Despite the much publicised dotcom fall-out, the painstakingly slow roll-out of broadband and the local loop unbundling debacle, e-business in the UK is alive, kicking and in robust health.
This at least is the opinion of Jeremy Beale, the man responsible for e-business at the employers body the CBI. He argues that e-business will persevere and the UK will be at the forefront of the new wave. "We're living through a time that is remarkable, also in terms of the UK re-establishing a lead in this area," he says.
Although Beale admits that e-business has been overhyped, he says this was bound to happen as "people were struck by the sheer novelty and the proliferation of it". There was a learning process, he says, "a process of gullibility, wild experimentation and excess on some people's parts". But Beale points to the extent that e-commerce has permanently changed the business landscape.
"We're not returning to the situation as it was before, we're just returning from some of the hype, hyperbole, and hysteria," he says. "It's settled down, but it's still a changed state."
According to Beale, there are two key areas that will be big-ticket items for both the CBI and the UK regarding e-business - broadband and e-productivity. "The important thing here is that until very recently the development of e-business, and e-commerce in general, was largely seen in the context of economic growth," he says. "But the dotcom bomb and the tightening economic conditions, both in the US and globally, mean that is no longer the case."
He points out that companies are, understandably, less willing now to invest in experimentation with Web sites and developing new revenue streams. A lot of money was wasted and the process has been brought to a crunching halt Beale admits, but this doesn't mean that e-business as a process is finished. "Far from it," he says. "The leading companies in many sectors will be those that continue to develop e-business processes."
Firms still need to be investing, coming up with new ideas and developing their e-business strategies. "It's absolutely essential," says Beale. "The leaders will be the companies that do this. But the question is now focused much more on how do you use technology and develop e-business practices that will contribute to productivity and competitiveness. Experimentation is a luxury that few people can afford."
In the light of the present situation, Beale believes the UK is well placed to take advantage of the opportunities e-business has created and to take a leading role on the international stage.
He says the UK has one of the highest penetration rates in the world for Internet connections, albeit using narrowband, and points to the many online service sectors that have developed:
- It has an innovative IT services sector
- It has a strong creative and intellectual property sector, which will underpin many of the services
- It is improving its position in research and development, although he says there is still a lot that can be done on that front.
"It's got many of the possibilities and there does seem to be a determination on the part of government, although we'll have to see if that's real," he says.
Beale also says the macroeconomic situation in the UK is better than that of any of its main competitors and this should help the UK get ahead in areas such as broadband.
The high level of entrepreneurial activity in the UK will also be a factor, he says, as it is the countries that foster this kind of activity that will gain the qualitative lead rather than those countries that try to control the process more. But for Beale, "The question really does come down to broadband in terms of whether that success can be maintained and advanced - and that's what the Broadband Stakeholders Group was set up to do."
On the record of the present Government, Beale is upbeat. "Its achievements have been pretty good," he says. "This Government has been very proactive in trying to get an agenda on e-commerce and e-business going and has been pretty successful in that regard."
And it has achieved this by not being too interventionist. Beale says that over the next six months the CBI will be looking to see whether the Government endorses the recommendations of the Broadband Stakeholders Group and creates a communications regulatory body that supports "light touch" regulation, competition and cross-sector investment.
He also believes a key role will be played by the Information Age Partnership (IAP), a high-level group of companies from across the e-business supply chain, chaired by trade & industry minister Patricia Hewitt. "It has been a very good body for developing a dialogue between government and industry over the measures that are needed to support the industry," says Beale. He thinks it is largely up to the IAP to ensure the UK stays in a healthy state and the successes so far are maintained.
Although he admits there has been "limited progress" on local loop unbundling, Beale is reluctant to find fault with Oftel, which, he says, has been in a really tough situation for which it was not designed. Neither will he lay the blame squarely at BT. Beale argues that local loop unbundling is an extremely difficult issue and no single group is in the best position to make it go forward.
However, Beale believes this situation will partly be resolved by the creation of the new regulator Ofcom, which will be better designed for a convergence era kind of regulation.
Beale shrugs off fears that Ofcom's remit will be too vast, arguing that, to move ahead in a convergence world, bringing regulators together and breaking down the separations is vital. "This Government has made a commitment to do it on the basis of its broader commitment to put the UK at the forefront of this technological revolution and that is important," he says.
No other country, according to Beale, has made this commitment and he argues that local loop unbundling has not really advanced anywhere in the world, so the situation in the UK is not uniquely bad. And he points out that a number of other options are being considered by the Broadband Stakeholders Group, such as persuading the Government to develop critical mass for broadband, since local loop unbundling is not the only way to develop broadband.
So it's not all doom and gloom. Far from it. "I would say the successes are considerable today," says Beale. "The question is do we, now that we're pretty much in the leading pack, keep our nerve and continue to go forward?"
Although he admits the UK is weak in terms of broadband, Beale points out that it's still a relatively new phenomenon and says he was heartened to hear prime minister Blair reaffirm the Government's commitment to broadband in his speech to the CBI conference earlier this month. "I think there is a determination to continue with this," he says. However, the private sector still has a lot of work to do, says Beale, who describes the adoption of e-business practices in the UK as relatively patchy.
According to Beale, to get more even growth you need to develop national communications systems - which is where local loop unbundling comes in - and you need broadband. And organisations like the CBI can bring isolated companies and developments together and raise awareness through promoting e-business best practice.
"One of the important things to understand is that the process of becoming an information age economy is not going to happen by one group or another clicking its fingers," says Beale. Such a systemic transformation of economic and industrial processes is going to mean a lot of different things happening in a lot of different ways.
"I would challenge anyone to identify whatever phenomenon is going to underline new economic growth other than e-business," says Beale, "And I don't just mean cyclical economic growth but systematic new growth. The development of e-business is the thing that will contribute to new productivity, new forms of wealth creation both in the UK and worldwide in the next five to 10 years and broadband is the most advanced form of that. It's the latest and most significant form of e-business for the next stage."
- Became the CBI's head of e-business in August
- Prior to joining the CBI, Beale was a research analyst for investment bank ABN Amro in Sydney, Australia.
- From January to June 1999 he worked as a team leader at the Performance and Innovation Unit in the Cabinet Office, promoting government policy on e-commerce.
- Between 1991 and 1999 Beale worked at the Organisation for Economic Co-operation and Development.
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