Jewish World Review Sept. 9, 2003 / 23 Elul, 5764

Dan Gillmor

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Consumer Reports

Congresss about to make serious mischief in arenas of privacy, innovation and corporate accounting | Uh-oh. The United States Congress is back in session this week, and it's up to serious mischief in the arenas of privacy, innovation and corporate accounting. In each case, powerful interests are backing bad legislation.

Here's a rundown, in order of the most immediate threats:

First - In one of the most dishonestly named bills of all time, the House recently passed the Junk Fax Prevention Act of 2004. The legislation would, in fact, open the floodgates for these intrusions into our lives.

The bill, S2603, would allow anyone who's done any kind of business with you during the last seven years - seven years! - to send you faxes without getting your permission first. You would have to opt out each time.

The FCC's latest regulations, which proposed to tighten the current rules against junk faxes, were too much for corporate America and its marketing wizards who continue to invade every corner of our lives. Their power with Congress is far greater than yours, so far.

At least they could tell the truth, naming S2603 the "Junk Fax Enabling Act."

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Second - There's surprising, but unfortunate, movement in the entertainment industry's most-desired legislation, also known as the "Induce Act." In the name of halting copyright infringement, it would threaten all kinds of technological innovation.

The tech industry, after snoozing at first, did finally start complaining about S2560. The bill was drawing bipartisan support, mostly from lawmakers who are taking megabucks in campaign contributions from Hollywood and its friends.

The aim of the bill is mainly to kill off peer-to-peer technology the copyright industry doesn't control. That's bad enough, given that there are entirely legitimate reasons for using such services - which might well be outlawed in the process. But the legislation could be used to threaten or kill some useful technologies.

After Internet service providers and some big tech companies objected, the chief sponsor, Sen. Orrin Hatch, R-Utah, challenged the opponents to come up with a better bill.

The opponents did just that, writing a draft that would target big-time commercial piracy while protecting innocent people and useful technology. Of course they were immediately rebuffed by the copyright lobby. I'm sorry to say the co-sponsors include Sen. Barbara Boxer, D-Calif. She should know better.

Third - Even as it moves to pass other ill-considered legislation, the Senate is considering whether to back the House's passage of a bill on stock options. This one also deserves to expire.

The legislation, S1890, would prevent regulators from requiring companies to more accurately account for the cost of stock options on their balance sheets. Currently, most companies hide the cost in footnotes rather than list them as expenses.

Listing the cost of options as expenses would not change the actual financial condition of any company. It would, however, reduce reported earnings in many cases.

For that reason, many in Silicon Valley furiously oppose the change, saying it will introduce new uncertainties in understanding a company's books. As I've noted before, the Valley approach seems to be that investors are smart enough today to figure out what's going on, but will suddenly become too stupid to understand if we move to a system that notes the very real cost to shareholders of options grants.

There will be moves to attach the House bill to legislation in the Senate. Two powerful Republican senators, Richard Shelby of Alabama and Ted Stephens of Alaska, have indicated their opposition to mucking with the work of accounting rule-makers.

And William Donaldson, chairman of the Securities and Exchange Commission, has also asked the Senate to butt out of this dispute. They should take his advice.

Please pick up the phone. Call (202) 224-3121 and ask for your U.S. senators. Their direct lines can be found on the Senate's Web site ( Add your voice on the issues. You can make a difference.

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Dan Gillmor is a columnist for the San Jose Mercury News. Comment by clicking here.


© 2004, San Jose Mercury News Distributed by Knight Ridder/Tribune Information Services