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October 28, 1999

UK Government Talks Up Internet Policy

By CBR Staff Writer

By Kevin Murphy

The UK’s chancellor of the exchequer Gordon Brown MP yesterday re-affirmed his governmentÆs commitment to making the UK an e-commerce leader. Addressing the first UK Internet Summit, Brown promised subsidized PCs for low-income families and tax benefits to encourage business angels to invest in technology start-ups.

Brown announced a three-year scheme to lease reconditioned PCs to low income families for 5 pounds ($8) per month, in an effort to get more people online. He said the plan was to avoid creating a society of the information haves and information have-nots.

However, the suggestion that pushing second hand (and probably near redundant) PCs at poorer consumers is unlikely to do much to narrow any information gap. As a growing UK lobby of conumser and buinsess interests argues, the chief cost of getting online is the phone bill that most Brits still pay to British Telecommunications Plc, the incumbent telco whose local loop monopoly is still virtually intact after more than 10 years of market deregulation.

The Conservative shadow minister for technology, Alan Duncan MP, jumped at the chance to rubbish the government line. There is no point giving people a cheap piece of kit if they find themselves with an enormous phone bill at the end of the month he said.

In his speech, Brown tried to side-step the local loop issue, commenting only that we must ensure that the price of telephone use is not a barrier to greater internet use, or lead to a divide. He said the forthcoming Utility Bill would force Oftel, the telecoms regulator, to protect consumer interests by promoting competition (something presumably already in the watchdogÆs remit). Brown pointed to the rise of subscription-free internet service providers as examples of how competition brings down costs.

Barclary Knapp, CEO of NTL Inc, the UKÆs biggest cable operator, echoed this opinion. He said The cost of internet access in the UK is among the lowest in the world, and predicted the UK would surpass the rest of the world for internet penetration, average access speed, and per capita e-commerce revenue within five years.

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The chancellor also said the Financial Services and Markets Bill, which was revealed in June, under which regulation concerning business angels would be relaxed in an attempt to foster innovation. Alan Duncan responded to this and the subsidized PC offer (which was revealed in BrownÆs March budget by saying: When is [UK Prime Minister] Tony BlairÆs government going to realize that people will not be fooled by their constant re-announcements of the same policies.

After claiming that the internet was invented in Britain (see separate story), Brown went on to describe what he sees as the countryÆs key advantages in the race to exploit e-commerce: our language… our telecoms market… our capital markets… our willingness to embrace new technologies… our access to a market of 390 million people [the European Union].

The English language strength mentioned by Brown was later challenged by chair of ICANN and Edventure Holdings Inc Esther Dyson, also a speaker at the conference, who hinted at hidden threats from the rest of the world. She said of English-speaking nations: Hungary [for example] is watching what we do, while we have no idea what’s going on there because we canÆt read their language.

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