Global business dialogue Priorities for e-commerce in 2006 by Ewan Sutherland Brussels, 18 October 2005

Mr Chairman, thank you very much for the opportunity to participate in the GBDe meeting.

It is my first time at the GBDe since the 2002 meeting here in Brussels.


Continental variations

I see enormous continental differences, between North America, Asia, Africa and in Europe.

Each has it is own approach, each has its own cultural and technological mix. Each goes its own way, with out many signs of convergence,.

In particular, I do not expect to see the ubiquitous model outside of parts of Asia in the foreseeable future.

In Europe, there are too many vested interests, in fixed and especially in mobile networks, to move to a single model of ubiquitous networks. In particular, the mobile network operators are constrained by GSM and W-CDMA that simply cannot offer true broadband. They seem very resistant to the attractions of alternative technologies that might allow them to reach 100 or 500 Megabits per second.  Moreover, there are too many problems of access and interconnection on both fixed and mobile networks which, while not insoluble, will delay the provision of services for many years. The network operators are too slow to adapt to change, they need years to discover what customers want and how much they will pay.

In North America, remonopolisation by merger and revision of regulation are too important to allow possible ubiquity to creep in. That will have to wait.

In Africa, broadband is only found on the northern edges and amongst a few plutocrats in South Africa. For the rest, it is cellular mobile telephony and Internet cafés from which services must be accessed.

China is the most impressive market, with over 35 million broadband lines and 350 million cellphones, adding 1 million and 5 million a month respectively. It is creating a vast market for electronic transactions. Soon China will regain its position, held for many centuries, of being one third of the global GDP.


Electronic commerce

I wonder whether e-commerce can any longer be call distinct and separate. It may now be what our American colleagues call "mainstream" and "embedded" in everyday commercial activities. .

We had a period of interest in m-commerce, for transactions on mobile phones. Yet this has taken a very long time to develop. Services such as the Sony-DoCoMo FeLiCa payment system provide  a contactless means to pay for transactions.

We quickly moved to u-commerce, an idea from Accenture in early 2002.

Electronic commerce is becoming both ubiquitous and also integrated in both B2C and B2B. The policy implications of which are quite considerable.


Privacy and the flow of personal data

I am of the old school on privacy. It is twenty years since I was taught the OECD Guidelines on the protection of privacy and trans-border flows of personal data by Michael Kirby and Hans-Peter Gassmann. Those guidelines have stood the test of time and, to me seem, entirely applicable today. The guidelines are comparatively elegantly embodied in European Union Directive 95/46. The principles apply to RFID, as they do to the locations of mobile phones and all manner of electronic transactions.

At the recent OECD meeting on RFID we were told security needed to be "baked in" with the design. We were not told that it had yet been done, but that it was for the future. I trust it will be done very quickly.

The OECD issues badges with RFID tags to staff and to visitors. Perhaps owners of nearby bars and restaurants might want to note that a bunch of economists is entering, in order to offer discounts or perhaps to raise the prices in order to test demand elasticity. The same sort of game of spotting other identifiable individuals may apply to the badges of legislatures, even to the European Parliament and the Congress of the United States of America.

RFID tags also promise to remove the element of the sordid from going through your refuse. Now your rubbish can be read from the RFID tags without opening the bag.

Here in Brussels you may get into trouble for failing to sort your rubbish into its various components.

With some enhancement of sensors and perhaps with the incentive of criminal intent, it may be possible to read the contents of homes. Deciding which home to burgle and which to pass by.

I do not imagine retailers will welcome competitors wandering through their stores and reading the RFID tags on their stock.

The challenge is how to apply the OECD principles. If we get the application wrong, however well intentioned, we risk losing confidence which will be much harder to regain.


The wireless home

One of the economic drivers for China, South Korea and Japan is the wireless home, with its servers and residential networks. These create enormous potential markets.

We are also to have networks in cars and personal area networks.  Already we have bluetooth headsets, most conspicuously the Motorola-Oakley Razrwire sunglasses and headset.

Yet, the electronic home and personal devices present very real threats. Devices that have limited capacity to carry the protection mechanisms that we have on personal computers.

A grandmother installing broadband and Wi-Fi for use by her grandchildren, straight from the boxes creates a highly insecure network I hope nobody will propose we send senior citizens on Cisco network administrator courses and explain to the MAC address filtering. We need networks and devices that are inherently secure and easy to use.

Many times we are told something is to be the "next big thing", mostly recently the Apple video iPOD. The next seems increasingly likely to be Spam for VoIP. It would be a chilling thought to return from this meeting to discover that you have 300 voice mails.

As a holder of UK passport, I have to confess that the UK is a world leader in zombie networks. It seems UK operators are unconcerned to suppress this problem.

We have seen the first "trojan" for the Sony Playstation. It is the first of many such innovations, more devices will be attacked for malice or criminal intent.

We do not want to see our domestic applicances such as freezers crash because of viruses delivered by spam.

The rising tide of malware shows an evolution that is truly at the pace of Internet time. We need to keep pace with that as industry, but also to ensure that laws, regulations and enforcement mechanisms are kept up to date.


The bottom of the pyramid

It is surprising that so late in a conference that I can introduce a new Three Letter Acronym (TLA), it is the Bottom Of the Pyramid (BOP), a term coined by C K Prahalad. It refers to the millions and billions of the poorest, who are to become the enormous markets of the future.

It is with the innovations in supply that these people can now be served by the mass production that has served developed world for so long. It entails the use of cellular and wireless local loop technologies, of shared Internet access and simplified point of sale terminals.

However, I will leave to Madame Feraud to follow up these issues on behalf of UNCTAD.


Conclusions

We need to recognise the extent to which criminals have joined the information society, even its avant garde. The tide of "malware" is rising rapidly and with surprising ingenuity. It is not only entrepreneurs and governments that see their future in electronic commerce, it is also criminals.

To obtain the full benefits of electronic commerce, we need to ensure significant levels of confidence in the use of services which have an electronic commerce component.  This must take account of our significant experience of electronic criminal activities. There is an incentive for companies and for governments to make the Internet more secure.

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