NATOA Journal of Municipal Telecommunication Policy December 2000;“

By Jonathan Bick, partner Greenberg Traurig, Adjunct Professor of Internet Law Pace Law School and Rutgers Law School and Author “101 Things You Need to Know About Internet Law” (Random House 2000)

Anyone looking for a report card on how well communities across the country are meeting the challenges of closing the Digital Divide -the distance between the haves and the have-nots - need only to look as far as e-­commerce law. On both state and federal levels, statutes and actions have, often inadvertently, increased the advantages of those who have Internet access over those who do no. Local government representatives, especially national organizations like NATOA, most accept the challenge to take corrective action. Consider just three examples: electronic signatures, taxes on the Internet, arid infringement liabilities.

Individuals Without Internet Access Have Been Statutorily Deprived of the Benefits of e-Commerce by the Federal Electronic Signatures Law

The Electronic Signatures in Global and National Commerce Act[1] (E-Sign Act) is intended to bring the legal community in line with e-transaction technology. It is designed to foster uniformity among states that have implemented the electronic authentication of contracts. The law simply states that contracts cannot be invalidated simply because they arc in a digital form. The law also contains several provisions designed to protect consumers using e-signatures.

However, the E-Sign Act, in its effort to protect con­sumers, requires that in order for consumers to benefit from the ability to use an electronic signature, they must give electronic consent. To be specific, consent must be given in a manner that reasonably demon­strates that the e-consumer can access information in the electronic form that will be used.[2]This has been generally ­interpreted to mean that a person must have access the Internet and must personally execute an electron­ic signature to take advantage of e-sign e-commerce.

This effort to protect consumers can effectively block persons without access to the Internet from participating in c-commerce. When companies see e-signa­tures as a way to cut postage, paper, storage and administrative costs, they may charge more for paper document transactions. The e-sign law permits companies to charge more for customers who can't or won't go online. It even allows firms to refuse to do business with people who can't provide an electronic signature. In this way, the e-sign law widens the Digital Divide between those who have Internet access and those who do not.

Those Without the Ability to Use the Internet to Buy Goods Face Higher Prices Due to Taxes

E-buyers whobuy goods from out-of-state retailers via the Internet have largely escaped paying sales and use tax on purchases due to complex existing sales and use tax statutes. This is partly because of the U.S. Supreme Court’s 1992 decision in Quill Corp. V. North Dakota.[3]The Quill court held that a seller has no obligation to collect sales taxes or use taxes on out-of state purchase transactions unless that that seller has a "nexus" - or substantial connection - with that out-of-­state jurisdiction and that such a requirement imposed by any state would be unconstitutional.

Forty-five states and the District of Columbia have use taxes that apply to out-of-state purchases in lieu of in-state sales taxes, but collection effort have not been effective for e-commerce transactions. Thus, those people without Internet access, often economically disadvantaged, are taxed

more heavily than those with Internet access, again widening the Digital Divide.

Significant Freedoms from Infringement Liability have been Granted to Those Who

Publish on the Internet as Compared With Those Who Do Not

The Digital Millennium Copyright Act (DMCA)[4] is designed primarily to address the complex issues of copyright on theInternet. Title II of the Act limits the copyright liability of Internet service providers (ISPs) and online service providers (OSPs). This Act generally grants them immunity from liability for the infringing activities of their subscribers. Due to the broad defini­tions of ISP and OSP host Internet, users can qualify for liability protection not available to those who call ­not use the Internet.

It should be noted that the special protections for Internet users afforded by DMCA were aimed at adapting international copyright law to the digital networked environment and were prepared to fit the framework of the World Intellectual Property Organi­zation (WIPO) and did not necessarily consider the interests of local government telecommunication needs. In this way, those large global multi-national corpora­tions with the mostresources are often more protected than small local businesses. Global entities with larg­er constituency of affluent Internet-haves benefit more than local entities with a larger constituency of disad­vantaged Internet have-nots, again widening the Digital Divide.

What Can Local Governments Do?

Although the Internet is generally thought of as a national or global telecommunication system, each of its parts and each of its users are located in Jurisdic­tions that are under the control (If a local government. Thus, national associations representing the needs and interests of local governments have expressed all inter­est in closing the Digital Divide and have the ability to do so. This is particularly true of national associations predominately composed of local government agencies, local government staff, and public officials, as well as consultants, attorneys, and engineers who consult local governments on their telecommunications needs.

Local governments have a definite role in closing the gap in the Digital Divide. National Organizations, especially those like NATOA, have the ability to inject interests of local governments with respect to cable administration, telecommunications franchising, rights-of-way management, and governmental access pro­gramming to information technologies. They can advo­cate and take action that will allow people without Internet access to close the Digital Divide.

With respect to electronic signatures, local govern­ment can promote solutions allowing all people to enjoy the opportunities offered by the E-Sign Act. After all, the E-Sign Act only pre-empts existing laws governing contracts to the extent they have a requirement that contracts or records be written signed or be in non-electronic form. Thus, one way local governments can act is by encouraging the use of electronic surro­gates (i.e. allowing one party to c-sign on another's behalf). This may be implemented by either the enactment of local statute or by local administrative agencies. The state of New Jersey has already taken action to augment the E-Sign Act.[5]

With respect to Internet taxes, local governtenta1 telecommunications representatives can

work with for-profit organizations whose needs and interests are complementary to level the tax

playing field. Local governments can insist that tax laws treat e-commerce and tradition commerce alike.

Local governments can also insist upon the collec­tion of use tax by' patties that facilitate e-commerce. Two easy options are available. First, the existing sales and use tax system can be simplified by moving the use tax collection burden to an Internet facilitator such as an ISP. Second, local governmental agencies could use software that would collect use sales taxes over the Internet from out-of-state purchases.

With respect to infringement liabilities, national I organizations of local government representatives especially' those like NATOA, can get involved in cast's before the Patent arid Trademark office, the Federal Communications Commission and the federal courts. Local governments can seek more equitable protection for all commercial communication transaction liability regardless of Internet use.

In short, national organizations of local govern­ment representatives can attempt to close the Digital Divide by supportingthe development of effective local information infrastructures that do not yield special benefits for c-commerce transactions. Each local community that is part of the Internet has control over part of the Internet. It is up to the local governments to require that voice, video, and data communications networks serving their communities provide telecom­munications resources in a manner that do not overly favor e-commence over traditional commerce, to stop the Digital Divide from widening. At the same time, local governments must promote initiatives that can close that same Digital Divide, perhaps through univer­sal access or infrastructure investment but definitely by implementing standards and policies promoting the neutral nature of commerce.

<HRsize=1 width="33%" align=left id=HRRule2>

[1] Public Law 106-299 enacted 6/30/00 and effective 10/1/00.

[2] 15 U.S.C.S. Section 7001(c).

[3] 504 U.S. 298

[4] 17 U.S.C. 512.

[5] "New Jersey Electronic Transactions Act", 2000 N.J. Assembly Bill 2327.