State Legislatures Magazine: June 2000: America Is Online

State Legislatures Magazine: June 2000

Editor's Note: This article appeared in the June issue of NCSL's magazine, State Legislatures. To order copies or to subscribe, contact the marketing department at (303) 364-7700.

America Is Online, and There's No Turning Back

How Wide the Digital Divide?

Dot-Com Changes the World

Government Goes Electronic
Consumers' Privacy on the Net a Growing Concern
E-procurement Wave of the Future

21st Century Junk Mail

Children and the Net

Federal Laws to Protect Kids

Merger Mania: Hold the Phone

Glossary of Terms
The Mad Dash for Internet Lines

America Is Online, and There's No Turning Back

This collection of pieces was written by NCSL's Information and Telecommunications Policy staff: JoAnne Bourquard, Pam Greenberg and Robert D. Boerner.

At comet-like velocity, the Internet is propelling us into a new world of electronic products, transactions, services and communications.

More than 100 million Americans currently cruise the Net. Through this worldwide portal, we have virtually unlimited access to information and staggering new business and educational opportunities. It's no wonder the Internet is dramatically reshaping the way we live, work, play and interact with one another.

For state lawmakers, these changes create a whole new landscape for public policy. In commercial law, policymakers are examining existing rules on paper-based information and transactions to determine how best to include electronic information and agreements. New questions about security and privacy need to be resolved to increase consumers' confidence in electronic commerce. And questions about whether and how to tax Internet transactions have serious ramifications for state budgets.

The global nature of the Internet also raises jurisdictional issues that remain unresolved. States seek to regulate the Internet to protect their own citizens, but must do so without impeding interstate commerce. Legislatures have an interest in protecting consumers from fraud and abuse. They're also hearing about problems like burdensome unsolicited junk mail. They have an interest in protecting children from harmful on-line materials. But enforcing existing laws can prove difficult or impossible in an environment where physical presence is irrelevant-criminal operations that are shut down in one state or country can simply set up shop in another.

The Internet holds great potential for improving the delivery of government services and providing instant access to resources. States provide license renewals, tax filings, applications for benefits and more through the Internet. And many state agencies use the Internet to provide information about services and products. They also publish a variety of public information on the Net, such as nursing home facts, lists of licensed physicians or even the names of sex offenders.

Every state legislature provides access to bills and other legislative information through the Internet, and almost half the states broadcast legislative proceedings for all to watch through the Web.

Not only is the Internet radically altering the lives of citizens, its unparalleled growth is influencing the shape of the information and telecommunications industries. Transporting data, voice and images is a fundamental requirement of the expanding cyberworld. Companies in the business of providing these capabilities are competing to provide an array of options. And merger mania has set in. New corporate entities and partnerships that combine entertainment, long-distance, local wireless, cable and computer capabilities are being formed every day. Companies are competing to give consumers the best in cable television, access to the Internet, movies and entertainment, telephone equipment and various kinds of telephone services.

The tremendous growth in consumer choices and advances in technology give rise to some brand new issues. State legislators are now debating the merits of whether access by competitors to high-speed Internet lines owned by cable television companies should be forced or optional. And lawmakers are trying to determine how best to eliminate regulatory barriers and encourage competition in an environment where advances in technology occur at an unprecedented pace.

What is the role of state legislatures in this new landscape? Policymakers can encourage growth and competition and offer safeguards for citizens. But, with the pace of change intensifying, can government keep up?

The challenge for state legislators is how to expand current laws to accommodate the growing electronic environment, while preserving the fundamental rights and protections rooted in existing law.

How Wide the Digital Divide?

Government is providing more information and offering more services through the Internet, but recent studies indicate that not everyone has access to these benefits.

A December 1999 U.S. Department of Commerce report, "Falling through the Net: Defining the Digital Divide," finds that the number of Americans who use the Internet has grown rapidly. But the study also finds a gap in Internet access between those at upper and lower income levels, and between whites and blacks and Hispanics. Rural areas and central cities also fall behind. Other recent studies, however, including those done by Forrester Research and Cheskin Research, indicate that the racial gap may be narrowing with blacks and Hispanics increasing their Internet use and computer purchases at a faster rate than the general population.

Many high-tech companies, nonprofit organizations, foundations and community groups are actively pursuing programs to address the digital divide. Scholarships, job training programs, donations of telecommunications lines or computer equipment and neighborhood technology centers are just a few of the initiatives under way. The Benton Foundation sponsors a Web site (www.digitaldividenetwork.org) that provides information about many of these efforts.

President Clinton has also announced a number of federal initiatives and partnerships to help close the gap between technology "haves and have-nots." These initiatives are summarized at www.digitaldivide.gov.

An increasing number of states are considering these issues. The California Senate conducted committee hearings on the topic, and Virginia Governor James Gilmore has announced a statewide effort. A number of states have enacted legislation to improve rural Internet access. Colorado passed the Rural Technology Enterprise Zone Act in 1998 to provide tax credits to companies that invest in improving Internet access in rural areas. Utah in 1999 established a Rural Telecommunications Task Force to review and make recommendations on ways to aid development of advanced communication services.

Several states, including Delaware, Maryland, Minnesota and Virginia, are working to build high-speed networks to provide Internet access for their citizens. This year, Illinois passed the Eliminate the Digital Divide Act, which will provide $1 million in grants to schools and other community-based organizations for the purchase of telecommunications services, computer equipment and software.

Dot-com changes the world

From flowers to clothes to airline tickets, consumers can now purchase nearly everything via the Internet. But do the laws and polices set in place for commerce on America's Main Street work for the electronic marketplace? And how should this business be taxed?

The Problem
During 1999, some 52 million people shopped online and bought something.

Experts predict that by 2003, the on-line retail market could exceed $144 billion, and business-to-business transactions could reach $1.3 trillion.

But there are barriers. People can't buy or sell online without some kind of electronic agreement. Current commercial law, which relies on paper and manual signatures, needs to be revised to ensure that electronic transactions are valid and enforceable. Existing laws need to be changed to eliminate obstacles to e-business and new policies crafted to provide the legal framework needed for the digital marketplace.

The growth in electronic commerce has also brought about what may be the most important issue the states have faced in a generation-taxing Internet purchases. For state and local government, sales tax is a vital source of revenue-about a third of the money they take in. Congress in 1998 imposed a three-year ban on state and local Internet access taxes, but not on sales taxes on Internet purchases. A permanent ban, if expanded to sales taxes, would strike a blow to important state and local government revenue. Additionally, a sales tax ban would result in competitive advantage for Internet retailers over brick-and-mortar businesses.

A federal commission established to study the Internet taxation issue failed to get the necessary two-thirds vote to make an official recommendation to Congress. But a majority of the members voted to "unofficially" recommend that Congress ban Internet access charges, sales taxes on digital goods and their "functional equivalent," and create new sales and use and corporate income tax benefits for Net-based firms.

STATE APPROACHES
To date, more than 40 states have passed laws that provide legal validity for electronic or digital signatures. They range from those that recognize 'electronic signatures'-any symbol used as an identifying mark in an electronic message-to those that require 'digital signatures' that use encryption. Encrypted signatures must be unlocked using a computer "key" that helps to ensure the confidentiality of the information and the integrity of the "signed" document. Secure transactions are a critical ingredient of the e-business world.

Two new model acts that provide rules for electronic transactions and information were recently developed by the National Conference of Commissioners on Uniform State Laws.

The Uniform Electronic Transactions Act makes electronic signatures and records legal and authorizes their use in government or business transactions. So far the model law has been introduced in half the states and enacted by Arizona, California, Idaho, Indiana, Kansas, Kentucky, Maryland, Minnesota, Nebraska, South Dakota, Pennsylvania, Utah and Virginia.

The second model act, the Uniform Computer Information Transactions Act (UCITA) establishes rules for selling new kinds of computer-based products, including software, databases and storage devices such as disks and CDs. Because the law has raised red flags among consumer groups who fear that it fails to protect buyers, it has been introduced in only a handful of states. Only Virginia and Maryland have passed it.

Supporters of the act argue that it is based on familiar rules of contract law that have been adapted to the special nature of computer and electronic information.

In a digital environment in which consumer transactions and communications take place electronically, without face-to-face contact or through the mail, policymakers are giving careful attention to protecting consumers.

In addition to these two model acts, the uniform law commissioners are revising other portions of the Uniform Commercial Code to accommodate electronic contracts, signatures and information.

At the federal level, the U.S. House and Senate have passed significantly different bills to create a national standard for the legal recognition of electronic signatures and records. The House bill preempts laws in every state, even those that have already passed UETA. The Senate bill preempts current law in states that have not yet passed this uniform act, but allows states to reestablish state jurisdiction by passing UETA or similar legislation. A conference committee must reconcile the two versions.

And responding to the tumultuous debate on whether and how to tax Internet purchases, more than 18 states have begun the process of simplifying how sales and use taxes are administered and collected.

They are looking at bills, based on a model developed by an NCSL task force, that would allow states to participate in discussions on developing a voluntary, streamlined, multistate system for the collection and administration of existing sales and use taxes.

THE OPINIONS
Be careful about making assumptions regarding how e-commerce will work-it keeps changing, and the most effective laws are those written to accommodate the inevitable change that will soon come.-Tom Smedinghoff, chair of Illinois Commission on Electronic Commerce and Crime and the American Bar Association section of Science & Technology.

It's a mistake to tax Internet business. At the turn of the last century, the United States gave the railroad industry big concessions. Today we need concessions for the emerging Internet industry that is not yet realizing a profit. I believe it will be every bit as important.-Delegate Joe T. May, co-chair of Virginia's House of Delegates' Committee on Science and Technology.

I've never bought this argument that if we apply sales taxes to products bought online, just as we do to products bought at the mall, we're going to snuff out e-commerce. The cost of delivering services over the computer is a fraction of what it costs to sell the same products face-to-face at the mall. The idea of treating purchases of identical products differently based on how they're purchased is something we need to get away from.-Senator Debra Bowen, chair of the California Senate Energy, Utilities and Communications Committee.

-JoAnne Bourquard, NCSL

Government Goes Electronic

State governments are embracing the Internet as a faster and better way to get services and information to people. Citizens with a computer can file their income tax online, renew licenses, apply for jobs, pay fines or request welfare and health benefits.

Georgia and Kansas are in the forefront with widespread use of downloadable on-line forms. Georgia citizens can apply for permits or licenses through the state Web page and pay for them by credit card. Business owners in Kansas can take care of taxes online, and e-mail messages to revenue department staff. Kansas also has a very high percentage of its tax records stored digitally.

Utah lawmakers have asked that state agencies use the Internet to do business. By 2002, the state will offer: Internet-based renewals of professional and occupational licenses, driver's licenses, hunting and fishing licenses; accept filings for income tax, sales tax and court documents; accept registrations for products, brands, motor vehicles, corporations and businesses; and take applications for unemployment, welfare and health benefits. Public schools will have student grades, progress reports, school calendars, schedules and teaching resources on the Internet. And parents will be able to reach school officials by e-mail.

More than three-quarters of the states passed e-government-related legislation in 1999, either by establishing bodies to study Internet use and information technology or by authorizing or requiring use of the Internet for publishing public records and accepting on-line registrations and filings and other government services.

Consumers' Privacy on the Net a Growing Concern

Privacy on the Internet is the No. 1 concern for consumers, as documented by numerous surveys. Legislators are also concerned.

California Senator Debra Bowen calls it the biggest e-commerce challenge facing legislatures. "Applying a fair and equitable sales tax to products bought online won't hurt e-commerce in the long run. But allowing people's personal, private information to be bought and sold has the ability to do plenty of damage," she says.

Bowen maintains that e-commerce will be in jeopardy if governments let privacy protections fall by the wayside. "Once people have information about their home loan, their groceries or the prescription drugs they take posted on the Web as if it were the L.A. Times, how long do you think it will be before they stop trusting the Internet? And not just an individual company, but the Internet as a whole."

Congress enacted protections for the privacy of children through the Children's Online Privacy Protection Act of 1998. It requires parental consent before Web site operators collect, use or disclose personal information from children 13 and younger, effective this year. The Federal Trade Commission will enforce the act by making electronic "sweeps" to ensure that Web sites are complying.

State governments are also passing such protections. In 1999, Georgia, Illinois, Maine, Nevada and Rhode Island passed legislation regarding publishing names of or identifying information about students and minors on Web sites or requiring Internet providers to keep subscriber information confidential. Alaska, California, Hawaii, Kansas, Iowa, Michigan, Minnesota, New Jersey, New York, Oklahoma and Tennessee have bills pending about subscriber confidentiality or all-encompassing privacy protection acts. California, Maryland, New York and Virginia have bills pending on privacy policies for employers and governmental bodies.

For the most part, the federal government has encouraged the industry to self-regulate. Groups like the Online Privacy Alliance, along with the Better Business Bureau (BBBOnline) and TRUSTe require industry members to follow the fair information practices set out by the FTC.

-Heather Morton, NCSL

E-procurement Wave of the Future

More and more state governments are using the Net to fulfill their procurement needs. Government Technology magazine says Internet procurement systems can "lower material and service costs by 10 percent; shorten purchase and order-fulfillment cycles by up to 70 percent; and reduce order-processing costs by 70 percent."

E-procurement varies in form, depending on the individual technology available to the state. One method involves on-line catalogs maintained by individual vendors that allow for price comparison. Buyers can use government purchase cards as payment, replacing purchase orders.

Similar to on-line catalogs is a multistate cooperative purchasing system known as EMall, where government buyers can use search engines to shop among multiple vendors. Current participants include Massachusetts, Texas, Utah, Idaho and New York.

Connecticut is considering an "embedded purchase card" that would operate as an electronic transaction, instead of requiring plastic cards.

Washington is piloting a program for legally binding bids submitted over the Internet, using digital signatures and encryption technology.

Pennsylvania is leading the development of reversed auction procurement, where vendors bid against each other trying to win the contract. A pilot program there saved $3.7 million last year.

-Heather Morton, NCSL

21st Century Junk Mail

Along with the benefits of the Net comes the downside-thousands of unsolicited messages known as spam.

THE PROBLEM
Spam (unsolicited commercial e-mail) is more than just an annoyance, it costs businesses and consumers.

Spam usually refers to large quantities of unsolicited commercial advertisements sent by e-mail. Spam is not always just the usual business advertising, either. It often consists of chain letters, get-rich-quick propositions or fraudulent schemes and advertisements for pornographic Web sites. Unlike other types of advertising, there is almost no cost to the sender, so even a small return can mean profit.

For Internet service providers, bulk e-mailings slow down systems and cause slower Internet access for their users. Providers have to upgrade systems to deal with the increased traffic and often have to hire staff just to deal with problems related to junk mail. These costs are passed along to subscribers and are estimated to range from 10 percent to 30 percent of a user's monthly bill. Most Internet users pay a flat fee for access. But for those who pay on a usage basis, the time spent reading or deleting junk mail means they actually pay for ads that come to their mailbox.

Spammers also can make it look as though a message is coming from a legitimate business or organization by using another group's site to relay the e-mail or otherwise falsify the message address. This not only hurts the reputation of the legitimate organization, but also can cause providers or Internet users to block any subsequent messages from that group. For example, a genealogical mailing list that served as a research resource for those seeking information about their ancestors was shut down because of junk e-mail. A spammer had used the mailing list as a fake return address for thousands of junk e-mails.

THE APPROACHES
These concerns have led Congress to introduce several anti-spam bills, and several state legislatures to enact similar laws. At least 14 states passed anti-spam bills from 1997 through 1999, and at least 16 more have introduced bills this year.

Nevada, Washington and California were the first states to pass anti-spam laws, followed by 11 more in 1999-Connecticut, Delaware, Illinois, Iowa, Louisiana, North Carolina, Oklahoma, Rhode Island, Tennessee, Virginia and West Virginia. Most of these laws allow Internet users or providers to sue spammers who don't abide by the law, but some states also provide criminal penalties for certain types of abuses.

Most of the laws target spammers who misrepresent, falsify or forge the point of origin or the routing information of messages. Several states also prohibit the sale or distribution of software that is primarily designed for this type of falsification.

Iowa, Nevada, Rhode Island, Tennessee and West Virginia require senders to include certain information, such as a toll-free telephone number or valid e-mail address, in the message so that recipients can decline any future messages. Critics feel, however, that these types of provisions can actually legitimize spam, since an advertiser could continue to send spam legally as long as the identifying information is in the message.

California and Tennessee require senders to include a label on e-mail ads-ADVT:-in the subject line of a message to indicate whether it contains an advertisement. They are also targeting spammers who send "teaser" ads for adult-oriented or porn sites, by requiring them to include the label ADVT: ADLT in the subject line. Similar labeling legislation passed the Colorado legislature in March 2000 and has been sent to the governor.

Most states have specified that the laws apply only to spam that is sent to or generated from locations within the state. However, King County superior court in Seattle has struck down a Washington state law that has such a provision, ruling it in violation of the Commerce Clause. Other challenges to state spam laws have been filed or are expected.

Even without state anti-spam laws, however, some providers have had success suing spammers using existing laws relating to trespass, unfair trade practices or computer fraud. When a company called Cyber Promotions sent bulk unsolicited commercial e-mail through CompuServe's networks without consent and after repeated demands that they stop, Cyber Promotions was found to have "trespassed" against CompuServe.

Network administrators and Internet users also have tools for fighting spam. Filtering software and other technical fixes can be used to discard or refuse all messages from a particular address. Users can also take other measures to avoid being spammed, although it may mean limiting their Internet use.

Spammers often use special software to automatically gather e-mail addresses from chat rooms and newsgroups. And some Web sites sell e-mail addresses gathered when users register for their site. So users should read any privacy policy posted on the site.

THE OPINIONS
"The Web has developed largely free of gov-ernment subsidies and interference, and there's no reason why government should now try to be a traffic cop on the Internet. It's a free speech issue. I see no reason why government should say how an advertisement should be written or labeled on the Internet. Government doesn't require advertising labels in print or television. The market provides plenty of recourse for citi-zens. I can find a provider whose rules can pro-tect me from spam. I don't need government to protect me."-Colorado Senator John Andrews, who opposed anti-spam legislation in his state.

"Since more and more people are going online, it's important that consumer rights are protected on the Internet and that we have recourse against false and offensive material. I am delighted with the fact that our attorney general is aggressively appealing the King County superior court ruling that recently declared our landmark legislation as unconstitutional. I'm very confident that it will be upheld by our supreme court. It is an absolutely vital foundation for our efforts to control abuses and cyber-hijacking."-Washington Representative Roger Bush, sponsor of the 1999 anti-spam legislation.

-Pam Greenberg, NCSL

Children and the Net

While the Internet can be a valuable learning tool, it also has its pitfalls. Policymakers try to protect kids without infringing on the Constitution.

THE PROBLEM
Most Americans believe the Internet is a valuable resource for their children and that children who have access have a distinct advantage over those who do not.

Yet most citizens fear for their children online. They worry about predators making contact and are concerned about how easy it is for kids to find pornography and other harmful information. And most believe that government hasn't done enough to protect children from the dangers of the Internet.

Congress and the states have tried. It's against federal law to post obscenity and child pornography on the Internet. It is illegal to use the Net to persuade a minor to engage in sexual activity, post a child's name on the Web or exchange e-mail about them for criminal sexual purposes.

STATE APPROACHES
States have also passed laws to address Internet crimes. A New York law, for example, prohibits sending indecent materials through any computer system to minors for the specific purpose of inducing them to engage in sexual acts.

The law was tested in a case involving 51-year-old Thomas Foley. Foley started on-line chat with "Aimee," who said she was a 15-year-old girl. He sent her sexual photos and attempted to arrange a meeting. Aimee turned out to be an undercover officer working for the state's Computer Crime Unit, and Foley was charged with a felony offense.

The New York law has so far held up to the legal challenges based on First Amendment and Commerce Clause grounds. At least 15 other states have since passed similar laws, although there are still some legal challenges pending in other jurisdictions.

State obscenity and child pornography laws as applied to the Internet have not been the focus of legal challenges. Child pornography and obscene speech, unlike indecent speech, are not protected by the First Amendment.

Some states, however, have tried to expand laws to prohibit sending or displaying "indecent" or "harmful" Internet materials to minors. The Supreme Court has ruled that these kinds of communications can be limited when the government has a "compelling interest" and if it is the "least restrictive" means available to solve the problem.

Court decisions have struck down Internet indecency laws in Michigan, New Mexico, New York and Virginia on First Amendment or Commerce Clause grounds. Because Internet users have no way of knowing whether a child in those four states might download information he or she has posted and whether the information could be considered indecent or harmful to minors, courts have found that these laws stifle free expression.

Courts also have decided that the laws violate the Commerce Clause, even in the absence of federal regulation, because they concern interstate commerce and seek to regulate conduct outside of state borders. Other less restrictive means of protecting children from harmful materials online exist, such as parental supervision or filtering or blocking software.

At least 12 states-Arizona, Arkansas, California, Kentucky, Louisiana, Maryland, Michigan, New Hampshire, Ohio, Pennsylvania, South Dakota and Virginia-have passed laws to require public libraries or schools to adopt policies that would protect minors from access to harmful materials. Legislation of this type has been introduced in at least 14 states this session, including some bills that would require public libraries to use filtering software.

However, a U.S. district court ruling, while limited in its jurisdiction, highlights possible challenges some of these laws may face.

In 1997, the board of trustees of the Loundoun County (Virginia) Public Libraries adopted an Internet policy that required libraries to block access to e-mail, chat rooms and pornography. A group of residents of Loudoun County-known as Mainstream Loudoun-filed suit, alleging that use of the software violated their First Amendment right to freedom of speech. The library trustees responded by noting that blocking Internet sites was no different than refusing to borrow from a large interlibrary loan system, from which the local library was not a borrower. Mainstream Loudoun, however, described the Internet as more like a large set of encyclopedias in which the library had blacked out portions of the text.

The district court held that the policy violated free speech and was unconstitutional. The court seemed to imply, however, that filtering in libraries might be constitutional if adults had different terminals than children or if they could turn off the filtering software. In addition, some states have changed their laws by tying filtering requirements to continued public funding of the libraries and schools.

THE OPINIONS
This law is not about infringing upon free speech, it is about protecting our children. Parents still need to be cognizant of their children's activity on the Internet, but we are sending a strong message to predators that their actions will not be tolerated. I'm frustrated that the courts do not recognize the need for these protections, and I encourage Congress to address the issue as a nationwide problem.-Senator Beverly Ham-merstrom, author of Michigan's 1999 law that was struck down by a U.S. district court.

Three district courts and one court of appeals have struck down state indecency laws on Commerce Clause or First Amendment grounds or both. It puzzles me why states would continue to pass these laws. We're also skeptical of filtering laws. There's enormous evidence that they are flawed. They both overblock and underblock, and most don't identify what or how they block. If legislators are considering filtering or blocking laws, they should be considering requiring filtering software to identify what it blocks.-Chris Hanson, senior national staff counsel, American Civil Liberties Union.

-Pam Greenberg, NCSL

Federal Laws to Protect Kids

CDA-The Communications Decency Act passed by Congress in 1996 and struck down in 1997 by the U.S. Supreme Court in Reno vs. ACLU, made it illegal to knowingly send or display obscene, indecent or patently offensive on-line materials to minors. The provisions relating to indecent and patently offensive materials were held to be a content-based restriction on speech violating the First Amendment.

COPA-The Child Online Pornography Act, sometimes called CDA II, was passed in 1998. It prohibits commercial Web sites from knowingly making harmful materials available to minors. Congress attempted to draft the statute narrowly enough to avoid the constitutional flaws of the CDA. It provides a more specific definition of "harmful to minors," restricting the law's application to commercial Web sites only and providing for good faith efforts to keep the material from minors. A federal district court, in ACLU vs. Reno II, however, issued a preliminary injunction against COPA's enforcement on First Amendment grounds. The government has appealed the injunction, and a decision is pending.

CPPA-The Child Pornography Prevention Act, passed by Congress in 1996, expands the definition of illegal child pornography to include visual depictions that are or appear to be of a minor engaging in sexually explicit conduct. The law covers the creation and distribution of sexual images involving minors that are modified or created by computer graphics programs. Two federal district courts have reached different decisions on the law-one found it passed constitutional muster, the other found it to be unconstitutionally vague and overly broad. Appeals are pending in both cases. Several states, including California, Illinois, Kansas, Maryland, Minnesota, Maine, Montana, North Carolina and Texas, have passed similar laws.

Merger Mania: Hold the Phone

Companies are racing into high-tech markets combining phone, cable and the Internet, and creating zillions of choices for the consumer.

THE PROBLEM

Big and small, companies across the nation are lining up to become a one-stop source for all your cable television, Internet access, and local and long-distance telephone services. It's a contest to offer consumers the most services with the best technology.

Telecommunications giants and industry newcomers are rushing to merge with each other-SBC Communications (formerly Southwestern Bell) with Pacific Telesis, Bell Atlantic with NYNEX, AT&T with TCI. Qwest Communications, the broadband Internet communications company, and US WEST Communications are expected to merge sometime this year and a deal is in process to merge AOL and Time-Warner. MCI WorldCom and Sprint Corporation have agreed to merge. Bell Atlantic and GTE have picked the name Verizon for the new company to be formed with their proposed merger. And companies are trying to get access to equipment and services owned by their competitors, including the Internet, at an alarming rate.

Never before have the once clear lines of who offers what been so confusing. The jury is out as to whether all of these events will in fact stimulate innovation, speed the development of new and better technologies and services, and make telephone and cable television services cheaper. In fact, the availability and choices that consumers have is limited and depends largely on where people live. Rural areas lag behind urban areas and true competition has not arrived in many parts of the country.

Many of the changes in the telecommunications landscape are due to the historic Telecommunications Act of 1996. The legislation represents the most comprehensive overhaul of the nation's telecommunications laws in more than 60 years. The act drastically alters the entire industry, including cable television services, eliminates regulatory barriers and encourages competition. In short, it attempts to address the realities of today's marketplace.

Among its many provisions is one that requires telephone companies to open their networks to competitors. It allows Bell companies entry into long-distance markets whenever local service becomes competitive, and it eliminates the ban on telephone companies providing video service. A telephone company may now provide service as a traditional cable operator or through an "open video system" in which two-thirds of channel capacity must be available to other programmers on a common-carrier-like basis.

THE STATES' ROLE

The United States is the only country to use a dual scheme (federal and state) for regulating telephone services. The first states began regulating telephone companies in 1907. The Telecommunications Act of 1996 retained the role of the states to "preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services and safeguard the rights of consumers."

However, the federal act eliminates state prohibitions against local telephone competition.

Virtually every state that was in session in 1999 considered some form of telecommunications legislation. More than 110 laws-many on competition-were enacted. For example, in Oregon the state public utility commission must now report annually to the governor and the legislature on the status of competition and regulation in the telecommunications industry. A new Minnesota law authorizes the state public utilities commission to enforce anticompetitive regulations by issuing penalty orders. And in Delaware, a new law grants authority to the city of New Castle to manage and operate wired and wireless telecommunications and other communication services systems, along with steam, manufactured gas, natural gas, heat, power and heating oil.

THE OPINIONS

I hope that the 2001 Legislature will pass comprehensive reform that encourages investment, enables competition and gives consumers more choices at lower prices. We may also have to empower municipalities to get in the telephone and other telecommunications businesses since there hasn't been new investment in many communities.-Minnesota Senator Steve Kelley, vice chair, Minnesota Jobs, Energy and Community Development Committee.

Alaska has enacted legislation that takes into consideration the rapid growth in telecom-munications technology. Telecommunications mergers and great advances in the technology will benefit our state very likely more than any other because of our inaccessibility and difficult climate conditions.-Alaska Representative Jeannette James.

I'm optimistic about the industry focus on one-stop shopping, consolidated pricing and broad-band rollout, especially for the more populous areas. But in spite of all of the recent advances, most phone customers still remain with their old companies. Few actually have a choice. Large and medium-sized businesses in cities have more alternatives, but the vast majority of residential and small business users do not.-Brad Ramsay, National Association of Regulatory Utility Commissioners, Washington, D. C.

-Robert D. Boerner, NCSL

Glossary of Terms

Bell Operating Companies (BOCs)-Twenty-two local companies were organized into the seven regional Bell operating companies following the 1982 decision that forced the divestiture of AT&T. At divestiture, they were: Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis, Southwestern Bell and US WEST.

Convergence-The merging of distinct communications technologies into a single electronic, computer-driven, environment.

Divergence-The offering of several telecommunications services by one provider. "Plain old telephone service" describes the telecommunications industry of the 1950s, but today's divergent environment includes the transmission of voice, data and images, not just voice.

The Mad Dash for Internet Lines

Discovery of the advantages of broadband Internet lines owned by cable companies has ignited a debate over who should have access to them. Broadband lines provide a connection to the Internet up to 100 times faster than conventional dial-up.

The access dilemma may be the most important telecommunications development issue of the decade. Should cable companies be "forced" to give access to the lines? Those who say yes believe it will stimulate competition, one of the stated goals of the Telecommunications Act of 1996.

States and municipalities are now debating whether access must be required through regulation or whether this poses a threat to the integrity of the Internet, as opponents argue. The Federal Communications Commission wants to be the sole regulator in this arena.

At least nine states, Delaware, Idaho, Illinois, Kansas, Maryland, Michigan, Ohio, Vermont and Virginia, debated legislation in 2000 that would require current providers of broadband to offer access to other Internet service providers.

In addition to forcing access, most of the legislation lawmakers are looking at would allow civil suits against cable operators and service providers who deny access. A bill in Kansas includes a penalty of $500,000 per day (not to exceed $10 million).

Localities in Florida and Oregon have passed their own open access laws. So far, they've held up in court. A federal district court judge dismissed most of a cable television company's lawsuit that challenged Broward County, Fla.'s, requirement that it share its lines. And Portland, Ore., has successfully sued AT&T to open its network to local competitors.

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