Less chain, more links: Equalisation, not regulation

Franco Arzano, Senior vice-president, Ericsson, Italy

Development of e-business should be left to the private sector. Governments should concentrate on creating a level playing field for competing firms, without falling into the trap of over-regulation.

Trying to keep a grip on how the digital world is evolving is exercising the minds of thousands of people in dozens of trans-global organisations – especially within the business arena. Some fundamental principles have emerged which form the basis for much of the policy development work going on now.

Most people agree that the development of e-business should be led by the private sector. The sector also has important responsibilities, not least allowing users the means to choose with respect to privacy, confidentiality and control of content.

Meanwhile, government intervention should be more about creating a stable legal environment. This also includes regulating the underlying telecoms infrastructure to allow new services and new entrants to compete, thus keeping costs moving down.

Governments should also protect the general interest and be technologically neutral. And national governments need to liaise to make sure systems can talk to each other from one country to another. That liaison should include inter-operability of tax systems.

The European Commission has 35 directives, draft directives and other proposals in the pipeline. Some of these have just been created to defend sectoral interests. Others have come about just to give an indication that consumers are protected. It is not all well targeted. The risk is that much of this regulation will slow the process down. S

But if you cut through much of the noise in the system, there are three crucial areas that governments in all the main trading regions must address.

The first is the diffusion of the digital economy. This will be based on the convergence of IT, telecoms, broadcasting and media through the same flexible, neutral and liberal regulatory frameworks. Small and medium-sized companies and new entrants should become the main instruments to maximise the benefits, and regulators must have a hands-off approach to internet and digital content development.

The second area is the integrity of networks and services. We need broadband infrastructure throughout; there must be more work on the health and safety effects (of electromagnetic energy, for example); and frequency allocation issues will have to be addressed. Development by private sector companies and by regulators will have to look urgently at the issues of electronic signatures and the legal basis of contracts, smart cards, security, and data protection – not to mention means to protect against criminality, harmful content and hacking.

Finally, consumers need to feel as happy doing e-business as they do shopping traditionally. When we get to that stage we will have really entered the digital economy. That means high standards of security and data protection, and a responsible framework of self-regulation for companies supplying goods and services electronically. If that does not work, then legislation needs to be in place, but only as a safety net.

Of course, within Europe, we have our own special problems. For one thing, we speak different languages. So maybe in the future internet business globally will standardise on English (though some people have suggested Spanish).

The other big European problem is our differing taxation systems. I find it unbelievable that we have 15 different taxation systems for VAT within the 15 European states. And since we are talking here about the policies of individual governments, no single state will want to shift from its own position.

I would guess that unifying the single currency to create the euro has been a much simpler task than trying to unify European taxation systems. But if business to consumer commerce is to grow, this issue has to be solved.

Biggest constraint: Lack of harmonisation of taxation across Europe.

Biggest push-factor: Creation of simpler and cheaper internet communications.

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