Memorandum by the UK Operator's Group
1. What needs to be done to create confidence
and stimulate e-commerce?
1. The Operator's group does not believe that
the Government needs to take further action to stimulate e-commerce,
rather we are of the view that growth within this environment
will be delivered by the market. New means of providing access
to e-commerce services through inter alia mobile telephony
and interactive digital television services will enable more consumers
to access e-commerce services without the expense of purchasing
a computer. Accordingly take up and growth of services will increase
as a natural development of the market. We are therefore of the
view that the Government should take a non-interventionist approach
to stimulating development of e-commerce, and a corresponding
light touch approach to regulation.
2. While we support the Government's vision
of Britain as a country at the forefront of e-commerce, we believe
that it is essential that the Government does not steer too far
ahead of the rest of Europe in implementing legislation. This
is of particular importance given the cross border nature of e-commerce
transactions. Rather we would support the Governments' role in
influencing and steering the development of legislation within
Europe to ensure that both suppliers and consumers have the confidence
to perform transactions by electronic means.
3. Consumer confidence is undoubtedly important,
however we do not believe that this will be addressed by changes
to the country of origin principle. There appears to be little
evidence to support the view that consumer confidence will be
increased by providing a right to sue in the consumer's jurisdiction,
as in practice it is unlikely that many consumers will seek redress
for disputes with suppliers through the courts. Rather, measures
such as an appropriate implementation of the Distance Selling
Directive will do much to provide confidence by providing consumers
with clear guidance regarding their rights when transacting at
a distance. However in implementing this Directive it is of vital
importance that consideration is given to the different means
that consumers will use to perform e-commerce transactions to
ensure that providers of services can comply with the Regulations
and that consumers feel equally protected irrespective of the
medium in which they transact.
4. Of equal importance to consumer confidence
is the confidence of SME's to make goods and services available
in an e-commerce environment without fear that they must comply
with the consumer laws of fifteen Member States. A lack of confidence
in this respect will undoubtedly provide a stumbling block to
the development of e-commerce for many SME's who would otherwise
seek to expand their customer base by this means. There has been
strong support in some Member States to changing the country of
origin principle to the country of consumption. The Operator group
would strongly urge the Government to resist such moves if confidence
is to be created within this environment.
2. Does the European Commission's draft Action
Plan "eEurope: An Information Society for All" offer
a realistic means of promoting e-commerce in the EU?
5. eEurope is a political initiative and
as such the scope of the action plan is significantly greater
thane-commerce. It encompasses a whole host of issues in the information
society ranging from education in a digital environment to intelligent
6. The eEurope initiative is an ambitious
project with ambitious target deadlines. However, it is vague
and in particular, it fails to address the issues of financial
engagements (eg Government funding). Given that it is a political
initiative, it is understandable that the paper discusses these
social policy issues. It would, however, be wrong to consider
that they should be funded as a universal service. In order to
promotee-commerce in EU, it is important to segregate social policy
issues from competitive market issues. It should not be a foregone
conclusion that social policy issues should be funded by the enabling
parties. Otherwise it will have a negative impact on the development
of e-commerce. The development of e-commerce needs to be market
7. Section two (cheaper Internet access),
section three (acceleration of e-commerce) and section six (risk
capital for high tech SME's), are realistic means of promoting
e-commerce in the EU. In particular, the unbundling of the local
loop and the significant reduction in short distance leased lines
tariffs are imperative, should we want to have a competitive environment
for electronic trading. A prerequisite to any of these initiatives
is a harmonisation of full implementation across all Member States
of the 1998 liberalisation package.
3. Will codes of conduct and co-regulation
provide sufficient protection? Is there a case for intervention
by national governments and the EU?
8. The Group believes that regulation of
e-commerce should be kept to a minimum. There is a real danger
that over-regulation will stifle the development of e-commerce,
widening the gap between the EU and America. Within this context
there is a potentially useful role for codes of conduct, together
with self and co-regulation (often referred to together as soft
regulation or soft law).
9. The Group's position is that soft law
can be a useful tool to protect consumer interests and promote
consumer confidence while not placing undue burdens on e-businesses.
10. Two particular qualities of the soft
law make it particularly suitable for application to thee-commerce
(i) It is a useful halfway house to full
regulation. We believe that a stepped approach to regulation is
necessary if over-regulation is to be avoidedso a soft-regulatory
approach should be tried before hard, legal regulation.
In this context we commend the approach taken in the UK'se-communications
(ii) It is well suited to a "hard-to-regulate"
world like the Internet. Detailed proscriptive rules are, in practice,
impossible to apply given the trans-jurisdictional nature of the
e-commerce world. We believe that, for example, a system using
recognised and respected self-administered quality marks is more
11. We believe that (either now or in the
future) soft regulation could potentially be applied usefully
in the following contexts:
Conclusion of online contracts.
Information to be supplied to customers
and refunds policies.
Control of online content.
4. Do the institutions of national governments,
on the one hand, and the European Commission, the Council of Ministers
and the European Parliament, on the other, function with sufficient
flexibility and coherence to promote the EU's objectives in the
field of e-commerce?
12. National and European institutions,
can by their very nature, act with only limited speed. In an increasingly
complex and ever more rapidly changing world of communications
these institutions will be less able both to intervene quickly
enough, and in a way which does not harm the market. This is doubly
true in e-commerce which is an aspect of the communications industry
which is moving at even greater speed than communications as a
whole. We believe, therefore, that there is limited scope to make
helpful changes to the way in which existing institutions function,
although it should be possible to make the UK institutional framework
more rationally reflect the nature of a converged communications
13. Changing the way in which European institutions
function would result in increased uncertainty which could hamper
the growth of e-commerce. In order to foster e-commerce there
needs to be more regulatory certainty and minimal risk. This will
give confidence to potential investors in the Internet's underlying
infrastructures and to those who will sell services and products
14. We believe, consequently, that beyond
establishing some higher level principles and guidelines in conjunction
with consumers and the industry, and facilitating non-regulatory
means to build consumers' trust in the use of the Internet, existing
government and European institutions should forbear as much as
possible from intervention in the communications market. e-Commerce
is developing at an incredible pace, and competition is spreading
at the same speed. Intervention could harm these developments.
The only regulatory tool to be used at this stage should be competition
rules. Only in the case of market failure would other forms of
regulatory intervention be justifiable. In short, if there is
any doubt about what to do, the best solution is to let the market
deliver what is needed. Bad intervention, or the prospect of it,
will hamper or even stop innovation and investment, and harm consumers'
interests. It will also make Europe second best in e-commerce.
15. The success of the mobile market, which
has expanded dramatically over a short period, can be attributed
in part to a "light touch" regulatory regime. For e-commerce
to develop along the same successful lines, the same light touch
regime should continue. The current institutional set-up has functioned
well for the take-off and establishment of competition in the
mobile sector, it should continue to do so for e-commerce.
16. Any sector specific regulatory reform,
especially for an industry as fast changing as telecommunications,
should be done within the context of forward-looking vehicles.
These exist already. The Government has recently announced the
start of discussions resulting in a White Paper later this year
on the regulation of the converging communications and broadcasting
sectors. The European Commission is moving towards its conclusions
following the 1999 Review of Communications which will lead to
new UK legislation.
17. In addition, telecommunications providers
are committed to the development of new forms of regulation including
self-regulation and co-regulation. This would, if given a chance
to develop, reduce the need for formal regulation. It would also
be in keeping with industry and government objectives to minimise
5. Should existing EU institutional structures
be changed or new ones created, to improve policy development
18. In the short-term, no. Rapid market
and technological developments in the field of e-commerce are
already to some extent providing governments and intra-government
organisations with difficulties in ensuring legislative and regulatory
frameworks are sufficiently flexible to deliver the objective
of promoting fair competition and stimulating innovation. The
European Union should not be distracted at this stage by institutional
reform, but instead focus on ensuring its current decision-making
procedures deliver quickly the necessary legal framework to promote
19. In the longer term, there is a case
for institutional reform, in particular increasing the authority
of the Commission with respect to National Regulatory Authorities
(NRAs) overseeing EU Member State telecommunications markets.
This will be important in ensuring full competition takes place,
a prerequisite for growth in e-commerce. Initial analysis of this
subject is already well underway as part of the EU Telecommunications
Review. Operators believe that the Commission needs to address
the procedural and institutional issues generated by the significant
transformation in NRAs responsibilities and principles implied
in the Review reforms. In particular, operators are seeking from
the Commission assertion of strong EU level direction and guidance
vis a" vis NRAs with respect to their performance in delivering
fair and effective competition. In addition, operators support
the Commission's proposal for establishing and chairing a new
Communications Committee that could, inter alia, function
as a forum for discussion and exchanges between NRAs and the Commission.
6. How can structural change be brought about
fast enough to accommodate to the growth of e-commerce?
20. It follows from the above that the Group
does not believe that one should concentrate at present on quickly
changing institutional structures with a view to trying to stimulate
the growth of e-commerce. Structural changes should only be made
when they are coherent with, and promote the objectives of, the
regulatory regime as a whole, in particular that foreseen in the
European Commission's 1999 Communications Review. By promoting
fast structural change only to try to accommodate the growth ofe-commerce,
there is a risk that one overlooks any regulatory objectives and
principles subsequently adopted in the context of the 1999 Communications
Review. This could have a counterproductive effect by actually
hindering the development of e-commerce.
21. It is more important for the moment
to avoid as much as possible to apply heavily interventionist
regulatory measures to e-commerce activities. These activities
will develop most rapidly if they are left to be dictated by market
forces. As pointed out above, any intervention in the market should
be made on the basis of application of competition rules.
93 Soft-regulation is, we believe, equally
valuable as a step-down from full regulation to total deregulation. Back