Computer Nerds Are Becoming Policy Wonks

WASHINGTON — Computer companies have long fancied themselves a freewheeling, laissez-faire bunch, too busy inventing the future to worry about government policy, lobbyists or the seesawing fortunes of legislation on Capitol Hill.

But as computer technology has moved into the mainstream of American life--and become steadily more entwined with the heavily regulated telephone and broadcasting businesses--the relationship between the high-tech industry and the government is suddenly changing.

Personal computer companies, online service operators and software vendors are now being scrutinized on a host of fronts as lawmakers and regulators wrestle with technology’s growing impact on the economy, education, crime and social mores. The industry is responding by hiring lobbyists, setting up Washington offices and mixing it up in policy debates that until recently it might have ignored.

America Online, whose corporate offices are only 45 minutes from this city, opened up a Washington office this spring. Computer-networking giant Cisco Systems Inc. and Internet software phenom Netscape Communications Corp. are contemplating new offices here as well.

They would join a host of recent Washington arrivals--including Gateway Computer Co., Dell Computer Corp. and Storage Technologies Inc.--which have opened offices in the last year. And veteran Washington operators such as Intel Corp. and Compaq Computer Co. have expanded their lobbying presence.

Although the high-tech industry has always been involved in a relatively narrow set of trade and industrial policy issues--and a number of Silicon Valley executives have been prominent supporters of Bill Clinton and vocal on the issue of securities fraud reform--recent developments have prompted a new level of activism.

“There has never been more of a need for Washington presence than now,” said James Burger, a Washington lawyer who formerly was general counsel in Apple Computer Co.’s Washington office. “It’s hard for some companies to see the benefits of a Washington presence when you are dealing with future technology issues that may not pay off for years. But convergence [of computer and communications technologies] is going to have a real impact on the computer industry.”

The industry’s attention has been galvanized by a series of legislative and regulatory initiatives, beginning with last year’s Telecommunications Act. The sweeping measure was mainly aimed at freeing broadcasters, cable TV operators, local phone companies and long-distance carriers to enter one another’s markets.

But it contained one major provision with a potentially far-reaching impact on the computer and online services industries: the Communications Decency Act, which would make it a crime to transmit or display sexually explicit material on the Internet unless steps are taken to control access. The law has thus far been blocked by the courts, and the Supreme Court is expected to rule soon on its constitutionality--a decision that will have a huge impact on how the technology develops.

If the decency act is approved, warns Rep. Christopher Cox (R-Newport Beach), “the FCC could become the Federal Computer Commission.” Adds Cox, one of the industry’s biggest allies in Congress: “If the Internet is shackled by government regulation or taxes, it might suffer crib death, because this is still an infant technology.”

The Telecommunications Act also set the stage for a May 7 Federal Communications Commission decision that imposes additional fees on multiple telephone lines--many of which are used for Internet access.

Computer and online service companies were also disturbed by an FCC policy paper published in March by the agency’s counsel for new technology, Kevin Werbach.

In the 86-page paper, Werbach concluded that although “the FCC has never directly exercised regulatory jurisdiction over Internet-based services . . . nothing in the [federal communications] act expressly limits the FCC’s authority to regulate services and facilities connected with the Internet . . . and the FCC and state public utility commissions indisputably regulate the rates and conditions under which [Internet service providers] purchase services and facilities from telephone companies.”

Meanwhile, lawmakers are threatening to weigh in on another growing cyberspace issue: unsolicited e-mail. Two measures were introduced in Congress recently to combat “spamming,” the practice of sending unsolicited e-mail to millions of people.

The Federal Trade Commission next week will conduct hearings on spamming and other issues related to online privacy protection.

The new government activism toward high-tech doesn’t stop with online services. Sen. Robert G. Torricelli (D-N.J.) recently introduced a bill requiring the FTC to investigate the way personal computer manufacturers advertise the performance of a computer’s central processing unit, or CPU.

Torricelli says the advertised “clock” speeds of CPUs--often expressed in megahertz, such as a 200-MHz Pentium CPU--are confusing to consumers and do not give an accurate indication of the overall speed of the computer.

Another recent blow was dealt computer modem makers, who, in the middle of a huge roll-out of new high-speed modems, discovered that an obscure FCC regulation governing telephone line signal strength would prevent the modems from reaching their advertised top speed of 56,000 kilobytes per second.

And widespread consumer grumbling about computer makers using used parts in equipment advertised as new, marketing software that is full of bugs, and selling computer monitors whose screen sizes are as much as 2 inches smaller than advertised have already prompted some states to crack down on PC marketing practices.

Meanwhile, the Clinton administration is wrapping up an exhaustive federal examination of how to better coordinate federal regulation of the computer industry and online services. The effort, headed by Ira C. Magaziner, a senior White House advisor on technology policy development, is focusing on electronic commerce and the impact of the administration’s limits on the export of strongly encrypted software. Computer software developers want more relaxed controls so they can expand their sales overseas.

Top Clinton administration officials deny that the computer industry is facing some new regulatory onslaught and vow that the government will keep its hands off of America’s biggest growth industry.

“From the president to Vice President Gore on down, there is a strong desire to stay out of regulating this industry,” said Larry Irving, the administration’s assistant secretary of commerce for telecommunications.

“The reason the computer industry is so successful is precisely because the government hasn’t gotten into their business. If I was the CEO of a computer company . . . I’m not so sure I’d spend $500,000 a year to have a physical office in Washington.”

Still, in light of all the recent legislative proposals and regulatory actions, some wonder why the industry doesn’t do more to capitalize on its political strengths to leverage its lobbying clout.

“Clearly folks in the high-tech sector need to find a way to generate more grass-roots involvement,” said Sen. Ron Wyden (D-Ore.), a computer industry ally who has introduced a bill aimed at protecting the growth of the Internet by barring state, local and foreign taxation of Internet commerce. “The irony is they are really the perfect people to put in motion grass-roots involvement because they can use their very own technologies like e-mail and the Internet” to galvanize support.

Said Andy Schwartzman, president of the Washington-based Media Access Project: “I think the computer industry runs the risk, internationally, of giving up its lead if it doesn’t work more effectively with the federal government” to define the industry’s future.

Already there are some cases in which the industry’s newfound interest in public policy has paid off. Microsoft Chairman Bill Gates--who, besides having recently opened a Washington office, has played golf with the president and counts Vice President Al Gore as a technology policy ally--took a call last fall from FCC Chairman Reed Hundt, who urged Gates and Microsoft to get involved in a government-industry debate over digital TV.

A handful of computer companies, notably IBM Corp. and Apple, had already been involved in the digital TV issue. But Microsoft’s presence helped force a compromise on technology standards that will help computer makers. Today, as broadcasters prepare to roll out the digital technology--which will offer sharper pictures, better sound, more channels and opportunities for integration with the Internet and other data services--computer executives say they are grateful Hundt nudged them to join others shaping the technology.

“Reed Hundt, to his credit, understood that the TV and the PC were converging,” said Michael C. Maibach, a lobbyist in Intel’s Washington office. “I’m glad he made that call. As long as we are here fighting for more competition and keeping our eye on serving our customer, I think we are going to be successful.”

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Times staff writer Jube Shiver covers telecommunications and technology from The Times’ Washington bureau. Staff writer Karen Kaplan contributed to this report.