VARUN SAHAY


INTERNET REGULATION: To Be Or Not To Be.

"As long as I am Chairman of the Federal Communication Commission, this agency will not regulate the Internet."
William Kennard

1. Introduction

Does the Internet as a whole really need regulation? What is regulation, and is it content regulation that is required or is it subject matter regulation. Or does regulation simply mean censorship of pornography and other freely available sybaritic material. The assumption is that Congress intended that the Internet be the highway into the new millennium, creating a niche in the cyber market and making the American economy even stronger. People realised that by making a posting on the Internet money could be made, everybody started using the Internet leading to the birth of a new market economy. People began stealing information from the net, either not knowing that consent was required by law for such use or knowing that such theft could not be monitored. A law was formulated, the Digital Millennium Copyright Act was passed, but to no avail. The effect of that law was to give commercial content owners a break in the form of entry barriers against upstart new competitors. The enactment was to expand the existing copyright laws to include network digital technology.

After looking at articles and other abstracts written by learned professors as well as other eminent authors, I have decided to present my view point on whether the Internet needs to be regulated or not.

2. Effect of Regulation

In Virginia on March 31, 1999, Gov. James S. Gilmore III signed into effect seven legislative measures he described as the first comprehensive set of state Internet regulations. By creating these measures, Virginia will soon be a state at the height of the information technology runway. Only time will tell as to the efficacy of this legislation, since implementation of these measures in Cyberspace is by no means an easy task.

3. History

If we look at the history of the United States telecommunication industry, Congress and the FCC (Federal Communications Commission) have played a very important role in its growth. Soon after the Constitution was drafted, Congress introduced the bill of rights, which dealt with the freedom of individuals in speech, action and expression to make the Constitution as free as it was intended to be. Congress introduced the Radio Act of 1912 after the Titanic sank on April 14, 1912 thereby seizing the airwaves. Congress introduced the 1927 Act after the dispute between Zeniths President Eugene McDonald and Secretary of Commerce Herbert Hoover, thereby making it clear that there would be no private ownership of the air waves, basically allowing for government ownership, government control. In 1934 the FCC was created along with its charter the Federal Communications Act. The 1996 Act was passed to do away with the flaws of the 1934 Act and to keep up with the moving technology in a brave new world. In 1982, when the consent decree was passed against the Monopolistic regime of AT&T, Congress was watching from the galleries waiting for the opportunity to eventually own the Ethernet. We can conclude by saying that the study of telecommunications regulation must be an inquiry into the proper standards for measuring the public interest and workable techniques for applying those standards. As the Internet does not actually serve as many people as it is made out to believe, is the danger so prominent that Congress sees the regulation of the Internet as forth-coming? After reading the papers presented at the Yale Law School symposium hosted this year (1999) in April, I believe that the Internet cannot be regulated without testing the waters. Regulation will come gradually and will be gentle.
4. Synopsis

Professor John Perry Barlow in his preliminary draft of "A Cyberspace Compendium: A Declaration of the Independence of Cyberspace" forced me to examine the facts and question how the Internet will really evolve. I will argue that a new amendment to the Constitution would allow the Internet to be regulated using the tests which the courts have formulated to examine situations involving free speech and expression.

The freedom of speech and expression found in the First Amendment have evolved slowly out of a churning society of people. As there was no contingency plan made for the Internet, obscenity likewise evolved and the ban on child pornography was content neutral, as a ban could not be imposed prior to the offence being committed. Scholars in their war paint came up with proposals to stop pornography. Where did the Internet fit? Does the Internet come into the categories where it does not need it owns law and where it can be included in another law? The Internet is basically a means to an end, the end is to eliminate transactional cost and to improve the modes of communication between industries and people. The Information Highway, would as its name resounds require information as basic food if I may for its survival. This very information we may call personal or private, but what we do not realise is that the mainframe service provider has no emotions, no thought. It is not like we are giving out our personal information to the Men in Black. Looking at Jessica Litmans view on the Digital Millennium Copyright Act in which she says, "It takes general principles of the Copyright Act, like, take "fairness," and translates them into exceptionally long, complicated, wordy, counter-intuitive and internally inconsistent proscriptions". As she herself points out, the law is trying to make itself adapt to the Internet. David G. Post in his paper on "Of Horses, Black Holes, and Decentralised Law Making in Cyberspace" talks about the law of the horses. The concept of Cyberspace should be interpreted with the help of a general theory of Intellectual Property Law and should not be given a pedestal of its own. E-mail and the Internet have become a means today whereby one can get any information they want, and if they search hard enough it is all for free. What's wrong with free? Commerce is not stagnating, money is being made and only the entrepreneurs who do not have the means of using new innovative ways of making money do not make any. If there is no law and the traditional business man feels he is losing money due to copyright infringement, then he/she should try to stop it by using technology. One example is MP3, the craze of the music industry, in which you upload one song and you get access to 50 songs. This is a case of piracy and of copyright infringements. If you want to stop this, then make sure that you can not download music by either encrypting it or by putting a tracer to find out the origination of the download. Today CD manufacturers are putting in encryptors in the CDs so that the CD can not be copied at all and if it is copied then you have a hissing sound in the back ground.

E-mail today is filled with Spam mail, get rich quickly. There is a technology called RBL (Realtime Blackhole List). The RBL has a list of Internet Service Providers (Listed ISP) which encourage the operation of spammers (commercial bulk E-mail operations) by use of something called an open mail relay system (which saves them horsepower and bandwidth and also allows them to reach mailboxes on mail servers who would never directly receive mail from a spammers network). This listed ISP is available and has easy access. Other ISP can block out this listed ISP and then the only way access is granted is when the Listed ISP infiltrates the other ISP through some other accepting mail service provider. This method is from the bottom up. Looking at the measures taken by the governor of Virginia, a perfect example of the measures against anti-spamming from the legislature down.

5. Copyright & First Amendment

In speaking of the value of the First Amendment, Supreme Court Justice Louis Brandeis wrote, "The greatest dangers to liberty lurk in the insidious encroachment by men of zeal, well-meaning but without understanding."

The speech and press clauses of the First Amendment ensure government non-interference in the market place of ideas. Copyright ensures the private production of ideas to fill the market. The copyright laws and the First Amendment laws go hand in hand. There are two basic implicit premises that are in substantial tension with each other. Markets in speech promote expressive freedoms. The other premise is that the capaciousnous of speech must be constrained in order to preserve expressive freedoms. The Communications Decency Act was passed in February 1996. The CDA criminalizes online communication that is "obscene, lewd, lascivious, filthy, or indecent, with intent to annoy, abuse, threaten, or harass an other person" or "obscene or indecent" if the recipient of the communication is under eighteen years of age "regardless of whether the maker of such communication placed the call or initiated the communication." Also prohibited is online communication to minors that "depicts or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities or organs, regardless of whether the user of such service placed the call or initiated the communication" . The CDA permitted the U.S., for example, to seek the arrest of a European content provider whose sexually explicit material was seen as "indecent" or "patently offensive." The 1996 Communication Decency Act was held to be unconstitutional by the US Supreme Court in 1997 as it violated the First Amendment.


6. Who Will Rule The Internet? Internet commerce is a pot of gold.

In 1997, Internet sales reached a staggering US $9 billion, in 1998, they tripled to about US $30 billion. By 2003, Internet commerce will reach US $3.2 trillion as companies sell movies, autos, books, software, banking services, insurance services, and medical expertise online, according to Forrester Research INC, an economic forecasting company based in Cambridge, Massachusetts. The White House estimates that the technology sector upped the national growth rate by 40% between 1995-1997. The concept of Internet commerce is different from over the counter retail. In Internet commerce, the people surfing from all over the world bring with them a whole surfeit of laws. Other countries have an enforcement mechanism and impose value added tax on transactions. In America, the land of the First Amendment, the government enforces tough disclosure and antifraud laws in its medical and stock markets.
Today digital signatures are valid in America as to ratify a contract. These contractually binding digital signatures are necessary for e-commerce to thrive. Consistent contracts among all members of these bank-based systems provide an environment whereby users are bound to the messages they digitally sign. Allowing enforceability of the contracts. In a bank-backed e-commerce system, governments should and will continue their important role of regulating participating financial institutions and protecting the rights of their customers. Because financial institutions issuing digital certificates within these systems are already regulated, local governments and policy authorities have an ongoing mechanism to oversee activity within these contractually closed e-commerce environments. Bank-backed e-commerce systems protect participants by dispute-resolution mechanisms that are dictated by common system rules, contracts, and business practices. There are treaties and agreements being signed all over the world in anticipation of free Internet commerce, for example at the European Union Head Quarters in Brussels, Belgium, at the Organisation for Economic Cooperation and Development in Paris, the World Trade Organisation in Geneva, the Asia Pacific Economic Cooperation Group in Singapore and the United Nations in New York. There are also smaller organisations like ICAAN, IETF and ANSI, to name a few, that meet frequently in Singapore and Berlin to draft legal and technical standards for the Internet, trying to create a world order which is run on the same principles universally.

The Internet Corporation for Assigned Names and Numbers (ICANN) will announce on Wednesday, April 21, 1999, which five applicants will be selected to participate in the initial test round of competition. ICANN was appointed to oversee the introduction of competition into the domain name registration business. The new competitors will have to pay Network Solutions some kind of fee. The company has proposed that the new registrars pay an up-front fee of US $10,000 to help offset the cost of the software it has developed for the shared registration system. It has also asked that they pay Network Solutions a US $16 fee per name registered. If the details are not finalised this month, then ICANN's plans can be derailed and the registry will not be open by the end of this month. In that case, they will not be able to have full-scale, international competition up and running by June.

7. Piracy Issues

Piracy cost the U.S. computer and video game industry more than US $3.2 billion in 1998. Countries such as Thailand, China, Paraguay and Malaysia, which top the list for software piracy, cannot afford to pay the exuberant costs of the items they pirate. When the costs are broken down, games are being made available for as little as 93 cents (which might be the cost price for the manufacturer). 93 cents in Thailand or Malaysia is a lot of money. The bootleg copies cannot affect the sale of the video game manufacturers to the amount of US $3.2 billion because the loss is being calculated at the present market value and anticipated sale. The new copyright law puts in place a complex system of entry barriers that will discourage amateurs who know the law is there and that is the intention of the law. The content owners will have new tools to stop piracy but free speakers are being stopped with these same tools today instead of the pirates.

8. Privacy

In the case of privacy, to which we keep making allusions, a new company called Free-PC-dot-com plans to give away computers to people who are willing to provide detailed information about themselves and be exposed to plenty of advertising messages. The deal includes free Internet access, but consumers may worry about the loss of privacy. That is part of the bargain. As the computer companies say, "this privacy we talk about never existed." Information was always relayed when we used the information highway by means of either cellular phones or by just using Microsoft Word or Excel. Computer chips have a number in them which have been there for nearly 20 years for the purpose of being able to be hooked to the Ethernet. We, however, did not know about this until the new computer manufacturers, such as Intel, decided to talk about it. Intel microprocessors have an embedded serial number that could be used to identify the computer and by extension, its user. Everyday devices could be linked so we would be living in one giant network, all hooked up by an electronic device. When we speak, the reverberations of our voice would enter every portal to be locked forever. When Scott McNealy, Chairman and Chief Executive of Sun Microsystems said, "You already have zero privacy get over it", I could not agree more. What is private also has a lot to do with the notion that our egos do not want it to happen but we are happy, if not content, using it without knowing that it is encroaching on our privacy. Jini was unveiled by Sun Microsoft amongst a lot of hue and cry as it had a built-in identification number which people said encroached on their privacy. A programmer in Massachusetts Robert M. Smith found that identifying numbers can easily be found in word processing and spread sheets files created with Microsoft's Word and Excel programs and in their Windows 95 and 98 operating systems. These numbers help Microsoft collect information if they chose to do so. Today Microsoft is trying to remove this Universally Unique Identifier (UUID). The Melissa virus was spread through the Outlook system found on Microsoft, and they must have caught the infiltrator using the UUID to identify him. The concept of computers is the basic use of numbers 0 and 1. Giving identification numbers to programs and software is a recourse for the companies to protect themselves against pirates. Innocent people have nothing to fear except if they have something to hide and in that case, it is not their privacy. There are issues which people should stand for but how are we defining privacy here. Giving information to the bank teller over the counter is encroachment on one's privacy as well. "In the real world there still has not been a break and no one's money has ever been stolen or a credit card number stolen using those protocols" said Micheal (Security First Network Bank, and also the creator of Five Paces software) in an interview relevant to online security with PC World Online.

In Europe, the New Privacy Directive, which was put in force last October, says that all companies operating in Europe, including American companies, must prevent misuse of Europeans' private data, including their names, addresses, health records and credit card records. This directive bars the selling of such data to countries that do not have similarly protective laws. This is a good directive to follow, however, if the information is not out there then the commerce also slows down. This is more of a consumer protection stance taken by other countries against the United States from emerging as the world market mover. The concept of the market being able to correct itself lives on. If there is a mistake made by the market, it discounts the mistake and corrects itself periodically, shedding its old skin. The Child Online Pornography Act was blocked from becoming effective by a federal judge in Philadelphia on Monday, February 1,1999. In Germany, one can refer to the trial of Felix Somm, managing director of the U.S. on line service provider's German unit until two years ago, who was charged with allowing child pornography and other illegal images to reach customers via the Internet between 1995 and 1996. This case will have little or no impact in the U.S. as the U.S. courts have cleared Internet providers of the Internet from carrying pornography as long as they did not have any editorial control over the material. If the service providers had to screen everything and be responsible as to the content of their service, then the Internet would be easily accessible and regulated. Then again, if Somm is found guilty, there would be a mass exodus of Internet service providers from Germany . The future of browsing and leaving our fingerprints are gone. The web sites we browse today enable cookies to enter our hard drive and absorb whatever information we have to offer, instant feedback, near-perfect information, and deeper insights into the habits, feelings, likes, and dislikes of us, their paranoid customers. Did this happen earlier and were we unaware of it? The transfer of information can not stop, for if it did, the Internet bubble would burst. Judge Brandeis's definition of privacy was the "right to be left alone" and not the "right to operate in secrecy".

9. Higher Bandwidth

Bandwidth cry out the seers from across the water, the regulators pay no heed as it would slow down their progress to regulate the Internet. George Gilder argues that by allowing such bandwidth the abundance thereof by allowing cable TV and phone companies to merge into a single wire conduit the most open networks will dominate and the proprietary networks will wither away ." Gilder had the Orwellian vision of a convergence which he talked about and which is still, after three years, happening today. Broadband access over cable lines provides a connection speed dozens of times faster than today's telephone modems. But consumer groups say the flip side of this is that cable companies which are not regulated as "common carriers" control not only the wires, but the programs that people see. The other problem is that every other industry cable and the telephones are regulated by different rules and therein lies the problem of convergence; it is expensive and would eventually lead to a monopoly being created by the telephone operators. The phone companies have seen the future of communications and it's in cyberspace. AT&T, Sprint, GTE, PacBell, and all the rest are spending billions to stake out their Internet territory. At present, most of the money that consumers spend to gain Internet access goes to local Internet service providers or larger national Internet companies such as AOL. The phone companies, understandably, don't like that. Hence, the movement to strike deals with Internet companies, cable companies and any other business that brings Internet access into the phone company fold. AT&T, for example, is buying cable companies Tele-Communications Inc. and MediaOne Group, a deal that will cost the phone giant some US $100 billion, but make it the largest cable TV company in the country. Through cable, AT&T hopes to be the dominant player in the high-speed Internet access market. High-speed Internet connections are particularly important to the phone companies because regular dial-up Internet service does not have the muscle to deliver video and other graphics-intense Internet content. At stake are potentially huge profits for the phone companies. And if the phone companies siphon off huge chunks of the Internet market that could mean huge loses for local ISPs and national Internet companies such as AOL.

10. Trademark Piracy Or Yellow Pages

When a surfer conducts a web search and types in a fairly common name, he/she gets a search result which displays every web page that is similar to the searched name. Take for example the word "Playboy". When entered, a banner advertisement for an explicit pornographic web site appears high above the list of pages generated by the search. But that site has nothing to do with Playboy. Is it sneaky and illegal for a search engine to display a non-Playboy advertisement to a user who enters the trademarked words "Playboy" or "Playmate"? Or is it fair play because search engines, like the Yellow Pages, naturally create the opportunity for advertising aimed at people seeking certain information? Playboy is not the only complainant of this trademark piracy. Last month, three subsidiaries of the Estée Lauder Companies Inc. filed suit in federal court in New York against Excite Inc. and The Fragrance Counter Inc., an online seller of cosmetics and fragrances. The use of one's brand name does not mean that the consumer/surfer was searching for the generic brand name and that the consumer should be allowed to do so as it is allowing a surfer to choose on a search engine what site he/she wants to visit.

11. Regulation In Other Countries

Demos (left wing think tank close to New Labour Part in England) suggests a choice scenario through the development of a national, state-owned e-commerce system that is similar in nature to the existing private CompuServe. This would be controlled by government officials and would be based on a central computer running e-shop where anyone could go online and buy things that they require. Since this would be state run, there would be some sort of control mechanism that could co-ordinate the transactions by verifying the sellers and the creditworthiness of the buyers. That brings us back to the initial issue of privacy! To even let this idea which the British would like to implement taint American soil would be preposterous, as the American people would never let it pass there privacy standards. I envisage that the advertising business is going to get cheaper as advertisers will all have web sites, but since there are not so many Internet users as of now they can still pay to advertise on TV. Once the Internet booms, advertisements on TV will be much shorter and they will direct their customers to the web. As surfers, we do not pay much attention to the advertisements but we should, because soon there will be no alternative. Ads on television will say "visit our web site @www.xxxx.com". The choice of TV vs. computer advertising will shift toward the computer as the monetary equilibrium will have to be maintained.

Taking a look at the pre-existing regulations that exist all over the world. In the U.K., most of the U.K. TV broadcasts are subject to greater regulation and much of the material on existing ITC (Independent Television Commission) licensees' web sites is subjected to the rules which apply to program support material. So what they hope for is content to comply with the general standards which apply to TV programs with regard to taste and decency . According to Eva Salmon (Deputy Secretary to the ITC), "As Internet access and use grows in the UK, and the demographics of users widens, it is increasingly likely that the public and the political perception of the need of Internet regulation will expand. If the Internet truly becomes a broadcast medium, it is inevitable that as long as there is a societal need/desire for TV regulation, it will cover the Internet as well". In the U.S the Federal Communication Commission (FCC) which regulates radio and television broadcasting refuses to touch the Internet, as Internet speech is entitled to special protection under the First Amendment. "It is in the national interest that we have a national broadband policy," FCC Chairman Bill Kennard said "The FCC has the authority to set one, and we have. We have taken a deregulatory approach, an approach that will let this nascent industry flourish." In fact, on Monday, April 19, 1999 the Supreme Court rejected an effort to have a little-known law banning annoying and indecent speech online officially declared unconstitutional. This means that webcasts in the U.S. will probably be subject to less regulation than radio and television broadcasts. Including music broadcasts on the Internet is a completely different ball game, as there are usually only two collection agencies, either the artists (authors or composers) or the recording companies or performers. Usually webcasters would require a license or copying or distribution licenses to cover mechanical, synchronisation and recording rights. The European Broadcasting Union (EBU) has proposed that there should be some distinguishing factor between these applications. The problem with the copyright laws is that, due to the digital formats, it is easy for people to download or copy. Various forms of technology are being developed to help protect copyright owners which involve some form of encryption or data embedding (digital watermarking and fingerprinting).

In Canada, the Canadian government formed the Information Highway Advisory Council (IHAC) in 1994 to study and prepare an official statement on what directions the Internet should take in Canada. In September 1995, the council released its first report, which contained only vague recommendations. On the issue of content, it concluded that there should be controls on two primary targets obscenity and racist/hate material. It is illegal to spread "hate propaganda" and "obscenity" in Canada.

In India, where commercial Internet access was launched in mid-1995, and the Internet was state-owned by the phone company, VSNL (Videsh Sanchar Nigam Ltd), has been allowed to provide international Internet services in order to maintain the government's monopoly on long-distance phone services. According to guidelines issued by the Department of Telecommunications (DoT), based on the antiquated Indian Telegraph Act of 1885, an ISP must ensure that nothing objectionable or obscene is carried on the network. These guidelines have not been enforced. In late January 1996, the DoT decided to allow commercial access, but all companies have to route their services through VSNL. In November 1998 India ended the three-year Internet monopoly of state-run Videsh Sanchar Nigam Ltd, which had only 150,000 subscribers. The government allowed an unlimited number of ISPs, but many key ingredients are still missing. India has allowed ISPs to have their own gateways to connect to the Internet, but until they build that capacity, only VSNL can provide the international links.

12. New Technology

On Monday, April19, 1999, Apple Computer introduced a new version of its Quicktime multimedia software designed to enabling computer users to receive video and audio programming over the Internet. This software is similar to the MP3. MP3 is the audio standard, a format for storing audio files, which has no built in copyright protection scheme. Microsoft has its own version known as MS Audio 4.0, and IBM & Sony announced that they would make their competing systems compatible with each other. It appears as though none of the giants want to wait for regulation to enter the market. They are willing to fight it out in the market and let the market decide who should survive. The battle over the market for Internet viewing of multimedia presentations has largely been between Microsoft and Real Networks, Microsoft which has built many of the most popular formats into its Windows Media Player, and Real Networks, maker of the Realplayer streaming software. However, today with Apple's strategy, it would probably make it a three-way race.

Conclusion

The questions that keep arising are always the same:

First, how do we control child pornography on the net and how do we keep children away from accessing it? We already have technological aids, such as, Filters, encrypted codes and cyber patrols and yet we remain unsatisfied with this issue.

Second, how can we maintain our privacy in this technological age, particularly when cookies are abundant and are set up to relay our information to outside servers or sources? Again, we can exercise control over our privacy by disabling these cookies, but there remains large numbers of people who feel that they should not have to go these lengths to protect themselves.

Third, piracy, like prostitution, is an age old vice which should be expected. However, we should come to the realisation that Internet piracy will eventually be increasingly regulated as developing industrial nations come to realise the benefits of enforcing copyright laws. While this involves factors which are perhaps beyond our immediate control, we can imagine that, in the intricacies of the Internet being regulated, we would be able to control this aspect as well. Convergence is going to take place. Whether the government likes it or not, the big boys are playing for keeps and the government needs to be a part. It is up to them to determine what role they want to play in the convergence. The good news is that, at least for the time being, the right balance between regulation and freewheeling, online commerce has been reached by default.

Existing contract law, banking regulation, and market forces already create an e-commerce environment that protects users from fraud while allowing commerce to thrive. The bad news is that lawmakers and policymakers are threatening to change course in a way that might upset the balance created by these legal and commercial forces. Over the last four years, for example, a number of domestic and international efforts have struggled with the issue of how to define the legal framework for authenticating electronic commercial transactions and the parties who conduct them. The digital signature has helped a lot in carrying out these transactions online. These include from myriad U.S. state-based digital authentication initiatives to several federal U.S. and non-U.S. efforts to regulate a still emerging, digital-signature-based commercial framework. Though there is some commonality in these efforts, existing regulative work suggests that a lack of uniformity is emerging among digital authentication techniques a potential legal monster of Babel for those who want to participate in e-commerce, particularly internationally.

Professor Lange in his paper "Cyberspace and its (Dis)Contents states that the future of an illusion "talks about the basic theory of discontentment where through his subtle but hard hitting examples he explains in his poetic fashion that being discontent and being content are just an illusion of each other when being content is just as easy as being discontent. This illusion that we nurture while trying to regulate the beast, which appears to be tame is hidden. We shall know the nature of the beast when it emerges completely from its lair. To be or not to be regulated, is what remains to be seen.