In his Politechs column, Rory J. O'Connor says that a long-term or even permanent tax credit for R&D smacks of corporate welfare. People finds out the whereabouts of lawmakers during the August recess. The Issue of the Week explains why inventors and businesses are breathing a sigh of relief over the passage of the patent bill. And the State Roundup talks to local government representatives about what it's like dealing with Beltway-savvy lobbyists.

Export
Bill Would Update Export Administration Act
     The Senate Banking Committee released a revised draft of legislation that would reauthorize the Export Administration Act. The draft bill aims to update the nation's export control laws, especially with respect to computer equipment. The Export Administration Act expired in 1994 but lawmakers have been unable to agree on how to balance both national security and commercial interests. The committee's first draft was criticized by both industry and the Clinton Administration. The new draft appears to streamline key sections of the first draft such as those relating to foreign availability and mass market products. Some industry officials expressed concerned that the first draft released in June did not clearly state that items deemed to be "mass market" or that meet the bill's foreign availability standards would be exempted from export controls.

Export
Bill Seeks To Improve Export Checks
     House and Senate conferees included language in the defense authorization bill for fiscal year 2000 that aims to improve the current system of end-user checks on high-performance computers exported to China to ensure they have not been diverted for military uses. The conferees finished their work on a final compromise defense authorization package last week. Congress is expected to vote on the conference report to the massive defense authorization bill , S 1059 , after Congress returns from its August recess in September. The computer language originally was added to the bill by Rep. Christopher Cox, R-CA, who chaired a select House committee that investigated technology transfers to China. The committee found that China had used legal means and espionage to gain access to sensitive information and computers that have aided China's nuclear weapons development program.

Domains
Rogan To Introduce Anti-Cybersquatting Bill
     Rep. James Rogan, R-CA, is working on legislation to crack down cybersquatting, the practice of obtaining Internet domain names such as those associated with famous trademarks for the purpose of selling them in the future at a substantial profit. Rogan is expected to introduce the legislation after Congress returns from its August recess. The legislation would likely be similar to a bill, S. 1255, sponsored by Sen. Spencer Abraham, R-MI, which was passed by the Senate. Rogan sits on the House Judiciary Committee's Courts and Intellectual Property panel, which has jurisdiction over the intellectual property and trademark issues.

Domains
Lawmakers Wary Of Online Obscenities
     A group of House lawmakers say they are concerned about the "proliferation of obscenity" on the Internet and whether the independent ICANN organization should be given control over the root server system that routes traffic on the Internet. Reps. Tom Davis, R-VA, chairman of the National Republican Congressional Committee, Christopher Cannon, R-UT, and eight other lawmakers sent a letter late last week to Commerce Secretary William Daley expressing concern about the U.S. government's ability to continue to monitor the Internet Corporation of Assigned Names and Numbers should it take over administration of the Internet. The lawmakers said they have "serious concerns" about comments ICANN President Mike Roberts made during a July 28 hearing about the U.S. government eventually relinquishing control over ICANN and wanted to know how the government plans to "monitor and influence" ICANN's actions in the future.

Domains
The Music Of Less Chairs
     The Internet Corporation for Assigned Names and Numbers voted unanimously to adopt changes to its bylaws that in effect will limit the number of seats that Network Solutions Inc. has on a council that will provide advise on Internet domain name issues. ICANN's' interim board approved the change during a private telephone conference call. The change relates to the structure of ICANN's Names Council, which is made up of members of various constituencies, such as Internet service providers and trademark interests, that have a stake in the administration of the Internet. Each constituency was originally awarded three seats; ICANN voted to limit that number to one in the case of constituencies that comprise a single organization. The move was aimed at NSI. As the only member of the top-level domain name registry constituency, the company argued that it should be able to claim all three seats originally allotted to each constituency. At ICANN's last meeting, some expressed concerns about NSI holding too much influence under such a structure.

On The Hill
Dig Sig Snag Over Consumer Protection
     A Senate electronic signatures bill, which appeared to be on headed for easy passage just before the start of the August break, has hit a snag in the form of Clinton Administration and congressional Democratic concerns over consumer protection. The e-signature measure, which is sponsored chiefly by Senate Commerce Manufacturing and Competitiveness Subcommittee Chairman Spencer Abraham, R-MI, is slated to be vetted on the floor in early September. But the administration, which according to sources is especially eager to see passage of legislation promoting the anticipated boom in online commercial transactions, nonetheless signaled this week that some consumer protection matters must be addressed. Abraham and the bill's other primary boosters, including some Democrats, had been hoping for a unanimous consent agreement on the measure. That hope was extinguished last week, after Sens. Paul Sarbanes, D-MD, and Patrick Leahy, D-VT, put a hold on the bill after consumer groups flagged what they see as the Senate bill's potential to present opportunities for consumers to be shortchanged through technological limitations or taken advantage of by unscrupulous businesses.

Telecom
FCC's Eyes Will Stay Wide Shut
     Federal Communications Commission Chairman William Kennard rejected a request by the agency's Local and State Government Advisory Committee for a formal inquiry into the growing role of cable in high-speed Internet access. "I continue to believe that the initiation by this Commission of a formal proceeding focused exclusively on broadband access would undercut our goal of accelerating the deployment of broadband networks," Kennard wrote in a letter to the committee's chairman, Ken Fellman. Kennard added that a formal proceeding would "chill investment in cable modem service," which would ultimately create less incentive for telephone companies to roll out competing high-speed digital subscriber lines.

Antitrust
Far From Seeing Eye To Eye
     Based on the proposed "findings of fact" introduced this week in the Department of Justice's antitrust case against Microsoft, both sides are so far apart in their readings of the court record that they can't even agree on whether the software giant is a monopoly. With the Department of Justice and the attorneys general of 19 states arguing that Microsoft engaged in a "broad pattern of unlawful conduct with the purpose and effect of thwarting emerging threats to its powerful and well-entrenched operating system monopoly," Microsoft's version of the facts alleges that for the government to win, it needed — and failed — to prove that the company can raise prices with impunity, and that the company's actions have harmed consumers. Judge Thomas Penfield Jackson is expected to spend the next 30 days reviewing the arguments, which will then form the basis for a decision about whether the company should found liable for violating antitrust laws. Out of its 776-page filing, the government devotes 100 pages to the question of Microsoft's monopoly power — with much of the evidence about the company's alleged pricing power blanked out because of sealed testimony. Microsoft devoted 67 pages of its 451-page filing to the question.

Taxes
Internet Tax Commission Sets Broad Plan
     A handful of members of the Advisory Commission on Electronic Commerce selected five general areas the full panel should study over the next several months, covering state and local taxation issues to international tariffs. At the same time, the panel agreed to strict limits on the number of outside groups that will present background information to the Commission. The subcommittee charged with developing a work plan, headed by Charles Schwab CEO David Pottruck, agreed to look at state and local taxation issues, the impact of taxation on electronic sellers, the consumer aspects of taxation, local fees on Internet service providers and telecommunications services and international taxes and tariffs.

Business
Board Upholds Stock Option Decision
     In a move that some high-tech companies say will hamstring their ability to hire skilled workers, the nation's accounting mediator, the Financial Accounting Standards Board , voted to uphold a March proposal that will force companies to consider pricing changes in their stock option program as expenses. FASB's Board decided, after considering comments from the business community and academia, to hold to its reinterpretation of a 1972 accounting options standard which requires an expense be charged when a company reprices stock options — a common practice among technology companies when they fall upon hard times. "We see the repricing issue as potentially hindering the information technology sector's ability to attract skilled workers. Our members are currently able to attract workers by offering stock options and since… IT is the driver of the economy, it could have additional ramifications," said Tinabeth Burton, director of communications for the Information Technology Association of America.

Budget
Applying The Right Amount of Pressure
     A group of science and technology associations and representatives from research universities and IBM were invited to the White House's Office of Science and Technology Policy to discuss strategy for pressuring Congress not to reduce the President's 2000 budget request for federal research and development funding. The White House is concerned that a seven percent reduction in the president's request for National Science Foundation funding in the Veterans and Housing & Urban Development appropriations bill could eliminate funds for thousands of researchers and science and math educators, according to an Office of Management and Budget report. Groups invited to the 90-minute meeting include the American Association for the Advancement of Science and the National Academy of Sciences.

Net Governance
Clinton Calls For Net Policy Working Group
     President Clinton issued an executive orderlast weekend calling for a cabinet-level working group to determine what new tools the government needs to punish the illegal sale of guns, drugs, explosives and pornography on the Internet. The order calls on the group to consider the administration's current Internet policy supporting industry self-regulation when making recommendations on how current federal laws are working, what new tools are needed for the federal government and what the government can do to "empower" parents, teachers and others to prevent online misconduct. The group, which will be headed by the attorney general, will include the chiefs or their representatives from the following agencies: Treasury, Commerce and Education departments, Office of Management and Budget, FBI, Drug Enforcement Administration, Federal Trade Commission, Bureau of Alcohol, Tobacco and Firearms and the Food and Drug Administration.

Campaigns
Gore Pushes For Bridge Over Digital Divide
     Noting that black Americans are only two-fifths as likely to have home Internet access as a whites, vice president and Democrat presidential candidate Al Gore outlined his platform for reducing that so-called "digital divide" if he wins the 2000 election. As part of the policy package, Gore proposed improvements in high school, elementary and pre-school education; reducing the student dropout rate from schools; increased funding for communities to build computer and training centers; and tax incentives for saving for higher education. He also endorsed a proposed tax credit measure, S. 546, for companies that pay to train their employees.

On The Hill
GOP To Sing Praises Of Armey's e-Contract
     House Republicans were instructed to trumpet their party's support for the high-tech community and highlight House Majority Leader Richard Armey's "e-Contract" as part of an overall public relations drive to drum up support for the Republican tax cut plan, according to a message Armey sent to colleagues before they left town on the month-long August recess. "As we head home to spend August in our districts, I'd like to sum up where I think we are, and what we'll do in September, so we can better see our way to victory in 2000 and beyond," Armey wrote. "On the Internet, while we didn't invent it, we are working full-time to keep the Administration's mitts off of it." Armey went on to charge that the Clinton Administration is looking for ways to regulate the Internet and to use it as a tool for spying on citizens.

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