Select Committee on European Union Written Evidence

Memorandum by BT Cellnet


(i)  BT Cellnet, a wholly owned subsidiary of British Telecommunications plc, is one of four mobile network operators in the United Kingdom providing services using the GSM900 and/or GSM1800 standards. Additionally, Dolphin provides mobile services to business users utilising spectrum in the TETRA frequency range. BT Cellnet currently has in excess of seven million customers and its digital network covers 99 per cent of the UK population and 85 per cent of the UK land mass.

  (ii)  BT Cellnet is leading the field in the development of mobile e-commerce and mobile Internet services. In 1997 BT Cellnet, in association with Barclaycard, introduced access to Barclaycard account information and Barclays Bank accounts via a customised BT Cellnet mobile phone. Also in 1997, BT Cellnet introduced its Genie service, the first Internet-based information service with a strong focus on mobile value added services. Genie has now developed into one of the 10 largest UK Internet Service Providers and is expected to have one million portal subscribers by this spring.

  (iii)  BT Cellnet is the first UK operator to launch a commercial Mobile-Internet service using the Wireless Application Protocol (WAP). Data transmission for mobile Internet users is set to increase significantly this summer with the introduction of BT Cellnet's General Packet Radio Service (GPRS) network. GPRS enables "packets" of information to be transmitted between computers at speeds up to 10 times faster than today. The development of Universal Mobile Telecommunications System (UMTS) will provide the means for interactive multimedia and video mobile services. The UK auction for the UMTS licences is due to commence on 6 March and services are expected to be launched around 2002.

  (iv)  Analysts expect that, by 2004, one in three Europeans will access the Internet using mobile devices[3]. Accordingly, BT Cellnet expects that Internet transactions carried out on mobile devices ("m-commerce") will constitute a significant proportion of e-commerce, which is expected to account for

1.6 trillion within the EU by 2004[4]. BT Cellnet's interest in the development of policy on e-commerce is, therefore, clear.


  1.  What needs to be done to create confidence and to stimulate e-commerce?

1.1  Building confidence in the efficacy of e-commerce is widely and, in BT Cellnet's view, correctly regarded as essential to its growth. Using the Internet, consumers are able to engage in transactions not under human control, to buy from remote locations, from suppliers they do not necessarily know. There is ample scope for errors, flaws and fraud. In addition, well-documented scare stories do not inspire faith in the process and hold back further development.

1.2  In order for the benefits of e-commerce to be fully realised, industry, government and consumer groups need to build up trust and promote consumer protection.

  1.3  BT Cellnet therefore welcomes the draft European Directive on e-commerce in the Internal Market[5]. The Directive seeks to promote the growth and competitiveness of e-commerce by establishing an appropriate legal framework and giving confidence to consumers and businesses alike.

  1.4  BT Cellnet supports the "country of origin" approach set out in Article 3 as the only practical approach.

  1.5  BT Cellnet welcomes the effect of Section 3 of the Directive, which governs the rules for electronic contracts and would require Member States to ensure that their legislation permits agreements to be concluded electronically.

  1.6  Article 16 of the draft Directive would require Member States and the Commission to encourage the drafting and implementation of codes of practice which seek to ensure compliance with other parts of the Directive. These include provisions governing the information to be provided with commercial communications, unsolicited commercial communications and the information to be provided to parties to proposed contracts. The Commission would examine draft national and Community wide codes. BT Cellnet would welcome such codes but notes that Member States and the Commission would be required merely to "encourage" their drafting and implementation.

  1.7  BT Cellnet welcomes Article 17 of the draft Directive, which would require Member States to ensure that appropriate out-of-court dispute resolution schemes are available.

  1.8  Article 18 would require Member States to ensure that interim measures are available to consumers to remedy alleged infringements. BT Cellnet welcomes this and expects that consumer groups would be able to take representative action.

  1.9  These measures should build consumer and business confidence, promoting the growth of e-commerce within the EU. Nevertheless, e-commerce between consumers and businesses which extends beyond the EU would not seem to be subject to these provisions.

  1.10  In addition, BT Cellnet notes that, in order to engage in e-commerce, consumers need access to money transmission services. A sizeable minority of people in the UK does not have access to such services and are therefore effectively excluded from engaging in e-commerce.

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?

2.1  Chapter 3 of the document, entitled "Accelerating e-commerce", notes that the US, with a similar sized economy to that of Europe's, enjoys e-commerce revenues more than three times European levels. It argues that there is a need for a reliable Internal Market legal framework to deliver legal security, remove barriers to cross-border services and build trust. Five targets are set for the end of this year:

    —  the implementation of e-commerce related Directives;

    —  changes to EU rules to permit public procurement procedures and transactions to be carried out electronically. Member States are to be encouraged to do likewise;

    —  Member States and the Commission to encourage online dispute resolution and other consumer redress mechanisms;

    —  Member States and the Commission to provide support to SMEs to "go digital"; and

    —  the Commission to support the creation of a ".eu" top level domain to encourage cross-bordere-commerce and assist those companies wishing to establish an EU-wide Internet presence.

  An essential part of the package of measures to encourage and accelerate e-commerce within the Community needs to be EU-wide protection against "cyber-squatting", ie rules need to be established such that the owner of a brand has the rights to the domain name in that brand. As an example BT Cellnet, as owner of the "BT Cellnet" brand should have a legal right to use the domain name "". There has been a number of cases in the UK where well-known companies, including BT Cellnet, have had to take legal proceedings in order to protect the use of their name.

  2.2  BT Cellnet agrees with the Commission's analysis of how e-commerce might be promoted. Whether the challenging targets and deadlines set out in the document can be met remains to be seen.

  2.3  At present, as noted above, a sizeable minority of the UK population does not have access to money transmission services and would therefore seem to be effectively excluded from engaging in e-commerce. Chapter 5 of eEurope: An Information Society for All, "Smart cards for secure electronic access", proposes the development of common specifications for a generalised smart card infrastructure. It is envisaged that such smart cards would provide all citizens with access to electronic payment methods and other uses. BT Cellnet welcomes this development.

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

  3.1  BT Cellnet believes that self-regulation, generally, and out-of-court dispute resolution mechanisms, as described in Article 17 of the draft Directive, in particular, would be appropriate for the majority of disagreements. BT Cellnet notes reports[6] that the Commission is seeking to establish an EU-wide clearing house to direct complaints to appropriate national bodies which, it is intended, will all operate an accepted dispute resolution mechanism. The Commission is reportedly co-ordinating its efforts with the US Federal Trade Commission, which is considering a similar scheme. It is envisaged that dispute resolution might ultimately be carried out online. BT Cellnet welcomes these developments.

  3.2  Consumers should not enjoy worse protection for online transactions than they do for equivalent conventional transactions. Accordingly, a right to bring proceedings should be retained for online transactions, where such a right existed before. However, bringing proceedings in one Member State may, in practice, prove to be uneconomic and impractical for consumers in another Member State. In its White Paper[7] last summer, the UK Government proposed to seek agreement with other Member States on proportionate and effective action in such circumstances. BT Cellnet looks forward to closer co-operation in this area.

  3.3  In addition, BT Cellnet believes that deceit, fraud and other malpractice cannot be left to self-regulation. Cross-border co-operation between enforcement authorities is necessary, and enforcement authorities must have the appropriate supervisory and investigatory powers. Article 19 of the draft Directive seeks to establish such a framework.

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?

  4.1  There are a number of different groups with an interest in the development of policy in this area. The European authorities need to ensure that reasonable efforts are made to consult with all such parties in the interests of openness and transparency and also to ensure the application of similar principles in converging industries.

  4.2  A reasonable minimum period of responses to consultation documents of eight weeks should be granted.

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

  5.1  No comment.

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

  6.1  No comment.

24 February 2000

3 Back

4   Ibid. Back

5   Amended proposal for a European Parliament and Council Directive on certain legal aspects of electronic commerce in the Internal Market, September 1999. Back

6, as at 22 February 2000. Back

7   Modem Markets: Confident Consumers, July 1999. Back

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