Testimony before the Consumer Affairs Committee of the Pennsylvania House of Representatives on Friday, May 21, 2004 .

Good morning Mr. Chairman and members of the Committee. I want to thank you for giving me the opportunity to speak on this important topic. My name is Linda Klose. I am the executive director of the New Jersey-Pennsylvania Council of AeA, Advancing the Business of Technology. AeA, formerly called the American Electronics Association, is the world’s largest industry association representing the high technology community. With more than 3,000 members worldwide, our unique international grassroots structure and overseas presence is not duplicated in any other high technology industry association. The New Jersey-Pennsylvania Council of AeA serves member companies in its two-state area through educational programs, network opportunities, and public policy advocacy. We are committed to ensuring a strong and healthy business climate in which high technology companies can grow and thrive.

Providing service to our members is our primary focus. But as the leading industry association for high technology companies, we also have access to a great deal of information about the growth of technology industries and what that means to the economic vitality of a given region. We also spend a great deal of time soliciting our members’ opinions of current business issues. We do this through an ongoing process of town hall meetings, committee meetings, and individual interviews that are conducted across the entire nation.

Here in Pennsylvania , I represent members who have high technology businesses from few employees up to multi-billion dollar, global corporations. These business people are happy and proud to call Pennsylvania home for their families and their businesses.

Technology, and the manufacturing associated with it, remains an important part of Pennsylvania ’s economy. In 2002, based on U.S. Bureau of Labor Statistics, there were 219,000 citizens employed in high-tech sectors by 13,600 firms. In fact, that meant that Pennsylvania was eighth in high technology employment in the US and had bypassed New Jersey . Also, Pennsylvania was sixth in the number of technology firms. There was also $2.6 Billion in goods exported from Pennsylvania to other countries. That’s 17% of all of Pennsylvania ’s exports. Clearly, technology is not just something bought and sold in Pennsylvania but something that actually is produced here which means jobs and revenue for the state.

In addition, there is a great deal of high technology retail activity in this state that stretches far beyond our technology companies. Rare is the business of any kind that manages without a computer. Still rarer is the school or government agency that has none. Generously sprinkled in our homes are still more. With these computers, we do research on the Internet, shop, check government regulations, pay taxes, balance our checkbook, write letters, or anything else that we desire. It is our choice.

It is that choice that this House Bill 2284 opposes.

When you shop for a computer, or other related equipment, today, whether in a retail store or online, as a consumer we make choices. How much memory, which processor, what size of monitor, and which warranty coverage do we want. People who are more confident in their abilities may opt for minimal coverage or a longer wait for repairs. Others who may not be able to afford any downtime or because they don’t want to personally worry about it, take a more comprehensive coverage. It is a very similar situation when you buy any other consumer product, such as your refrigerator or your automobile.

Of course, those who want the greater coverage know they will have to pay more. Under this bill, you are telling all consumers in this state that they must pay more whether they want or need this coverage. And because this is only in Pennsylvania , it is obvious what any savvy shopper will do – go out of state to shop and deceive the retailer in the neighboring state. Because to admit being a Pennsylvania would cost the consumer an extra substantial fee.

Meanwhile, what about donations? Who is going to want the added cost of donating equipment in Pennsylvania ?

As for the Pennsylvanians who decide to purchase online, despite the extra charges, there is a delay while their signature is collected. Currently, ordering online is quick and efficient. But with this bill, all online retailers for computers, or other related equipment, will need an entire new routine. Unless, or course, they just decide to forgo sales to Pennsylvanians. For some smaller companies, that may be the only viable choice. They can add the line “Not available for sale in Pennsylvania ” to their website.

And for the really thrifty, one option will be eliminated. The sale of refurbished computers for many families or cash-strapped small businesses is a great way to get a fully functional computer at a substantially reduced price. Given the difficulties of tracking returned computers and, even more so, the software and peripherals received back from just Pennsylvania, I can’t see anyone bothering. Besides is a computer returned from a New York consumer a better computer than the banned Pennsylvania one?

Another freedom of choice that is eliminated in this bill is the way that the computer, or other related equipment, will be repaired. Currently, before a seller has you return your computer for repairs, there is usually a process where a technician walks the consumer through some basic debugging steps. Amazingly, many issues are easily resolved this way. Since this would now count as one of the attempted manufactures’ repair attempts, they will probably have the equipment shipped to them. The extra cost has already been added at purchase time for this service. But now, what might have involved a few minutes on the telephone becomes a week or more without this vital equipment. In fact, at this point, small problems may be ignored by the consumer rather than set into motion an elaborate, but legally required, series of procedures.

This all assumes there was anything wrong with the equipment in the first place.

As difficult as all of this is, there is one clause in the proposed bill that is totally impossible. I refer to Section 3b. “At the time of sale of a computer device, the manufacturer must conspicuously disclose the name and version number of all software programs or combinations of programs that will or may be likely to cause operating problems with the computer device.” There are currently millions of software programs available. There is no way to test every combination. Certainly, manufacturers try to warn you about system requirements, but it is totally impossible to keep a fully comprehensive list up to date.

Almost as impossible is the requirement in Section 4c that the second attempt at repairs must be made at the physical location of the consumer within three business days and that the manufacturer cannot ask that the computer be shipped for repairs. Given the shortage of qualified technicians and the number of rural locations in Pennsylvania, this is a huge burden.

I know that your intention is to protect your constituents from seriously defective equipment. However, when the regulations are the same for a piece of software that may cost less than $5.00 but requires a full disclosure statement and repair procedure if it malfunctions, there is a problem. Keeping up the paper trail alone in the service department will negate any possible profit for the producers. It will mean the elimination of whole classes of software programs and inexpensive equipment.

If this bill is intended to protect consumers, I fear that you may find that has an entirely different effect. It will give Pennsylvania consumers fewer choices and higher costs.

Thank you again for inviting me to testify on this important issue.

Linda K. Klose, Executive Director
New Jersey-Pennsylvania Council
AeA, Advancing the Business of Technology
908-561-351
linda_klose@aeanet.org

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