Peter Sinclair: Here comes the regulated net

The world is closing in on the web. The signs are all there; it only remains to wonder whether the internet will be recognisable 10 years from now, when the suits have tightened their grip on cyberspace and the geeks have fled, muttering, to its anarchic fringes.

Its traditional freedoms are being eroded on all sides. The music industry has already gelded MP3.com and is sharpening the knife for Napster. The cherished anonymity of the internet could be the next to go.

We've already seen a couple of cases in the US where ISPs have been forced by the courts to yield up the identity of their customers. Canada follows where America leads, and now Canadian e-mailers can run but certainly can't hide any more. If there are reasonable grounds for supposing they have broadcast defamatory statements, a new law passed a couple of weeks ago compels ISPs to surrender the identities of anonymous users.

Canadian-based activists such as PrivacyX, which offers an encrypted, anonymous e-mail service to nearly 70,000 customers, opposed the law but failed to deflect it.

Even more ominous for the health and wellbeing of the web, California - the state which spearheaded the e-revolution and pioneered e-commerce - is trying to drive another nail into the coffin of the web as we know it.

Despite the US Government's three-year moratorium on internet taxes, both houses of the California legislature recently passed a bill which would have forced online retailers associated with a bricks-and-mortar company within the state - Barnes & Noble is an example - to collect sales tax from Californian citizens. Amazon in Seattle, on the other hand, would not.

Governor Gray Davis (who, in the words of the San Francisco Chronicle's Jon Carroll - "has come up with the interesting idea that judges who disagree with him must resign") promptly vetoed it because of this anomaly, and also in case the bill "sent the wrong signal about California's international role as the incubator of the dotcom community."

Our own value-added tax strategy, in contrast with America's tangled web of conflicting state and federal sales taxes, seems almost cosy; or at least, it did for an hour or so after Mayer Golditch, of the New Zealand Customs Service Policy Unit explained it to me.

Thanks to GST our internet activity is, in theory at least, already being taxed like everything else other than exported goods.

If you fall in love with, say, a $NZ200 stainless-steel cookware item on the web, you will theoretically be charged a 7 per cent tariff ($14), plus 12.5 per cent GST ($27), a total of $41 in customs charges.

But forget it. A benevolent Customs Service will pat you on the head and tell you to run along - under Customs Regulation 70 it will apply a "de minimus" waiver of all duty under $50. And in fact, there is a trigger value of $399 on most goods brought in for private use.

"Digitised goods [software], having no physical manifestation," says Mayer, "no tax is enforceable."

Not yet, but didn't I hear Helen Clark mutter something about "taxing the internet" the other week?

Companies such as TaxWare International are already designing software for consumption tax collection.

It may be too late for the net to watch its back.

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LIES, DAMNED LIES...

Aarrgh! a crashed computer can be more stressful than a crashed relationship. Online services company ICL claims 17 per cent of British workers say computer glitches are as bad as being left by a partner; 38 per cent find them worse than being stuck in traffic or visited by in-laws.

Price on your head: you're now worth $US78 - the "median cost of customer acquisition" - says a report from Intermarket's eCommerce Almanac. Major net players spend a fortune on marketing - some budgets for the first quarter: E*Trade, $US177.5 million; Amazon, $US140.1 million; Charles Schwab, $US100.9 million; Ameritrade, $US54.8 million; and Priceline, $US40.4 million.

Cyber-surge: 9.2 million adult Russians (8.3 per cent of the population) have now logged on at least once. The online audience in Russia is 2.5 million, with 1.8 million people spending more than one hour a week online. In contrast, latest United States internet audience measurements from Nielsen//NetRatings show usage soaring: 52 per cent of homes have access - nearly 144 million people - compared to 106 million a year ago. The China Internet Network Information Centre says the number of wired Chinese has doubled in the past six months, to 16.9 million.

Out of the medals: sports coverage must be served hot, and NBC's delayed, web-free Olympics coverage in the US drew the fewest viewers ever. The IOC meets in December to formulate an "Internet Plan" for 2004.

Big Bang: the net is 500 times bigger than indicated by search-engines, according to BrightPlanet, which claims 550 billion pages are now stored on the web, many of them hidden in giant databases maintained by governments, universities and business.

Links

PrivacyX

Barnes and Noble

Jon Carroll

NZ Customs Service

TaxWare

McEntee Hire

ICL [may not be working]

Nielsen//NetRatings

BrightPlanet

Peter Sinclair