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Volume 2, Issue 115: Friday, October 6, 2000
- "Fear of Slowdown Takes the Shine Off Tech Stocks"
Los Angeles Times (10/06/00) P. A1; Mulligan, Thomas S.; Dunn, Ashley
Analysts wonder whether the current decline of many prominent tech stocks is the beginning of a slowdown for the tech industry. The tech-heavy Nasdaq index has fallen 18 percent since Sept. 1, and recent low-revenue warnings from computer makers Apple and Dell have added to speculation among analysts and investors that the technology market may have reached a saturation point. Analysts note that PC sales growth is falling for businesses and home users. Nearly half of all homes in the U.S. now own computers, and those owners are in less of a rush to replace their current models, say analysts. Also, the growth of the Internet may also be slowing, analysts warn. Once U.S. Internet access passes the 50 percent mark, the growth rate could fall below 5 percent, analysts say, citing the results of a recent Pew American Life Project survey that found that half of those Americans not already using the Web have no desire to do so. Investors expect the few tech stocks still trading at high price-to-earnings ratios, such as Sun Microsystems, to fall as more dot-coms and other tech companies falter. However, some analysts say Wall Street is overreacting to normal changes within the maturing tech industry. They point to recent stock decreases for Nextel, which lost 12 percent of its value yesterday after announcing 540,000 new subscribers rather than the expected 550,000. Sales volume outweighs growth rate, these analysts argue. Other analysts point to young, growing tech fields such as optical networking as markets to watch.
- "Protecting E-Copyrights"
Boston Globe (10/05/00) P. 26
Motion Picture Association of America President Jack Valenti and Stanford professor and Internet law expert Lawrence Lessig argued the conflict between copyright protection and fair public use over the Internet at a Harvard Law School debate this week. The debate focused on the Constitutional scope of copyright protection, which is based on a clause in Article 1, Section 8 that seeks to support "useful arts, by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries." Valenti also relied upon the terms of the 1998 Copyright Term Extension Act, which extended copyright protection from 14 years to 95 years, and the 1998 Digital Millennium Copyright Act, which figured prominently in a recent court case that banned the posting of software code that cracks encryption coding on DVD files. Lessig responded that copyright protection serves no purpose once a work's creator is dead and that copyright law is preventing older work from enjoying the benefits of being in the public domain. Lessig is supporting a New Hampshire man who is archiving books through a Web site. Both Lessig and Valenti agreed that digital copyright protection should not stop libraries and other institutions from accessing protected material.
- "Piracy a Concern as the China Trade Opens Up"
New York Times (10/05/00) P. W1; Smith, Craig S.
China may not be able to follow the regulations of the World Trade Organization, analysts say. They point to the country's rampant copyright piracy, a long-standing problem that the Chinese government seems powerless to stop, as proof. Although the country promised five years ago to crack down on the pirates, stolen software still accounts for 91 percent of all software in use in the country, according to the Business Software Alliance. Pirated copies of DVDs and popular books are available on nearly every major street, and copyright piracy has now spread to the Internet. In a recent high-profile example of the problem, pirated copies of a state-sponsored anti-corruption movie have become a bestseller. Although China has promised the WTO it will crack down on such piracy, many believe that it is unrealistic given the size of the country. He Zizhuang, who co-wrote the anti-corruption film, does not expect piracy to cease because "law enforcement is not enough and there is regional protectionism in many different places." What concerns many analysts is that laws against piracy are straightforward compared to other WTO regulations, and they wonder whether the central government can communicate these regulations to China's many disparate parts. China's government has announced a summit of its provincial governors this January to address WTO regulations.
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- "Net Patent Bill Introduced"
Wired News (10/03/00); Ellis, Kathleen
A bill that could affect how high-tech business patents are awarded was introduced in the House this week. The Business Method Patent Improvement Act of 2000, sponsored by Reps. Rick Boucher (D-Va.) and Howard Berman (D-Calif.), seeks to "create the presumption that the computer-assisted implementation of an analog-world business method is obvious and thus is not patentable," Berman says. The public will be allowed to challenge people who seek patents for a business method that is already in use, according to language in the bill that permits the introduction of evidence that the business method is already in common use. Berman predicts that the measure will become the hottest intellectual property subject during the next session of Congress.
For information regarding ACM's work in the area of intellectual property, visit http://www.acm.org/usacm/copyright.
- "ICANN Pursuing Slowest-Possible Expansion of Net Domain Names"
SiliconValley.com (10/03/00); Gillmor, Dan
ICANN, the organization responsible for creating and maintaining the Domain Name System, should allow as many new top-level domain names as possible, argues Dan Gillmor. ICANN received applications from 47 groups proposing new top-level domains and should select the finalists before the end of the year. Suggested new domains include .kids, .shop, .xxx, and .travel. Observers expect ICANN to choose as few as three new top-level domains. However, there is no compelling reason why ICANN should not allow dozens, even hundreds, of new top-level domains, Gillmor argues. He believes ICANN is bowing to corporate pressure to restrict the number of domains because of copyright concerns. Corporations, Gillmor says, do not want their dot-com trademarks to be rendered meaningless by a sudden expansion of domains. Also, if there were a greater number of domains, corporations would be hard-pressed to monitor all of the new Web sites for possible trademark violations. Gillmor also questioned the H-1B legislation Congress passed this week. Gillmor argues that if there is a shortage of technology workers the solution is providing green cards to skilled foreign workers, not restrictive H-1B visas. He also notes that there are many stories of older tech workers that can't even get interviewed.
For information regarding ACM's Internet governance work related to ICANN, visit http://www.acm.org/serving/IG.html.
- "Jetsons' Rosie, Other Robots, Almost Here"
Investor's Business Daily (10/05/00) P. A8; Vallone, Julie
Several firms are working on new robots they hope will appeal to everyday consumers. For example, IRobot's new iRobot-LE acts as a roving Web camera. The robot moves via remote control and can even climb and descend stairs. Although priced at $4,995, its creators expect consumers will find numerous purposes for the robot, whether to check in with loved ones or co-workers, to give facility tours over the Internet, or to teleconference. Other firms are working on robots that will automate everyone's most hated household chores. The RL500 robot, new from Friendly Robotics, mows lawns. Navigation devices and special software tell the robot where and where not to mow. Friendly Robotics is also developing robotic garbage cans and snow blowers, and another firm is working on a robot vacuum cleaner. Although the walking and talking robots of science fiction may be another century away, scientists say the robots emerging today could be very useful. John McCarthy, a computer science professor at Stanford University, says, "If those gadgets help people get their housework done, I'm sure there will be a market."
- "Web-Crazy Mexicans Turned Off by Download Glitches"
Financial Times (10/05/00) P. 3; Mandel-Campbell, Andrea
The poor quality of Internet service in Mexico is discouraging many Mexicans from going online, and some experts blame the situation on the monopoly held by Telmex, the country's dominant carrier. Mexican ISPs say they are overwhelmed by demand for service, but Telmex often forces them to wait months before providing new lines and increasing routing capacity. Telmex claims over 95 percent of the local telephone market, and is the main provider of local lines and interconnection links to ISPs. In addition, Telmex's backbone is the main path to the U.S. Internet nodes that route all of Mexico's Internet access. Telmex says it is unable to keep up with the rapid growth of the Internet and that its own ISP, Prodigy, is among those waiting for increased capacity. However, other ISPs believe Telmex engages in anti-competitive practices by favoring Prodigy, which controls 60 percent of the ISP market. Although Telmex has directed dissatisfied ISPs to switch to one of several new local telephone providers, these providers are having trouble offering service due to hostile market conditions, analysts say. Some analysts believe the Mexican government should offer stronger investment incentives for local operators and more straightforward regulations for Telmex. Although the number of Mexican Internet users will rise 300 percent by July 2003, infrastructure issues have already limited the Internet's growth potential by 20 percent, says David Cuen of Mexican IT consultancy Mund.
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- "Web Sites Can Give Best Clients Fastest Access"
USA Today (10/05/00) P. 5B; Kessler, Michelle
Content-delivery firm EpicRealm in July began offering a prioritization service that allows companies to serve Web pages to loyal customers faster than to other visitors. PriorityRealm has been popular with early users, as traffic volumes on the Internet continue to rise and Web administrators look for ways to keep their best customers from becoming frustrated while waiting for pages to load. However, critics say prioritization is a threat to online privacy and equality. The data that labels priority customers could be misused, warns Electronic Privacy Information Center policy analyst Andrew Shen. In addition, some observers are offended by the idea of certain individuals receiving better service than others. EpicRealm rival CacheFlow is also experimenting with prioritization, but says many companies are not yet ready for the service. Prioritization could become widespread as global Internet use increases, says Giga Information Group analyst Joel Yaffe.
For information regarding ACM's activities on behalf of privacy matters, visit http://www.acm.org/usacm/privacy.
- "Hi-Tech Group Asks Govt to Stay Out of E-Commerce"
Industry representatives who attended a meeting of the House subcommittee on Treasury, Postal Service, and General Government on Tuesday called upon the federal government to suspend the introduction of e-government services that compete with private sector efforts. "It does not serve the taxpayer well for the government to...focus on trying either to duplicate the services the private sector is already offering, or to try to manage competition, revise business models, and run the industry," said Computer & Communications Industry Association (CCIA) CEO Ed Black. Many lawmakers have echoed Black's sentiments in recent months. New e-government services from the Postal Service and IRS have been held up as prime examples of unnecessary governmental competition with private sector initiatives. Later this month, the CCIA will release the results of a study on the economic impact of government e-commerce efforts.
- "Study: E-Gov Can't Stop Now"
Civic.com (10/02/00); Sarkar, Dibya
Federal, state, and local governments will collect some 333 million submissions over the Internet by 2006, according to a new report from Forrester Research. The report concluded that, as the demand for online government from business and citizens increases, the number of available services will increase. The report projects a three-stage plan for the deployment of those services, with basic services such as parking-ticket payment and online tax filing appearing in the next few years. Governments will then focus on e-commerce functions such as business and professional license registration and building permit applications. Finally, after 2005, governments will provide nearly all services, including simplified tax filing and online voting, over the Internet. For example, by 2006, governments will receive $602 billion in online tax payments. The report also identifies several potential barriers to this development, including a tech labor shortage and an unwillingness to change within the government bureaucracy. Also, citizens may not wish to pay convenience fees to use government services online and may have concerns about security and privacy. However, the report said citizens' desire for e-government outweighs even these worries.
- "What's at Stake: High Tech"
National Journal (09/30/00) Vol. 32, No. 40, P. 3051; Munro, Neil
Analysts contend that the positions of Texas Gov. George Bush and Vice President Al Gore on Internet-related issues are relatively similar, and that neither would make any radical changes in the area. Gore concentrates more on the digital divide, federal spending on technology, and less federal regulation, while Bush advocates changes in tort law, tax cuts, and free market solutions to solve the high-tech industry's problems. Both candidates want to see beefed-up privacy protections for sensitive medical and financial information, but appear to favor a laissez-faire approach to Internet regulation in general. Experts say the avoidance of tough stances by both candidates on the most contentious high-tech issues, such as online porn, consumer privacy, or Internet open access rules, is proof that the industry need not worry that a President Gore or President Bush would change the current direction of the Internet economy.
- "The Outlook for Tech"
Business Week (10/09/00) No. 3702, P. 168; Reinhardt, Andy
Information technology industry observers tend to agree that the third quarter slump by Intel does not suggest that there will be a widespread downturn among tech firms. Even though more Internet startups are shutting down, more dot-com workers are out of jobs, PC sales are slowing, and telecom companies will miss their financial goals for the year, market observers are confident about the prospects of the IT economy, barring a plummeting world economy and panic on Wall Street. Although growth is slowing, experts maintain that tech remains at a healthy level and that it is so entrenched in society that it would not decline at as fast a pace as the rest of the economy if a recession occurred. The IT economy currently represents 5.3 percent of the gross domestic product, up from 2.5 percent in the 1980s. International Data (IDC) says more than $975 billion will be spent on computers, networking, and software this year, an increase of 10.4 percent. IDC expects companies to invest heavily in Web initiatives, spending $119 billion this year, and $284 billion in 2003. Meanwhile, Salomon Smith Barney surveyed 50 CIOs and found that more spending on hardware and software will be on their agendas next year. The telecom sector has raised some concerns as its players seem to have spread themselves too thin by entering the wireless and Internet markets. Accordingly, spending on telecom and networking gear could suffer. Chip and software makers are viewed as positives, with the software industry seen as the stronger of the two. PCs are somewhat mixed as the home business market thrives while corporations are waiting longer to buy new machines. And finally, computer servers and storage will continue to grow at an exceptional pace.
- "Forum Warns of Hidden DDoS Legal Liability"
Network World (10/02/00) Vol. 17, No. 40, P. 16; Greene, Tim
The RFC2267-plus Working Group, an industry group formed to combat distributed denial-of-service (DDoS) attacks, warns companies and ISPs to take steps to prevent DDoS attacks or risk being held liable for damage if such an incident occurs. The consortium, named for the RFC 2267 Internet router filtering standard that could help prevent DDoS attacks, says courts could maintain that companies have a reasonable expectation that a DDoS attack could occur. Therefore, the group suggests that IS executives try to prevent their systems from becoming the zombies that carry out DDoS attacks by following any guidelines of accepted safe practices that the group releases. Companies that conduct business on the Internet should share information regarding DDoS attacks to help one another avoid and minimize the damage of the attacks. Although the group has not yet issued any formal guidelines, it suggests that companies form a response team to plan a reaction to attacks, audit security of vulnerable systems between the firewalls, and implement known security software patches as well as an intrusion-detection system.
- "Marketers Fear EU Regs Will Hinder E-Commerce"
Advertising Age (10/02/00) Vol. 71, No. 41, P. 16; Wentz, Laurel; Meller, Paul
By the end of the year the European Union could have a law in place that will expose U.S. companies that do business over the Internet to being sued in the country of the consumer. The new proposal, which will go to vote in the fall, appears to be another hassle for Web companies, particularly small to medium-sized businesses that want to capitalize on the Internet. Furthermore, the new EU regulation creates confusion because the member states' Council of Ministers has already adopted an EU directive on e-commerce that addresses advertising, direct marketing, and sponsorship. For example, the legislation proposes that marketers get consumers' permission before sending email, while the e-commerce directive says marketers do not have to do so. U.S. officials weighed in on the issue last month when the FTC issued its 20-page report on "Consumer Protection in the Global Electronic Marketplace." The FTC says just because consumers in other countries can access a Web site, particularly when the company is not marketing to that country's citizens, does not mean that there are grounds for a lawsuit. EMarketer estimates that e-commerce sales will reach $420.2 billion in Europe by 2003, but it also believes that e-commerce could be held in check by EU regulations.
- "Virtually There"
Computerworld (10/02/00) Vol. 34, No. 40, P. 74; Forster, Barbara
The first practical applications of holographic technology are already making inroads on a limited basis. Fiber-optic technology may make holographic data storage available soon because fiber optics can accommodate the wide bandwidth of holograms and transmit data much faster than television. "We can store 100,000 different photos or digital pages--that's a terabyte [of information]--in something the size of a sugar cube," claims MIT's Stephen Benton. Industries already use holographic technology as a tool for quality control and nondestructive testing for fractures, while military and civilian aircraft incorporate "heads-up" holographic displays in cockpits. Artists employ holography's unique use of 3D space and pure light to produce non-traditional media. Physicians will use enhanced holograms such as Parallax to examine internal systems in 3D and make more accurate diagnoses. The Spatial Imaging Group of MIT's Media Laboratory, which Benton heads, has developed two working prototypes of a holographic videoconferencing system. Researchers established the principles of information reduction and image scanning when building the system, but a practical display size has yet to be devised. Benton estimates an in-office/in-home version of the system will not be available for at least 10 years. Other research groups are working on LCD-based holography systems; one group in England is trying to cut down holographic image transmission times, while another group is developing a system that can mimic the sensation of touch, Benton says. Researchers expect that microelectromechanical systems (MEMS) will make practical holographic devices feasible. This breakthrough will significantly lower the manufacturing cost of optical devices, says Benton.
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- "After California"
Industry Standard (10/09/00) Vol. 3, No. 41, P. 106; Craft, Cynthia H.
California Gov. Gray Davis vetoed a bill that would have imposed sales taxes on some online purchases, and signed a separate bill that will establish a new state commission to study the new economy and tax policy. However, the bill had enough support to get as far as the governor's desk in a state known for nurturing e-commerce. Davis said taxing the Internet now would hamper its growing businesses, and that the Internet must be given time to reach its full potential. But the vetoed bill would not have imposed new taxes--instead, it would have enforced existing laws that require remote sellers to collect sales tax if they have a physical presence in the state in question. Booksellers Barnesandnoble.com and Borders.com, for instance, have stores in California but do not collect sales tax on online orders, and California's tax commissioners are not enforcing the law. The bill's author, Assemblywoman Carole Migden (D-San Francisco), says the idea was to make the state aware that it should enforce tax laws equally. The vetoed bill represents a nationwide trend in state capitals to impose sales tax on Internet shopping, running counter to the federal Internet Tax Freedom Act. State legislators say the Internet has had an advantage long enough at the expense of state revenues and traditional stores. The states say they will create a simplified system for imposing and collecting taxes online. State policy makers have been meeting since March on the Streamlined Sales Tax Project, and they point out that states get 30 percent to over 60 percent of their revenue from sales tax. The 26 participating states want to shift the tax question from Congress to the states; 13 more are observing the project. Four participating states have asked software companies to collect and administer sales tax electronically, rather than having online retailers handle it.