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Volume 3, Issue 157: Friday, January 26, 2001
- "As Free ISPs Fade, Others Raise Rates"
Washington Post (01/26/01); MacMillan, Robert
ISPs are raising rates in order to stay afloat. Whereas previously ISPs' goal seemed to be accumulating as many customers as possible, ISPs now acknowledge the need for revenue. Greg Gibson, former owner of PressRoom, an ISP acquired last year by Frontline Communications, says $19.95 is now the industry standard and the minimum an ISP needs to maintain service and business viability. Telecom analyst Jeff Kagan says the days of experimenting with revenue streams are not over as many companies will continue to try all types of business models ranging from banner ads to full-price and full-service. AT&T WorldNet is one ISP still offering bargain prices for its dial-up connections. However, in return for a low $4.95 per month, customers are subjected to a ever-present banner ad on their navigation bar.
- "Europe Chipmaker Reports Big Gains"
International Herald Tribune (01/26/01) P. 18
STMicroelectronics, the largest chipmaker in Europe, reported Thursday that its net income in the fourth quarter totaled $461.9 million, up 151 percent from the same period last year. The chipmaker cited a strong demand for its two major products--flash memory and mobile phone chips--as the main reason for the growth. The French-Italian firm's total growth in 2000 was $7.81 billion, a 55 percent increase from the previous year, making it the seventh largest chipmaker in the world. Its 55 percent growth last year was well ahead of the 36 percent growth seen by the semiconductor industry overall. However, the chipmaker warned that economic troubles in the United States would lead to a downturn in the industry and predicted that sales of its own chips would decrease 9 percent in the first quarter. STMicroelectronics President and CEO Pasquale Pistorio said the firm would react to the downturn by cutting capital spending rather than funds for research and development. The chipmaker does not expect the industry downturn to extend into the second half of the year.
- "Indian IT Center Boosts Skilled Immigration Drive"
Financial Times (01/26/01) P. 9; Daniel, Caroline; Merchant, Khozem
The Indian IT firm Wipro has opened a development center in Reading, England, to facilitate the movement of Indian IT professionals into the United Kingdom. Working through the center, Indian IT professionals can obtain a work permit within one week, according to U.K. minister for e-business Patricia Hewitt, who argues that the center will benefit the United Kingdom as well as India. "What struck me is the strength of [the Indian] engineers and technical training, and their world-class IT institutes." The center will provide Indian IT professionals with the option to move to the United States, as many Indian firms want to limit involvement with the U.S. tech industry during its current downturn. Approximately one-third of all Indian overseas investment now goes to the United Kingdom.
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- "FCC May Revise Limits on Spectrum Under the Control of Wireless Providers"
Wall Street Journal (01/24/01) P. A4; Wigfield, Mark
The FCC may alter current regulations restricting the amount of spectrum telecommunications carriers can own in a single market. While the restrictions were first instituted to encourage competition, telecom officials believe the rules are now having a negative effect on the growth of the wireless Web industry. The FCC is expected to make a decision concerning the restrictions within several months. According to FCC regulations, telecom firms are only allowed to own 45 megahertz of spectrum in urban markets. Currently, about 190 megahertz per market is open for offering wireless services. While the FCC says no carrier has reached its limit for owning spectrum, Verizon Wireless spokesman Jeffrey Nelson says the firm may reach its limit in New York because it has made billions of dollars in bids to acquire licenses in the market. New FCC Chairman Michael Powell supports the removal of the restrictions.
- "Web Sales of Allegedly Counterfeit Items Lead to Indictments, in a Legal First"
Wall Street Journal (01/26/01) P. B4; Bensinger, Ken
Mark Dipadova and Theresa Gayle Ford have been indicted by a Columbia, S.C., grand jury for allegedly selling fake luxury items over the Internet. The pair allegedly carried out their scam on the Fakegifts.com Web site. An indictment involving the trafficking of fake goods on the Internet has never occurred before now, according to legal experts. "In this specific area, we are unaware of any other cases," says assistant U.S. attorney Dean Eichelberger, the prosecutor in the case.
- "U.S. Slowdown a Boon for Software Firms?"
The Indian software industry could benefit greatly from the downturn in tech spending by U.S. firms, tech industry consultant Ed Yourdon said during a lecture Tuesday in Bangalore, India. U.S. firms, which Yourdon said will increase tech spending by only 7 percent or 8 percent this year, compared to 11 percent last year, will seek out low-cost software in order to save money on IT spending. He said this presents a prime opportunity for the high-quality, low-cost Indian software market. He suggested that Indian firms consider entering markets they had previously ignored, such as software maintenance, and also said they should consider investing in areas that might scare off nervous U.S. firms. "Indian companies should identify the next big thing after the Internet," he said. "If they make the right guess, they will be extremely well placed to benefit from it."
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- "Lawsuit Accuses Yahoo of Justifying War Crimes"
Yahoo! Chairman Tim Koogle is being sued by French Nazi concentration camp victims for "justifying war crimes and crimes against humanity" by allowing Nazi memorabilia to be sold on Yahoo! auction sites. "If you organize a system like an auction where people bid for the best price, you excuse these crimes, and they become commonplace," said Charles Korman, head of the group representing the camp victims. The group is seeking symbolic damages of 1 franc. Korman criticized Yahoo! for agreeing to comply with a French court order to stop the auctions while simultaneously appealing the order in the United States.
- "For Internet Businesses, a Post-Mortem"
Washington Post (01/21/01) P. H1; Barbash, Fred
Contrary to the popular notion that success for an Internet business is dependent largely on luck, Harvard Business School professor Clayton M. Christensen and Innosight CEO Michael Overdorf say their study of dozens of online businesses reveals some clear lessons for current and would-be Web-based businesses. Titled "After the Gold Rush," the study finds that many failed dot-coms made the same or similar mistakes. Drugstore.com and PlanetRx, for example, moved into a market--pharmaceuticals--virtually controlled by a small number of industry giants already operating very efficiently. The dot-coms then failed to realize that there was nothing preventing the established giants from leveraging the Internet themselves, effectively neutering any advantage the dot-coms may have been able to create. The dot-coms also failed to develop business models that were unique to the online channel, presenting consumers with little incentive to do business with them rather than the corner store. Dot-coms also get into trouble when they fail to recognize the basis for competition in a given market, Christensen and Overdorf write. "When companies choose to facilitate competition on the wrong basis of competition--for example, by attempting to bring a convenience-based proposition to a reliability market--they are effectively forcing a behavioral change on that tier of the market for which the market is not eager or even willing to pay," they write. Finally, "After the Gold Rush" reports that those online services which empower less-skilled or less-wealthy consumers to do things they could not do before stand a greater chance of success. Reflect.com, for example, gives cosmetics shoppers the opportunity to create their own cosmetic products and brands at a reasonable cost, something no traditional retail concern offers.
- "Commentary: Digital Rights Belong in a Complete Business Plan"
CNet (01/22/01); Gold, Jack; Sribar, Val; Kutnick, Dale; et al.
Although digital copyright protection is vital to artists and content owners, security and digital rights management should be weighed against the potential for upsetting legitimate users, say a group of Meta Group analysts. The analysts argue that people enjoy sharing books and music and will eventually reject hardware-based solutions that make such sharing impossible. Instead, the analysts suggest that copyright violations could be discouraged by drastically lowering the price of music. This would likely generate a larger audience of music buyers, who would then be willing to purchase goods related to their favorite artists--concert tickets, t-shirts, etc.--or perhaps music by other artists similar to their favorites. The analysts claim that if artists and copyright owners considered the savings that could be achieved by getting rid of the middlemen and physical distribution costs that are hallmarks of bricks-and-mortar retail sales, as well as the huge amount of data that can be collected about their online customers and used in the future for targeted advertising, then most would probably not worry so much about securing digital copyrights.
For information regarding ACM's work in the area of intellectual property rights, visit http://www.acm.org/usacm/IP.
- "New Risk to Poor in Digital Divide"
Financial Times--2001 and Beyond (01/25/01) P. 4; Beattie, Alan
Politicians, economists, and tech-industry executives remain divided over the extent and the importance of the digital divide. Those in support of increased investment in IT for developing countries consider the digital divide another instance of the rich getting richer while the poor get poorer and think that it will prevent balanced, fair international trade. Former South African President Nelson Mandela says, "Eliminating the distinction between information-rich and information-poor countries is critical to eliminating the other inequalities between north and south." This disparity between the haves and the have-nots is sharp, argues U.K. development minister Clare Short, who notes that New York has more Internet connections than all of Africa. The G8 consortium of the world's richest countries has made some efforts toward resolving the divide, including Japan's $15 billion investment in IT for developing countries. The G8 also recently formed Dot.force, a committee that focuses, in part, on IT issues in developing countries. However, not everyone is convinced that efforts should be focused on developing countries' IT infrastructure. Bill Gates has recently said that those living in poverty need food, not computers, and protesters at a recent G8 summit set laptops on fire to emphasize this point.
- "Most US, EU Sites Ignore Int'l Privacy Standards--Study"
Newsbytes (01/24/01); Kelsey, Dick
International privacy laws are doing little to stop consumer privacy violations on the Web, according to a new study from Consumers International. The study of 751 Web sites finds that more than two of every three consumer-focused Web sites collects personal data from site visitors, and the vast majority of the sites make requests for identifying information. Anna Fielder, director of the Consumers International Office for Developed and Transition Economies, says that many of the companies are collecting unnecessary personal information from site visitors. The "inadequate implementation of existing government measures" leaves consumers unable to control their own data, Fielder adds. European Web sites have top-notch privacy policies, but even they have trouble providing notice as to how customers' data will be used, according to the study. The study also determined that just one in 10 of kids-focused Web sites requested parental permission before taking children's personal data. Consumers International is urging the introduction of laws that give Internet users greater command of their personal data.
- "Hacking on the Rise in Dot-Ca Domain"
National Post (01/23/01); Akin, David
Upwards of 53 .ca Web sites were altered by hackers in 2000, compared to only 44 in 1999, according to Attrition.org. Someone named the Algorithmic Cracker, leveraging Windows NT attributes most of the time, was responsible for 10 successful hacks. Attrition.org started watching hackers in 1997, and since that time 80 percent of all hack jobs were done on Windows NT-based systems, 10 percent were on Linux systems, 3 percent were on the BSD OS, and 3 percent were on Sun Microsystems' Solaris OS. In 2000, Attrition.org documented over 5,800 defaced Web sites, which was 2,000 more than the previous year, with the .com domain reporting nearly 40 percent of all defacements in 2000. A majority of successful Web site breaches are reported to Attrition.org by hackers. Web hacking has become more prevalent over the past few years because hacking into a Web sites is one of the first lessons taught to new hackers and most site operators are lax in securing their systems. A majority of organizations that are hacked refrain from trying to catch the hacker because of the embarrassment of having been breached.
- "Inside Track Law & Business: Dotcoms Taking a Legal Risk"
Financial Times (01/22/01) P. 14; Page, Nigel
PricewaterhouseCoopers legal practice correspondent Landwell conducted a survey that demonstrates how little Internet startups know about or are concerned with legal risks. Of those surveyed, 20 percent were unconcerned about legal risks of any kind. While working hard to gain market profile, dot-coms spend large sums on building brand, and this practice continues. Legal risk management is hardly looked at, and customer service and satisfaction are not high priorities. Almost 33 percent of the dot-coms were not trying to protect their local trademarks and only 20 percent have registered patents. Less than 50 percent of the dot-coms surveyed registered a trademark overseas. Domain name registrations also followed the trend, as 40 percent of the dot-coms had not registered their domain name outside of their local area. While most dot-coms thought that users in more than 10 countries overseas would access their sites, 80 percent of those same dot-coms ran on a single local Internet site.
- "Presidential Transition Not Going at Cyberspeed"
Atlanta Journal and Constitution (01/24/01) P. 9A; Glass, Andrew J.
The White House Web site, which receives as many as 2 million hits daily, no longer contains the 20,000 page history of former President Bill Clinton's tenure in office. Instead, it now offers only a skeletal structure that can be fully accessed in minutes. However, Tucker Eskew, President George W. Bush's spokesperson on high-tech issues, promises "a full range of services, including email contacts, accessible to all Americans," although he could not say exactly when those features would appear. Many federal agencies, such as the departments of State, Defense, and the Treasury, have been quick to integrate the new leadership into their existing systems. When Clinton took office in 1993, the federal government had no Internet presence. The White House went online in 1994 and has since restructured its Web site three times.
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- "Tech Group Hails IRS Stock Option Rule"
Newsbytes (01/19/01); McGuire, David
An IRS ruling, forbidding federal tax withholding on stock options until the beginning of 2003, has been hailed by the American Electronics Association. The association, which believes withholding requirements would be a disincentive for employers to offer stock options, last year, asked that stock options not be brought under withholding rules until the rules for stock options are clarified.
- "Microsoft Web Sites Attacked"
Washington Post (01/26/01) P. E1; Cha, Ariana Eunjung; Streitfeld, David
Microsoft's main Web sites--Expedia, Hotmail, Microsoft.com, and MSNBC.com--were inaccessible yet again yesterday due to a denial-of-service hacker attack. On Tuesday, faulty coding in the four Microsoft domain name servers crippled the sites. Two days of continuous problems have embarrassed the software giant, prompting company officials to call on the FBI for help. Security experts say the company was caught completely off-guard by Wednesday's attack. In the attack, the hacker used a number of hijacked computers to flood Microsoft's systems with information requests at the same time the company's four domain name servers went back online and millions of other computers with legitimate requests were trying to obtain updated address information. Three months ago, still unidentified hackers breached Microsoft security measures and gained access to its internal network, highlighting the vulnerability of even the largest software company's technology.
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