15 June 1998
Source: Hardcopy The New York Times, June 15, 1998, pp. D1, D7
By JERI CLAUSING
WASHINGTON, June 14--Nearly one year after President Clinton disclosed a list of ambitious goals to foster the commercial growth of the Internet, critics say that the Administration's contradictory policies on data encryption and its slow progress on privacy controls have left the nation's nascent electronic commerce industry adrift on a rudderless ship.
And critics contend that two major issues seem particularly in disarray-- a policy for protecting consumer privacy on line, and an export policy on data-scrambling, or encryption, technology.
"The whole area of E-commerce is going to come unglued unless we solve the crypto policy, unless we resolve the privacy issue," said David Farber, a professor of computer science at the University of Pennsylvania and a board member of the Electronic Frontier Foundation.
Because electronic commerce--buying and selling products and services on line-- is widely considered the engine that promises to drive commercial activity in the next decade, the stalemates on those two key points have overshadowed an otherwise productive year for the Administration on information-technology issues.
Mr. Clinton's senior adviser on Internet issues, Ira Magaziner, in an interview last week declared success in meeting most of the one-year goals that he had set in drafting the President's framework for a tax-free, self-regulated digital marketplace. Most important, he said, the Administration made considerable progress on international accords to keep Internet commerce duty free.
Mr. Magaziner also noted that pending legislation would put a moratorium on domestic Internet taxes; that a framework had been developed for making the issuing of Internet addresses a self-governing and competitive system and that Congress was close to putting into effect a treaty to protect digital copyrights in cyberspace.
In the private sector, companies and Internet consortiums have developed a variety of filtering products and rating systems to give parents options for controlling where their children can venture on the Net. Those efforts have so far averted new attempts at Government controls over Internet content.
"If you had asked me a year ago would we be as far as we are, I would have been cautious about it," Mr. Magaziner said. "I think we have made tremendous progress."
Yet, two weeks shy of the White House's own July 1 deadline for initiating an effective code of conduct to protect consumer privacy on line, the Administration is scrambling to address a report issued last week by the Federal Trade Commission.
That report, the culmination of more than 10 months of hearings and investigations, paints a dismal picture of the industry's efforts to police itself on privacy issues. It proposes that legislation be enacted to protect children on line--not just from the usual suspects like pedophiles, but from predatory marketers who gather information about children and their families with no apparent regard for privacy rights.
Industry groups generally praise the Administration for staying true to its vow to let the private sector lead. With a little more time, they say, they will have the proper controls in place.
But privacy advocates and academic observers say that the Administration has been inconsistent and passive. Worse, they say, it has failed to provide the kind of leadership that would force the private sector into the kinds of cross-industry agreements needed to make self-regulation work.
About the only thing everyone, including Mr. Magaziner, agrees on is that the Administration has made no progress in resolving its most glaring policy contradiction: its continued support for Government regulation of encryption technology.
Bowing to law enforcement concerns about terrorists and drug cartels using strong data-scrambling technology to conceal their crimes, the Administration has refused to let American companies freely export strong encryption. But the same kinds of computer security that the Federal Bureau of Investigation and other police agencies insist on controlling are exactly the kinds of security that must be in place before credit card and other sensitive transactions can be considered safe from hackers and on-line thieves.
"E-commerce cannot succeed without strong encryption to protect people on the Internet," said Robert Holleyman, president of the Business Software Alliance, an industry association whose members include the Microsoft Corporation, the Netscape Communications Corporation, Novell, Sun Microsystems and the nation's other top software developers.
In a sign of just how crucial encryption policy is to the computer industry, Microsoft's chairman, William H. Gates, and his top rivals put aside their differences last week and traveled to Washington for a closed-door meeting with Attorney General Janet Reno and the F.B.I. director, Louis Freeh.
"It is fair to say this is one area where our policies are not consistent with the rest of the approach, and the reasons are because of the concerns of law enforcement," Mr. Magaziner said.
As for privacy, Mr. Magaziner said it was too soon to call self-regulation a failure.
Many in the on-line business world agree.
"People have to understand that this is a fairly new phenomenon," said Harris Miller, president of the Information Technology Association of America, a trade group. "The technology is still being developed to give people the confidence that their privacy is being protected."
What is more, says Henry H. Perritt Jr., dean of the Chicago-Kent College of Law at the Illinois Institute of Technology and president of the Center for Information Law and Policy, if progress on self-regulation is slow, it is the Administration that is to blame.
Lending a sense of urgency to that perception is the fact that in October, strong privacy protections take effect in European Union nations and those measures could have a serious impact on American companies doing business overseas. Mr. Magaziner has been globe-trotting for the last few weeks trying to dissuade other nations from following the European model, assuring them that self-regulation will work.
An industry-Administration summit meeting to help draft privacy guidelines has been in the planning stages for months. Final dates, June 23 and 24, were set the day that the trade commission issued its dismal findings about children's privacy on line.
A 13-Step Internet Program
Here is an overview and status report on the Administration's
ONE YEAR GOALS
|Develop rules and
on the Internet
|A Federal Trade Commission report found that
private industry efforts have been inadequate.
The Commerce Department will hold a
conference this month on the subject, just days
before a progress report is due.
agreements to keep
the Internet tax-free
|Japan has signed an agreement and it has
general support worldwide. The World Trade
Organization recently adopted a one-year ban on
tariffs on information sold on line.
with state and local
keep the Internet
|Legislation is pending to create a three-year
moratorium on taxes on Internet access, on-line
services and information traveling across the
Internet, at least until a study on taxing electronic
commerce can be done.
on digital copyrights
|The Senate has ratified the treaty. Legislation to
put the treaty into effect has passed the Senate
and is pending in the House of Representatives.
|Make control of
|Currently, domain names are assigned by
Network Solutions Inc. under a Government-
sponsored monopoly. The Administration has
released a plan for handing governance over to a
nonprofit corporation. but the international
community still has to reach agreement on who
will be on the board.
|Develop rules for
|International discussions are continuing and
legislation is pending to adopt a uniform national
rating and filtering
systems that can
|Several technologies are being developed, but
their effectiveness is debatable Legislation is
pending to require schools that receive Federal
Internet funds to install software to screen
|Get more involved
|The Administration wants to expand its "GSA
Advantage" on-line shopping service.
LONGER TERM GOALS