The threats to e-commerce that will cost us all dear

We've had the hype. We've had the counter-hype. The dot.com share prices went up and they came down, and still the Pru could have sold its online banking subsidiary, Egg, nine times over to would-be investors yesterday. That is bad news for e-sceptics. The internet bubble has burst, but the internet is still there.

We've had the hype. We've had the counter-hype. The dot.com share prices went up and they came down, and still the Pru could have sold its online banking subsidiary, Egg, nine times over to would-be investors yesterday. That is bad news for e-sceptics. The internet bubble has burst, but the internet is still there.

Online banking and shopping is the tip of the iceberg. It will grow rapidly, as so few of us order online yet. However, if the new electrical retailer helpful.co.uk really does offer £50-200 savings on branded items, with a three-year guarantee and free delivery and installation, Comet and Dixons will have to match it. But even if online retailing never captures more than a fraction of the market, it can still be of huge benefit to all of us shoppers.

Electronic transactions between businesses, which cut costs dramatically, are already dwarfing consumer purchases on the Web. It is a long way from the glitz of the high-profile dot.com wannabes, but cost-savings of 15 per cent for manufacturers ordering their widgets online could deliver even bigger benefits. There is nothing automatic about such gains, however; the internet economy is still under construction.

The Government's crass attempt to claim draconian powers to monitor electronic communications, the Regulation of Investigatory Powers Bill, would stifle the development of e-business, e-government or e-anything in the UK. As a report from the London School of Economics points out, this Bill proposes surveillance of internet activities without proper supervision. If it is passed, the Bill will substantially increase the powers of public authorities.

Already, an environment hostile to e-commerce is developing, the latest move being the granting of a court judgment removing bulletin-board users' anonymity. That would undermine the trust essential for the the emerging use of the internet. It would also increase costs for businesses forced to comply with the proposed authoritarian rules for monitoring the internet, to the extent that they might as well not bother going online.

So, while automatic cynicism is misguided, it would be foolish to swing back to mindless euphoria about anything with an "e" in front of its name, or a dot.com after. The potential is inspiring, but we still have to negotiate our way from here to there. There is no El Dorado offering easy riches ripe for discovery by buccaneering explorers, but rather a new world still being built by its hard-working pioneers.