rights. (British Music Rights)
— Access to individuals' details can
be used for direct marketing enhancing supplier business.
— The firewalls, for protection of
data while on-line.
The factors that were perceived to discourage
e-business regarding privacy and data protection:
— Hacking into secure servers.
— Viruses and "Trojans" affecting
or destroying important information (eg "ILOVEYOU" bug).
— Fear of Government monitoring, eg
The RIP Bill, which allows police access to data and places the
burden of proving innocence on the accused. (Informix Software
Ltd)
— Denial of service, ie when the servers
are flooded with requests that either disable the service or just
slow down its connections with the rest of the world.
Implications
— Need sound legislation and advanced
encryption technologies to prevent unauthorised users from access
to private information.
— Governments should leave it to individuals
as to whether or not they want their private details to be accessible
by others.
PAYMENT SECURITY
ISSUES
Security measures that would encourage the uptake
of e-commerce activities by businesses:
— Co-operation by industry and law
enforcement to deal with criminal internet activity. (WIF)
— New payment technologies, eg cyber
money such as the Belgium Proton system put forward by Ms Felicity
Ussher from Silicon.com or the gismo and paypal systems in the
US or the smartcard scheme. (Mobile age technology)
The fears regarding security:
— Credit card frauds—UK banks
do not cooperate to verify information (Digital Exchange (ISP),
EURIM).
— Other users of the internet can gain
access to company's confidential files.
— Electronic signatures not recognised—reduces
confidence.
— Encryption codes have the possibility
to be hacked into.
— Conflicts between single market principle
of home country rules. Establish a cross border redress. (Barclays,
PwC)
— Microsoft acted as a 3rd party in
the US, but the US government were afraid of their monopoly status—of
being too powerful and hence broke it up.
— Support for encryption devices to
protect on-line intellectual property rights—British Music
rights.
— Hacking is a problem for cyber money.
FINANCIAL ISSUES
The factors that were perceived to encourage
e-business regarding financial incentives:
— Tax incentives, especially taxation
on stock options. (EICTA, PwC, Italian Country Report)
— Incentives for venture capitalists.
(ICL, Alan Bates)
— Well developed venture capital market.
(1st Tuesday club, Alan Bates)
— Alternative payment means to credit
cards such as smart cards. (FSA)
— Increased market via trading globally.
The factors that were perceived to discourage
e-business regarding financial incentives:
— Large initial costs of engaging e-commerce
activities.
— Skilled labour required which leads
to increased training costs. (Italy Country Report)
— Translation costs in trading across
borders.
— High risks for investors.
Implications
— Create tax incentives to ensure companies
have access to capital, and keep companies within the country.
— Government could subsidise e-business
training.
— Lower access costs by deregulation
of telecommunications market. Decrease trade barriers to encourage
global exchange.
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