Speed the Net

[John Young <jya@pipeline.com>]

   Wall Street Journal, November 17, 1997, p. 28

   Congress Asked To Help Speed Internet Growth 

   High-Tech Firms Propose Controls to Build Trust In Digital
   Marketplace 

   By John Simons

   Washington - In an attempt to assert their newfound clout
   along the Potomac, 11 major U.S. high-technology companies
   are asking Congress and the White House to speed the growth
   of electronic commerce.

   Among the things they want are a moratorium on Internet
   taxes, the addition of Internet-specific language to the
   Uniform Commercial Code and a loosening of
   encryption-export controls.

   In an 18-page policy paper, to be released tomorrow, the
   chief executives of companies including Compaq Computer
   Corp., Digital Equipment Corp., Hewlett-Packard Co.,
   International Business Machines Corp., and Sun Microsystems
   Inc. outline their recommendations on several prickly
   issues, including sales taxes and tariffs, encryption,
   consumer privacy and content regulation. The coalition,
   also known as the Computer Systems Policy Project, urges
   governments to act quickly to help cyber-merchants foster
   consumer trust in the emerging digital marketplace. Most of
   the companies that endorsed the proposals are poised to
   take advantage of what could be a $200 billion-plus sales
   arena by the year 2000.

   Other companies in the coalition include Apple Computer
   Inc., Data General Corp., NCR Corp., Silicon Graphics Inc.,
   Stratus Computer Inc. and Unisys Corp.

   Although the policy recommendations are another example of
   Silicon Valley's current hot and heavy relationship with
   the nation's capital, the paper is hardly a love letter.
   One familiar refrain: Though industry needs government's
   help, Washington should keep its presence to a minimum.
   There is even a sense that some of the CEOs are reluctant
   to sully themselves by becoming overly involved in matters
   of politics.

   "I have no specific interest in lobbying in the strict
   sense," says Lars Nyberg, the CEO of NCR, co-chairman of
   the authoring committee with IBM's Louis V. Gerstner Jr.
   "Politicians can help this change or they can slow the
   evolution dramatically. We have the responsibility to make
   sure that doesn't happen. So, this is just something we
   have to do."

   The paper's authors are perhaps at their least subtle where
   they chide the Federal Communications Commission for what
   they believe is a plodding and shoddy implementation of the
   Telecommunications Act of 1996. The group argues that in
   order to populate the new digital domain, consumers need
   inexpensive, readily available access to an array of
   telecommunications services.

   Coalition members are concerned about the lack of
   competition in local telephone markets. They insist that
   local monopolies have hampered technological progress.
   "Until there is competition in the local markets for data
   and digital traffic, there will be no pressure on the
   incumbent telephone carriers to deploy new technologies."
   the group states.

   On the tax issue, the CEOs advocate "tax neutrality,"
   meaning that no tax system should discriminate based on the
   way a consumer purchases a product. Uncoordinated attempts
   to "force fit" existing tax structures, for example, "could
   impose discriminatory and multiple taxes on e-commerce
   transactions." they say. To avoid the problem, the group
   prods Congress to pass pending legislation to put a
   moratorium on new Internet sales taxes while industry,
   federal and local governments worked out a national
   standard for levying taxes on Internet commerce. The
   paper's authors are also pushing for a comparable
   international moratorium.

   As for the Internet's legal framework, the paper calls for
   an immediate amendment to the Uniform Commercial Code, one
   that updates contract laws and consumer protection rules
   for on-line transactions.

   The paper is most vague in its prescriptions for encryption
   policy, an area where government and industry have clashed
   on numerous occasions. The U.S. has held tight restrictions
   on the export of strong encryption software, which can be
   used to ensure security for Internet transactions,
   contending that it would be impossible to protect citizens
   from hacker attacks and other digital misdeeds if strong
   encryption were  made available overseas. The coalition is
   critical of the administration's stance, but offers few
   specific solutions.

   In part, the paper is a response to a challenge the White
   House issued last summer. In July, the Clinton
   administration released its "Framework for Global
   Electronic Commerce," a far-reaching set of policy
   prescriptions authored by Ira Magaziner, the president's
   senior adviser on policy development. Throughout the paper,
   Mr. Magaziner stressed that government should take a
   passive role in regulating the Internet. His preferred
   alternative: Help industry to set its own rules and standards.

   Mr. Magaziner called the coalition's paper "a very
   interesting, useful and helpful initiative." He said, "The
   principles are consistent with what we're hoping for. And,
   what's important is they are stepping up and leading."

   Convincing Congress, much less foreign entities, to agree
   on these issues will be difficult, however. Over the next
   few weeks, members of the coalition plan to travel overseas
   with their message. The group expects to meet with members
   of Congress, White House advisers and FCC officials
   sometime in January.

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