Aug 1, 1998 12:00 PM

"Don't Tread on Me"

By Jennifer Hillner

| THE NETIZEN

| "Don't Tread on Me"

Wiretap Nation

Magaziner's Modest Gain

Hit the Road, Union Jack

Netscape's New Rules

See No Evil

Fighting over the Kids

Smudged

Raw Data

<h4>#### ess Semiconductor CEO T. J. Rodgers is leading a campaign to stomp out corporate welfare – and renounce the Valley's new political style.</h4 We Silicon Valley heavyweights like John Doerr and Jim Barksdale are cozying up to Washington, Cypress Semiconductor CEO T. J. Rodgers is keeping the distance. Bucking a trend that has seen California biz bigwigs appealing to the federal government for help in dealing with problems ranging from a shortage of skilled workers to anxieties about Microsoft (see "<a hcape's New Rules</a>age 93), Rodgers is signing up Valley leaders to end subsidies for high tech companies.

"ley CEOs haven't changed," Rodgers roars. "We are capitalists who make money by making things. Gov-ernment only subtracts from that!"

Eyear, the US government gives away nearly US$65 billion in corporate subsidies – handouts that arrive in the form of tax breaks, export incentives, and pork-barrel contracts. Rodgers argues that these policies only harm competitiveness and increase taxes. "Politicians are destructive people," he says. "They give us their money, then take away taxes and our freedom in the marketplace. That's the game."

Se asking a Senate subcommittee last year to end "corporate welfare" – even if that translates into funding cuts for his company – Rodgers has persuaded 78 Valley entrepreneurs to sign his "Declaration of Independence" from subsidies. Cosigners include Scott McNealy of Sun Microsystems, Scott Cook of Intuit, and Jerry Sanders of Advanced Micro Devices.

Cics point out that Rodgers may find it easy to turn his back on the government. His $550 million company, described by one analyst as "token change," has little to lose if assistance is cut off. Netscape public-policy counsel Peter Harter adds that the Valley's separatism is doomed. "If you're a long-range thinker,"he says, "you have to get involved."

Beven if they disagree with his antipolitics, Rodgers's friends are willing to join his cause. "T. J. is seldom without an opinion," says cosigner and Kleiner Perkins VCFloyd Kvamme. "He's a great American."

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Crimey be down in the US, but wiretaps are still on the rise. State and federal law-enforcement agencies sought permission to conduct 1,186 surveillance interceptions in 1997 – a 3 percent jump from 1996 and a 176 percent increase since 1987. Every one of last year's requests was granted, although only 1,094 wiretaps actually were installed – at an average cost of US$61,000 each. Seventy-three percent of all intercept authorizations were acquired in the course of narcotics investigations, making drug peddlers the primary targets of communications snoops, while gambling rings and racketeers tied for second at 8 percent each.

aa lot of listening to put a few bad guys behind bars – of the roughly 2.3 million conversations intercepted last year, 20 percent generated incriminating evidence, resulting in 3,086 arrests and 542 criminal convictions.

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ing fad last year to secure congressional renewal of its "fast track" negotiating authority for international trade agreements, the Clinton administration's free-trade agenda has suffered a new setback. The White House had hoped to use the World Trade Organization's Ministerial Conference in May to introduce a long-term international freeze on ecommerce tariffs. Push

alicy that was the brainchild of tech adviser Ira Magaziner, the Clinton camp wanted the WTO's 132 member nations to sign an agreement prohibiting, for an unspecified period, duties on "digitized information," such as downloadable software or data. Magaziner says the accord was designed to codify "the principle that cyberspace should be unregulated and that the Internet should stand as a seamless global marketplace." But

lity got in the way. European officials complained that the tariff freeze diverted attention from more controversial issues like encryption and privacy protection. Developing nations, worried about the financial impact of the proposal, balked at an open-ended agreement. In the end, the US had to settle for a temporary freeze to be reviewed in late 1999. Still, that modest step forward may be one of the biggest trade endorsements the Clinton administration receives this year. <str

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stralioised to hold a referendum next year on rejecting its Commonwealth status, polls show that a majority already wants to remove the Union Jack from the national flag. With that in mind, last fall a nonprofit group called Ausflag sponsored a professional flag-design competition. Almost 3,000 entries were received, and Aussies have until the end of this year to vote for their favorites. The top three will go to the Australian federal government for consideration. Only Australians are eli-gible to vote, but anyone can check out the contenders at <a href="http://au/</a>. And, no, nof the proposals feature Vegemite. By W

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ale kn#### how much an embattled company can do with a lot of lobbying muscle. Is the rest of the industry paying attention?</h4> <h4>By Will Ro /#### Forget stoc cThink political capital. That's the plan at Netscape Communications, and it's paying dividends. Although Netscape has taken a beating on Wall Street, the company's stock has been on the rise in Washington ever since the Justice Department launched its antitrust lawsuit against Microsoft in conjunction with 20 states. And now that Intel has joined Microsoft as an antitrust target, the rest of the industry may want to take a closer look at Netscape's playbook. Thus far Mic

fas taken a beating. Although pundits have made much of Microsoft's decision to spend US$1.9 million beefing up its lobbying presence last year, the company's woes suggest that throwing money at an antitrust problem won't make it go away. Washington insiders who have worked on the antitrust investigation echo many of the same complaints cited by Microsoft's frustrated software competitors, charging Redmond with deception, stonewalling, and arrogance. According to

ee Antitrust Subcommittee staffer, "There is no comparison between Microsoft and Netscape on the lobbying front. The problem is, Microsoft still thinks everybody is dumber than they are." Take, for in

cthe high-profile row over Microsoft's exclusivity agreements with ISPs. Shortly before Bill Gates testified before the Senate Judiciary Committee last March, Microsoft announced it would drop a contract provision that prohibited partner ISPs appearing in the Windows 95 desktop "sign-up wizard" from promoting competing browsers. The concessi

ehe Senate to believe the matter was settled, but Microsoft neglected to mention that the Goliaths of Net access – America Online, CompuServe, and AT&T WorldNet – were not included in the new arrangement. Instead, the three services were tucked away in a separate folder on the Windows 95 desktop, where they remained bound by exclusivity provisions. Senate staffers were livid when they discovered the half-truth several weeks later, and Gates exacerbated the insult when he wrote a letter to Judiciary Committee chair Orrin Hatch (R-Utah) in which he maintained that all ISPs promoted with Windows 95 – the Big Three included – were no longer required to exclusively promote Internet Explorer. Netscape, me

ihas done a much better job of making friends and influencing people – an accomplishment that can be traced directly to CEO Jim Barksdale. Having previously served as chief executive of Federal Express and president of McCaw Cellular Communications, Barksdale cut his teeth at companies that skillfully manipulated regulatory structures to pry open captive markets. FedEx, for example, is a master of the lobbying art, having used its formidable clout to keep the US Postal Service, labor unions, and the Federal Aviation Administration at bay. Barksdale cheerfully acknowledges that these experiences taught him how valuable a strong Washington presence can be to an underdog player surrounded by larger competitors. No surprise, then, that during the past two years Netscape has poured almost $1.7 million into the lobby till. Netscape "ha

eery effective" in helping Congress pursue its antitrust investigation of Microsoft, says Jon Liebowitz, minority counsel to the Senate Antitrust Subcommittee, who singles out Barksdale for praise, adding, "He's more than just a talking head. He's very substantive." Netscape has

eetter than most tech concerns simply by demonstrating a little bit of DC street savvy. Instead of blustering, the company has pressed its point firmly and consistently – without going too far. Microsoft's

,anwhile, are prodding the industry to pay more attention to events in the capital. As a sequel to the Microsoft case, the Federal Trade Commission has filed suit to halt Intel's allegedly anticompetitive practice of withholding technical data from some computer manufacturers. Further over the horizon, there are occasional murmurs that Cisco could also find itself in the government's antitrust crosshairs during the months ahead. It may be true that only the paranoid survive in the high tech industry, but in Washington, paranoia just doesn't have the same kind of cachet. <str

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es is stranger to the media spotlight. Long the nemesis of Internet free-speech activists, the telegenic communications director for the antipornography group Enough Is Enough has also taken heat from conservatives who complain that she isn't doing enough to protect children from online smut. Both sides will probably have more to gripe about this September, when evangelical publisher Baker Book House releases her new title, Kids Online: ProtectYour Children in Cyberspace. Describing herself Net advocate, Rice Hughes hopes parents will turn to her opus as an awareness and resource tool. "It isn't an agenda book," she says. "I think it achieves a necessary balance."

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am thaoles out megabucks to connect schoolchildren to the Net in every congressional district in the US should be the toast of Capitol Hill. But it hasn't worked out that way. Instead, Republicans fear that the multibillion-dollar "e-rate" subsidy plan looks like the first plank in Al Gore's 2000 presidential bid. A few years back, la

eagreed that phone users – who already subsidize basic telecom service in rural and poor areas – should also chip in to bring the Internet into classrooms and libraries. After the Telecommunications Act of 1996 was passed, the Federal Communications Commission established a nonprofit entity called Schools and Libraries Corporation to manage and implement the E-rate program by collecting up to $2.25 billion a year from the telcos and, ultimately, their 95 million customers. Republicans have cri

oSenator John McCain (R-Arizona) blasted the FCC for paying a politically connected lawyer $200,000 a year to run the corporation. Senate Appropriations Committee chair Ted Stevens (R-Alaska) has peppered agency officials with questions about "excessive spending levels," and House Speaker Newt Gingrich called the plan a "Gore tax." The GOP also found an unlikely ally in a coalition of consumer groups who oppose AT&T's and MCI's plans to pay for E-rate by adding surcharges to some long distance calls. FCC chair Bill Kenna

agreed to revamp the program's administrative structure and adjust allocations, but he is determined to keep it alive. With inner-city kids trailing suburban students in Net access, he says, "we've got to keep the program moving forward." DIG

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a key ponent of the Internet's security infrastructure – which is precisely why the banking industry wants to promote their use. While several congressional lawmakers have floated proposals to clarify the legal status of online authentication systems, a bill by Republican Senator Bob Bennett of Utah is in the lead so far. Dubbed the Digital Signature and Electronic Authentication Law of 1998 (S 1594), Bennett's bill would allow banks and other financial heavyweights to use electronic authentication from any customer or business. Consumer groups complain

t1594 would allow big banks to discriminate, allowing some parties to use digital signatures while others are left to rely on pen and ink. Moreover, Bennett's bill does not hold banks responsible for losses caused by security failures. Privacy groups, meanwhile, aren't much happier. The Center for Democracy and Technology says the bill could create a centralized data bank that will allow identity theft to flourish. At the same time, CDT warns, the data bank could be a precursor to national ID cards. Any legislation may be p

t. Now that more than a dozen states have enacted their own digital-signature laws, "the states are functioning as policy laboratories," says CDT's Alan Davidson. "It makes sense to continue that kind of organic experimentation." The number of Internet s

rrs in China increased 32 percent, to 820,000, during the first three months of 1998 (China Internet Information Center) … Almost 50 perU and publishers agree that news coverage is "shallow and inadequate," while 55 percent say it is "too cynical" (Editor & Publisher) … No governmenthcomplied with the amended 1996 Electronic Freedom of Information Act, which mandates posting federal documents on agency Web sites (OMB Watch) … During the 19h the ratio of students to computers in public schools was 19 to 1. By 1996-97, it was 7 to 1 (Market Data Retrieval) … Only 27 percelhmen believe it is essential to keep up with political affairs (UCLA Graduate School of Education &Information Studies)