One summit panel discussed "Electronic Commerce in the Digital Divide Era." Moderator Toru Maegawa, visiting professor at Waseda University's Global Information and Telecommunication Institute, said that there were many problems to resolve, such as taxation of Internet-based transactions, defense against hacker attacks, copyright protection and privacy concerns.

John Ryan, president and chief executive officer of Entrust Technologies Inc. of the U.S., warned that those who don't get on the World Wide Web now risk becoming road kill later. Users will have incredible choice, and small and medium-size businesses will have the same power as big companies, he said.

Geography will be eliminated as a constraint, Ryan said. But he acknowledged that there are problems of trust, such as preserving confidentiality, to be overcome.

Robert H. Kohn, chairman of EMusic.com Inc. of the U.S., said that music downloads are set to eclipse compact discs as the major source of recorded music. The cost of a download from the Internet is extremely low, he said, pointing out that it is already possible to carry around a complete compact-disc collection in one's pocket.

However, there remain problems on the legal side, Kohn added. To illustrate, he posed a question: When a Japanese user downloads music created in the U.S., which country's laws apply?

Another problem is that e-music providers cannot determine where the users are located at the time of transactions because nothing physical is sent to the buyer. That is the big difference from other kinds of e-commerce that culminate in an actual delivery, he said.

Eric Brewer, chief scientist and co-founder of Inktomi Corp. of the U.S., laid emphasis on the importance of infrastructure companies operating behind the scenes. This allows a region to have its own identity. Automatic translation devices are also helping broaden access to non-English speakers, he added.

Toshiharu Aoki, president and CEO of NTT Data Corp., said that up to now, traditional business had been conducted on the Internet, but the Web is shaking off all restraints and turning into a consumer-led market. He said convenience stores will be an important access point.

Aoki also mentioned that Japan trails the U.S. in e-business, but it is gradually becoming profitable even on a domestic basis. "E-business changes the distribution system. Money, products and information used to have separate distribution channels, but the Internet has integrated them all," he said.

"Today in Japan, most Internet users are 20-35 years old, whereas the age of U.S. users is more spread out. So, whether digitized appliances will create new markets among, for example, the elderly is key to the Internet business," he said.

Brewer pointed to music as an example of how niche markets could be successful. Japanese traditional music, which would not be profitable to market overseas due to a narrow fan base, could be distributed at low cost via the Internet.

Elliot Maxwell, special adviser on the digital economy to the U.S. Secretary of Commerce, said that some 4,400 new Web sites are created every day. Maxwell said a mobile labor force was driving the rapid expansion of the Internet as the brain power was thus available to take advantage of the opportunities.

Maegawa asked if the growing practice of patenting business models could slow the growth of e-commerce. Ryan warned that there have been cases of e-businesses being delayed for as long as 15 months because of legal suits. He suggested standards be established to resolve the patent issue.

By Natsuko Segawa

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