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State board mulls Net rules

Focusing on how the Internet can create jobs in California, Gov. Pete Wilson urges a new industry advisory body to encourage e-commerce.

REDWOOD CITY, California--Focusing on how the Internet can create jobs in California, not on the potential tax revenue or new regulations, Gov. Pete Wilson urged a new state industry advisory body to encourage Internet commerce.

The group, which includes four chief executives and other leaders of major California e-commerce firms, decided to focus on taxation, regulation, privacy, and other consumer issues, and the overall role of government in Internet commerce. The group is due to report to Wilson in six months.

"We don't want any activity of government to inhibit the growth of electronic commerce," Wilson told the 20-member committee. "We want to encourage rather than inhibit. California should play a leading role in the national debate [on appropriate governmental policies for e-commerce]."

The group will grapple with See related story: 
High-tech lobby gains ground some of the thorniest policy issues in Internet commerce, many revolving around the paradox that Internet commerce is essentially borderless but crosses numerous government jurisdictions, thus encountering myriad and inconsistent laws and regulations.

Among the questions: How should online purchases be taxed? What is government's role in e-commerce? What kinds of regulations of online commerce are appropriate? What privacy protections should be in place?

Because many of the firms now involved in Internet commerce are based in California, Wilson and others expect that policies adopted by the state will influence other states and potentially national lawmakers.

The group, chaired by venture capitalist Floyd Kvamme of Kleiner, Perkins, Caufield & Byers, will receive staff support from state agencies but has no local government or consumer representatives.

"This is not supposed to be a local government panel," Wilson said after the meeting. "We were trying to get an industry perspective." He raised the possibility, however, that local government representatives might appear before the committee.

Called the Electronic Commerce Advisory Council, the body has a Web site where approved drafts of its work will be posted. Members include the chief executives of Yahoo, auction site Onsale, online toy retailer eToys, and certificate authority VeriSign. Senior officials from Netscape Communications, Disney Online, and Excite, which hosted the meeting, also sit on the panel.

The group also expects to do most of its work online--Kvamme hopes it will need only one final meeting to approve recommendations that emerge from its four subcommittees. Although Kvamme would like to use the Web site to solicit public comment, no such plans have been finalized.

The group assumes that a three-year moratorium on new taxes on Internet companies, a compromise now pending in Congress, will be approved, thus allowing it to focus on longer-term tax issues.

Michael Boskin, a Stanford University economist and former chairman of President George Bush's Council of Economic Advisers, urged other members of the panel to take a "principled" look at the issues it addresses, not simply do what's best for Internet companies.

Lee Grissom, California's Secretary of Trade and Commerce and an ex-officio member of the group, urged the advisers to "be our eye in the sky on this issue." He added: "The world has changed, but established institutions in the world have not."

Panel members complained that existing regulations of commercial activity often don't apply to the online world.

"Many existing regulations are inappropriate," said Catherine Valentine, general counsel of Intuit, which is building an active e-commerce site for financial services. She urged a review of existing regulations over the next several years, saying laws are hurting both consumers and service providers.