Report: Agencies' Internet Projects Compete With Business

By Nick Wakeman, Senior Editor


OCT. 12 ? Government rules and guidelines have created an ambiguous environment in which some federal agencies develop beneficial Internet activities, while others launch ventures that compete with the private sector, according to a new industry-sponsored study released Oct. 12.


The study, sponsored by the Computer & Communications Industry Association, proposes 12 principles to determine whether a government Internet activity improperly competes with the private sector.


The report criticizes activities such as the Postal Service's eBillPay program that allows people to pay bills online through a Postal Service Web site. But the study concluded that the Labor Department had struck a fair balance in developing its online job bank.


"The government was never meant to use information technology and the Internet to become a publicly funded market competitor," said Ed Black, president and chief executive of the association.

The association's membership includes senior executives of equipment manufacturers, software developers, telecommunications and online service providers, re-sellers, systems integrators, third-party vendors and other related business ventures.


The study was prepared for the association by Sebago Associates Inc., a policy think tank in Belmont, Calif., and breaks the principles into three categories.


The first category of principles is called Green Light, which includes things such as providing public data, improving government efficiency and supporting research. These activities are considered appropriate for the government.


The second category is Yellow Light and indicates areas in which the government should move cautiously. For example, the government should only provide goods under limited circumstances.


The last category is Red Light and indicates areas where the government should not be involved. For example, the government should not try to maximize net revenue or take actions to reduce competition. It also should not enter markets where private-sector firms are active.


The study was written by Joseph Stiglitz, a professor of economics at Stanford University and former chairman of the President's Council of Economic Advisers and former chief economist at the World Bank; Peter Orszag, president of Sebago Associates; and Jonathan Orszag, managing director of Sebago, a former assistant secretary of Commerce and director of the Office of Policy and Strategic Planning.