Select Committee on European Union Minutes of Evidence


Memorandum by Reuters Ltd

1.  INTRODUCTION

  1.1  Reuters is a public company with its principal place of business in the United Kingdom. It is the world's largest supplier of information to the financial services and business communities and to the media, with services available globally. Given Reuters corporate objective of making "financial markets really work on the Internet", we have a particular interest in the issues covered by this inquiry.

1.2  Financial services e-commerce is one of the fastest growing sectors of e-commerce. The UK's established pre-eminence in international financial services business, supported by a strong e-commerce economy, should ensure that this is also a sector where the UK will excel internationally. These factors provide the opportunity for the UK to give regulatory leadership within the EU and beyond.

  1.3  We would like to address the first two questions that the Committee is considering.

2.  WHAT NEEDS TO BE DONE TO CREATE CONFIDENCE AND TO STIMULATE E-COMMERCE?

Cross Border Regulation of E-Commerce

  2.1  The continuing inability of national regulators to have confidence in each other's ability to supervise online supplies is proving to be one of the most intractable barriers to e-commerce. As a consequence, online suppliers are faced with multiple, inconsistent and/or duplicative national regulations. We therefore applaud the work of the Internal Market DG at the European Commission in supporting the principal of country of origin in the draft e-Commerce Directive.

  2.2  We are concerned that other initiatives—such as the Brussels and Rome conventions—will undermine this. In the area of financial services advertising, we are also concerned that recent national initiatives in the UK, Italy, the Netherlands, France and Germany all assert jurisdiction over financial advertising and other promotional material emanating from other countries, even material from other EU Member States. It is of concern to find the UK among these countries. Member States that wish to continue to protect their markets from competition from more efficient UK suppliers will take heart from the unexpectedly protectionist lead provided by the Treasury proposals[1]. Inconsistencies between the e-Commerce Directive and national initiatives will act as a disincentive to e-commerce. e-Commerce-relevant regulation would be improved with better co-ordination within Member State government departments. In the case of the UK proposals on financial promotion, this would have been achieved if the Treasury had fully consulted with the DTI, which was responsible for negotiations on the e-Commerce Directive, before publishing its consultation document.

  2.3  One of the reasons why governments assert wide extra-territorial jurisdictional claims over overseas online services is the belief that this will ensure that consumers are properly protected. We believe that the way to address these concerns without entangling online suppliers in a regulatory web of inconsistent national regulations is to promote the use of simple, cheap and effective cross-border redress mechanisms. This will promote confidence in e-commerce and should persuade EU Member States to abandon "country of reception" supervision and move towards mutual recognition. We therefore support Commissioner David Byrne's current initiative on this issue (see Financial Times article, 22 February 2000) and encourage the Committee to urge HMG to lend its support to this initiative and to take a lead in encouraging mutual recognition within the EU and with other leading e-commerce nations.

Telecoms Costs

  2.4  Lower telecommunications costs are the key driver to e-commerce uptake. Given the global nature of e-commerce, it follows that governments need to foster a globally competitive telecommunications sector if they are to attract e-commerce. We welcome the European Commission's Information Society Directorate General's recent work in this area and note that cheaper Internet access is a central plank of the eEurope initiative. Specifically, the Commission's work in targeting the uncompetitive sectors of the leased lines market and calling for local loop unbundling (LLU) by the end of this year is particularly welcome. We hope that Member States will follow the Commission's recommendations in these areas. However, we note that leased line tariffs are only becoming competitive in certain areas[2] and that circuits in provincial areas continue to be dominated by former monopoly holders such as BT. Competitive pricing is vital in all market sectors and geographical areas if we are to avoid discriminating against businesses and other telecommunications users located outside capital cities and other main business centres.

  2.5  It is of concern that the UK regulator OFTEL is not following as energetic a timetable as the Commission, particularly with regard to LLU. European Commissioner for Competition Mario Monte recently commented that "the Italian (Communications) Authority has accomplished in a year what OFTEL did in five years". We are concerned that the UK's competitive position is continuing to decline with regard to the rest of Europe[3] and suggest that HMG should consider updating OFTEL's statutory commitments to include a duty to foster in the UK the best telecommunications environment for electronic commerce in the world. We recommend that the Utilities Bill, now before Parliament, is amended to place more aggressive obligations on OFTEL in the same way that the Financial Services and Markets Bill has very successfully modernised the objectives of the Financial Services Authority to expressly promote innovation and the UK's competitiveness.

3.  DOES THE EUROPEAN COMMISSION'S DRAFT ACTION PLAN EEUROPE: AN INFORMATION SOCIETY FOR ALL OFFER A REALISTIC MEANS OF PROMOTING E-COMMERCE IN THE UK?

  3.1  We welcome the eEurope initiative.

Public Sector Information

  3.2  In addition to the issue of cheaper telecoms costs discussed above, we are pleased to note the Commission's targets in the area of "Government online". Government data is the largest resource of raw material for the publishing sector. Making Government information more widely available will have a number of benefits. It will enhance administrative transparency, modernise the appearance of Government, strengthen democracy by broadening access to the public, improve business efficiency; encourage more widespread use of Information and Communication Technologies (ICTs) and enhance the competitiveness of, and create new employment opportunities in, the private sector.

  3.3  Reuters notes the Commission's recent Green Paper in this area and looks forward to a follow up communication. Furthermore, the EU institutions have in the main recently overhauled their previously archaic and inefficient methods of licensing by moving towards the US model, which is considered to have produced substantial benefits along the lines detailed above. We are pleased that HMG is currently reviewing its approach to this issue and hope that it will follow the EU in moving towards a similarly efficient model for the management of this prime information resource. We recall that the House of Lords Science and Technology Committee's July 1996 report Information Society: Agenda for action in the UK commented that "promoting the use of electronic publishing to facilitate widespread access to Government publications is one of the most important steps which Government could take to encourage the development of the Information Society in the UK (paragraph 5.60) and that it recommended a review of HMG policy in this area. We urge the Lords to support current Government moves for greater efficiency in this sector.

  We hope the above comments are useful and would be pleased to provide further evidence to the Committee if that would be helpful.


1   The Treasury proposals form part of the draft Financial and Services and Markets Bill. The Treasury published a consultation document and draft S1 in October 1999 which has been widely criticised by online companies for its country of reception stance and for its treatment of online intermediaries. Back

2   In the UK this is only in the central London (0207) area. Back

3   We would be pleased to provide information to the Committee on the UK's declining competitive position in the EU telecommunications sector if that would be helpful. Back


 
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