High Tech Scores 2 Big Victories

The high-tech industry scored two big victories on Capitol Hill on Thursday as lawmakers approved a three-year moratorium on new Internet taxes and gave the final OK to a separate measure that will let thousands more skilled foreign workers into the United States.

Hitching a ride on an end-of-year government spending measure, the high-tech industry shoehorned those bills and several other avidly sought industry measures into a huge legislative package that is expected to be approved by Congress as early as today and sent to the White House for President Clinton’s signature.

But high-tech supporters also suffered a big setback when budget negotiators brushed aside White House and industry objections and included provisions in the federal budget bill that regulate Internet content. The content bills include a new Child Online Protection Act that imposes criminal penalties and fines of up to $50,000 for commercial online sites that don’t block access by children to material deemed “harmful to minors.”

The inclusion of the Child Online Protection Act provoked an immediate outcry from civil liberties groups that say it is overly broad and could infringe on the rights of adults searching for material on the Internet.

“Overall I think the Internet fared well on the Hill, but the . . . child porn thing was a bitter pill to swallow; we are already mapping our strategy for challenging the law,” said James Dempsey, counsel for the Center for Democracy and Technology in Washington.

For the most part, however, industry executives said they were pleased with the outcome of a whirlwind congressional session that produced more major pieces of high-tech legislation that any in recent memory.

“In the past, we’ve been accused of being naive as an industry, but we are one of the gorillas at the table now,” said Ken Salaets, director of government relations for the Information Technology Industry Council, a Washington trade group.

Along with the Internet tax and jobs measure, the industry on Thursday won a one-year extension of federal research and development tax credits that had expired June 30. High-tech industry leaders said the credits were crucial to ensuring further development of new technologies.

The industry also won a provision in the budget bill that encourages the federal government to transact more of its business with citizens and businesses online, through the use of authenticating “digital signatures.” The technology, which helps ensure that people in cyberspace are who they claim to be, will allow the government to accept more bids for work online, rather than on paper.

In addition to the Child Online Protection Act, lawmakers also included a provision in the budget accord that requires Web site operators to notify Internet users of the availability of technology that will allow them to block objectionable material from their computers.

Although some in the online community supported the provision, others objected to it as more government interference. Some even argued that it was symbolic of the adverse consequences Silicon Valley risks by becoming more visible on Capitol Hill.

“I think the industry has made a tragic mistake to engage Washington,” said Bill Freeza, a general partner in a Sewickley, Pa.-based high-tech venture capital firm. “You get thrown scraps by Washington while the politicians sink their tentacles deeper and deeper into the industry.”

One example, an exasperated industry lobbyist said, was a successful effort by Sen. Dan Coats (R-Ind.) to attach a provision to the Internet tax moratorium measure that withholds the moratorium from any business that sells pornography over the Internet.

“One hand giveth while the other takes it away,” the lobbyist said.

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