Guernsey Introduction
Guernsey encourages information technology
operations, in line with its general strategy
of increasing the sophistication and capital
intensity of business operations on a small
island where resources are already very strained.
The Information Services Department of the States
of Guernsey is actively planning support measures
for the development of e-commerce activity.
The Government's vision statement includes
the paragraph: ' The possibilities offered by
e-commerce have been recognised by the Island's
Government, which is putting all its energy
into the development of e-Guernsey as a world
class centre of excellence in this field.
In January, 2001, Guernsey's
Board of Industry announced the appointment
of Kevin Green as the island's e-Business Director.
Mr Green previously undertook brand and business
development client assignments for international
companies through his consultancy company, Metasis
International, and had recently been working
on a series of successful e-commerce projects
in the B2B, B2C and C2C arenas.
The legislative framework to
support e-commerce was introduced in March 2001
with the enactment of the Electronic Transactions
(Guernsey) Law 2000 and the establishment of
an intellectual property law.
During March 2001, Ernst and
Young in the Channel Islands asked 215 organisations
in Jersey and Guernsey to complete a written
questionnaire relating to information security
in the electronic economy. The findings of the
survey, entitled Channel Islands Information
Security Survey 2001, revealed that security
and privacy concerns were the biggest inhibitor
to the expansion of e-commerce in the islands,
closely followed by the lack of facilities.
Many of the organisations surveyed
did not have an e-business strategy, although
they did use the Internet. Whilst 22% of those
surveyed were using electronic transaction capabilities,
a further 38% said they were considering using
them, so security issues are becoming an increasingly
important concern for companies in the Channel
Islands. Indeed 77% of the respondents to the
survey cited security and privacy concerns as
the major stumbling block, due to lack of employee
awareness, lack of confidence in detecting hacking
attacks, or previous experience of business
systems failures.
However, a hefty 37% of the
respondents said that they considered the lack
of resouces, skills and expertise within the
Channel Islands as the second major barrier,
the three principal areas identified as needing
improvement being the cost of telecoms services,
broadband services and infrastructure, particularly
links to the UK and Europe.
Other concerns identified by
the survey were lack of confidence in business
partners or third parties and lack of confidence
in IT infrastructure to support it. Many of
the Channel Islands' e-commerce enterprises
outsource a variety of IT functions - the main
ones being ISP web-hosting and IT infrastructure
- for reasons of expertise, cost efficiency
and maximum service levels. However, a number
of respondents indicated that they were unhappy
with at least one key area of their outsourcing
deal.
In September, 2001, the governments
of Guernsey and Jersey announced a scheme under
which e-commerce business needing to re-locate
from island to island as part of a disaster
recovery situation would be spared any change
in their tax status.
The income tax authorities
of both Islands agreed that, if in need of disaster
recovery, 'any temporary relocation to the other
Island will not cause any tax burdens due to
that relocation,' which effectively means that
a company which continues to make profit whilst
based in the other Island will not be subject
to taxation from that Island's tax authority.
Jersey's Comptroller of Income
Tax, Malcolm Campbell explained: 'Facing a disaster
causes any company a tremendous upheaval and
we felt that we did not want to add to this
administrative problem by placing a subsequent
financial burden on businesses. Additionally,
the agreement provides yet another string to
our bow in attracting new e-commerce business
to the Island.'
The agreement is detailed in
each Island's Code of Practice entitled the
'Concession and Practice Booklet.' Although
it extends to any type of business, it is particularly
important in respect of e-commerce businesses
due to the fact that if it becomes necessary
to establish a business recovery location in
the other Island, not only will they benefit
from the no tax rule but they will also be able
to make use of the bandwidth running through
the inter-Island fibre optic cables.
In July, 2002, Guernsey' Board
of Industry produced a case-study book, telling
the stories of some of the Island's e-business
successes. Deputy Kevin Prevel, vice president
of the Board of Industry explained that:
'Contrary to what the sceptics
will have us believe, e-business is most certainly
not finished. Guernsey must continue to do everything
it can to support its pioneering of e-business,
and to attract further innovative hi-tech businesses
to the island for the long-term prosperity of
the Bailiwick.'
See below
for specific information on e-commerce in Guernsey,
or go to Offshore-e-com.com
for an extensive analysis of the commercial
possibilities and the legal background.
Guernsey Telecommunications
Provider(s)
On 29 March 2001 the States
of Guernsey approved a new model for the privatisation
of Guernsey Telecoms. The licencing of the state
owned company had been proposed in 2000 but
no major Telecoms company made a serious approach.
Now an equity partner with a controlling stake
was being sought in order to expand the company
and take it away from the limitations of public
control. The States re-affirmed that the sale
of a majority shareholding in GT was being done
to attract a world class telecoms player, rather
than a way to raise cash.
The equity partner turned out
to be Cable & Wireless, and a deal was finalised
in mid-2002, with Guernsey Telecom officially
rebranded with a Cable and Wireless label in
October 2002. Guernsey must be hoping that Cable
and Wireless will be more forward-looking in
the Bailiwick than it has been in many other
offshore jurisdictions, where it has jealously
protected its monopoly to the disbenefit of
e-commerce development.
In August 2005, Cable & Wireless Guernsey announced that
is was doubling the speed of its broadband packages
for home and business users from 512kbps to
1 megabit per second at no extra cost. It means
that local broadband users can get a 1Mbs broadband
connection for as little as GBP26.99 per month,
which was 40% cheaper than in Jersey and nearly
half the price of Isle of Man. It also allows
unlimited downloads, which compares favourably
with similar packages from UK ISPs.
in October 2005, Cable &
Wireless unveiled a plan to develop a state
of the art telecommunications infrastructure
that will ensure the island benefits from the
latest technology and services in the future
with a GBP6.5 million project to install two
new fibre optic links connecting the island
to Cable and Wireless's global network. In an
address to local politicians and business leaders,
Lord Robertson, deputy chairman of Cable &
Wireless and a former UK cabinet minister and
secretary general of NATO, said it would put
the island on a par with major cities and leading
international financial centres across the world.
"Guernsey will become a world-class
telecommunications hub, with secure, high performance
global connections that are capable of supporting
the highest quality services. As well as providing
for the future needs of islanders and businesses,
it will attract new investment and much-needed
diversification, as companies look to locate
operations here and take advantage of the island's
world-class links," he said.
The new connections will give
the island's financial services and business
sectors direct access to the global Cable &
Wireless's telecommunications network, which
already links many major cities and international
financial centres across the world. These include
London, Hong Kong, New York, Sydney, Tokyo and
Paris.
Newtel Solutions is an alternative
telecommunications carrier offering a range
of voice, data and video services in Jersey
and Guernsey. The Group has been in operation
since 1988 and was awarded a Public Telecommunications
Operators licence in Guernsey in November 2002
and in Jersey in January 2003.
Wave Telecom, a wholly owned
subsidiary of the Jersey Telecom Group, has
also been granted licences by the Office of
Utility Regulation to operate fixed and mobile
telecommunications services to, from and within
the Bailiwick of Guernsey. By the end of 2006,
the company claimed to have captured 20% of
the Guernsey mobile market from its rival, Cable
& Wireless Guernsey. Wave also competes
in a number of business-to-business markets
and has grown its offering in private circuits
and IP services.
The company has continued its
investment in future technology by connecting
on-island networks to the world and in 2007
was due to deliver Project Liberty, a GBP6m
high capacity fibre optic cable linking the
JT Group network to the UK, via Guernsey.
As part of Project Liberty,
Wave provides direct fibre cable access to key
corporate customers with a view to supplying
enhanced services. Wave said in 2007 that it
was also investing in core infrastructure, as
the company moved forward with its plans to
install a Next Generation Network (NGN), which
will give it a platform from which it can deliver
ultra high speed broadband to the home, Super
3G mobile services and mobile TV.
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Guernsey ISP & Hosting Services; Connectivity
A list
of Guernsey based ISPs is as follows:
Dixcart.net
Double Plus Software
Fort Trustees Limited
Internet (CI) Ltd
Lynx Financial Systems
Milvus Software
Newtel
The fibre-optic
cable link between Jersey and Guernsey has been
upgraded at a cost of several hundered thousand
pounds, doubling the amount of information it
can carry. The move is the first stage of a
project which will grow the available capacity
on the existing cable links to meet the forecast
growth demands for e-commerce and Internet activities
in the Channel Islands. The cost has been split
between joint owners Guernsey Telecoms and Jersey
Telecoms.
Jersey
Telecoms executive director, Bob Lawrence, commented:
'This type of network upgrade work is all about
ensuring the Island has sufficient capacity
in place to meet the growing demands for Internet
connections and electronic commerce.'
The submarine
cable network is provided over diversely routed
fibre optic systems which are protected by a
system known as Synchronous Digital Hierarchy.
This means that should one cable fail for any
reason, the other automatically takes over the
provision of all connections without service
loss or any degradation in performance. In addition
to this bandwidth capability, Jersey Telecoms
also has its own independent links to France,
which provide direct capacity to Europe and
further back-up links to the UK.
Mr Lawrence
said: 'Our fibre optic submarine network cables
are capable of being upgraded on a continual
basis in order to meet such demand and we can
provide for almost unlimited capacity over these
links. At present, we're currently using only
a fraction of the existing potential capacity
and the upgrade is being done at this time to
meet projected forecasts for next year. As a
company we're strongly committed to providing
high quality, value for money telecommunication
services for the Island and I hope that this
increase in capacity will demonstrate this and
also help to dispel a current misconception
that the telecoms connections to the Island
are in someway inadequate or limited.'
In August,
2006, Newtel Solutions announced that it had increased
the capacity of its core transmission network
infrastructure between the Channel Islands and
London.
The announcement, which came
just six months after Newtel announced its last
upgrade, saw the company's network between the
Channel Islands and London quadrupling in capacity
from STM-4 (622Mbit/s) to STM-16 (2,488.32Mbit/s).
"The customer requirement for
high quality bandwidth and service convergence
in the Islands is becoming increasingly sophisticated,"
noted Andy Elston, Director of Operations, Newtel
Solutions.
"The network will be used as
the bedrock platform on which to transport next
generation network (NGN) services," he added.
Gary Whipp, Commercial Director,
Newtel Solutions added: "Newtel is able to provide
carrier-class connectivity to businesses in
the Channel Islands, whatever the size and nature
of the business.
"The increased capacity will
allow for further development of broadband and
voice services together with the core network
infrastructure providing opportunities for businesses
locally and internationally."
The enhanced infrastructure
has been made possible through an agreement
with COLT Telecom, a leading European provider
of business communications.
Newtel has been providing telecommunications
capacity via the high capacity CIEG telecommunications
network since 2002.
Newtel is a fully licensed
Public Telecommunication Operator (PTO) in both
Jersey and Guernsey, providing a range of hosting,
private circuit, Internet and voice services
over its own infrastructure.
In 2005, Newtel acquired Guernsey.Net
and its wholly owned subsidiary Localdial, making
Newtel the largest independent Internet service
provider and telecoms company in the Channel
Islands.
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Guernsey Applications
In July, 2005, the UK's Forum
of Private Business (FPB) revealed that it has
lodged complaints against the music superstore
HMV and the Guernsey Government with the UK's
Treasury, National Audit Office, and HM Revenue
and Customs, after it emerged that the retail
giant is setting up a website on the Island
to sell CDs and DVDs VAT-free.
The FPB announced that HMV's
move to Guernsey had "set alarm bells ringing"
coming just weeks after the Jersey Government
announced that no more major retailers would
be granted licenses to sell goods VAT-free from
their island.
The loophole allows retailers
to sell goods such as CDs, DVDs, computer games
and contact lenses that are valued at under
GBP18 VAT-free from Jersey and Guernsey back
to the UK through websites. The Channel Islands
are not part of the EU for VAT purposes and,
therefore, goods under this value sent by mail
order from the Islands are exempted from VAT.
Reports in the UK media in
early 2006 suggested that this was no longer
the case, as the Guernsey authorities had announced
that they will not grant permission for distributors
acting for online retailers located in the United
Kingdom to establish warehouses in Guernsey.
According to the Financial Times, the Guernsey
government also revealed that it would not grant
housing licences for the employees of such operations.
Speaking the BBC with regard
to the move, Guernsey's Deputy Minister for
Commerce and Employment, Carla McNulty-Bauer
explained that:
"Our priority is to ensure
that our local, home-grown businesses that are
Guernsey-friendly are looked after and given
the best advantage possible. We do not want
those companies to be prejudiced against in
any way."
The island of Alderney has
developed a specific regime for Internet betting.
In 1999 Alderney said it would issue four licences,
but later increased the number to six, as well
as introducing a regulatory structure for gaming.
In July 2001 legislation fixed
the maximum number of betting licences at six
and each licence holder is entitled to employ
a maximum of ten staff based on the Island.
Licences are issued for a three year period
and are subject to an annual fee of GBP75,000.
The licences are specifically
for betting and sports book business and the
appropriate legislation is "The Gambling (Betting)
(Alderney) Ordinance 1997" and "The Gambling
(Betting) (Amendment) (Alderney) Ordinance,
1999", copies of which are available from the
Alderney Gambling Control Commission.
In May 2000 the States of Alderney
established an independent, non-political, commission,
the Alderney Gambling Control Commission, to
take over the regulation of the licensed businesses
from the Island's Policy and Finance Committee.
The Commission has built upon and developed
the policy of ensuring its regulatory and supervisory
approach meet the very highest international
standards.
The Commission is also engaged
in regular dialogue with other regulatory bodies
at an international level. It participates in
the Gaming Regulators European Forum (GREF)
and the International Association of Gaming
Regulators (IAGR). The Commission works closely
with other agencies, particularly in the prevention
of financial crime.
The Alderney Gambling Control
Commission chairman, John Godfrey, says: 'We
have tried to position Alderney so that it is
attractive to the highest quality companies,
and those seem to be the kind that we are getting.
When you are dealing with the ones that we want
in Alderney, regulation is not a substantial
burden to them because it reflects the way they
wish to run their business in any event. It
is a matter of good corporate governance.'
Mr Godfrey also said that there
is 'continuing, widespread interest' in the
Island from internet betting providers, announcing:
'It is encouraging. We are quietly and cautiously
confident. It is going as well as we could reasonably
expect.'
In January, 2004, the Gambling
Control Commission confirmed that Harrah’s Online
Limited, the world’s biggest casino company,
had been awarded an interactive gaming licence.
Founded 66 years ago, Harrahs’ Entertainment
Inc. operates 25 casinos in the United States,
primarily under the Harrah’s brand name. The
licence has been issued for Harrah’s new online-gambling
site “Lucky Me”, which went live in the UK at
the end of January. A spokesman for Harrah’s
Entertainment claims “the new site will offer
innovative forms of gaming, is modelled on popular
games-for-prizes Internet sites and will also
appeal to women."
In June, 2004, the Gambling
Control Commission announced that it now had
12 licensees, and its annual report for 2003
revealed a healthy surplus of GBP535,502 over
expenditure, generated from interactive gaming
and gambling licensing fees, compared with the
previous year's results which produced a small
surplus of GBP62,165.
In April, 2005, the Commission
reported on another successful year in 2004,
which had seen the number of licences issued
by the Commission increased from ten to fourteen
during the year. At 31 December 2004, the net
assets of the Commission stood at GBP1,345,925
after a total surplus of income over expenditure
of GBP767,794 compared with GBP535,502 in 2003.
By 31 December 2004, the list
of Interactive Gaming Licence Holders was as
follows:
- Littlewoods (Alderney Ltd),
a subsidiary of Littlewoods Promotions Ltd.
based in the UK and which is known for its
sport pools and internet gaming businesses.
- Ritz Interactive Ltd - a
subsidiary of The Ritz Club, London
- WagerWorks Alderney Ltd ,
supplier of complete Internet gaming solutions
- Bonne Terre Ltd, a wholly-owned
subsidiary of BSkyB
- VI Limited - a wholly-owned
subsidiary of Las Vegas Sands Inc., Las Vegas
- Cryptologic - Software supplier,
wholly-owned subsidiary of Toronto-based Cryptologic
Inc.
- Rank Interactive Gaming Ltd,
a wholly owned subsidiary of the Rank Group
Plc
- Harrah's Online Ltd, a wholly
owned subsidiary of Harrah's Entertainment
Inc., Las Vegas
- Blue Square Gaming Alderney
Ltd, part of the Rank Group Plc
- Cantor Casino (Alderney Ltd),
part of Cantor Fitzgerald, the London-based
spreadbetting firm
- Samvo International Ltd (Electronic
Betting), owned by Samvo Entertainment Ltd
In July, 2006, the Commission
announced that it had conducted a major review
and revision of the legislative framework under
which it regulates the eGambling industry.
Robin Le Prevost explained:
‘We have over the years, like many other jurisdictions,
modified our laws to cater for the very fast
changing eGambling industry. But we realised
that as those changes began to add layer upon
layer there was a danger that the fundamentals
could become submerged. The States of Alderney,
advised by the Alderney Gambling Control Commission,
decided to take a radical review of the structure
of its entire legislative framework and concluded
that a root and branch rewrite was the best
way to go forward.’
He continued: ’Whilst we have
retained most of the previous provisions in
the revised structure and provided for a grandfathering
element to cater for our existing licensees
and certificate holders, we have made many changes
which we expect will find great favour with
the industry. Firstly and importantly, we have
created a single eGambling licence which caters
for all activities and is transparent from a
technological perspective. Whether you are a
casino, poker room, lottery or a Sportsbook,
and increasingly operators provide their customers
with one or more of the above and no matter
how you operate whether solely on the Internet,
mobile or any other medium it can now all be
done under a single licence for one single licence
fee for an all inclusive fee of GBP70,000 per
annum.
'Secondly, all provisions related
to ongoing operations of licensees, which were
previously contained in the Ordinances and which
required Government approval to be amended,
have been dropped down into Regulations, which
is administered by the Commission. This implies
that, any changes required because of market
and technical forces can be affected quickly
and pragmatically. In doing so, we also took
a good hard look at all the checks, balances
and processes we have currently and many have
been simplified and modified to make them less
burdensome.
'Thirdly we have introduced
a new type of licence, termed a Restricted Use
eGambling Licence. Rather than go down the prescriptive
and narrow route of Disaster Recovery legislation
we have brought in the ability to grant Restricted
Use licences for those operators who want to
operate a mirrored site from within the jurisdiction,
while primarily operating elsewhere in the world.
The terms for this licence are identical to
that required for the Full eGambling licence
so as to ensure that we do not compromise our
standards and quality of licensees but there
are major concessions on the fee and the need
to incorporate an Alderney Company. The effect
of this licence is that the operator can utilise
his equipment hosted in the jurisdiction whenever
required and for whatever purpose in exchange
for a daily fee. Should the operator decide
to operate from the jurisdiction for an extended
period of time, they can simply and swiftly
turn the Restricted Use eGambling Licence into
a Full eGambling Licence and of course switch
to the annual licences fee basis.
'We are absolutely confident
that without compromising the global respect
the jurisdiction has justifiably earned over
the last 5 years, these steps create a business
friendly environment second to none and when
seen in conjunction with the absence of all
gambling and gaming taxes and duties and extremely
low corporate taxes and no sales taxes we shall
extend our advantage even further.’
In September, 2006, the Alderney
Gambling Control Commission announced that Gala
Coral had been successful in its application
for the first of Alderney’s new eGambling Licences.
The new eGambling Licence allows
operators a great deal of flexibility as it
doesn’t restrict the type and number of gambling
activities an operator can run under a single
licence, for instance poker, casino games and
sports betting and bingo could all be conducted
under the single licence. This reflects the
growing trend for operators to offer multiple
games to their customers.
Following the decision to license
Gala Coral, the Commission has a total of 20
Full eGambling licences and 5 Associate Certificates
in issue.
Robin Le Prevost, Head of E-Commerce
Development for the States of Alderney said
that they were delighted with the news and commented
“Gala Coral are one of the most respected names
in the eGambling industry and we take it as
a compliment that they have chosen to acquire
a licence from Alderney.”
Robin added “We are currently
seeing an unprecedented interest in Alderney
with a great many companies at various stages
of applying for licences. The recent legislative
changes have been well received by the industry
and combined with the fiscal benefits and technical
infrastructure on offer in the Bailiwick of
Guernsey, have cemented Alderney’s position
as a leading jurisdiction.”
At its October 2006 meeting,
the Alderney Gambling Control Commission resolved
to grant a further four full eGambling Licenses.
These licenses were granted to WagerWorks (Alderney)
6 Ltd, Asia Pacific Gaming Ltd, World Poker
Tour Alderney Ltd and ElectraWorks (Alderney)
Ltd. The granting of these licences followed
the decision of the Commission in the previous
month to issue full eGambling Licenses to the
Alderney subsidiaries of William Hill plc and
Sportingbet plc.
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