Telcos Still Hinder European E-Commerce

Earlier this week, Microsoft Corp. founder Bill Gates told a gathering at the World Economic Forum in Davos, Switzerland that European e-commerce continues to be hamstrung by high per-minute telephone tolls.

“A country’s communications will determine how quickly the Internet takes off in that country,” Gates said.

Even though there is a growing number of successful European Internet entrepreneurs, many industry analysts agree with Gates’ assessment that an e-commerce critical mass will only be achieved in Europe when telcos reduce their tolls.

While Internet access in the U.S. is generally available for a flat rate of about $15 to $20 (US$) per month for unlimited usage, European telcos charge based on a per minute basis — making Internet access far more expensive than in the United States.

Blue-Ribbon Panel

In August, British Prime Minister Tony Blair commissioned a blue-ribbon panel to examine why UK e-commerce lags miserably behind the United States, Germany and France.

Industry observers were quick to point out that the UK’s lack of e-commerce success has nothing to do with a lack of initiative, innovation, or talent among British companies and entrepreneurs. If anything, 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 United Kingdom.

These analysts blame shortsighted telcos for driving to make money now instead of investing in the UK’s future. Additionally, proponents of the new economy predict that if the telcos eliminated the tolls, the UK’s Internet economy would soar — making it more likely that individuals and businesses could afford more telecommunication services that were previously out of reach.

Slow Progress

According to a study by London’s HSBC Investment Banking PLC, the U.S. generates about 80 percent of worldwide e-commerce, with Western Europe kicking in 10 percent and Asia about five percent.

European leaders recognize the problem and have been banding together to press Europe to catch up with the United States.

Unfortunately, the progress of European e-commerce is also being hindered by a lack of broadband capacity and the fact that different cultures and languages present obstacles to addressing these issues in a unified manner.

These challenges have led to deep frustration, which became evident in December when French and Swedish Internet executives met to focus on cooperation between the two countries’ technology firms and ended up launching a full-board complaint session about the U.S. domination of e-commerce.

The meeting in Paris was indicative of the outrage that some European powers feel toward U.S. success in leveraging the Internet.

In fact, Jonas Birgersson, the CEO of a Swedish consulting firm, urged his compatriots to “kick ass on the Internet and challenge Americans.” He added that, “If they win, it won’t be a question of free trade. It will be a question of slavery.”

Many at the conference went so far as to lament that just as Europeans once conquered the Western hemisphere with force, the Americans are now doing the same thing via the Internet.

Inferiority Complex

Ultimately, all of this drama is a self-inflicted wound that could be healed easily. While concern over the presence of giant American e-tailers like Amazon.com and Yahoo!, is a legitimate one, much of the rage is really misplaced anger that should be laid at the doorsteps of European telcos.

What do you think? Let’s talk about it.