The British Are Coming!

Her Majesty's Government deals a strong hand to U.K. e-commerce and cryptography firms. Congress may need to re-examine regulation of U.S. firms lest it stack the deck in favor of offshore competition.

by Patricia Fusco ISP-Planet Managing Editor [November 22, 1999]

The Queen has unveiled the British government's agenda for the coming year and UK e-commerce is a going to be a brilliant jewel crowning the Labour Party's priorities for the 21st century.

Enlightened monarchy
Speaking last week at the first state opening of Parliament since the majority of hereditary peers were abolished, the Queen told Parliament that the Labour Party's third legislative program would seek to reform and modernize the UK.

In doing so, the U.K. government appears to have succumb to pressure to amend its controversial legislation about Internet policing and e-commerce.

Civil rights groups attacked the first draft of the Electronic Communications Bill in July. In its original form, the bill would have liberally granted police the authority to review and monitor Internet correspondence.

Industry analysts said that the bill would only work to restrain the growth of U.K. e-commerce, undermine consumer protection, and violate the European Convention on Human Rights

Civil libertarian trend
Cyber-Rights and Cyber-Liberties (U.K.) is a non-profit civil liberties organization founded in 1997. The group's prime directive is promote free speech and privacy on the Internet.

Mr. Yaman Akdeniz, Cyber-Rights and Cyber-Liberties director, said the removal of the law enforcement section, Part III of the Electronic Communications Bill, from the Electronic Communications Bill, the provisions would comply with the Human Rights Act 1998.

"E-Commerce should have been confined to e-commerce a long time ago—without the law enforcement agenda," Akdeniz added.

The revised bill, as presented by the Queen, would let police monitor suspicious Internet activity in the same manner that they can tap telephone calls. Authorities could also force people to hand over the software key to encrypted data and convict them of violating the law, if they chose not to comply.

New broom sweeps clean
U.K. industry analysts applauded Patricia Hewitt, the recently appointed "e-Minister," for her intervention in revising the original bill. She successfully removed much of the unnecessary Internet regulation that would have restrained e-commerce and violated the privacy on the global online community.

With the removal of the investigative powers section, the Electronic Communications Bill is now largely uncontroversial. That's not to say that U.S. Internet and e-commerce enterprises should rest on the laurels of their current market share.

The Bill includes verbiage to create new laws that would simplify Oftel's ability to update telecommunication licenses. (Oftel is the U.K. equivalence of the FCC in the U.S.)

Streamlining the licensing process is just the sort of thing that could give the U.K. Internet communications industry a shot in the arm, particularly wireless communications. Spurring wireless Internet growth could dramatically expand the U.K. online population.

One day after the Queen's proclamation, British Telecommunications announced its plan to implement £5 billion ($8 billion) five-year investment plan to make its dedicated data network 60 times faster. BT is beefing up its Internet Protocol (IP) backbone to provide the bandwidth that U.K. e-commerce growth will demand.

Cryptograpic lessez faire
One of the more interesting aspects of the revised Bill, stipulates that secure Internet transactions be self-regulated by the industry. A popular decision among leading Internet and e-commerce companies, the provision scrubbed the original cryptography and key code regulation scheme that would have forced compliance.

The U.K. legislation provides a new legal basis for the electronic signing of messages to ensure that e-mail messages cannot be tampered with and that the communication is considered secure.

The advent of electronic signatures would also allow for e-mail to be recognized as binding communication by the courts. The Bill would further sweep away existing laws insisting on the use of traditional paper communication.

New market vulnerabilities
Back in the U.S., Sendmail and MessaginDirect joined forces in October to produce a new mail platform that provides a secure foundation for companies' e-business billing efforts. The software lets consumers securely receive and pay bills online.

U.K. software enterprises may be looking to target the secure e-mail market and surpass American efforts to create a standard for online payments because the government's primary ambition is to develop U.K. e-commerce into one of the best environments worldwide for electronic trade and services.

The U.K. intends to make-good on its pledge to lead the world in the promotion of e-commerce enterprises. The government has set an ambitious schedule that requires it to electronically purchase 90 percent of routine goods by 2001.

Old habits . . .
F or security reasons, U.S. law limits the export of encryption software. Current U.S. law only allows approved vendors to receive a "license exception'' to export software that uses a 56-bit "private encryption key.'' Few vendors have achieved Congressional dispensation to export 128-bit or "strong" encryption technology used by e-commerce entries for secure transactions.

Perhaps Congress should take a cue from the Queen and further loosen its chokehold on the U.S. cryptography market.

If it does so, American cryptography and secure email enterprises might be able to defend their markets from the forthcoming onslaught of the U.K. e-commerce revolution and consumers demanding secure e-commerce environments.

Reference: http://www.publications.parliament.uk/pa/cm199900/cmbills/004/2000004.htm

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