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The Washington power brokers tackling high-tech.
By Ellen Messmer and David Rohde In the U.S., democracy is a contact sport. And as high-tech honchos are finding out, if you don 't know how to play ball in Washington, D.C., you 'd better learn fast. Witness mighty Microsoft. Convinced that it was simply good enough to build the biggest, baddest, most successful software company the world has ever known, Microsoft never saw the government coming. Now Bill Gates is battling against the Department of Justice, an opponent about which he knows little. But the Justice Department is just one bastion of power in D.C. Let 's start at the White House with the government 's top technocrat, Vice President Al Gore. The vice president is the coach of a dozen federal agencies with regulatory powers over telecommunications, the Internet and online commerce. His team includes the top dogs at the Federal Communications Commission and the Federal Trade Commission, agencies that tackle everything from telecom competition to protecting consumer privacy on the Internet. Gore 's personal agenda includes trying to ensure all schools have Internet access and trying to protect consumer data on the 'Net. Although encryption can be helpful in keeping data private, Gore has not been in favor of fully lifting all the rules against exporting encryption technology. He 's worried terrorists and criminals can exploit the technology for their own purposes. But when it comes to going after Internet fraud, Gore has backed the establishment of a growing FTC strike force to investigate criminal activity. HATCHING A CASE Down Pennsylvania Avenue a bit resides the Senate quarterback on high-tech issues, Orrin Hatch (R-Utah), chair of the Senate Judiciary Committee and a member of the Finance Committee. The conservative senator -- convinced Microsoft 's marketplace dominance is dangerous -- is out to tackle Gates. Hatch says Microsoft is "clearly a monopoly and will have to learn to live by the rules that govern monopolies."
Hatch also has a handful of other high-tech concerns. He 's fought against telephone slamming, railed against Internet gambling and, in the coming year, expects to hold hearings on whether merger mania among the regional Bell operating companies has gone too far. As Judiciary Committee chair, the senator also has a key voice on encryption export issues and the eligibility of foreign citizens to receive high-tech work visas. HARDLINER Joining Hatch in his determination to subject Microsoft to new rules is Joel Klein, a hard-nosed Justice Department official.
Klein, who is the same age as baby boomers Bill Clinton and Gore, has been with the Clinton administration from the start. He first served as deputy White House counsel and then as deputy to Attorney General Janet Reno. He assumed the antitrust post in 1996. Outside the courtroom, Klein is the point man for explaining why the Clinton administration has revived antitrust enforcement based on laws written in the 1890s. Not content with bar-association chats, Klein has gone to groups such as the Software Publishers Association to explain that "antitrust law is every bit as relevant today." This more overtly political role has drawn the ire of some Senate Republicans, who have tried to withhold from the Justice Department funds that they claim are being used for improper "public relations activities." Not that Klein is personally combative -- quite the opposite. He works closely with state attorneys general, the European Commission and the FCC to shape policies affecting the computer and telecommunications industries. PRIVACY MAVEN While slamming Gates has become a popular sport in Washington, when it comes to high tech, the House and Senate have other fish to fry. Internet privacy is one area in which Gore is likely to see eye to eye with the Republican Congress. "Americans should have the right to choose whether their personal information is disclosed," said the vice president last May as he called for "an electronic bill of rights."
In its first privacy case last August, the FTC said GeoCities, which has a huge virtual community of more than two million members, lied about what information it collected about its members and then sold to advertisers. In a settlement, GeoCities was forced to post a more complete privacy policy that is hyperlinked to every page on which personal data is collected. Under Pitofsky, the FTC has built a strike force of attorneys who scour the Internet to investigate possible consumer fraud of every stripe. And, like Klein at the Justice Department, Pitofsky is chomping at the bit to take down a high-tech behemoth on antitrust charges. In this case, it 's chip manufacturer Intel. The FTC has taken Intel to court, claiming the manufacturer used its monopoly in microprocessors to deny customers and potential competitors, such as Compaq and Intergraph, access to technical information. Few are betting Pitofsky 's agency will win this one, though. LEC linebacker When it comes to throwing weight around, few can match the effectiveness of mega-lobbyist William Barr. He 's executive vice president and general counsel of GTE, the local-exchange giant that looks like a regional Bell operating company but doesn 't have to ask anyone 's permission to go into long distance or to buy a major ISP -- both of which it 's done in the past two years.
In October, Barr drew the assignment of arguing the ILEC 's case against the FCC before the Supreme Court. The issue: whether the FCC acted properly when it drew up rules requiring incumbent local carriers to lease network parts to potential competitors. But rather than just attacking the FCC 's rules on legal grounds, Barr employed a politically sophisticated argument designed to make it appear that ILECs actually favor robust local competition. He claimed the FCC 's liberal rules would actually retard the pace of local competition. His reasoning was that making it too easy for competitors to lease ILECs ' network elements would stop them from building their own local networks. TELECOM REFEREE Barr 's work has certainly not been gratifying for FCC Chairman William Kennard, who is in charge of charting the regulatory course for the nation 's telecommunications networks.
smaller companies were doing just that. He publicly criticized AT&T for passing along a new universal service fee instead of absorbing the charge. And he forced the long-distance carriers to add wording to their bills explaining the FCC is reducing RBOC access fees. What 's more, he openly championed petitions by several RBOCs this year to deregulate their data services before their voice services. But these so-called Section 706 petitions are now mired in a comment period, after the FCC voted out an ultracomplicated data-deregulation proposal laced with exceptions and restrictions that Kennard accepted after long-distance lobbyists got their say. That 's what leads some conservative think tanks in Washington to say that Kennard is really nothing more than a kinder, gentler Hundt who ultimately believes in wordy regulation, no matter how much he preaches deregulation. Kennard has three years left in his term to prove them wrong. Powerful team While he doesn 't have the public platform Kennard has, Bob Holleyman has some powerful backers. As president of the Business Software Alliance (BSA), a trade group for the big software companies, he is typically seen as leading the charge on behalf of companies such as Microsoft, Lotus and Novell.
Holleyman scored big last year with the passage of the Digital Millennium Copyright Act, which protects music, software and written works on the Internet. BSA was joined in its lobbying effort by the entertainment industry. The most vexing unsolved problem for Holleyman, though, may be trying to free the software industry from the U.S. government regulations that prohibit software firms from exporting products with strong encryption to other countries. For years, Holleyman and some well-heeled lawyers from the computer industry have lobbied for the passage of bills, such as the Security and Freedom through Encryption Act that would end the onerous controls the government puts on encryption export (which is regulated more or less like munitions under Commerce Department rules). But so far Holleyman has been foiled by the nation 's security agencies, which manage to convince key lawmakers that strong encryption represents a threat to surveillance of terrorists and other criminals around the world. On different teams with different goals, one thing all these D.C. Power Players have in common is that they like the sport, and they play to win.
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