Examination of Witnesses (Questions 800
WEDNESDAY 10 MAY 2000
800. But you also want the Government to make
sure that there is no anti-competitive behaviour. You also want
legislation which does not impose undue policing burdens on service
providers. Do you not think there is some inconsistency in this?
How do you see your way through? How do you think that government/industry
agreements on self- and co-regulation can be made to stick without
rubbing up against each other?
(Mr Green) Perhaps I can address the philosophical
question you are asking, and my colleague Ian Morfett can answer
the specifics as to what it is we think needs to be done. What
we are saying is that ex-ante regulation which prevents things
happening because the regulator is worried about what the effects
of them might be, will slow down the penetration and the pace
of change because this is a phenomenally fast moving industry.
Therefore, they should rely on the competition legislation, and
this country now has really excellent competition law for the
first time, to clamp down very quickly on anti-competitive practices,
that the regulators are the last people who should try and guess
which is the appropriate technology and try and control and regulate
how it should happen. That is the philosophical difference between
us and some other people relating to the regulations.
(Mr Morfett) I agree that we might have a feeling
of "cake and eat it" about it. We do believe that there
is a framework which says you need a legal framework in which
to operate and both the UK Government and Brussels have developed
one and we are generally very supportive of it. We think it is
the right sort of thing. As Colin has said, we believe that the
Competition Act is not sector specific. It does not apply to a
great deal of what we are talking about in e-commerce and therefore
quite a lot of the heavy sector-specific regulation is unnecessary
and will indeed inhibit it and that moves regulation somewhat
to ex-post rather than ex-ante. We are also rapidly seeing the
self-interest of companies that want to operate in this space
driving them to come up with self-regulation measures so that
that should take the lead and the fallback would be legislation
or regulation. That would be the balance that we would look for.
I will take the opportunity just to refer to one specific part
of the European proposals and that comes back to the point about
heavy burden monitoring and so on. A copyright directive is currently
being discussed in Brussels. It could either be a tremendous success
in providing companies who want to come on to e-commerce with
the assurance of the clarity of the framework that they need,
or it could be a significant burden or brake. The difference is
that the liability for inappropriate illegal copyright should
not fall with the intermediary but with the company that is transmitting
it other than when they know that there is a copyright breach,
in other words that they should not monitor in advance. We would
see existing self-regulation of the Internet as a good example,
in the sense that if a company were informed in appropriate circumstances
of a copyright breach they would immediately take down the material.
We see that with the Internet Watch proposals which is about child
pornography on the Net. We would see a similar approach with copyright
but it would require both self-interest and discipline amongst
the companies that want to expand, and an appropriate copyright
directive as a fallback framework.
Lord Woolmer of Leeds
801. That leads us into the host country kind
of issue, does it not? In your document at various points you
put a plea in for a country of origin principle, moving it towards
saying that consumers should be able to make choices about the
legislative environment, although you never quite get to say that
it might even be the home environment or the consumer. How do
you see a balance being achieved between these two stances?
(Mr Green) It is a difficult issue. There is not an
easy answer. We favour country of origin because we think that
is the only way currently for small businesses to come on to the
e-commerce bandwaggon. Any small business, a five-man business
or even a one-man business, runs the risk of dealing with a consumer
in another country and having to deal with proceedings in that
country may well be deterred from doing that. As far as the consumer
is concerned we think that some of the industry concepts for giving
assurances to consumers will help. The United Kingdom Government
has suggested that there should be some kind of intergovernment
discussions about facilitating claims across borders and we would
support that. At the end of the day the consumer does have a choice.
If businesses are required to state whether they are relying on
their local law and jurisdiction or not, the consumer can then
choose whether to deal with them. That will drive consumers either
to brands that they know and trust or to businesses that are part
of some kind of security system that gives them assurance, or
to using credit cards if the credit cards accept parallel liability.
There are a whole variety of ways in which the consumer can get
protection, but if you move to country of residence or home country
for e-commerce, basically I think you will deter a lot of SMEs.
This is not a problem for BT. We can handle that because we have
businesses throughout Europe. This is an issue which we think
is critical for facilitating e-commerce amongst the small to medium
802. If you are a consumer you might be able
to understand the argument, but if you are a consumer then you
are almost bound to prefer to operate in the environment which
is consistent with the culture and regulations of your own society,
are you not?
(Mr Green) If someone comes over from France and goes
to Dover and goes into a shop and buys something, do they worry
about the fact that if something goes wrong then they are going
to have to raise a claim in the United Kingdom? Do they take that
into account when they are buying? I do not know. It is not a
lot of difference so long as the consumer knows.
803. The Internet is global and if you are sitting
in somewhere in the South of France and you are dealing with somebody
in the United States or in China, it is not quite the same as
someone coming over. The analogy you draw is that I should say
to you, is not a terribly fair one in the complexity of cultural
variations, that I sympathise with the problem but I do not think
popping across the Channel is quite the challenge that people
would face on the Net, is it?
(Mr Green) So long as there is some requirement for
the consumer to be told when he goes on to the site that it is
a Chinese jurisdiction, he can make a choice. Most consumers in
those circumstances in my view will go for the safe option or
they know they are taking a risk.
804. It is caveat emptor, is it not?
(Mr Green) Yes, but making sure they have the information
to make an informed decision.
805. Is the issue of libel on the Net an issue
for you or is it just an issue for the ISPs?
(Mr Green) First of all we do have ISPs, so from that
point of view it is an issue. It goes back to what Ian was saying,
that if someone tells you that the thing is libellous and you
know it is libellous and you do not take any action, I think it
is reasonable for there to be some exposure, so long as, as in
the United States, there is protection if you make a mistake.
If you do not know that the thing is libellous and you have no
means of knowing that it is, then, just as the Post Office is
not liable for carrying an envelope which has something in which
is libellous, we do not think that the transmission agency should
806. When you talk about security and integrity
of credit cards, yesterday I was listening to You and Yours
on my way to the airport and I seemed to pick up from that that
the integrity of credit cards was such that they were more vulnerable
on hand-held telephones than they would be on PCs.
(Mr Andradi) I do not know.
807. I wondered whether it was more vulnerable.
(Mr Green) Unless it is to do with the potential for
interception it was greater on analogue than it is on digital
to hack into it.
Chairman: We did have some views expressed in
America that that was the case. Gentlemen, we have still got more
questions we would like to put to you but there is a limit to
how long we can run. Again I would like to express our gratitude
to you for coming along. You have also promised to let us have
some further papers which we look forward to. Thank you very much