May 5, 2000

The Honorable Henry Hyde (all members of the House Judiciary Committee)
US House of Representatives
Washington DC 20515

Re: H.R. 1685 and 1686

Dear Representative :

On behalf of the Information Technology Association of America (ITAA) and its 26,000 direct and affiliate members, I want you to be aware of our serious reservations regarding H.R.1685 and 1686, sponsored by Representatives Robert Goodlatte and Rick Boucher. While an amendment dated May 3, 2000 to HR 1686 being circulated by Rep. Goodlatte improves the bill in comparison the language that was originally introduced, ITAA continues to oppose the legislation.

If there should be a fundamental principle for Internet public policy, it is to draw upon the wisdom of the "Hippocratic Oath" --first do no harm. There is a natural temptation with technology policy to tinker at the margins to reach desired ends. However, the Internet is evolving which such speed and dynamism that even the best-intentioned interventions can have unanticipated negative consequences.

ITAA represents the builders of the Internet and e-commerce revolution. Our companies' products and services, from software and telecommunications to consulting and complex systems, form the technical infrastructure on which all else rests. Our companies are unified in making the promise of the Internet age a reality.

Before commenting on our specific reasons for opposing these bills, I want to emphasize this is very much a disagreement among friends. Congressmen Goodlatte and Boucher have long established a laudable record on behalf of the Internet and demonstrated leadership on a broad range of high tech issues. Few Representatives have more effectively articulated a vision of the importance of an infrastructure for the information age than they have.

1. Broadband Deployment

We ask that you to oppose the so-called "broadband relief" measures contained in H.R. 1685 and 1686 and to support the growth and innovation that is just starting to benefit every American. These bills would harm telecommunications competition by releasing the incumbent telephone companies from the market opening requirements of the Telecommunications Act of 1996 under the guise of "broadband relief."

Our companies have the strongest possible interest in seeing consumers receive access to advanced broadband services as soon as possible. They use telecommunications services to make the promise of the information age a reality by offering products and services with ever increasing speed and power. As computing power doubles every 18 months, the limitations of analog, circuit-switched networks become all the more apparent. Picture trying to flow a raging river through a garden hose: it cannot be done. But that is what we are trying to do until we have true broadband deployment so that everyone can experience the wide benefits of the Internet.

We reject the claims made by some large incumbent telephone carriers , that the pro-competitive regulatory requirements contained in the Telecommunications Act have deterred them from deploying broadband services necessary to provide high-speed access to the Internet and other information services. The simple reason for the incumbent local carriers' failure to deploy advanced telecommunications services is that, in the absence of competition, they lack the incentive to do so. The best means to promote the deployment of advanced services, therefore, is to promote market based competition in the local market.

The Goodlatte-Boucher legislation would allow the Bells into interLATA markets before they opened their local bottlenecks to competitors. The consequence would be to strengthen their local chokeholds and expand their monopolies into the Internet market. Contrary to its stated intention, the legislation would hurt competition by destroying the incentives to open up the "last mile" bottleneck that were built into the 1996 Act and reduce incentives for investment in competitive providers.

Similarly, we believe that the Telecommunications Act, rather than the Sherman Act, is the appropriate vehicle for prohibiting anticompetitive behavior by incumbent local exchange carriers, and ask you to oppose provisions in these bills to change that situation. Legislative changes in this regulatory structure at this time would introduce a legal uncertainty that would discourage the very significant investment being made to deploy broadband.

2. Privacy

The Internet's growth has sparked renewed attention to consumer privacy. Numerous consumer surveys and newspaper stories conclude that one of the hurdles to e-commerce is satisfying consumers' demands for privacy.

Consumer surveys also demonstrate that consumers are carefully weighing the impact on their privacy in participating in this new medium. We believe that barriers should not be constructed to the ability of Internet companies to offer consumers convenience, nor should we underestimate the capacity of consumers to make informed privacy choices. The Internet is a highly interactive medium over which consumers exercise considerable control. If a consumer does not like a particular E-tailer, he or she is literally a click away from an alternative business source.

A recent Gallup poll for @Plan found that 85% of the public was extremely concerned about Internet privacy. Yet the same survey found that by a 60 to 37% margin, the American public prefers the "Internet Industry" to the "Federal Government" to protect their privacy. These numbers suggest general support for consumer empowerment and industry self-regulation, rather than government Internet regulation to address the concerns.(i)

With the Administration's strong encouragement, as well both regulatory and bipartisan Congressional support, ITAA and many of our member companies have met this challenge for an industry response with the formation of the Online Privacy Alliance.(ii) Numerous widely recognized seal programs have been developed that consumers can look to with confidence.

Last year an independent survey concluded that although 93% of surveyed websites collected personal information, 66% posted privacy policy notices.(iii) Perhaps even more important in its impact on consumers, 94 percent of the Top 100 most popular Web sites had posted privacy policies to inform consumers about what information was being collected and how it would be used.

That was a dramatic improvement in just one year and confirms that the overwhelming majority of the most heavily trafficked online sites has now adopted and display privacy policies. Only a year earlier, a Federal Trade Commission (FTC) survey of commercial web sites had found that only 14% posted any disclosure regarding their information practices.(iv) While more remains to be done, our industry has responded to its self-regulation challenge in "Internet time."

It is also important to understand that the introduction of new computing appliances will change the way consumers access the Internet. This is another reason we caution against legislation, such as H.R. 1685, that apparently assumes the continuation of a personal computer based technology model. For example, consumers are likely to access hand held or automotive devices differently than the PC. The standards that would be mandated by the legislation would be difficult to apply in such a context.

Technological solutions being developed today will give consumers even greater flexibility to exercise their privacy preferences. For example, the Platform for Privacy Preferences or P3P being developed by the World Wide Web Consortium at the MIT Laboratory for Computer Sciences is new browser technology that will allow consumers to set their privacy preferences online. The browser will then automatically query online sites to determine whether those preferences are being met.(v) This is an industry-supported initiative that is seeking to use technology to empower consumers to an even greater extent then they are already. In short, we expect that the privacy language of HR 1685 will seem an anachronism is a relatively short time, and, therefore, should not be enacted.

As a general principle, ITAA cautions against any regulations that would discriminate against online commerce by establishing requirements not faced in the more traditional brick and mortar economy. Many other studies have linked the productivity gains resulting from the information technology networks as a vital contributor to the long prosperity the country has enjoyed in this decade.

3. ISP Competition

ITAA has long strongly supported consumer choice for enhanced services, such as Internet Service Providers. The information services market is highly competitive - with more than 6,000 companies vying to provide Internet access service - but potentially vulnerable to anti-competitive practices by telecommunications providers.

Over thirty years ago, in its First Computer Inquiry, the Federal Communications Commission (FCC) began wrestling with the issue of what it described as "the growing convergence of computers and communications has given rise to a number of regulatory and policy questions within the purview of the Communications Act." ITAA has been a long time participant in these policy deliberations in support of the robust development of the information services marketplace-in short, in favor of competition.

Since the First Computer Inquiry, the FCC has recognized that the incumbent local companies' monopoly control over local transmission facilities provides them with both the incentive and the ability to provide their information service affiliate with an unfair competitive advantage.

Anticompetitive conduct places non-affiliated ISPs at an insurmountable competitive disadvantage, thereby allowing the incumbent telephone companies to leverage their telecommunications monopoly into the information service market. The end-result is to limit consumer choice.

Without question, preserving the ability of consumers to select the ISP of their choice will serve the public interest. Experience in numerous other contexts has conclusively demonstrated that allowing users to select from among multiple providers creates incentives for providers to improve the quality of their services, provide consumers with expanded offerings, develop innovative new technologies, and offer services at lower prices. ITAA has strongly urged the continuation of existing prohibitions on bundling telecommunications and information services to the incumbent telephone companies' provision of advanced telecommunications services.

ITAA has had a long history of supporting telecommunications access for unaffiliated information service providers. We believe that competition among multiple telecommunications providers -- be they cable, incumbent telephone, competitive telephone, wireless, satellite, or third wire overbuilds -- offers the best protection against discriminatory conduct by incumbent local providers. Market-place competition, rather than regulatory intervention, is the preferred mechanism to address the ISP competitive access issues that Goodlatte-Boucher seeks to address. While continued vigilance and oversight is appropriate, the evidence is encouraging that the marketplace is in fact providing cable consumers a choice among multiple ISPs.

Last year the Federal Communications Committee released a thoughtful report, The FCC and the Unregulation of the Internet. It traces how a policy of government non-intervention in the data and information markets has contributed to the development of the Internet. The Commission has tried to maintain essentially a hands-off approach to these markets in order to encourage competition, consumer choice and speed to market.

The FCC deserves great credit for pursuing these policies and resisting what may sometimes be the natural impulse of regulators to intervene. We salute them for getting it right, and further encourage supporting a similar path.

Thank you for your careful consideration of these important issues. If you have any questions about the matters raised above, please feel free to contact me (703/284-5340; hmiller@itaa.org), or Mark Uncapher (703/284-5344) of my staff.

Sincerely,

Harris N. Miller
President

(i) - http://biz.yahoo.com/prnews/000306/ct_plan_ne_2.html
(ii) - For more information see, http://www.privacyalliance.org/
(iii) - This report is available at http://www.msb.edu/faculty/culnamm/gippshome.html.
(iv) - Federal Trade Commission, Privacy Online: A Report to Congress, Washington DC June 1998
(v) - See http://www.w3.org/P3P/