The site owner operated her server from her home in a residential neighborhood. Although the business actually had a local business license for "Internet sales and service", fortune telling required a different license, not available in the owner's neighborhood. Like many communities, Long Beach's zoning code quite legally protects residential neighborhoods against activities perceived as unsavory.

This case highlights another twist of the Internet economy. How should decades-old zoning laws, intended to keep smokestacks away from backyard lawns, apply to cutting-edge Net firms that can exist anywhere a modem can be connected?

In the Long Beach case, the code rules absolutely prohibited fortune telling at the site owner's home, online or off. However, the Internet business was invisible, other than through a web browser. Nothing about the business changed the neighborhood's appearance or increased traffic.

Long Beach wasn't the first community to try fence in cyberspace with bricks and mortar zoning rules. Many towns have invoked zoning rules to battle online pornography sales from local studios. In fact, a national convention of anti-pornography activists in April discussed zoning as creative method to fight online porn. A U.S. Supreme Court Justice has even suggested (but not ruled) that special online zoning to restrict pornography could satisfy both First Amendment and real world zoning guidelines, in the landmark 1997 opinions striking down the Communications Decency Act of 1996 on free speech grounds.

For example, a "peep cam" business, Voyeur Dorm, has so far survived local challenges in Tampa, Florida, that it is an illegal "adult entertainment use" in a residential zone. The site broadcasts live footage from the home of seven paid college coeds. Although the Tampa city council upheld a zoning board ruling against the house, the site owners appealed in federal court to delay a shutdown. The appeal claims that the zoning ruling violates the site owner's free speech rights.

Elsewhere, local officials in Wisconsin and Maryland are investigating whether online sex toy and nude photo retailers violate zoning rules for home businesses. As in Long Beach, however, the owners don't believe they create the problems zoning was meant to prevent. "We don't bug anybody," said the Wisconsin entrepreneur. "We just want to be left alone." Similarly, the Maryland site operator argued, "What about the lady across the street that sells Tupperware? If you're going to shut me down, shut everyone down" with a home business in a residential zone.

Even University of Virginia law professor Robert O'Neil agrees that a logical problem exists. "What you've got is a real neighborhood, which is invaded by virtual means, without the accompanying consequences of a red-light district."

But what about using real world zoning against more commonplace online businesses? A typical home-based Internet business probably will not create the problems that zoning was intended to regulate. As long as taxes are paid, what harm can come from someone generating tax revenue by selling products online from a spare room?

Of course, a home-based business that handles shipments or gets lots of deliveries does create additional demands for services, and causes more traffic in a residential neighborhood. However, do we demand licenses or extra taxes from homeowners who shop from catalogs or online, and get a parade of UPS trucks during holiday season?

Like many other laws, zoning rules must be updated to accommodate communities' legitimate interest in preserving their traditional way of life in a Net economy that can function anywhere, anytime. Beleaguered local officials struggling against national - and international - economic changes may find that zoning lets them fight online businesses just as easily as they can resist waste dumps or shopping centers.

On the other hand, what local government can pass up new sources of business tax revenue, without significant service needs or costs? Home-based Net business in residential neighborhoods could even ease the pressure on property taxes paid by residents - and voters. In today's economy of flexible, time-shifting jobs, zoning rules against home-based online businesses could drive away tomorrow's tax base.

Americans have long demanded that government stay out of our homes and bedrooms. Why should the rules be any different when the "illegal" activity taking place there is red, white and blue free enterprise?