Opportunities and Challenges

Whenever a new technology emerges with the potential to

change the way people live and work, it sparks lively debate about

its impact on our world and concern over how widely it should be

adopted. Some people will view the technology with tremendous

optimism, while others will view it as threatening and disruptive.

When the telephone was first introduced, many critics thought it

would disrupt society, dissolve communities, erode privacy, and

encourage selfish, destructive behavior. Others thought the telephone

was a liberating and democratizing force that would create new

business opportunities and bring society closer together. The Internet

brings many of these arguments back to life. Some optimists view

the Internet as humanity’s greatest invention—an invention on

the scale of the printing press. They believe the Internet will bring

about unprecedented economic and political empowerment, richer

communication between people, a cultural renaissance, and a new

era of economic prosperity and world peace. At the other extreme,

pessimists think the Internet will result in economic and cultural

exploitation, the death of privacy, and a decline in values and social

standards.

If history is any guide, neither side of these arguments will be

proved right. Just as the telephone, electricity, the automobile, and

the airplane shaped our world in the 20th century, the Internet will

shape the early years of the 21st, and it will have a profound—and

overwhelmingly positive — impact on the way we work and live. But

it will not change the fundamental aspects of business and society—

companies will still need to make a profit, people will still need their

social framework, education will still require great teachers.

However, the current debate over how widely we should adopt

this technology does raise some serious issues that must be addressed

to make the most of the Internet’s vast potential.

Protecting intellectual property. The Internet makes it possible

to distribute any kind of digital information, from software to books,

music, and video, instantly and at virtually no cost. The software

industry has struggled with piracy since the advent of the personal

computer, but as recent controversy over file sharing systems such

as Napster and Gnutella demonstrates, piracy is now a serious issue

for any individual or business that wants to be compensated for the

works they create. And since the Internet knows no borders, piracy

is now a serious global problem. Strong legislation such as the Digital

Millennium Copyright Act (DMCA), cooperation between nations to

ensure strong enforcement of international copyright laws, innovative

collaboration between content producers and the technology industry,

and standards developed by organizations like the Secure Digital Music

Initiative (SDMI) that can prevent or deter piracy have already made

an impact on addressing this problem. But as more and more digital

media becomes easy to distribute over the Internet, the government

and private sector must work together to find appropriate ways to

protect the rights of information consumers and producers around

the world.

Regulating global commerce. Hal Varian and Michael Armstrong’s

contributions to this project detail another major challenge

the Internet poses to governments around the world: how can we

regulate Internet commerce — or should we do it at all? Because the

Internet offers people an easy way to purchase goods and services

across state and national borders — generating tremendous economic

growth in the process — it makes global commerce even more

challenging to tax or regulate effectively. But since the Internet’s

economic effects result largely from the “friction free” commerce it

enables, any regulation that gets in the way comes at a price: lost

economic growth. As more and more business transactions take place

on the Internet, governments and businesses must cooperate to find

innovative ways to regulate and derive tax revenue from Internet

commerce without interfering with the economic benefits it can

provide.

Protecting individual privacy. In the coming years, people will

increasingly rely on the Internet to share sensitive information with

trusted parties about their finances, medical history, personal habits,

and buying preferences. At the same time, many will wish to safeguard

this information, and use the Internet anonymously. Although

technology has placed individual privacy at risk for decades — most

consumers regularly use credit cards and exchange sensitive

information with merchants over the telephone — privacy will become

a far more pressing issue as the Internet becomes the primary way for

people to manage their finances or keep in touch with their physician.

The use of personal information by retailers wishing to provide

personalized service and advertisers that want to target very specific

audiences — some of whom have resorted to gathering information

from consumers without notifying them — has greatly increased public

concern over the safety of personal information. It has also left many

people reluctant to trust the Internet with their data.

Private industry and many in government currently favor self

regulatory tools and privacy — enhancing technologies as the best

way to protect privacy. Today, several independent organizations

enforce commonly accepted “fair information practices” that ensure

honesty and accountability among companies that gather and use

personal information. But as Ellen Alderman and Caroline Kennedy’s

contribution to this project explains, it is still unclear whether this

approach is fully effective. Nonetheless, protecting individual privacy

is a major barrier that must be overcome — as soon as possible —

in order to keep the Internet moving forward.

Keeping the Internet secure. Security has always been a major

issue for businesses and governments that rely on information

technology, and it always will be. Much the same is true for individual

security — long before the Internet, people were happily handing

their credit cards to restaurant waiters they had never met before,

and that too is unlikely to change. But as our economy increasingly

depends on the Internet, security is of even greater concern. Widely

publicized incidents of Web site hacking, credit card fraud and

identity theft have given the Internet a largely unjustified “Wild

West” reputation. In order to keep the Internet a safe place to do

business, software companies have a responsibility to work together

to ensure that their products always offer the highest levels of security.

And the judicial system and the law enforcement community must

keep pace with technological advancements and enforce criminal laws

effectively and thoroughly.

Protecting our children. The Internet can revolutionize education,

giving children the opportunity to indulge their intellectual curiosity

and explore their world. But while it helps them to learn about

dinosaurs or world history, it can also expose them to obscene, violent

or inappropriate content. And since the Internet is an unregulated

global medium, it is hard to “censor” in any traditional way. The private

sector has already made great strides in giving parents and teachers

more control over what children can see and do on the Internet,

through filtering software that blocks access to objectionable Web

sites; industry standards such as the still evolving Platform for

Internet Content Selection (PICS) that enable helpful rating

systems; and Internet Service Providers (ISPs) that voluntarily

regulate the activities of their customers. Government has also played

a part, encouraging the growth of the market for child safety tools,

and increasing law enforcement’s role in policing and prosecuting

online predators. So far, the issue of protecting children on the Inter

net has served as an excellent example of how governments and

the private sector can work together to tackle problems on the

Internet.

Bridging the “digital divide”. The Internet can empower and

enrich the lives of disadvantaged people around the world — but

only if they have access to it. Robert Knowling and Ernest Wilson’s

contributions to this project clearly show that the digital divide is

a global problem. In the United States, where a large percentage of

the population has access to the Internet, it’s easy to forget that most

of the world has never made a phone call, much less browsed the Web.

In the 1930s, the United States government helped bridge

the “electrical divide” by forming the Rural Electrification Administra

tion, which brought power to rural areas that could benefit most from

electrification. Similarly, “universal service” programs have helped

some remote areas and disadvantaged communities have access to

inexpensive telephone service. These efforts have been largely

successful in the United States, but on a worldwide scale there’s still

plenty of work to be done before the Internet can make a real

difference. It’s important to remember that much of the world is still

without adequate electrical power, telephone service, or even quality

healthcare and education. Bridging the digital divide is but one of

the many ways we can improve the quality of life worldwide.

However, the benefits of widespread access to the Internet and

communications technology are clear enough that governments now

need to decide whether a similar principle should be applied to ensure

that nobody is left behind in the Internet Age. What is government’s

role? The Internet is a constantly changing global network that

knows no borders, presenting a unique problem for governments that

need to address the many challenges it presents. In the coming years,

governments will have the opportunity to develop thoughtful and

innovative approaches to policies that protect their citizens while

nurturing the openness, flexibility, and economic opportunities that

make the Internet such a compelling technology.

The light hand of government regulation has created an

environment that has encouraged the Internet to flourish, and

enabled companies to bring their innovations to consumers at

breathtaking speed. Over the next few years, governments worldwide

will find it rewarding to pursue policies that speed the building

of the infrastructure that will make it possible to bring the benefits

of the Internet to more people. This includes finding ways to speed

the implementation of broadband technologies, deregulate where

necessary to stimulate competition, resist the temptation to enact

new regulations, and redouble our efforts to protect content on

the Internet by strengthening and enforcing intellectual property

rights.

The Internet gives people the opportunity to put their

knowledge to work and take advantage of greater opportunities to

lead productive and fulfilling lives. It is the gateway to vast amounts

of knowledge, art and culture. It provides equal access to information

and communications, allowing the formation of rich communities

and forging real connections between people. It breaks down

barriers between (and within) nations, opening up economies and

democratizing societies. And as cheap computing power becomes

more pervasive, the Internet can bring all these benefits to more and

more people around the world.

Ensuring that the Internet can have the broadest and most

positive impact on the greatest possible number of people will be

a tremendous challenge for our political and business leaders. There

are some key issues that need to be overcome to realize the Internet’s

full potential, but although they are challenging, they are not entirely

new and definitely not insurmountable.

And it’s clear that these are challenges worth facing — like

the printing press, the telephone, electricity or the automobile,

the Internet is a revolutionary technology that is transforming our world.

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