January 1999

COMMUNITY NETWORKING
Web Towns Scale Back Urban Sprawl (ChiTrib)

DTV
HDTV Set Prices Are Falling, but Buyers Remain Scarce (NYT)

COMPETITION
AT&T Widens Local-Service Phone Plans (WSJ)
FCC TO AT&T: Unveil phone plans (B&C)
The Titans of Wireless Are Tearing Down Regional Fences (NYT)

ELECTRONIC COMMERCE
Digital Timestamps: Punching an Electronic Clock (CyberTimes)
Returning Online Buys Not So Easy (WP)

LOBBYING
Technology Industry Group Lists '99 Policy Priorities (SJ Merc)

ANTITRUST
Microsoft Pricing Data to Be Disclosed (WSJ)

WEB TOWNS SCALE BACK URBAN SPRAWL
Issue: Community Networking
A look at the state of community computer networks in the Chicago area. Many
sites sprang up in the early-90's, but have failed after an early burst of
enthusiasm. Surviving sites have become smarter about what they can offer.
"Technology, ultimately, has to be built from the
bottom up. The best way to be of service is to deal with folks where they
are, to start with modest goals and build up," says Larry McClellan,
executive director of LincolnNet (www.LincolnNet.net). Story contains a
brief history of Web communities
http://chicagotribune.com/business/businessnews/article/0,1051,ART-21437,00
.html and a look at the Top 10 reasons why "Web towns" fail"
http://chicagotribune.com/business/businessnews/article/0,1051,ART-21436,00
.html
[SOURCE: Chicago Tribune (Sec3, p.1), AUTHOR: Michele Fitzpatrick]
http://chicagotribune.com/business/businessnews/article/0,1051,ART-21435,00
.html

===
DTV
===

HDTV SET PRICES ARE FALLING, BUT BUYERS REMAIN SCARCE
Issue: DTV
Only a few months after its introduction on to the market, a high-definition
television set can be now purchased for a mere $2,999 - less than half of
the introductory price. Even with the rapidly dropping cost, HDTV sets are
still much more expensive that the average consumer is willing to spend for
a TV. Most people are likely to wait until the price tags are less than half
of what they are now, which leads the industry to fear that, in the
meantime, consumers will hold off purchasing any TVs -- either analog or
digital. So far, with television set sales up 6% this past year, the
industry's concern about a disastrously unprofitable transition to digital
appear to be unfounded.
[SOURCE: New York Times (C14), AUTHOR: Joel Brinkley]
http://www.nytimes.com/library/tech/99/01/biztech/articles/11hdtv.html

===========
COMPETITION
===========

AT&T WIDENS LOCAL-SERVICE PHONE PLANS
Issue: Telephone
AT&T said it is stepping up plans to provide local telephone service to
millions of consumers nationwide through the cable lines it is acquiring as
part of its purchase of cable giant Tele-Communications Inc. AT&T said it
will spend $2 billion more than originally anticipated to accelerate plans
to upgrade TCI's cable lines so they can provide local, Internet and
advanced-video service by the end of the year in 10 markets. In a massive
filing with the Securities and Exchange Commission, AT&T said it made a
last-minute change against issuing a separate tracking stock for some of its
consumer businesses. AT&T's board also authorized a 3-for-2 stock split, its
first since 1964, and a $4 billion repurchase of AT&T's stock. AT&T
executives also told analysts at a meeting in New York that the company is
moving to offer customers all of its services - from long distance and local
calling to cable movies - in one-price bundles for a set amount each month.
People close to the company said it has begun to test such a program in
Freson, CA. Also AT&T said to analysts it will step up efforts nationwide to
reward consumers who subscribe to its services. The awards may include free
movies or wireless telephones.
[SOURCE: Wall Street Journal (A3), AUTHOR: Rebecca Blumenstein]
http://www.wsj.com/

FCC TO AT&T: UNVEIL PHONE PLANS
Issue: Mergers
At a press briefing on his 1999 agenda, FCC Chairman William Kennard said
that the agency plans to review broadcast ownership rules and make a
decision on the AT&T/TCI merger early this year. Chairman Kennard urged AT&T
to unveil its plans to provide local phone service over TCI's cable lines.
He expressed a strong desire to see more competition in local markets. The
FCC chairman also said that Congress should allow satellite providers to
offer signals from local network affiliates, which would bolster their
ability to compete with cable operators. This type of competition, according
to Chairman Kennard, would push down cable rates.
[SOURCE: Broadcasting and Cable (p14), AUTHOR: Bill McConnell]
http://www.broadcastingcable.com/

THE TITANS OF WIRELESS ARE TEARING DOWN REGIONAL FENCES
Issue: Wireless
The announcement of AT&T's new 'Digital One Rate' plan - which essentially
gets rid of both long distance rates for wireless customers and "roaming"
fees associated with traveling outside of the company's network area --
represented an important change for the cellular industry. Consumers are
eager for lower rates and broader coverage areas and the once thriving
regional carriers are finding it increasingly difficult to compete with
large national carriers that can afford to offer such cost saving plans.
For the past few years, the wireless business has been one place in the
telecommunications industry where scale is not necessary for survival.
Recently, however, more and more of the market share is going toward
national services, forcing many small and local carriers to partner in hopes
of survival.
[SOURCE: New York Times (C1), AUTHOR: Seth Schiesel]
http://www.nytimes.com/yr/mo/day/news/financial/wireless-pricing.html

===================
ELECTRONIC COMMERCE
===================

DIGITAL TIMESTAMPS: PUNCHING AN ELECTRONIC CLOCK
Issue: Electronic Commerce
A number of firms are trying to develop "digital timestamps" that would act
like a notarized signature, establishing a document's existence or state at
a particular time. As electronic commerce becomes more popular, timestamps
could be used for fraud protection, preventing people, for example, from
backdating transactions. Digital timestamps are actually more accurate than
paper timestamps because not one character in the document can be changed --
in paper copies, pages can be added at a later time. For more info see
Surety Technologies http://www.surety.com/, DigiStamp's e-TimeStamp
http://www.e-timestamp.com/, Stamper http://www.itconsult.co.uk/stamper.htm.
[SOURCE: CyberTimes, AUTHOR: Peter Wayner pwayner( at )nytimes.com] 1/10/99
http://www.nytimes.com/library/tech/99/01/cyber/articles/10notary.html

RETURNING ONLINE BUYS NOT SO EASY
Issue: Electronic Commerce
When it comes to returning goods to many online merchants, you still need to
phone in, wait for a representative who can give you a return authorization
number, pack up the items and schlep to the post office. An estimated $3
billion was spent online during the Christmas holidays, nearly tripling from
a year ago. But now that Christmas is through, consumers are seeing that the
high-tech online world has some low-tech glitches - with returns topping the
list. Not all online merchants handle exchanges; some consumers are
discovering they must get a refund before they can purchase something else.
Some merchants, like Shopping.com, will only accept the item if it is
shipped in the packaging it came in, which means holding on to boxes and
wrapping. Many others, including Victoria's Secret and Wal-Mart, won't let
shoppers return most goods to their brick-and-mortar stores. After hearing
consumers' complaints, some online retailers are already taking action.
Amazon.com, for instance, has extended its holiday returns deadline until
January 31, instead of its usual policy of 30 days after purchase date.
Many others are agreeing to pay shipping for returns if a customer complains
about the charges. One new Internet mall, Buyitonline.com, is going so far
as to offer a no-hassle return policy.
[SOURCE: Washington Post (Online), AUTHOR: Rachel Beck (Associated Press)]
http://www.washingtonpost.com/wp-srv/WAPO/19990110/V000092-011099-idx.html

========
LOBBYING
========

TECHNOLOGY INDUSTRY GROUP LISTS '99 POLICY PRIORITIES
Issue: Lobbying
An interview with David B. Wright and Carl Guardino of the Silicon Valley
Manufacturing Group, a public policy trade association that represents 130
of Silicon Valley's largest companies. Some of their priorities for 1999 may
surprise you: Said Mr. Wright, " The top priority will be education. Number
two will be the whole area of cost of living and how to make it attractive
for people to want to live here, stay here or come here, rather than go from
here. This includes the issues of housing and transportation." On education
he continued, "We're in the information age. Literacy's a very big key
issue. Can I read? Can I write? Can I communicate? We should focus on issues
like: Can we attract teachers in this area? Can we enhance the skill-sets of
our teachers? Can we improve the media that we use to help educate our
kids?" Mr. Guardino says the group will focus on "teacher training, teacher
housing and teacher compensation."
[SOURCE: San Jose Mercury News]
http://www.mercurycenter.com/business/top/073784.htm

=========
ANTITRUST
=========

MICROSOFT PRICING DATA TO BE DISCLOSED
Issue: Antitrust
Confidential pricing data are expected to be disclosed today in the
Microsoft Corp. antitrust trial in a closed court session. Microsoft and
several PC makers have asked that the data remain under court seal, although
several news organizations filed last week to open the proceeding to the
public. U.S. District Judge Thomas Penfield Jackson is to rule today on the
news organizations' request. The government is expected to detail how
Microsoft used Windows software prices to punish some personal computer
makers while rewarding allies. Microsoft fought hard to prevent the
government from getting access to the prices. The data could also help
shape any court-imposed remedy if Microsoft is found to have violated
antitrust law. The data is expected to show that Dell and Compaq got better
pricing from Microsoft while Gateway and IBM, which were not as friendly
toward Microsoft, paid more for Windows. The Government will also try to use
the data to show that Window's price has risen significantly, a fact that
will be disputed by Microsoft's first witness in the case, a MIT professor
who is scheduled to take the stand later this week. A Microsoft spokesman
says the Government's data is "flat wrong and deliberately misleading."
[SOURCE: Wall Street Journal (A3), AUTHOR: John R. Wilke]
http://www.wsj.com/

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Happy Monday!

TELEPHONY
Phone-Rate Ruling May Cut Revenue For Web Servicing (WSJ)

INTERNET
MindSpring to Buy Big Piece of Netcom from ICG in $245 Million
Transaction (WSJ)
Cisco Pushing Internet Gear For Home Use (WSJ)

DIGITAL TECHNOLOGY
If Only Demille Had Owned A Desktop (NYT)
Second Generation Digital TVs Demonstrated (WSJ)

MAGAZINES
Hearst Creates Two Magazine Groups To Better Battle TV, Other Titles
for Ads (WSJ)

==========
TELEPHONY
==========

PHONE-RATE RULING MAY CUT REVENUE FOR WEB SERVICING
Issue: Telephone
The Federal Communications Commission is preparing a ruling which could
curtail fees in the complicated issue of "reciprocal compensation" in which
Baby Bells pay independent carriers to pass local calls on to Internet
service providers. The hundreds of millions of dollars in fees have been a
windfall for the rival carriers. The ruling could slash the fees by
defining Internet calls as interstate. The ruling, expected as early as
next week, could let state regulators oversee future compensation
negotiations. The Baby Bells estimate they racked up roughly $600 million
in fees last year and that totals will increase under the present system.
The FCC is expected to suggest that both sides negotiate future payment
rates on their own with oversight by state regulators. But the agency is
likely to hint at how to set those rates to more effectively reflect the
cost of passing on Internet calls. The agency would also give state
regulators the power to decide whether existing pacts between Baby Bells and
independent carriers should stand. Some analysts and government officials
said this could lead to different policies for different states and result
in a myriad of court cases.
[SOURCE: Wall Street Journal (A14), AUTHOR: Kathy Chen & Stephanie N. Mehta]
http://www.wsj.com/

==========
DIGITAL TV
==========

IF ONLY DEMILLE HAD OWNED A DESKTOP
Issue: Film
Beyond just creating really cool special effects, digital technology has
enabled independent filmmakers to produce higher quality movies at lower
costs than previously possible. Now, more and more films made with the aid
of powerful home computers and digital camcorders are finding their way into
theaters. "The filmmaker of the future is the person holding a computer
mouse," says Chris Gore, publisher of an underground film magazine. With new
technologies, struggling filmmakers no longer have to worry about the
expensive cost of film stock and developing. This increased accessibility to
the means of film production means that many new voices will have
opportunities to tell their stories. "This technology offers a real
opportunity for filmmakers who currently have been very marginalized by the
industry to create their own footholds in cinema," said Kay Shaw, founder
and owner of Amber Images, a distributor of minority films.
[SOURCE: New York Times (E1), AUTHOR: Michel Marriot]
http://www.nytimes.com/library/tech/99/01/circuits/articles/07vide.html

SECOND GENERATION DIGITAL TVS DEMONSTRATED
Issue: Digital TV
Major electronics manufacturers showed off the second generation of digital
televisions at the annual Consumer Electronics Show in Las Vegas, but
executives said product rollouts will continue to be slow as several
technical and marketing issues remain unresolved. Prices of digital models
are expected to drop by a few thousand dollars this year, but will remain
very expensive when compared to regular TVs. Also holding back purchases is
limited reception due to transmissions from only a few digital television
stations. The most optimistic predictions suggest sales of 150,000 digital
TVs this year. Companies are preparing for new digital-TV equipment to roll
out later this year. Samsung Electronics said this year it will add three
regular-tube "digital ready" TVs to its existing high-definition,
rear-projection models. The South Korean company's separate receiver box
for digital-TV reception will also pick up satellite signals and have
Internet connections. Sharp Corp. and Panasonic's parent company have both
announced they will add plasma-based, ultrathin-panel TVs to their digital
lines. Thomson Consumer Electronics, maker of RCA and GE brands, will sell
a $649 receiver box so today's TVs can pick up a digital signal.
[SOURCE: Wall Street Journal (A17), AUTHOR: Evan Ramstad]
http://www.wsj.com/

========
INTERNET
========

MINDSPRING TO BUY BIG PIECE OF NETCOM FROM ICG IN $245 MILLION TRANSACTION
Issue: Merger/Internet
MindSpring Enterprises Inc., an Atlanta Internet service provider, will buy
part of Netcom, a division of ICG Communications Inc., for $245 million in
cash and stock. In effect, MindSpring is buying Netcom's 400,000-member
customer base, plus some other assets. The deal will push MindSpring over
the one million customer mark, bolstering its competitive muscle and putting
it on par with the larger Internet service providers. The largest ISP
continues to be America Online Inc. with more than 15 million customers.
ICG said the sale fits its strategy of focusing on its core business of
providing local phone service.
[SOURCE: Wall Street Journal (A18), AUTHOR: Andrea Petersen]
http://www.wsj.com/

CISCO PUSHING INTERNET GEAR FOR HOME USE
Issue: Computer Technology
Cisco Systems Inc., best known as a maker of computer networking gear, is
emphasizing consumer business at the Consumer Electronics Show in Las Vegas.
It is highlighting a new cable modem that can be used for high-speed
Internet connection in the home. It will license the technology to other
companies to manufacture the devices. While the modems themselves are not
"big profit" items, Cisco hopes that their use will increase demand by
telecommunications companies for their routers and switches. The company
also is announcing this week that it will be a key supplier to AT&T as it
builds a national cable modem network using the infrastructure it has agreed
to buy from Tele-Communications Inc.
[SOURCE: Wall Street Journal (A17), AUTHOR: Lee Gomes]
http://www.wsj.com/

==========
MAGAZINES
==========

HEARST CREATES TWO MAGAZINE GROUPS TO BETTER BATTLE TV, OTHER TITLES FOR ADS
Issue: Magazines & Journals/Advertising
Hearst Corp. has restructured its magazine operations to create two new
groups in an effort to better court advertisers by category. One new group
is for five magazines in the home/lifestyle category; the other group will
include six women's magazines. Combining similar titles into one group
"enhances their selling efforts," says Cathleen Black, president of the
company's Hearst Magazines unit. The move comes as magazines are under
greater pressure to fight for advertising dollars. The Hearst magazines
traditionally have competed against each other for advertising dollars. Ms.
Black said that she didn't expect competition to diminish among Hearst
publishers. Rather, she hopes the collaboration will enhance programs
offered to potential advertisers. Hearst's two largest titles, Cosmopolitan
and Good Housekeeping, will remain separate under the new arrangement. The
other three magazines owned by the company are already in a group called the
Men's Active Team.
[SOURCE: Wall Street Journal (A14), AUTHOR: Wendy Bounds]
http://www.wsj.com/

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NEWSPAPERS
Chattanooga Times Folds After Long Newspaper War (NYT)

INTERNET
Computer Experts to Disclose Discovery of Potentially Serious
Web-Security Gap (WSJ)
Prodigy Cleared by Appeals Court of Responsibility for Nasty E-Mail
(WSJ)
America Online May Link to CBS News (NYT)

ELECTRONIC COMMERCE
Reports Indicate Online Holiday Sales
Exceeded Expectations (CyberTimes)
Real Force in E-Commerce Is Business-to-Business
Sales (CyberTimes)

PHILANTHROPY
Corporate Medici Lost to Mergers, Art Groups Fear (NYT)

ANTITRUST
Windows Has No Rival, Says Intuit CEO (WP)

============
NEWSPAPERS
============

CHATTANOOGA TIMES FOLDS AFTER LONG NEWSPAPER WAR
Issue: Newspapers
After 120 years of publication, the Chattanooga Times will be no more. The
paper finally scrum to a decades old battle of survival in a two newspaper
town. The thirteen grandchildren of Times' founder Adolph S. Ochs passed
control of the paper to its rival, The Chattanooga Free Press. A new daily,
displaying the nameplates of both papers, will carry two editorial pages --
one representing the liberal views of the Times, and the other articulating
the conservative opinions of the Free Press. Only a handful of American
cities continue to publish competing daily newspapers.
[SOURCE: New York Times (A13), AUTHOR: Felicity Barringer]
http://www.nytimes.com/yr/mo/day/news/national/chattanooga-newspaper.html

=========
INTERNET
=========

COMPUTER EXPERTS TO DISCLOSE DISCOVERY OF POTENTIALLY SERIOUS WEB-SECURITY GAP
Issue: Privacy
Dubbed the Russian New Year exploit, a potential security "hole" which makes
it easy to booby-trap World Wide Web sites to steal or destroy data has been
discovered. Finjan Inc., a computer security firm, is expected formally to
announce the problem today. Bill Lyons, Finjan's CEO said, "We think this
is probably the biggest security hole in Internet history." The danger is
caused by combining two legitimate functions to create the hazard. The hole
exploits the CALL function of Microsoft's Excel spreadsheet that divides Web
sites into frames. Code can be secretly downloaded to users' computers
simply by visiting the booby-trapped site. The computer user must have
Excel on the users' machine but the program does not have to be running to
create the security problem. Microsoft already makes software available
that disables the CALL function.
[SOURCE: Wall Street Journal (B6), AUTHOR: Don Clark]
http://www.wsj.com/

PRODIGY CLEARED BY APPEALS COURT OF RESPONSIBILITY FOR NASTY E-MAIL
Issue: Online Services
In a unanimous decision released yesterday a four-judge New York appeals
court dismissed a case against Prodigy Communications Corp. saying Prodigy
was not responsible for a series of nasty electronic mail and online
postings made by a prankster. The ruling is expected to further protect
Internet-service providers from libel lawsuits. The suit, filed in 1994 by
a 15-year-old boy named Alex Lunney, sought punitive and compensatory
damages from Prodigy. The prankster used Lunney's name in the e-mail and
online postings. The court noted that Prodigy wasn't legally responsible
for the electronic communications since the company wasn't a "publisher" of
the statements and also did not know that they were false.
[SOURCE: Wall Street Journal (B4), AUTHOR: Kara Swisher]
http://www.wsj.com/

AMERICA ONLINE MAY LINK TO CBS NEWS
Issue: Internet/ Journalism
America Online and CBS are expected to announce a deal for the network to
replace ABC as the exclusive provider of broadcast news for AOL. Details of
the deal are not yet available, but agreement will most likely initial
"promotion for promotion." CBS has long trailed other TV network news
organization in building a presence on the Internet. CNN and MSNBS's new
sites are among the most visited sites on the Web.
[SOURCE: New York Times (C4), AUTHOR: Bill Carter]
http://www.nytimes.com/library/tech/99/01/biztech/articles/05cbs-aol.html

======================
ELECTRONIC COMMERCE
======================

REPORTS INDICATE ONLINE HOLIDAY SALES EXCEEDED EXPECTATIONS
Issue: Electronic Commerce
Tedeschi reports, America Online said that sales for the six-week holiday
season reached $1.2 billion on its network alone, half of some estimates for
total holiday spending on the Internet by residents of the United States.
"It's no longer your computer geek who's driving online shopping," said
Wendy Brown, AOL's vice president of electronic commerce. "People were
buying toys, things for babies, kids, apparel, electronics -- you name it."
Of AOL's 15 million members, 1.25 million used a service to make their
first-ever online purchase from one of the site's 110 merchant partners; 63%
reported that they were "very satisfied."
[SOURCE: CyberTimes, AUTHOR: Bob Tedeschi tedeschi( at )nytimes.com]
http://www.nytimes.com/library/tech/99/01/cyber/articles/05aol.html

REAL FORCE IN E-COMMERCE IS BUSINESS-TO-BUSINESS SALES
Issue: Electronic Commerce
You think Amazon.com and CDNow are big in e-commerce? The combined sales of
Internet retailers is $7.8 billion -- one business-to-business seller,
Cisco Systems, says its Internet sales currently average more than $8
billion per year. Business-to-business transactions make up 75% of Internet
sales. Even though Wall Street loves Internet retailers right now,
business-to-business e-commerce will continue to have a much greater effect
on the American economy than all the high-profile virtual retailers
combined. Forrester http://www.forrester.com/ projects
business-to-business sales will reach $1.3 trillion, or 9.4 percent of all
business-to-business sales. Meanwhile, the Aberdeen Group
http://www.aberdeen.com/index.htm, a Boston-based research firm, "pegs
business-to-business at 10 to 20 times the business-to-consumer market,"
said David Alschuler, Aberdeen's vice president of e-business and enterprise
applications. Holiday Internet retail hype "has put visions of sugar plum
fairies into people's heads," Alschuler said. "But the fact is, business on
the Internet is cutting significant costs out of the supply chain, with
better procurement and resource planning. That stuff shows up as line items
on balance sheets of companies like Intel, but in the long run, that will
have a far bigger impact than what you buy from Amazon."
[SOURCE: CyberTimes, AUTHOR: Bob Tedeschi tedeschi( at )nytimes.com]
http://www.nytimes.com/library/tech/99/01/cyber/commerce/05commerce.html

==============
PHILANTHROPY
==============

CORPORATE MEDICI LOST TO MERGERS, ART GROUPS FEAR
Issue: Arts/ Philanthropy
With a record number of corporate mergers in the past year, arts
organizations and other charitable groups have begun to wonder about how
these large-scale consolidations might effect them. There is a fear that
corporate giving might become a causality of merger mania. Newly merged
companies often give less combined than each of them gave individually. It
is also common for a corporation to cease giving to a state or community
once it has closed its headquarters there. Many nonprofit institutions are
anxious about their futures because of the large role that companies play in
philanthropic giving. Twelve percent of all contributions to non-religious,
nonprofit organizations come from corporations.
[SOURCE: New York Times (B1), AUTHOR: Irvin Molotsky]
http://www.nytimes.com/yr/mo/day/news/arts/arts-donate.html

==========
ANTITRUST
==========

WINDOWS HAS NO RIVAL, SAYS INTUIT CEO
Issue: Antitrust
The Microsoft Windows operating system is an "essential service" for which
"there is no effective substitute." That was the view expressed by William
Harris, chief executive of Intuit Inc., as the government's antitrust trial
against Microsoft Corp. resumed yesterday in Washington. Harris urged the
court to order a "broad remedy" that would prevent Microsoft from using
market advantage with Windows to favor its other software products.
Microsoft's lead attorney, John L. Warden, mocked the witness's suggestion,
saying it would have the effect of creating a "national operating system
commission" that would determine what features could and could not be added
to Windows. Warden also took issue with another of Harris's proposed
remedies - that Microsoft be forced to include rival software products in
Windows - saying that the "operating system can't include every application
in the world." The government's final witness, Franklin M. Fisher of MIT,
is expected to take the witness stand today.
[SOURCE: Washington Post (C1), AUTHOR: Rajiv Chandrasekaran]
http://www.washingtonpost.com/wp-srv/business/longterm/microsoft/micro.htm
See also:
MICROSOFT LAWYER RAISES THE SPECTER OF FEDERAL OVERREGULATION OF SOFTWARE
[SOURCE: Wall Street Journal (B5), AUTHOR: John R. Wilke]
http://www.wsj.com/

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