Global E-trade Plan Threatens Service Providers

By David Molony at CommunicationsWeek International

16 August 1999

A high-profile global trade association is poised to establish an ambitious worldwide e-commerce network for companies that cannot afford to build their own systems for trading across the Internet. The scheme threatens to undermine e-commerce offerings being developed by telecoms and Internet service providers, which are currently rolling out Web-hosting and hosted applications services to small and medium-sized businesses.

The plan was originally proposed by the International Telecommunication Union (ITU), based in Geneva, as a way of helping developing countries to build electronic commerce infrastructure. But it could now be extended to 110 countries worldwide under the auspices of the New York-based World Trade Centers Association (WTCA).

It envisages the establishment of more than 300 major e-commerce service centers - many in the same advanced telecoms markets where commercial service providers are trying to build their own e-commerce points of presence.

Analysts said the WTCA project was in danger of relegating service providers such as Cable & Wireless and GTE Internetworking to the role of sub-contractors for secure payment systems, server technology supply and bandwidth links, but without being able to sell a branded private services package.

"The service providers would be invisible to the (trader)," said Roland Hanbury, director of intellectual assets at NVision Ltd., an e-commerce consultancy in Bracknell, England. "Effectively, (each World Trade Center or WTC) would use the WTC brand to attract people to sign up. Provided service is at a comparable price, users would probably prefer WTC (e-commerce services) to (commercial suppliers)." However, Hanbury said there could also be opportunities for service providers to offer some outsourced software management to WTCs, although this would still mean relinquishing a direct relationship with the end-user.

The Global Electronic Commerce (GEC) project has been developed at the World Trade Center in Geneva, which has signed a contract with a new company, ECCE SA, to market value-added e-commerce services from the GEC portal site.

The GEC provides a package of certification and transaction software, which member companies and organizations can subscribe to at much lower cost than if they assembled the package on their own Web sites. The idea for the GEC started in the technical services department of the ITU in Geneva two years ago, and the Electronic Commerce in Developing Countries (ECDC) project was adopted as an official operating activity of the ITU by Council in September 1998. Advisers aimed to develop basic e-commerce software that could save businesses in developing countries the cost of using expensive e-commerce consultancies. They already had set up e-commerce infrastructure to support the ITU's own publications marketing and extranet links with other United Nations organizations in Geneva. But the ITU technical staff working on the project lacked marketing and operational capability for a global project, and the scheme was redefined to promote e-commerce training centers in a number of countries, through partnerships with private companies and associations.

The original ITU scheme was intended to extend e-commerce services to countries outside those of the Organization of Economic Cooperation and Development, which operate the majority of e-commerce infrastructure.

The WTCA was invited on board for its commercial expertise. "We can do the technology part," said Alexander Ntoko, project manager for the ECDC. "They do the business part." But the WTCA also wanted to extend the program, although it would also support the ITU's e-commerce development program.

Philippe Doubre, project manager at GEC and chairman of the information and communications committee of the WTCA, said he is proposing to extend secure e-commerce services to all WTCs. "This is not only an ITU solution," said Doubre. "E-commerce is global, not local."

"Each individual WTC would be a (registration authority) and a (certification authority)," said Doubre. "Each would develop local portals and services."

WTCs provide trade facilities and information exchanges from their own offices, as well as on-line services. Most therefore have in-house server and Internet connectivity infrastructure for e-commerce. Organizations and companies affiliated to a WTC would be able to contract for the package of services from the WTC. In return, the e-commerce trader would be able to offer secure order clearance and payment settlements for buyers in other countries, all managed by the WTC.

"It is still difficult for smaller organizations to do business across the Internet," said NVision's Hanbury. "There is a strong case for a prepackaged, off-the-shelf e-commerce service to enable companies to trade overseas.

The WTCs provide ready-made international transaction centers." Hanbury estimated it currently costs at least $100,000 for any company to add e-commerce applications, such as catalogs, shopping baskets and transaction facilities, to its basic Web site. He added that a WTC even has valuable content to support an e-commerce entrant, with data on trade regulations in countries in which the WTC operates.

Doubre's new company is partnering with encryption software developer Swisskey AG, Zurich, and micropayments systems supplier Transac, a subsidiary of Swisscom AG. Doubre said the Geneva partnership could be the model for a WTC e-commerce network, with WTCs forming their own local supplier partnerships.

The first ECDC sponsored center is due to open in Venezuela next month, and its facilities are to be demonstrated at the ITU's Telecom '99 conference and exhibition this October in Geneva. The ECDC's Ntoko said he is in negotiations with other private sector associations, such as the World IT Services Alliance, Vienna, Virginia, for sponsorship.

Some analysts said the growing number of industry-based e-commerce providers, such as Automotive Network Exchange Inc., and Chemdex Corp., based on combinations of vendors and integrators targeting vertical markets, could provide competition for any burgeoning WTC network. "There is a problem here," said Sarah Skinner, e-commerce analyst at Durlacher Research Ltd., London. "(As a business) I'd be keener to be hosted on a network engineered to my business space. But (WTC) could be aggregators, by setting up links to sector portals."