Global Information Summit 2000

Net Conference

Session 2 - "Electronic Commerce in the Digital Divide Era "

Digital Divide 2
From: William L. Schrader (11) Digital Divide is a Lie
The so called Digital Divide is directly caused by high cost dialup (minute-based) prices from domestic telephone companies (like NTT and BT), high cost Internet services which are driven by limited licensing for ISP competitors (like Singapore) and high cost telephone long line circuits (Japan, HK, ROK), and lack of serious competition in selling computers and related services in domestic markets. These situations are principally created and intentionally maintained in their stagnant state by government legislators and government employees who wish to keep control of the telecommunications infrastructure in the hands of the Former Dominant Carriers (FDCs). While they claim to be "deregulating as rapidly as possible", the dates are always measured in years instead of days. Most of the legislators can be kindly referred to as Well Meaning Politicians (or WiMPs for short), but it is clear to me that they are either too ignorant to notice the effects of their "work" or they are arrogantly and intentionally keeping their electorate fully subjected to the abuse of the FDCs. Without the Internet, we would STILL be suffering from their lack of innovation in services, features and price reductions which has been permanently embedded in the Internet. To whine falsely about a Digital Divide is to ignore the facts. I have absolutely no interest in discussing the fake problem of Digital Divide. Simply remove the WiMPs in the next election, OR wait three to four years until the FDCs all collapse of their own ignorance.
From: Nobuo Ikeda (12) Digital Divide is a Lie
(10) Izumi Aizu 'Digital Divide', I think it is a real issue, especially between already economically divided nations and peoples. Yes, they are already divided, very old problem of capitalist society. The divide in the usage of IT is not the cause but the result of economic one. The Internet may equalize it. There are much Internet BABBLES, as well as bubbles, such that it brings about "winner-take-all society" due to "increasing returns". No economic evidences support such claims. On the contrary, the computer industry is so competitive that very few companies can survive for more than ten years. The Internet is even more so. It is the opportunity for the poor to access the information and capitalize their good idea. I don't think it is a good idea to discuss "Net Strategies for the Digital Divide Era", because there will be no such Era.
From: Kenichi Kataoka (13) Bill's presumption
Start-Up (7) William L. Schrader I'd like to know if anyone disagrees with my personal presumption that 80% of voice traffic will be VOIP by end of 2003, that 80% of all commerce will be dependent on the Internet in some meaningful way, that 80% of all countries will allow FULL maximum encryption without public key escrow, that 80% of all countries will treat the Internet as TAX FREE in all respects. Agree, or disagree? This is Ken Kataoka, joining from Mitsubishi Corp, Tokyo. Please show me how governments will get revenue at EOY2003, when 80% of all commerce will be dependent on the Internet and 80% of all countries will treat the Internet as tax free in all respects...80% of revenue will be from heritage tax and property tax?
From: Anthony M. Rutkowski (14) Kenichi's presumption
(13) Kenichi Kataoka 80% of all commerce will be dependent on the Internet and 80% of all countries will treat the Internet as tax free in all respects... 80% of revenue will be from heritage tax and property tax? You didn't mention income tax. Here in the States this is an ongoing debate. The advocates for the Internet as a tax-free zone point out that public revenues are at an all-time high and growing rapidly - despite the Internet's current tax free zone status and growth. This suggests that the Internet economy is significantly facilitating public revenue growth is diverse ways.
From: William L. Schrader (15) Kenichi's presumption
(13) Kenichi Kataoka Please show me how governments will get revenue at EOY2003, when 80% of all commerce will be dependent on the Internet and 80% of all countries will treat the Internet as tax free in all respects...80% of revenue will be from heritage tax and property tax? Governments will, by necessity as you point out, modify their tax regime. Regardless of their motions, they will be unable to successfully tax Internet transactions, and most will have figured that out prior to 2003. At that time, some might still justify taxing bricks-and-mortar firms for their sales through VAT or Sales and Use Taxes. Others may implement or increase income tax on individuals or revenue tax on corporations, still others will implement or increase property taxes. Bottom line, however, governments will be technically unable to tax Internet transactions, and those who try will have no appreciable Internet transactions to tax, and no appreciable commerce left because of that, and that government will either be voted out of office or overthrown by disrespecting subjects or voters. I am simply stating the future facts, and you do not need to agree with me today or ever, since agreement is not what I seek.
From: Jim Johnson (16) Moderator - Feedback and Questions
This is Jim Johnson again, hoping to moderate some of the great free for all discussion we have had on a wide range of issues: Some feedback, and then some questions: 1. Even if your own parents are not using the Internet, you can be certain that B2B e-commerce is going to sweep the whole world in this decade. And that you and your children will be using it for every aspect of your lives, very soon. This technology is moving faster than any in history toward universal adoption. It is changing everything. It is not just a faster, mechanized way to do the same thing. It offers whole new concepts in personal services, business organizations, social relationships, political structures and processes, and delivery of everything for human needs. (John Chambers of CISCO - a serious man with lots of clout in the industry talks about refrigerators that will self-detect when you need milk and eggs, and send an order over the Internet to the grocer who will automatically deliver to your home ― and the homemaker won't even know that it is happening.) It challenges the very philosophies of whole societies and institutions. Democracies will work differently in a few years. Internet voter registration and voting is already online for the 2000 elections in the USA. People are meeting their spouses over the Internet. 2. Deeply homogenous cultures, such as Japan, are faced with serious cultural adjustments to try to keep abreast of the industrial world. Marja gives us the picture in Finland (Great to hear from you, Marja). Finland is a deeply homogenous culture with a language that is more unique than Japanese; but amazingly they are practically the Internet powerhouse of Europe. There are some cultural clues that Japan needs to learn from Finland. 3. Many of you have pinpointed government policies, and especially government owned monopoly telcos as a basic part of the problem for the digital divide. (I rather like to think of the digital divide as a clumsy phrase for all the collection of barriers that are still preventing people from transitioning into the true cyber world, and some of these are self-imposed!) What is amazing is that in spite of predatory access rates charged by monopoly phone companies, people are excited fighting for access to the Internet.( And look at China: three major government policy barriers to Internet access announced in the past three months, and yet huge growth in Internet access.) People everywhere are making end-runs on the phone companies. They are fighting their local companies for faster access, like Tony said - even in the Washington, D. C. suburbs. 4. The problems of process in doing business or transacting life over the Internet, such as those mentioned with payment systems, security, privacy, access speed, taxation, etc. are being addressed incrementally all over the world. What looks to most governments like a regulatory, public policy problem generally turns out to be a matter of applying new technologies to solve the problem. Certainly, privacy is solved by technology and business practices, more than government rules. 5. On taxation, I have been trying to get the USA's commission on e-commerce to think globally about taxation of business online. Unfortunately, they are mostly trying to solve the problems of the states in collecting sales taxes on out of state transactions. The challenge the states face is to harmonize their own definitions of what is taxable. Then all the e-commerce vendors will know what sales taxes to charge based on the point of delivery (or the billing address on the credit card) for the products purchased. And the credit card companies and the electronic money makers can serve as third party brokers to assess and distribute the right taxes to the right places. The Governors of the states have been whining about loss of revenues at the same time they are all awash in surpluses generated by e-commerce and the booming economy driven by huge efficiencies in B2B e-commerce. The US commission is going to ask for an extension of the moratorium to let the states get their act together. The real issues are what is the European Commission going to do? They are zealous in taxing e-commerce; and they are shooting themselves in the foot, too. And they are so zealous in protecting consumers that they forbid catalogue vendors on the INternet from offering absolute, 100% guaranteed customer satisfaction, no questions asked on replacements of products for the life of the product (i.e. LL Bean), because this is "unfair competition." EU Consumer advocates still can't figure out why credit card companies are offering full refunds and intervention with vendors on behalf of cardholders as a customer service. No law says they must. It is competition in a global cyber marketplace! The compelling power behind the growth of this phenomenon, inspite of its pitfalls, and its criminal hackers, and its trash sites, and its failings is that the Internet actually is proving a benefit to people who never imagined they could do something so new and important and helpful for themselves and their families and their communities and their nations. SO: ― What are some practical steps for Japan to take to insure universal access for all to the Internet? Does NTT need to be really, really broken up? Do MITI and the DOEd need to get out of the way to allow access to more foreign content? ― Can decisions about growth, using these technologies, be made a lower levels within Japanese companies? Can middle and regional managers be more trusted to make changes and innovate? ― Can Japan's employment social structure withstand people loosing jobs in one old company, retraining and then finding three new jobs in other smaller companies? ― How can the world embrace and pressure China to open up to allow its people open access to the Internet without government restrictions? ― Can Japan see itself as leading all of Asia in an Internet revolution? ― What is the impact of recent mega mergers of information and technology companies on the digital divide? Will the rich get richer and the poor get poorer, or can we change that formula?
From: Kenichi Kataoka (17) presumption
(14) Anthony M. Rutkowski You didn't mention income tax. Here in the States this is an ongoing debate. The advocates for the Internet as a tax-free zone point out that public revenues are at an all-time high and growing rapidly - despite the Internet's current tax free zone status and growth. This suggests that the Internet economy is significantly facilitating public revenue growth is diverse ways. I'd like to know your idea if current tax framework will keep on working in this decade, or other kind of taxes will be necessary, such as poll tax like one. (15) William L. Schrader Governments will, by necessity as you point out, modify their tax regime. Regardless of their motions, they will be unable to successfully tax Internet transactions, and most will have figured that out prior to 2003. At that time, some might still justify taxing bricks-and-mortar firms for their sales through VAT or Sales and Use Taxes. Others may implement or increase income tax on individuals or revenue tax on corporations, still others will implement or increase property taxes. Bottom line, however, governments will be technically unable to tax Internet transactions, and those who try will have no appreciable Internet transactions to tax, and no appreciable commerce left because of that, and that government will either be voted out of office or overthrown by disrespecting subjects or voters. I am simply stating the future facts, and you do not need to agree with me today or ever, since agreement is not what I seek. My suggestion is that some kind of new tax will be possibly necessary to catch up the change of economics, as taxes on property or revenue will be out of date, and sales or transactions will be untaxable. I am simply interested in the future tax regime, and actually I agree to the future facts you pointed out.
From: Jim Johnson (18) Moderator - You've Got Power
Something about this Nikkei online discussion on Internet access, and telecoms and the digital divide must be pretty powerful. Japan's NTT announced today that they are cutting the rates for Internet access. I guess they got tired of our trying to lobby them! Good for you! You have power! They finally realized that they were creating the digital divide in Japan, and choking the future growth of the nation's economy. Here are some new questions to ponder: 1. The European Commission is currently circulating their proposed policies for taxing online commerce. They are classifying digitally delivered "goods" (i.e. music, books, data, videos, etc.) as "services" and thus are proposing to tax them. QUESTION: Are digitally delivered products "goods" or "services?" 2. The U.S. Government is circulating a proposal for "protecting the security" of the Internet, and especially of networks used by government agencies. Many have criticized this proposal, and the powers of the government to track down hackers, as a violation of individual citizen privacy. QUESTION: Where is the balance between government's right to protect itself, and the right of citizens to be left alone in their privacy? 3. Hackers just brought down the websites of Yahoo, Amazon.com, e-Bay, and CNN, etc. Are hackers part of the free, ruleless, borderless culture of the Internet, or are they criminals? Do hackers create a digital divide by striking fear into the minds of those not yet online? What do you have to say?
From: Takashi Tanemura (19) Answers to the Moderator
(16) Jim Johnson What are some practical steps for Japan to take to insure universal access for all to the Internet? Does NTT need to be really, really broken up? Do MITI and the DOEd need to get out of the way to allow access to more foreign content? Very difficult problem. The PC home penetration is not as high in Japan and that could be one of the reasons that "digital divide" is not such a big issue here yet. If Japan needs to insure universal access for all, I'd say some type of governmental commitment is required. A good example is Minitel terminals in France. Internet terminals and bandwidth should be provided in some way or another. (16) Jim Johnson Can decisions about growth, using these technologies, be made a lower levels within Japanese companies? Can middle and regional managers be more trusted to make changes and innovate? I think it is very difficult to change the corporate culture in big companies although there are some companies trying to change. (16) Jim Johnson Can Japan's employment social structure withstand people loosing jobs in one old company, retraining and then finding three new jobs in other smaller companies? It might be a little difficult to change the employment social structure, but the younger generation might not care about changing jobs as much as the older ones. It's up to the companies to change the structure. We employees can't control this problem. (16) Jim Johnson How can the world embrace and pressure China to open up to allow its people open access to the Internet without government restrictions? I think this is a big problem in China, but it might also apply to Japan. At this moment, I feel that Japan is a country where everyone should be treated equally. If we take a look at the services provided on Japanese sites, there aren't many which have specials for Internet users. This is my guess, but the government would not like to give big advantages to Internet users. That's why "digital divide" is not such a big issue here yet. If we want to make the government open up, we need services from abroad which will give Internet users a big advantage. (16) Jim Johnson Can Japan see itself as leading all of Asia in an Internet revolution? I wouldn't want to say out loud, but I don't think so. We are too dependent to the Japanese language that we will never become a leader in Asia. I believe countries like Singapore and Malaysia where English is like the first language is better suited. I would like to hear Mr. Aizu's opinion on this matter. (16) Jim Johnson What is the impact of recent mega mergers of information and technology companies on the digital divide? Will the rich get richer and the poor get poorer, or can we change that formula? I think according to what is happening in the US, it looks like the rich get richer.
From: Jim Johnson (20) Moderator - Thoughts to Ponder
1. In the earlier note "You've Got Power" I noted the announced reduction this week of Internet access rates by NTT in Japan - thus removing a barrier causing the digital divide. It turns out that NTT only lowered the rates for its own direct ISP service (where you have to dial into NTT's own ISP service). They did not lower the interconnect rates for other ISP service companies who are competing with NTT. Can our Japanese colleagues clarify what is going on with NTT? Should more pressure be brought on them to see the problem they are causing? 2. In response to my note about hackers bringing down several major websites, Bill had an interesting proposition. First of all it seems that hackers used both direct attacks on the security measure of these websites (which Bill maintains are very weak and the result of the carelessness of the website owners). And they used massive spamming techniques by flooding these sites with thousands of void messages, thus denying real users access. Now Bill characterizes these hackers as gallant knaves of the Internet roundtable who should be recognized for their free spirits and their pioneering and daring escapades. On the other hand he chastises the website owners for their failure to properly build suitable security fences. Perhaps these websites should first build technology motes around themselves, fill the mote with brackish water (not suitable for swimming or walking on) and then populate the mote with alligators and snakes (all technological security measures, of course). Then these weak website should build high stone walls against intruders, topped by broken glass and spikes. And, of course, at the top of each tower is a boiling pot of hot oil ready to be dumped on any who dare to scale the walls. Of course, there should be only one draw bridge into the website, with passwords and secret handshakes. This paints an interesting picture of "globalization" and the wonderful world of noble people crossing borders of culture and language and economics to communicate freely and to learn and to transact mutually beneficial relationships of all kinds. I wonder why we cannot require a higher standard of noble behavior from these knaves who could be expected to limit the outright destructive results of their exercise of freedom. That might make for a global community! In Japan, one of the barriers to growing usage of the Internet for commercial transactions (a digital divide) is the difference between the trust and confidence factors which Japanese feel in dealing with local business people, versus the dangers created by such knaves as the hackers who bring down commercial websites. What do you think? return to Digital Divide 1　to Digital Divide 3