Memorandum by Energis Communications Ltd
1. What needs to be done to create confidence
and stimulate e-commerce?
1.1 The internal market principle and the consumer
protection dichotomy is probably one of the most challenging issues
we face in the Information Society. It is in the interest of UK
Plc to ensure that both consumers and businesses have the confidence
to use e-commerce without fear of material loss or harm through
interference to their rights as an individual or a business. Energis
is committed to finding this solution with all stakeholders.
1.2 Section 10, "Trust", of the
PIU report [email protected] deals with the significance
of trust as a barrier to participate in e-commerce and puts forward
a number of recommendations to overcome that barrier. In particular,
Energis believes that Recommendation 10.2, ie the use of hallmarks
and the development of an Internet dispute arbitration service,
will create confidence and stimulate e-commerce.
1.3 Consumers want a brand (symbol, hallmark
etc.) that they can trusta simple hallmark to guarantee
that a supplier meets a certain standard. They are not looking
for a legislative solution. For businesses, especially SMEs which
may not have a well-known brand, the hallmark could be used to
promote trust and its services. This solution creates a "win-win"
situation for both parties. However, it cannot be over emphasised
that the use of hallmarks would only succeed if it is backed by
clearly defined standards. A mechanism for policing its standards
is also a prerequisite. To this end, Energis is encouraged by
the DTI's proactive involvement with the Alliance for Electronic
1.4 With regards to Internet dispute arbitration
service, Energis is supportive of the development of electronic
out-of-court dispute settlement schemes. For example, the development
of an alternative dispute resolution (ADR) mechanism that could
be linked to existing EU Member State ADR schemes through a network
could ensure a satisfactory outcome for both consumers and businesses.
This type of online system could allow disputes to be resolved
by the ADR in the country of origin of the business, while ensuring
consumers access to the ADR from their own Member State.
1.5 For the UK to become the world's best
environment for electronic trading, businesses, especially SMEs,
need a clear understanding of their obligations arising from EU
legislation. Energis is concerned that the requirements arising
from a number of directives may be confusing to both businesses
and consumers. For example, both the Directive on the Protection
of Consumers in Respect of Distance Contracts ("Distance
Selling Directive") and the proposed directive "on certain
legal aspects of Information Society services, in particular electronic
commerce, in the Internal Market" have a similar, yet diverging,
provision on general information to be provided.
Energis believes that it is imperative that the implementation
of the two directives does not lead to inconsistent requirements.
Moreover, to ensure that businesses comply with the relevant regulations
and consumers are given the protection they need, the message
to both consumers and businesses must be consistent, simple and
1.6 The Government needs to recognise that
these businesses cannot afford to implement similar yet diverging
requirements on a piecemeal basis. Complex variations in requirements
will inevitably lead to non-compliance and, as a result, consumers
will lose confidence in e-commerce and new media services. Energis
therefore urges the Government to take a holistic approach when
dealing with directives with recurring themes. Perhaps the Government
could draft guidelines on the whole legislative framework.
2. Does the European Commission's draft Action
Plan "e-Europe: An Information Society for All" offer
a realistic means of promoting e-commerce in the EU?
2.1 e-Europe is a political initiative and
as such the scope of the action plan is significantly greater
than e-commerce. It encompasses a whole host of initiatives in
the Information Society ranging from education in a digital environment
to intelligent transport. A prerequisite to the success of any
of these initiatives is the harmonisation by full implementation
across all Member States of the 1998 telecommunications liberalisation
2.2 The e-Europe initiative is an ambitious
project with ambitious target deadlines. However, it is vague
and in particular, fails to address the issue of financial engagement
(eg industry or government funding). Given that it is a political
initiative, it is understandable that the paper discusses a number
of social policy issues. It must not, however, be a foregone conclusion
that any of these initiatives will be funded by the industry,
ie the enabling parties, as a universal service. In order to promote
e-commerce in the EU, we believe that social policy issues should
be segregated from competitive market issues. The development
ofe-commerce needs to be market driven.
2.3 Section Two (Cheaper Internet access)
and Section Three (Acceleration of e-commerce) offer realistic
means of promoting e-commerce in the EU. In particular, we agree
that the unbundling of the local loop (ie access) and the significant
reduction in short distance leased lines tariffs (ie interconnection)
are imperative should we want a competitive environment for electronic
trading. We also agree with the Commission that regulation of
e-commerce should be limited because of the speed of change and
the implications of global change. To keep up with the rapid pace
of change, the role of self-regulation and co-regulation ought
to be increased.
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 Energis believes that the development
of e-commerce should be market driven. However, given the range
of issues e-commerce and the Internet encompass, we acknowledge
that legislation is necessary in certain areas. For example, codes
of conduct or co-regulation would have been inappropriate to ensure
that electronic signatures are legally recognised. The global
and fast-moving nature of the Information Society suggests, however,
that any legislation introduced must be "light-touched".
To this end, we believe the Government has taken the right approach
in the introduction of the Electronic Communications Bill.
3.2 In this fast moving industry, the benefits
of codes of conduct and co-regulation cannot be over emphasised.
A prime example of this is the use of hallmarks as mentioned earlier
in the paper. Codes of conduct and co-regulation are useful tools
to protect consumer interests and promote consumer confidence
while not placing undue burdens on e-businesses. In this respect,
we believe quite a lot of the requirements arising from the Distance
Selling Directive should be implemented as codes of conduct or
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 Energis believes the key issue is timing.
We are very concerned that some of the directives on the horizon
will be obsolete by the time they come into effect. For example,
although e-commerce is within the scope of the Distance Selling
Directive, it is quite clear that technology such as WAP (Wireless
Application Protocol) was not anticipated when it was drafted.
Initiatives such as TrustUK did not exist either. Energis fully
understands the Government's responsibility to implement this
Directive. However, one could argue that many of the obligations
no longer remain appropriate because technology has moved on or
the issues have already been proactively addressed by codes of
conduct or co-regulation.
5. Should existing EU institutional structures
be changed or new ones created, to improve policy development
5.1 This issue is currently being reviewed
as part of the Commission's 1999 Communications Review. As such,
Energis has yet to finalise its views on the matter. However,
it is worth noting a comment by Commissioner Liikanen. Last December
he was invited to the European Parliament's Industry Committee
where he was asked whether there should be a task force on telecommunications
and e-commerce, with representatives of the three institutions
(Commission, Council and Parliament). Commissioner Liikanen replied
by urging the Committee to try the new "e-Europe initiative".
However, he also acknowledged that telecoms and e-commerce matters
are handled in a piecemeal fashion by the various Directorate
General, which all want a piece of the action.
5.2 The potential need for convergence of
regulatory and legislative bodies is not restricted to the EU.
As such, Energis looks forward to the Communications White Paper
and its recommendations.
6. How can structural change be brought about
fast enough to accommodate to the growth of e-commerce?
6.1 Again, since this issue is currently
being reviewed as part of the Commission's 1999 Communications
Review, we will not comment on this occasion.
81 Article 5 of the Proposed Directive on
electronic commerce and Article 4 of the Distance Selling Directive. Back