Supplementary memorandum by Dr Michael
I Shamos, submitted by e-mail|
Are there still barriers that need to be removed?
Yes. The most critical are: telephone access
charges that make Internet use prohibitive; lack of full consumer
protection to guarantee safe use of the Internet for consumer
e-commerce; lack of a comprehensive legal framework for electronic
transactions; lack of compulsory licensing to allow distribution
of copyrighted content on the Internet (with fair compensation
to the copyright owners).
What are the "efforts to discriminate against
Attempts to levy discriminatory taxes (ie those
that apply only to e-commerce); legislation to forbid certain
goods from being sold over the Internet (eg Georgia forbade sales
of automobiles to protect local car dealersthis backfired).
How can protectionism be reviewed critically?
I hope that Internet transactions, particularly
all-electronic ones, will hasten the death of protectionism. In
my view, the way to prop up inefficient domestic businesses is
not to penalize their efficient foreign competitors but to encourage
domestic modernization through incentives.
Alongside "free hook-ups and inexpensive
PCs", will technologies such as mobile telephony and digital
television be important in moving towards universal access?
There's no stopping mobile telephony. By 2002
the number of wireless Internet-enabled handsets will exceed the
number of PCs connected to the Internet. Digital television will
be important only as part of a fully converged solutionone
in which the TV, computer and phone systems are effectively linked.
Europe is perceived to be ahead in mobile communications.
Is this important? How is the US responding to this?
I don't think it is important. Mobile use is
increasing in the US at its natural pace, which is to say quickly.
We're behind Europe and Asia, but we're ahead in other Internet
structure. It is not perceived as a problem.
Is the role of government fundamental or peripheral?
It's peripheral unless the role is to interfere!
It's very tempting to see e-commerce as a source of new tax revenue.
The role of government should be to ensure that the necessary
infrastructure exists to provide the required connectivity and
that existing laws are not used to hamper e-commerce growth.
The suggestion that government should, in some
way, pay to improve the infrastructure sounds un-American: is
that a real possibility?
It certainly is. The US government pays for
the interstate highway systemit might well pay for the
digital superhighway system. It's not unusual for the US government
to do things that are perceived as benefiting everyone.
What regulation has been of critical importance?
A lot. The AntiCybersquatting statute has cleared
up many domain name problems. The tax moratorium has kept local
officials at bay. The Digital Millennium Copyright Act (1998)
has clarified the rights of ISPs for carrying various kinds of
How important is the role of self-regulation?
Where should the responsibility for consumer protection, for example
credit card loss, reside?
Self-regulation only works in the context of
a realistic threat of government interference if self-regulation
In general, losses in all system should fall
on the party most able to (1) prevent them; (2) bear them; or
(3) insure against them. Most of the credit-card companies have
figured out that they can't have the loss fall on the (innocent)
To what extent are current laws and regulations
The real question is where they are enforceable.
The Internet has turned the concept of jurisdiction upside down.
We are in serious need of international conventions on the issue.
Unfortunately that will do little to deter rogue states that care
to harbor e-commerce fugitives.
4. SOCIAL ISSUES
Have social issues been separated from economic
To some extent. Certain US statutes begin with
"findings" of Congress that a particular problem is
damaging to e-commerce and therefore the following legislation
is needed. The social issues are very difficult to formulate and
There have been reports that the growth of e-commerce
widens social divisions and increases social exclusion. We have
also heard evidence that the opposite is true. What is your view?
It increases social divisions if the poor or
disadvantaged are further disadvantaged by being unable to obtain
access. It surely narrows the differences if there is equality
of access. In a world where information is power, then systems
that reduce the cost of information are empowering to the poor.
In a world where access to the Internet grants access to an entire
world of consumers, low cost Internet access is empowering to
How should the Government, or others, ensure that
appropriate e-commerce skills are developed in schools and elsewhere?
Train young teachers (and students still studying
education) NOW. Offer existing teachers incentives to become Internet-qualified
(eg pass this test online and you will get a raise). Offer existing
teachers incentives to create online courseware and to develop
Internet education materials. When there are as many public Internet
terminals as there are cigarette machines, there will be some
chance of success.
How will E-Commerce affect national issues such
as employment, transport and energy? What planning is carried
to predict the impact?
In employment, we will see a shift in the types
of jobs performed by people. It is a fallacy that automation reduces
jobsit doesn't and never has. What it does is to make certain
jobs obsolete, but at the same time improves the efficiency of
workers. These workers spend a smaller fraction of their day working
to meet daily needs (since they are more efficient) and therefore
have more disposable income. The increase in consumption leads
to demand for more workers, etc. The employees who suffer are
the ones who are unable to retrain for the new jobs.
Layoffs that are caused by declining profits
due to inefficiency lead to recession. Such job positions, once
lost, may never be replaced. Efficiency, however, only hurts the
few who thrive on its opposite.
E-Commerce clearly increases the need for transport:
(1) people order goods from farther away
because of the Internet;
(2) the demand for rapid delivery of items
generates a need for extensive logistical systems capable of meeting
the need. There is a lot to discuss here, such as ways in which
warehouse and transport space can be shared among manufacturers,
cutting out immense duplication of facilities.
E-Commerce leads to more efficient use of energy
because the supply chain can be viewed as a whole and energy cost
can be reduced through electronically mediated planning. For example,
in the logistic example above, truck routes can be optimised by
computer to save distance, time and driver costs. The tendency
of E-commerce to force just-in-time manufacturing also increases
energy efficiency. I cannot say whether this leads to an overall
reduction in the use of energy since the global standard of living
will rise and with it so may energy consumption.
18 April 2000