A Look at Internet Regulation

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Washington -- Just a couple of years ago, the Internet was
the Wild West.

At least that was the metaphor of choice used here to
describe the frontier nature of the Internet. Politicians who worried about the medium
being ensnared by a collection of conflicting state and local taxes argued that the Web
should be left alone to expand wherever it could.

Others fretted about children's welfare, saying that
readily available pornography and online gambling saloons could become irresistible
enticements for impressionable young minds.

The metaphor was apt, if a bit hackneyed. But things have
changed.

"This was clearly a year in which the Internet came of
age in Washington," said Brian O'Shaughnessy, director of public policy for the
Internet Alliance, based here.

Congress spent more time debating the World Wide Web this
year than ever before, even managing to pass a slew of Internet-related legislation.

Most of the bills -- ranging from new standards for
children's online privacy to expanded digital copyright protections -- reflect a better,
if not fully mature, understanding of how the Internet works and what its implications may
be, analysts said.

Over the past few years, Internet-industry representatives
have advocated self-regulation, urging Congress and the Clinton administration to take a
mostly hands-off approach to governing the Internet. But there are some issues that only
the government can settle.

The most important move to foster the growth of electronic
commerce was the passage of legislation blocking local and state governments from imposing
new taxes on the Internet, said Michael Putnam, an analyst for Forrester Research.

Forrester projected that Internet commerce has the
potential to grow to $3.2 trillion by 2003.

"But that will only happen if governments and
businesses get their act together," Putnam said.

The Internet Tax Freedom Act, which was included in the
massive spending package that Congress passed at the end of the session, imposed a
three-year moratorium blocking the nation's 30,000-plus taxing jurisdictions from creating
new taxes on the Internet.

The bill's sponsors argued that the Internet's economic
potential would be stifled under a morass of conflicting local- and state-imposed taxes
unless Congress stepped in.

A few dissenters questioned whether the legislation would
hamper states' ability to collect sales taxes from companies that sell their products over
the Internet. The question was complicated by the vagueness of existing laws that govern
mail-order companies, which result in states losing out on most taxes from their
residents' out-of-state purchases.

While there was a good deal of debate in the Senate about
the Internet-tax issue, there was very little about a more controversial provision
restricting the distribution of online pornography to minors, which was also included in
the omnibus spending bill.

Online smut has been a hot-button topic for many lawmakers
for several years. In 1996, Congress included the controversial Communications Decency Act
in its rewrite of telecommunications regulations, also offering almost no discussion about
the constitutional ramifications of the bill.

The next year, the Supreme Court struck down most of the
legislation, saying that the restriction on distribution of any online material deemed
"patently offensive" or indecent to minors was simply too broad.

This time around, the Child Online Protection Act's main
sponsor, Rep. Michael G. Oxley (R-Ohio), was careful to write the legislation with
language previously approved by the high court, said Peggy Peterson, Oxley's spokeswoman.

The law requires commercial Web-site owners that feature
material considered "harmful to minors" to verify a user's age before granting
access to the site. Failure to comply could result in fines of up to $50,000 for each day
of violation and up to six months in prison.

Most states use the "harmful to minors" standard
to craft laws restricting children's access to pornographic magazines and books -- for
example, requiring stores to stock the material behind a counter, Peterson said. She also
noted that the law only applies to commercial sites. The 1996 law applied to all sites on
the World Wide Web, as well as to chat rooms and bulletin boards.

While the White House initially objected to the bill, in
the end, the Clinton administration allowed it to stay in the spending bill, which was
signed into law.

But civil-liberties groups still objected to the new
wording. A coalition of organizations, led by the American Civil Liberties Union, has
filed suit against the law, arguing that it still contains "constitutional
flaws."

One of the most problematic aspects of the "harmful to
minors" standard is that it is partially dependent on the standards of a particular
community, said James Boyle, a visiting scholar at Yale University's law school.

"On the Web, [material] can be downloaded
anywhere," Boyle said. "The whole idea of community standards is that we have
different kinds of standards, depending on whether you are talking about 42nd Street or a
small town in Iowa."

The problem, Boyle said, is that many lawmakers do not
understand the economic or political ramifications of the Internet. It isn't that
congressmen need to grasp the technology, but how the technology functions in unique ways.

"They have to understand ways in which copies are
costless and how that transforms economic issues, and the way in which the Net is
distributive and how that changes speech issues," he said.

But a few analysts said Congress has proceeded more
carefully with the creation of laws protecting the sanctity of digital copyright.

The Digital Millennium Copyright Act, sponsored by Rep.
Howard Coble (R-N.C.), makes the dismantling of technological protections on copyrighted
material, such as encryption, illegal. Supporters also said the law implements two
treaties that provide protection for American digital material around the world.

One of the key outcomes of the measure is that it outlaws
so-called black boxes, which can circumvent encryption on televisions or computers, said
Rich Taylor, vice president of public affairs for the Motion Picture Association of
America.

These boxes allow people, for example, to watch
pay-per-view cable networks without actually paying to watch.

Universities and libraries had worried that the new digital
copyright rules would hamper the free exchange of information and ideas on the Internet.

In the end, most agreed that enough accommodations were
made in the legislation to protect libraries and schools from being liable for copyright
infringement.

States News Service

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