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January 28, 1998

Congress Faces List of Internet Issues
By JERI CLAUSING Bio
WASHINGTON — Congress returns from a long winter break this week to face a growing list of complex decisions that will shape the future of Internet commerce, content and privacy in the digital age.

A key unresolved issue that dominated the fall session is the fight between the Clinton administration, high-tech companies and civil libertarian groups over the regulation of encryption technology.


Other Issues
The bill being backed by virtually everyone but the FBI to ease export restrictions on encryption technology and prohibit any mandatory third-party decryption systems was nearly gutted in the fall, prompting some to call for a cooling-off period on the very controversial topic this spring.

"We remain skeptical as to whether the industry attempt to relax export controls is truly viable at this point," Dave Banisar of the Electronic Privacy Information Center (EPIC) said at privacy briefing last week. "If it comes down to a bad bill…versus no bill at all, we prefer to have no bill at this point."

Don Haynes, a former lobbyist and now Washington consultant for the American Civil Liberties Union, said the ACLU opposes "any legislation on encryption right now because we believe the political climate in Congress is such that it will inevitably serve as a vehicle for anti-privacy controls on domestic use of encryption."


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Senators John Ashcroft, a Missouri Republican, and John McCain, an Arizona Republican, have both said they intend to hold hearings next month on encryption policy. McCain, along with Senator Robert Kerrey, a Nebraska Democrat, is sponsoring a bill that has a provision backed by the administration to put in place a voluntary decryption system, called key recovery, for strong domestic encryption.

Pending in the House is the bill that has been backed by industry and groups like the ACLU and EPIC, the Security And Freedom through Encryption (SAFE) Act by Representatives Bob Goodlatte, a Virginia Republican, and Zoe Lofgren, a California Democrat. But there are five different versions of that bill, including one from the House Intelligence Committee that was amended to do exactly the opposite of its original intent: impose a mandatory third-party key recovery system on all domestic encryption software that would give law enforcement immediate back-door access to all scrambled data. That provision was added after the FBI and National Security Agency officials held a number of classified briefings with members of Congress.

Louis J. Freeh, the director of the FBI, has championed the cause for key recovery, insisting law enforcement officials need the back-door access to fight terrorists and drug cartels that would use encryption software to conceal their activities. Proponents of the SAFE Act say such criminals would never use such encryption software, which essentially comes with spare keys. And they insist strong private encryption software is necessary to keep criminals from gaining unauthorized access to public and private databases.

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Lofgren, who represents California's Silicon Valley, said she remains optimistic about getting export restrictions eased this year.

"We are not going to have a worse situation," she said. "Two committees of primary jurisdiction passed our bill without any adverse amendments whatsoever. I think we have the ability, given our allies on both sides of the aisle in both bodies to pull the plug if it looks like the bill would be worse than current law. We've always known, and I've said repeatedly, legislation isn't the only way to resolve this. This could be resolved with an executive order. So we need to continue, and I am continuing, a dialogue with the administration. Certain industry and civil liberties groups need to do the same."

But industry and online special interest groups say for the immediate future in Congress they are focusing on other issues. And while they are all united against controls on encryption software, the different groups clash on how to strike a regulatory balance on content, privacy and copyright protections.

"Our sense now is that privacy has moved to the front of the line as the number one Internet issue,'' said Marc Rotenberg of EPIC. "There are a wide range of privacy issues — everything from medical records to kids online and international data protection. They are all critical issues and there are questions about what solutions will work.

"The administration is proposing self-regulation. There's a lot of enthusiasm within the business industry about the prospects for self-regulation. But when you return to the basics and you look at cases like Timothy McVeigh [the Navy sailor who faced expulsion after America Online released to investigators information linking McVeigh to a profile in which he used the word 'gay' under marital status], you get the sense that perhaps self-regulation is not going to do everything."

Indeed Congress will be considering a number of bills to regulate the Internet.

Decency
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In addition to privacy issues, Internet content remains an area lawmakers want to continue trying to regulate now that the Communications Decency Act has been ruled unconstitutional.

Senator Dan Coats, an Indiana Republican who was a chief sponsor of the decency act, has filed a sequel. This one is narrowly tailored to restrict the distribution of commercial pornography on the Web. The new bill would require commercial distributors of material that is "harmful to minors" to restrict access with credit cards or personal identification numbers.

And McCain has promised to introduce a bill Feb. 10 that would link FCC subsidies for public schools' Internet connections to a requirement that schools "limit students' access to indecent Internet material in the classroom."

Internet Tax Freedom
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A s for Internet commerce, industry groups are hoping for more movement on the Internet Tax Freedom Act, which would impose a moratorium on state and local taxes on Internet commerce. One version was passed by the Senate Commerce Committee last fall, but now awaits a hearing in the Senate Finance Committee. A companion bill in the House is being redrafted to try to address concerns of states and municipalities, who have staunchly opposed the bill as an infringement on their rights to collect revenue on business conducted in their jurisdictions.

Online Gambling
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Some lawmakers are also trying to halt a controversial but growing form of Internet commerce: online gambling. Senatory Jon Kyl, an Arizona Republican, and Goodlatte have introduced a bill that would ban all wagering online. The bill is being fought not only by gambling interests but other groups that fear it would set a dangerous precedent of the government's picking and choosing what types of business to allow on the burgeoning international network. Kyl and the National Association of State Attorneys General are pushing the bill as necessary to protect children from online evils.

Intellectual Property
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Another topic expected to be debated this spring is the World Intellectual Property Organization Copyright Treaties Implementation Act. The administration is pushing the bill as necessary both to comply with international copyright laws and to give copyright holders, most notably large media and software companies, the legal power to protect their property from illegal electronic distribution.

But opponents, including a legion of industry and public interest groups, say the proposed law is much more restrictive than the treaties require and would give nearly absolute control over digital information to copyright holders. There is also concern about whether Internet service providers will be held liable for copyright violations of people on their network.

Mark Traphagen of the Software Publishers Association said the debate over the WIPO treaty exemplifies the struggles the Internet community is going through as it becomes more commercial.

"We're going through the transition of the Internet from a purely communication tool to one that's a vehicle for commerce," Traphagen said. "In order to make commerce come true on the Internet there needs to be a rule of law. And that includes respecting copyright. That doesn't mean that all the wonderful communication on the Internet is going to fade away. The two can coexist."

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Jeri Clausing at jeri@nytimes.com welcomes your comments and suggestions.



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