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Business In The Beltway
What Will AOL And MSN Tell Uncle Sam? WASHINGTON - When he signed the Homeland Security bill on Monday, President George W. Bush effectively drafted corporate America to serve in the war against terrorism--with Internet service providers among those on the front line. The law puts new burdens on ISPs to cooperate with the government. For example, law enforcement agencies won't need a court order to install pen register and trap-and-trace devices when there is an "ongoing attack" on any computers used in interstate commerce or communication. But the ISPs got something in return: The new law makes it easier for AOL Time Warner (nyse: AOL - news - people ), Comcast (nyse: CCZ - news - people ), Microsoft's (nasdaq: MSFT - news - people ) MSN unit, United Online (nasdaq: UNTD - news - people ) and the rest of the nation's 3,000 Internet service providers to volunteer subscriber information to government officials without worrying about customer lawsuits. Under the new law, they can release the contents of customers' communications to law enforcement without a court order and without fear of a suit if they have a "good-faith" belief that an emergency warrants it. Before, they had to have a "reasonable" belief--a higher legal standard--that release was warranted. Stewart Baker, an attorney at Washington's Steptoe & Johnson, lobbied hard to get the protection for ISPs in the bill. "Until the new law, the ISP was going to be in a terrible position of facing legal liability on one hand and responsibility to law enforcement on the other," he says. Solution: Erase the liability. But privacy advocates think the new protection for the ISPs goes too far. True, if it's not an emergency, the ISPs still cannot volunteer information about their customers' communications to the government. But privacy experts worry it will be difficult to rebut the presumption that the ISP's employees had a "good-faith" belief there was such an emergency. "Good faith--it's just too subjective," complains Chris J. Hoofnagle, legislative counsel for the Electronic Privacy Information Center. It's not yet clear what if anything the ISPs will do to inform their customers of the new rules. For example, Earthlink (nasdaq: ELNK - news - people ), an ISP which prominently promotes privacy in its marketing, doesn't state in the privacy policy made available to customers that it may sometimes volunteer customer information to the government. So just how big a burden is the new law on ISPs? The nation's small independent ISPs, who according to ISP Planet still control 55% of the subscriber market, are worried. "It's a major concern that small providers won't be able to support an increase in requests from law enforcement agencies," says Sue Ashdown, executive director of the American ISP Association, which represents small-fry ISPs. One of them is Farmer's Telephone of Essex, Iowa, near the Nebraska border, which serves 7,000 customers with its Heartland.net service. Charles White, a Heartland executive, says that if authorities demand Heartland to track down customer information or the origin of a customer's Internet communications, it will have to hire outside experts to help it do so. Like scores of ISPs, Heartland.net operates in dozens of communities where it doesn't control the network switch, meaning it could have trouble identifying the dial-up customers using its network for law enforcement. "We may not be able to identify addresses or phone numbers of some of our customers," says White. "And there's hundreds of companies in our position." Even AOL acknowledges it can't always track customer addresses. But for the major ISPs, the law should be a lesser burden. Companies such as Verizon Communications (nyse: VZ - news - people ) and America Online already have dedicated legal and technical staffs to process government requests. Indeed, the rumor around Washington is that AOL maintains a separate fax line at its Virginia headquarters just to receive court orders from the sheriff's office of Loudoun County, Va. An AOL spokesman declined to confirm this detail, offering only: "We have a 24/7 channel of communication with law enforcement." Click here for more Business In The Beltway columns
Game Over? Not Yet - 1/8/03 12:00:00 PM ET Sony is leading in the videogame console race, but Microsoft isn't giving up so easily. Alcoa Sounds A Sour Note - 1/8/03 11:55:00 AM ET The aluminum maker cites weak demand in posting a fourth-quarter earnings shortfall. Ottawa Senators Financing On Thin Ice - 1/8/03 1:45:03 PM ET The NHL team, which may file for bankruptcy, is low on our ranking of the most valuable franchises. Layoff Tracker Update: Jan. 8, 2003 - 1/8/03 5:00:00 PM ET Aluminum behemoth Alcoa lays off 8,000, or 6% of its workforce. IBM, AMD In Microprocessor Deal - 1/8/03 3:34:43 PM ET Aiming squarely for Intel, they hope to market high-performance units within two years.
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