Legal and Regulatory Issues
Friday, November 12, 1999
2-3:15p.m.

Glen O. Robinson: I'd like to start. We don't have a lot of time. and we've got a lot of things we want to talk about. Had the e-summit planners been a bit more attentive to vernacular fashion, they probably would've called this a session on cyber law. There is admittedly some debate as to whether or not there such a thing as cyber law, that is to say, whether the subject is worthy of separate consideration. Be that as it may, there is certainly a lot of controversies on which the Internet is having an impact. Almost across the board in traditional areas of regulating of mass media and telecom media, pricing of Internet services, regulating content, universal service subsidies, taxing, e-commerce, enforcement of libel laws, fraud, Internet gambling, intellectual property rights. The list is very long and guess what? We're not going to cover all those issues this afternoon. What I hope to do is at least discuss a little bit of the headlines.

We have a distinguished and diverse panel of experts to discuss some of these controversies. Let me introduce starting from my far right Mark Lewis who is a founder partner of Arnheim Tike and Lewis, which is PriceWaterhouseCooper's correspondent law firm in the U.K. Mark is an international expert on e-business and information technology law and I'm looking to him to provide a comparative perspective on what is, after all, a global phenomenon.

Next to him is Mike McQuarry, who is Chief Operating Office of Mindspring Enterprises, one of the largest and most successful Internet access providers which is about to become even larger and I expect more successful after its merger with Earthlink and I believe Mike will be the president of the merged company.

Charlie Thomas, to my right, is gone as you see, so I won't bother to introduce him until he shows up.

Tom Power, to my immediate left, is senior legal advisor to FCC Chairman [Bill Kinnard] who describes him as a witty policy wonk, so we're going to be looking to Tom for some witty wonking.

Jon Sallet, next to him, is Chief Policy Counsel, I should say to MCI WorldCom which also makes him a policy wonk as well, and as a long ago student of mine, I can vouch for his wit as well, so we're going to expect some more witty wonking from John as well.

The format here can best be characterized as loose. I wanted to avoid to getting all hung up in set speeches. Besides I also wanted to control as much of the dialogue as I could and the only way I could think of to do that is to start with a series of questions and one I want to start with has to do with administrative regulation. Tom Power, open access is a subject on which I think everybody will hold forth. We might as well get to it right away. This is by all odds, at least by all odds if you read the newspapers, the regulatory controversy de jour. Can you tell us just briefly what the debate is about and then I'll ask Jon Sallet for a rebuttal.

Thomas C. Power: I don't know if the competition will be on who's got the best policy views on this or who's the wittiest, but I guess I'll let you try to figure that one out, John. Let's see. Where to start--the debate begins with, I think, something that everyone is in agreement on, everyone in policy, everyone in Washington, all the providers of Internet access. The goal that I think we're all shooting for is broad-band access, high speed Internet access to the home, and the question is how best to get there. I think the conventional wisdom right is that now the cable modem access that the cable operators have developed seems to be the more popular way, the best way, of getting high speed access, but not the only way. The phone companies are rolling out their DSL service, digital subscriber line service, to compete with cable on the broadband front to the home and in the coming years, we will see more of this, whether provided by wireless or satellite providers as well, but right now a lot of folks seem to think that the best way into the home for high speed is over the cable lines. You have AT&T gobbling up a large number of the cable systems in the country and upgrading those systems to deliver broadband. You also have AT&T in the Internet business through their ownership of At Home and the fear that folks like Mike McQuarry at Mindspring and Steve Case at AOL and other ISPs have is that AT&T and other cable operators will use their control over the pipe, the broadband pipe, to discriminate in favor of their affiliated ISPs At Home, in the case of AT&T to the detriment of Mindspring or AOL and others and ultimately to the detriment of consumers.

And we've been asked in a number of contexts to step in and essentially mandate open access as it's known or as cable operators call it, forced access. Essentially it would require the cable operators to give non-discriminatory access to their cable pipes to all ISPs. We've refrained from doing that and I can speak somewhat on behalf of the FCC but I'll speak primarily on behalf of my boss, the chairman. His view is that the bigger challenge right now is simply getting broadband to the home, and for now, that's what we're focusing on and the concern is that if we jump in with some kind regulation in the form of mandating open access, you slow down investment in the deployment of cable access. That, in turn, reduces the pressure on the phone companies to be rolling out DSL service and that, in turn, reduces investment in other ways that we're looking at down the road to get broadband, so right now, our goal is to step back, let the market play out for a while, concentrate on getting broadband into the home, and if competitive problems develop later, then perhaps you think about stepping in, but right now with so few in the country even having broadband and, in fact, even five years out, it's predicted that as many as 50% of the people will still be using the old dial-up connection to get to the Internet, now we think it's just too early to stepping in and I should point out that it's been the roll-out of cable modem service that has prompted the Bell operating companies in particular to start pushing their DSL product. DSL's a technology that's been around for 10 years. Nobody's seen much of it until the cable guys started rolling out their broadband service and that prompted the phone companies to respond with DSL.

From the ISP side, you see ISPs now cutting deals with the local phone companies for DLS or the satellite providers, it's those kind of market mechanics that we want to see and foster and promote rather than have the government sort of step in, declare cable modem access to be the winner and have the markets following the government's lead. We think it should be the other way around, so for now, we've refraining from stepping into this and so far are fairly happy with what we're seeing develop.

Robinson: John, what's wrong with that analysis?

Jonathan B. Sallet: Well, let me start this way. Each of you in the room has decided to spend valuable time on a Friday afternoon listening to a discussion of legal and regulatory issues. This is an active of self-sacrifice that far exceeds anything the panel is doing this afternoon, but it does suggest that we can start off this question, analyzing the question, by asking about sort of legal regimes. There are two big ways that the government has acted that affects all communications. One way the government essentially built the Internet and then turned it over to private enterprise to use. Those are the early fundamental actions of the government through the Department of Defense, later through NSF, created the backbone, the initial structure, the protocols, even some governmental funded research into web browsers and a variety of ways created the real estate that's the Internet, and then turned it over basically. Think of those old movies of people in covered wagons rushing out to get the first land grants when the government opened up the west. That's what basically happened in the Internet and what this led to was a piece of cyber real estate that is very open, and here's one concrete example of that.

You use a telephone line to get to the Internet today. The speed at which you can get to the Internet is relatively slow, but it's a very open system. That is to say, you pick up the telephone line. You can call any Internet service provider you want, whether it's Mindspring or AOL or anyone. There's no limit on your choice. The only limit is on the ability of the marketplace to produce choices for you. That's one model.

The second model of government action that we saw this century was a government decision that it was more important to get people a service than to worry about market competition and that's why we ended up with monopoly telephone companies and monopoly cable companies because the government thought, look, we want to get it to people and if a monopoly will provide it, then we'll insulate that monopoly from competition. Now, the first half of the century sort of in some sense was the story of building those monopolies and the second half has been a long tortured struggle of undoing the monopolies. The best example--the divestiture of AT&T in the early '80s leading to a competitive long distance market while the local markets most people in the U.S. today do not have a choice of their local telephone company not withstanding legal actions and a lot of work on the part of the FCC to bring competition.

So, now you get an essentially monopoly providing cable and the question is who should have access to the cable wire. You know, in a very analogous situation, the answer has been clear. Just this week Congress is debating a satellite home viewer act that's designed to insure that cable doesn't get a bottleneck or doesn't hold as strong a bottleneck on the delivery of video services, so you can get through a satellite what you can get in local video programming over the cable wire. The position of people like me who think that the FCC ought to take action to open up the cable for data is very simple. When the market creates a monopoly, we think it's the government's obligation to make sure the monopoly is undone. It's not enough to just say we create a monopoly and maybe there shouldn't be one any more, but we think the government has an affirmative obligation to say, look, these people still have monopoly power. We got to make sure that open access really exists, so to our mind, a view which I know has been spectacularly unsuccessful in persuading anybody at the FCC thus far, we would answer politely that concerns the chairman and Tom Reys in this way. Will opening the monopoly cable wire deter investment? No. It hasn't deterred investment by the Bell Telephone Companies who have their own wires opened up because they're monopolies of a different industry. It hasn't deterred investment by a lot of people who've created new competitive telephone companies although they are subject to what are called interconnection requirements.

Secondly, would this keep the telephone companies from responding? No. We think it's a false choice. We think as competition comes, it doesn't undermine choice. It enhances it as the cable wires would be open, more people would come in to provide more access and more choice to consumers and that will create even a bigger threat which will force other facilities to be used, and finally, is it too early? Well, what we learned at the beginning of the century was we gave basically AT&T a monopoly around 1913. It's 1999 and we are still trying to figure out how to undo that monopoly without tremendous success across the board. In a world of Internet time, our fear is that a failure to open monopolies now turns into a situation that's very difficult to actually redress later.

One last point, and I apologize for the length of this. This is not to say that we all aren't working as hard as we can on alternative technologies. There're a lot of companies out there--satellites looking for ways to provide Internet access. My company, MCI WorldCom and Sprint, each buying hunks of wireless spectrum called MMDS with the hopes that broadband can be deployed over wireless. People laying fiber. Electric utilities talking about how their facilities can be used. So it's not that we all don't want to go do the work to come up with better facilities. We would all like to do better. I mean, think about cable television service you get at home and ask yourself would any competitive company want to be limited by the quality of cable facilities. I think not, but we face a real problem here still and it is our view respectfully if so far unsuccessfully submitted to the FCC that where a monopoly power exists, it ought to be dealt with in this fashion.

Robinson: Just to pursue this a little bit further, although not to get too much into the arcane details, what I've heard a lot about is the right of access, but I haven't heard anything, Mike McQuarry, about how much you're willing to pay for it. As you well know, this same question and Jon has alluded to the fact that the telephone companies have their own access interconnection requirements, as you know, since 1996, they still haven't settled on exactly what they will pay, what competing local carriers will pay, to get access to the incumbent carriers' facilities. Now, it would seem that even if you got access tomorrow, you'd still have a long regulatory battle to determine how much you're going to pay for the conduit. How much are you willing to pay?

McQuarry: First of all, a show of hands--how many people in here are either law students or attorneys? Okay, I'll talk slow then for you [laughter]. Everybody else up here is an attorney and I'm not, so we may have some translation problems. I think the short curse answer is we're willing to pay a rate that will give them an extremely fair profit for the service that they're going to give us. We're not asking for any sort of a free ride. What we're asking to do is pay our way. It is in the best economic interest of AT&T and TCI and anybody else who holds a cable franchise. It's their best interest, long-term economic interest, to open that traffic up for both wholesale and retail access. However, we've got a roadblock in the short-term. That roadblock's called At Home. At Home is basically the monopolists' monopoly. All of the cable providers got together and created a retail arm to offer cable access to consumers. That company currently has a market cap of $16 billion that based upon normal revenues and cash flows, you can't even rationally begin to approach that sort of market cap.

However, based upon the fact that it is a monopoly, that lock does have some huge uplift on the value of that company. The lock-up for the cable companies expires in 2002 and the question in front of us is which one of the eight that TCI and AT&T are going in there, which one of them is going to be bold enough to pull the cornerstone out and basically deflate their own value because they have a stake in that company in At Home. I think that's really the issue at hand as to economically why they don't open it. We're more than willing to pay a great fee for it. They'll make a better profit than they would just trying to sell it through their own monopoly retail channel. It's going to be good business sense, but in the short-term, putting the pinprick to that lofty valuation At Home, it just too much for almost any of them to swallow and Tom, your boss has got a hard job. You've got a hard job and they both do it extremely well and I would try and avoid this issue like the plague if I were you, because you guys sort of got to see which the way the wind's blow politically in D.C., and the good news we don't want you to regulate this.

The bad news is want you to deregulate it. It's already a regulated pipe. We want you to open up competition and it's hard to be a hero in Washington but here's an opportunity for you to step right to the forefront and be a hero.

Power: Somebody key the music [laughter].

Robinson: Let me ask you about the Washington angle because Washington may not be where it's at. He may not be able to control the issue. You've got petitions around the country--30,000 of them.

McQuarry: There's a lot of municipalities who are taking action on their own and what's brought about the opportunity to do that is the cable franchise in each local community is something that the city has to grant the license to, and they've granted licenses to TCI to have that monopoly cable video service in their towns. However, when AT&T purchased them, that license didn't necessarily rubber stamp over to AT&T, so a lot of communities-- I mean, nature pours a vacuum and in light of the FCC deciding to step back and do nothing, the communities are rushing in to decide on their own whether or not open access should be something that they can actually dictate and I think Portland, Oregon's probably on the forefront of saying that we think we should be open. We're not going to grant this license transfer unless the pipes are open. It should be a nice legal donnybrook. Lots of lawyers are going to make lots of money arguing that one.

Robinson: They already are. Mike, just by way of an update. That case is now before the 9th Circuit Court of Appeals. Decision's probably due out sometime in January, so we'll see where it goes. Mark, is this just an American dispute or what's going on broadband access on the other side of the pond?

Mark C. Lewis: Can I say by way of preface to that that it's going to apply to a lot of the responses from me this afternoon, that in Europe, you're looking at a market that is probably 18 months behind the U.S. in almost every aspect of the Internet and regulation. The opportunists say we're eight to nine months behind and I think that is far too optimistic, but we're improving because up until about a year ago, we were probably three to five years behind, so what is happening in Europe right now is that we're looking at a market that is not yet liberalized itself. In the U.K., you have the most advanced liberalized telecoms market and bear in mind that we created a private sector monopoly as long ago as 1984, and it's taken us about 16 years to get to the position where the U.S. was at when you liberated the baby Bells or created the baby Bells, so we are someway behind, but the two big issues I'd say, are playing out around anti-trust law which is effectively administered by the European Commission and it looks at the whole of Europe as a single market and then it looks at each country within Europe as a separate market and there the European Commission is concerned in particular--

A lot of the ISP market because I think it's generally recognized by the ITU and others, this is a highly liberalized competitive market, but in the access to the backbone of the Internet, this is where the great concerns and there're already signs the European Commission is beginning to challenge the bigger players about their interconnect and access agreements.

The other point, if I can reduce this here, is that you're looking at a market in Europe where we still pay local call charges. Now, that's one of the greatest inhibitors we've found to the development and take-up of the Internet, so we're way behind but we're watching the debate very closely as it plays out in the U.S.

Robinson: Mark, you raise an interest point about the charge mechanism in Europe which gets me handedly to the next topic actually. It wasn't quite the next one, but I'll go where the flow is. As you know, there is around here a raging debate about access charges. I won't try to explain it all, but basically let me set the framework this way. All long distance telephone callers pay what is called an access charge for the use of the local exchange facility. However, Internet providers or Internet users do not pay that charge. There has been recently some development in this area but reason of the fact that it is now possible to buy software which will allow you to use the Internet network for regular voice-to-voice, phone-to-phone telephany, so my question to Tom Power is how can you possibly justify the continuation of the present policy whereby an Internet user can use the Internet, avoid the same charge that an ordinary telephone user does, and clog up the local network? In a way it ties into Mark's point because one of the answers that I've often heard is well, but look what it got Europe. They have metered charges and we don't want to go that way. The flip side of it, of course, is that in our system, it's the ordinary long distance telephone user that is subsidizing the Internet user now. Is that fair? Is that going to be continuing?

Power: It's not going to be continuing. I mean, we're in a transitional phase on this issue and let me just put this in a little context. Access charges essentially are the way that long distance carriers compensate local phone companies. You want to make a long distance phone call to California. Your local phone company handles the first leg of the call, hands it off to MCI who takes it across the country. They hand it off to PAC Bell out in California who delivers it to the person you're calling. MCI then pays an access charge at both ends. You sit down at your computer and you start surfing the web. AT&T very similar process. If you've got dial-up access, it's over the phone line out onto the Internet backbone and off to somewhere else.

The FCC has exempted Internet providers from paying access charges for their use of the local leg even though traditional long distance carriers pay those access charges. There's such a history and complexity to this that it's hard to get through all this in this format, but the development of access charges went not simply to compensate on sort of a cost basis to the local carrier, but there're also subsidies in there. For a long time, of course, long distance calls were very expensive in this country and part of that was simply because the regulators at both the federal and state level wanted to keep local phone service cheap. One way to do that is just charge more for long distance, more than it costs and then you keep basic local phone service cheap. We're in the process of trying to reform these access charges to bring them down to cost because that simply makes for a more efficient marketplace and in terms of universal service, the idea of keeping local phone service cheap coming up with a way of funding that which is more explicit instead of building in implicit subsidies in access charges, you just have a separate fund that you pay to the local phone company who gets the customer.

As we've been marching through this process, up sprang the information service providers and we did create what's called the ISP exemption to exempt them from access charges and really the thought there was this is a growing, developing, hopefully soon-to-be competitive, market. Let's not saddle it with the type of regulation that has been typical of regulation of phone companies this century and so I guess my broader point here is that as these new technologies develop, our response--

I think we have to fight the urge to sort of treat everything new the way we've treated everything old. Rather, the right answer is to figure out what's the right thing to do right now for ISPs, for instance--exempt them from access charges and then fix the access charges as they are charged in the traditional phone context, so to answer your question, since it is the status quo, I won't say it's unfair since we mandated it. I've got a conflict there, but it does have to change.

Robinson: Let me just ask--will the FCC, if, in fact, telephany or voice over the Internet, as they call it, does catch on and does become a significant service, will the FCC at least allow the local exchange, the [box] and other local exchange companies, to levy an access charge on that service?

Power: I mean, to be fair, they are in a sense. I mean, the ISP now has to go and buy the local phone lines.

Robinson: But they pay a fixed?

Power: Right.

Robinson: A metered charge.

Power: Right. So the question will be, is that the right way to do it. Do you just buy local phone lines at a fixed rate or should you put it on some usage basis. I don't think we want to go the usage route. Mark put his finger on the problem, and especially now, when we're all used to being able to sit down on the computer and it doesn't cost you any more to stay on there for an hour by having all these on-connection. I think consumers are too used to that and are enjoying that too much, so there's got to be some reform to the process but I don't think we'd go to a metered usage plan.

Robinson: But then maybe the answer would be that Jon's company, for example, would go to flat rate charges for long distance service instead of just seven cents a minute, six cents a minute, five cents a minute. Who knows what it is?

Power: Yes. I think that's much more likely.

Robinson: Is that in the future?

Sallet: Before we sat at the panel, Tom and I were talking and I said, you know, I haven't prepared very much. What do I do if I get a tough question? [laughter]. He said, "look, here's what you do. You want to give an answer. You got to say something, but you want people not to pay too much attention, so what you want to do is start discussing the arcane aspects of access charges" [laughter]. Here we are.

Power: Well, I beat him to the punch.

Sallet: Exactly.

Robinson: We're getting to cyber porn in a minute here, Jon.

Sallet: Here's the plan. There's three things. One, history. Two, bad economics. Third, the future. History--I talked before about the problems of monopoly, right? One of the problems of monopoly is people don't have choice, but the other problem is government gets to solve its problems through what is purportedly the private industry. In other words, because there's only one provider, you don't have to have a tax. You can just tell the monopoly how to conduct its business and so when AT&T got broken off, the long distance market went one way, local went another. The government said, look, we're just going to pump money from long distance consumers to the local telephone companies. That'll be a good thing. It will compensate the local telephone companies for some real costs. There are some, no questions about it. It will, we think, keep the cost of local telephone down. It has without a doubt made the local monopolies much more profitable than they otherwise could be, because nobody has ever gone back to size the subsidy and asked is this the amount of money we actually need. Now, as always happens here, this policy only works as long as the monopoly really remains a monopoly and can't be challenged by any new technology.

What's happened is the new technology, the nascent technology, of making phone calls over the Internet has arrived and all of a sudden, put in jeopardy this constructed scheme. Its pernicious effect is not just the ones that I would submit that have been described, but to go to the second point, bad economics. What it actually does is create arbitrage opportunities that are not necessarily economically rational. I'm a business. I want to carry your voice traffic. It's cheaper for me to carry it over the Internet merely because the government puts an extra price on the traditional voice networks. I'm inclined to invest more in Internet technologies. We may say that's a great thing because we're now in a age where everyone loves Internet technologies, but the fact of the matter is, when one can make money by arbitraging against governmental subsidies, that's the situation where real economic signals are not being sent to real marketplace participants and it is a wonderful way to get inefficient investment that then runs to the government and seeks protection.

Now, I'm not saying that's the case of all Internet but I'm saying if you were a business person right now trying to make this play, you'd be encouraged to go in a direction because of what the government has done, not necessarily because of what the marketplace will do, which is the way we want it to work.

The third point--future and we're finally actually getting to a point Glen asked about. Flat rate pricing--yeah. Right now, long distance telephone service is very cheap by historical terms. A lot of price cuts over the summer that everybody saw and more importantly, we're seeing the abolition of the distance between local telephone calling and long distance. Some of you who have wireless phones know that you can buy bundles of minutes for a flat rate and it doesn't make any difference if you call across the street or across the continent. Well, that pricing structure we can expect to come into what we think as traditional voice and secondly, as traditional voice in the real marketplace meshes with data, right, as we get broadband pipes to our homes that can carry both voice and data simultaneously, we would only expect that the pricing goes in the same direction, so I do think that you're right, that a likely trend here is that it's coming in the not very distant future, home consumers will be able to pay a flat rate either, say, for just minutes regardless of where you call or say, for just bandwidth regardless of how you use it--voice, data, video, e-mail, anything else you can imagine.

Robinson: Let's talk some more about subsidies since we've got on the subject. This is a little off the subject. You might think of law, but in fact, the subsidies in this country have been interwoven into the regulatory fabric as Jon and Tom have been explained very well, but I want to talk about two other kind of subsidies. I want to talk about, first of all, the e-rate subsidy that the FCC administers. The universal service subsidy--1996 telecommunications act mandated, or didn't mandate it, it told the FCC, I believe, to study the possibility of including within traditional universal service subsidies which were used to subsidize high cost markets, rural users, etc., to consider embedding within those subsidies, a subsidy for the Internet, and so what we have now is this so-called e-rate which subsidizes schools, libraries, and rural health care clinics. Its amounts to, I think, about $2_ billion, not exactly chump change as Everette Dirksen once said, "a billion dollars here and a billion dollars there and pretty soon, you're talking about real money." It has been enormously controversial, I think, not only at the FCC but elsewhere. The question I really want to put out and I want to start with you, Tom, but I don't want to end here, is why are we doing this exactly? As I understand, a lot of this money is just going to pay the school's telephone bills. Is that right?

Power: I don't know the proportion, but the act directed the Commission to set up a program that would subsidize telecommunications service and Internet access, and yet, the phone bill was telecommunications service, but it also subsidized Internet access. I was really pleased and gratified at this morning's session to hear so many of those folks talk about the need to get technology into the classrooms. It was great to hear it from that panel and those folks because I think it's a smart and wise and successful bunch in there, and it's great that they see things that way. It's just a question of priorities and I for one agree with what I heard in that session this morning that getting this technology and Internet access into the schools is essential. It's what we need to do. Congress directed us to do it. As always, left things a little vague and gave us a lot of leeway and then giving each member of Congress the opportunity to come back and say we got it wrong, but I think it's not really taken off as a successful program and I think it's really got now bipartisan support in Congress. You can argue on the edges as to what exactly it should support and how much and all that, but I'm proud to say I think we've turned the corner on that's and the money's flowing and school kids throughout the country are benefiting as a result.

Robinson: Mark, what are they doing in Europe on this kind of subsidy? Is there a mechanism for subsidizing schools for Internet access?

Lewis: This is a very crude U.K. mechanism that I think is being pursued in Europe. Firstly, in the U.K., we operate under a heavily privatized utilities market and when the Labor administration was voted in, one of the things they wanted to do and they did in fact do first off, was to impose a windfall tax on the privatized utilities including British Telecom. Now, this creamed off a significant part of the profits. They're still pretty significant in BT's hands as well, but it's allowed the government effectively to start funding programs of the kind you described and there're two initiatives currently the U.K. government is pursuing and I understand a number of European governments as well.

One is specific subsidies to individual schools to hook them up to the Internet and the other, which I find slightly bizarre, is to give direct subsidies through the social security system to lower income families to allow them to buy PCs. Now, you can argue that all of this is achieved or at least some of this is achieved through the mechanism of a very crude windfall tax imposed on the privatized utilities and moreover, it gets slightly better. Our Prime Minister's done a deal with the chairman of British Telecom who have agreed to further subsidize the access by schools to the Internet.

Robinson: Who ends up paying the bill?

Lewis: The taxpayer.

Robinson: The taxpayer, whereas here it's the long distance telephone caller. Does it make any difference do you think?

McQuarry: No. I think Tom's pretty well got the issue scooped out. We need the funds. Where it comes from it just a matter apportioning the payment. I won't argue that it shouldn't come from the general tax base. As different industries evolve, things that the government wants to help fund are going to come from different sources, and these guys are on it.

Robinson: Arguably it makes a difference to you, Jon. You're a payer of this tax. Are there any regulatory implications in terms of how you do business since you pay some of these universal service funds? Would you rather see it-- I assume you'd rather see it done by the general tax revenues, right?

Sallet: I think what's important to us, and it's a question of prioritization. The world in which I work, the world of telecommunications, is awash so much today in what we think of billions of dollars of hidden implicit subsidies that we're happy to go to a scheme that's sizes the subsidies, makes them public, makes them explicit, so to us, what the FCC is doing, our wish is that the FCC has been doing it a little faster, but not to complain about it, to move to explicit subsidies where you can cite a number, right. You were able to cite a number of a few minutes ago. There are still implicit subsidies in the system to which we cannot site numbers and this seems to us a step forward, but let me make one other point if I might, on a less corporate level. We understand both the benefits and I think the limits of programs like the e-rate. Without getting people onto the net, it is by definition impossible for them to take advantages of the net and so a condition that proceeds schools taking advantage of the Internet is that they be able to be wired and hooked up and that's what this program is to do. But we ought not to think that's the end of the game. It's seems to me at least that effective use of the Internet in schools requires that teachers be trained and the curriculums be reformed so that the technology isn't just a box that sits in the back of the classroom or in a school library that someone can go to and when the servers are working, this week get on Encyclopedia Britannica, but rather something that transforms not the experience of technology but the experience of education. That is a role that is not only the FFC's. It's the role of all the school districts, parents, concerned citizens and children in America and so it seems to me a way to advance the debate on these issues is to ask ourselves at the same time not only what this program is achieving but how we can achieve a time when educational attainment and not just the presence of technology is improved by efforts such as these.

Robinson: One more tax question. One more subsidy question--a general question, not a regulatory issue. Internet tax freedom act has declared a moratorium on excise taxes imposed by states on e-commerce. I'm oversimplifying it, but basically it called for a three-year moratorium on any further new multiple or discriminatory taxes and there's now talk by the Clinton administration and in Congress about making that moratorium permanent. If I understand the issue, let me direct this to the right, to Mike first. If I understand the issue, it is simply whether or not to add one more subsidy to the Internet, right, because what we're talking about is creating a special immunity from taxes for my going and buying a book from Amazon.com as opposed to my walking into the local bookstore where I will be taxed on the same purchase. Now, are we being a little hasty? Have I misunderstood this?

McQuarry: I've got to break it down even more simply than that because I'm not that smart and I've got to grasp it. It really comes down to the government has to make a choice of one or two things--does the government want more tax revenue coming to fund programs by taxing commerce on the Internet or is to the better economic good of our country to put a moratorium on that in the short run? I think clearly the decision right now is to put a moratorium on that in the short run and any revenue that isn't coming in through the tax base on this is going to be ten times overrun by the overall economic benefit of getting e-commerce and that industry up and running. Longer term, what you're really going to see is a lot more business and business transactions being the predominant e-commerce transaction. In that case, right now, in the brick and mortar world, all you have to have is a wholesale exemption and you're not going to pay that tax anyway, so the business-to-business e-commerce world, I don't see it being all that different.

Robinson: So you don't see any significant distortion of skewing as Jon would call it, skewing resources simply to take advantage of some special--

Sallet: I think they are taking advantage of a special point in time but I think that the overall economic benefit that we're all going to see from that more than outweighs any short-term tax revenue that would come in.

Robinson: Mark, there's a global connection here because as I understand it, the Clinton administration is arguing for a similar, maybe permanent, but at least a moratorium on taxation world-wide. How does this play out on the other side?

Lewis: Jon, as you say, this discussion is currently being played out through the OECD. In Europe, the perception of taxes is that it's a hugely complex issue because you have a central authority, the European Commission, trying to regulate separate economies, and we split out the taxes to add the complexity around direct taxes, the taxes around where a e-business is situated, where its permanent establishment is, because there are huge potential loopholes if you are going to allow--

If you start off with the tax base and you're going to allow the establishment a server on a ship offshore or offshore generally from which income can be generated and revenue authorities don't touch it, the biggest issue though which I guess is different in the U.S. is that we have differential sales taxes, value added taxes, different in the sense that it's applied differently although it's on a harmonized basis in the U.K., and that's where the member states of the European Union start becoming worried because if we do retain some kind of tax on the Internet, countries like the U.K. are going to do far better because we have the lowest rate, one of the lowest rates, of valued added tax in Europe.

And there's a third point which our regulators are trying to grasp is the excise duty. When I buy a book from Amazon.com as I do very often because [Amazonco.UK ]doesn't get me the books quickly enough although they have bricks and mortar not far from where I live. I have to pay duty on top of that and that really is a hidden cost, so these three kinds of taxes are what our administrators are trying to grapple with.

Robinson: You have to pay duty on the book from the U.S.?

Lewis: Pay duty on the book from the U.S. If it's over a certain price, it's 18 pounds, so that's about $25 U.S.

Robinson: But it's cheaper to begin with, right? If you go into Amazon.com in the U.K., that same book would be listed at a higher price than it is in the U.S.

Lewis: It'll be listed at a higher price but lower than the general off-the-shelf price.

McQuarry: Make a deal. We'll trade you for a whole bunch of Harry Potter books [laughter].

Lewis: Done.

Robinson: Well, let's get away from this dull economics and get to cyber porn which is where all the excitement is right now. I guess this is the same in Europe, Mark, at least from what I read. In fact, maybe the concern is even more over there, but there's this abiding concern with cyber porn on the net over here. We've had two major cases. The Supreme Court first declared unconstitutional portions of the Communications Decency Act unconstitutional insofar as it attempted to regulate Internet indecency. Philadelphia District Court earlier this year also did the same thing with an on-line child protection act and that stopped the regulators. As we speak there're bills working their way through Congress to continue to reach out and do something, God knows what. What are we doing in the U.K.?

Lewis: Well, I'd rather tell you what they're doing in Germany because it's quite a lot of fun, unless you're the CEO of CompuServe there. He was arrested. He was put in jail without any sort of process because CompuServe had been found to be hosting pornographic and sexually and racially offensive material and they were sued by the German government. The German courts at that point decided that they would uphold the prosecution, went on appeal, for a variety of reasons I don't want to bore you with, CompuServe were let out, but then guess what? The authorities continued to monitor CompuServe's sites and chat rooms and they picked up another instance of this and they threw the CEO of CompuServe of Germany in jail.

McQuarry: Whenever you're throwing presidents of Internet companies in jail, this is a bad thing [laughter].

[Sallet]: You might not want to make that argument to a group of lawyers [laughter].

Lewis: And Germany have since enacted a law which says that wherever you are in the world, if you happen to be transmitting pornographic material that finds it way into a Germany home, you will be committing a criminal offense. You can ask how their long arm jurisdiction works in order to actually put people in jail doing this, but that's an extreme example.

What's happening in the U.K. of the courts using the common law system are trying to adapt a 19th century law to 21st century technology but they recently found that a very enterprising guy who, in fact, managed to get some service base in the states and carried on a living in the U.K. uploaded pornographic material from the U.K. to his site in Virginia and then made it available to U.K. citizens at about $40 bucks a month was actually publishing that pornographic material in the U.K. because the uploading had technically taken place from the U.K. and it was finding its way back into the U.K.. It is a trend that is coming out of Europe. It is that the various jurisdictions are now trying to attach liability to transmissions into those countries irrespective of where the service from where that transmitted the situation.

____________: ?? don't worry about this, right? You are content providers.

McQuarry: We're not a content provider, but we are concerned about it, but I would tell you right now pornography on the Internet is much less of a problem than it probably was four years ago. One of the dirty little secrets of the Internet is a lot of the technological advances that were made were made by people who were trying to improve the quality of pornographic, video, audio, graphics. It's something none of us are proud of, but a lot of that's what drove the technology and early on, those early adopters people heard about, sure, a lot of them were computer science geeks but a lot of them were just sort sticky mouse geeks and now that the Internet's hit the mainstream, I think the number of people who are on the Internet looking for pornography dramatically reduced.

What I'd like to put forward and see get some traction is let's treat it like it's old wine in new bottles. Let's treat it like we treat it in a lot of other areas. I'd like to create a red light district on the Internet. People are going to find pornography on the Internet if they want it. Let's at least put it all in one place where we know where it is and everybody goes through the front door to get it and I think that's probably the best way to handle it. The worst part and the big is fear somebody accidentally types in a site wrong and pornographers are infamous about doing this. They'll take a very popular site and Amazon instead of an "o" if you type in an "a", you're liable to go to a porn site and that's what we really want to try and avoid is particularly kids accidentally thinking they're going to safe havens, and ending up someplace they can't, but it's not a new issue. The Internet's like Main Street U.S.A. Let's treat the pornographic issue like we treat it in regular society.

Robinson: Your account of Amazon reminds me of time about a year ago when in my infinite naivete I was trying to research on the Internet something--

[McQuarry]: This is your story and he's sticking to it!

Robinson: Foxes--and you all test this for yourself that if you go on to the Internet and type foxes in your search engine, you will get a lot of things that are not foxes [laughter]. It doesn't get any better if you change to vixen either [laughter]. The FCC's not involved in enforcing any of the current initiatives on cyber porn, but I have a different kind of question that's related.

This show I think is going to be web cast on a delayed basis, not that you'll want to regulate it, but I'm wondering why not, if we develop this technology any further, what's the difference between this web casting and broadcasting. I read somewhere not too long ago that in fact Yahoo! has signed-- No, maybe not Yahoo!, maybe it was AOL. Anyway, AOL signed a deal with CBS News to start streaming CBS News. Well, as you well know, CBS News is regulated by the FCC, well, sort of. CBS is regulated by the FCC. There're certain limited types of content regulation imposed on CBS, but I take it that if that same program was web cast, streamed to me on my computer monitor rather than my TV set, you wouldn't regulate it or would you?

Power: No. We wouldn't.

Robinson: How do you differentiate if it's the same program?

Power: You know once posed this question to me previously was Michael Moore, the guy who did the "Roger and Me" and he actually came, kind of ambushed us at the FCC and he set up a big box outside the FCC. It was a booth, really, that I'm told these booths exist in adult movie stores and bookstores. I don't know anything about them.

McQuarry: They are.

Power: Thanks, Mike [laughter]. And it said XXX on it, and there was a hole you could stick your head in and look at and he got a permit from the city of Washington to erect this booth and have this going on, and if you looked in, what you saw was-- I think he was replaying an edition of "Nightline" covering the Monica Lewinsky case up in Washington and his point was that stuff was a whole more distasteful and borderline pornographic than anything Howard Stern ever did and why are we fining Howard Stern and not Ted Kopple. It's actually kind of a reverse situation. That's two different broadcasters but we are seeing this convergence of technologies in the same service or similar service being offered different media. The quick answer to your question is that what we regulated is not CBS, but we regulate broadcasters and broadcasting and so we regulate CBS to the extent they are broadcasting, over-the-air broadcasting.

Robinson: Let me stop you right there. Suppose broadcasting meaning airways--

Power: Right.

Robinson: Suppose I use a wireless Internet service provider. I use one of those MMDS fixed wireless things that Jon was talking about earlier. It comes in straight over the air, no different from broadcasting, identical technology except its higher in the frequency. You wouldn't regulate it then, would you?

Power: No.

McQuarry: So it really doesn't turn on-- The FCC's going to regulate a particular spectrum that they've given for broadcasting. Stuff that's outside of that spectrum just doesn't fall into your purview right now.

Power: That's been the traditional justification for regulation of broadcasting has been that the airways are a public resource. We all own it, but only so many people can have licenses because if everyone's on the air at the same time, you get a bunch of static. Everybody would be speaking on top of each other, so historically, we've allocated licenses and frequencies and in light of these circumstances, the Supreme Court has recognized the strong interest of the government to impose certain regulations, but with new technologies, in particularly the Internet, questions like these come up. The easy answer to me is you don't just slap the old regulations on the new technology. You start backing off the regulation on the old technology.

Sallet: Can I follow up on that? Technology can be the problem, technology can be the solution. The discussion of pornography is, in some sense, a problem with technology in the sense that it allows people to get content that we think, particularly children, ought not to have access to, but we ought not forget that technology can be a solution here in a couple of ways. Mike suggested one: to screening off of certain areas. We actually did something like that in the telephone business with 900 numbers when the use of 900 numbers was increasing for lewd, pornographic, whatever, use. That's one way to do it.

The other way to do it is, of course, to remember what we say about the Internet. What we say about the Internet is that it an empowering technology and we'd be much more intelligent rather than taking the kinds of actions that were described in Europe where one tries to clamp down on someone as if that person controlled the content and all of you know that nobody knows when you go on the Internet your ISP provider doesn't control that, and try to get to the degrees of the network the technology to control it.

So, parents having resources, for example, to screen where their children can go on the Internet. There are a variety of efforts. There's one organization, non-profit, called getnetwise.org which is designed to give parents resources in a number of ways so that they will feel safer with their kids on the Internet so they can find, for example, screening software or web sites that are safe. In the world of the Internet, this decentralized solution is always going to, in fact, work better than a purportedly simple but ultimately ineffective attempt to control the Internet at its center where no center exists.

Power: I should point out that we're making moves on this even on the broadcast side with television. One of the differences between television, of course, is just the way that it's grown up in this country. It's sort of a passive activity. It's on your TV. You've got a TV set. The kid can turn it on at any time. These other types of services take a little bit more action in the form of just paying subscription charges, for instances, and so if the consumer's out there seeking it out, then the consumer's sort of on notice and it's caveat emptor, but even on the broadcast side now, we're trying to empower parents through the v-chip for instance so again, sort of get government out of the business of regulating the stuff, but let parents have the tools just as they do with filtering software on computers.

Robinson: I think it's an appropriate time to hear from the audience. I'd like to give some opportunity to have some interaction with the audience, so let me just stop the dialogue here and if nobody has any questions, we'll just pick it up and go on. I ask you only if you will step to the mike, not because I can't hear you but because this is being recorded and we won't be able to pick it up until you speak into the mike. Anybody want to speak? I can't believe it. Nobody has any legal questions. There aren't really any lawyers here, I think. That's the secret. Notwithstanding their hands up a moment ago.

McQuarry: They're just not used to not getting paid for talking [laughter].

Sallet: No. It's not that. It's that they're lawyers; they're not used to not being called on up name [laughter].

Robinson: There is actually one other set of legal topics we can finish up with. It's I think not the particular specialty of anybody here, but I'm sure you all have views on it. One of the things, and this ties into the cyber porn issue, it ties into a lot of the issues that have been talked about. One of the things that bothers people about cyber law, so-called, is that a lot of the transactions and things that involve the Internet are traditional kinds of legal issues. I mean, fraud over the Internet isn't much different from fraud anywhere else. Gambling over the Internet is still gambling. Arguably, porn over the Internet is still porn, but there is in all these areas intellectual property, you name it--liable and slander, the famous Drudge case.

A special problem that the Internet raises and Mark alluded to earlier which is how do you enforce those laws in a global environment in which you don't even know where the message originates. One possibility, I suppose, that ought to bother you, Mike, would be, well, you go for the infrastructure and the providers of the basic access service, but is that the only way we've got to enforce--

Let me just give one illustration. There're several bills that have been introduced in Congress to deal with on-net gambling. This is gambling that is legal in some country or, most notably, in the Caribbean, where there is an actual real casino but, of course, the main impact of this is that you can place your bet, you can place your bets on the net. A number of states have either threatened to outlaw that or have actually done so, but the question is whether there's any way of enforcing it or whether we should give up on all those kind of traditional concerns. Mark, you alluded to this in the context of Germany. How do they expect to-- There're a number of other countries that have tried to control these kind of things in Europe, too. How do they enforce it?

Lewis: It's a question that's been bothering me until I read about a series of cases. You may have heard of one. He's not a vexatious plaintiff, but he comes close, a guy called Godfrey who has sued a number of academic institutions including Princeton University in the U.S. and Georgia Tech, I believe, and some others, and he seems to be able to bring proceedings in the high court in London which is a pretty sophisticated court, and he seems to be able to persuade the court except in the case of Georgia Tech, I believe which is still running on, that he has been defamed in a chat room and that the courts ought to accept jurisdiction. They buy it. Now, I don't understand how they buy it, but I guess one of the problems you have if you are blue chip corporate, even if you don't have assets or an establishment in a country in which you're sued, is reputational risk. It's one of these things that we come across most often for large corporations who are moving into e-business and the one thing that bothers more than the damages they may pay is reputational risk, and Princeton I understand instructed counsel in London to represent them to argue their case, unfortunately unsuccessfully, so what it about Princeton that made it feel it had to represent itself in a London court. It doesn't have assets as far as I can tell in the U.K. and with taxes, this is a similar issue. How does the tax man get tax from large corporates even if you find loopholes because the big corporates want to be seen to be paying taxes, so I think there's a kind of pragmatic view that those who are the other end of the law suits are buying.

Robinson: That'll work for the big companies who have global presence or at least global reputations, but presumably wouldn't take care of the hit and run person who posts something on his personal web page, I assume.

Lewis: It wouldn't, but then of course we're looking at the tier above and that is to what extent-- We haven't covered it in detail here. To what extent we're going to impose liability on the carriers, on those who provide access to the networks or Internet services.

Robinson: That was going to be my very next question. I was going to direct it to Mike because I think he's in harm's way here.

McQuarry: Yes, I think we've got to look at the Internet since there's no de facto governing body that can enforce anything in what we call the Internet community. By the community, it's the infrastructure providers but it's also the users of the Internet. In almost any corner, we're going to call for self-regulation and the Internet community which is by and large made up of more users than infrastructure providers, does have a good moral compass. It's a good sense of humor and it's got several methods of retribution. In the case of CompuServe German CEO who was dragged into jail, the Internet community was quickly and swiftly putting the word out, fine, let's just cut Germany off the Internet per se. It would be easy for us to. If they want to take matters into their own hand and not allow us to try and self-regulate, there are ways that the Internet community can respond very quickly and fairly devastatingly to carve out people who we think are not acting in the best interests of the overall Internet.

It happens every day. Every once in a while there'll be an exercise to prove it, like People magazine's most beautiful person last year went on line and Sid the Drunken Dwarf won to sort of prove that we could mass enough people to go to one site and vote to beat Brad Pitt. The Internet community has a sense of humor. It has a good moral compass and we do take action quickly where we can as a group and again, I'm not talking as an ISP. I'm talking about a group of users and infrastructure providers and I think that's why people in the government that get it and we clearly talk about people that get it in terms of the Internet and people that don't.

Ira Magaziner got it. He was a big proponent of leaving it alone. Tom and his boss, ??Bill Kinnard, get it. As much as possible, they want to leave it alone and let it self-regulate and I think that's the right answer and I think you will see that as more and more people get involved in the Internet, it truly is one of the most democratic vehicles and mediums that they are to act quickly against things that we don't think are in our overall best interest and the common good.

Robinson: Can I ask you a question specifically what your company would do?

McQuarry: Bail me out of jail.

Robinson: Somebody calls you up and says that there is-- You don't provide a portal. You do provide some kind of--

McQuarry: We host a lot of sites. We're the largest hoster of sites.

Robinson: Somebody calls you and tells you that one of those sites is infringing their trademark. What do you do at that point? Do you say, well, you'd pass that along to the site or do you try to do anything? Do you take an active role and isn't that kind of a double-edged sword? Isn't that a problem for you because the more active role you do take, the less you look like a neutral provider and the more a content provider and it's kind of a double bind for you.

McQuarry: What we actually do is take the role that we're not an editor of this material, but to the extent that somebody wants to complain about a site, either for defamation, for some sort of pornography, or anything else that could skirt the bounds of what's legal, we have a department that does nothing but field those inquiries and our stance is public and very clear. Unless we get some sort of legal notification, we're going to basically stay out of it. Unless it crosses the boundaries of our appropriate use policy and it's clear and not gray--child pornography is not part of our ISPs appropriate use policy. Any other sort of pornography, we're not going to get in and try and make a value judgment as to whether or not something's out of bounds, but if we receive proper legal notification in terms of a court order or a search warrant from an entity, we will cooperate to the full extent of the law to provide that information so that people who make that judgment outside of the Internet can make it inside of the Internet as well. To the extent that we start editing content, all we do is increase our own selves as a target for liability.

Audience questions: I'm Jeffrey Haden at the University here. I'd like to follow up on precisely this point. About a year ago I discovered through a search engine that someone had literally lock, stock and barrel mirrored my site in another location and it's not a matter of just a few pages. There were literally thousands of pages that they had picked up and moved to another site. When I went to the University counsel here, they said, well, it's your intellectual property. Therefore, your problem notwithstanding a very bold copyright notice on the front page of va.edu. Are you saying that if I wrote to you and said you're providing the service for somebody who stole my intellectual property, that you wouldn't get involved except that I came through a lawyer at my own expense?

McQuarry: That's accurate, and our stance is that we're like the public service-- Not the public access. What's these garages that you can rent? We're not going to look what's inside your particular garage? We're going to rent you the space on our servers. What you do with it is absolutely your business and unless a legal entity comes to us and says you need to open up that locker and let us take a look inside, we're going to stay out of it, and frankly I hope that the University didn't make that decision based upon the fact that it was a web site and they would've done the same thing if it was a textbook somebody had copied from you. I think legal entities need to take the same approach to the Internet and how you legislate on the Internet as you do in everything else. It's not something to be fearful of. It's old wine in new bottles. Don't let the flashy label get in the way of bringing judicial measures where judicial measures need to be taken.

Audience question: I'm Richard Marks from Vince and Elkins in Washington, and I just have a general comment but I'll start off with the last speaker asked the question. The technology is moving so fast and the changes in society are moving so fast that the law is not keeping up and I'm sure that none of the lawyers on the panel find that surprising nor do any of the other lawyers who are here attending. Our law's all based on concepts of territoriality and time delay and tangible things and as so many folks have pointed out already today, none of that matters in the Internet world, but in fact, it goes beyond the Internet because digital technology is enabling many things in addition to the Internet and the law's just being left farther and farther behind.

But those of who work in dealing with regulatory industries and looking for solutions or those of who litigate these problems really understand this as we search for solutions. In fact, there is a new statute--the digital millennium copyright act--that would give you an opportunity to press your case and would keep Mike and his company out of the middle which is where they need to stay out, but it's expensive because none of these rights are self-enforcing. You'd have to get a lawyer and pursue it, but there's a way to give notice to Internet service providers that infringing material is being carried and then the statutory mechanism would authorize him to take it off and, in fact, require it unless there was a counter-notice and on and on and on, but litigation's expensive.

I'd just like, because I know we're coming to the end of this panel though, try to illustrate the point I'm trying to make about how the law is not adequate to these new tasks, particularly because of concepts of territoriality. There's a professor up at Northwestern, an engineering professor as it turns out, who's got a web site that has got the authorities in Germany quite upset and that's because this web site is essentially one of Nazi propaganda, and the authorities in Germany would like the authorities in the United States to do something about this fellow. Of course, in the United States, Nazi propaganda is protected as free speech under the first amendment. In Germany, however, which has a constitution that we wrote, Nazi propaganda's a crime and so you have a perfect microcosmic example of how the boundless nature of digital technology has created a dilemma for the law and it's just going to take a long time for the social structures and the social changes to catch up so that we can all think about this way that makes sense to us. At the moment it doesn't make sense.

I would put to you that the same phenomenon occurs in the taxing area because our governor, Governor Gilmore, has come out as the head of the commission asked to look at taxing in the Internet and said we shouldn't tax it. All of the local state taxing folks are up in arms because logically that makes no sense. What does make sense is a new social development where people just don't want to pay tax on the Internet and it's something that the politicians are going to have to struggle with as we all are.

Robinson: Thank you.

Sallet: Can I respond just in general because you really asked the question what is the world of the law when it meets the world of the Internet? Let me give two examples because it seems to me the law has got to change because the Internet is not going to stop. One, those of us who can dimly remember our first year law school know that we were taught on basic common law principles. The common law is fundamentally backwards looking. I go in front of a judge and my job is to say to the judge that nothing new has happened, that every decision that was ever made back to Blackstone is consistent with what I'm doing. The Internet is a fundamentally forward-looking regime. Now, the law has come up with ways to sometimes be forward looking legislative acts, but this fundamental question of whether one looks backward for comfort or future for opportunity seems to me is a cultural clash between the law and the Internet at a very fundamental level that I would think law schools like this one at this University and professors like Professor Robinson have to grapple with every day, but it's a real problem and I think it permeates the two examples you give and others.

Second example--if you were going to write mathematical algorithm for what is due process, you wouldn't have a really highly-weighted variable for speed. You'd had variables for accuracy and fairness and confrontation of adverse evidence, but except for making sure that prisoners on death row don't take too long to exercise habeas corpus rights, we have not in general of late being worried that the processes takes too long. This doesn't work in the Internet either where the failure to make a decision quickly can have as many effects as a wrong decision because Internet speed is moving at such a fast rate. This, it seems to me, has implications for antitrust law, administrative law, every other kind of regime because it tells us that we've got to get the law moving at the same pace.

Indeed, the taxation example you give, the moratorium, in effect, is precisely an attempt to try to understand the implications of what the law would do before it does it perhaps badly, and so I think your comment's right and I suggest they go to the fundamental nature of historic legal processes and how they are being confronted by this new technology.

Audience/Richard Marks: And as lawyers we do run into the problem that all of our Internet clients think the same way. They think that this is all forward looking and you have to tell them that if there's a problem and they're in front of the judge, the judge will still look backward and make whatever analogy he or she can and the slammer will still be there. It's a great dilemma for the lawyers.

Sallet: But the point Mike makes is fundamental. At some point, the Internet is just going to go around the system. The other example that we face is encryption policy where the world of the Internet just overwhelmed the legitimate but unsustainable concerns of parts of the National Security Agency. His point, I think, is a fundamental one about the way this law works. A judge may take an action, but the Internet can go around the process.

McQuarry: But that's not to say that the lawyers shouldn't get involved in this industry. It moves fast; it's exciting. If you're a law student and you're considering a field to get into, as Larry Flynt once told his attorney, the best possible clients are going to be ISPs and telecommunications clients because, one, we've got a lot of money, and two, we're going to get in a lot of trouble.

Robinson: On that note, I think I've got to be forward looking and close the official session. I thank you all for coming. If you have comments or questions, we would welcome them after the session's over. Thank you.