Select Committee on European Union Written Evidence

Memorandum by Digital Exchange


Digital Exchange is the information service provider (ISP) arm of Trams plc focusing solely on business users wanting permanent online connection to the Internet at competitive pricing. The business-to-business ISP offers the whole range of Internet services, simple connectivity, Web hosting and emergency support service, Web and e-commerce design and consultancy.

  Digital Exchange recently became the first ISP to offer small to medium enterprises (SMEs) ADSL service for commercial use. The high-speed digital line allows information to be downloaded at up to 40 times faster than today's modems, which will be ideal for small businesses and self-employed wanting to engage ine-commerce and Internet-related working practices.

  Trams plc, is Apple UK's number one value-added reseller, and leading provider of IT to City corporates, with the capability to specify, design, supply and support complex multivendor sites. The company has extensive networking skills based on both PC and Apple platforms, and is authorised for major vendors including Compaq, HP, IBM, Microsoft, Apple, Toshiba and Cisco.

  Digital Exchange's parent company was formed in 1990 and over the two divisions now employs over 75 staff and has a turnover in excess of £15m. With its headquarters based in central London, Digital Exchange is ideally placed for the fast provision of supply of new technology to City based clients, as well as businesses across the UK.

Q:  What needs to be done to create confidence and to stimulate e-commerce in Europe?

  To create confidence there needs to be a secure method for merchants to obtain fraud-free payment over the Internet. This is the biggest single barrier to e-commerce.

  UK banks currently consider e-commerce as "customer-not-present" transactions, where it's the merchant that takes all the risk of the purchaser being fraudulent. At present the banks will not even share information with each other to enable card holder information to be verified. The lead in this has come from the US where the banks operate an "address verification" scheme where it is a straightforward process to check that the address for delivery given is correct. The banks cover the fraud risk to the merchant if the delivery is made to that address. We need this system in Europe.

  In order to stimulate e-commerce governments need to stop talking about it and start embracinge-commerce themselves. Preference should be given to those who communicate with Government electronically—rather like the Chancellor's announcement that a five per cent discount would be given to those who file their tax returns electronically.

  However this is heavily dependent on the Government sorting out its own systems. At present a very high proportion of tax returns to the revenue, for example, are rejected because of errors in the revenue system. That's not really an acceptable situation for the way forward.

Q:  Will codes of conduct and co-regulation provide sufficient protection? Is there a case for intervention by national governments and the EU?

  In my opinion there should be as little regulation as possible. Codes of conduct and self regulation will not be perfect and some dishonesty will occur, but this should be dealt with by conventional means. There should be a central agreement between governments so that criminals cannot hop past jurisdiction, trying to avoid prosecution.

  Perhaps there should be an EU definition of e-commerce fraud, which can be prosecuted in all member countries irrespective of where the crime is alleged to take place. A central EU liaison would be required to make sure that only one country prosecutes each crime.

Q:  Should existing EU institutions' internal structures be changed, or new ones created, to improve policy development and co-ordination?

  I think that it is commonly accepted that all the EU institutions need radical change, irrespective of the impact of e-commerce. However all institutions should certainly actively embrace e-mail, at the very least, as well as publishing documents over the Web; and should give preference (or possibly even exclusivity) to those who communicate with them electronically.

Q:  How can structural change be brought about fast enough to accommodate the growth of e-commerce?

  In order to maintain cross-border cohesion, all IT systems should be able to communicate in a common standard, probably XML.

  Secondly, a single chief executive, with wide powers to enforce change, should be appointed to drive e-commerce forward. This is not a "jobs for the boys" appointment for a superannuated politician but one for a widely respected figure from the IT Industry who knows what needs to be done and how to do it.

18 April 2000

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