Law and Policy in the Age of the Internet

Robert E. Litan


The world is just at the dawn of the Internet revolution, a revolution which promises both benefits and new sets of challenges, if not problems. The benefits manifest themselves in political, economic, and social dimensions. The policy challenges are more numerous, but four in particular have attracted significant attention: privacy, intellectual property protection, taxation, and “open access” to high-speed or “broadband” networks.

In this Essay, I survey the benefits of the Internet and then outline a framework for dealing with the aforementioned policy issues. My approach is eclectic. I doubt that the four issues will (or should) be resolved either by the market or by government alone, and thus I recommend a judicious mix of the two. I also want to be clear that in the fastmoving Internet environment, policymakers’ first instinct should be to rely on markets and technology to address troublesome issues and to act only if there are identifiable market failures that can be corrected usefully by some type of government intervention. Furthermore, when government action is warranted, it should maximize the opportunities for achieving social benefits while minimizing any disadvantages or downsides—a guide that is as applicable to the “real” world as it is to the “virtual” world.

Policy issues relating to the Internet have loomed larger as the use of the Net has grown. In just four years, the Net had attracted fifty million users, the fastest pace of adoption of any communications technology in history. By contrast, it took thirteen years for television and seventy-four years for the telephone to reach the same number of users. As of January 2000, more than seventy-two million computers from more than 220 countries were connected to the Internet. Internet penetration is projected to continue increasing. Perhaps even more important, the speed of access is also projected to advance for any single user by leaps and bounds once various “broadband” technologies—cable, wireless, or enhanced services over conventional copper telephone lines—are installed more universally.


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