WASHINGTON-As wireless e-commerce struggles to establish itself as an industry mainstay, it faces major legal, technical and security challenges like the cyber attacks of last week that temporarily shut down several popular Web sites and triggered a Justice Department probe of such activities.
With forecasts that wireless devices will be major drivers of e-commerce in the future, the latest wave of cyber attacks have major implications for the industry in the emerging Net economy.
Last week’s Web hacking, which points up the vulnerability of doing business on the Internet, is just one of the obstacles facing wireless e-commerce. Privacy, taxation, fraud, and information theft are suddenly on the radar screen in the brave new world of wireless e-commerce.
While firms are busy constructing e-commerce business models based on location-driven advertising, such advertising-without preconsent from mobile phone subscribers-is illegal.
The wireless 911 bill, signed into law last October, limits wireless location information-absent “express prior authorization of the customer”-to emergency use.
Wireless firms could get around the restriction by seeking prior consent when customers sign mobile phone contracts, but doing so could backfire by alerting prospective subscribers that carriers need to track their whereabouts in order to provide location-sensitive advertising to them.
In addition, it is unclear whether Net experts have figured out a profitable scheme for wireless e-commerce. Small screens on Web phones will require the development of an e-commerce business model that’s different from that based on desktop and laptop computers.
With the Net becoming fertile ground for New Age fraud, keeping information secure is key to building consumer confidence in wireless e-commerce.
“We’ve taken all the necessary steps and precautions to make sure our customers’ data is protected,” said Tom Murphy, a spokesman for Sprint PCS. Sprint PCS is a pioneer in wireless e-commerce. New Sprint PCS phones are equipped with Web browsers.
In addition, Murphy said Sprint PCS has agreements with its content providers to protect customer information. Bell Atlantic Mobile, Nextel Communications Inc. and others also are incorporating Net access into subscriber equipment and factoring it into future revenue projections.
“Reports in the media remind us on almost a daily basis that e-commerce is fraught with security pitfalls and that many businesses are not proactively managing potential security risks,” said Dan Woolley, president and chief operating officer at Global Integrity Corp., a separate subsidiary of Science Applications International Corp.
Meantime, the Federal Trade Commission and other government regulators are trying to stay ahead of the e-curve. But it’s an uphill battle.
“Americans’ right to privacy is at risk because laws have not kept pace with sweeping technological changes,” said Senate Minority Leader Tom Daschle (D-S.D.).
Senate Democrats and Republicans have created separate privacy task forces.
As for hacking, the consequence is the same for wired and Web phones alike: the inability to buy a book or make a trade on the Net.
“We are committed in every way possible to tracking those who are responsible,” said Attorney General Janet Reno. “We’re committed to taking steps to ensure that e-commerce remains a secure place to do business.”
Cyberattacks hit Yahoo on Monday; Amazon.com, CNN.COM, EBay and Buy.com on Tuesday; and ZDNet and E-Trade on Wednesday.
Last Thursday, Deputy Attorney General Eric Holder told reporters the government should consider stiffer penalties for cyber crimes. As for the probe, he stated, “This is … a hot investigation.”
The Clinton administration has spent millions of dollars in recent years to study and put into place new structures to protect cyber attacks that could undermine critical infrastructure, such as telecom systems, electric power grids, air traffic, nuclear warning and banking, that depend on computer systems.
But some lawmakers and privacy advocates are unhappy with the administration’s National Plan for Information Systems Protection, which was unveiled early last month.
Last week’s cyber attacks likely will heighten the issue’s priority on Capitol Hill.
“We should promptly move ahead with our computer crime legislation that would download a wealth of expertise to states who don’t always have the resources to prevent or prosecute cyber crimes,” said Sen. Patrick Leahy (D-Vt.), ranking minority member of the Judiciary Committee.
Leahy and Sen. Mike DeWine (R-Ohio) have co-authored a bill to create a new, $25 million grant program within Justice for states to draw from for improved education, training, enforcement and prosecution of computer crimes.”
Leahy also is pushing legislation to curb hacking of government Web sites.
Hacking aside, many argue future viability of the Internet is based on it being free of regulation and taxation. So far, government and tax collectors have kept their hands off the Net. But there is growing pressure for that to change.
Some governors and local retailers are opposed to an outright ban on taxes. But the business lobby has joined other lawmakers to extend the current three-year moratorium on Net taxes another five years.
With the marriage of wireless and the Internet (and technology convergence in general), policy makers must rethink regulations and their applicability.
For example, there is tension between the Internet industry and the disabled community over the application of the Americans with Disability Act to the Net.
The National Federation for the Blind filed suit last fall against America Online Inc. saying the firm’s Internet service is incompatible with software that translates text to audio or Braille.
The Associated Press contributed to this report.
