To say that 2001 was a difficult year for thehigh-technology and telecommunications sec-tors of the U.S. economy would be a consider-able understatement. Following a technologystock spree that included briefly catapulting aprofitless Priceline.com to a value higher thatthat of United, Continental, and NorthwestAirlines combined,
severance packages andpink slips became commonplace in the techsector as the dot-com deathwatch kicked intofull gear. The survivors of this bloodletting triedto put the best spin on their plunging stock prices and dismal quarterly earnings reports.But there is no hiding the fact that the tech sec-tor is hurting.Meanwhile, consumers of high-tech prod-ucts and services are equally dispirited. Manycomplain that the competition and con-sumer choice they were promised has notmaterialized. Affordable high-speed broad-band also remains a dream for most smallcompanies and average households. Andmany other tech products or services (espe-cially of the dot-com variety) failed to live upto their much-hyped expectations. While vul-ture auction houses benefit from selling theoverindulgent wares of an industry gonesouth and employment websites see loads of traffic, the tech industry licks its wounds andwonders what happened.Nothing happens in a vacuum, of course,and the tech sector’s recent troubles are noexception. The overall macroeconomic picturefor the U.S. economy in 2001 was not a goodone. With the economy in a general downturn,demand for many tech products and servicesslacked off or never fully materialized, and newinvestment and innovation throughout the sec-tor was put on hold. We have since said good-bye to dot-com darlings Pets.com, Toys.com,WebVan, and Kozmo.com.Moreover, while the amazing stock returns and employment growth of previousyears were a blessing for millions of investorsand high-tech CEOs alike, the bubble wasbound to burst. The general economic down-turn merely facilitated this process, and didso with a vengeance, as tech sector stocksexperienced a meteoric fall and ended uptrading, quite literally, for pennies.The news is not all bad, of course; venturecapital investment and the number of compa-nies funded are still considerably higher thanthey were 10 years ago.
But although the irra-tional exuberance of investors in past yearsand overall economic malaise of the past yearcertainly contributed to the tech sector’sdeclining fortunes this year, it is worth consid-ering the impact of the political or regulatoryenvironment on this sector as well.It is not unreasonable to ask whether atleast some of the tech sector’s troubles can belinked to the threat of regulation or even thelegal uncertainty that continues to surroundthis sector. The past year saw a steady rise inthe overall level, of legislative and regulatoryactivity dealing with tech or telecom policymatters. Hundreds of bills were introduced atthe federal level, and thousands more wereentertained by state and local governments.An exact bill count is difficult, given the defin-itional disputes regarding what exactly quali-fies as technology-related legislation, but as of early December 2001,
National Journal’s Techno-logy Daily
listed almost 350 technology-relatedbills for the 107th session of Congress.
Empower America’s annual technology legis-lation survey listed more than 220 federal billswhen it was released in the summer of 2001.
Regardless of the exact count, by any availablemeasure there has been a significant increasein the overall volume of legislative activitycompared with previous years.These bills dealt with a wide array of issues, including website privacy policies,Internet taxation, broadband deploymentand diffusion, antitrust and competition pol-icy, wireless spectrum issues, broadcast televi-sion and radio regulation, content controls,child protection, cyber-security, intellectualproperty, and Internet gambling. What isperhaps most remarkable about this legisla-tive activity is not simply how many moremeasures were introduced than in previousyears, or even the breadth of technical or legal
It is not unrea-sonable to ask whether at leastsome of the techsector’s troublescan be linked tothe threat of regulation.