- The Washington Times - Tuesday, January 18, 2000

States will consider nearly 2,000 Internet-related consumer bills this year, underscoring the public's growing wariness of technology, an alliance of high-tech companies predicted.
And the pace of activity in states such as California, New York and Utah marks a notable shift away from Washington, analysts said.
"The states are more active and in some ways more willing to step up and take action" than Congress, which has adopted a "wait-and-see" attitude, said William Whyman, Internet analyst with Legg Mason Inc.'s Precursor Group.
Maryland is one state where the legislature is expected to tackle many consumer-related Internet bills intended to boost privacy this session.
Maryland legislators didn't tackle Internet issues as quickly as Virginia's state politicians, but observers are interested in watching the legislation's progress.
When Gov. Parris N. Glendening proposed a plan last week to regulate the Internet, he suggested a measure to protect the privacy of consumer information that state agencies collect and store on their databases.
"The proposal mirrors what's been so significant in the private sector self-regulation," said Emily Hackett, state policy director for the Internet Alliance, which has members like America Online and AT&T.;
The federal government has deferred making rules, allowing the new industry to develop on its own. In one case, the Federal Communications Commission has refused to order cable companies to open their lines to all Internet providers, urging the market to resolve the dispute.
States, though, are ready to act as consumers, faced with the increasing role the Internet plays in daily business, worry about loss of control over information about themselves. Industry analysts said it's too early to gauge the outcome of any state initiatives and predicting corporate reactions is difficult.
A key issue for consumers is their on-line privacy when conducting business using the Internet. They fear that as the Internet expands, companies will have the ability to sell information about their on-line purchases and activities, with unwanted results. For example, insurance companies might raise a customer's premiums or deny coverage if the file showed purchases of unhealthy products.
A way to curb such fears is to prohibit Internet-service providers from selling information about their subscribers. Without federal action, the states will be pressed to determine the extent to which Prodigy, America Online Inc. and others can collect and use data generated when customers use their service, said Pam Greenburg, who tracks Internet bills for the National Conference of State Legislatures.
"I wouldn't say this is the first year that these issues have come up," she said. "But it's a growing area and states are focusing more attention on them."
Such attention could result in a variety of approaches among states, creating different guidelines for companies such as Prodigy and Amazon.com Inc. that would preclude adoption of any common nationwide standard. Analysts said states probably will avoid sweeping reforms that could jeopardize a particular class of Internet business.
Maryland has proposed policing itself in seeking a mandate that state agencies post a notice on Web sites that tells people which personal information will be collected and how it will be used.
"Maryland is making a very public commitment to an aggressive privacy policy," Internet Alliance Executive Director Jeff Richards said.
No state has imposed such a requirement on its state agencies, Mr. Richards said.
Other consumer-related Internet proposals in Maryland include measures to set up the legal framework to conduct business over the Internet, legally sign contracts over the Internet, and ban "spam," unsolicited electronic mail.
"We think Maryland has one of the best legislative packages among the 50 states," Mr. Richards said.
In Virginia, much of the state's Internet framework was established last year with passage of the landmark Internet Policy Act.
This year, Virginia's General Assembly will consider a proposal that could set a legal standard for a new commercial law for the information-technology industry.
A bipartisan legislative commission has recommended the issue go before the assembly. The topic could become one of the most controversial and complex to face lawmakers this year.
The Uniform Computer Information Transactions Act would govern electronic contract law, such as the software licensing agreements that people enter into when they download a computer program.
The state efforts could benefit some companies, such as Internet-service providers, Mrs. Hackett said. Lawmakers will work to end spam, which often includes pornography, and may let service providers sue parties that originate such messages.
"It's an industry interest and a consumer interest because bulk e-mail makes systems go down," Mrs. Hackett said.
Utah and Pennsylvania could lead on many Internet issues, she said. Their policy-makers are on the "bleeding edge, not the leading edge, but just a little further out so they're really making innovative and unique approaches," she said.
California, Texas and New York will be closely watched, because they're "innovators in most policy areas," she said.
Amazon.com and other electronic commerce companies that have escaped state sales taxes also may see that edge start slipping away. State legislators are beginning to realize how much revenue they are losing as customers buy merchandise on line, said Scott Mackey, chief economist for the National Association of State Legislatures.
States could lose as much as $15 billion a year in sales-tax revenue by 2003, the group predicts. In 1998, Congress pre-empted states from revising their tax laws to capture electronic commerce-based revenue for three years while it studied Internet tax policy.
The Advisory Commission on Electronic Commerce, a panel with federal, state and corporate representatives, is to deliver its findings to Congress in April and the states will likely begin considering plans to regain tax revenue, Mr. Mackey said. The National Governors Association is drafting a plan to simplify sales taxes with a single system nationwide.
Once Congress gets the report from the advisory commission, which is headed by Virginia Gov. James S. Gilmore III, it could decide to extend the Internet tax moratorium.
Congress likely will adopt a few pieces of federal Internet legislation this year, analysts say. Most significant will be a measure to give digital documents the same legal protection as paper copies, which already passed the House and Senate, because "it's the single technology needed to move to a paperless society," said James Lucier, an analyst at Prudential Securities Inc.
In addition to spamming and ownership rights to database information, Congress also could consider action on copyright protections for Internet content providers.

Staff writer William Glanz contributed to this article.

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