Tony Blair says he wants to make the UK the best environment in the
world for e-commerce, but how does the UK compare to its nearest
neighbours? Ray Hearnlooks at the state of e-commerce in
Europe
Last September, Tony Blair set out a vision that the UK would offer
thebestenvironmentfor e-commerce. "E-commerce@itsbest.co.uk", the
Government claimed.
Then along came the furore over the Regulation of Investigatory
Powers Act, a piece of legislation which would actively discourage
organisations from basing their e-commerce operations here, at risk
of having the contents of their e-mails monitored by the security
services.
To follow that, in May, computer services group CMG suggested
that, far from being the leader in Europe of the new kind of
commerce, the UK was actually falling behind, and it was now France
that led the UK proportionately in the amount of business carried
out online.
However, figures from the Government's latest reports into
e-commerce tell a different story:
- One third of the UK population is now online, more than any
other European country
- One third of UK employees engage in online financial
transactions with customers or suppliers, a higher percentage than
Sweden, Germany, France, the US or Canada
- The UK is the largest e-commerce market in Europe
So, the question needs to be asked: if some businesses are
quietly moving their e-commerce processing operations out of the UK
(though without making too much of a fuss about it), and if those
e-commerce services are not to be offered from the UK, where should
they be based in Europe and why?
Telecommunications costs are a key factor to consider. According
to a report for Oftel by Richmond-based company Teligen which
examined all usage by residential and business customers, the UK
had the lowest prices for most residential users of the Web. It was
a point the Government was very keen to point out in the launch of
its latest e-commerce report.
Yet, on average, the UK, has the highest charges for businesses
compared to the other countries surveyed.
The extensive examination of a number of telecommunication
services also included a look at what kind of Internet charges were
demanded from UK businesses using the Web compared with a selection
of European and American companies.
"One possible reason for this discrepancy," says Richard Cadman,
deputy managing director of Teligen, "is that the UK has a two-tier
phone structure - one, the lower rate for residential use only, and
the other for business. Business here does get a priority service
if things go wrong, but you pay a higher price. Other countries in
the survey, as far as we can make out, do not have this kind of
difference."
A similar picture emerged with ISDN services. For both
residential and business use. UK residents pay, on average,
relatively high prices compared to Germany and Sweden (both of
which were about 33% cheaper) and close to those in France (where
prices were 6% cheaper).
For business use of ISDN, the UK is the most expensive of the
four countries studied in the report, with Sweden almost 42%
cheaper.
So, how do other parts of Europe contrast with the UK in terms
of their suitability as a base to offer e-commerce services? We
have looked at countries from across Europe, taking into
consideration e-commerce culture, the "e-friendliness" of
legislation, and the economic background for business.
Northern Europe
Sweden: mobile commerce leader
Sweden was the first country in Europe to fully deregulate its
telecoms market. At present, there are 40 telecoms operators in
Sweden, resulting in a fiercely competitive market and a wide range
of sophisticated services. Scandinavia is already a leader in
mobile commerce
There is also a strong engineering and invention tradition.
Sweden holds more patents in force per capita than any other
country. In addition, according to 1998 figures, the Swedes invest
6% of their GDP in IT and telecoms, just behind the US, and well
above the average for Europe.
Svenska Kraftnat, the Swedish electric power network, together
with the nation's three largest electric power companies, has
joined a project to build a fibre optic broadband network. The
first stage consists of a 1,700km fibre cable system that will
cover about 80 towns and four million homes - nearly half the
population.
At the same time, other firms have combined to connect
households with broadband. This will allow Internet access at up to
200 times the speed of traditional telephone wires. By the end of
2001, up to 20% of homes will be able to access the Internet using
this high-speed method. In four years' time almost the entire
population will be linked to broadband.
Western Europe
France: catching up
France has demonstrated a typically Gallic stance regarding the
Internet. Three years ago, French justice minister Jacques Toubon
railed against the use of the English language throughout the
Internet. In March this year, at the EU summit, French prime
minister Lionel Jospin launched what was described as a "rearguard
action" regarding European Internet progress. However, less than 5%
of companies worldwide use the French language, and that includes
French-based firms.
In 1984, France launched the Ecole Pour L'Informatique et Les
Techniques Avancees (Epita), a computer and telecommunications
college, but it almost failed before the mobile and Internet
revolutions finally took hold.
Until recently, starting an e-business in France was a rarity,
but many graduates of Epita have now formed e-businesses. Two of
them, On-net Services and Planet StartUp, have come to be regarded
as being among the fastest growing firms in France, providing
technical, financial, legal and commercial help to newer Internet
companies
According to Jean-Michel Durocher, founder of French mobile
content company Webraska, the tax laws in France do not help
high-tech companies. Stock options are heavily taxed, and companies
often have to take on more administrative staff to solve red-tape
headaches.
Germany: heading for leadership
Germany once struggled to get to grips with e-business, but now
looks likely to take over as Europe's e-business juggernaut. Four
years ago, German exporters complained that they were losing trade
because the Internet made it easier to compare prices and was
consequently increasing competition.
German business laws, traditionally inflexible and designed to
protect employees and consumers, also held up progress towards a
new German economy. But this year saw major Web-related changes. In
February, Gerhard Schroder, the German chancellor, invited 30,000
foreign computer specialists to work in the country to boost its
Internet competitiveness.
The move was made in response to a chronic lack of skills, with
at least 75,000 experts needed in research and development. The
country was prepared to go to Eastern Europe and as far afield as
India to find the right kind of specialists. However, there have
been complaints from some foreign workers over their rights to set
up businesses or bring family members into the country.
A new cyber-crusade was launched to increase Internet usage in
the home and among businesses by forcing price cuts. The Internet
Without Metered Charges Group wants to see the number of German
homes online, currently estimated at 7.1%, increase
dramatically.
T-Online, run by Deutsche Telekom, has a 62.3% share of the
German Internet market, followed by AOL with 18.9% and Compuserve
with just over 4%.
In April, in another significant move, two 70-year-old German
shopping laws were marked down for termination. This promised a
significant relaxation in the country's notoriously restrictive
retailing sector, which restricted both discounting and special
offers.
Despite these moves, Germany had one of the slowest
ITdevelopment growth rates among major European countries in 1999.
But thanks to companies such as GoIndustry, a Munich-based surplus
equipment online marketplace set up by a British entrepreneur, that
slow growth is now likely to be a thing of the past.
Southern Europe
Italy: driving a new hot economy
Like Germany, Italy has slow IT growth, but its telephone sector
is buoyant. According to the country's National Association for the
Production of Technology and Communication Information Services
(Assinform), in 1999 the telephone sector was worth a total of
63,290bn lire - up 14.6% compared with the previous year.
The direct market impact of the Internet and related components
was not greatly significant, but, according to Assinform, the Web
has "forced" many market players - both buyers and producers - to
acknowledge the presence of an important process of technological
innovation. This led to a need to keep up with the times, which had
tangible results on both upgrades and equipment renewals.
Many newly-formed companies in Italy cited the existence of the
Internet as their sole reason for starting a business. In the
fourth quarter of 1999, free Internet access was introduced by many
operators, and had a much greater success than was expected. This,
plus PC and software demand, helped to fuel growth.
The largest IT growth area is in the south of the country
(including the Italian islands), estimated at 12.3%. Factors behind
this growth include technology and application acquisitions by
companies competing on the international markets, and the start-up
of countless new enterprises in response to incentives encouraging
young people to take up the opportunities offered by the Internet
economy. This area - often regarded as the poorer part of the
country - is expected to attract a growing number of advanced
software and technology production operations.
Spain: overcoming the manana effect
In Spain, the manana attitude of southern Europe is fast
disappearing as the country wakes up to the Internet.
In March, the Spanish Association of Internet Users (AUI)
reported that there were four million Internet users in Spain,
accounting for 12.4% of the population, and a large proportion of
these were business users. This compares with just 1.3 million
people four years ago, and represents a 218% rise in Internet
use.
Of the four million users today, nearly 40% are business users,
and this includes a significant number of small, home-based
enterprises. Forecasts suggest incredible growth. By 2005 there
could be 13 million Spanish people using the Web in one form or
another.
Meanwhile, the authorities have set up a special group, Info 21,
to push Spain into the electronic revolution. There are plans to
give aid - possibly through some form of tax relief - to boost
e-commerce. So far, there is no "free" Internet connection, but
there are plans for expansion of broadband and ISDN.
Although known for its agricultural produce, nearly 80% of
Spain's output is in industrial products, and this is where it is
hoped the Web will produce greater opportunities.
About 99% of Spanish companies are small businesses, and it is
possible - as in the UK - that they will be among the greatest
beneficiaries of Web expansion. Dotcom businesses are also
beginning to emerge.
Eastern Europe
Czech Republic: infrastructure burden
Internet business growth in the Czech Republic has been limited,
not because of enthusiasm or realisation of the possibilities, but
simply due to factors such as credit card systems for use on the
Web not being as developed as they are in western Europe.
However, the picture here is about to change. In 1999, 7.8% of
the population were Internet users, representing only 800,000 out
of a total of nearly 10 million people. But, by 2005, Web use is
predicted to rise to 36% of the population, and volume of business
could be as much as $3bn (£1.9bn).
Next year alone there is expected to be a tenfold increase in
Web use, and another tenfold increase by 2002.
The Czech Republic has three major ISPs: Czech On Line, Internet
On Line (owned by Czech Telecom) and Contactel (owned by a
partnership of a Czech radio company and the Danish company
TeleDenmark). In addition, there are 300 smaller ISPs scattered
across the country. But businesses get no special help from
officialdom to either get on the Web or purchase the right kind of
computers and software. Also, by Czech standards, local phone calls
are expensive.
However, companies appear to be eager to get online and make use
of the opportunities to sell to the world for relatively low
cost.