World Telecommunication Day 1999 |
Concerns about the latter are growing as e-commerce develops. The legal and regulatory problems posed by the Internet in general, and by e-commerce in particular, are formidable. They include decisions about standardization, privacy, security, tax and tariffs, intellectual property rights, liability, competition, authentication, domain name assignment and content. In legal, governmental and industry circles, issues concerning government intervention versus self-regulation in these areas are being hotly debated.
There are four possible approaches to Internet regulation, as described in a 1999 report by the International Telecommunication Union (ITU) called ''Challenges to the Network: Internet for Development.'' One is statutory control, where governments take a highly regulatory approach. A second is independent regulation, where industry-created bodies take on this responsibility. A third is self-regulation. The fourth is no regulation at all.
Customized approach
The ITU suggests that governments resist the temptation of a single, one approach-fits-all solution, and focus instead on ''which aspects of the Internet require regulation and which do not, and then proceed accordingly.''
This approach is being taken in the European Union, championed by EU Commissioner Martin Bangemann. Speaking at an IBM conference last month, he suggested that a collegial approach to legislating is best because there is not yet sufficient cohesion across Europe with regard to the new technologies. ''Politics is lagging behind economic reality,'' he said. In his view, the EU has to agree on general principles, while details may vary slightly from country to country, as in a European agreement on digital signatures.
A key element for Mr. Bangemann is to listen to industry before making rules. He also believes that laws should address distribution systems, not the consumer, so the EU is involved in regulating new horizontal business models.
As for ''local content,'' this has been a favorite whipping boy in many countries, usually couched in terms of objecting to Hollywood's influence on filmmaking or television. Some opinion-makers fear that the same thing will happen with the Internet, and would like to use regulation to control its content. ''The European Commission has never been in favor of audiovisual quotas,'' insists Mr. Bangemann. ''People don't lose their cultural identity by participating in a global system, but they need to learn that. If a culture is a closed shop, it will die,'' he says.
The issue of legal jurisdiction is so confusing that in the United States, a three-year moratorium on taxes for e-commerce has been imposed while the 50 states wrestle with how to deal with it. If a seller located in New York, where the state sales tax is high, sells a product over the Internet to a buyer in New Hampshire, where there is no sales tax, whose tax jurisdiction should apply? Or if a seller based in Sweden sells a sexually explicit product over the Internet to a buyer in Saudi Arabia, whose community standards should apply?
Workable solutions
The case for country-of-origin jurisdiction is clear: Anything else is unworkable, except perhaps for the largest corporations. How many companies can afford to hire lawyers familiar with the legal workings of every country in the world, which is necessary for a global sales distribution channel?
The case for buyer-based jurisdiction is also compelling: Why shouldn't buyers be protected by the consumer-protection laws of the place where they live? Otherwise, they might wind up buying something from a respectable-sounding company that has deliberately set up operations in countries ''of lenient legislation,'' points out Ben Petrazzini, a policy analyst at the ITU.
Businesses, of course, favor the jurisdiction of the seller. Bill Poulos, director of electronic commerce policy for Electronic Data Systems, believes that neither notion is completely workable, but that country-of-origin makes more sense, certainly for business-to-business electronic transactions. ''One has to distinguish between business-to-business and business-to-consumer e-commerce,'' he says. ''Businesses are realistic about the fact that consumers may not be fully aware of the implications of making a contract. We recognize that there must be transparency to ensure consumer confidence.''
Most important, he insists, are complaint-resolution mechanisms that create such confidence and are easy to use, inexpensive and provide effective redress. Through the Global Business Dialogue and the Transatlantic Business Dialogue (private business groups set up to address the issues raised by the new technologies), industry is moving in the direction of developing such third-party alternatives for dispute resolution. ''They are cheap, easy and workable,'' says Mr. Poulos, adding that they would not infringe on basic juridical rights. They are designed to meet the needs of consumers in industrialized and developing nations.
Claudia Flisi