Senate Subcommittee Hears Argument For ‘Hands Off’ E-Commerce

At a hearing on Internet standards yesterday, a handful of e-commerce watchers told the U.S. Senate Science, Technology and Space Subcommittee to let the market decide how and where global electronic commerce matures.

The witnesses largely echoed the sentiments of countless other Internet executives and researchers who have been telling anyone who will listen on Capitol Hill, in both chambers, to leave this nascent business alone for a few years and see what develops.

Some on yesterday’s panel, however, argued that a slightly more complex mix of government assistance and market forces will yield the most progress toward interoperability.

“Any effort toward global interoperability in electronic commerce must walk the fine line between market-driven solutions and government initiatives,” argued Andrew Whinston,director of the University of Texas Center for Research in Electronic Commerce.

Standards A Must

Whether the government or the industry handles the details, all agreed that some type of technical standards are needed to make sure the Internet does not become a splintered set of commercial enclaves using different, mutually exclusive technologies.

“Timely and appropriate standards are critical to the long-term commercial success of the Internet, as they allow products and services from different vendors — and different regions — to work together, facilitate robust competition, and reduce uncertainty in the global marketplace,” U.S. Department of Commerce General Counsel Andrew Pincus said.

Setting those standards, however, gets complicated as globale-commerce and the competitive nature of the private sector are factored in, the panelists said. “If several years ago a standard-setting body or a government agency had sat down and tried to define e-commerce standards or structures, no person, no matter how enlightened, could have hoped to envision the future and develop protocols to serve all the needs that have emerged,” Wal-Mart Stores, Inc. Senior Vice President of New Business Development Glenn Habern said.

Habern added, “We believe that this period of dynamic growth is just beginning, and some conditions will hold true in the future, namely that no standard-setting body could hope to replicate the innovations that will be introduced according to the demands of commerce itself.”

The Commerce Department agrees, Pincus said, noting that governments of all types — in all regions of the world — should resist the temptation to define and regulate Internet technology. In a way, he argued, standards are already being developed.

“More often than not, the standards we take for granted today are in fact products and services that are broadly used and implemented on a global and national basis. These so-called ‘de facto’ standards are driving the growth and use of applications of the Internet, and are moving faster than both traditional and non-traditional standards-setting organizations can keep pace with,” Pincus said.

On top of the natural development of e-commerce technology based on business needs, some businesses are voluntarily working together to ensure interoperability, according to CommerceNet President Randy Whiting.

CommerceNet, for example, is a non-profit member-driven group focused upon improving the value of businesses through innovation in electronic commerce. “We provide a variety of programs that support member research, invention, experimentation and collaboration,” Whiting said. “Our major area of focus is on interoperability and its impact on technology, applications, public policy and business models.”

Whither the Government?

There is still a role that the government can play in this process, the witnesses argued, as a facilitator of cooperation. For example, Pincus said, the National Institute of Standards and Technology has already begun working with companies to improve interoperability and define technical standards for broadband wireless access technology.

In fact, some testified that the government’s oversight, even if passive, might be necessary to protect weaker businesses. “Leaving standardization entirely up to market players will not guarantee that such an effort will not be anti-competitive,” Whinston argued. “For example, a standard-setting session among competitors may be a disguised conference for collusion.”

The government can also lead by example, as Whiting put it, by being a “first mover” in the implementation of interoperablee-commerce technologies. Under the direction of the Departments of Commerce and Defense, many federal government agencies have been moving toward paperless commerce and reducing barriers to electronic commerce between the government and the private sector.

By making the early moves, Whiting said, the government can “more strongly and effectively influence the direction and adoption of interoperable e-commerce.”

Global Example-Setting

Pincus noted that the government should also “strive to reduce the abuse of standards by governments to create technical barriers to global electronic