Copyright 2000 Times Mirror Company
Los Angeles
Times
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April 6, 2000, Thursday, Home Edition
SECTION: Metro; Part B; Page 11; Op Ed Desk
LENGTH: 773 words
HEADLINE:
COMMENTARY;
PERSPECTIVES ON TECHNOLOGY;
INTERNET IS RIPE FOR
GOVERNMENT INTERVENTION;
WASHINGTON WON'T BE ABLE TO RESIST STEPPING
INTO THE TECHNOLOGY INDUSTRY.
BYLINE: BRUCE J. HEIMAN,
Bruce J. Heiman is a lawyer and lobbyist in Washington
BODY:
A prediction for the new century: The
information technology industry will be regulated. It's no longer a question of
whether, but rather of what kind of regulation.
Surprised? After all,
who would want to kill the golden e-goose? The explosive growth of computer
hardware and software and Internet and e-commerce companies has fueled this
country's longest economic expansion. Indeed, even Federal Reserve Chairman Alan
Greenspan attributes one-third of our economic growth to increased productivity
resulting from the infusion of new technology. Employment in these industries
grew at roughly three times the national average in the 1990s. Prices for
computer hardware and software continue to fall. Market capitalization of
Internet companies soars. Yet government regulation is inevitable, no matter
which party occupies the White House or controls Congress. Here's why:
*
The growth and success of these "new" companies is now taken for granted. In the
'90s, infotech was thought of as an "infant industry" that should be treated
with kid gloves. It escaped regulation under the Telecommunications Act
of 1996, and Congress even passed a moratorium on Internet taxation.
Yet now the headlines scream about AOL acquiring Time Warner Inc. in the
largest merger in history. Jeff Bezos, head of Amazon.com, is Time magazine's
Man of the Year. In the face of all this media hoopla, there is less constraint
on a politician's professional inclination to want to "do something."
*
People are raising questions about the content of the stores on this new Main
Street (how to control or "regulate" sex, gambling, tobacco, liquor,
pharmaceuticals). There also is rising public concern about the privacy of
electronic information, such as medical and financial records. And some people
are beginning to assert a right to computer technology and Internet services.
For a politician, "public" translates into constituents and votes--so they
listen and respond.
* The past three years have seen a dramatic increase
in intra-industry fights evocative of the local versus long-distance phone
company wars. Sun, Oracle and Netscape versus Microsoft. Intergraph versus
Intel. AOL versus AT&T and Excite@Home. In each, companies attack a
competitor and call for government "assistance" (read regulation). And
politicians are good at playing companies against one another.
* It used
to be that industry was united on its public policy agenda, such as protecting
intellectual property rights against foreign piracy. This unity remains today on
such issues as encryption reform and making permanent the research and
development tax credit. Yet industry is intensely divided on such issues as
intellectual property protection for databases, compulsory licensing of content
and software patents. These divisions make it easier for politicians to
characterize any government action as "pro-technology."
*
Governments--federal and state--feel threatened by the new technologies that
challenge their jurisdiction. Thus the controversy over Internet taxation. Or
about which law should govern e-commerce. Politicians are adept at playing off
public concern about unconstrained private power to justify government action.
Historically, when the public complaints and requests for intervention
by competitors coincide, then regulations result. Recall the re-regulation of
cable television in 1988. People had become convinced that they had a right to
cable television at reasonable rates. At the same time, broadcast and satellite
television companies complained of an unfair playing field.
So the
question really is, what kind of regulation will occur? It does not seem likely
that a federal internet commission will begin licensing entry and regulating
user rates. Yet there are troubling signs that the government could mandate
nondiscriminatory access to patented technology and high-speed Internet service;
insist that access must be on "fair and reasonable" terms (inserting itself as
the arbiter of what is fair and reasonable); impose content control by forcing
adoption of private codes of conduct; limit what can be done with certain
information, in the name of privacy; and tax e-commerce and subsidize certain
services.
Perhaps the best indicator that regulation is coming is the
number of companies that already have opened Washington offices, hired lobbyists
and established political action committees to make campaign contributions. And
those that haven't are running to catch up.
American information
technology companies are inventing the future. In the meantime, they must deal
with the political present.
LOAD-DATE: April 6, 2000
