Spreading ripples from the Cabinet Office (24 September 1999) Last week the Performance and Innovation Unit of the Cabinet Office issued e-commerce@its.best.uk, a report with recommendations to Government, on e-commerce. It's a large file (1.2MB) and you'll need Acrobat Reader to view it, but we present a few extracts from Section 9 which is the most immediately relevant to us: REMOVE UNNECESSARY BARRIERS TO NOVEL TARIFFS 9.3 E-commerce telecommunications usage is different to voice traffic - calls tend to be much longer. UK tariff structures should not create inappropriate disincentives for spending time online relative to international rivals. The PIU recommend that the new e-Minister, working with OFTEL/DTI, remove unnecessary barriers and that: Recommendation 9.1: telecommunications operators should be encouraged to offer a wider range of tariff structure options. Recommendation 9.2: telecommunications operators should be encouraged to explore new commercial interconnect arrangements with BT, allowing more flexible retail tariffs. Remove barriers to rapid roll out of high-bandwidth technology 9.4 Many new e-commerce services require high-bandwidth connections. Barriers should be removed which hinder the competitive roll-out of new high-bandwidth technologies, particularly Digital Subscriber Loop (DSL). OFTEL’s 'Access to Bandwidth' programme aims to achieve this. However, largely as a watching brief, PIU also recommend that: Recommendation 9.3: OFTEL ensure BT’s DSL roll out plans do not give it unfair competitive advantage. Recommendation 9.4: e-Minister/DTI ensure that OFTEL has sufficient resources to meet DSL roll-out timetable. Ensure success of inclusive access initiatives 9.5 Various sections of society may not have opportunities to access e-commerce markets. Government currently has many initiatives to remedy this. To maximise the chances of success, PIU recommend that the e-Minister facilitates: Recommendation 9.5: better co-ordination and marketing of access initiatives. It matters because it reflects Government talking to Government at the highest level. Because of its importance it has been widely reported on and we are doing a lot of work following up various leads. For example: » an article by Anatole Kaletsky in The Times (21 September), which reads in part: One example of such a strategy, suggested by the Cabinet Office paper but unfortunately not yet confirmed as Government policy, is action on telephone tariffs. As long as Internet users incur high per-minute charges, as they do in Britain, they will act as a deterrent to Internet use. In fact, it is only with permanent online connections that the Internet really comes into its own as a business tool. To encourage optimal use of the Internet, telephone subscribers should ideally be charged a flat fee for installing and maintaining a phone line and then nothing at all for their calls. Yet the thrust of tariff regulation in Britain and many other countries works in the opposite direction; uneconomically low line charges are subsidised by per-minute call rates that are far above the marginal cost. These unbalanced tariff structures are justified by the need to 'protect' low-volume users such as old age pensioners who might be deterred from having a phone at all if fixed charges were pushed up. But that is a social problem which ought to be dealt with through explicit government subsidies and social spending, not by stunting the development of the Internet. » an article by Nicholas Negroponte in The Guardian (23 September), again in part: That's a real challenge. Anyone who has grappled with a few e-business sites knows that, on average, they're not nice at all. But it was left to Nicholas Negroponte, founder of the MIT Media Lab in Massachusetts, to highlight one of the main reasons why Europe is so far behind the US in e- business. 'The killer is metered local call rates,' he said. 'If you want to do one thing to change the economic future of a country, change to an unmetered charging system for local phone calls.' Our message is getting through; a journalist told us yesterday that Patricia Hewitt, speaking at a conference, stated that access costs would be at the top of the Government's Internet agenda.