Select Committee on European Union Written Evidence

Memorandum by the Telecommunications Managers Association (TMA)


  1.  The Telecommunications Managers Association is the premier professional association of communications consumers working within business user organisations. It has 2,000 members responsible for a combined direct annual spend on telecoms and IT in excess of £9 billion. The companies employing TMA members, whether SMEs or large Corporates, tend to be in the vanguard of businesses harnessing e-commerce to expand their trading capabilities. Their interests are therefore identical with the interests of those who seek to stimulate the rapid take-up of e-commerce in all sectors of society.


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

  2.  The wording of the question presumes that lack of confidence is perhaps the only factor affectingslow roll-out. A pertinent and well-researched report from the ITC shows that "concerns about the internet and its content lessen when people learn more about it". It is difficult to see how the present public enthusiasm for the Internet could be further stimulated by action to "create confidence". On the other hand, it is very clear that the cost of access is a major consumer deterrent, which perhaps explains why President Prodi's list of key elements in his e-Europe Initiative has as its second bullet point the cost of access to the Internet. Whereas lack of confidence may be easily spread across information haves and have-nots alike, the issue of cost of access bears down particularly hard on the have-nots, the very sector that deserves encouragement and assistance. The cost of access has two facets; the one-off cost of the terminal and ongoing cost of connection to the network. While the price of a terminal, whether TV or PC, is probably within the reach of all but the most disadvantaged consumer, the cost of frequent and prolonged access to the internet is almost certainly not. Two things are lacking: "always-on", high-speed access from any home in the EU to the global network, together with affordable tariffs. In short, if it's (a) attractive and (b) affordable, everyone will go for it, and hang the risk. Were it not so, the world's oldest profession would not exist.

  3.  Our response to the Committee's final question (below) offers some practical proposals for attacking the cost of access issue.

Second Question. 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?

  4.  Broadly, yes. It is vital that a trading framework be established and internationally accepted with minimum further debate and delay. There is a real danger that the best will become the enemy of the good. The draft Action Plan is good.

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

  5.  The UK, in common with all other member states and, indeed, the EU itself, isn't a communications island. If, for example, the rules for provision of affordable, broadband access aren't applied consistently across the EU, the result will be a deepening of the divides between rich and poor. Such socio-economic issues cannot be left to codes of conduct and co-regulatory regimes. Independent regulation of the telecommunications sector will remain a requirement for many years to come if the consumer is to be adequately protected and provided with the services he needs, not what an imperfect market is willing to supply. This comment applies to other sectors, such as financial services, up and down the value chain, to varying degree. The final regulatory picture will probably be a patchwork of strict regulation in key areas, with a light touch or, in the extreme, codes of conduct (such as that applied by the UK's ISPA to control of content), in others. The challenge is to achieve that marriage.

Fourth Question. 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?

  6.  TMA welcomes the preliminary agreement on the e-Commerce Directive, which now states that e-commerce businesses need only comply with their domestic laws. Such flexibility is to be applauded, but there is still room for improvement to allay consumer fears. For example, it is noted that there is a requirement for every new Bill to carry a front-page statement that it complies with the European Convention on Human Rights. It would focus the thoughts of drafters of new Directives and Communications, and greatly assist their audiences, if their drafts were to carry a similar brief, clear and readable statement on the "consumer impact" of their intentions.

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

  7.  No. The impact of change throughout the e-commerce industry is already overwhelming. Radical, revolutionary change at the institutional level would be very likely to add further confusion and detract from the effectiveness of regulation. The message must be "evolve to keep pace and get it right first time".

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

  8.  Structural change in the organs of the EU is not necessary and is not the answer. Our response to Question 1 addresses growth in e-commerce in terms of affordable, broadband access. Some practical steps which should be given serious consideration nationally and might also be applicable to the wider context of the EU, are:

    (a)  HMG (the Commission) should publicly commit to the concept of a nation-wide (EU-wide) broadband infrastructure.

    (b)  Early adopters (of broadband) may pay more for the service based on value and need but ought to be able to take advantage of price reductions as service roll-out increases. Alternatively, we should accept that initially among consumers the many will subsidise the few in order that the few may more rapidly become the many. (In short, price to the end-user is at worst a short-term, transitory issue).

    (c)  The E-Envoy (the nearest pan-European equivalent is DGXIII) should be tasked with generating targets, incentives and processes for the roll-out of affordable, broadband service.

    (d)  Because all the key technical constraints on wireless and DSL roll-out plans are associated with issues of spectrum management, we should prioritise our spectrum management policy towards facilitating broadband access technologies.

    (e)  We should have a clear idea of the economic model that allows Bell South to offer 512kbps "always on" for $50 a month and apply it in the UK and more widely across the EU.

    (f)  In pursuit of sustainable competition we should vigorously encourage—and ruthlessly enforce—a level playing field at service provision level in order to reduce retail prices for ADSL-based service and for services based on other delivery mechanisms.

    (g)  We should impose an localised obligation to supply affordable broadband on all licensed infrastructure operators having Significant Market Power in specific geographical areas.

    (h)  We should give tax breaks to infrastructure operators who offer broadband access.

    (i)  We should give tax breaks to consumers who take up broadband services, tapering off as the market approaches critical mass.

  9.  The thrust of this is that we can't leave the market to drive things along so long as it's sitting on its hands and claiming that there's no demand and no hurry. The cork in the bottle is the dominant (ie ex-monolopy) operator's need to protect its revenue derived from traditional dial-up services and leased lines—regulatory action to drive up competition and reduce prices is the only weapon the consumer has against such vested interest.

17 February 2000

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