Republic races Britain to become e-commerce hub

The flurry of Internet-related public and private sector initiatives which were hurried into existence last month, here and in…

The flurry of Internet-related public and private sector initiatives which were hurried into existence last month, here and in Britain, underlines a tussle between the two countries to become the leading European centre for electronic commerce.

Or does it?

In July, Britain released its long-awaited draft e-commerce bill ( cii/elec/ecbill.html), reached the final stages of the licensing process for mobile broadband operators, and British Telecom announced it would introduce high-speed ADSL Internet access by spring. Britain also got its first high-profile Internet initial public offering, with free Internet access pioneer, Freeserve.

In the Republic last month, the Government revealed its cornerstone "public-private partnership" deal with transatlantic cable operator Global Crossing, which will wire Ireland for broadband access, and directly into the Internet backbone, by next year.


Government agency Forfas launched a lengthy report on national policy requirements for creating an e-commerce-based economy. And telecommunications regulator, Ms Etain Doyle, released a report that significantly alters Irish telecoms regulations, allowing for increased competition and more choice in the Internet access market.

Because the Republic and Britain are the only European nations with English as their primary language, they have been seen by many analysts as the main contenders to serve as Europe's e-commerce "hub". Both the Taoiseach, Mr Ahern, and British Prime Minister, Mr Blair, have firmly indicated such a goal is part of their governments' official policy.

Ministers have dutifully emphasised that perspective. Following her announcement of Britain's draft e-commerce bill two weeks ago, new Department of Trade and Industry secretary, Ms Patricia Hewitt, wrote in the Sunday Times: "The government is already laying the foundations to make the UK the best place in the world to conduct electronic business by the end of this parliament."

In the Republic, Public Enterprise Minister, Ms O'Rourke, and Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, have reiterated the Government's intentions of aggressively promoting Ireland as Europe's e-commerce hub. Both have, at various times, acknowledged Britain as the other key contender for the role.

The rash of initiatives and policy statements issued recently by the two countries and the jockeying by companies within private industry for leading roles as enablers for digital business certainly indicates a rising awareness that e-commerce will be a major factor in and may even underpin national economies of the future.

The Republic might seem too small to be a significant rival to Britain.

But British industry analysts are aware that in a digital economy, size isn't everything. Many observers are concerned that the Republic has worked harder than Britain to promote an e-commerce friendly environment.

Following the release of the draft e-commerce bill in Britain, Mr Caspar Bowden, director of the London-based Foundation for Information Policy Research, complained last week that the bill still left doors open for too much Net regulation. The FIPR studies and advises on the relationship between information technology, government policy and business.

"Electronic businesses can trade from anywhere in the world. Threatening a mountain of red tape will cause e-business to move to places with a more supportive climate such as Ireland or Canada," Mr Bowden warned in a statement responding to the bill.

Still, Britain would seem to have the natural advantage, given its greater size and population, more developed communications infrastructure and the location of one of the world's leading financial markets in London.

But the Republic has countered those pluses with an aggressive, co-ordinated strategy between Government Departments such as Ms Harney's and Ms O'Rourke's, and agencies such as IDA Ireland, Forfas and Enterprise Ireland, to woo e-commerce players and to attempt to make the Republic an attractive environment for them.

Britain, on the other hand, has taken a laissez-faire approach, with sporadic attempts to introduce e-commerce bills, all of which have, up until now, contained elements seen as highly restrictive by industry. The British Home Office has never had a co-ordinated policy of promoting e-commerce and has lacked a minister with responsibility for the area.

"Of course, it's doing immense damage to the UK's commercial reputation," says Mr Bowden. "I think the DTI's been enormously complacent."

Mr Mike Butcher, editor of London-based Internet industry newsletter New Media Age, is also critical. "We still haven't had anything the like of what the Irish or the American government has pushed through," he says. "There's no co-ordination to policy and there's no single person to drive things forward at a government level."

However, e-commerce now has a momentum of its own, he says. In particular, "The Freeserve effect has completely caught the public and the market's imagination," he says. That may well mean no single European country can dominate as a hub.

He imagines e-commerce markets will disperse themselves globally in the same way that traditional industries find niches in some countries but not others. But, he says, "I think Britain lost a window of opportunity [in the e-commerce market] where it could have been more visionary."

For all Mr Bowden's warnings, he says he doesn't really fear a mass migration of e-commerce-based industry to Ireland. "Ireland is playing a very aggressive game and I'm sure they'll get a large slice of the business," says Mr Bowden. But he feels that the sheer size of Britain will ultimately give that country the greater role. "It's simply not credible for a country like Ireland to think they're going to compete against that weight of infrastructure."

The global e-commerce environment has shifted significantly, says Mr Paddy Holahan, marketing vice-president for Irish encryption technologies company Baltimore Inc and a member of the committee that drafted the Forfas e-commerce report.

As the concept of e-commerce has become more mainstream, all countries will compete for e-commerce businesses. It will probably become more difficult for particular nations to dominate, he says.

"I think Ireland is probably a much higher player in the tech industry, but the UK is a larger economy. The question is, can Ireland become a hub for critical competencies [in e-commerce]? Certainly, we can leverage our position in the IT industry to achieve that," says Mr Bowden.