Last year, for World Telecommunication Day 1999, the International Telecommunication Union issued a Discussion Paper on Policy Considerations for Electronic Commerce, which was distributed to all ITU Members. The Discussion Paper described in brief the broad range of policy issues arising from the rapid growth of e-commerce services, applications, and technologies, with particular emphasis on telecommunications-related concerns. It then asked members to respond to a series of survey questions concerning the status of policy initiatives and positions on these issues in their countries, as well as their views and experiences with respect to a variety of aspects of e-commerce development.

A wide cross-section of ITU members responded to this survey (see Appendix for complete list), and offered valuable insights into the state of policy development relating to electronic commerce around the world. This report provides a summary of those responses, and highlights the most prominent trends, and controversies, that appear to be emerging in the realm of telecommunications and electronic commerce policy.

The Discussion Paper was organized according to the framework established by the Organization for Economic Cooperation and Development (OECD), which has identified four categories of policy objectives for promoting development of electronic commerce: Enhancing Infrastructure, Building Trust, Establishing Ground Rules, and Maximizing Benefits. Under each category, there are several topics of specific policy debate. This report provides only a synopsis of the issue descriptions from the Discussion Paper, repeating the section introductions that explain each category. For each specific topic for which the Discussion Paper sought ITU member responses, we describe the main findings and trends expressed in the survey, along with some general observations about the possible implications of these views.

Electronic commerce is entirely a phenomenon of the technology revolutions of the late 20^th century: in computers and information systems, in telecommunications, and also in banking systems and even postal and delivery services. It is the advancement and the integration of the essential infrastructure of these technologies that has fueled e-commerce growth worldwide. At the same time, the comparative lack of such infrastructure throughout many parts of the developing world is what most impedes the opportunities for e-commerce to flourish in those countries, and to accelerate their economic and social development.

Accordingly, the need to enhance (or indeed introduce) national infrastructure to support e-commerce is the paramount concern of developing countries – far more so, for example, than in the developed world. With basic telephone service penetration below 15% for numerous countries, and access to computers and data services even lower, even the possibility of participating in the global electronic marketplace is remote for much of the world’s population. The same is true of access to banking and financial services, where are equally necessary for consumers and small businesses to conduct commerce in a digital environment. The topics in this section address the need for enhancing infrastructure in these areas, and the potential means for developing countries to pursue these objectives in the new marketplace.

According to the survey results, there is nearly universal consensus among ITU members that access to ICT infrastructure and electronic commerce services represents a "top level priority for achieving national development goals." This view is held most strongly by less developed countries, but even the most advanced economies concur on their importance.

The consensus is not so strong, however, on the question of where the greatest emphasis should be placed for telecommunications development. The traditional view of universal service seeks to bring voice telephone service to every home. For countries with well developed infrastructure, this goal has essentially been achieved already, and the focus has shifted to advanced infrastructure, broadband transmission capacity, and questions of universal Internet access.

Among developing countries, however, there is a mix of opinions as to whether "community-based access to advanced communications and information services should take precedence" over universal voice telephony. About 35% of respondents from developing countries disagree with such a shift of emphasis, and some (e.g., Mexico, Grenada) disagree strongly. However, the fact that 65% of developing nations do consider advanced ICT access to be a more important objective than universal voice telephony reveals how rapidly views on this issue have been changing. It may be significant that many of the countries that agreed most strongly with this proposition are among those with the least developed communications networks (Rwanda, Azerbaijan, Cambodia, Tanzania, among others), and hence are farthest away from the vision of truly universal telephone service. Nevertheless, there appears to be a strong majority position emerging that traditional universal service objectives for developing countries must be updated in light of the prospects of electronic commerce.

The survey also sought to gauge the degree to which countries are taking initiatives to pursue these objectives. In particular, it highlighted the strategy of establishing multipurpose community telecentres (MCTs) to expand ICT access. In spite of the broad-based agreement on the objectives and priorities, however, most respondents indicated that they have taken only small steps, if any at all, toward promoting community telecentre development. Fewer than 20% of developing countries indicated that they had at least some active telecentres in operation, although many claimed to be exploring options in this area. More than a third responded that they currently have no significant telecentre initiatives at all. By contrast, virtually all of the more developed country respondents identified substantial telecentre activity, even though they already have nearly universal telephone service.

Another perspective on infrastructure development policies explored by the survey was the role of competition and private investment. Specifically, respondents were asked whether the "changing dynamics" of the industry will "accelerate" the need for such market-oriented policies in their countries. The responses were remarkably uniform: over 70% agreed "strongly" with this view, and nearly all respondents agreed at least somewhat. It is worth noting that, for an industry that less than a decade ago was dominated by state-owned monopolies, the overwhelming consensus in the year 2000 favours accelerated movement toward private investment and competitive markets. Although this trend may have been gaining momentum for some time, clearly the explosive arrival of the Internet and e-commerce have propelled it forward irreversibly.

Beyond the question of developing information technology infrastructure, the Discussion Paper addressed key regulatory issues surrounding the telecommunications sector, in the context of promoting electronic commerce. In particular, it focused upon tariff or pricing regulation, recognizing the new importance of advanced services such as high speed data connections, both domestic and international, as well as end user data and Internet access services, to the success of e-commerce ventures. Traditionally, these more sophisticated services have often been overpriced relative to their costs, while basic voice telephony has been the principal focus of cross-subsidies and "affordability" concerns.

Respondents to the survey were asked their views on the need to revise the traditional regulatory emphasis and approach to tariffs, in light of the developments of e-commerce. On these questions, there is near unanimity among ITU survey participants. Nearly all agreed, and most strongly agreed, that pricing priorities and methodologies for local and domestic data communications services "need to be revised, to help make e-commerce services more affordable."

Interestingly, the consensus is even stronger on the question of pricing policies for international data circuits. All ITU representatives responding to the survey concur that "international interconnection and pricing policies need to be reviewed to seek more equitable pricing and service arrangements" for international connections to the Internet backbone. This view is supported by, among others, Australia, Canada, France, and the United Kingdom. Note that the United States, which is home to the overwhelming bulk of backbone capacity and service providers, did not respond to the survey.

The survey also inquired specifically about the current levels of pricing for data and Internet services in the responding countries. Responses tended to vary quite widely, but we can identify the approximate range of these prices:

The Discussion Paper also identified banking and financial services as an equally critical element of the national infrastructure necessary for electronic commerce to flourish. In particular, banking services must be seamlessly linked with businesses as well as consumers, and with the international financial community, to allow transactions to proceed efficiently, and to enable all users to participate in the digital economy. The survey inquired about the degree of development of electronic banking technologies in ITU Member States, as well as any particular initiatives being undertaken in this area.

As might be expected, responses were quite mixed. Some members report that they have achieved complete, state-of-the-art national financial services infrastructure (most developed countries, but also others such as Brazil, Hungary, Turkey). Others are in various stages of actively upgrading their banking sectors, while a few (Syria, Cambodia, Tanzania) are as yet only in the planning stages for such upgrades.

With regard to expanding the geographic scope of banking services, such as on-line banking through community centers, fewer members report active initiatives. In fact, almost no respondents claimed to have fully achieved such an expansion of services to regions not served by conventional banking services (although the question may not be pertinent to the most developed countries). And of the developing countries that answered this question, 50% claim that policies and projects to expand on-line banking services are either not a priority or are only in the planning stages at this time.

If anything, the gap between the richest and poorest countries may be even greater for access to advanced financial services than in the area of public telecommunications infrastructure per se. On the high end, countries such as Canada and the United Kingdom described very ambitious policies to develop electronic cash and other new technologies to expand and enhance the value of banking systems as part of the development of electronic commerce. At the other extreme are many developing countries, which are just beginning to utilize such features as debit cards (e.g., Guyana), or which indeed have no in-place policies to promote electronic or on-line banking capabilities (e.g., Bhutan).

Among the main differences between electronic commerce and traditional commerce are the fact that electronic transactions are far more impersonal, anonymous, and automated than transactions made between flesh-and-blood persons in a store, at a bank, or even over the telephone. This dehumanization of business relations is accompanied by a quantum increase in the technical means and opportunity for fraud and abuse of both individual consumers and large corporations alike. For all these reasons, a healthy sense of caution, if not outright distrust, has prevailed in the evolution of many aspects of e-commerce.

Consequently, for these new, globally impersonal technologies to advance to a more universal level of acceptance, business and government institutions must develop policies that build greater trust in these new transaction media. Trust implies confidence that electronically-based purchases, funds transfers, and business deals will be as valid as traditional activities; that personal information and finances will be secure; that consumers will be protected from fraud and mistreatment; and that the world of on-line information and communication will be at least as accountable for the quality, reliability, and legality of products and services as is the in-person world.

The topics in this category are closely linked to one another. Security and cryptography issues tie in with both privacy protection and certification, as well as with the technical options for creating and validating digital signatures. All of these concerns relate to consumer protection, as well as to ensuring the integrity of business and government on-line activities.

This topic addressed the ongoing policy debates and concerns regarding the security of data networks from misuse, sabotage, theft, and espionage. The principal policy issues revolve around treatment of cryptography in both domestic law and international agreements. Survey respondents were asked their countries’ current views on the extent to which government should be able to restrict use of cryptography, and have access to public key codes, as well as their participation in international agreements on the issue. The responses are illustrated below:

Some 42% of respondent countries take the position that there should be no restrictions on domestic businesses’ use of cryptography in electronic transactions. These are primarily more developed countries, but this is also the view of Brazil, El Salvador, and Grenada. On the other hand, 29% require government approval of cryptography technology, while 13% favour government participation in setting industry guidelines.

Concerning government access to public key codes of private cryptography, only 13% take the position that there should be no such access for any government agencies. Almost half (48%) permit access for national security authorities, and 35% include police with a court order. A few countries (16%) indicate that any law enforcement authorities can access public key codes (among them Slovakia, Thailand, Turkey, Australia, and Denmark).

Many countries (42%) are unsure about whether they would join international agreements requiring mutual recognition of cryptography standards, although only one (France) specifically stated that it would be opposed to joining such an agreement. Some 16% of respondents claim to be already party to international agreements, while 42% are considering joining.

Protection of personal privacy for on-line users is emerging as perhaps an even more critical element of trust in the digital environment than security of electronic financial transactions. However, as the survey showed, many countries have yet to come to grips with the issue, either through explicit privacy protection laws and regulations, or through policies to govern the use of personal data by on-line services and database owners.

Of the countries responding to the survey, 33% claimed to have strong privacy laws already in place, with fairly equal representation of less and more developed countries. Another 30% have some, weaker privacy protections, while the remaining countries have little or no current privacy legislation or regulations.

The survey also asked Member States’ policies (or opinions) on the obligations of database owners and on-line service providers concerning sale or disclosure of personal data. It suggested multiple options of increasing stringency. Many members responded that their policies required a combination of these practices, although interestingly, no one policy was cited by more than 42% of respondents. The responses are below:

The most common policies are to require written consent before personal data can be used, and also to require official registration of databases under public authority (both identified by 42% of respondents). Relatively equal numbers of respondents (about 35% to 40%) cited requirements to notify users of personal data use policies, and user access to the stored information. Only 32% of countries suggested that they impose restrictions on the export of databases containing personal data.

These results do not suggest any particularly strong trends, at this time, in the area of privacy protection policies among ITU Member States. This is a relatively new area for many governments, with new laws just being brought into force, and apparently no clear consensus as to the scope and direction of personal data protection.

Legal implications of electronic commerce are far reaching. The Discussion Paper described the need for sweeping revisions to contract laws, for example, to accommodate the digital environment. The leading prototype for new legal definitions and standards in this area is the UNICITRAL Model Law on Electronic Commerce. The survey explored ITU members’ progress in revising domestic contract laws, in light of e-commerce and related technology trends, and in particular the extent of reliance upon the Model Law. The results were as follows:

A combined 33% stated that new legislation on electronic transactions has already been drafted or revisions are underway. This is the status primarily in developed countries in Europe or the Pacific Rim. Some 36% of respondents indicated that a policy review is underway on contract laws, while 18% identified no specific efforts to date in this area. As for the UNICITRAL Model Law, almost half of the countries replied that their current or pending legislation follows this model, either closely (17%) or loosely (27%).

The Discussion Paper identified the emerging role of Certification Authorities as institutions that can add credibility and security to electronic commerce transactions, both domestic and international. Many of the practical questions surrounding CAs are just beginning to present themselves, among them the degree to which national governments should mandate or control such authorities, as well as cross-border jurisdiction issues.

The survey investigated members’ views on the option of government-mandated Certification Authorities versus private industry initiatives. Opinions were very mixed on this question across a range of possible alternatives:

Only 16% supported the notion of government established and operated CAs, but another 25% called for government requirements and licensing of these Authorities. Some 22% were in favour of the option of government guidelines and general oversight for private CAs. Finally, 19% preferred "industry self-regulation, with government intervention in cases of major abuse or neglect". Interestingly, most countries favouring the pure self-regulation approach were either low, middle or upper middle income (e.g., Philippines, Syria, Grenada, Nicaragua, Uganda, Brazil,), while only Canada, Denmark and France among the more economically developed nations advocated this policy.

There is broad agreement that Certification Authorities should be established at both national and international levels. About 72% of respondents favoured this position, while only 19% felt that only national authorities should be established. No country felt that Certification jurisdiction should be entirely transferred to international bodies alone.

As to the present status of Certification Authorities, the majority of respondents indicated that there do not exist formal CA’s in their countries at this time . Only 17% responded that there are existing government agencies or offices within their countries that have certification responsibility, while another 13% replied that there are industry-based private authorities, under government guidelines. More than 60% of members indicated that at best there are informal industry standards, loosely defined under the law, or indeed no initiatives whatsoever regarding Certification Authorities. It is unclear how high a priority this type of policy will be for many countries to promote trust in electronic commerce, given the many other legal and policy concerns that they are seeking to address.

In most respects, users of electronic commerce should expect to follow the same laws, rules, and regulations as everyone else. The sense that there needs to be new rules to deal with unprecedented types of relationships and transactions doesn’t mean that the old rules are irrelevant or need to be abolished. In fact, one of the stronger sentiments concerning the ground rules for electronic commerce is that there perhaps shouldn’t be major new policies to apply to on-line transactions, such as "bit taxes" or new import duties on data transmissions.

Nevertheless, just as technology is changing consumer and business relationships, it is changing the nature of governments’ oversight of and intervention in those relationships. The most profound manifestation of this change is in the globalization of commerce, which places national governments and international institutions in a quandary as to which jurisdiction, and hence which set of rules, should apply to which activities, by whom. The success of worldwide e-commerce thus greatly depends upon a worldwide harmonization of certain basic policies, in areas such as taxation and duties, as well as treatment of intellectual property rights and other trans-jurisdictional concerns.

The easy exchange of all forms of information across the Internet, from business documents and designs to music and films has brought questions of intellectual property rights to the forefront of global debates over electronic commerce policies. These issues are being actively addressed by existing international treaties and institutions, specifically the World Intellectual Property Organization (WIPO) copyright treaties and the Agreement on Trade-Related aspects of Intellectual Property Rights (TRIPS). On the domestic level, not all countries have taken equivalent legislative steps to protect owners of intellectual property from piracy or unauthorized use.

The survey inquired as to the extent of such protections in Member States. Among them, 49% claim either to have strong intellectual property protection laws and enforcement in place, or "reasonable enforcement" of laws that are generally consistent with the TRIPS and WIPO agreements. The other 51% of countries do not have well-established intellectual property laws, or must still update those laws to account for changing technologies. This group includes both less developed countries (e.g., Syria, Tanzania, Burkina Faso) as well as some more advanced economies (Australia, France, Singapore, Switzerland, among others). It is apparent that trends have been moving so rapidly in this area that many countries have yet to come to grips with the complex issues of intellectual property rights in the context of electronic commerce.

The specific subject of Internet domain names in relation to trademark protection has special significance in the electronic commerce arena. Examples of piracy or extortion of established international by renegade web sites are well known, and the problem has been growing as the Internet has spread rapidly across the world. Conflicts can be just as difficult within countries, as domestic businesses seek to expand onto the Web and retain their name recognition. The Discussion Paper touched upon these and related challenges involving the domain naming system in particular, and asked whether members have established active policies regarding domestic domain names.

In 28% of responding countries, the government has active responsibility for the domain naming system. In 21%, domain names are handled by an industry association, with government guidance. But for nearly 52% of members, there is no formal domain name policy, and disputes are either handled on an ad hoc basis, or there is no government involvement in domain name issues at all. Clearly, this issue remains on the horizon for many countries, and is likely to become an increasing area of concern in the future.

Most of the policy debates and proposals surrounding electronic commerce are geared toward removing barriers and promoting opportunities for these new types of commercial activity to expand even more rapidly than they already are. A final category of issues can be seen as focusing more directly upon the direct benefits that can be gained from electronic commerce, particularly the benefits that developing countries might achieve with successful strategies.

It is apparent that most of the main developments in this field have sprung from the private sector, and will continue to do so in the future, with governments’ roles primarily oriented toward facilitating market access and business opportunities, especially for small, medium, and microenterprises (SMMEs). In the developing world, the advantages of electronic commerce might not always be in the form of entry into competition on a global scale, or international distribution of products and services; domestic markets may themselves stand to gain tremendously from the efficiencies and expanded reach of information technologies.

At the same time as we are concentrating on promoting the greatest possible gains from e-commerce, it is important to recognize that there could be downsides as well. One key area that has gained attention is the impact of the shifting dynamics of the marketplace upon the labour force, and the possibility that many jobs could be lost, either to foreign competition, or to changing means of doing business that simply eliminate many existing labour-intensive activities. While these types of impacts may be unavoidable, and more than compensated in the aggregate by job creation due to economic growth, there may be responses that government and industry can pursue to minimize such adverse impacts, and help ease the transition for workers and communities.

This section of the Discussion Paper addressed some of the practical requirements that confront new electronic entrepreneurs, particularly in developing countries, to enter and compete in the global digital economy. In addition to financial and technological resources, development opportunities depend heavily upon access to skilled labour and training, and the knowledge and experience of successful ventures elsewhere. Government and industry can cooperate in many ways to promote these potential benefits, and the survey sought to identify the range of programmes and initiatives underway in Member States.

Respondents cited numerous instances of both public and private programmes aimed at supporting e-business opportunities, as illustrated below:

The most common activities are national training and support programmes for electronic trade (55%), and web sites promoting national trade, tourism, and on-line businesses (over 75% of responding countries have such web sites). Only 28% claim to have targeted microfinancing programmes for new electronic businesses. And surprisingly, only 17% of members cited participation in international incubation programmes such as UNCTAD’s Trade Point Network, despite its widespread activities.

The survey asked members what areas or types of business activity are likely to be sources of significant growth for their economies, by means of electronic commerce, suggesting a variety of the most common industry segments. Nearly every respondent identified Tourism as a primary growth area (an interesting result that suggests either tourism will increase everywhere, or some countries’ expectations may be disappointed). Similarly, over 80% believe that the Financial Services sector will grow via e-commerce technologies. Over 60% also identified the information/entertainment sector, and the software/IT sector as candidates for growth.

There was less broad optimism, however, for the prospects for both indigenous arts, crafts, and products, on area that has received wide publicity for examples of the Internet opening new export opportunities. Only 35% of responding countries foresee significant growth for these businesses due to information and communication technologies; these include Trinidad and Tobago, Uganda, Bhutan, and Guyana, among others. Also, only 38%, a majority of which are from more developed countries, anticipate growth in legal and professional services through e-commerce channels.

The survey separately asked about public services that might be provided by members’ governments to their citizens, making use of advanced communications technologies. By far the most common practices or plans involve electronic delivery of public education services and facilitation of trade efforts through electronic means (over 80% each). Only 37% of members anticipate supporting health care efforts partly via electronic means. Similarly, less than 40% identified public welfare services or electoral/political activities as candidates for applying communications technologies to public functions. It remains to be seen whether, as many of these countries become more accustomed to these technologies in private sector activities through electronic commerce, they may pursue broader applications in the public sector as well.

Finally, the Discussion Paper addressed concerns of many labour movements around the world with respect to the changes in industrial activity, and related job markets, resulting from the spread of ICTs and electronic commerce. The survey asked members’ opinions about the likely impact of expanding electronic commerce and telecommunications-based industry development on the domestic labour situation in their countries, as well as the policy responses their governments are likely to take to respond to these impacts.

In response, 58% shared the view that these technological developments would "result in minor losses in current jobs, with major gains for workers in new industries." Another 31% felt that technological change would "affect only a small proportion of skilled workers one way or another." A smaller group of 19%, among them Austria, Denmark, France, Latvia, and Hungary, are concerned that electronic commerce could "result in much more job losses in traditional sectors than gains in new industries." No respondents, however, believe that e-commerce will lead to "very large disruptions in the labour force," or grave economic consequences.

In terms of policy responses, the consensus favours two primarily indirect approaches, emphasizing education: assistance or obligations for companies to help educate and retrain displaced workers, and broad national education initiatives in advanced technologies (65%). There is very little support (less than 10%), by contrast, for interventionist or protectionist policies such as direct support or subsidies to sustain traditional industries, or restrictions on use of foreign labour or moving of corporate operations offshore. These views suggest that the trends of globalization and transformation to an information economy are viewed as inevitable by nearly all countries, and that the best policies are to help accelerate and support that process, rather than seek to restrain it.