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You may suppose that California — the home of Silicon Valley — is the best state for citizens to engage in e-commerce activities. Not! According to a study this month by the Progressive Policy Institute (PPI) entitled “The Best States for E-Commerce,” California actually ranks toward the bottom of the list of Internet-friendly states, whereas somewhat unlikely states such as Indiana, Louisiana, Iowa and Alaska rank toward the top. The stated goal of the PPI study is to “encourage states to examine carefully their laws, particularly those designed to protect incumbent brick-and-mortar companies against e-commerce competitors, with an eye toward giving their citizens more choices and options as Internet users.” METHODOLOGY In coming up with its rankings, PPI assessed states in each of 11 categories to determine the ease of conducting certain types of transactions over the Internet by consumers. The study was not designed to address best states for companies to locate their e-commerce businesses. The categories surveyed by the study included: contact lenses, prescription drugs, tele-medicine, mortgages, insurance, automobiles, wine, auctions, Internet access taxes, digital government and enactment of the Uniform Electronic Transactions Act (UETA). THE RANKINGS The overall rankings are somewhat surprising, as states such as California, home of Silicon Valley, and New York, home of Silicon Alley, are almost at the bottom of the list. In order from top to bottom, the overall rankings of the states are as follows: TOP TEN � Oregon, Utah, Indiana, Louisiana, Iowa, Alaska, Hawaii, Idaho, Michigan and Colorado SECOND TEN � Kentucky, Kansas, Maryland, Wyoming, Washington, Pennsylvania, District of Columbia, Massachusetts, Oklahoma and Maine THIRD TEN � Nevada, Mississippi, Connecticut, Minnesota, Missouri, Virginia, Arkansas, Rhode Island, West Virginia and New Jersey FOURTH TEN � Texas, Nebraska, Vermont, Montana, North Dakota, Wisconsin, Arizona, South Dakota, Florida, and Georgia BOTTOM ELEVEN � Illinois, New Hampshire, Tennessee, New York, Delaware, Ohio, North Carolina, California, Alabama, New Mexico and South Carolina WHAT DOES THIS MEAN? PPI is quite right when it says that “state governments can make a big difference in how easy it is for their citizens to fully take advantage of the Internet to buy things, engage in legally binding transactions, and interact with government.” Along with its goal of highlighting ways that states may encourage e-commerce, PPI adds that states can further facilitate the process by: � avoiding protectionist regulation � promoting uniformity in licensing requirements across state borders � using information technologies to create digital government � adopting UETA to enable the use of digital signatures � eliminating taxes on Internet access END GAME Ideas such as these certainly are worthy of healthy debate and consideration. Of course, states can only do so much, as the sweep of the Internet crosses all geographic boundaries and thus truly requires national and international policies and laws. But whatever states can do to promote e-commerce likely will benefit their citizens and their economies. Despite the recent dot.com meltdown, the “Internet revolution” may be only in its infancy. Indeed, PPI states that according to Census Bureau reports, e-commerce retail sales were up 13 percent from the fourth quarter of 2000 to the fourth quarter of 2001, with e-commerce sales increasing 2.5 times quicker than all retail sales. PPI also states that e-commerce sales may reach $3.2 trillion dollars by 2004. Fasten your seatbelts … Eric J. Sinrod is a partner in the San Francisco office of Duane Morris, where he focuses on technology and litigation matters. His Web site is sinrodlaw.com and his firm’s site is Duane Morris.Mr. Sinrod may be reached by e-mail at [email protected]

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