British E-Commerce Held Hostage by Telcos

Last week, British Prime Minister Tony Blair commissioned a blue-ribbon panel to examine why U.K. e-commerce companies lag miserably behind the United States, Germany and France.

I rarely get political in this column, but Mr. Blair and his counterparts in the U.S. need to realize that they are flying blind. Similar Internet-related studies are sprouting up across the United States, and the usefulness of these blue-ribbon panels in both countries is exactly the same: Zero.

Telephone Access Fees

In the U.K.’s case, the lack of e-commerce success has absolutely nothing to do with the initiative, innovation, or talent of British companies and entrepreneurs. In fact, the recent success of Freeserve’s IPO on the British stock exchange and Wall Street proves that e-commerce has come to the boiling point in the U.K.

So what’s preventing critical mass?

Telephone access charges. In their nearsighted and selfish interest to make money now instead of investing in the U.K.’s future, telephone companies have stunted Britain’s e-commerce growth. What they foolishly fail to realize is that if they eliminated the tolls, the U.K.’s Internet economy would skyrocket. Individuals and businesses would suddenly be able to afford telecommunications services that were previously out of reach.

Mr. Prime Minister, you don’t need a blue-ribbon panel. Just ask your fellow citizens who use the Internet.

U.S. Taxes

Before I get too high on my horse, I must point out that this type of myopia is not limited to Mr. Blair’s side of the pond. Many U.S. economists are convinced that the reason the U.S. economy is shooting off the charts — rather than plunging into a depression — can be boiled down to two words: The Internet and e-commerce.

By some freak accident, this exploding new economy happened so quickly that it passed right under the radar screens of most U.S. politicians and bureaucrats. Now, in response, they’ve decided to tax e-commerce. So like jackals fighting over a wounded deer, our U.S. politicians are battling not over whether the Internet and e-commerce should be taxed — but how much and by whom.

The only thing keeping the vultures at bay in the U.S. is a one-year tax moratorium. But some fear that the end of the moratorium will bring down the U.S. economy.

A Call to Action

Mr. Prime Minister, please drop the panels and pick up the phone. Call the chief executive officers of all the telephone companies doing business in the U.K. Ask them to suspend their tolls for a six month period and just see. Their revenues will skyrocket, and so will Britain’s economy.

What do you think? Is this solution too simplistic? I’d like to hear from some of our U.K. readers.