Wall Street Journal, November 17, 1997, p. 28 Congress Asked To Help Speed Internet Growth High-Tech Firms Propose Controls to Build Trust In Digital Marketplace By John Simons Washington - In an attempt to assert their newfound clout along the Potomac, 11 major U.S. high-technology companies are asking Congress and the White House to speed the growth of electronic commerce. Among the things they want are a moratorium on Internet taxes, the addition of Internet-specific language to the Uniform Commercial Code and a loosening of encryption-export controls. In an 18-page policy paper, to be released tomorrow, the chief executives of companies including Compaq Computer Corp., Digital Equipment Corp., Hewlett-Packard Co., International Business Machines Corp., and Sun Microsystems Inc. outline their recommendations on several prickly issues, including sales taxes and tariffs, encryption, consumer privacy and content regulation. The coalition, also known as the Computer Systems Policy Project, urges governments to act quickly to help cyber-merchants foster consumer trust in the emerging digital marketplace. Most of the companies that endorsed the proposals are poised to take advantage of what could be a $200 billion-plus sales arena by the year 2000. Other companies in the coalition include Apple Computer Inc., Data General Corp., NCR Corp., Silicon Graphics Inc., Stratus Computer Inc. and Unisys Corp. Although the policy recommendations are another example of Silicon Valley's current hot and heavy relationship with the nation's capital, the paper is hardly a love letter. One familiar refrain: Though industry needs government's help, Washington should keep its presence to a minimum. There is even a sense that some of the CEOs are reluctant to sully themselves by becoming overly involved in matters of politics. "I have no specific interest in lobbying in the strict sense," says Lars Nyberg, the CEO of NCR, co-chairman of the authoring committee with IBM's Louis V. Gerstner Jr. "Politicians can help this change or they can slow the evolution dramatically. We have the responsibility to make sure that doesn't happen. So, this is just something we have to do." The paper's authors are perhaps at their least subtle where they chide the Federal Communications Commission for what they believe is a plodding and shoddy implementation of the Telecommunications Act of 1996. The group argues that in order to populate the new digital domain, consumers need inexpensive, readily available access to an array of telecommunications services. Coalition members are concerned about the lack of competition in local telephone markets. They insist that local monopolies have hampered technological progress. "Until there is competition in the local markets for data and digital traffic, there will be no pressure on the incumbent telephone carriers to deploy new technologies." the group states. On the tax issue, the CEOs advocate "tax neutrality," meaning that no tax system should discriminate based on the way a consumer purchases a product. Uncoordinated attempts to "force fit" existing tax structures, for example, "could impose discriminatory and multiple taxes on e-commerce transactions." they say. To avoid the problem, the group prods Congress to pass pending legislation to put a moratorium on new Internet sales taxes while industry, federal and local governments worked out a national standard for levying taxes on Internet commerce. The paper's authors are also pushing for a comparable international moratorium. As for the Internet's legal framework, the paper calls for an immediate amendment to the Uniform Commercial Code, one that updates contract laws and consumer protection rules for on-line transactions. The paper is most vague in its prescriptions for encryption policy, an area where government and industry have clashed on numerous occasions. The U.S. has held tight restrictions on the export of strong encryption software, which can be used to ensure security for Internet transactions, contending that it would be impossible to protect citizens from hacker attacks and other digital misdeeds if strong encryption were made available overseas. The coalition is critical of the administration's stance, but offers few specific solutions. In part, the paper is a response to a challenge the White House issued last summer. In July, the Clinton administration released its "Framework for Global Electronic Commerce," a far-reaching set of policy prescriptions authored by Ira Magaziner, the president's senior adviser on policy development. Throughout the paper, Mr. Magaziner stressed that government should take a passive role in regulating the Internet. His preferred alternative: Help industry to set its own rules and standards. Mr. Magaziner called the coalition's paper "a very interesting, useful and helpful initiative." He said, "The principles are consistent with what we're hoping for. And, what's important is they are stepping up and leading." Convincing Congress, much less foreign entities, to agree on these issues will be difficult, however. Over the next few weeks, members of the coalition plan to travel overseas with their message. The group expects to meet with members of Congress, White House advisers and FCC officials sometime in January. -----