IBA Net Bytes Archive

BUSH: GORE IS AN ANALOG GUY
FRASER, Michigan -- Deriding Democrat Al Gore for "analog thinking in a digital age," Republican George W. Bush on Thursday cast himself as a better steward of the new economy who would protect the Internet from "the heavy hand of government." "It was an amazing achievement, unrivaled in the annals of technology until 1986, when one senator from Tennessee, alone in his office, invented the Internet," Bush said. "This is analog thinking in a digital age, 28K thinking in a broadband era, an eight-track ideology in an MP3 world," Bush added.

BUSH, GORE SEE NEW ECONOMY AS BEST FRIEND
The Al Gore and George W. Bush campaigns have released lists of hundreds of high-tech executives who believe their candidate is best to lead in the new economy. An equal number of drivers behind each presidential hopeful signifies how influential the high-tech sector has become in electoral politics. The Bush-Dick Cheney 2000 campaign said Tuesday that its list of Internet, telecommunications, and technology business leaders endorsing the Republican ticket has grown to more that 440. That matches the list of some 440 tech executives the Vice President Gore-Sen. Joseph Lieberman campaign released earlier in the day.

INTERNATIONAL ECONOMISTS LAG BEHIND IBA PRESIDENT ROBERT SMITH
POSTED 7/27/00
Economists from the World Bank, Harvard, and the London School of Economics may disagree on the issues of e-money and its effect on traditional banking, but one thing they all have in common is is their tardiness in addressing the challenges of digital financial transactions. (See The Economist, 7/22/00) Customary custodial procedures and base money so dear to central banks, such as currency, deposits, accounting, credit, mutual funds will surely take on new forms as e-money and smart cards spread. IBA President Robert Smith addressed these issues in 1995 at the first international Internet Law Symposium in Seattle and following years for various IBA events. No doubt about it: IBA is a good Internet business resource with forward thinkers.

OLD ECONOMY CHIEF PROVIDES LESSONS FOR NEW ECONOMY MODELS
POSTED 6/26/00
Eaton Corp. chairman Stephen R. Hardis with winning experience in his industrial manufacturing company offered
some realistic lessons for hotshots of New Economy startups (as reported in the 6/22/00 Wall Street Journal): 1) Old and New need technology for survival and money; 2) Great ideas fuel all kinds of companies and profits matter; 3) Survivors in the New Economy will do traditional things well; 4) Presently the stock market will not give the Old its true sense of worth; 5) Old-line firms need to attract top talent when the weather is favorable.

e-MARKETPLACES ARE NEW e-COMMERCE TREND
Posted 4/17/00
New creations in the EC sphere may resemble the old electronic data interchange (EDI), but the developers of e-malls or e-marketplaces look to the Net's ubiquity to pull together multiple buyers and sellers into one virtual place. Access is easily found through the Web browser with promises of decreased transaction costs. Forrester Research Inc polled buyers and sellers last month finding more than two-thirds of them plan to use e-marketplaces within two years. It is possible that in disrupting decades-old relationships and ways of doing business, that the e-marketplaces may even reduce the advantages of scale and technological prowess that have helped the world's largest companies. Among the cynics refusing to marvel at the e-mall trend is Mark L. Walsh, CEO of the online trading community VerticalNet. He views this pooling effort as " EDI in drag."

COMMISSION ISSUES ANOTHER NET TAX REPRIEVE
Posted 3/20//00
A majority of the 19-member Congressional Advisory Commission on Electronic Commerce endorsed a proposal
that would extend by five years a moratorium on new Internet taxes. In addition to extending the moratorium until October 2006, the panel decided that Congress Should permanently ban taxes on access to the Internet an
repeal a century-old telephone tax in a decision issued March 20.

The final vote on the business section proposal was 11 in favor, one against, and seven abstentions. Among those abstaining were 3 panel members appointed by the Clinton administration.

House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Trent Lott, R-Miss, have said Congress would
take a look at whatever the majority produces as long as it doesn't suggest tax increases.

In establishing the Advisory Commission last year, Congress set April 21, 2000, as the deadline for the final Commission report which could reflect several differing proposals

BUSINESS-TO-BUSINESS AIMS FOR PRODUCTIVITY GAINS
Posted 2/16/00
The big promise of e-Commerce is in the business-to-business(B2B) realm where the back and front operations are automated for such processes of supplier integration and order fulfillment. Even the giant corporations are still seeking the seamless software/systems integration for that bottom line of productivity gain. Consider General Motors Corp, which spends in the neighborhood of $85 billion a year with its nearly 32,000 global suppliers and must integrate existing electronic interfaces with these suppliers. Last December GM launched a B2B auction on the WWW called TradeXchange as a network of suppliers, designed to cut its supply and purchasing costs. What GM is aiming for is reducing the costs of purchase order processing from an average of $100 to $10. The success of e-Commerce will be calculated when both the big guy and little guy achieve that kind of productivity gain.

OSHA FLIP-FLOPS ON CERTAIN HOME TELECOMMUTER REGULATIONS
Posted 1/17/00
After proposing regulation and restrictions for home workers, the US Occupational Safety and Health Administration (OSHA)has exempted companies from any health or safety violations for work by certain employees who telecommute from their home offices. However, employers are not exempt from liability for hazardous manufacturing work that employees perform in their homes, including manufacturing of electronic components.

Y2K HYPE DEMONSTRATES WEAKNESS OF SOUND-BITE NEWS
Posted 1/4/00
Author and Manhattan Institute fellow Peter Huber (Wall Street Journal 1/4/00) calls the Y2K overplay the “anchorman law of technological catastrophe: If Peter Jennings can see it coming, then it isn’t.” Huber finds fault not only with anchormen, but also with the ordinary folk who similarly in the office or at the party “make short, sonorous pronouncements on technical subjects we little understand.” At least he says the Y2K fear-mongers may be credited with promulgating a story “specific enough to be proved wrong.”

DIGITAL SIGNATURE BILL REFLECTS HOUSE HIGH TECH BI-PARTISANSHIP
Posted 1/4/00
In the waning days of the 1999 session the US House GOP leadership relied on the votes from New Democrats who rebuffed their party House leaders and the White House to pass a law to make contracts sealed with digital signatures binding. Although the high-tech industry had initially lost the first vote days earlier, generally technology executives and representatives are gaining respect and attention from members of Congress.

US GOVERNORS FAVOR "VOLUNTEER" INTERNET SALES TAX COLLECTION
Posted 12/16/ 99
State governors in the US through Utah Governor Mike Leavitt on the Congressional Advisory Commission on Electronic Commerce recommended at the third meeting of the commission that concluded last Friday to encourage Internet businesses to "volunteer" to collect sales taxes from all Internet shoppers on behalf of all 50 states. Only Virginia Governor James Gilmore, commission chair, has maintained a strong anti- iTax position. Thus far, the US Chamber of Commerce is opposing the volunteer iTax collection plan while the National Federation of Independent Business has expressed no position. The 50,000 member Small Business Survival Committee testified against the Governors iTax proposal. A Wall Street Journal editorial ("Governors' Internet Grab"-12/20/99) in anticipation of the final commission meeting in April states that "Fortunately, the bulk of the Presidential primaries fall between now and the fourth meeting . . . giving the candidates a chance to show up the wayward Governors."

TAXATION CULTURES CLASH OVER INTERNET SALES
Posted 12/15/99
During the first of a two-day San Francisco meeting of the Congressional Advisory Commission on Electronic Commerce two taxation cultures clashed in debate. A representative from the European Commission indicated that the European Union member countries have little hesitancy to levy taxes on Internet sales. Michel Aujean, the EU tax policy director, further suggested that Europe is willing to require US Internet suppliers to register in the EU, or at least hire a European representative. The idea that "they're going to create tax agents in Europe boggles the mind" responded Fred Smith, head of the US based Competitive Enterprise Institute. Smith earlier in the day emphasized his group's position that the "taxer" (governments) must be responsive to the taxed (voters). In other words, governments should not tax other people.

LARGEST MUSIC COMPANY NEARING TEST TO SELL NET DOWNLOADS
Posted 12/7/99
Universal Music Group will start selling music in the spring of 2000 through digital downloading on the Net. The world's biggest music company is a division of Seagram Co., whose CEO Edgar Bronfman Jr announced at a media-investment conference in New York that Universal will begin testing the Internet music download in 10 days with technology known as "Nigel," also used by BMG Entertainment (Bertelsmann AD of Germany), Matshushita Electric Industrial of Japan, and AT&T Corp.

BROOKINGS INSTITUTE WRITER SEES MERIT IN NET COMMERCE TAX PLANS
Posted 12/3/99
Writing in the Washington Post (12/3/99), Henry J Aaron of the Brookings Institute finds merit in the proposal by Govs. Michael Leavitt of Utah and Don Sundquist of Tennessee who propose a use-tax with zip-code tracking of Internet purchases. Aaron maintains, "The same technology that makes Internet sales possible also enables taxation of those sales. . . It would be straightforward to write software identifying the tax rate applicable to each type of good or service in each Zip code. Internet and mail-order companies could be required to use the services of newly created firms licensed by the states to administer such software and to distribute revenues among the states." Leavitt and Sundquist serve on the Congressional Advisory Commission on eCommerce have proposed a similar plan on a trial basis. Commission chairman, Gov. James Gilmore of Virginia, supports an Internet commerce tax ban.
GOP SUPPORT ADMINISTRATION WTO POLICY OF FREE TRADE e-TRADE
California Rep. David Dreier on behalf of his Republican colleagues in the response to the weekly radio report by the President, expressed support for Clinton administration efforts to "make free trade in ’e-commerce’ a top priority for new trade talks. America wins when government officials, from Buenos Aires to Beijing, don’t use taxes and regulation to block business over the Internet.” Dreier maintained that, "America must promote its technological leadership at the WTO meetings, and prevent countries or groups from blocking the future of business." (Posted 11/19//99)

DRUCKER TURNS 90
The speed of start-up opportunities, lower costs for employing the Internet, and constant challenges from new competition are shifting company focus from the build-then sell model, to one where the customers call the shots. This latter approach is Peter Drucker business insight moving at Internet speed. A Drucker entrepreneur would ask: What is our business? Who is the customer? What does the customer value? Mr. Drucker who reached his 90th birthday November 19, 1999, must take no small pleasure from observing his management basics playing well over the Ether and through the Web. ((Posted 11/19//99)

CLINTON SAYS END DIGITAL DIVIDE
President Clinton called Sunday for developed nations to ensure their citizens have access to the Internet "as complete as telephone access," saying that would dramatically reduce the income gap between rich and poor. At a gathering of world leaders who adhere to "third way" politics, Clinton said one of the greatest domestic problems facing developed countries is the "digital divide" that gives those who have computers an enormous advantage over those who do not." It has to be closed," Clinton said. "I think we should shoot for a goal within the developed countries of having Internet access as complete as telephone access within a fixed number of years. It will do as much as anything else to reduce income inequality." (Posted 11/18/99)

US HOUSE URGES WTO TO EXTEND NET TAX MORATORIUM
With a vote of 423 to 1 the US House approved a resolution on October 27calling upon the World Trade Organization (WTO) to extend the current one-year moratorium on Internet taxes. WTO will hold its annual world-wide meeting at the end of November in Seattle. Sponsored by GOP Rep. Chris Cox of California, the Global Information Tax Freedom Act has received a favorable nod from the White House. This resolution also urges the Organization for Economic Cooperation and Development (OECD) to back the moratorium while it criticizes the United Nations proposal to tax digitally transmitted information. The lone representative to oppose the resolution was Hawaii Democrat Neil Abercrombie. (Posted 11/20/99)

INTERNET COMMISSION CHAIR PROPOSES CONTROVERSIAL EC TAX PLAN
The chair of the US Congressional Advisory Commission on Electronic Commerce, Gov. James Gilmore of Virginia, has proposed a plan sure to create controversy: a ban of any taxes on Internet commerce with federal money for compensating states and cities for lost tax revenues. Congress has requested this 19-member commission issue its recommendations by April 2000. Gilmore claims that the guiding principal of his own proposal is that electronic commerce "must not be thwarted by taxation." In addition to banning taxes on Internet sales and services, his proposal would impose a new 1% tax on local and long-distance service for compensating states for lost revenue, phase out the local and long-distance telephone excise tax (originally established to finance the Spanish-American War), oppose international sales taxes and tariffs on US Internet commerce, encourage states to simplify tax codes, allow states to use federal welfare dollars to finance Internet access and computers for poor families. December 14 and 15 the commission gathers for its next full meeting in San Francisco.

STATE TAX REVENUE LOSSES FROM ELECTRONIC COMMERCE OVERSTATED
While growth in electronic Commerce has exceeded most forecasts, estimates on the potential tax revenue losses appear to be greatly exaggerated. Tax loss figures for the next 2-3 year period range from $20billion to $45 billion. a more realistic figure may be a tax loss of $2 billion. The higher estimates are grossly overstated because these calculations fail to separate the business-to-business (B2B) component of eCommerce. Stephen Kroes of the "Cal-Tax Commentary" claims the overstatements could be based on figures inflated as much as 800 percent! As Kroes explains, "Business-to-business commerce is a huge and growing component of electronic commerce, but it does not generate significant sales tax losses, mostly because those sales are usually not retail sales."

US OFFICIALS PUSH TO SUSTAIN NET COMMERCE TAX BAN

House of Representatives Policy Chairman Christopher Cox (R-Calif.), Sen. Ron Wyden, (D-Ore.) and Sen. Patrick Leahy (D-Vt.) this week said they would call on the US trade officials and the World Trade Organization to support the global Net tax moratorium. In their proposed legislation these lawmakers will promote US actions to nix what is known at bit taxes placed on the Net by other countries. While there has been a one-year WTO tax ban on Internet transactions, European countries have voiced desire to place value-added taxes on merchandise with Pakistan and Egypt open to this idea. Cox claims that those who support a permanent global Internet tax ban have been discouraged by a lack of active support by U.S. President Bill Clinton.

WEB PURISTS ALARMED BY BIG-WIG CONTROL EFFORTS

While 29 of the world's most powerful technology and media executives gathered in Paris, September 13, for a meeting aimed at taming the Internet, several Net purists warn that power and money that may destroy basic Net charm -- that of disorganization. Among the power players are IBM, Fujitsu, AOL. Time Warner, Bertelsmann AG, and Nokia. Stephanie Gruner (Wall Street Journal, September 13) quotes Internet elder and U of Pennsylvania telecommunications professor David Farber : "The danger is that there's an overwhelming desire among corporations to turn [the Net] into something they understand and defeat all the marvelous potential of it. . .The Internet offers some unique opportunities to really change the economic base of the world. But most of them don't want change. They're comfortable."

Electronic Catalogs Trend in Electronic Procurement System

A Message from Robert E. Smith, IBA President
The fad of companies to develop electronic catalogs (e-catalogs) systems is driven the novelty of electronic commerce but for businesses much more is needed and this is defined at an electronic procurement (e-procurement) system. The electronic catalog is just a start, but beware. Visa reports that only 2% of its transaction are Internet based and they are 50% of disputed claims. The main issues for both e-catalogs and procurement systems are how the transactions are captured. Digital signatures and certificates do NOT solve the problems. To learn the details on these increasingly important issues, do join us at the Internet Business Alliance. There are new web-based requirements for electronic commerce not covered in e-commerce standards.

ROBERT METCALFE: "Good-bye malls . . . Welcome Back Main Street"

Ethernet creator and technology prognosticator, Bob Metcalfe ("From the Either," INFOWORLD, September 6, 1999) anticipates within the next 30 years "Internet shopping will grow so important that homes will be built with large drops boxes out front so that packages of atoms can be delivered without disturbing us. Packages of bits will in increasing numbers bypass the drop boxes and come into our homes directly over the Internet. Good-bye malls. Good-bye WalMart. Welcome back Main Street, as a place to socialize."

MBA PROGRAMS CHANGE AS STUDENTS BYPASS MORE TRADITIONAL FARE

Could there be IPO envy infecting the business schools? MBA candidates in great numbers, not only in Silicon Valley but across the country, are choosing such courses as "Principles of Internet Marketing" and "Consumer Behavior in Online Environments" reports Michelle V. Rafter in the September 13 issues of The Industry Standard. Rafter claims that "students are filling up courses faster than descriptions can be posted online."

READY FOR E-BUSINESS INSURANCE?

Net security may take the form of e-business insurance to protect companies from damages causes by hackers, viruses, "spammers," and other dangers that could place businesses in jeopardy and liability. Pre-set amounts are also available to cover intellectual property stored on a company network. Giant March & McLennan claims to offer the highest available e-business coverage with a limit of $200 million.

INTERNET AGE ECONOMY NOW OFFICIAL IN USA!

US Department of Commerce has changed its industry classification system to include computers, electronics, as well as jobs related to these areas because in an "information-based economy, the quality of information determines the quality of policy." Among the latest DoC statistics for 1997: US consumers bought more computers that automobiles and sent more e-mail that snail mail.

WHAT'S NEXT IN WEB ADVERTISING?

Bill Bass, senior analyst for Forrester Research, predicts that the heyday of banner ads may be coming to a close. While viewers remember TV commercials, he claims that no one remembers banner ads. Bass says the next wave of Net advertising will include pop-up ads embedded in commercial sites and advertiser buying sponsorships of specific content areas.