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July 25, 2000     (512) 463-0300

Advisory Council on the Digital Economy Discusses Privacy Issues and the Digital Divide

AUSTIN - The Advisory Council on the Digital Economy held its fourth and final public hearing today, Tuesday, July 25, 2000, in the Senate Chamber.

The 25-member council was created in 1999 by Lt. Governor Rick Perry to help keep Texas on the edge of high technology research, development, and job creation. Perry was present to welcome local and out-of-state participants to Austin.

Today's meeting considered the third charge given by Perry to the council. The charge addresses how the growth of the Internet brings new opportunities, such as greater information distributed more broadly, but also new risks. The council plans to develop strategies to promote the broad opportunities that the Internet brings and will consider what, if any, steps might be taken to minimize the adverse effects of the new risks. Specifically, the council is to consider: a) How to bridge the digital divide and make the opportunities of the Internet available to more Texans; b) What consumer protection measures, including fraud protection, privacy protection and anti-spamming protection, can provide consumers with greater confidence in their use of the Internet as a tool for information and commerce; c) How to utilize the Internet as a means of addressing public health concerns regarding the delivery of medical information and services; d) How to utilize the Internet as a tool to allow for greater public participation in the democratic process; e) How to utilize the Internet as a means of enhancing rural economic development; and f) What measures can be taken to give parents greater control over their children's use of the Internet.

The initial topic addressed at today's hearing was on-line privacy. All witnesses agreed that privacy issues have become daunting in this technological age, but disagreed on the level of government regulations that should be imposed. The first testimony was provided by Orson Swindle, Commissioner of the Federal Trade Commission, who said we should approach Internet regulations with caution to avoid limiting the development of businesses. "We are just in the beginning of this [Internet] evolution," Swindle said, "and it is fragile." He told council members that the private sector, and not the government, can better address the issue. John McCain, Senior Vice President of E Solutions, agreed, saying that the public tends to notice the few bad cases of privacy invasion, but that most companies are doing a good job. Like Swindle, he also worried about the economic impact of new privacy laws. Dissenting with this view, Austin Senator Gonzalo Barrientos considered abusive practices done through telemarketing, and expressed doubts that the private market can police itself. Paula Breuning, staff counsel of the Center for Democracy and Technology (CDT), a non-profit organization, also disagreed, saying we should all be concerned about the protection of civil liberties and consumer privacy on the Internet. Breuning said 63% of those on-line do not shop electronically, mostly because of privacy concerns. She recommended a uniform and basic set of rules to be followed by all companies. Kevin Rollins, Vice-Chairman of Dell Computer Corporation, said his corporation would like to share their own initiatives with the Legislature and government agencies, to possibly apply them to the private sector in general.

Sharon Strover, Director of Telecommunications and Information Policy Institute, presented the results of their statewide survey, where 65% of Texans agree that privacy on the Internet is a concern for them, with African-Americans showing more concern than any other racial or ethnic group. The survey also indicates that experienced Internet users register lower levels of concern than nonusers. Most Texans find the release of their driving history by the State unacceptable, and are extremely concerned about providing financial or nonfinancial electronic information to the government. Nevertheless, confidence about State use of private information was higher than about its use by the private sector. Most citizens strongly preferred the "opt-in" (giving permission) as the best method of privacy protection.

Texas Attorney General John Cornyn announced his office has identified 20 web sites which may be out of compliance with a new federal law, the Children's Online Privacy Protection Act (COPPA). The law regulates web sites that cater to children under age 13. These companies are obliged to get parental consent before they collect or use a child's personal information. The Attorney General office also took action against Toysmart. com and Craftshop.com - failed dot com companies that proposed to sell their personal consumer information in violation of their privacy policy. Cornyn also announced a meeting this fall with fellow Attorneys General, and consumer and tech leaders, to discuss a consumer bill of rights for the Internet.

The council then focused on the digital divide. The Telecommunications and Information Policy Institute conducted a survey about the digital divide, finding high levels of computer and Internet use in Texas. The Anglo population shows the highest Internet use, followed by Hispanics and African-Americans. Most nonusers are 66 years of age and older and most users are between 18 and 55 (the survey did not measure those under 18). The higher the educational and income level, the more Internet use is found, with most of the nonusers among those who did not finish high school. The study also showed that when the income is higher than $30,000-$40,000, the differences in use between races and ethnicities disappear. As was expected, city dwellers showed more Internet use than the rural population, however the rural population is more concerned about children using the Internet. Among the state population in general, concerns about children is the second given reason for not using the Internet, the first being not using computers at all. The home is the most common place to use the Internet, seconded by the place of employment and public access sites such as libraries. The Hispanic population is more likely to cite phone and internet service provider (ISP) charges as an impediment for Internet use. And Hispanic and African American respondents are more likely to report that "it's too difficult" or "there is not enough time" to use the Internet. The institute's recommendations for public policy include better technology infrastructure in terms of availability and costs, more access opportunities in public libraries and job centers, more and earlier training in computer skills, and consideration of community-based economic development with links to local businesses.

Roger Benavidez, member of the Board of Telecommunications Infrastructure Fund, briefed the council about his agency. The board was created by the Public Utility Regulatory Act of 1995, and has awarded approximately $341 million in grants to public schools, libraries, community colleges and universities, and health care facilities. Recognized as the nation's leader in deploying technology, its grants are given for technology training and sustainability, reaching rural, remote, and economically disadvantaged populations. Gregg Petersmeyer, Senior Vice President of America's Promise - The Alliance for Youth, also provided testimony. Led by General Collin Powell, the alliance's mission is to mobilize people from every sector of American life to provide our nation's youth an environment with caring adults, safe non-school places, a healthy start, marketable skills, and opportunities to give back through service. The group says that at least one out of three communities in America do not have adequate resources to fulfill all of these five "promises". Their goal is to develop an "alliance for youth" in each of these communities, with their local web sites as one of the main tools to attract volunteers and donors. Carmen Moran, Principal, and Lili Ortega, employee of Campestre Elementary School, provided testimony related to their school's special program. Thanks to a grant received through the University of Texas at El Paso, the school has provided computer training to 293 parents. After two weeks of training, these parents, most of them without any previous computer knowledge, can take the laptops home on loan, and demonstrate their new acquired skills to family members and friends. Additional testimony was provided by Jerome Kolenovsky, Director of the Houston Area League of PC Users.

Next, the council addressed the topic of telehealth, including telemedicine, a method by which doctors can provide health care from a distance, through the use of computers. Patti Patterson, Director of the Center for Telemedicine/Telehealth at Texas Tech University, said they provide 2,500 consultations a year, 95% of them to clients in correctional facilities. Dan Dugi, M.D., a physician from Cuero, Texas, gave a live demonstration showing the tremendous potential telemedicine has for the treatment of patients, especially those in rural, isolated environments, and the elderly. Dr. Dugi suggested that very soon, patients will be able to receive telehealth care while in their home, without even having to go a clinic.

The fourth panel discussed online democracy. Senator Rodney Ellis and James Truchard, President and CEO of National Instruments, provided testimony about how to apply Internet technology to politics and the democratic process. They talked about the benefits of future online registration and voting, and how the transmission of political conventions and information about candidates on the web can contribute to a more politically savvy population and a better democracy.

The 21 members from the private sector appointed by Lt. Governor Perry to the Advisory Council on the Digital Economy are: Mike Maples, formerly the Vice President of Worldwide Products at Microsoft, serving as council chair; Andrew Busey, CEO of living.com; Michael Capellas, President and CEO of Compaq Corporation; Ken DeAngelis, general partner of Austin Ventures; Thomas (Tom) Engibous, Chairman, CEO and President of Texas Instruments; Bob Fabbio, partner of TL Ventures; Donald Hackett, President and CEO of drkoop.com, Inc.; Dr. Katherine Hammer, President and CEO of Evolutionary Technologies International; John Hime, private investor; Christina Jones, President of pcOrder.com; Terrell B. Jones, President of Travelocity.com; James H. Lee, President of Tradescape.com, Securities LLC; John McCain, Senior Vice President, E Solutions, EDS; Dick Moeller, President and CEO of VTEL Corporation; Dennis E. Murphree, Managing General Partner of Murphree Venture Partners; David G. Nance, President and CEO of Introgen Therapeutics Inc.; Kevin Rollins, Vice-chairman of Dell Computer Corporation; David Sikora, CEO and Chairman of Question.com; James Truchard, President and CEO of National Instruments; Max Watson, CEO of BMC Software; and Padmasree Warrior, Vice President and Assistant Director, Digital DNA(TM) Laboratories at Motorola.

Perry also appointed four Senators to the council; Gonzalo Barrientos of Austin, Rodney Ellis of Houston, Steve Ogden of College Station and Florence Shapiro of Plano.

The council stands adjourned.

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