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Internet changing more than usual


The Internet, it is a-changing.

Which is a bit like proclaiming that the sun rose this morning -- pretty much a given.

Even though the Internet has been in a constant state of evolution since its inception, some particularly notable changes are on the horizon for the new year.

The Bush Administration is working on a proposal that could require Internet service providers to help build a centralized system to monitor the Internet. The President's Critical Infrastructure Protection Board is preparing the report, which is intended to create public and private cooperation to regulate and defend the national computer networks from not only viruses, but also possible terrorist attack.

Such a proposal would be subject to Congressional and regulatory approval, and would be the basis for an Internet strategy for the new Department of Homeland Security. But one unmistakable consequence of such a system would be the potential for the government to monitor individual citizens‘ Internet activity.

Depending on your point of view, the Internet is either the last bastion of truly free speech and communication, or a filthy cesspool of unregulated junk mail which includes unsolicited pornography. The government cannot stop the distribution of printed materials due to our right to a free press, but it does have regulatory authority over television and radio stations through the Federal Communications Commission. Stations can broadcast over the public airwaves only after receiving an FCC license, which comes up for renewal about once a decade.

But radio and television are one-way communications: broadcaster to consumer. The Internet is fast becoming one of the primary ways people communicate directly to each other, along with face-to-face, the telephone and the personal letter or note. And our rights to privacy in those communications are protected by it being illegal for the government to open private mail or monitor telephone conversations without a judicial order.

Expect a firestorm of reaction from First Amendment advocates when this proposal is officially introduced early next year. A Pew Research Center study of attitudes toward the Internet earlier this year showed that 47 percent of Americans believe the government should not have the right to monitor individuals’ activities, but 45 percent believe there should be some government oversight. Ultimately, when there is government monitoring of the Internet -- and there will be at some point -- expect the same privacy thresholds that apply to telephone and “snail mail” communications. Nobody can argue much with the need for law enforcement to be able to monitor the communications of criminals, but other private communications should be off-limits.

Another major change to look for in the coming year is that less and less Internet content will be available for free. A year ago at this time, Bob Pittman, former chief operating officer of AOL Time Warner, Inc., predicted that online product enhancements would eventually result in users’ monthly Internet bills being nearly $150.

Presently, most consumers pay between $10 and $25 per month for dial-up telephone line access to services such as America Online, MSN and Earthlink. Cable television and telephone companies also offer high-speed access at between $40 and $50 per month in most areas.

Pittman’s vision of dollar signs was probably similar to that of most of the dot-com companies that had their 15 minutes or so of fame as the new millennium arrived. Most of them collapsed and folded for the same reason that businesses have failed since the beginning of time: they didn’t have enough sales to generate a profit.

The Internet business model is still a work in progress. What the dot-coms were banking on that didn’t happen is that the Internet would be flooded with advertising dollars, much like television. It’s only been in the past 20 years or so that the television industry started to earn revenue by charging for programming (cable, satellite, pay-per-view). Prior to that, the only way television stations earned revenue was to sell advertising because programming was free to the viewers.

Internet access companies have succeeded in earning revenue, but the content providers are still looking for the sure-fire way to make money on the Web. Advertising hasn’t been the answer. Ebay, the most successful Internet company, basically invented a new business model -- taking a small piece of the action from each of millions of auction transactions.

With advertising revenue not meeting expectations, companies doing business on the Internet are starting to charge for more and more services. MSNBC will begin charging for access to video clips in early 2003, as CNN.com and ABCNews.com already do. Yahoo has added a number of add-on services for a fee, and Microsoft is charging $19.95 to download games from its MSNZone.com gaming site.

The expansion of high-speed and broadband connections makes it possible for Internet users to see better-quality video and download larger media files more quickly. Few people would pay for jagged video and downloads that take hours. But as the Internet is maturing, so is its business model.

"The best thing that happened to our business was the dot-com bomb, because it turned free into a four-letter word," Garrett Bender, president and CEO of iBill, a Fort Lauderdale-based company that handles billing and credit transactions online, told the Palm Beach Post. "Even if it's a dollar or two, everyone wants to charge because it really adds up."

Consider yourself warned.

This column was written December 22, 2002, and published in several print publications across the country.

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