The six-point Statement of Principles calls on government officials to let industry run the Internet with minimal regulation.

By establishing the 50 caucuses, the council's advisory panel of industry executives can better help states select policies that support online commerce, said William Myers, director of the Washington-based council. Companies backing the council will likely direct their campaign donations to legislators supporting the council's anti-regulatory policy principles, said Myers.

However, legislators may also use the council to check policies pushed by industry executives, said state Senator-elect Steve Kelley, a Democrat from Minnesota who is a member of the council. "If you let industry dominate, there are legitimate issues about [the future of] consumer protection and other issues," such as online privacy, he said.

The first meeting of the council was held Dec. 10 at the Chamber of Commerce in Washington. Roughly 40 legislators met with executives from companies such as AT&T Wireless Services Inc., Jones Intercable Inc., Microsoft Corp. and Intel. The council was organized by the industry-backed Progress & Freedom Foundation and is aided by the industry-backed Center for Democracy and Technology and the Information Technology Industry Council.

Formation of the state caucuses will complement the Internet caucus established in Congress by Internet boosters Rep. Rick White, R-Wash., and Sen. Patrick Leahy, D-Vt., said industry officials.

Industry's increased focus on state legislators reflects the growing role of state regulators, said industry officials. "Policy-making for issues affecting the Internet is going more rapidly to the states," said Jeffrey Eisenach, president of the Washington-based Progress & Freedom Foundation, which lobbies for laws that would shrink government's regulation of the telecommunications business.

"We need to get ahead of the curve" and begin working with state legislators before they pass laws that could restrict the Internet's growth, said Jerry Berman, director of the Washington-based Center for Democracy and Technology.

Some state groups have already begun working to slow the growth of the Internet, said Myers. For example, lawyers in Virginia oppose online searches of records on property titles, while doctors in Kansas have organized to curb the online delivery of medical services from outside the state, he said. These groups "represent real political power in the states" and can only be countered by similarly powerful groups of Internet supporters, he warned.

Critical policy issues facing state regulators in the next few months and years include telecommunications deregulation, taxation of online commerce, digital signature laws and possible regulation of online content, such as pornography.

One pressing issue is taxation of online commerce, said several legislators and executives. "It is going to be a problem," said Ron May, a Colorado state legislator.

However, Leahy said online taxes could cripple the fast-growing Internet. "I would urge all state legislatures [to] ... be careful about jumping in too quickly."