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Bush faces thorny 'Net issues

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WASHINGTON, D.C. - George W. Bush did not run for president with a high-tech agenda, but after taking the oath of office on Saturday, he will face several complex Internet policy issues that demand early action, insiders say.

From online privacy to copyright protection and Internet taxation, these issues go to the heart of whether and how the Bush administration will regulate the fast-changing Internet industry.

"Whether Bush or Gore had won, the government was going to have to deal with these issues," says Richard Wiley, an advisor to the Bush transition team and a partner with law firm Wiley, Rein & Fielding.

Although Bush has not clarified his positions on many Internet issues, Wiley expects he will work through the private sector as much as possible.

"I don't see regulation of the Internet as something this administration is going to favor, and that's good," Wiley says. "They're going to try to avoid it where they can, but some of these issues are going to involve if not regulation, then some understanding and oversight."

Indeed, the Bush administration will confront an unprecedented number of Internet issues, and pressure is mounting for federal government action on many of them, including international trade barriers, broadband access and law enforcement authority.

"There will be much more debate this year about whether to keep a hands-off approach to the Internet," predicts Daniel Ebert, executive director of NetCoalition.com, a lobbying group for Internet companies that includes AOL, Amazon.com and Yahoo.

"Given the people Bush is bringing into his administration, I think he will continue to view the Internet as a very dynamic and important part of our economy," Ebert says.

The first Internet-related issue that the Bush administration will likely encounter is online privacy. Capitol Hill watchers expect as many as two dozen online privacy bills to be introduced by the 107th Congress, with hearings anticipated early this year.

A consensus is emerging for the passage of a bill that will require companies to notify consumers about their privacy policies and to let them opt out of information gathering. But fights are looming over how notice and choice are defined, how the law will be enforced and whether federal law will pre-empt state laws.

Some observers view online privacy as an opportunity for Bush to take a leadership role on a bipartisan issue with much momentum.

"The Clinton administration took a wait-and-see approach, a self-regulatory approach to privacy. But many of the consumer groups are now saying it's time for the government to get involved," says Rebecca Whitener, executive vice president at Fiderus, a North Carolina privacy consulting firm. "Business also recognizes that something needs to be done to close the consumer confidence gap."

Another issue that may come to the forefront quickly is copyright protection on the Internet. The movie, music and book industries are watching a lawsuit against Napster, the Internet file-sharing service. If Napster wins, these industries will likely push for modifications to the 1998 Digital Millennium Copyright Act.

"The issue is whether Napster is fair-use copying or not," says Bob Yoches, a partner with Finnegan, Henderson, Farrabow, Garrett & Dunner, a law firm specializing in intellectual property. "The lower court says not. The appellate court hasn't spoken yet. That issue could be remedied by legislation."

Less visible but perhaps more contentious is how accommodating the Bush administration will be to Internet content restrictions from the European Community and Asian nations. The Clinton administration, for example, negotiated the so-called Safe Harbor program for U.S. firms to minimize the impact of stringent European online privacy laws. Some observers hope the Bush administration will take a harder line.

"How the Europeans regulate the Internet is critically important," says Robert Cresanti, senior vice president and general counsel at the Information Technology Association of America (ITAA). "I think Safe Harbor is going to crumble, and then we'll be looking down the barrel of trade problems with the Europeans."

Industry executives want to make sure Internet-based trade is not hampered by restrictive laws in other nations.

"The Bush administration has to figure out how it is going to represent the American version of a very open Internet," says Marty Abrams, executive director of the Center for Information Policy Leadership at Hunton & Williams.

Because of its conservative leanings, the Bush administration is expected to oppose Internet taxation and promote a less-aggressive position on antitrust issues. Industry observers expect more mergers to be approved and with fewer conditions. High-profile cases against companies such as Microsoft and Intel are less likely. And business-to-business exchanges that were bogged down with questions by the Democratic-led Federal Trade Commission may get a green light.

"The Bush administration may be a little more reluctant for the government to intervene, but I don't see a 180 degree shift in direction on antitrust," says Albert Foer, president of the American Antitrust Institute. "I'm working on the assumption that there will be a tradition of law enforcement that continues."

Meanwhile, federal IT executives hope the Bush administration will continue to support the e-commerce and Web initiatives started by the Clinton administration, such as selling Treasury bills online and the FirstGov portal to government resources.

"Many of these issues we have dealt with - such as privacy, security and electronic government - are clearly bipartisan and have gained support from both parties in Congress," says Jim Flyzik, vice chair of the Federal CIO Council and deputy assistant secretary of the Treasury Department.

One remaining question is who in the Bush administration will handle Internet policymaking. Among Bush's cabinet picks, no one has emerged with the level of enthusiasm for the Internet exhibited by Vice President Al Gore.

"Vice President Gore was a stellar leader in this area and a forward-thinking person. He also had a substantial amount of authority," Cresanti says.

While the ITAA has applauded the nominations of John Ashcroft for attorney general and Spencer Abraham for Energy secretary, the industry group admits it's unclear what impact these appointments will have on Internet policies.

"I don't see [Ashcroft and Abraham] as being technology advocates . . . but they are well-reasoned people, and they will advocate for industry overall," Cresanti says.

"I'm less concerned that there is a poster child for the digital economy vs. people who really understand the overall economy," agrees Fred Cate, director of the Information Law and Commerce Institute at Indiana University.

In general, Internet industry observers seem optimistic about the Bush administration.

"There's a slight chance that agency heads will be a little more free-market oriented and a little less regulatory focused," says Connie Correll, director of communications at the Information Technology Industry Council, which has Cisco and Nortel Networks as members. "But overall for our industry, the Clinton administration was very helpful, and we anticipate the Bush administration will be, too."

Network World Senior Editor Ellen Messmer contributed to this report.

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