The Demos initiative is certainly a step in the right direction, in that some government interest in e-commerce would be welcome

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The Independent Culture
Demos, the left-wing think-tank known to be close to New Labour, has recently published a detailed proposal for the Government to take over ownership of the electronic marketplace. The report is written in response to the provocative stand of British Interactive Broadcasting (read, Rupert Murdoch) that TV-based e-commerce, soon to be launched by BIB, will be available only to the big UK retailers, and only selective and non-competitive Internet retail sites will be available to the online buyers.

Demos suggests an alternative scenario through development of a national, state-owned e-commerce system that is similar in nature to the existing private CompuServe. It would be controlled by government officials, and based on a central computer running e-shops where anyone would be able to buy or sell services within a state-regulated shopping mall. The system would also address issues of verification of sellers and creditworthiness of buyers. This safe, secure marketplace would support a system that links all the databases from all involved retailers. This would allow real-time price competition between online vendors. By developing a centralised mall, the Government would ensure inclusion of homeless, by guaranteeing their creditworthiness via a special charity that backs their purchases. In other words, an e-commerce CyberNanny.

Overall, the proposal is interesting and Demos's detailed description of the operational side of the system is certainly impressive. However, there are a number of technical and commercial issues that should be considered before, out of dislike for the Murdoch crowd, we throw the e-commerce baby out with the bathwater. First, if Demos is upset with BIB's exclusivity to large retailers, it shouldn't be unduly concerned. Both NetChannel and Microsoft's WebTV will be available at roughly the same time and both will offer full Internet access via a television set. That access will include all Web-based e-shops, regardless of size. Also, the Government could ensure that only a company which provides access to all Internet shops will be issued a licence to trade via TV screens. Since technically BIB can easily provide full Internet access, I am sure that a bit of persuasion by the licence issuer would achieve the required inclusivity of all traders.

A much bigger issue is the assumption that the Government should run the e-commerce system as it does the Post Office or our roads. If this were a valid analogy, it would mean the Government financing a national fibre-optic network and not owning e-shops or e-malls. A fibre-optic network acts in the same way as a road network and would enable truly democratic, UK-wide access to shopping and information at a speed suitable to 21st- century connectivity. That would be an excellent idea, particularly considering that the hapless cable companies make progress of three households per month, and at the current rate it will take 167 years before all of us can use cable to access the Web.

Demos' requirement for a verification system for online trader is, of course, a welcome contribution, as there are plenty of substandard services online and an occasional bogus vendor. However, for the past 16 months UK retailers been working through the Interactive Media Retail Group to define and enforce an online commerce certification procedure. The IMRG's blessing will soon be required to enter online trade, which should put an end to all the US-style shenanigans of e-commerce.

However, the biggest problem of the Demos plan is that it would be based on a central computer system rather than the Internet's method of distributed computing, which allows faster progress than any central computer model. Single solutions don't lend themselves to scaling, as demonstrated by a solid record of disastrous central computer-based projects attempted by the previous government. Modular networks and distributed computer systems solutions are the only way for the future and as such Internet e-commerce in its current distributed format is the optimal option to ensure efficiency of cost, modular upgrades and open standards. A central computer solution would mean a nightmare of logistics to squeeze every merchant into the same framework, synchronise development and upgrades. The most likely outcome would be a Minitel-like technological cul-de-sac, which, after massive investment, had to be dumped in favour of a distributed computing solution (ie, the Internet).

Finally, Demos makes an assumption that such a central computer system would automatically allow for vendors' databases to be linked to each other. From my few years of e-commerce experience, it would be a very progressive retailer who would let his competition know the state of his stock, or worse, his customer database.

But none of these problems is insurmountable. The Demos initiative is certainly a step in the right direction, in that some government interest in e-commerce would be welcome. There are plenty of examples of retailers being offered tax breaks to build shopping centres in underdeveloped zones. Tax breaks for retailers to offer their wares online would stimulate business and create lorryloads of interesting jobs.

The Government should also consider introducing tax breaks for employers, to ensure that current retail employees are retrained to run online shops and database marketing. A state-owned fibre-optic network is something all of us have been praying for for a long time, and now the e-commerce momentum certainly justifies such a nationwide initiative.

If there is a vacancy for Minister of e-commerce, my e-mail is