Economic concerns as ISPs flee snooping bill

A day after the e-envoy assured Britain that the RIP Bill would not have a negative impact on e-commerce in the UK, ClaraNet has announced plans to move services abroad to escape the proposed legislation.

The company explains it is prepared to move servers to either its Frankfurt or Paris offices for clients concerned by the Bill. It says that many of its bigger corporate clients are worried about electronic communications being compromised after the Bill is introduced. Two other ISPs -- Poptel and GreenNet -- also say they are considering a move offshore in reaction to RIP.

Conrad Werner, an Internet analyst with investment research company Morgan Stanley Dean Witter says that this trend is not encouraging for Britain as a centre of Internet investment and sees the costs of RIP as potentially damaging to e-commerce.

"Freeserve may be able to do this [implement RIP], but for smaller companies, there is a legitimate cost concern. It may cause some venture capitalists to turn away from companies. It sounds inhibitive."

Tim Pearson, council member for ISPA (Internet Service Providers' Association) is under no doubt that RIP in its current form will damage the e-economy. "There is no question that it is damaging and in the worst case scenario it could have serious economic impact." Pearson is not prepared to put a figure on the cost to e-commerce but explains it will affect every aspect of innovation. "Every time a service provider wants to introduce a new broadband service for instance it will have to think about RIP. There is a cost in terms of time. RIP can only slow down development."

The UK will lose money if RIP goes through thinks Ben Knox, chief executive of Dircon. "ISPs that don't have facilities outside the UK will suffer. It is all money going out of the UK."

GreenNet, which provides hosting and email services for environmental groups, says that the financial burden of implimenting RIP or relocating may force it to close down. As a relatively small non-profit organisation, GreenNet says that it cannot afford the expense that commercial service providers can.

"Closing down GreenNet altogether has been mentioned," says GreenNet spokesman Phil Carr. "Moving would come first but there is a lot of expense in relocating."

GreenNet is particularly worried that its customers could be targets of surveillance. "I don't think that anyone here would be happy running an ISP where users' emails are not secure," adds Carr.

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