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Executive Summary
Week Of July 12, 1999
Intelligence Committee Language Could Endanger SAFE
The House Intelligence Committee approved substitute language on Thursday that made significant changes to H.R. 850, the so-called SAFE Act aimed at loosening controls on encryption exports. The committee adopted the substitute amendment offered by committee Chairman Porter Goss, R-FL. The major change concerned the provision allowing for the export of encryption products above 64 bits. The substitute allows stronger products to be exported under a license after a 45-day technical review and the submission of information detailing potential end users and uses of the product. Goss added language to the substitute that would give the president the authority to waive this provision, if it is consistent with national security, to allow products over 64 bits to be exported without a license. This would give the president the option of allowing those sectors such as financial and insurance industries that currently are allowed to export strong encryption products without a license to continue doing so. Earlier in the week, Goss had called on President Clinton to take a more active role in and hold a summit on the controversial issue. But at hearings on the matter this week, the White House resumed it attack on SAFE with Attorney General Janet Reno and FBI Director Louis Freeh both warning the House Armed Services Committee the measure poses a threat to national security. Also this week, B'nai B'rith International, the oldest Jewish services organization, has stepped up its lobbying against SAFE over concerns that it will leave law enforcement agencies unable to track terrorists.
Privacy
Poor Marks From Markey
Federal Trade Commission Chairman Robert Pitofsky said "the business community deserves a lot of credit" for implementing privacy policies and rallying behind a self-regulatory system advocated by the Clinton Administration. However, Rep. Ed Markey, D-MA, played the role of professor on Tuesday, dismissing the "B+ or better" grade given to the online industry by Pitofsky, and assigning the group "a big fat F" for its efforts at self-regulation over the past year. "This isn't self-regulation, it's self-delusion," said Markey. He tried to corner Pitofsky during a House subcommittee hearing, forcing him to concede that the right to a notice about privacy principles and consent to Web sites' data-sharing arrangements were essential. Other legislators also were skeptical. "I am frankly appalled by the recommendation that we should not act now," said Rick Boucher, D-VA, whose Internet legislation introduced with Rep. Bob Goodlatte, R-VA, includes a right for consumers to opt-out of the collection of personal information. The FTC's annual online privacy report highlighted that the less than 10 percent of all Web sites employ the "fair information practice principles" recommended by the FTC.
Privacy
Administration Could Stall On Medical Privacy
Even if Congress doesn't meet its August 21 deadline for guaranteeing the confidentiality of medical records, the Clinton Administration is prepared to hold off issuing its final regulations if it appears that legislation will pass later this year, officials at the Department of Health and Human Services said late this week. Under health care legislation passed in 1996, the authority to promulgate rules governing the privacy of electronic medical records shifts to HHS should Congress fail to pass comprehensive medical privacy legislation by the date. That appears an increasingly likely prospect given that neither the House nor the Senate has succeeded in marking up legislation on the subject. While HHS has until February 2000 to issue its final proposed regulations, under the Health Insurance Portability and Accountability Act of 1996 the agency only has the authority to regulate electronic medical records. Although rapidly growing, the number accounts for only about 5 percent of medical records, and HHS officials say they would prefer to see comprehensive legislation governing both paper and electronic data. Tension over the issue was exacerbated by an amendment Rep. Greg Ganske, R-IA, attached to financial modernization legislation H.R. 10 that would have required customer consent before medical information was shared within financial institutions – while offering a number of significant exceptions.
Taxes
Five More Years!
The high-tech industry won a partial victory with the House Ways and Means Committee when the panel's chairman agreed to include a longer extension of the research and development tax credit in his tax bill than Congress has passed in years past but declined to include a long-sought permanent extension. Ways and Means Committee Chairman William Archer, R-TX, included a five-year extension of the R&D tax credit in his broader tax bill. Senate Finance Committee Chairman William Roth Jr., R-DE, has yet to outline his position on the issue. He is expected to release the details of his tax bill later this week. Despite industry lobbying for a permanent extension, an aide to Archer said that five years seemed like an appropriate extension, providing industry with some certainty and Congress with a chance to review the credit in five years. The tax credit expired on June 30, but Archer's extension would be retroactive, and would cost some $13 billion. Industry officials said they were pleased that the chairman included a longer extension than the one or two-year extensions Congress has typically provided since the credit's creation in 1981.
On The Hill
More Money For Tech Gathers Few Foes
Representatives from industry and academia praised a bill that would boost funding for research and development spending on information technology. Witnesses at a hearing of the House Subcommittee On Basic Research told members that proposed spending on information technology provided in H.R. 2086 the Networking and Information Technology Research and Development Act, will benefit all aspects of U.S. economy. The bill, introduced by James Sensenbrenner, R-WI, provides a $366 million increase in information technology R&D and proposes a jump in the National Science Foundation's budget from $151.2 million in FY1999 to $415 million by 2004.
Telecom
Time On Their Hands
House lawmakers quietly passed an amendment that would extend the date for which telecommunications companies could be reimbursed by the government for upgrading their networks to comply with the 1994 Communications Assistance Law Enforcement Act. "This could help the ongoing negotiations with the industry and the Justice Department," said Roy Neel, president of the United States Telephone Association. "We have been in a slug-fest with the Justice Department over the past few years." The CALEA amendment, which was passed by a voice vote as part of a bill dealing with federal arbitration rules, H.R. 916, extends the date for which telecom companies could be reimbursed for making upgrades to June 30, 2000, from Jan. 1, 1995. Companies also would have more time to become compliant. The amendment extends the compliance date to "no earlier than June 30, 2000." The amendment also clarifies some definitions within the act.
Internet Access
International Men Of Mystery Talk Telecom
The Senate Judiciary Committee seemed unsure of what course it should take to ensure continued competition in the growing high-speed data market, recommending no solutions at a hearing. Committee Chairman Orrin Hatch, R-UT, called together industry leaders for a hearing, but does not have any broadband-related legislation of his own. There are currently five broadband bills pending in the House and Senate ranging from requiring cable companies to open their networks to competing Internet service providers to giving the Baby Bells relief from aspects of the 1996 Telecommunications Act. United States Telephone Association President Roy Neel said that with five bills in the hopper, chances are "even or better than even" that at least one will pass through Congress this year. Chances "are 10 times better than they were six to eight months ago," Neel said. USTA is pushing hard for deregulation of the Baby Bells so they can offer high-speed data services outside of their local networks and circumvent some requirements of the 1996 Telecommunications Act. Neel said deregulation is needed so the Bells can compete with AT&T's growing cable network.
Y2K
Most Cities Lag In Y2K Preparations
The nation's largest cities are lagging in preparing themselves for the 2000 date change, according to a new study by Congress's watchdog group. Only Boston and Dallas are Y2K ready, while half of the remaining cities plan to be ready by Sept. 30, and the remainder between Oct. 1 and Dec. 31, according to a General Accounting Office report. While most cities have completed work on transportation and telecommunications systems, few have finished upgrading water treatment systems, public buildings and emergency services. In a number of cities, services such as electric power and healthcare facilities are operated by counties or states. The 10 cities that expect to be ready by Dec. 31 include: Los Angeles, Chicago, Phoenix, San Antonio, Detroit, San Francisco, Baltimore, Columbus, OH, El Paso, TX, and Washington, DC.
Access
U.N. Report Finds Worldwide Tech Gap
A new United Nations report finds that while the Internet could aid disadvantaged groups around the globe, many of those most in need of innovative ways to reach new markets are the least likely to have access to information technology. The 1999 Human Development Report, released this week by the United Nation's Development Programme, devotes a chapter to the growing gap between those worldwide who have access to information technology and those who do not. "Communications technology opens new opportunities for small players to enter the global marketplace and political arena," the report said. But the information revolution also has "exposed the risks of dividing and polarizing societies, threatening greater marginalization of those left out and left behind." Much of the world's population has been unable to take advantage of the potential benefits of the Internet and electronic commerce. Industrialized countries reported having 88 percent of Internet users, most in North America, but only 15 percent of the world's population.
Campaigns
New Dems Tout High Tech Ties
A week after a trip to Silicon Valley, a group of 63 moderate Democrats, who call themselves the New Democrats, highlighted their long relationship with the high-tech community and unveiled a list of policy issues that they say will spur the continued expansion of the high-tech economy. On the list were many policies that Republicans featured in their "e-Contract," including relaxation of encryption export controls, H-1B visa expansion and improving education. But New Democrats said they differ from Republicans in their commitment to education, the e-rate and making the research and development tax credit permanent.
Lobbying
Mr. Net Lobby Goes To Washington
Lobbyists for the newly formed NetCoalition.com, which represents nine online companies, will kickstart its formation by meeting with Senate and House staff early next week to lay the groundwork for a larger visit by the companies' top executives in September. Government relations staff from America Online, Amazon.com, DoubleClick, eBay, ExciteAtHome, Inktomi, Lycos, theglobe.com and Yahoo will chat with staff from the Senate Democrats' High-Tech Working Group and the Senate Commerce Committee. The group intends to discuss telecommunications, intellectual property, privacy and trade policy. NetCoalition.com currently has no specific policy agenda, but it is trying to develop a consensus for a formal launch in the fall. One issue notably absent is broadband deployment. Two of the founding members, AOL and ExciteAtHome, are polar opposites on this topic.
E-commerce
No More Rules Unspoken
More than 100 business groups have banded together in an international effort to develop a set of common business standards to help build consumer confidence in electronic commerce. The Standard for Internet Commerce effort is being crafted by the Council for Internet Commerce. In addition to an industry advisory board, the public will be able to vote on the standards so the council can see where opinions on the two sides fall.
We welcome your feedback; please e-mail comments to Managing Editor Sharon McLoone at smcloone@nationaljournal.com.
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