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Jan 7, 2000 - enterprises which used the Web to support International trade. .... Six of the eleven R-3 companies reported technical problems which were largely related to ... commerce and online government service delivery in the bush.
Electronic Commerce: The End of the Beginning 13th International Bled Electronic Commerce Conference Bled, Slovenia, June 19-21, 2000

The Role of Government in Internet Commerce: Views from the Fields Tanya Castleman, Paul A. Swatman, Paula M.C. Swatman

Abstract The Australian Government has introduced, through the National Office of the Information Economy, a number of initiatives to foster Internet commerce nationally and, particularly through its Networking-the-Nation program, to create economic opportunities in the rural and regional areas of the country. It is important to those regions themselves and to the nation as a whole that rural areas return to economic sustainability. This paper reports the findings from a recent study of 46 organisations which use Internet commerce, of which 11 are based in regional Australia. While the perspective of rural-regional enterprises does not significantly differ from that of their metropolitan counterparts, they face some additional problems in access to resources and support. Their experiences of using Internet commerce and their perceptions of the appropriate role of government in stimulating and regulating Internet commerce suggest ways in which Government strategy for regional sustainability via Internet commerce should be refined.

1.

Introduction

A disturbing trend in population movement in most developed countries is the drift of population from rural to metropolitan regions—indeed it has been estimated that the cities of the world grow in population by 1 million people per day. Donaldson and Carnevale (1999) highlight this trend, pointing out that by 2030 more than 75% of the world’s population will be living in urban areas. The drift of population is a part of a spiral of rural decline, the interconnected components of which include:





Reduction of expensive services by government and big business1 leading to:



A contracted local economy and consequent business contraction/closures and job losses, leading to:



Population drift, reduced population density and increased cost of service provision…

This spiral of rural decline strikes particularly deeply into the national soul of Australia. Concern has been growing about those areas of the country outside the major population centres in metropolitan areas, primarily in the capital cities. This concern includes regional areas (centred around provincial cities), rural areas and remote locations. The regional-rural-remote (R-3) areas warrant this concern. For all that Australia is one of the most highly urbanised nations in the world2, approximately 57% of export income is earned from commodities and the image of the Sun-bronzed Aussie living in a country which “rides on the sheep’s back” pervades the national consciousness. A consequence of the highly urbanised demographics coupled with the vast geographic area of Australia is the difficulty and expense of providing social, health and commercial services to areas of extremely low population density. The iconic nature of “the bush” in Australia makes shortcomings in this area highly visible and politically damaging to both State and Commonwealth Governments. One early consequence was that on 5 December 1996, the Commonwealth Government Minister for Communications and the Arts, Senator Richard Alston, announced a A$250 million Regional Telecommunications Infrastructure Fund “to improve the quality of telecommunications services and enhance employment opportunities in regional areas” (DOCITA, 1996). More recently, in late 1999, the conservative State Government in Victoria lost power following a swing to Labor by R-3 voters who, believing their complaints about declining services in the bush were falling on deaf ears, demonstrated their power by means of the ballot box. This unexpected swing against a sitting government standing for its third consecutive term has caused a marked lift in the profile of rural voters. One of many similar newspaper features notes that: “The Prime Minister has warned all his ministers that he would see ’a red light flashing’ if any of them proposed cutting any further Commonwealth services to rural Australia” (Wright, 2000).

2.

Electronic Commerce and Sustainability in Regional ( R-3 )Australia

More generally, the Commonwealth Government recognised the fundamental importance of telecommunications and electronic commerce to the nation and, in a policy statement issued by NOIE (the National Office for the Information Economy) in December 1998, identified ten priority areas for action. “We will direct our efforts to: •

Maximise opportunities for all Australians to benefit from the information economy.



Deliver the education and skills Australians need to participate in the information economy.

1 For example the ANZ bank (one of Australia’s four major banks) alone closed 175 regional and suburban branches in the twelve months to 30 June 1998 (The Weekend Australian, 21/2 November 1998) 2 Approximately 70% of the population live in the 10 largest cities – and the Australian Bureau of Statistics, in its most recent statistical profile update, notes that: “some areas of Australia have experienced significant population decline in recent years … the fastest population decline has occurred in rural areas. Most of this decline has been caused by net migration loss. Such population loss is associated with technological, social and economic changes in rural areas, and industry restructuring in local economies” (ABS, 2000). 2





Advance the growth of a world class infrastructure for the information economy.



Increase significantly the use of electronic commerce by Australian business.



Develop a legal and regulatory framework to facilitate electronic commerce.



Promote the integrity and growth of Australian content and culture in the information economy.



Develop the Australian information industries.



Unlock the potential of the health sector.



Influence the emerging international rules and conventions for electronic commerce.



Implement a world class model for delivery of all appropriate government services online.” (NOIE, 1998)

The A$250 milllion grant for regional telecommunications infrastructure described above became known as the Networking the Nation programme and continues, managed by the Department of Communications, Information Technology and the Arts (DOCITA), as the primary mechanism for the implementation of this strategy in rural and regional Australia. The programme, which provides over A$400 million to not-for-profit organisations, is designed to offer support for a range of telecommunications needs in regional, remote and rural Australia. It forms a part of the federal government’s endeavours to ensure equity of access across a huge, sparsely populated country and the promotion of services which telecommunications makes possible (DOCITA, 2000). Unfortunately, the impact of the provision of telecommunications infrastructure in the bush is much more complex and difficult to predict than this strategy seems to suggest. Consequences of the provision of telecommunications infrastructure (and high-bandwidth Internet connectivity) to citizens of rural and regional communities include: •

the (partial) destruction of the geographic niche advantages enjoyed by local businesses



the opportunity for the replacement of face-to-face service delivery by government and big business with electronic service delivery

which helps to alleviate information poverty within the community at the expense of job loss and economic contraction – the very problems which the programme was initially designed to address. Electronic Commerce, touted as the solution to all economic ills in the 21st century by print and electronic media alike, does not offer the universal magic bullet it appears to provide for online ‘start-ups’ in the major capital cities. Without a cooperative focus and support from local businesses and communities, eCommerce solutions can cause more problems than they solve by encouraging purchasing outside the local economic region (Wilde and Swatman, 1999; 2000). Although there has been considerable speculation about the impact of eCommerce on R-3 Australia, however, there has been little academic research published so far reporting the experience of innovators in this area.

3. Background to the study This paper offers an additional rural-focused analysis of a study of enterprises using Internet commerce for international trade, conducted in 1998. The study was undertaken as a project of the CollECTeR (Collaborative Electronic Commerce Technology and Research) inter-university research network under the auspices of the Australian Commonwealth Government’s Department 3



of Foreign Affairs and Trade (DFAT). The purpose of the larger study (DFAT, 1999) was to investigate the role which Internet-using import/export companies wanted DFAT to play in the development of eCommerce policies and provision of information relevant to eCommerce. The discussion here focuses particularly on those companies within the original group which were located in rural areas or regional centres. By analysing the findings from these companies separately, we are able to identify more precisely the issues affecting the development of eCommerce in rural areas and to consider government initiatives in the light of the experiences and perspectives of those companies. Study method The complete New Silk Road project involved a mix of research methods, including survey, case study, “round table” focus groups; together with a comparative study of overseas experiences in Internet Commerce-based trade (DFAT, 1999a; 1999b). The project involved 31 Australian-based companies using Internet commerce for export or import – and was itself an extension of the phase 1 research project (DFAT, 1998) which reported case studies of 12 Australian companies involved in international trade and using Internet commerce to a greater or lesser extent. Case studies were considered particularly useful in understanding the needs of Australia’s pioneers in Internet-based international trade, because the use of Internet commerce is developing so quickly and little was known about actual eCommerce implementation in that sector at the time the data were gathered. Case studies provide a much richer picture of the world than can be obtained from surveys (Yin, 1994), which are restricted to gathering information related to the questions on the survey instrument. Case studies are particularly useful in the identification of issues for further investigation (Benbasat et al., 1987). The case study method was part of a broader research strategy which included a survey of 130 Australian companies (see Gable, 1994, for a discussion of the benefits obtained from combining case research with surveys in Information Systems). This paper includes only the case study results – we believe that an in-depth understanding of the specific problems of remotely-based companies trading via the Internet is best obtained from the case results. Sample selection The larger study comprised case studies of 46 Australian companies which were at that time using the Web for commercial trade purposes. The original focus of the study was on small to medium enterprises which used the Web to support International trade. While most of the case study participants fitted this profile, the final sample also included some larger companies which were making an original contribution and a few companies whose trade was exclusively domestic (and occasionally even local to a region). The 46 case studies (31 of which were reported in DFAT, 1999a), while not selected using any scientific sampling technique, give a good insight into the experiences of Australian companies in the small and medium business sector. 11 of the companies in the sample were located in R-3 areas or dealt significantly with the regions. The major characteristics of these companies are summarised in Table 1.

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Table 1. Key Characteristics of Rural Companies Company Name

Core Business

Size

Mkt

Bus. Sect.

State

Sales

Qld WA

Sect1 Bluegum Beef Pty Ltd

Beef production and marketing

Medium N/I

Cooperative Bulk Handler of bulk grain for export Large2 Handling Ltd (CBH)

I

Sales

Great Barrier Reef Travel wholesaler Visitors Bureau (GBR)

Micro

I

Services Qld

protective Large

I

Mfr

NSW

Instep International Pty CDs for relaxation/breathing Micro Ltd techniques

I

Sales

Qld

Mildura Native Nursery

N/I

Sales

Victoria

provider, Micro desing,

L

Services Victoria

The Semex Shop

Distributor of livestock genetics Small

I

Sales

Victoria

Tobwabba Art

Retailer of aboriginal products

I

Sales

NSW

Medium I

Mfr

NT

Small

Services NSW

Industrial Galvanizing Manufacturer Corporation coatings

North East (NET)

Transfer Heavy equipment manufacturer

Walcha Telecottage 2)

Suppliers of native Australian Small plants

Telecentre Internet Service training, web consultancy

United Bulk Systems

1)

of

Information processing

Micro

L

I = International, N=national, L=local The cooperative’s members are typically small to medium enterprises (grain growers)

As Table 1 shows, these companies vary in size and represent different states and industries. We have broadly classified their activities as Manufacturing, Sales (Retail and Wholesale) and Services. They were all successfully using the Internet in their business activities. Manufacturing The two companies in this category are both engaged in heavy manufacturing activities. Both trade in international markets. Sales Half of the rural companies were engaged in sales activities, although the products they sold were diverse. Most sold distinctive rural products: three sold primary industry products (beef, wheat and plants), one sold artworks produced by a local Aboriginal community. The remaining company sold CDs and other health information products with no special link to rural enterprise.

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Services Two of the three companies in the services sector linked their offerings to the distinctively local rural environment. The tourism site, Great Barrier Reef Tourist Bureau, was active in attracting and facilitating visitor bookings to Far North Queensland and the North East Telecentre provided support for a range of local community activities. The third company (Walcha Telecottage) provided information processing services in the local area and increasingly beyond it but its activities were not specifically linked to rural enterprise.

4. Findings We have looked the eleven rural case studies to identify any distinguishing elements in their experiences of developing and using the Internet for their business activities. The main focus of our analysis is to identify what the companies’ experiences suggest about the effectiveness of eCommerce in supporting rural sustainability. These initiatives can only succeed if they help reduce the population drift into the major metropolitan cities and reverse the vicious cycle of population lossÅ service withdrawalÅ economic declineÅ lowered amenity and lifestyleÅ which results in fewer people living in the area which has been made less attractive by these changes. These processes are circular and the various factors interact. Our investigation sought to identify what (if any) impact eCommerce initiatives among these R-3 companies had on breaking this cycle. To assess their impact and to clarify ways in which the benefits of eCommerce might be realised, especially through government initiatives and policy, we provide an overview of the participants including: •

their patterns of eCommerce usage



the obstacles they encountered in adopting eCommerce



the impact of eCommerce on employment



their views of ways in which the Government could support and advance eCommerce .

Current use of the Internet Current use of the Internet by our case study participants appears to fall into the following categories: •

As an internal communications medium to improve organisational efficiency. Three of the R3 companies used the Internet primarily (or originally) in this way. CBH use the Internet to communicate with 10,500 shareholders which improved its internal efficiency. Bluegum Beef use the Internet for communications among group members (primarily email at present because of rural telecommunications limitations) and have developed retail activities subsequently. UBTS began their Internet commerce activities largely to improve their internal operations through improved communication.



The Internet is used as a new channel for the organisation’s existing business. Three companies (Tobwabba Art, Industrial Galvanising and Instep) have all used the Internet to expand markets and reach customers previously out of reach. For Instep, Internet activities have largely replaced their conventional business while for Tobwabba, the Internet is still a minor part of their activities).

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The Internet has enabled the company to diversify into new product/service lines. For example, Semex now offer ISP services in addition to their core business and Mildura Native Nursery has developed a significant native plant database which is marketed both as a CD and via the Internet.



The Internet is fundamental to the business; without it there would be no business. For example the Great Barrier Reef Visitors Bureau and Walcha Telecottage are fundamentally Internet enterprises.



The Internet is the subject of the business. The raison d’ètre of the North East Telecentre is to develop Internet activities in the region it serves.

Obstacles in Internet commerce development Our respondents firms all reported obstacles in developing Internet commerce. These obstacles can roughly be categorised as: •

Technical and infrastructure problems



Cost



Ability and willingness to adopt IC .

Technical problems and infrastructure inadequacies in R-3 Australia Six of the eleven R-3 companies reported technical problems which were largely related to the poor performance of rural ISPs and the slow bandwidth available in rural areas. The connections were problematic — unreliable and slow. It is sometimes even problematic for R-3 residents to access any on-line service at all. Those participants who encountered technical problems felt strongly about the issue. Bluegum Beef identified poor line quality and performance and difficulties with line connections as major obstacles to the group’s activities. These views were repeated by CBH, Semex, GBR Tourist Bureau, Tobwabba Art and the NET. This is the key Internet issue in R-3- Australia. The actual quality of the infrastructure in the ground is a huge barrier to the take-up of electronic commerce and online government service delivery in the bush. Many farmers have Internet accounts but can only use the service for email as they can’t get anything more than a 2400 bps connection (which needs to be provided under the Universal Service Obligation). Blue Gum Beef pointed out that such very low linespeeds are extremely frustrating and severely limiting the usefulness of the Internet. In fact, some of the Bluegum members do not even have access to 2400 bps lines! Tobwabba Art, an aboriginal art retailer on the Internet located in a rural Forster, NSW, believes the Australian technological infrastructure needs to provide faster and more efficient access to the Internet through greater bandwidth. Tobwabba Art believe improved infrastructure could be achieved through pressure and possible regulatory action directed at the telecommunications industry, to enhance telecommunications in rural Australia. The reason for the poor connections in rural Australia is that the copper cable in the ground is old and needs to be replaced. In many rural areas poor line quality is exacerbated by electric fence interference, which can severely disrupt Internet access. The simple fact is that in some areas outside the cities, the telecommunications infrastructure is so poor that it will not support the Internet access that is taken for granted in the cities. The North East telecentre point out that often special equipment or modems have to used to try and minimise the problem. While Telstra is gradually replacing all its analogue exchanges with digital exchanges, and this will greatly assist some rural users, it still will do nothing for those properties with poor quality copper 7



lines running from the exchange to the homestead. And it won’t address the problem of those who may have adequate cable in the ground but are just too far from the exchange to get a good connection. Inadequate customer access network infrastructure (i.e. from exchange to homestead) is a significant barrier to rural areas competing in electronic commerce in a deregulated telecommunications environment, where the carriers’ decisions are increasingly made on the ability to get a quick return on investment. In such an environment, the North East telecentre point out, the people in the bush can readily be relegated to remaining second class citizens. Several of the respondents (e.g. Bluegum Beef, the North East Telecentre) expressed the view that selling off Telstra is not going to help people in rural areas get a better telecommunication service. The North East Telecentre expressed the opinion that if the bush had little telephone companies, rural communities would get a better service because the customers would constitute a significant market for them and would therefore be able to receive better customised services. Cost Three of the companies reported problems with the cost of Internet commerce although others which had encountered slow response times also implied cost problems. Instep found the cost of Internet services in Australia high compared with US providers while NET and CBH both encountered problems in the high cost of telecommunications and Internet use. This problem may be especially acute, or at least more noticeable, when an Internet application includes members who are private individuals or very small businesses as opposed to larger business or anonymous customers. Ability and willingness to adopt Internet commerce Nine of the companies reported problems in the uptake of their Internet activities. In some cases this stemmed from lack of customer or member knowledge of IT and the Internet (Tobwabba, Mildura, CBH, NET). Sometimes the problem seemed to stem from a generally sceptical attitude and a reluctance on the part of rural and farming community members (Mildura Native Nursery, Blue Gum Beef, Semex, NET). Walcha Telecottage also reported reluctance and lack of interest, but for them the attitude problems were not in the R-3 areas but in other areas where the availability and advantages of R-3 telework were not recognised. Several other obstacles were reported including: •

concerns about the privacy and security of on-line transactions



lack of resources



protection of the intellectual property in Internet-supplied services



problems in getting a business name registered online.

These seem to be general problems, not specifically related to the R-3 sector. Internet commerce and the job market One question which is asked regularly by both public and private sector organisations is what impact the Internet will have on employment. Clearly, this is a matter for serious concern to any government — but it is also relevant to companies wishing to understand the implications for their Human Resources over the next decade. While it is still too early to answer this question with any real accuracy, our results indicate that although some jobs (particularly those which involve repetitive data entry or paper shuffling) are being lost as a result of Internet Commerce, other jobs are being created to replace them, or are being modified to cater for the changed needs of online 8



commerce. This is as true for the R-3 companies as for urban ones. The difference is that the consequens of any overall job loss in the country is more problematic because of the less buoyant R-3 job market and fewer employment alternatives. In some cases there are (or are likely to be) job losses within individual companies, but these are often off-set by greater use of out-sourcing, which may simply mean that staff have a change of employer, rather than losing their jobs. The impact of the changes depend on how central the Internet has become to the company’s business. For example, the Internet is absolutely central to the North East Telecentre’s operations and, as one would expect, the jobs available within the company are all Internet-related to some degree. Being based in Wangaratta in northern Victoria, the NET had to train many of its staff, since the skills the organisation required were not immediately available — it required web site selling skills, telemarketing and web designers, none of which is the type of experience generally found in a country town. To a large extent, the NET has brought the high-technology sector to Wangaratta! None of the eleven companies studies reported overall job loss through their Internet business activities. Five reported job growth in the company (even if the absolute numbers were small); three reported an increase in demand for external consultants and contractors. Three of the R-3 companies we interviewed reported no direct job impact from Internet trading as measured by changes in staff numbers. Even where there was no measured change in employment levels however, the Internet had a qualitative impact on the activities undertaken by staff. Mildura Native Nursery’s co-owner has found that he has had to devote a considerable period of time to gaining familiarity with the Internet. Although there have been no overt employment effects in this company the devotion of nine months of the co-owner’s time to learning the Internet has had a more subtle impact on the company. This experience is not uncommon. It is likely that job creation from successful eCommerce applications is greater than that reported by the participants in this study. For example, Industrial Galvanisers reported that eCommerce was contributing to overall company growth which would, in turn, lead to higher levels of employment in the area. These findings suggest that eCommerce can contribute to R-3 job growth. However, it is important to remember that all the companies in our sample were successful in this venture. We were unable to include companies which might have lost customers (and jobs) as the result of increased Internet commerce by other stakeholders. The eCommerce adopters in our sample which had attracted business directly into their local area (Walcha, NET, Great Barrier Reed Tourist Bureau and Tobwabba Art) have clearly had a positive effect. The others had either improved their competitiveness and business performance (CBH, Mildura Native Nursery, Industrial Galvanisers, UBTS) or their access to international markets (Instep, Semex). They are likely to have had a positive impact on the area with few disadvantages. Potential negative impact of Internet commerce is most likely to be felt by R-3 retailers, wholesalers and local business intermediaries. There was no evidence that any of the eCommerce use reported in our sample would have had that negative effect. Perceived role of government in stimulating and regulating eCommerce We were particularly interested in case study participants’ views of where and how government could assist in the development of Internet Commerce. Technology is changing at an everincreasing rate, but governments are composed of people who must develop policies and procedures at a much more human speed. We hoped that those who were actively engaged in Internet Commerce would be able to tell us the areas in which government most needed to participate and, possibly, legislate. We found that companies’ responses tended to reflect their own experiences — those which had had unfortunate experiences with software pirates or people trying to steal their corporate information databases, for example, tended to be very definite about the need for improved copyright laws, while those which had been inconvenienced by government 9



regulations tended to believe that government would do better to stay out of Internet regulation and let the private sector get on with the job. The varied responses to our question about the appropriate role of Government in developing eCommerce in Australia and in R-3 Australia particularly, can be categorised as follows: •

activities to raise awareness, provide information and promote Internet commerce and the Australia companies using eCommerce



training for Australian companies wanting to embark on eCommerce



initiatives to address the critical issue of technical problems and infrastructure inadequacies which bedevil many businesses and residents in R-3 Australia



policy and agreements to improve and regulate trading over the Internet.

Awareness raising, information provision and promotion of Internet commerce We received some very enthusiastic responses on this topic — ten of the eleven R-3 companies suggested that there is a real and important role for government in terms of raising awareness of eCommerce, promoting use of the Internet and developing confidence in this technology. Although everyone knows about the Internet as a technology, there appears to be a lack of awareness within the business community of the potential of the Internet as a business tool. This gap needs to bridged and many are looking to government to provide the framework to do it. In particular businesses are looking for advice on opportunities and pitfalls in electronic commerce, assistance in the promotion of Australian businesses doing business on the Internet both domestically, general awareness raising campaigns among the public and the business community. A widely held view is that the Government should be the leading source of accurate, impartial information on all aspects of eCommerce. Some companies believe that an appropriate role for the Government is to campaign actively for the adoption of Internet commerce. One suggestion was a “One-stop Registration Point for Assistance” or “Government Information Service” website, as well as an 1800 number, providing a single, comprehensive government site or document which covered all aspects of trade on the Internet (the do’s and don’ts of getting online, how to get started, education courses, appropriate technology, access to a database of trading contacts; government agencies and assistance schemes, contracts and legal and regulatory information on Internet commerce etc). Internet marketing, website design and hints on how to exploit Internet commerce opportunities could also be covered. Thus, the government could become a leading source of know-how on Internet commerce. (UBTS, Tobwabba Art, Mildura Native Nursery, Great Barrier Reef Visitors Bureau). Five of the participants suggested that the Government could take an even more active role in promoting Internet eCommerce by: •

including links to companies using the Internet for business on government websites



promoting Australian Internet business internationally and coordinating Australian business bids for international business



support R-3 Internet business with government contracts



providing assistance with raising venture capital



protecting R-3 areas from Internet-based competition.

Many of the respondents thought that the Commonwealth Government could improve its advice to companies on marketing and conducting international business through the Internet. Other companies, for example Mildura Native Nursery, are considering entering overseas markets in view of the rising number of queries and direct orders being received from overseas via their 10



website alone. Government concise, directed information on issues such as export regulations and criteria (through a central government information website) would assist this move to international trading. Many companies thought that a key mechanism for assisting Australian companies expand into international trade is the provision of a Government International Trade website. Training Training was seen as another important way to raise awareness of electronic commerce and help small businesses get online. Six of the R-3 companies suggested a government role in providing training through formal education programs, especially in TAFE3 colleges, and through self-help tool kits. Technical information is difficult to access in R-3 areas and government involvement would help plug that gap. Not all of this involvement need be structured formally. For example, Mildura Native Nursery suggested that a small business mentoring scheme be set up, where small organisations who are leaders in their area of electronic commerce could be encouraged to share their knowledge with others. Incentives to foster training could be provided in the form of grants, tax exemptions or formation of government backed formation of groups to encourage sustainable development. In R-3 Australia there is commonly inadequate technical support and expertise available to rural areas at a reasonable cost. This can constitute a significant barrier to businesses attempting to take up electronic commerce. The Cooperative Bulk Handling case study clearly illustrates this problem and proposes some possible solutions, for example, providing some form of subsidy to encourage computer professionals to locate in rural communities and provide a service, or funding the telecentres to provide this service to surrounding communities. The main other forms of government support suggested included: •

provision of online information to assist companies to develop their Internet commerce activities



information on export in general and via the Internet.

Industrial Galvinising, for example, suggested Government could use its resources overseas to assist potential international customers contact Australian companies through the Internet. Some companies, such as Tobwabba Art, are already conducting international trade but would welcome additional Government assistance. Several of the rural companies strongly supported the concept of a Government web presence promoting Australian-made goods (Tobwabba Art, Mildura Native Nursery, Industrial Galvanizing, UBTS). These businesses are looking for government assistance in actively promoting Australia’s business capacity overseas through the Internet and by traditional means. Currently, the large number of contacts on the Internet in all categories makes it difficult to define individual contact opportunities. Some sort of national database, administered by AusTrade or a similar organisation, may be able to provide an efficient contact gateway to make the connections with international markets. UBTS points out that at the moment, if someone tries to find Australian businesses on the net, they will get a set of company addresses without any description of products or other company related information. This kind of information is not very useful. For electronic commerce to really take off in Australia, many companies believe that Government has to be a role model and itself must be an exemplary user of electronic commerce. For example, Sands Solutions pointed out that overseas promotion of Australian companies’ electronic commerce capabilities by the Government would be enhanced if government itself was a large user of electronic commerce.

3 TAFE = Technical and Further Education: a post-secondary, vocational education programme provider. 11



The North East Telecentre (NET) highlighted a model role for government in quite a different policy area. They suggested the opportunity to develop policy which rewards the aggregation of Commonwealth (and State) Government interactive information services delivery to the community. A large part of what the government offers is information, therefore there is an obligation to ensure that an adequate infrastructure is in place to deliver it to all Australians on an equitable and affordable basis, not just to urban Australians. One option the NET would like to see is a small proportion of all departments’ budgets set aside, and aggregated for electronic service delivery to community centres throughout Australia in order to ensure equity of access to government services. Infrastructure and telecommunications Problems with R-3 infrastructure were noted by almost all the companies interviewed, even those which had not experienced these problems themselves. This is the one area where a major difference emerges between the R-3 and urban eCommerce users. It is seen as an area where urgent action is required and an area in which a significant Government presence is generally seen as appropriate. The cost of Australian telecommunications in general consistently came up as a key barrier to online trade. Many businesses are choosing U.S. based ISPs to host their web pages because the costs are much more reasonable, the speeds faster and the services offered are felt to be much superior. There is a strong sentiment coming through from many quarters that ISDN charges in Australia are excessive. While there were many general complaints about the cost of telecommunications in urban areas, the high telecommunications charges in R-3 Australia posed an even larger hurdle to online service take-up as discussed earlier. Semex and Walcha both said the government should take all possible steps to ensure that both rural and metropolitan customers have access to a standard of digital service roughly comparable to current ISDN functionality, at the same price as available to urban users today. The North East Telecentre also believes that Telstra’s high ISDN pricing is a major obstacle to small-to-medium companies becoming involved in electronic commerce. They point out that the regressive pricing for rural clients is evident in all the services that charge for higher prices based on distance, when in most cases new technologies are distance independent, are becoming available at lower capital and operating costs, and the equipment is ever more reliable and capable. There was a strong sentiment that the delivery of affordable access to the Internet is essential to stimulate online service take-up in rural Australia. Many of the businesses interviewed therefore look to Government to find a workable solution for how business in regional areas can afford to participate in electronic commerce. There is a well demonstrated need for the Government to take immediate action to ensure that the Universal Service Obligation minimum service requirement is increased to significantly higher levels than the low 2400 bps data transmission over a phone line. Many were of the opinion that something of a service speed similar to basic rate ISDN (64 Kbps) to permit the satisfactory operation of electronic commerce and online government service delivery in all rural areas should be aimed for. Actions of the State governments and the National Farmers Federation, and many other associated initiatives are increasing the pressure to achieve wide ranging access to the Internet at local call rates. However, some of these actions, while intending to bring local call rate access to many rural areas, also have unintended consequences on the viability of local Internet Service Providers who have set themselves up at significant cost, only to find that many state governments are now mandating that all schools and government departments use the government ISP. The experiences of the North East Telecentre and Semex are cases in point. The affected businesses felt that the government should urgently develop strategies to ensure that when governments undertake to aggregate demand to obtain cost efficiencies and extend the 12



delivery of online services into previously non-viable areas, they should ensure that all opportunities are pursued to encourage competition. A carrier who wins a whole-of-government contract may have sufficient economies of scale to undercut or “kill off” competition from existing small regional players. It is also important to make sure that the power of government buying does not drain off the profitable customers from an existing rural ISP, thus making the business unviable. Other government roles in regulation and policy development The major areas in which government involvement was suggested have been discussed above but a number of additional suggested roles are worth mentioning here. As part of its role to raise awareness and advise the community about eCommerce, the Government needs to ensure that businesses and consumers receive accurate information concerning the real risks associated with Internet Commerce. Suggestions for Government action to address this problem include: • Instigate a government endorsed code for approved small businesses operating on the Internet (via a Standards Australia perhaps) and promote these endorsed businesses via for example the print media (Mildura Native Nursery); • Conduct an advertising campaign to educate users about the real risks to financial transactions over the web, e.g. providing comparative figures for over-the-counter and telephone credit fraud and Internet credit card fraud; The Great Barrier Reef Tourist Bureau • Introduction of secure electronic transactions and the associated “e-wallet” and “e-till” secure online credit management. (The Great Barrier Reef Tourist Bureau ). Government involvement in developing international agreements on intellectual property and other rules and standards for Internet trade, especially internationally was given wide endorsement (seven R-3 companies). However, most of the rural companies believe that the Government should exercise only moderate regulation of Internet activities. Rather, it should foster an environment in which Internet traders can operate with certainty and security in a reasonable and predictable framework of minimal regulation. Despite some support for strong government involvement in regulating the Internet, most believe that government should simply stay out of the way. The general view appears to be that there should be no Internet tax and only minimal interference in other areas. 5.

Summary and Conclusions

In this paper, we have examined the role of Australian Government policy on eCommerce, as it affects rural, regional and remote (R-3) Australia, by examining 11 case studies of companies in these areas which are using Internet commerce successfully. We have attempted to place our analysis of these cases within a contextual description of R-3 Australia and the impact of eCommerce on this sector of the economy. The contextual description has been drawn from background research for a project being undertaken by CollECTeR@Deakin University relating to the use of telecommunications to enhance the sustainability communities within R-3 Australia, especially of Warrnambool and its surroundings in Victoria’s Western District (see Wilde and Swatman, 1997; 1999; 2000). Networking the Nation, the major Commonwealth Governmental policy initiative which has been in operation since 1996, cannot be said to have had a major systemic impact on RRR Australia. Wilde and Swatman (1999; 2000) have suggested that this is primarily because the impact of the complex inter-linkage of cause and effect in relation to R-3 eCommerce has been vastly underestimated. Nonetheless, some organisations in R-3 Australia have prospered through the adoption of eCommerce within the current policy context. We have reported studies of a number of such organisations, focusing not just on their success in the face of difficulties but, more 13



importantly for this paper, on the impact which their success has had on the communities in which they are embedded, and the perceptions these successful Internet businesses hold of the role of Government. It is clear that these businesses do change the context in which they are embedded—they require a range of support services including ISPs (which themselves require improved telecommunications infrastructure), eCommerce systems builders/suppliers, technical support and strategic planning advisors to assist them to take advantage of the opportunities eCommerce offers. Although the Internet businesses themselves appear to have little direct impact on the local job market, this need for high-tech support services is likely to change the employment profile of regions in which such businesses become significant. Successful R-3 Internet businesses see a significant role for Government, particularly in the areas of: •

the provision of information and independent advice—particularly in encouraging awareness and the early stages of organisational change—but also at a technical level



provision of support, assistance with developing a geographically wider customer base, advice on international trade as well as promotion overseas



being a role model for the use of eCommerce



telecommunications infrastructure provision – where pricing was also a key issue, though a delicate one. For example, the impact on the local business network of local ISPs’ services being undercut by providers external to the region was considered a major problem.

Our study suggests that successful eCommerce businesses support the general thrust of Networking the Nation in implementing, within RRR Australia, the National Office of the Information Economy’s policy on eCommerce (NOIE, 1998). The results do, however, suggest that there may be insufficient focus within that programme on contextual support – both nationally and, within each region, on the business community generally.

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