Despite Internet Growth since 1997, Authentication Still Lacking

The salient developments in e-commerce as voted by SIAA members were, in reverse order: the BlackBerry; iTunes; user-generated content; open standards such as HTML; Google Adwords; Amazon.com; eBay auctions; U.S. broadband penetration crossing 50 percent; and Google itself.

Wide adoption of encryption is an achievement deserving recognition, said John Patrick, president of Attitude LLC and former IBM Internet technology vice president. “There would be no e-commerce without encryption,” even though the Defense Department classified the tool as a “weapon” until the mid- 1990s, he said. “We didn’t get the security payoff that we actually expected” from encryption, though, said Stewart Baker, DHS assistant secretary for policy, who as the report was being drafted was ending a stint at the National Security Agency. Exploitation of security holes is now a “business model” government could have prevented by building security into the Internet, but “I don’t think we're likely to be able to root them out.” The “S” in SMTP stands for “simple,” not “secure,” and that explains why e-mail took off, Patrick said: “The beauty of the Internet is that it was not overdesigned.”

Authentication ought to be a higher government priority than encryption, now called a bulwark against data loss, Baker said. “I only wish I were smart enough to know how the government could successfully drive adoption” of authentication technologies, he said. “If there’s someone in government that knows how to do this, it’s not DHS,” he said, to laughter. “It’s not a technology problem,” Patrick said, citing more use of authentication by banks and hospitals due to regulatory pressure. The health system is a mess because “they don’t know who the patient is” and make easily avoidable mistakes, which will change in the next year as interoperable standards for electronic health records are adopted, he said.

Consumer use of the Web continues to outpace business use because “businesses feel that it’s a bigger bet for them” to move operations online, said Daniel Burton, SalesForce.com’s senior vice president for global public policy. His company pioneered the Internet-based software- as-a-service model that drew companies worried about large- scale, on-premises software installations. Companies wanted to “kick the tires and make sure [the Internet] was really industrial strength,” he said. Sales figures for e-commerce are impressive -- 30 percent compound annual growth since 2000, said Jamie Estrada, Commerce Department acting assistant secretary for manufacturing and services. The real coup of e-commerce is more efficient supply-chain management, Burton said.

Internet service is better in Rwanda than some parts of the U.S., said Magaziner, a regular visitor to Africa in his role as Clinton Foundation HIV/AIDS Initiative chairman. The U.S. has not created an adequate “competition climate” for Internet service, he said. France, which resisted joining the Internet as the industrialized world was setting standards, now is beating the U.S., installing Wi-Fi everywhere and creating government partnerships with utilities to expand service, as are Norway and Germany, Patrick said. “Europe is running away from us. It’s not socialism… It’s partnering,” he said. “Why we can’t figure that out in this country is a mystery to me.”

Blame the U.S. policy of “let a thousand flowers bloom” for poor mobile network performance compared with the rest of the world, Baker said. Europe pushed the “stupid” GSM standard worldwide and now GSM networks are widely available and resilient, he said. “It may well be that what is happening in broadband is something similar.” Cell phone standards should have been set by the U.S. long ago, Magaziner said, but those are simpler than Internet standards, which are “premature” now. Long term, Japan, South Korea and other countries that have set Internet standards “may hit a wall because they haven’t preserved all approaches,” he said.

Strong U.S. pressure against Internet censorship in China and others is unlikely to work, speakers said. Estrada said the U.S. must articulate “global principles,” and is working through the Organization for Economic Cooperation and Development to press governments, starting with India’s, to respect user privacy. Patrick went to China in 1996, thinking he was there to discuss security, only to find that China meant censorship, he said. New technology allows computer users to make available their machines as Internet proxies, allowing friends in censoring jurisdictions to simply visit their proxies to elude state controls. China is “not going to lock out Joe Blow’s computer in Cleveland,” Patrick said. The Internet will not make “unfree societies free,” despite technology advances to empower users, Baker said. “Technological determinism really isn’t going to stand in the way.”

The Clinton administration wanted to set a “basic” level of copyright protection for the Internet without helping Internet service providers take “control of all the water that went through the pipe,” as they sought early on, Magaziner said. The Convergence Law Institute’s James DeLong asked how user-generated content and its incorporation of copyrighted content challenges the copyright regime in place since Clinton. “The glass is half full, not half empty,” Patrick said, with the Digital Millennium Copyright Act still able to handle copyright complaints and companies like Google and YouTube sifting content in cooperation with copyright owners.

The problem with the net neutrality debate is the term itself, Patrick said. “It means something different to everyone,” and a preventive approach could “bring in regulation that we'd all regret.” He does not want content to be “tied to the pipe” but the best outcome is “if there’s no [government] solution, and let the Internet take care of it.” -- Greg Piper

SIIA Notebook…

If someone had told Ira Magaziner in the mid-1990s that South Korea would be number one or two in broadband penetration, “I would have said they were smoking something,” he told the forum. The chief author of the Clinton administration’s 1997 e-commerce report visited that country soon after the report was released, as political cartoons were mocking the U.S. for hyping an unknown technology, the “Internet,” he said. There were many “dogs that didn’t bark” that made the Internet successful, he said, such as the demise of a proposed European Union “bit tax.” The International Telecommunications Union wanted to take over international regulatory oversight of the Internet, as the FCC did domestically, and suits challenging Internet protocols were moving through courts worldwide, said Magaziner. The Defense Advanced Research Projects Agency, then in charge of Internet routing, wanted to quit that role. Magaziner said he got physical access to the core routers in university building basements. “I could have blown these things up,” he said. But good policy eventually emerged, with the World Trade Organization agreeing to block Internet tariffs and the U.S. imposing an access tax moratorium, he said. The so-called bubble largely resulted from New York business interests “looking for anyone under 30 with a computer” in California, but the Clinton report’s original prediction that the Internet economy would grow about 10 times faster than the offline economy has proven out, he said. Bipartisan sponsorship of anti-regulatory bills helped get them through Congress, but so did Clinton’s insistence on keeping Internet efforts out of the State of the Union address, because any program mentioned “immediately got attacked and opposed,” Magaziner said. -- GP

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“It does feel a little bit like 1999… but investors are a lot smarter,” with few “trying to change the world,” easing the risk of another Internet bubble, Attitude LLC founder John Patrick told the forum. Some gloomy soothsaying, especially on bandwidth scarcity, is overblown, the former IBM Internet technology executive said. If everyone in the world made a VoIP call at the same time, the traffic would represent three percent of fiber capacity, he said. Opera’s next-generation Mini mobile browser, which reformats any Web site for mobile display, works on 750 million phones now in use, foreshadowing a world in which “the PC really does become the minority player.” China and India lead in mobile use; most of their residents will never own a PC, he said. Rising adoption of Linux on mobile devices finally will open them to competition and innovation, he said. Broadband over powerline technology “works technically, [but] the electric companies are a little slow on the marketing side,” slowing the arrival of Internet facilities competition, Patrick said. Virtual world Second Life is becoming “the next generation of WebEx,” he said, referring to the Internet conferencing company, as companies join the virtual world for internal collaboration. RFID chips soon could see use, say, to alert a primary care physician with an automatic blog post when a patient’s hospital gurney moves, he said. Customer service is the big disappointment online. Every company has a privacy policy but few have the resources to see if it is implemented, he said. Call centers provide long lists of options and require callers to press buttons, leading to a human employee asking for the same information, he said. “That isn’t going to cut it in the future.” A company asking Patrick to create a secret question and answer to log in to his new account rejected his initial suggestions, and financial institutions force customers to call or fax the company rather than fix problems over e-mail, for the average user the most natural path, he said. “It’s not the technology; it’s the attitude.” To stay ahead, companies should set up advisory panels of teens and college students making suggestions weekly, he said.