TCS Daily


High Techs Top Concerns: Over-regulation, State Of Economy

By James K. Glassman - January 22, 2001 12:00 AM

"The technology community thought we might be immune from some of these old economic forces. I think we know now that that is not necessarily the case,'' says new TechNet CEO and former Seattle-area Congressman Rick White. He tells Tech Central Station Host James Glassman that the biggest danger to the new economy, though, is if the industry's "constructive" relationship with government gets too cozy. "The industry itself does not know what is coming down the pipe. And the government certainly does not know what's coming down the pipe either." Education and privacy top are top legislative issues.

Jim Glassman: You've just taken over as CEO of TechNet, the network of high-tech executives that lobbies and educates Congress on common public policy concerns affecting the Internet. Last year, your organization successfully sought approval for a permanent trade status with China, more visas for high tech workers and the rescission of federal accounting rules that were deemed adverse to high tech industry. What are your key concerns in this Congress?

Rick White: Well, you know, we had our executive committee meeting just last week to talk about those and we kind of decided two or three things. Number one, education is definitely going to be at the top of our list. The time is right for that. The administration is focused on it, and Congress is, too. So, that's definitely something that we're going to try to focus on. Privacy is an issue that is going to be on top of everyone's mind, and we want to be involved in that. We want to make sure that these accounting issues that you mentioned are finalized. Those are our three priorities.

Glassman: Are you satisfied that the immigration issue has been taken cared of?

White: No, in fact, I don't think it has been taken care of. And I frankly think that we are still in the situation where we're going to have to deal with those issues on a regular basis, maybe not every year. But we haven't solved the problem. That's really one of reason we're focusing on education, because right now you don't have the level of math and science literacy in the U.S. population that you should have to able support the things that technology companies do. That's one reason why we ended up having to have so many H1B visas issued, so that people can come in and do those jobs.

Glassman: You mentioned privacy, which is a major concern at Tech Central Station. As the founder of the Congressional Internet Caucus, you advocated a hands-off policy for the Internet, but it seems there is more and more political interference. The Federal Trade Commission has even tried to promulgate some privacy rules recently. Do you think that the federal government has any role to play in policing privacy in the Internet?

White: Well, let me say a couple of things about that. Number one, there definitely has been an evolution in the last couple of years in the technology community about whether or not there should be legislation in this area. There could be lots of different kinds of legislation. I don't think they've reached the point of deciding there should be legislation. But two or three years ago, people were pretty adamant that there shouldn't be any role. Now, at least there is a difference of opinion. They are starting to have a little bit of debate about it, and there are some people who'd tell you that it is inevitable. TechNet knows it's going to be important, although we haven't really taken a position. It's one of the things that we're going to do in the next month or so is, talk with some people, see what the administration thinks about this, see what people in Congress really think about it, and then come up with a consensus in the industry on what we ought to be doing. But I think in general our members would agree that the less federal government involvement in business issues, certainly in freedom of speech issues, the better. There has definitely been some different thinking here than it was a few years ago.

Glassman: Did TechNet take a position last fall when Congress ordered schools to have filters against pornographic materials?

White: I don't think it did. Although I was not here at the time, but TechNet's mandate basically is to pick two or three things that we can really focus on and focus on those to the exclusion of everything else. So I don't think we were involved in that last year.

Glassman: I'm going to ask you about some issues that probably TechNet has not taken on a position, but I'd like to know your position or some of the people that you are working with. As a Seattle technophile, what do you think the Bush administration ought to do in regard to antitrust in high tech areas, for example, the Microsoft case. Do you think that it should be dropped at this point?

White: Well, one thing they definitely should do, and I think that most technology people would agree with this, is take a hard look at the whole way antitrust relates to technology so it is not applying outmoded standards to it. I represented Microsoft when I was in Congress, and obviously I was not a big fan of the antitrust suit. I know that Microsoft people are not, and I am sure they are hoping for a whole change in direction. But I know that there are other people at TechNet, of course, who have a very different opinion. I think everybody, though, would agree that you're going down a very dangerous path if you just apply the standards that relate to the old technologies to new technologies. They have to do that every 20 years in the antitrust law. You saw it when you looked at railroads, and you looked at banking, and you looked at the airline industry. They are now looking at the Internet technology, and we want to make sure that you have standards that make sense -- that you take those old principles that were enacted more than a hundred years ago and figure out how they apply in today's world. I am sure the Bush administration will do that. The Microsoft case is already pretty far down the pipe, so I don't know whether the new administration is really in a position to just drop it. I am sure Microsoft hopes it will, but I think it is still too early to say that that will happen.

Glassman: I just read it in the Wall Street Journal that the FCC approved the AOL-Time Warner merger as long as AOL opens up its instant messaging system. There is concern among a lot of tech people that the FCC and the FTC are going into the business of exacting tributes from companies that want to merge. Is that growing intervention by regulatory bodies in the Internet of concern to you?

White: Absolutely. In terms of intervention with respect to the Internet, I certainly believe that the less government, less regulation, the better. And I think probably most people in the technology community would agree. They'd like to see the government stick to its basic principles when they are approving mergers. It's one thing to review a merger for antitrust reasons or anti-competitive problems. But you probably don't want the agencies coming up with other things that really aren't related to their primary mission as a condition for mergers to happen. TechNet does not have a position on that, but I think most people in the industry, which is one where you see quite a bit of merger activity probably would like to see government review focused on the things that government's really there to focus, and not other areas.

Glassman: Isn't it a problem for an organization like yours? You and I believe, and probably your members believe that government intervention is in principle not a good thing. Yet there are many interventions that benefit individual companies. For example, the idea of opening up instant messaging, I am sure, will be beneficial to a lot of high-tech companies. Does not that create a problem?

White: Both parties think highly of our industry and want to help us out. And if we take this opportunity out to do some things that the whole technology industry agrees on, and that everybody agrees makes our country better able to continue this technological progress that we have, then it's a real win for our industry and for the country as a whole. That's what we ought to be doing. If instead we decide that we're going to fight among ourselves and each company is going to try to get a leg up on its competitors by fighting in the public policy arena, then I think we will have wasted this wonderful opportunity and will become just a lobbying organization like everybody else has. Everybody is trying to tilt the playing field in his or her advantage. So, I think, the fact that we have a really broad based group at TechNet with differing views on something helps us focus on the things that we agree on. And that's really what we should be doing, at least for the time being while we get this window of opportunity.

Glassman: I am surprised that the issue of Internet taxes, especially sales taxes, is not a bigger issue for TechNet.

White: You know, I've been a little surprised myself and I haven't delved into the details of this. I know there is unanimity among our members on this, and I don't even know which members are opposed to extending the moratorium, or if there are any even opposed. I just know that there is more than one opinion on it, and so I probably need to go to the bottom of it so that I can understand that a little better.

Glassman: You actually helped to craft the moratorium. As one of the crafters of that legislation, are you worried about how this extension has been slowed down, and does it appear that the forces on the other side have really finally gotten their act together and could this end moratorium?

White: Well, I think we always knew that there was a little bit of urgency to this whole situation. When we started talking about the tax moratorium, and I was the second co-sponsor in the House to the tax moratorium bill, we were talking about a six-year moratorium that would not expire unless there were additional steps that Congress or the president took. And it ends up getting pared down a little bit, and a commission was appointed. So, there was recognition pretty early on that the states and the local governments have some concerns here, and they are a very powerful force on Capitol Hill. Once they decided that this was going to be a problem for them, they were very effective. One of the things that came out in some of the commission discussions is that the evidence is pretty mix on what kind of effect e-commerce has on brick-and-mortar commerce and on tax revenues. In fact, the evidence seems to be that it is all going up. So, it didn't really point to any problems being created. What you've got now may be a little bit of uncertainty and some regrouping. I really don't know what's going to happen to the moratorium. The administration is probably inclined to extend it. But I haven't really talked to people in Congress, so I don't really know exactly what kind of reaction people up there would have on it.

Glassman: What do you see as the biggest threat to the New Economy?

White: The biggest threat to the new economy? There are several of them. One thing might be if we for some reason decided that we need much more of the government's attention. One of the things that the technology industry has done well over the past few years is to evolve to a point where people in the industry are willing to engage with government, talk with the government a little bit, not just try to hope that the government will ignore them and go away. Technology is too important now; it's too big a part of the economy for that to happen. So there is really a good "constructive" engagement going on between the government and the technology industry. It would be a shame, I think, if we passed too much in the way of regulation, or legislation. One of the great things about this industry is that you can never predict where it's going to go next. And the industry itself does not know what is coming down the pipe. And the government certainly does not know what's coming down the pipe either. So, I think it will be a shame if we went a little bit too far in our desire to start dealing with the government.

Glassman: What else?

White: I guess the other thing that is a potential challenge is just the state of the economy. You know, for a while we, the technology community, thought we might be immune from some of these old economic forces. I think we know now that that is not necessarily the case, and I think that a lot of people whose stock has really has taken a big fall understand that. So I want to be sure we have the right policies in place so that our part of the economy and other parts can continue to succeed. And we probably need to do a little bit more thinking about that than we have done in the past.

Glassman: Let me just ask you about that. Is there something that you think that government can do specifically now to get the economy going again, especially helping new economy again? Is there anything positive, such as a tax cut?

White: Well, I think there are some things the government can do to take some obstacles away. And I actually have some views about the economy in general. But from a TechNet standpoint, things like the R&D tax credit, which is still not permanent. That's an area where you could make a change that would have an impact on technology and biotechnology. That's probably a change that is overdue and that people should be focusing on.

Glassman: But it appears that there will be a pretty strong movement to cut taxes. Even Congressman Gephardt seems to be in favor of that. Do you think TechNet is going get involved?

White: I don't think we're going to take a position on taxes in general. I really don't know what our members are thinking, but I am sure they pretty much span the political spectrum in terms of their view on that subject. But I do think we would look at other problems in the tax code that are obstacles to success for high-tech companies - areas of the tax code that will help our industry succeed. If so, makes sense to let the government know about that.

Glassman: Last question. Let me ask you this as a former Republican Congressman, not as a TechNet person. One thing that has always puzzled me is why Silicon Valley and tech executives in general have not embraced the Republican Party. It's really pretty much split, kind of 50-50, even though it would appear the Republicans, on the issues that seem to count the most, are much much more in sync with tech people. Why is it?

White: You know I think the answer is the one that Bill Gates gave. Bill Gates would not necessarily speak for everybody in Silicon Valley on everything, but on this issue he was very representative. I had a dinner with him and Newt Gingrich around 1995, during my time in Congress, and just five or six of us were in the room over in the Speaker's office. And Newt asked Bill exactly that question. He said, "Look, you're the premier entrepreneur, you're certainly one of them, and we're the party of entrepreneurial values. Why aren't you guys Republicans?" And I think the response that Gates gave is essentially, "We do agree with you guys on business issues and on economic issues and on some of the things that relate to our business. But I think there is some hesitation on social issues in the technology community."

Glassman: I see.

White: And I think that's probably about the way it breaks down. They, Republicans, tend to be a very entrepreneur-oriented policy. I think the technology industry is going to respond to that very well. But there are some other things that kind of hold them back on the social side, and that makes the difference.

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