Cisco Government Affairs E-Update

Volume 2, Issue 26

28 June 2002

Brought to you by Cisco Government Affairs Online: http://www.cisco.com/gov

This Week@Cisco in Government Affairs

Cisco's E-Update keeps you up to date on the major policy news of the week. Focusing on broadband, education and e-government areas, but covering high-tech and telecom in general, the E-Update is a great source of information for state, federal and international policymakers. To subscribe, send a message with “subscribe” in the subject line to “Subscribe-eUpdate@cisco.com

BROADBAND POLL – SHARE YOUR VIEWS IN OUR BROADBAND POLL.  Do you have broadband?  Do plan to get broadband?  Is broadband too expensive?  Go to our broadband poll and give your input: http://forums.cisco.com/eforum/servlet/HtCom?page=main

NOTE: CISCO GOVERNMENT AFFAIRS E-UPDATE WILL NOT BE PUBLISHED NEXT WEEK. 

NOTE 2:  Congratulations to Brazil and Germany for making it to the World Cup finals.  E-Update wishes both teams well. 

This Week@WASHINGTON, DC

RESEARCH SHOWS LIFT IN U.S. BROADBAND ADOPTION - The penetration of broadband Internet access in the US has accelerated, suggesting that the nation is catching up with certain Asian countries in the deployment of the technology.  The number of internet users of broadband in the home jumped from 16 per cent at the end of last year to 21 per cent in May, according to data released on Monday from the Pew Internet and American Life Project, a Washington-based research group. The slow uptake of broadband - typically through cable modems or the Digital Subscriber Line (DSL) systems that operate over telephone lines - has alarmed the US technology industry, which has blamed initially disappointing adoption for the slump in personal computer sales and related technologies.  The entertainment sector has also come under fire for not providing a legal and simple mechanism for users to download music and movies on the internet.  http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1024578193059&p=1012571727248

PEW INTERNET AND AMERICAN LIFE REPORT: "The Broadband Difference: How online Americans' behavior changes with high-speed Internet connections at home"
You can view the report here: http://www.pewinternet.org/reports/toc.asp?Report=63

CABLE FIRMS FAULTED FOR RESTRICTIONS ON INTERNET SERVICE - Some cable providers have imposed "troubling" restrictions on how their high-speed Internet networks can be used by consumers and businesses, a coalition of high-tech companies has told federal regulators. In a filing with the Federal Communications Commission, the companies say that in the subscriber agreements of major cable Internet providers, there are prohibitions on the use of private corporate networks that allow employees to work from home; restrictions on adding hardware such as servers and game boxes to the networks; and clauses that reserve the right to restrict access to certain bandwidth-intensive sites, such as those for online gambling. The FCC filing is the latest instance of intense corporate jockeying to influence how high-speed Internet access will be deployed nationwide and under what rules. http://www.washingtonpost.com/wp-dyn/articles/A58542-2002Jun27.html

IRS FREEZES STOCK TAX PLAN - Technology workers and their employers breathed a sigh of relief after the Internal Revenue Service said it has indefinitely postponed its plan to collect payroll taxes on certain stock-based employee benefits starting next year.  The plan, announced in November, caused an uproar in the technology industry.  At a hearing before the IRS in May, Microsoft, Texas Instruments and networking equipment maker Ciena joined a number of companies in asking the government to stop the plan. Several tech-lobbying groups, including TechNet, the Information Technology Association of America and the American Electronics Association (AeA) rallied opposition against the plan, and 10 members of the Senate Finance Committee wrote up a condemnation of the plan. The controversial plan would have imposed payroll taxes on incentive stock options and employee stock purchase plans (ESPPs) beginning Jan. 1, 2003. The taxes already apply to some stock plans, but this rule would extend the taxes to ESPPs and other currently exempt plans that are widely used in the computer industry to recruit and reward staff.  http://msnbc-cnet.com.com/2100-1017-939342.html

ANALYSTS: BROADBAND COMPETITION A 'FIRESTORM' - In an analysis released this week criticizing the U.S. Federal Communications Commission, market research company Gartner Dataquest said a "radical reform" of telecom policy is needed if the rollout of high-speed Internet services, or broadband, is ever to break out of the slow lane.  The report recommended that regulators take a broader approach to guiding the industry, adding that they must find the right balance between "incentives, requirements, competition and monopolies," then sit back and let the market do the rest.  "Rather than trying to micromanage every little aspect of regulation, the regulators should be setting the principles of operation and then allowing the industry to negotiate bilateral and multilateral interconnection agreements and settlements," the report stated. http://story.news.yahoo.com/news?tmpl=story&cid=75&ncid=75&e=5&u=/nf/20020627/tc_nf/18412

OMB MOVES FORWARD WITH E-GOV ARCHITECTURE - The Office of Management and Budget by October expects to issue the first complete version of an enterprise architecture for its 24 e-government projects.  Bob Haycock, new manager for OMB’s federal enterprise architecture initiative, said that drafts of business, technical and application capability reference models likely would be done by the fiscal year’s end. He spoke at an Oracle Corp. Government Executive Forum in Washington. http://www.gcn.com/vol1_no1/daily-updates/19109-1.html

BELLSOUTH CALLS FOR END OF "NAPSTERIZATION" OF TELECOM - Calling current government policy the "Napsterization of Telecom," a BellSouth executive told a group of Congressional and Administration office staff members that "current regulations have drained profits from profitable businesses to subsidize unprofitable or bankrupt ones." "We have to build a better mousetrap, then give it to our rivals at below-cost rates," explained Margaret Greene, BellSouth president regulatory and external affairs. She was addressing a lunchtime Forum on Technology and Innovation, sponsored by the Council on Competitiveness and Sens. Jay Rockefeller, D-W. Va. and Bill Frist, R-Tenn.  http://bellsouthcorp.com/proactive/newsroom/release.vtml?id=40823

This Week@EMEA

INTERVIEW WITH ERKII LIIKANEN - Gartner analyst Andrea Di Maio interviews Erkki Liikanen, the European Commissioner for Enterprise and Information Society, about e-government and broadband policy. Erkki Liikanen plays a major role in the coordination of the eEurope program which intends to bring the benefits of the information society to all Europeans. The program was launched by the European Commission in December 1999, revised as the eEurope 2005 Action Plan, and adopted by the European Council on 18 June 2002.  http://www3.gartner.com/1_researchanalysis/special_reports/eu062102.html

U.K. E-COMMERCE MINISTER: NO RURAL BROADBAND SUBSIDIES - Stephen Timms MP says market forces - with some government help - are the best way of rolling out broadband across Britain - The UK government is still not prepared to subsidise the rollout of broadband to rural areas, as is happening in some other countries, despite increasing concern that a digital divide is emerging between broadband haves and have-nots.  In an exclusive interview with ZDNet UK, the e-commerce minister Stephen Timms said he supported the decision of his predecessor, Douglas Alexander, not to provide tax breaks to support infrastructure rollout -- as was recommended by the Broadband Stakeholder Group (BSG). http://news.zdnet.co.uk/story/0,,t269-s2112337,00.html

MIXED SIGNALS FOR EUROPEAN WIRELESS TELECOM - Mobile phone operators are getting crossed signals from European Union lawmakers. There is plenty of political talk supporting the broad aims to digitize the European Union economy, including development of Internet-based mobile phone services. But at the same time new rules are being drafted that would heap greater regulatory and financial pressures on wireless network operators, as they struggle to switch to a new, third-generation mobile phone technology. As European Union heads of state agreed to an ambitious "eEurope" action plan at a conference in Seville during the weekend, they and the European Commission, whose job it is to build the regulatory framework for the so-called information society, have been criticized for overlooking current realities to set their sights on the long term.  http://www.nytimes.com/2002/06/24/technology/24NECO.html

THE EUROPEAN UNION IS FALLING FURTHER AND FURTHER BEHIND IN RESEARCH AND COMPETITIVENESS - In the USA, €288 billion ($265 billion) was spent on research and technological development (R&D) in 2000, but only €164 billion in the EU. European Commissioner for Research Philippe Busquin presented the latest figures available today in Brussels. "In euro values at current rates, the gap between the USA and the EU widened to €124 billion in 2000", he affirmed. "At parity, and at constant prices, this gap was more than €100 billion in 2000. In 1994, the gap was €51 billion, but it has constantly increased since then.  http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/02/939|0|RAPID&lg=EN

BRITISH WIRELESS BROADBAND TAKES OFF AT HEATHROW - British telecoms operator BT Group Plc officially fired up its first wireless local area network (WLAN) "hot spot" at Heathrow airport on Monday, offering high-speed Internet access to nearby laptop users.  The trial of the new BT Openzone service at the London airport Hilton comes in advance of the August 1 launch, when companies will pay $143 a month for one employee to get unlimited Internet access in the 100-yard-radius zones. Crucially, WLAN traffic runs on fixed-line networks, not mobile. BT joins a growing list of European fixed-line players following U.S. footsteps into WLAN, which delivers data at 20 times the speed of mobile phones. Wireless firms worry it may take revenue from their own costly next generation services, but optimists say the two technologies will be complementary. http://story.news.yahoo.com/news?tmpl=story&ncid=582&e=2&cid=582&u=/nm/20020624/wr_nm/telecoms_bt_wlan_dc_1

EGYPTIANS FLOCK TO NEW NET PLAN - Egyptians are spending more time on the Internet since the Internet became free -- free of subscription fees that is, because users are still paying the nominal cost of 20 cents per hour for their Internet calls.  That's good news for the ISPs, which collect 70 percent of the call revenues from the phone company.  The new agreement was brokered by the Ministry of Communication and Information Technology (MCIT), which figured the state-owned operator, Telecom Egypt (TE), ought to play a part in a national drive to increase Egypt's online presence. Access is vital because only one million out of 69 million Egyptian citizens use the Internet, and as a developing country, Egypt risks falling further behind as the global economy becomes increasingly knowledge-based. http://www.wired.com/news/business/0,1367,52993,00.html

UN: DIGITAL DIVIDE IN ARAB WORLD 'STAGGERING' - A United Nations study released says the divide between the Arab and advanced world is "staggering." According to the report, only one percent of the 280 million people in the Arab world use the Internet. Although improving infrastructure is critical, the study found that slow reforms in the Arab telecom sectors, poor access to information resources, limited personnel and economic difficulties all aggravate the digital divide.  The United Nations Development Program (UNDP) is currently working with Arab states to create strategies for upgrading their information technology systems.  http://www.voanews.com/article.cfm?objectID=647B33EE-F05F-4D9A-940D6B97F1FBD01E&title=UN%3A%20%20Digital%20Divide%20in%20Arab%20World%20%27Staggering%27&catOID=45C9C78D-88AD-11D4-A57200A0CC5EE46C

WEB GIVES A VOICE TO IRANIAN WOMEN - The past few months have seen a jump in online journals or "blogs" in Iran as more and more women turn to the Internet to discuss taboo subjects. In 2001, approximately 400,000 people were online in Iran and that number is expected to grow to 15 million over the next 4 years. The government does not censor the Internet and Iranian journalist Hossein Derakhshan said many of the online journals deal with social issues, "... the underground lives that Iranian youth have these days. Things like girlfriends, boyfriends, the music they listen to, the films they see.” http://news.bbc.co.uk/hi/english/sci/tech/newsid_2044000/2044802.stm

BROADBAND BY BLIMP? Huge airships could replace telecom satellites in 5 years  - Huge airships hovering miles above major cities could replace satellites as providers of telephone and Internet services in as little as five years, Britain’s Meteorological Office said. The unmanned balloons would sit in the stratosphere — between 7.5 and 37 miles above sea level — keeping their position fixed by making use of solar-powered propellers and the vagaries of the weather in inner space. http://www.msnbc.com/news/771760.asp?0si=-&cp1=1

This Week@Americas/International

CANADIAN MINISTER OF INDUSTRY VISITS CISCO – Minister Alan Rock visited Cisco Headquarters in San Jose, California this week and heard from Cisco executives and talked about broadband and Canada’s Innovation strategy.  Cisco Senior Vice President, Chief Marketing Officer and fellow Canadian, James Richardson, greeted Minister Rock and gave him an overview of Cisco’s presence in Canada as well as a bit of history about Cisco. 
Bio of Minister Rock: http://www.ic.gc.ca/cmb/Welcomeic.nsf/ministers/Minister

CANADA’S INNOVATION STRATEGY - http://www.innovationstrategy.gc.ca/cmb/innovation.nsf/pages/index

EMBRACE E-BIZ OR LOSE EDGE, STODGY SMES TOLD: CeBI aims to nudge local firms onto global stage through Net power - When Veseys Seeds Ltd. went on-line in 1999, it only made sense. After all, the York, P.E.I.-based firm was already Canada's largest mail-order gardening company and the Internet looked like a logical next step. The company also needed to get on-line since several of its competitors were also building a Web presence.  Since then, the company's on-line business has been growing, with Internet sales accounting for a quarter of Vesey's total business in 2001, up from about 18 per cent the previous year.  Veseys is a good example of how a company can harness the power of the Internet, according to Nancy Hughes Anthony, the president and chief executive officer of the Canadian Chamber of Commerce and the co-chair of the new Canadian e-Business Initiative (CeBI).  http://www.globeandmail.ca/servlet/GIS.Servlets.HTMLTemplate?tf=tgam/search/tgam/SearchFullStory.html&cf=tgam/search/tgam/SearchFullStory.cfg&configFileLoc=tgam/config&encoded_keywords=CEBI&option=&start_row=1&current_row=1&start_row_offset1=&num_rows=1&search_results_start=1

AMAZON LAUNCHES SITE IN CANADA - Amazon, the online retailer, yesterday made its first international expansion in 18 months as it launched a bilingual site for the Canadian market.  Diego Piacentini, vice president for worldwide retail and marketing, said that although the group's US website was already the leading e-tailer in Canada, the Amazon.co.ca site would bring the significant benefits to the company and to Canadian consumers.  "By shipping from Canada itself we can create a better customer experience. Customers pay in local currency, we can lower the shipping expense, avoid delays in customs and also customers will not have to pay local VAT," he said.  http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1024578243829&p=1012571727248

This Week@Asia/Pac

MICROSOFT INTENDS TO INVEST A TOTAL OF $750 MILLION IN CHINESE MARKET - Microsoft Corp. unveiled plans to invest about $750 million in China during the next three years, marking the largest foreign software venture ever in the country. Microsoft announced the deal Thursday at the end of a two-day visit by Chief Executive Steve Ballmer, who has made China a priority for the U.S. software giant. Mr. Ballmer said the funds would be invested in education, training and manufacturing facilities in China, as well as in local Chinese software companies, according to a Microsoft statement.  "This wider range of investments and cooperative agreements is designed to support both China's locally owned software industry and its intellectual property," Mr. Ballmer said in a statement, which didn't provide more details on the investments.  http://online.wsj.com/article/0,,SB1025200584265700160.djm,00.html (Paid subscription required)

SIEMENS GIVEN 3-G GO-AHEAD IN CHINA - The Chinese government has given Siemens, the German technology group, and Datang, its Chinese partner, the go-ahead to build a third-generation mobile communication network based on the jointly developed TD-SCDMA standard, according to industry insiders.  The TD-SCDMA decision is the first in 3G technology in China. The move shows that the Chinese leadership is eager to push locally developed technology into the country's booming mobile communications market.  China had about 145m people using mobile phones at the end of last year, according to the Chinese Ministry of Information Industry.  http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1024578202787&p=1012571727260

This Week@US STATES

AEA CYBERSTATES STUDY OF ALL 50 STATES – A state-by-state overview of the high technology industry. http://www.aeanet.org/Publications/IDMK_cyberstates2002_press_releases.asp

7,000 TECH JOBS ADDED IN D.C. AREA LAST YEAR, REPORT SAYS - While job growth in the electronics and information-technology industry leveled off nationwide in 2001 -- there were job cuts in 17 states -- the Washington area attracted about 7,000 new high-tech jobs, according to a report to be issued today by the American Electronics Association.  The sixth annual "Cyberstates" report on state-by-state growth in technology issued by the D.C.-based trade group, indicates that nationwide the sector grew only 1 percent last year, adding about 80,000 jobs, compared with more than 440,000 jobs added in 2001.  http://www.washingtonpost.com/wp-dyn/articles/A45408-2002Jun25.html

PLUGGEDIN: FED UP WITH DSL? GO WIRELESS - Fed up with the long wait for high-speed Internet access? After digital subscriber line services promising high-speed Net access over existing copper telephone wires fell well short of expectations -- with lengthy delays and installation problems -- a new wireless technology will come out later this year that promises to eliminate the hassle of getting broadband at home. It's a wireless connection based on third-generation mobile phone technology that will bypass problematic wire and cable networks to deliver fast Internet and telephone access to homes and businesses over airwaves. http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020625/wr_nm/column_pluggedin_dc_2

AS WIRELESS NETWORK PRICES DROP, WI-FI DEMAND SOARS - Wi-Fi demand has skyrocketed thanks to dropping prices and an increasing number of homes with multiple PCs and fast Internet connections. Starbucks and chain hotels are setting up Wireless Fidelity (Wi-Fi) networks and charging users a fee to log on. Home owners are sharing their wireless subscriptions with neighbors and the number of home Wi-Fi network devices shipped to consumers is expected to almost double this year. While there are some pitfalls such as interference from home appliances, more and more people are drawn to the convenience of wireless surfing. Gemma Paulo, an analyst at In-Stat/MDR said, "Wireless has grown faster than we ever expected it to grow." http://online.wsj.com/article/0,,SB1025039743158381200,00.html?mod=todays%5Fus%5Fpersonaljnl%5Fhs (Paid subscription required)

OTHER TECH STORIES OF THE WEEK

BABY BELLS EMERGING AS WINNERS IN TELECOM WARS - When the Justice Department forced the breakup of AT&T in 1984, the Baby Bell local phone companies were seen as telecom's biggest losers, stuck in the stodgy, slow-growth business of providing basic dial tones and phone books.  Nearly 20 years later, with this week's spectacular implosion of WorldCom, the nation's No. 2 long-distance provider, the Baby Bells are starting to look like the real survivors.  http://www.siliconvalley.com/mld/siliconvalley/3560255.htm

MORE HEALTH-CARE PROVIDERS OFFER PATIENT RECORDS ONLINE -  As her father was slowly dying of liver disease, Carol Heppner agonized over his condition. But unlike most children who live far from their elderly parents, she also took an active role in his care.  Armed with a secret password, Ms. Heppner used the Internet to view portions of her father's electronic medical records at Geisinger Health Systems. She checked his lab results and medications. She ordered prescription refills and made appointments. The Marlton, N.J., resident was even able to forestall the possible onset of pneumonia after noticing unusual fluctuations in his temperature and alerting his doctor in Lake Scranton, Pa. "Not only did it help with my dad, it gave me peace of mind," says the 42-year-old artist and freelance writer.  http://online.wsj.com/article/0,,SB1024948755289043760.djm,00.html (Paid subscription required)

DOT FORCE RELEASES REPORT ON BRIDGING GLOBAL DIGITAL DIVIDE - The G8 Digital Opportunities Task Force, or DOT Force, today released a report that outlines how governments, businesses and civil society can work together to advance human development and reduce poverty through the use of information and communications technologies. The DOT Force report follows up on the 2001 Genoa Plan of Action, which called for a concerted plan to narrow the technological gap between developed and developing nations. English: http://www.dotforce.org/reports/documents/64/General-Report_e.pdf, French: http://www.dotforce.org/reports/documents/64/General-Report_f.pdf (Adobe files)

NYTIMES PROFILE ON CISCO’S JOHN CHAMBERS - What the boy could not do well himself, he recruited someone else to accomplish. Specifically, he was not about to lose his childhood church-league basketball championship, but being slight and, while coordinated, not supremely athletic, he needed to attract great players to join his team. That was something that the boy — John T. Chambers, who would become chief executive of Cisco Systems — had a real knack for. "His teams always won; he picked his people very well," said his father, also John, adding with a laugh: "Whether or not they were all Methodist, I was never sure."  http://www.nytimes.com/2002/06/23/business/yourmoney/23CISC.html

HOLLYWOOD, HIGH-TECH CROSS SWORDS OVER DIGITAL CONTENT -ENTERTAINMENT FIRMS FIGHT GIZMOS THAT LET CONSUMERS COPY RATHER THAN BUY - When Sonicblue, maker of ReplayTV, designs new products, the team includes some unlikely people: lawyers.  That's because Sonicblue builds products that Hollywood hates and consumers love. It specializes in gadgets that let people download, copy and share digital music and video.  Those devices, entertainment companies say, often infringe on their copyrights because they allow the sharing of pirated content.  ''The movie industry will quickly discover what we discovered . . . that we need (tech companies),'' says Hillary Rosen, head of RIAA.  http://www.usatoday.com/usatonline/20020625/4219723s.htm

FACTS AND STATS:

ASIAN SMES WARY ABOUT THE INTERNET - A new report from the Yankee Group claims that while small and medium-sized Enterprises (SMEs) in Asia-Pacific have been quick to adopt email, they've yet to embrace higher-order Web applications such as ecommerce.   http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358071&rel=true

A THIRD OF WORLD'S NET USERS FROM ASIA-PACIFIC - Asia-Pacific has one-third of the world's Internet users, reports eMarketer.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358085&rel=true

GERMANS STILL LEADS EUROPE IN INTERNET USERS - New research from NetValue reveals that Germany still has the highest number of Internet users in Europe.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358068&rel=true

EUROPEAN EGOVERNMENT SERVICES IMPROVING - The availability and interactivity of public services on the Net in EU countries has got better, says a new report.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358088&rel=true

US IS BEST FOR EGOVERNMENT - The US has the best egovernment initiatives among the 190 UN member states, according to a new study.  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358075&rel=true

MORE AUSTRALIANS SWITCHING TO BROADBAND - The number of broadband connections in Australia doubled from July 2001 to March 2002, according to the Australian Competition and Consumer Commission (ACCC).  http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358086&rel=true

BROADBAND ACCESS SERVICE REVENUES TO GROW - Global broadband access service revenues will rise by more than USD136 billion over the next six years, according to a new forecast from Pioneer Consulting. http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358084&rel=true

HIGH-SPEED GROWTH FOR DSL - The number of worldwide DSL subscribers grew by 20 percent during the first quarter and showed an increase of 110 percent on Q1, 2001. http://www.nua.com/surveys/index.cgi?f=VS&art_id=905358065&rel=true

For Facts and Stats on the New Economy, visit our Facts and Stats page.  Also, see our special State of the Internet report on this page. For daily, topical Facts and Stats visit our Hot In Tech page.

STOCK OPTIONS DISCUSSION – “QUESTION OF THE MONTH” – JOIN THE COVERSATION - Got an opinion on the stock options debate?  Add it in Cisco Government Affairs High-Tech Community.  There are plans in Washington and beyond which would make companies expense stock options, which for many companies could fundamentally change the way options are issued to all employees. Many companies (including most high-tech companies) and entrepreneurs have used stock options as productivity drivers as well as a way for employees to "own" the company they work for, rather than just "rent." What are your views on the stock options debate?  http://forums.cisco.com/eforum/servlet/HtCom?page=main

CISCO GOVERNMENT AFFAIRS@2002

Cisco’s top policy focuses for 2002 are the areas of Education, Broadband Deployment and eGovernment.  To read or listen to our thoughts on these issues, please visit our Government Affairs home page or our visit our multimedia section. http://www.cisco.com/gov/multimedia/index.html

E-UPDATE ARCHIVE

To view past issues of Cisco’s Government Affairs E-Update, visit our E-Update Archive page. http://www.cisco.com/gov/archive/eupdates/index.html

DISCLAIMER

Positions in articles and papers from outside sources are in no way endorsed by Cisco Systems' Office of Government Affairs.  We offer articles on topics of interest to our audience to further the debate on the issues that are important to high-tech.  To view our positions on the policy matters that we care about, please visit our Government Affairs homepage. – http://www.cisco.com/gov

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