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  by Mark Uncapher
1. ITAA WINS VICTORY IN "E-RATE" COURT DECISION Local phone companies can't block IT companies for competing for schools and libraries Internet business ITAA claimed victory in a July 30 decision by the Fifth Circuit Court of Appeals to uphold the right of schools and libraries in the e-rate program to contract with service providers of their choosing. GTE, Southwestern Bell, Bell Atlantic and others had sued the FCC, challenging its schools and libraries or "e-rate" program. Among their contentions, the carriers claimed that since "non-carriers" paid nothing into the "universal service fund" that pays for the schools and library hook-ups, then "non-carriers" should not be able to draw from the fund. ITAA participated as an intervenor in the case to oppose this. The court concluded that "It [the FCC] is taking modest steps to ensure that Congress's instruction on expanding universal service in the form of Internet access and internal connections will not be frustrated by local monopolies. For these reasons we affirm the decision to permit support of non-telecommunications carriers providing Internet access and internal connections to schools and libraries." "The Court's decision is another victory for Americans seeking high speed, low cost access to the Internet. Competition has again won over incumbent control," said ITAA President Harris Miller. "We are pleased that the Court agreed with our position, which will allow the principles of deregulation to continue to work in the on-line world." Jonathan Nadler of Squire, Sanders & Dempsey and outside counsel to the ITAA Telecommunications Committee represented the association in the case. 2. ITAA FILES IN INTERNET TRAFFIC APPEAL - Treatment of compensation for Internet traffic at stake ITAA filed a statement on August 5th with the US Court of Appeals for the District of Columbia Circuit. As part of the appeal of the Federal Communications Commission (FCC) reciprocal compensation order for Internet-bound traffic, the court will consider whether calls to Internet Service Providers (ISPs) are local or interstate in nature, or some hybrid of the two. The appeal challenges a FCC decision earlier this year concerning the distribution of payments or "reciprocal compensation" for calls placed to the Internet. Two sets of plaintiffs have challenged the FCC's order. MCI WorldCom and its supporting intervenors contend that Internet traffic is local in nature. Another group, primarily incumbent local exchange carriers such as Bell Atlantic, argue that Internet bound traffic is non-local. ITAA argues that the most persuasive legal rational for the current treatment of Internet-bound traffic was put forth in the Eighth Circuit Court of Appeals decision upholding the FCC's Access Charge decision. That Court had agreed with ITAA and the FCC that the facilities used by ISPs are "jurisdictionally mixed," carrying both interstate and intrastate traffic. As a result the FCC cannot reliably separate the two components of the call, or even decide what percentage of a particular call is purely interstate or intrastate." Preserving the 'jurisdictionally mixed' rational helps avoid arguments that Internet traffic is interstate in nature and therefore should be subject to access charges applied to long distance calls. Access charges of even 2.5 cents per minute would add $30 per month to the costs of the typical Internet consumer." Jonathan Nadler of Squire, Sanders & Dempsey represented ITAA in this appeal. A copy of the ITAA statement is available at http://www.itaa.org/isec/pubs/archive.htm. 3. ITAA E-COMMERCE PROGRAMS: Getting to E-Medicine: The Opportunities for Using IT in the Healthcare Industry Did you know that an extra $18 billion in IT spending by the healthcare industry could produce $120 billion in administrative savings and clinical improvements over a six year period? Or that the healthcare industry lags behind most other industries in the percentage of its revenues devoted to IT? These are just two of the conclusions of the ITAA's pending report, Getting to E-Medicine: The Opportunities for Using IT in the Healthcare Industry. This summer, Gregory Barnes, a lawyer and a student at Harvard University's Kennedy School worked with ITAA's Information Services & Electronic Commerce Division on a special report to identify opportunities and barriers to increasing the use of information technology within the healthcare industry. The report explores on a macro level how to help health providers make better use of information technology and quantifies the potential savings. On Wednesday, September 1, 1999 at 11am eastern time, ITAA will conduct a FREE Webcast about our E-Medicine project. If you or someone else in your organization would like to participate, email jbrown@itaa.org or register online at http://www.merantpresents.com. 4. FREE INTERNET ACCESS? Could AOL & AltaVista announcements be a trend? According to Bloomberg News, AOL Europe, a venture between America Online, the world's No. 1 online service, and Germany's Bertelsmann, the world's No. 3 media company, will create a free Internet service to complement its existing AOL and CompuServe brands. The new service, Netscape Online, will offer the Netscape Navigator browser and AOL Instant Messenger 2.0, which alerts a user when friends or colleagues go online. In Britain AOL competes with about 100 free Internet providers. Freeserve, started by the Dixons Group last Fall, has emerged as the country's top ISP. According to Bloomberg, Freeserve now has twice as many users as AOL. Earlier this summer Microsoft's MSN service dropped subscription fees in the UK as well. AOL had previously resisted providing free Internet access, since subscription fees continue to be a primary source of revenues for ISPs. Users in the United Kingdom pay between 1 pence and 4 pence per minute in local phone charges. AOL did not disclose which telephone company it has tied up with to provide its free service. The new service will charge for customer support. In a related story, AltaVista advanced the free ISP trend in the US on August 12th with the announcement of free Internet access combined with the world's first microportal. AltaVista FreeAccess and the AltaVista MicroPortal are available now as a single integrated service downloadable for free at http://www.microav.com, or from the industry's leading AltaVista Search site at http://www.altavista.com. According to the company, AltaVista is the first leading Internet brand in the US to offer users free online access and the ability to browse the entire Web and link to personalized services. AltaVista FreeAccess is a nationwide dial-up free service offering an Internet connection without monthly service fees. AltaVista combines the FreeAccess service with the new AltaVista MicroPortal, an up-to-the-minute personalized desktop window to premier AltaVista media and commerce services, including the legendary AltaVista Web search capabilities. AltaVista apparently intends to generate e-commerce income. It is offering customers "electronic cash certificates" for products available at AltaVista's Shopping.com. Similarly InterActiveWeek reports that if Microsoft decides to offer free Internet access through MSN, it may require subscribers to commit to spending a certain amount of money with Microsoft's e-commerce partners. AltaVista's FreeAccess service is available to users with Windows 95 and 98 and will be offered to Windows NT and Macintosh users soon, the company said. In addition, it said the advertising that supports the free service involves rotating ads in a window that takes up less than 5 percent of the user's screen. The user also can move the advertising to anywhere on the screen. 5. STUDY PROJECTS GLOBAL ANNUAL COST SAVINGS FROM ELECTRONIC COMMERCE WILL REACH $1.25 TRILLION BY 2002 The Giga Information Group (http://www.gigaweb.com) projects that electronic commerce will provide total annual cost savings of $1.25 trillion in industrialized nations by 2002, with half occurring outside the United States. Using Internet technologies will reduce or eliminate many costs by improving core business processes. According to research conducted by Giga Information Group, global businesses in industrial nations had e-commerce-driven cost savings of $17.6 billion in 1998, with the majority, $15.2 billion, occurring in the United States. The U.S. cost savings will reach more than $600 billion annually in 2002. Traditionally, cost savings produce greater profit margins -- typically 60-80 percent, depending upon implementation costs -- than increases in sales revenue. As a result, Giga estimates that in 2002, U.S. businesses will see between $360 billion to $480 billion in profits from Internet-based cost savings alone. Businesses in other industrialized nations will see similar results. "The Internet is more than just a new way to sell products and services, it's a way to efficiently run a business, resulting in significant cost savings that add to an organization's bottom line," said Andrew Bartels, a vice president following the e-commerce market for Giga Information Group. "Just as the telephone affected more than communications and jet airplanes affected more than travel, the Internet will continue to drive significant changes in business practices and processes, in addition to sales." In addition to providing an efficient and effective sales channel, the Internet offers significant potential to improve business processes, including:
6. CLINTON ORDERS RENO PROBE OF INTERNET LAW ENFORCEMENT. A month after the Federal Trade Commission advised Congress that online privacy legislation was not necessary, and a Federal Communications Communication staff report, The FCC and the Unregulation of the Internet, concluded that its "unregulation" had been a crucial factor in the growth of the Internet, President Clinton issued an executive order directing a working group headed by Attorney General Reno to study unlawful conduct on the Internet. The Reno Internet working group has 120 days to report back to the President and Vice President on "the extent to which new technology tools, capabilities, or legal authorities may be required for effective investigation and prosecution of unlawful conduct that involves the use of the Internet. Other members of the task force include the FBI Director, the Bureau of Alcohol, Tobacco and Firearms Director, and the Administrator of the Drug Enforcement Administration. ITAA and representatives of member companies have met with White House staff working with the task force to encourage that it consults with industry before making recommendations. 7. ITAA E-LETTER PRIMER: WHAT IS BROADBAND? The legislative and legal skirmishing over broadband is just the beginning of an all out marketing battle, as more and more consumers and businesses choose which broadband provider to use. But what is broadband? Broadband access will enable consumers to have an "always on" connection to the Internet that is one hundred times faster than today's dial up modems. This superfast pipeline will facilitate convenient interactive communication through video, voice and data services. For years the transmission speed, called baud rate, of the telephone modem was far less than the maximum capacity of the telephone lines. Over time, modems were improved, but PCs began to process greater amounts of data at much faster speeds. These capabilities outdistanced the telephone modem, which was unable to handle data at the speeds people wanted. Part of the problem with using voice-grade telephone lines to send data is the narrow bandwidth of the channel. A standard voice-grade channel is 4 Khz and can carry a relatively small amount of data at a time. Even a high-speed telephone modem can send and receive data at only 28,800 bits per second (28.8 Kbps). Already more than 159,000 high-speed phone-based Internet connections known as digital subscriber lines (DSL) were in service at the end of the second quarter, according to telecommunications consulting firm TeleChoice. By comparison, the cable modem market recently topped 1 million customers. Nearly three-fourths, or 73 percent, of all DSL lines were used by residential customers, while 27 percent were used by businesses, according to the study which included all types of DSL, except HDSL and HDSL2.
8. ITAA E-COMMERCE PROGRAMS: The eCustomer Intimacy Conference One of the opportunities of Internet commerce is the potential for targeting and personalizing customer communication. However, this customization involves complex marketing, privacy and technological challenges. The eCustomer Intimacy Conference will be brimming with case histories of companies, large and small, that discovered the secrets of establishing and maintaining close customer-intimate relationships. These companies are reaching out to customers. They're making it easy for customers to do business with them! Discover how companies are getting closer to their customers. How getting closer to customers increases revenues, decreases costs, and helps get a bigger share of each customer served. For more information, or to register, visit www.icdevents.com or Patricia Neri at 781-275-7493 ITAA members are entitled to a 10% discount off the registration fee. The E-customer Intimacy conference is October 13-15, 1999, at the DoubleTree Suites in Boston, MA. For those who are unfamiliar with ITAA Web casts, they are the latest in "virtual seminars." ITAA utilizes the Internet to provide members with real-time, online presentations from industry experts without having them leave the office. Each presenter guides the participants through a PowerPoint-like presentation while listening on a conference call. With help from our sponsors, we are able to provide ITAA Members with timely presentations on various topics throughout the year, not just during our conferences. ITAA Web casts are a FREE service for ITAA members and focus on new topics each month. Industry experts will be on hand to deliver insightful and timely presentations on topics that continue to shape the future of the industry. |