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It was certainly one of the ironies of this year’s history-making elections. Over the next four years, Washington lawmakers and regulators will debate, shape, and decide the role of the federal government in the Internet economy. Yet national candidates for the most part paid little attention to a set of key high-tech issues — particularly Internet privacy, piracy, databases, Internet taxes, immigration limits on skilled laborers, and export controls on advanced technology policy conversation — that promise to continue to dominate policy regardless of who occupies the White House. And it seemed clear last week that the outcome of the Nov. 7 elections may well serve high-tech industry well. Although the Republicans have retained control of the House of Representatives and the Senate, their margin in each chamber slipped. And if a narrowly divided Congress — plus a possibly ambiguous mandate for the president — produces moderate legislation or stymies policy making altogether, that would be good news to high-tech executives and their lobbyists. Gridlock means that legislation to increase government oversight of the largely unregulated Internet has less of a chance of becoming law. That doesn’t mean, however, that high-tech issues won’t see the light of day in the 107th Congress. To the contrary, many industry-watchers are forecasting that an unprecedented number of Internet-related bills will be introduced in the next year — they just won’t get passed. A lot of talk and not a lot of action translate into a lot of work for lobbyists, who in recent years have helped to keep high-tech issues from breaking along party lines. That isn’t expected to change. Both Republicans and Democrats have kept a hands-off approach to the Internet, for fear that any tinkering could slow the economy’s No. 1 growth engine. Not everyone agrees that an evenly split Congress will have the effect of taking high-tech issues off the table. Robert Atkinson, director of the Progressive Policy Institute, says legislators’ fear of taking on high-tech issues may be subsiding. “Each year that goes by, you see an erosion of that attitude.” As lawmakers become more comfortable with technology issues, and as more intra-industry battles come to the surface, the likelihood of legislation at least being proposed will increase, according to Atkinson. “High-tech is at risk, frankly, of being seen as one more typical Washington interest group,” he says. “If they fall over that line, they’ll see their influence erode.” But Ed Black, president of the Computer & Communications Industry Association, doesn’t see high-tech losing any of its pull in Congress. “The high-tech industry, by supporting Democrats as well as Republicans, has made bipartisanship possible,” says Black. “As long as we ask for reasonable things and don’t get too greedy, I think we are going to be all right.” Still, not all high-tech issues are alike, and some will be entering the next session of Congress with more foes than ever before. Privacy: At the top of the list of New Economy issues likely to be the subject of legislation in the coming year is Internet privacy. Although Internet interest groups were able to stave off new legislation by pledging to do a better job at self-policing, the Senate hearings held last summer following the Federal Trade Commission’s call for increased government regulation brought unprecedented pressure and attention to the industry. The public’s percolating interest could overcome Congress’ predisposition to let the industry come up with its own solutions. John Bentivoglio, a former chief privacy officer in the Justice Department who is now a partner at Arnold & Porter, says Internet privacy was raised in at least three congressional races in Montana, Washington, and Maryland. “It’s not a top-tier issue like Social Security and Medicare, but it’s at the top of the second tier,” says Bentivoglio. As a result, he adds, “The election has probably deepened the bipartisan support for some sort of privacy legislation.” Piracy: Mark Plotkin, head of the e-commerce group at D.C.’s Covington & Burling, anticipates that Congress will take on the issue of Internet piracy in the next session. “Already there is a lot of negotiation going on behind the scenes in Congress to reopen certain aspects of the Digital Millennium Copyright Act, to look at fair-use provisions and first-sale provisions,” Plotkin says. Yet many lobbyists, taking into account the politically split Congress, aren’t expecting any significant movement on piracy until the courts resolve the case against Napster Inc., the music-sharing Internet portal. “The nature of the legislation will likely depend on the outcome of the case,” says Plotkin. He notes that Senate Judiciary Chairman Orrin Hatch (R-Utah) has hinted that he might favor a bill that would impose mandatory licensing on the recording industry if it and Napster cannot agree to a settlement. But the recording industry and other content-producers aren’t waiting for an unpredictable court decision. These groups have started prodding legislators to propose laws that more clearly address rules governing the use of copyrighted information over the Internet. At the same time, some Internet companies are quietly circulating legislative proposals that would provide immunity for certain activities, according to Plotkin. With this much activity centered on piracy, it’s probable that Congress will address the issue. But it remains to be seen whether Democrat and Republican legislators can be cajoled into a lawmaking – and cooperative – state of mind. Databases: In the 106th Congress, the publishers of off-line databases lobbied hard, appealing to Rep. Howard Coble (R-N.C.), chairman of the House Judiciary Subcommittee on Courts and Intellectual Property, to sponsor legislation that would protect database information from being republished on the Web. The Internet community countered with its own lobbying efforts. House Commerce Committee Chairman Thomas Bliley (R-Va.) and others on Commerce introduced a competing bill that aims to protect databases without restricting the flow of information. The result was a turf battle between the two committees, which only divided companies and their lobbyists further. But House term limits on committee chiefs will force Bliley and Judiciary Chairman Henry Hyde (R-Ill.) to the sidelines, giving some advocates reasons to believe joint legislation may now be possible. “We’re hoping that we can focus on the substance and get beyond the jurisdictional squabble that has held legislation up,” says Keith Kupfershmid, intellectual property counsel for the Software and Information Industry Association, which supports Coble’s bill. Work Visas: While high-tech industry got the cap on H-1B visas increased from 115,000 to 195,000 a year, the extension expires in three years, when the cap automatically goes back to 65,000. High-tech lobbyists expect to have to fight the battle again around since they’ve lost one of their biggest supporters, Sen. Spencer Abraham (R-Mich.), who co-sponsored the H-1B visa legislation with Hatch of Utah. Allen Erenbaum, an attorney with Mayer, Brown & Platt and former director of the Immigration and Naturalization Service’s Office of Congressional Relations, says that Abraham’s defeat “creates a void in the Senate which will not be clearly or easily filled.” Some observers say it’s a long shot that Congress will lift the cap again. “Politically if they ask for more, it’ll look ridiculous. It’ll look like they are being greedy,” says the Progressive Policy Institute’s Atkinson. Export Controls: Advocates for reduced export controls on computer and other encrypted technology products also won a brief victory this year. Congress passed a bill reducing the number of pre-notification days that the administration must give legislators before changing rules that limit the transfer of some advanced forms of technology. But what the industry really wants — a rewriting of the Export Administration Law, which it claims has been out of date since the end of the Cold War — remains out of reach. The congressional elections didn’t bring industry any closer to reaching that goal anytime soon. The Computer & Communications Industry Association’s Black says that his group’s chances of reforming the export control laws were significantly impaired by the defeat of Rep. Sam Gejdenson (D-Conn.), the ranking minority member on the House’s Foreign Affairs Committee. “When you lose a champion who not only sides with your issues, but knows them and can articulate them, it’s a blow,” says Black. Internet Taxes: Neither Democrats nor Republicans have wanted to touch the question of Internet taxation Internet retailers have convinced lawmakers that imposing taxes on goods sold over the Internet would stifle the growth of the new industry. But mounting opposition is coming from brick-and-mortar retailers, who during the past year have become more motivated and organized, as well as from state lawmakers, who are increasingly worried about losing revenue from sales taxes. But the future interests of Old Economy retailers could change. As more and more traditional merchants launch their own online shops, their interest in pressing for Internet taxation may diminish. Here, a divided Congress just muddies the water further, making an attempt at predicting what’s to come a pretty futile exercise. There’s sure to be a lot of talk about the issue, but probably no action.

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