Select Committee on European Union Written Evidence











  1990s—World Wide Web

  2000s—digital TV/WAP

  e-commerce is not new. The first conventions for international cable traffic date from just after the US Civil War. The first case on whether a cable authorisation is a signature is over a hundred years old. Today over 90 per cent of international trade is negotiated, transacted or authorised electronically. As yet, less than 1 per cent is transacted over the Web.

UK Payments
% of Total Billion
% Change on Previous Year

Debit Card
Credit Card
+8.2 Direct Debit/Credit, Standing Order etc
+6.0 £98 billion
Total E-
-3.2 £1,200 billion
Total Non-Cash (Plastic Card,
Automated, Paper)
Cash (est)
-4.6 Post Office Order Books, Pass Books

  Source: APACS—1998 Payment and Cash Acquisition Volumes.

  Over 20 per cent of current UK transactions are already electronic (credit cards, direct debits, standing orders and so on). Most of you are paid by BACS and settle your regular bills by standing order or direct debit. Your visits to the supermarket are bar code scanned, card paid and trigger a series of EDI re-orders—but you have to do the expensive and labour intensive picking, packing and local delivery yourself. Less than 0.01 per cent of UK transactions are over the Web.


  Commercial e-mail—1980s
  World Wide Web—1990s—1995
  Atlanta Olympics Test Bed—1996
  Web TV/WAP/Analogue—2000

  Moreover, over 90 per cent of Internet transactions are not over the Web. They are over the EDI supply chain systems of the US aerospace, retail and finance industries which use the TCP/IP protocols for secure and pre-determined routing, "guaranteed" performance and delivery as opposed to "any-to-any", "best endeavour" delivery by whatever route currently available, packet switching.

  The idea that the Internet has changed the pace of change is equally wrong. The transition from the US communications standby for WW3, including the conferencing and supply chains of the defence suppliers, through semi-academic e-mail and information services to a global e-advertising and e-information network has taken over 30 years—the first nodes outside the United States date from 1967. The World Wide Web is over 10 years old (layers of bloatware on a 1980s page swapping protocol). Even is over five years old. I' not yet the most expensive start-up since the Canadian Pacific Railway but it's getting that way.

  The Internet is no more, and no less, than the latest stage in the evolution of the world's largest machine, the global telecoms network. The next stage of evolution being by the protocols for digital TV and the wireless mobile, plus a new generation of analogue technology to handle the bandwidth required.

  So why the haste to get users to transition to web-based products and services, rather than wait for the bottlenecks to be removed and the online credit-checking, authentication and payment systems to work?

  Why the promotion of the Web as synonymous with the Internet and of the Internet as synonymous with Electronic Commerce?

  Why the lack of publicity for those who have, very profitably, been using web front-end to EDI systems for many years?

  Why publicise web-based operations which can handle thousands of transactions an hour but not those which use EDI to handle millions an hour?

  Is it that:

    —  dot.coms account for all the growth in advertising and PR spend over the past 18 months in the UK and US?

    —  telcos need a boom in bandwidth hungry mass-market applications to prevent a crash in revenues as competition rises and costs and barriers to entry fall?

    —  hardware and software suppliers need to restart cash flows after the Y2K systems freeze before users jump from PC and browser protocols to WAP and Digital TV?

    —  those who are successfully and profitably marrying the old and the new while preparing for the next, keep quiet and are delighted to see potential competitors pouring their funds through the holes in the Web?

  The current situation gives massive opportunities for IT and e-commerce Directors with strategic vision as opposed to technology blinkers. But first you must ensure that the rest of the Board shares your vision.

  Ensure that they all have personal experience of crawling through the cybercrud and not merely watching the pre-cached demos. Give them ISDN lines and cable modems so that they know that the bottlenecks are such that doubling or quadrupling the bandwidth makes little difference. Then sell them on the benefits of marrying EDI with low bandwidth web-based front-ends for trial services this Spring with rapid roll-out in the event of success. But tell them you expect to save the main investment in mass-market roll-out for when there is two megs or WAP and Digital TV to your target customers (probably the year after next).

  But ensure that your colleagues know that the main difference between success and failure is building and retaining an in-house team which understands the business and its customers, not just the technology. That means generous profit-related bonuses and share options for the key members of the e-commerce team you plan to recruit and develop in-house from the brightest and best of their staff (and of course for yourself!).

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