Prepared for the 1999
Maryland General Assembly
Wednesday, March 3, 1999
The Impact of Junk E-mail on
Maryland Business and Consumers
The Forum for Responsible and Ethical E-mail
Junk E-mail and Electronic Commerce in Maryland
Let there be no mistake: with the nature of the Internet. It stems from the realization by
the consideration of HB 573, grows out of the cooperative unscrupulous mass market-
the Maryland General Assembly arrangements upon which the ers that they can force un-
is taking up an issue of tremen- Internet was created, where wanted and unwelcome mes-
dous importance for the future each participant pays for their
Junk E-mail in Brief: of online commerce. portion of the infrastructure.
This means that once an e-mail
On three occasions, different
There is no other medium quite is sent, whether it is an adver-
courts have ruled that First like junk e-mail in its ability to tisement or a letter from a col-
Amendment guarantees do not damage Internet systems and lege student to her parents, the
apply to junk e-mail. impede legitimate Internet com- costs for relaying, transmitting,
merce. There is no more effi- receiving, storing, and down-
Junk e-mail shifts the cost of
cient means of consuming the loading the message borne by
advertising from the sender to time, money and resources of any number of people, except sages on millions of consum-
the recipient. millions against their will. the sender. When one is not ers, with just the touch of a
The effect of junk e-mail on busi- paying the freight, as is the button, at virtually no cost to
Unlike virtually every other com- case with the sender, it is only themselves.
ness is exactly like a tax on the
munications medium, the ma- natural to be less concerned
jority of e-mail costs are paid by with the costs involved. And But the same cannot be said
Junk e-mail is a threat to elec- the recipients – not the sender. therein lies the problem. for recipients of junk e-mail.
tronic commerce because it This is, for better or for worse, The problem with junk e-mail
undermines trust in the medium. Continued on Page 2
The right of private action for
individual recipients is the best
deterrent against junk e-mail.
A Chilling Effect: E-mail by the Numbers
E-mail is the most used online business application in the U.S., with over 14.7 million business
Q&A: Answers to the most frequently 19 percent of U.S. businesses use e-mail to seek new customers, and 45 percent said they
asked questions about junk e-mail. planned to use it to solicit customers during 1998.¹
Junk e-mail could be costing both British and Irish businesses up to USD8.2 billion per year.²
Isn’t legislation against junk e- 2 41.5 million U.S. adults have access to the Internet, up one third from last year's figure. An addi-
mail a form of censorship?
tional 23.8 million people will go online in the US in next twelve months. 75 percent of US adults
accessing the Internet use it for e-mail.³
How can regulating junk e-mail be 3
anything but anti-business? In 1997, America Online testified before the Federal Trade Commission that junk e-mail is the
number one consumer complaint. It estimated that 30 percent of the traffic across its network is
If we pass junk e-mail legislation, 3 junk e-mail.
won’t they just move out of state? In the summer of 1998, America Online was forced to raise its monthly subscription fee from
$19.95 to $21.95 – almost 10%.
Wouldn’t it be better just to filter 3 The SBA estimates there are 23.3 million businesses in America. If only three percent of those
out junk e-mail, or just delete it?
business send junk e-mail just once per year, then each recipient should expect to see an aver-
age of 1,890 junk e-mail messages each and every day.
Isn’t this more dangerous govern- 4
ment regulation on the ‘net? ¹ From the U.S. Small Business Internet Survey, conducted by Cyberdialogue/FINDSVP July 1998.
² From a survey conducted by Benchmark Research of information technology companies in the UK during April 1998.
³ From the American Internet User Survey, conducted by Cyberdialogue/FINDSVP in February 1999.
The Small Business Administration Office of Advocacy, September 1997.
Page 2 The Impact of Junk E-mail on Maryland Business and Consumers
Q&A: Isn’t this censorship?
No. you have to pay the costs and Junk e-mailers would prefer to
not force those costs onto oth- have us all “opt-out”, or ask e-
The Federal junk fax law, upon ers. mailers to remove us from their
which certain key provisions of lists for a finite period after the
HB 573 is based, survived a When junk e-mail supporters first e-mail. But opt-out laws
Constitutional challenge. The hide behind the First Amend- give every junk e-mailer one
courts upheld the law because ment, it is helpful to remember free bite at our wallets. If opt-
it is not censorship. It's about the words of Federal Judge out were the law of the land,
making the advertisers bear Stanley Sporkin in the case of we’d have to respond to a daily
their own costs Turner Broadcasting v. FCC: average of 1,890 junk e-mails if
The 105th Congress failed to take action on
three different bills aimed at curbing junk e- Commercial e-mail would be a mere 3% of businesses in
"[They’ve] come to court not America decide to use junk e-
mail. The States are left to close the breech. permitted under HB 573, but because their freedom of
only if junk e-mailers bear the mail just once per year. How’s
speech is seriously threatened that for a chilling effect on elec-
minimal burden of ensuring that but because their profits are; to
their messages only go to peo- tronic commerce?
dress up their complaints in
ple who have expressly agreed First Amendment garb de-
to bear the costs. It’s called means the principles for which
“opting in”. HB 573 merely says the First Amendment stands."
that if you want to advertise,
Junk E-mail and Electronic Commerce in Maryland
Continued From Page 1 with increased numbers of cus- advertisements as widely and
“Unlike virtually tomers. However, when a junk e indiscriminately as possible.
Costs to the ISPs include the -mailer begins to consume an
every other load on the processor in their ISP's bandwidth, the ISP has You will undoubtedly hear from
communications mail servers. "CPU time" is a few choices: 1) let customers representatives of the market-
precious commodity and pro- cope with slower internet ac- ing industry who will say that e-
medium, the cessor performance is a critical cess, 2) eat the costs of in- mail represents a low cost
majority of e-mail issue for ISPs. When their CPUs creasing bandwidth, or 3) raise method of marketing which will
are tied up processing junk e- rates. In short, the recipients put mass advertising into the
costs are paid by the mail, it creates a drag on all of are still forced to bear costs hands of even the smallest
the mail in that queue -- wanted that the advertiser has avoided. businesses. That is certainly
recipients – not the and unwanted alike. This is also true. But what they never
sender.” a problem with "filtering" When turned into an advertising acknowledge is that what
schemes; filtering e-mail con- medium, the skewed econom- makes junk e-mail so inexpen-
sumes vast amounts of CPU ics of e-mail turn traditional sive is that every recipient is
time and is the primary reason notions of advertising on their forced to subsidize that adver-
most ISPs cannot implement it head. In virtually no other ad- tising whether they want to or
as a strategy for eliminating vertising medium does the ad- not.
junk e-mail. vertiser get to force the recipi-
ent to bear more costs than HB 573 creates real deterrence
ISPs purchase bandwidth -- they do. With telemarketing, TV against all forms of cost shifted
their connection to the rest of or print ads, or ads in the U.S. advertising, be it junk e-mail,
the Internet -- based on their Mail, the sender incurs signifi- junk faxes, or telemarketing
projected usage by their pro- cant initial costs and is forced calls to cellular telephones. We
spective user base. For most to target their advertising care- urge this body to pass this cru-
small to midsize ISPs, band- fully because each additional cial legislation.
width costs are among one of ad bears an incremental cost.
the greatest portions of their But in the world of junk e-mail
budget and contributes to the marketing, it costs no more to
reason why many ISPs have a send the first email than it does
Businesses that provide Net access to their tiny profit margin. Sans junk e- to send the ten millionth e-mail.
employees suffer the same problems mail, greater consumption of Thus, there is every incentive
caused by junk e-mail as ISPs. bandwidth would normally track for the marketers to cast their
Prepared for the 1999 Maryland General Assembly Page 3
Q&A: Isn’t this legislation really anti-business?
No. ing in business. The death of all sizes.
unprofitable or harmful busi-
There's a long tradition in this nesses is the essence of capi- But worst of all, junk e-mail
country of making commercial talism, the essence of the free degrades trust in this new medi-
enterprises bear the costs of market. So long as junk mailers um over which billions of dollars
what they do to make money. can't pay their own way, we all in trade annually may eventual-
For example, it would be far must fight to make sure that we ly take place. Users are accost-
cheaper for chemical manufac- don't pay their way for them ed daily by scams and snake-oil
turers to dump their waste into against our will. via e-mail. It’s difficult enough
the rivers and lakes. However to instill trust in something as
"externalities" (as economists Furthermore, the expenditures intangible and ephemeral as
call them) are bad because they by companies to defend them- the Internet without having to
allow one person to profit at selves from junk e-mail and to contend with the problem of Business should bear the costs of what they
another's — or everyone's — keep their systems properly junk e-mail. do to make money, not foist them on unwill-
expense. If a business can't functioning amid the onslaught ing others.
compete without stealing or is not at all insubstantial. HB
engaging in unfair trade practic- 573 provides relief from this
es, then it has no business be- cost, benefiting businesses of
Q&A: Won’t Junk E-mailers just go out-of-state?
If HB 573 becomes law, it won’t most people won't need to sue they have prevailed under exist-
matter if they do. because the potential risk and ing law). It’s just too expensive “A private right of
cost to junk e-mailers will be felt for most others, and the cost
HB 573 does what neither of even if only one or two people would just be passed on to cus- action for junk e-
the other two pending e-mail are motivated to bring a case tomers, aggravating the central
bills do: It gives individual recip- and win a judgement. problem of cost-shifting. The
mail recipients in
ients of junk e-mail in Maryland weak possibility of action by an Maryland is crucial
a private right of action to pur- HB 56 and HB 745 grant ISPs ISP in Maryland is no deterrent
sue statutory civil damages in a an additional venue to pursue at all. A private right of action for effective
court of small claims no matter their rights against junk e- for junk e-mail recipients in deterrence.”
where in the U.S. the junk e- mailers. But ISPs are reluctant Maryland is crucial for effective
mail comes from. to bring suit under existing law. deterrence. Almost anything
Only the largest of ISPs have else is worse than no law at all.
The reality, of course, is that taken on junk e-mailers (and
Q&A: Can’t we just filter out junk e-mail if we don‘t want it?
Sure. takes to process and deliver in- invented yet.
bound e-mail. That means ISPs
Filtering technologies and strat- So why not just hit the Delete
or businesses with e-mail must key when it comes in? By the
egies abound. But while filtering
double or treble their computing time you get to press the key,
removes the annoyance of see-
resources just to maintain the the costs associated with that
ing junk e-mail in your mailbox,
same level of service to its cus- piece of junk e-mail have al-
filtering actually exacerbates
tomers or employees. And the ready been extracted from your
the central problem of cost pocketbook. It’s like hitting the
filtering technology that can
shifting. snooze button on your alarm
catch all junk e-mail without
clock — the more you hit it, the Popular speculation aside, anti-junk e-mail
Effective filtering programs discarding legitimate business efforts are not funded in secret by timber
deeper in trouble you are.
double or treble the time it communications hasn’t been companies (TINLC).
The Forum for Responsible and
Andrew J. Barrett, Maryland FREE Coordinator
Sensors for Medicine and Science, Inc.
12321 Middlebrook Rd. Suite 210
Prepared for the Members of the
Germantown, MD 20874 1999 Maryland General Assembly
with the Cooperative Effort of
Days: 301.515.7260 Volunteers all around the World
E-mail: email@example.com and across the Internet.
Free speech isn’t free if it arrives
LEARN MORE ABOUT US:
W W W . S PA M F R E E . O RG
Q&A: Isn’t this just more stupid and dangerous government regulation?
No. legal right to take the perpetrators to
court. The right of private action embod- This law won't harm legitimate Net com-
Unlike the blatantly unconstitutional ied in HB 573 would place enforcement merce, but it will make advertisers account-
Communications Decency Act, which put in the hands of the consumer, not in the able for their actions. It creates an incen-
the Federal government in a position of hands of any government agency. tive that's not there now — an incentive for
policing the Net, HB 573 would empower commercial e-mailers to attract willing sub-
individuals to take control of their own Most of those involved in anti-junk e-mail scribers and leave unwilling recipients
mailbox again. This is another reason efforts (or “Anti-spammers“) are long- alone.
why the private right of action is so cru- time "Net Activists" who are zealously
cial. Our legal system says that you can't protective of the anarchy of the Net, es-
sue someone unless you have a clearly pecially in the face of regulation by the
established right to do so, and HB 573 government. However, it is helpful to
would give people that right. remember that we are a group of ISP
administrators and technical experts who
Unlike other efforts at "policing" the Net, have realized that technical solutions are
this law doesn't create any bureaucracies inadequate.
or boards or committees to decide what's
morally good or bad. It doesn’t even di- Unlike some efforts at internet-related
vert enforcement dollars from the investi- laws, this is being requested by those
gation and prosecution of other, more experts most familiar with the technolo-
serious crimes. Instead, it clearly defines gy. That's what makes this law different:
a deceptive and unfair business practice it is one being requested by the Net Com-
that is damaging and costly to business- munity rather than something being im-
es and consumers, and gives recipients a posed on the Net Community.