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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.
The cable modem, which connects to the same coaxial cable that
carries cable television programming, accesses a specific frequency, or
channel, that the cable operator sets aside for data transmission.
Because of the much smaller bandwidth available in CATV systems for
upstream channels, the data rate for upstream transmissions ranges from
512 Kbps to 10 Mbps. The actual speed of a cable modem connection is
affected by the number of users on line at the same time and is also
partly a function of the on-line service or host and its ability to
transmit at higher speeds and handle the volume of traffic. 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.
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