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Volume 2, Issue 81:  Monday, July 17, 2000

  • "U.S. to Allow Some Encryption Exports"
    Washington Post (07/15/00) P. E1; Savino, Lenny

    The U.S. government could announce looser encryption export controls as early as Monday, allowing software firms to send advanced encryption products to the European Union without licensing or review. Until now, software companies were only allowed to export weak encryption products, due to concerns that hostile nations could use the tools against the U.S. While U.S. companies were subject to strict export laws, Asian and European rivals gained an edge in the markets in which U.S. firms were unable to compete. The new rules will allow U.S. firms to export encryption tools freely to Canada, Europe, and Australia, which together with the U.S. account for roughly 80 percent of the worldwide encryption market. Export restrictions will still apply to some countries, including Cuba, Iran, Iraq, and North Korea.
    For information regarding ACM's activities related to encryption, visit http://www.acm.org/usacm/crypto

  • "Domain Names Aside, Future of Net Is at Stake"
    San Jose Mercury News Online (07/16/00); Gillmor, Dan

    ICANN's board followed the predicted path of choosing to increase the number of top-level domains in order to promote competition; however, the decision does not clear the air of questions on how the process will be accomplished, what new domains will be developed, and really hides the true function of ICANN, which is to decide ownership of the Internet, according to columnist Dan Gillmor. Those applying to become registrants of the yet-to-be-determined top-level domain names will have to pay a non-refundable, $50,000 application fee to ICANN. This will probably limit the number of applications from public interest organizations, although companies with lots of money will not mind. Nor will Network Solutions, which still leads the process of domain registration. ICANN's fee may just be an effort by the organization to keep down the number of applicants and to bring in some funds, as ICANN is not financially stable. Although there has been a great deal of concern over the establishment of new top-level domains, the process of establishing domain names has actually been growing for quite some time. Another issue is the at-large membership of ICANN's board members. ICANN's board did hear the voiced concern that the at-large board membership would be reduced. ICANN reduced the amount of member support required for an at-large candidate's nomination from 10 percent to 2 percent, leaving five positions open to public election this fall. However, ICANN is preparing to examine the way its board is constituted, which could mean that at-large directors and even the elections themselves could be eliminated. ICANN's true role of determining who will run the Internet is a good reason for individuals to register as at-large members and participate in the elections, concludes Gillmor.
    For information regarding ACM's Internet governance work related to ICANN, visit http://www.acm.org/serving/IG.html

  • "Directors 'At Legal Risk From Internet Crime'"
    Financial Times (07/17/00) P. 5; Grande, Carlos

    Many company directors are unaware of their liability for failing to stop Internet crime by employees, reports a recent survey by European IT firm Integralis. Computer security experts say that employees that spread viruses, or hackers who use a corporation's systems to launch "denial of service" attacks, all pose major threats to companies, particularly smaller firms that are less likely to employ firewalls or email monitoring programs. Failure to confront these issues could cost companies millions of dollars in lost business, lawsuits, and public-relations damage. One example of corporate e-business liability is a 1997 case in which Norwich Union was forced to pay 450,000 British pounds sterling in damages when it was discovered that some employees had used the corporate email system to make libelous comments about a competing insurer. Computer security professionals warn companies that they need to establish and clearly enforce guidelines on employee Internet use lest they find themselves in the middle of an expensive lawsuit.

  • "H-1B Visa Fight Escalating"
    Wired News (07/13/00); Chaudry, Lakshmi

    A group of engineers led by the Programmer's Guild and the American Engineering Association has launched an online campaign aimed at countering the high-tech industry's efforts to raise the number of H-1B visas that allow foreign IT professionals to work in the U.S. The campaign includes letter-writing and email efforts, as well as a petition that urges Congress to eliminate the H-1B program. Refuting the industry's claim that more visas are needed to ease the IT labor shortage, the grassroots coalition views the H-1B program as a way for tech companies to obtain an inexpensive workforce to replace American workers. The coalition believes that tech companies distort figures to reflect a shortage of skilled workers and contends that the U.S. has a sufficient number of people capable of filling IT jobs. The H-1B program is especially harmful to older American IT workers, who are often laid off and replaced with younger workers on H-1B visas, says Norman Matloff, a computer science professor at the University of California, Davis. Evidence suggests that H-1B workers earn 20 percent to 30 percent less than American workers for the same job, says American Engineering Association President Bill Reed. The H-1B program also allows the tech industry to keep all IT salaries lower than would otherwise be possible, because the demand for workers falls as the supply of workers rises, Reed says. Despite the campaign efforts, the coalition has little doubt that Congress will approve legislation that will almost double the annual H-1B visa caps.

  • "Computer Hosts Fight Gatecrashers: Hardware Companies Are Looking Hard at New Market"
    Financial Times (07/15/00); Grimes, Christopher

    Companies such as IBM, Global Crossing, Verio, and market-leader Exodus Communications are competing to provide customers with increasingly high-end and complicated co-location, hosting, and software and network management services, freeing the customers to focus on their core competencies. The global Web hosting services market is expected to reach $18 billion by 2003, up from $1.8 billion in 1999, according to International Data. The rising scale and cost of providing Web hosting services is prompting many players in the market to consider partnerships or consolidation, as evidenced by the proposed plan for Exodus to purchase Global Crossing's Web hosting operation, Global Center.

  • ".Gnu Domain Names"
    Geek.com (07/12/00)

    The Free Software Foundation's (FSF) proposal urging ICANN to add .gnu to the list of approved top-level domains, and accompanying request that the company to be a registrar for .gnu, is one of the many excellent suggestions given to ICANN during its conference in Japan this week, according to this opinion piece from Geek.com. The .gnu domain name suffix suggested by FSF, one of the organizations that helped to initiate the open source movement, would be utilized solely for open source projects. FSF's proposal is particularly enticing because it recommends a good top-level domain name as well as a method to register names within that domain. However, if .gnu is accepted, ICANN would need to place conditions on FSF to avoid having the organization take advantage of its status as registrar, just as Network Solutions, formerly the only top-level domain name registrar, abused its power. The addition of even a small number of top-level domain names would be a boon for the Internet, and would enable a controlled expansion of new names in the future, thereby simplifying the Internet as well as making it more useful. ICANN's position of handling the administration of parts of the Internet could cause some issues, but hopefully the Internet community will come to accept ICANN or at least agree on some other entity or entities to handle what ICANN currently manages.
    For information regarding ACM's Internet governance work related to ICANN, visit http://www.acm.org/serving/IG.html

  • "Firm to Use Credit Reports to ID Net Consumers"
    Associated Press (07/14/00)

    Credit reporting agency Equifax has entered an agreement with Checkfree to use the latter's authentication engine to verify the identities of Internet users who sign up for Checkfree's online bill-paying service. Equifax says it will use information found in customers' credit records to determine their online identities; for example, customers may be queried about how much their mortgage payment is, in order to quickly identify them. The new system is safe, secure, and protects users' privacy, according to Rich Crutchfield, head of Equifax's e-commerce unit, and ACLU Associate Director Barry Steinhardt gives the system his approval as one of the less threatening ways of verifying user identify on the Internet. The process of applying for Checkfree is also made easier because information such as account data is already entered, says Crutchfield.
    For information regarding ACM's activities on behalf of privacy matters, visit http://www.acm.org/usacm/privacy

  • "Reality Check: The State of E-Commerce, Part II"
    E-Commerce Times (07/12/00); Brady, Mick

    Although much of the latest hype concerning e-commerce focuses on the dot-com shakeout, wiser market observers are turning their attention to the magnitude of the role that international markets will play in e-business in years to come. In fact, a number of analysts believe the U.S. will account for less than half of all online sales as early as 2004. Sweden and the rest of Northern Europe have already made significant strides in e-commerce. In comparing countries around the world in readiness for e-business, the Economist Intelligence Unit (EIU) ranked the U.S. first, followed by Sweden, Finland, Norway, and the Netherlands. The next five countries were the United Kingdom, Canada, Singapore, Hong Kong, and Switzerland. In an another survey by Wired magazine, Stockholm, Sweden, was found to be the third "most influential high-tech hub" behind Silicon Valley and Boston. After recording $2.6 billion in online consumer spending last year, the United Kingdom is projected by the U.K. arm of Forrester Research to generate $30 billion in online consumer spending by 2005. Latin America also is expected to play a larger role in e-commerce, according to eMarketer, which sees the region doing $15 billion in e-business by 2003 and having 19 million users. Meanwhile, Japan is expected to be one of the top markets in Asia. Japan, which did $4 billion in e-business last year, could see $693 billion in e-commerce by 2003, mostly in business-to-business e-commerce.

  • "Cases Set High Bar for Internet Speech"
    Hill (07/12/00) Vol. 7, No. 28, P. 32; Remes, David

    Three recent court cases strike down Internet speech restrictions on the grounds that they violate the First Amendment, and these suits will present a challenge for Congress as legislators consider the regulation of speech on the Internet. In June, a federal appeals court struck down the Child Online Protection Act, Congress' second try at protecting children from "harmful" material online. A month earlier, the Supreme Court struck down a provision of the Children's Decency Act (CDA) that limited sexually oriented cable television programming to late-night scheduling--a decision written with the Internet in mind. And in 1997, the Supreme Court struck down the CDA itself. The three cases indicate a strong anti-regulatory philosophy, and they present an obstacle to Internet speech restrictions that limit speech to adults while trying to protect children. In 1997, the Supreme Court decided that Internet speech is entitled to the highest degree of First Amendment protection. Specifically, the court found the restrictions of the CDA unacceptable given alternatives such as parental controls, and objected to the act's override of parental authority and choice. The court would rather see alternatives involving elective self-protection. The May cable case saw the Supreme Court fault the federal government for not producing strong evidence of the harm that it meant to prevent. The courts applied a First Amendment principle in all three cases: that the government may not protect children by restricting the adult population to viewing only material that is considered fit for children, or imposing conditions on speech that would produce the same result.

  • "Panel of Experts Ponders Next Challenges for Government IT"
    Government Computer News (07/10/00) Vol. 19, No. 19, P. 20

    Partnering is likely to become a major trend in the federal government as it moves online, according to several experts who participated in a Government Computer News roundtable with the Association for Federal Information Resources Management. The government will not necessarily turn to outsourcing for new clerks, according to G. Edward DeSeve, partner and national industry director for federal services at KPMG Peat Marwick of New York. Instead, the government will look to work with industry, which has some new procurement models. Harris Miller, president of the Information Technology Association of America, agreed with DeSeve. Miller suggested that the role of government will be different because technology will allow citizens to play a more interactive role when dealing with various agencies. For example, Miller said citizens will want to sit down at their PCs to renew their driver's license instead of waiting in line. Still, the government will need people with IT skills, which will be difficult with the current labor shortage, said Janet Caldow, director of the IBM Center for Electronic Communities in Washington. David Lehman, chief technology officer at Mitre, added that designing systems today for tomorrow's technology would be a challenge. Caldow and Miller noted that people will demand a single government portal, and DeSeve even suggested that people would offer a free government-wide portal to the federal government. Sallyanne Harper, assistant comptroller general at the General Accounting Office, agreed with Miller that electronic government will be everywhere by 2010. Other experts added that e-government will shrink the government, making it transparent and personal.

  • "Legislators Debate Latest Proposals for E-Commerce Taxes"
    InfoWorld (07/10/00) Vol. 22, No. 28, P. 24; Johnston, Margret

    A shopper who purchases goods from an out-of-state merchant usually does not have to pay sales tax to the merchant's state, but is supposed to pay tax to the shopper's own state and local government. The growth of e-commerce has highlighted the problem of collecting those taxes. There are several bills pending that would help states collect sales and use taxes on such Internet and catalog transactions, and members of the U.S. House Judiciary Subcommittee on Commercial and Administrative Law recently held a hearing to discuss three of those bills. State and local officials say untaxed Internet and catalog sales are a major issue because several critical local services, such as the police, are supported in part by sales taxes. Much of the hearing concentrated on a bill sponsored by Rep. Spencer Bachus (R-Ala.), which would create a sales tax compact involving at least 20 states. The states would agree to harmonize and simplify their tax codes so they could collect use tax on purchases made by their residents from retailers outside their state. The Supreme Court has ruled that it is too complex for merchants to try to collect these taxes, given all the different tax jurisdictions, but the court also says that if the codes could be simplified, merchants could be made to collect the tax. Arthur Andersen partner Karl Frieden says state and local officials are pressuring legislators to act on the issue, and the Bachus bill appeals to the officials. However, some members of Congress fear that such measures would endanger the growth of e-commerce. None of the discussed bills are expected to pass this year.

  • "E-Comm Survival Guide"
    Network World (07/10/00) Vol. 17, No. 28, P. 48; Ulfelder, Steve

    Marketing and IT departments often approach Internet initiatives with dramatically different ideas on what the project goals are and how they will be met. Ideally, marketing staffs have some technical experience and IT staffs possess some business savvy; having well-rounded workers significantly helps the business and technical departments work together effectively with shared goals and expectations in mind. Yet because many situations are not ideal, steps must be taken to ensure marketing and technical staffs are synchronized. First, IT departments must be involved in all of marketing's IT projects, even those that do not require vast technical expertise. When the time comes to enhance a minor marketing project or handle another more ambitious project it will important for marketing personnel to be familiar with the IT staff. Additionally, a committee composed of many different business units and accountable for its actions should be convened to plan and oversee any major IT project. IT personnel should be responsible for establishing project goals, timelines, metrics, and opportunities for analysis in order to ensure a successful project. IT professionals tend to have stronger project management skills than "big-picture" marketing professionals. IT personnel can also demonstrate available technology for marketing and leave the marketing staff to brainstorm ways of leveraging the technology. Generally, companies benefit when the IT staff is involved in more general business issues and is responsible for managing projects rather than simply solving the inevitable problems as they arise. This holds true for outsourced IT projects as well, as there are still facets of such projects than can only be addressed in-house.

  • "3Q May Decide E-Tailing Game"
    Interactive Week (07/10/00) Vol. 7, No. 27, P. 46; Trager, Louis

    This summer is proving to be a busy one for e-commerce sites gearing up for the holiday season. Although the third quarter is a relatively slow gift buying season traditionally, e-tailers are upgrading systems behind the scenes while maintaining fulfillment systems and customer and vendor relationships. In addition to third quarter's myriad preparations, e-tailers are concerned about the second quarter's Internet stock upheavals and the upcoming challenges of the fourth quarter. Dot-coms are bolstering their business models by promoting customer loyalty and demonstrating prompt profitability plans. In the wake of tightened venture capital, startups are avoiding extravagant promotions and portal deals. Instead, they are using measured customer acquisition techniques such as affiliate and customer-referral programs, as well as other current customer-targeted incentives. Because the third quarter is critical to fourth quarter success, analysts advise companies to not waste time and sales growth with too much deal making and cost cutting. Preparing holiday season customer service, fulfillment, and disaster recovery strategies is foremost.

  • "Failure Foilers"
    InformationWeek (07/10/00) No. 794, P. 22; Greenemeier, Larry

    Midsize businesses looking to address IT solutions and staffing shortages are increasingly turning to management service providers (MSPs). In addition to Web-site monitoring services, MSPs offer network, systems, storage, security management. Midsize businesses may prefer using MSPs because they provide clients with expensive software without support headaches. MSPs help minimize costly system failures, and may save potential lost revenue, while not requiring companies to outsource their IT infrastructure completely. MetaGroup reports that, not considering staffing costs, using an MSP over a five-year period may actually cost up to 15 percent more than in-house software setup and operation. But the consultancy concludes that increased costs are justified, as it speeds investment returns and boosts internal IT staff productivity. MSPs' reliance on the Internet makes services cheaper and more flexible than traditional management services' private networks, but private networks are not subject to online downtime. The hosts vary according to the levels of access to management applications they allow their clients; 2ndWave allows interaction with the Tivoli distributed system management software it hosts, and even offers Tivoli software management information, while others deliver only specific management data through the Internet.

  • "UN: Global E-Commerce Challenges Abound"
    Computerworld (07/10/00) Vol. 34, No. 28, P. 12; Hoffman, Thomas

    In a discussion on e-commerce growth worldwide at the United Nations in early July, delegates devoted much of their attention to the role governments are playing in advancing the technology. The experts agreed that governments need to loosen their bureaucracies and act more as agents of change so their citizens can become more accustomed to e-business. The prospects of e-commerce still look poor in developing regions, where 84 percent of the world's population reside but just 6 percent of the people use the Internet, according to a report issued last year by the UN-based International Telecommunication Union. An advisor to the prime minister of Greece, George Doukidis, said the country is investing $300 million over the next five years on its e-commerce infrastructure. But Doukidis said the initiative would encounter cultural resistance in that Internet illiteracy is widespread and most people are used to the country's old-style economy. Another delegate, Mpho Malie, the minister of industry and trade for Lesotho in southern Africa, said skilled IT workers are so scarce that 15 neighboring countries might have to share an IT consultant. India was cited as a country that has hindered the private sector from becoming more entrenched in e-commerce, while Brazil was said to have increased the number of citizens filing tax returns electronically from 600 in 1997 to 8 million this year. Delegates said even the U.S., where 96 percent of the federal government's transactions are still handled manually, has a long way to go.
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  • "Crash and Learn"
    Business 2.0 (07/11/00) Vol. 5, No. 13, P. 166; Donahue, Sean; Girard, Kim

    Many dot-coms are being forced to strip their strategies down to the bare necessities to survive in the newly competitive business environment. The following five tips may ease help to guide companies seeking to eliminate the luxuries once enjoyed by Internet ventures. First, companies should consider seeking alternatives to venture capital funds. One option is to solicit corporate investments; having investment partners in the same industry with brand name can be helpful to a smaller dot-com. Publicly traded companies should also consider selling stock at a discount to private investors, or obtaining more funding than originally planned to remain prepared if the private equity market is unavailable when needed. Online companies must also hold onto current staff, which can be achieved by creating a pleasant work environment and by offering more options. Another option is to reduce the marketing budget, although key efforts to lure customers should be preserved. Companies are increasingly adopting low-cost customer acquisition strategies such as targeted print ads, direct email marketing, and targeted promotions. Despite the risks involved in change, some online businesses should also try to cut costs by altering the company's business model, adding new businesses or targeting a different, less competitive market. Last, the option of selling is always available, and can be a viable strategy for survival, particularly early on, when the company can command a good price. Additionally, Chapter 11 can be a useful tool for companies seeking buyers because it provides a protective barrier from the creditors and a buyer can purchase the businesses' assets without inheriting the debt and liabilities.

  • "Living on the Fault Line"
    CIO (07/01/00) Vol. 13, No. 18, P. 218; Moore, Geoffrey A.

    Too many companies devote critical resources to contextual tasks rather than core tasks, writes Geoffrey A. Moore in his soon-to-be-published book, "Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet." Although it is true that context tasks--those which must be performed in support of a business' core purpose--are crucial to success, they must not attract attention away from the core tasks that differentiate a business from its competitors and build value for shareholders, Moore contends. More than simply tying up resources that otherwise could be funneled into core projects, an emphasis on context tasks promotes a corporate culture resistant to change and innovation, which creates a competitive opportunity for newer companies that devote more effort to core tasks. Additionally, Moore says, there is no reward for a business that executes its context tasks exceptionally well. Once customer service operations are running consistently as they should, for example, Moore says that the task will become expected and there will be no market reward for doing it even better. By contrast, companies that strive to execute their core tasks will continually produce new ideas and differentiate themselves from their competitors. Context and core tasks will differ from company to company, even within the same industry. Moore uses the pizza business as an example: although restaurants such as Round Table consider the quality of ingredients to be core, others, such as Domino's, concentrate on delivery time, making pizza preparation a context task.

  • "The Art of the New Deal"
    Darwin (06/00) Vol. 1, No. 1, P. 82; Hildebrand, Carol

    As technology changes the rules of business, CEOs must take a leading role in driving their corporate IT strategy. Yet often, CEOs are reluctant to embrace their new duties because they are intimidated by technology. To combat this critical problem, CEOs must start by evaluating their firm's IT literacy, including their own knowledge. In assessing executives' knowledge, CEOs should focus on whether broad IT trends are being followed, says Jim Ware, vice president of Kingwood, Tex.-based consultancy The Concours Group. Key questions include whether top executives understand the impact of IT on their firm's corporate strategy and whether they understand how IT will impact the way their business is operated and managed. CEOs should also approach a leading role in technology by focusing on broad issues, rather than becoming weighed down by details. Instead, CEOs should focus on overarching issues such as which IT projects deserve priority, which cutting-edge technologies could best serve their business, and how technology initiatives can support long-term business goals. Also important is to ensure that business goals are fully integrated with technology goals to form a unified corporate strategy instilled in managers throughout the company. Furthermore, CEOs must work to apply technology in areas that will keep them competitive. CEOs should talk to customers to determine their needs, and examine their corporate technology infrastructure to ensure that it will support IT projects-both in the present and the future. Last, but perhaps most importantly, CEOs should continue to broaden their IT knowledge as development continues.

  • "Microsoft Sees Software 'Agent' as Way to Avoid Distractions"
    New York Times (07/17/00) P. C1; Markoff, John

    Microsoft will soon introduce software that promises to ease the information overload of computer users. Designed by artificial-intelligence specialist Eric Horvitz, Attentional User Interface will manage and prioritize the streams of data entering into users' computers, voice mail boxes, cell phones, and handheld devices. The software will even monitor the users themselves, using a camera to tell how busy users are at any given moment or when they are away from their desks. The software, which would operate from the Internet, will decide which information is important enough to warrant an interruption of a user's time. Horvitz based the new software on the statistical analyses of 17th-century mathematician Thomas Bayes. Bayes' studies reveal how to make a more accurate prediction of future occurrences based on observation of present events. Current applications of Bayes-based technology include the Paper Clip icon that gives advice to users of Microsoft Office. Horvitz admits that their are numerous problems with the new software, not the least of which are the privacy concerns that will arise from users' personal information being kept on the Internet. Still, Microsoft believes that Attentional User Interface will attract users who want to relieve their information burden and the software will be a cornerstone for the company's new .NET initiative.

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