Encryption
McCain Bill Would Loosen Crypto
Senate Commerce Committee Chairman John McCain, R-AZ, detailed the encryption legislation he plans to offer that would allow for the export of much stronger encryption to some countries than is now permitted. The legislation, which McCain plans to offer when the Senate returns from its break April 12, represents a significant shift in the direction of the high-tech industry's position. McCain will move away from a measure he sponsored in the 105th Congress that aimed to promote the use of products with a "key recovery" feature opposed by industry. A McCain aide said "it is designed to allow the greatest amount of free trade while still protecting U.S. security interests" and noted that it will be co-sponsored by key industry allies, Sens. Patrick Leahy, D-VT, and Conrad Burns, R-MT. Conspicuously missing from the list of initial backers of McCain's bill is Sen. Bob Kerrey, D-NE, who cosponsored McCain's encryption bill in the 105th Congress. Like McCain, Kerrey has shifted his position on the issue.

E-commerce
DOJ Won't Dodge E-commerce Panel Issue
The Department of Justice agreed to defend the Advisory Commission on Electronic Commerce, and the individual business reps on that panel, against a lawsuit filed by the National Association of Counties (NACo) and the U.S. Conference of Mayors. NACo and the mayors are seeking an injunction to block the congressionally-appointed commission from meeting until its membership is changed to represent government and business interests equally. The commission has an 18-month life span, which started in December 1998, and must make recommendations to Congress on how to cope with taxing goods and services sold on the Internet. Virginia Governor James Gilmore, R, said the commission would meet in June despite the lawsuit, with the first meeting scheduled for Williamsburg, VA, followed by conferences in Silicon Valley, Austin, TX, and New York.

Telecom: Internet Access
Raising McCain Over Net Fees
Senate Commerce Committee Chairman John McCain, R-AZ, will drop legislation soon after the congressional recess that would prohibit the FCC from regulating Internet service fees. McCain's office released detailed language of the plan, the Internet Regulatory Freedom Act, that says the FCC has no authority to make any regulatory changes that would "require providers of Internet information services to increase the price of customers' access to Internet information services." Rep. Fred Upton, R-MI has introduced similar legislation, H.R. 1291, aimed at preventing computer users from having to pay per-minute charges to calls made to ISPs. This recent flurry of activity was spurred by a decision made by the FCC last month that treats calls to ISPs as interstate calls, rather than local calls.

E-commerce
Gilmore Makes History And Plans More
Virginia Gov. James Gilmore, R, Tuesday signed into law the Virginia Internet Policy Act, the nation's first comprehensive state Internet policy. The package incorporates seven bills and formally establishes the Secretary of Technology, the first state cabinet position of its kind. The legislation also imposes penalties on those who clog systems with unsolicited bulk e-mail, adding that provision to the Computer Crimes Act; extends privacy protection to include the Internet; increases penalties for criminal use of encryption technologies and posts information requested under the Freedom of Information Act on the Internet.

Antitrust
Slow Pace Builds Settlement Pressure
U.S. District Court Judge Thomas Penfield Jackson explained to the Department of Justice, Microsoft officials and reps from the state attorneys general why he plans to reinstate a two-step process for the trial that will delay any verdict in the antitrust case until mid-September. The process, in which Jackson will separate findings of fact from findings of law, is similar to the one he attempted early in the case with the appointment of a "special master." Microsoft successfully challenged that appointment. The trial itself is now slated to tentatively resume May 10. William Kovacic, a professor of antitrust law at George Washington University says the drawn-out process may be beneficial for Microsoft. He estimated that it could be more than three years before the U.S. Supreme Court or the Court of Appeals render a final verdict. Also this week, The Seattle Times reported that Sen. Slade Gorton, R-WA, informally chatted with a handful of Microsoft employees after a speech at the software giant's headquarters, disclosing that he thought Jackson was a "second- or third-rate judge."

Antitrust
Gorton Passes Harsh Judgment
Brushing back an attempt by Sen. Slade Gorton, R-WA, to deny a budget increase for the Justice Department's antitrust division, Sen. Orrin Hatch, R-UT, allied with Democrats to pass a Senate resolution rebuking Gorton's effort to punish the DOJ for prosecuting Microsoft. In one of a number of "Sense of the Senate" resolutions passed as amendments to the budget bill, Hatch joined his own proposal endorsing the DOJ's funding request with those of Sens. Byron Dorgan, D-ND, and Herb Kohl, D-WI. The measure, which passed without objection, was specifically engineered to combat report language that Gorton had introduced in the Budget Committee, according to antitrust committee staffers.

Cyberterrorism
FBI Strikes Back At Melissa Virus
The FBI launched an attack Monday on a computer virus rapidly spreading over the Internet. "The transmission of a virus can be a criminal matter, and the FBI is investigating," said Michael Vatis, the head of the National Infrastructure Protection Center. The "Melissa" virus, which targets only certain Microsoft Office programs, has unleashed the first virus warning from the FBI's National Infrastructure Protection Center. It also spurred the Defense Department to issue its first "flash" message about a computer problem in the history of the DOD. If the damage caused by Melissa incurred a loss of more than $5,000, such a crime is a felony punishable by up to ten years in jail and $250,000 fine. The New Jersey attorney general's office called a press conference Friday to disclose that the author of the virus has been caught.

Telecom: Internet Access
Wallop Not Open To AOL-Led Group
Former Sen. Malcolm Wallop, R-WY, launched a counteroffensive against America Online and the OpenNET coalition, saying the group and its leading member are unwisely inviting government regulation of the Internet. Wallop said that OpenNET's call for AT&T and TCI to open up their proposed upgraded cable network to all data providers would stifle investment in the Internet. OpenNET has argued that the cable network should be open to competitors just as phone networks are required to do. But counter-arguments assert that the cable network was built with private investments, and shouldn't be forced open by the government.

Y2K
The Ten Percent Solution
Since federal computer systems will not be 100 percent Y2K-ready by the March 31 government-wide deadline, the Senate special Y2K committee is planning a review of contingency plans and testing efforts in April. About 90 percent of federal mission-critical computer systems will be Y2K-compliant, but the remaining 10 percent may prove the most troublesome. These include systems run by contractors or states to administer food stamps and Medicare payments, Defense Department systems and Federal Aviation Administration computers.

Y2K
Halfway Home-Free
The federal government came halfway to meeting its Wednesday deadline for mission-critical computer system Y2K readiness, with 13 of 24 agencies reporting they are 100 percent ready. White House Y2K czar John Koskinen estimates the lagging federal agencies will complete their work by the end of this summer, and still have enough time remaining to test their Y2K repairs. The Departments of Defense, State and Transportation are still at the bottom of the government's readiness list, with only 85 percent to 89 percent of their crucial computer systems ready.

Y2K
AHA's Healthy Outlook
A survey of American Hospital Association members found that one-third will not be completely Y2K-ready by January 2000, but that no patient-related services should face any problems. Less than one percent of the 538 hospitals that responded to the survey said they will not be ready for the 2000 date change and are predicting possible "adverse effects" in their critical operations. The health care industry was targeted in a report issued by the Senate special Y2K committee for being one of the least prepared industry sectors. The AHA reported that hospitals are having trouble verifying the Y2K readiness of products they use, because suppliers are reluctant to share the information out of fear of litigation.

Business
Resentment Of Repricing Plan
The Financial Accounting Standards Board, the nation's accounting referee, moved closer to requiring technology firms to change the way they reprice their stock options, angering the industry. "What concerns us is this forces changes of current business models that are working well and benefiting the economy," said Jon Englund, senior vice president of the Information Technology Association of America. FASB reviewed current accounting laws and concluded that repriced stock options should be a potential expense. The repricing of options is a common practice among technology firms, who often tie their compensation packages to stock options. Should the value of the stock options plunge, a company would be able to reprice them for employees, a favorable break that is not available to the common shareholder.

Privacy
Spam Makes Strange Bedfellows
An unlikely alliance between the anti-spam Coalition Against Unsolicited Commercial E-mail activist group and the Direct Marketing Association is reaping some benefits. A new provision in S. 759, spam legislation introduced last week by Sens. Frank Murkowski, R-AK, and Robert Torricelli, D-NJ, partially incorporates a proposal by the two groups that would allow domain operators to block unsolicited e-mail. The new provision would allow a company or an ISP to block bulk, unsolicited e-mail, in addition to requiring marketers to identify themselves in the messages and allow consumers to remove their names from mailing lists. CAUCE is still not pleased with the details of the plan, however, because it would require domain owners and ISPs to register their requests to block spam with the Federal Trade Commission. The group says it would force the FTC, state attorneys general and ISPs to enforce the law.

Domains
WIPO Will Wait A While
The World Intellectual Property Organization has postponed the date for release of its final report on intellectual property issues relating to Internet domain names until April 23. WIPO originally said it would release the report at the end of March. But Francis Gurry, WIPO's assistant director general and legal counsel, said the organization wanted more time to "analyze very carefully all the comments received and to consult with our expert panel."