Pols, agencies, lobbies itch for Internet governance role
By Daniel W. Gottlieb -- Purchasing, 2/10/2000 2:00:00 AM
Despite preaching freedom for the Internet, pols, bureaucrats, and lobbies are itching to regulate some aspects of e-commerce.
As a result, we're seeing Internet governance cropping up in the year-2000 campaigns. Expect to hear a lot more about such issues as taxation, domain registration, encryption, privacy and financial security. Everyone's for minimizing regulation, but competing private and public interests want to ensure that some aspect of the Internet operates in their favor. It's easy to see why: Billions and trillions of future dollars may be involved. As with any mass commercial activities where big bucks are involved, new lobbies for Internet and telecommunications are blossoming on the banks of the Potomac.
Congressmen and bureaucrats are behind the curve, however, in the fast-moving development of the Internet. They're struggling to grasp the technical issues involved, and for this reason, the lobbies are having great influence in defining the public agenda for Congress.
It's hard to predict how the ensuing tug-of-war involving Internet providers, software developers, merchant and consumer interests will change the shape or growth of e-commerce. But knowing and tracking the key issues in Internet public and private governance will be critical for buyers expanding their transactions in cyberspace.
As the millennium begins, here's a primer on some key developments to look for in the coming year--
- Taxation. This is the hottest issue. Already it has crept into presidential politics, with Republican Senator John McCain standing firm for no taxes and front-runner George Bush being open to them. As the Administration's point man on the Internet, Gore has been identified with the three-year moratorium on Internet taxation. Although his own definitive position is yet to be set forth, he has pledged to work for duty-free e-trade between countries. However, this is not necessarily inconsistent with allowing domestic taxation. This issue is likely to be alive and kicking beyond the presidential election, since the current Congress is extremely divided on the issue. Meanwhile, the congressionally mandated Advisory Commission on Electronic Commerce, which is to report to Congress this April, is far from reaching a consensus on whether or how to tax transactions in cyberspace. With the Republican-Democrat balance in both houses up for grabs in the fall election, the issue is likely to be punted to the new Congress.
- Domain names. Competition has begun to replace the old monopoly over assignment of domain names contracted by the government to Network Solutions. Nearly 100 registrars have been accredited by the Internet Corporation for Assigned Names and Numbers (ICANN). And more than a dozen are in business offering registration under the .com, .net, and .org domains. ICANN also has adopted a uniform dispute resolution policy to cut down on "cybersquatting." Yet issues regarding ICANN's permanent structure and rules are still unresolved. Some experts predict that this voluntary self-financing global body will fail and its functions will be assigned to an official global governing body, such as World Intellectual Property Organization (WIPO).
- Encryption. The Administration has been under pressure from multinational businesses and the software industry to further liberalize export controls on encryption software that it lifted partially last September, promising further revisions. The Administration says the revisions will facilitate business-to-business e-commerce in a number of ways: Protection from unauthorized access, authentication of commercial and individuals' Web applications, and making encryption technology readily available to secure their corporate databases, e-mails and proprietary files and records
- Privacy. With a few exceptions, such as medical records and bank customer account information, the Administration and Congress have left the protection of personal and consumer data up to industry associations and individual company measures, such as posting their confidentiality policies on the Web. If these voluntary efforts fail to satisfy the public and U.S. trading partners (particularly the European Union, which has strict privacy rules), the government may jump in. The Federal Trade Commission (FTC) has already announced plans for an advisory committee to evaluate the industry self-regulatory efforts and plans to conduct an online survey this year to reassess progress of company disclosure practices. If the privacy issue heats up as consumer use of the Internet grows, Congress may also try to pass mandatory disclosure laws.
- Verification of financial transactions. Progress is being made toward adoption of a minimal code by states for acceptance of digital signatures. A model Uniform Electronic Transactions Act (UETA) is expected to be taken up in about half of the state legislatures this year. But the Administration and Congress are also pushing for legislation to ensure enforceability of electronic contracts and signatures. A similar measure was passed by the House of Representatives (H.R. 1714) but was not acted on by the Senate.
Given the complexity and far-reaching implications of the issues involved, there are no quick fixes on the horizon. And as more Americans get wired, federal and state regulation of the Internet will probably expand in the coming year. Yet there's enough political power behind e-commerce to keep it rolling forward in spite of the tax and regulatory inclinations in Washington and the 50 state capitals.
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