[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Senate]
[Pages S10378-S10379]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        ELECTRONIC COMMERCE EXTENSION ESTABLISHMENT ACT OF 1999

  Mr. BINGAMAN. Mr. President, yesterday I was pleased to be joined by 
Senators Rockefeller, Snowe, and Mikulski in introducing the Electronic 
Commerce Extension Establishment Act of 1999. The purpose of the bill 
is simple--to ensure that small businesses in every corner of our 
nation fully participate in the electronic commerce revolution 
unfolding around us by helping them find and adopt the right e-commerce 
technology and techniques. It does this by authorizing an ``electronic 
commerce extension'' program at the National Institute of Standards and 
Technology modeled on NIST's existing, highly successful Manufacturing 
Extension Program.
  Everywhere you look today, e-commerce is starting a revolution in 
American business. Precise e-commerce numbers are hard to come by, but 
by one estimate e-commerce sales in 1998 were $100 billion. If you add 
in the hardware, software, and services making those sales possible, 
the number rises to $300 billion. Another estimate has business to 
business e-commerce growing to $1.3 trillion by 2003. Whatever the 
exact numbers, an amazing change in our economy has begun.
  But the shift to e-commerce is about more than new ways to sell 
things; it's about new ways to do things. It promises to transform how 
we do business and thereby boost productivity, the root of long term 
improvements in our standard of living. A recent Washington Post piece 
on Cisco Systems, a major supplier of Internet hardware, notes that 
Cisco saved $500 million last year by selling its products and buying 
its supplies online. Imagine the productivity and economic growth 
spurred when more firms get efficiencies like that. And that's the 
point of the bill, to make sure that small businesses get those 
benefits too.
  Electronic commerce is a new use of information technology and the 
Ineternet. Many people suspect information technology is the major 
driver behind the productivity and economic growth we've been enjoying. 
The crucial verb here is ``use.'' It is the widespread use of a more 
productive technology that sustains accelerated productivity growth. It 
was steam engine, not its sales, that powered the industrial 
revolution.
  Closer to today, in 1987, Nobel Prize winning economist Robert Solow 
quipped, ``We see the computer age everywhere but in the productivity 
statistics.'' Well, it looks like the computer has started to show up 
because more people are using them in more ways, like e-commerce. 
Information technology producers, companies like Cisco Systems who are, 
notably, some

[[Page S10379]]

of the most sophisticated users of IT, are 8% of our economy; from 1995 
to 1998 they contributed 35% of our economic growth. There are also 
some indications that IT is now improving productivity among companies 
that only use IT.
  But here is the real point. If we are going to sustain this 
productivity and economic growth, we have to spread sophisticated uses 
of information technology like e-commerce beyond the high tech sector 
and companies like Cisco Systems and into every corner of the economy, 
including small businesses. Back in the 1980's, we used to debate if it 
mattered if we made money selling ``potato chips or computer chips.'' 
But here is the real difference: consuming a lot of potato chips isn't 
good for you; consuming a lot of computer chips is.

  I emphasize this because too often our discussions of government 
policy, technology, and economic growth dwell on the invention and sale 
of new technologies, but shortchange the all important topic of their 
use. Extension programs, like the electronic commerce extension program 
in my bill, are policy aimed at precisely spreading the use of more 
productive technology by small businesses.
  With that in mind, the e-commerce revolution creates both 
opportunities and challenges for small businesses. On the one hand, it 
will open new markets to them. On the web, the garage shop can look as 
good as IBM. On the other hand, the high fixed costs, low marginal 
costs, and technical sophistication that can sometimes characterize e-
commerce, when coupled with a good brand name, may allow larger, more 
established e-commerce firms to quickly move from market to market. 
Amazon.com has done such a wonderful job of making a huge variety of 
books widely available that it's been able to expand to CDs, to toys, 
to electronics, to auctions. Moreover, firms in more rural areas have 
suddenly found sophisticated, low cost, previously distant businesses 
entering their market, and competing with them. Thus, there is 
considerable risk that many small businesses will be left behind in the 
shift to e-commerce. That would not be good for them, nor for the rest 
of us, because we all benefit when everyone is more productive and 
everyone competes.
  The root of this problem is the fact that many small firms have a 
hard time identifying and adopting new technology. They are hard 
working, but they just don't have the time, people, or money to 
understand all the different technologies they might use. And, they 
often don't even know where to turn to for help. Thus, while small 
firms are very flexible, they can be slow to adopt new technology, 
because they don't know which to use or what to do about it. That is 
why we have extension programs. Extension programs give small 
businesses low cost, impartial advice on what technologies are out 
there and how to use them.
  What might an e-commerce extension program do? Imagine you're a small 
speciality foods retailer in rural New Mexico and you see e-commerce as 
a way to reach more customers. But your specialty is chiles, not 
computers; imagine all the questions you would have. How do I sell over 
the web? Can I buy supplies that way too? How do I keep hackers out of 
my system? What privacy policies should I follow? How do I use 
encryption to collect credit card numbers and guarantee customers that 
I'm who I am? Can I electronically integrate my sales orders with 
instructions to shippers like Federal Express? Should I band together 
with other local producers to form a chile cybermall? What servers, 
software, and telecommunications will I need and how much will it cost? 
Your local e-commerce extension center would answer those questions for 
you. And, you could trust their advice, because you would know they 
were impartial and had no interest in selling you a particular product.

  This bill will lead to the creation of a high quality, nationwide 
network of non-profit organizations providing that kind of advice, 
analogous to the Manufacturing Extension Program, or MEP, network NIST 
runs today, but with a focus on e-commerce and on firms beyond 
manufacturers. MEP demonstrates that NIST could do this new job well.
  Similarly, this bill is modeled on the MEP authorization. It retains 
the key features of MEP: a network of centers run by non-profits; 
strict merit selection; cost sharing; and periodic independent review 
of each center. In addition, it emphasizes serving small businesses in 
rural or more isolated areas, so that those businesses can get a leg up 
on e-commerce too. In short, this legislation takes an approach that 
has already been proven to work.
  Practically speaking, if this bill becomes law, I assume NIST would 
begin by leveraging their MEP management expertise to start a few e-
commerce extension centers and then gradually build out a network 
separate from MEP. I also want to note that this is a new, separate 
authorization for an e-commerce extension program because it will have 
a different focus than MEP and because I do not want it to displace MEP 
in any way.
  Mr. President, I hope my colleagues will join me in supporting this 
important, timely, and practical piece of legislation. Just as a strong 
agricultural sector called for an agricultural extension service, and a 
strong industrial sector called for manufacturing extension, our shift 
to an information economy calls for electronic commerce extension.

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