Memorandum by the Telecommunications Managers
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 http://europa.eu.int/comm/dg13/eeurope/pdf/pr081299_en.pdf
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
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
(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
(f) In pursuit of sustainable competition
we should vigorously encourageand ruthlessly enforcea
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
(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
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 linesregulatory action to drive up competition
and reduce prices is the only weapon the consumer has against
such vested interest.
17 February 2000