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Techies Voice Tempered Electoral Glee
by Bara Vaida
At first blush, the switch in partisan power to Republicans in the Senate appears to mean that the high-tech sector will have an easier time winning empathy for their policy priorities. But some lobbyists are not so quick to jump on the bandwagon of enthusiasm for the changeover.
The issue of technology mandates as a way to manage digital rights to copyrighted works is not likely to die. It may just become fodder for soon-to-be Judiciary Committee Chairman Orrin Hatch, R-Utah, according to some lobbyists. They also are not sure what approach Arizona Republican John McCain, who has a reputation for being a maverick, will take on the issue in the Commerce Committee, the primary battleground for the past two years.
Lobbyists also are unsure of McCain's intent on legislation aimed at promoting high-speed Internet services and have reason to be concerned about his efforts to require public companies to record employee stock options as expenses. And privacy and export-control reform, issues dormant or plagued by controversy for most of 2002, are expected to resurface as a renewed headache for lobbyists when Richard Shelby of Alabama takes the Banking Committee gavel.
"There has been a lot of initial glee, but I think the view should be more tempered," Mark Heesen, president of National Venture Capital Association, said of the GOP takeover. "When you look at who may be chairing certain committees, they may or may not be friends of high-tech or the venture-capital community on certain issues."
No GOP Mandate Against Tech Mandates
Take the issue of technology mandates. Most lobbyists breathed a sigh of relief that GOP success at the polls means that South Carolina Democrat Ernest (Fritz) Hollings will not chair Senate Commerce. Hollings introduced a far-reaching bill, S. 2048, aimed at stopping piracy on the Internet, and tech companies vigorously opposed it. Conventional wisdom is that Walt Disney Co. CEO Michael Eisner's friendship with Hollings helped his case and pushed the lawmaker to embrace the motion picture industry's position that government legislation is necessary.
McCain did not support Hollings' legislation and historically he tends not to support government mandates, lobbyists said, so the change in that committee chairmanship "is pretty good news," said Ken Kay, executive director of the Computer Systems Policy Project. "From our perspective, we still have a lot more work to do, but having a chairman that has a more balanced view and generally inclined not to support government mandates is a good development."
But Jack Valenti, president of the Motion Picture Association of America (MPAA), said he is unconcerned about the loss of Hollings as chairman and plans to continue to aggressively press for technology mandates. "I believe my relationship with Republicans and Democrats is warm and affectionate. ... You don't survive in this town if you are bitterly partisan," Valenti said. "There is zero change in our strategy, which is how do we protect ... the awesome engine of the economy that is intellectual property ... in the digital world."
One entertainment industry source also noted that McCain's view on solving online piracy "is still evolving" and that his staff is "suspicious of both Hollywood and high-tech." And several Capitol Hill sources said that while Hatch has been a friend of the high-tech industry, he also strenuously supports intellectual property protection.
"Hatch is more supportive of the content industry's approach than [current Senate Judiciary Committee Chairman Patrick] Leahy, D-Vt.," one Senate staffer said. "People shouldn't be so quick to assume that the content industry's agenda might not get pushed by someone else."
Kay said MPAA undoubtedly will continue to pursue its agenda in the 108th Congress but added: "I think the lineup congressionally helps us. I think there will still be appropriate congressional involvement in urging the industries to work together cooperatively, but this Congress is less likely to impose government standards where there isn't a marketplace consensus."
To back up their argument, about a dozen high-tech companies created a coalition to fight the bill and hired Republican lobbyist Fred McClure -- known for successfully shepherding John Ashcroft's controversial nomination for attorney general through the Senate in 2001.
The Maverick Who Is Sen. McCain
McCain also could preside over another difficult issue for the high-tech industry: mandatory expensing of stock options. He and Sen. Carl Levin, D-Mich., introduced a bill, S. 1940, that would require such expensing and vowed to have a Senate vote on the measure.
The accounting scandals of 2001 and 2002 prompted some companies to voluntarily begin formally recording stock options as expenses rather than just providing information on them in the footnotes of company balance sheets. But the issue of a mandate is now under consideration by both the nation's Financial Accounting Standards Board and its global counterpart, the International Accounting Standards Board.
In Congress, the issue is technically one for the Banking Committee to decide. But some observers fear that McCain could try to revive the congressional debate.
"This is a Banking Committee issue, and Shelby hasn't shown much interest in it," said one high-tech lobbyist whose company is a member of the International Employee Stock Options Coalition. "But McCain is now in the majority and press-savvy, and he could use that as an opportunity to stir up interest in his bill."
A Senate Commerce Committee spokeswoman said McCain has yet to decide on an agenda for the 108th Congress and will not do so until he meets with Hollings and the GOP leadership later this week.
Sen. Shelby: A Hurdle On Privacy, Export Controls
On the privacy front, conventional wisdom among was that online privacy legislation that failed to move under a Democratic-controlled Senate certainly would not move under a Republican, pro-business Congress. But Shelby, a former trial lawyer, co-founded the Congressional Privacy Caucus in 2000 and is likely to consider tougher privacy financial rules as part of the reauthorization process of the Fair Credit Reporting Act (FCRA) next year.
"The passion with which Senator Shelby views [the privacy] issue is second to no one," said Robert Cresanti, vice president of public policy at the Business Software Alliance. "I think it will be one of his top-tier issues ... and that means high-tech will be engaging on this again."
What worries high-tech lobbyists even more is that legislation to renew and overhaul export-control laws now pending in the House might not be cleared in the post-election "lame duck" session of Congress. Lobbyists said they are counting on the White House to push the House Republican leadership to move the bill, as its chances of passage would diminish considerably with Shelby as Banking Committee chairman and California Republican Duncan Hunter as the next likely House Armed Services Committee chairman.
Both lawmakers lean toward the view that easing export controls on computers and other goods could weaken national security. "The elections and changes in the leadership in Senate and House committees make it less likely that a responsible, balanced bill that meets the needs of the business community and the Bush administration can be met," Kay said of export-control reform.
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