Next Step : Hong Kong’s Remedy for Subversive Use of Cyberspace: Pull the Plug : Recent raids on Internet providers have some users worried that Asia’s free-information oasis is setting a bad precedent.

While many countries welcome the world-shrinking properties of the Internet, some Asian leaders are wondering how to control potentially subversive information on it.

Hong Kong has an answer: Just pull the plug.

Police here recently raided seven Internet providers on charges of operating without a license, leaving most Hong Kong users--including the U.S. Consulate--without a connection to cyberspace. The police officers, who posed as deliverymen to seize computer equipment and files of nearly 10,000 users, say they were worried about hackers and computer crime.

But the shutdown has raised darker fears. Some worry that Hong Kong is losing its role as a free-information oasis in the countdown to China’s takeover in 1997.

“It’s a bad precedent to set for China,” said Ching Man, operator of LinkAGE, one of the Internet gateways that was shut down. “Now (the government) can raid you for no license. Next they will raid you if you say something political they don’t like.”

Hong Kong’s laissez-faire government has made the territory into Asia’s information and business hub. Nearly 600 international companies have their headquarters here, and two-thirds of the region’s telecommunications are routed through Hong Kong’s high-tech digital network.

Until the Internet raid in March, the government’s hands-off attitude toward business seemed to extend to media and information services--a relative exception in a region where more conservative governments keep a tight lid on alternative viewpoints.

In authoritarian Singapore, the government announced last month that it will police the information superhighway for pornography and libel. Internet users were encouraged to turn in offenders, and the government said it would take them to court.

Ironically, China, which is known for its tight grip on information, has so far given the Internet free rein. But Beijing’s history of censorship, even jailing journalists who have published such “state secrets” as economic statistics, makes some wary.

“It’s a matter of time” until Beijing realizes the Internet’s potential and puts up electronic roadblocks too, said a computer user who spends several hours a day exploring cyberspace under the handle “Zolton.” “It’s very important that Hong Kong stays open.”

Hong Kong authorities say they are not worried about the flow of information but about its potential misuse. This British colony of 6 million is also a major center for commercial scams--an international capital of credit card fraud, and an important entrepot for bootlegged software flowing out of China.

The U.S. software industry estimates that 94% of the software available in China is pirated from American manufacturers and predicts that the black market will quickly extend to cyberspace.

That’s the reason for the Draconian crackdown, said Neil McCabe, chief superintendent of Hong Kong’s Commercial Crimes Bureau.

“It’s better to send a message by shutting down seven companies now, before everyone is on the Internet,” he said, “than 107 later.”

Hong Kong requires a license to provide telecommunications services, including access to Internet. Licensing provides revenue to the monopoly holder, Hong Kong Telecom, but also helps the police monitor potential computer crimes.

“People are screaming about ‘Big Brother,’ ” McCabe said, “but in order to stop hacking and other abuses, we have to know who the (Internet access) providers are.”

The police hint that they are in the middle of a major hacking investigation, on the scale of the nationwide hunt in the United States that brought down premier hacker Kevin Mitnick in North Carolina in February.

Mitnick, who reputedly inspired the movie “WarGames” with an assault on the NORAD computer system in his teens, had stashed 20,000 stolen credit card numbers in another user’s file.

But computer experts say that, if police are trying to track a hacker, shutting down the system is the wrong way to go about it.

“It’s like trying to catch a speeder by closing down the highway,” said Philip Wong of Asia On-Line Ltd.

Indeed, U.S. authorities nabbed Mitnick by carefully monitoring his movements in cyberspace without letting him know they were watching.

“That kind of investigation requires the assistance of all providers,” said David Wu, of Internet OnLine Hong Kong Ltd. “And even then, hackers can operate from anywhere in the world--they don’t have to be in Hong Kong to penetrate Hong Kong’s system.”

Internet operators say they do not like hackers, but they dislike the heavy-handed police interference even more.

Despite the freewheeling, almost anarchic, culture of the Internet, at least one service is willingly cooperating with the government.

Hong Kong SuperNet, which is operated by the Hong Kong University of Science and Technology, voluntarily ended access to pornographic material in a file called “alt.binaries.pictures.erotica.”

“I know people call Hong Kong SuperNet ‘Hong Kong CensorNet,’ ” project manager Pindar Wong said. “We do feel strongly about the rights of people on the Internet, but we have to comply with local laws and industry practices.”

SuperNet was the only service provider of eight in Hong Kong with a license before the raid. “Internet has no boundaries,” Wong said, “so we have to define our own limits.”

There are many issues that need to be addressed, Wong said--equal access, libel and defamation, freedom of expression, intellectual property rights--and it is important for users to create equitable solutions before rules they dislike are imposed on them.

“China is watching to see how to deal with these issues,” Wong said. “We are the test case.”