1. ONLINE PRIVACY LEGISLATIVE FRONT HEATS UP - ITAA opposes Internet regulation efforts
2. OTHER CONGRESSIONAL HIGH TECH ACTIVITY: Access Charges and Encryption
3. ITAA OPPOSES BELL ATLANTIC-GTE REQUEST FOR REGULATORY RELIEF - Companies withdraw request days after ITAA letter
4. ITAA CALLS FOR PASSAGE OF CALIFORNIA LINE SHARING BILL - Would help high speed Internet access for consumers
5. ITAA URGES FTC TO LOOK TO EXISTING LAW FOR ONLINE PROTECTIONS
6. EU MOVES FORWARD ON TWO ELECTRONIC COMMERCE LAWS - ITAA had filed comments
7. ISP ACCESS TO CABLE INFRASTRUCTURE DIVIDES HIGH TECH TELECOM INDUSTRY
8. FCC RELEASES REPORT ON TELECOM YEAR 2000 READINESS - Worried about International, and Smaller Companies
9. ITAA E-LETTER RESEARCH: MERRILL LYNCH RESEARCH EXPLORES REVOLUTION GENERATED BY E-COMMERCE
10. ITAA E-LETTER RESEARCH: MORE TAX PAYERS GO ON-LINE FOR HELP WITH TAX PREPARATION
11. ITAA FINANCE MARKETPLACE UPDATE ANNOUNCES FIRST WEBCAST OF 1999

1. ONLINE PRIVACY LEGISLATIVE FRONT HEATS UP- ITAA opposes Internet regulation efforts

The online industry is facing more efforts to regulate the Internet as various legislators offer bills to give the Federal Trade Commission (FTC) broader authority over online communication. Last week Sens. Conrad Burns, (R-MT), and Ron Wyden, (D-OR), introduced their Online Privacy Protection Act of 1999, (S.809) mandating businesses permit customers to "opt-out" of their information-collection databases and giving the FTC broader authority over Internet commerce.

In a statement following the introduction of the Burns-Wyden bill, ITAA questioned the need for the Online Privacy Protection Act of 1999.

"Acceptance of Internet commerce is occurring at an unprecedented speed. The Internet as a consumer medium is only four years old, so it is natural that different consumers may require varying degrees of comfort level using it," said ITAA President Harris N. Miller. "The reluctance of some consumers to engage in Internet commerce after such a short period should not be seen as a need for regulation. "

ITAA believes that the Act would create unnecessary regulations and restrictions on an industry that has made speedy progress towards self-regulation and that the proposed legislation overlooks the broad strides forward that the Internet community has made towards self-regulation. It ignores technological and other tools that can empower consumers. The bill instead assumes that consumers can't be trusted to make their own informed online choices.

According to Mark Uncapher, ITAA Vice President and Counsel, "one of the principal benefits of online commerce is the potential for marketers to use technological means to customize their communications to the specific interests of individual consumers. Setting the Federal Trade Commission loose to regulate this Internet communication could stifle that innovation."

Recently Rep. Edward Markey, D-MA, indicated that he expected to introduce even broader legislation that would create the right to sue as a result of privacy breaches. "Do not wait for a privacy meltdown of Chernobyl-like proportions before you endorse some governmental role," Markey said in a speech at the Computers, Freedom, and Privacy conference. Markey noted that while Congress last year adopted legislation prohibiting commercial Web sites from collecting a variety of personal information from children age 12 and under without consent from a parent, he had supported extending privacy protection to adults in an earlier bill. Markey said his revised proposal, still being written, will require Web sites to notify visitors of what information is collected and how the data will be used or sold to others.

The bill also might require that Web sites give visitors an opportunity to prohibit the collection of their personal data, Markey said. A provision opposed by some companies that would grant people a right to review and correct errors in data collected from them is still being refined.

Still other pending privacy proposals include Rep. Bruce Vento’s (D-MN) Consumer Internet Privacy Protection Act of 1999, (H.R. 313), and Rep. Bob Franks’ (R-NJ) Children’s Privacy Protection and Parental Empowerment Act, (H.R. 369), toughening last year’s Child Online Privacy Protection Act with criminal penalties for disclosing information about children without parental consent.

Jean Cantrell, Director of Government Affairs for Dun & Bradstreet and Chair of ITAA’s Information Policy Committee was quoted in the National Journal’s Tech Daily saying: "Unless some catastrophic privacy violation happens online, there isn’t enough muster to make it happen this year."

"We promote self-regulation as a first resort, and we clearly agree that if industry can’t step up to the plate, then we would want to look for some other remedies," Cantrell continued. "There has not been enough time to allow the markets to prove that they can take care of these issues."

2. OTHER CONGRESSIONAL HIGH TECH ACTIVITY: Access Charges and Encryption

Internet Access Charges - Sen. John McCain (R-Ariz.) unveiled the Internet Regulatory Freedom Act of 1999 when Congress, which would prevent the FCC from regulating or taxing Internet services. The bill would also make sure that local telephone companies have incentives to provide high-speed Internet service to customers, but would prevent the FCC from forcing telephone companies to resell their services to middlemen. Similar legislation was introduced in the House by Rep. Fred Upton (R-MI) and has attracted over 60 co-sponsors.

Encryption- A new bill be being proposed by Senators John McCain, (R-AZ), Pat Leahy (D-VT), Ron Wyden (D-OR), Conrad Burns (R-MT) and Spencer Abraham (R-MI) is not as strong as a House bill backed by Virginia Republican Bob Goodlatte and California Democrat Zoe Lofgren. Under current rules, U.S. companies generally may not export products with software "keys’’ longer than 56-bits, while cutting edge encryption uses keys of 128-bits or more. Stronger products with longer key lengths are allowed to be exported to companies in a few industries like banking and health care. The strength of encryption is largely dependent on the length of the key. Hackers have cracked 56-bit messages in under a day while 128-bit keys are considered virtually impenetrable using existing techniques. The new Senate bill would allow exports of 64 bits, and allow stronger encryption exports to ‘’responsible entities and governments’’ in Europe and certain other countries. Responsible entities would include publicly traded companies, companies subject to government regulation or annually audited under widely accepted accounting principles, subsidiaries of U.S. companies and online merchants. Strategic partners of U.S. companies would also be included.

3. ITAA OPPOSES BELL ATLANTIC-GTE REQUEST FOR REGULATORY RELIEF- Companies withdraw request days after ITAA letter.

ITAA released on April 9th an ex parte letter to Federal Communications Commission Chairman William Kennard opposing a February 24th request by Bell Atlantic Corp. and GTE Corp. for the FCC to grant them "interim relief", allowing the companies to retain GTE Internetworking's Internet backbone business after the companies merge. Bell Atlantic wants to keep the business despite restrictions preventing Bell companies from providing long distance (local access and transport area) services, including Internet backbone service.

Just days later, both Bell Atlantic and GTE reversed themselves, asking the FCC for a delay in consideration of their $52 billion merger until the companies prepare a revised proposal for dealing with GTE’s Internet business. The companies also asked the Commission to ignore their joint February 24th letter.

The FCC has already concluded that the long distance restrictions on Bell companies apply not only to voice services but also to data services. This decision has kept the Bells from entering the Internet backbone business.

ITAA’s letter had opposed the Bell Atlantic - GTE request for regulatory relief on the grounds that Bell Atlantic should not be able to "end run" around the requirements of the Telecommunications Act of 1996. The companies had proposed that if Bell Atlantic qualified to offer long distance in just New York State, that it be able to use GTE Internetworking to offer long distance data service in its entire service area.

ITAA commended the numerous pro-competitive actions the FCC has taken since the signing of the Telecommunications Reform Act of 1996, and urged the Commission to "stay the course" by denying the request for Bell Atlantic to provide Internet backbone service before it has opened its local market to competition.

Jonathan Jacob Nadler, a partner at Squire Sanders & Dempsey and outside counsel to ITAA’s Telecommunications Committee wrote the Commission that: "Under Bell Atlantic's proposal …if the carrier makes the required showing in New York State, it will be permitted to provide inter-LATA service anywhere in its region. This is unacceptable. The Commission cannot grant a region-wide waiver on the basis of the quintessentially New York assumption - made famous by Frank Sinatra and apparently embraced by Bell Atlantic - that "If I can make it there, I can make it anywhere."

To view the complete text of the letter, visit www.itaa.org/isec.

4. ITAA CALLS FOR PASSAGE OF CALIFORNIA LINE SHARING BILL - Would help high speed Internet access for consumers

ITAA wrote California Assemblyman Lou Papan in support of his proposed bill AB 991, which would allow competitive telecommunications carriers the right to provide services through what is known in the telecommunications industry as "line sharing."

In ITAA’s April 6th letter to Papan, ITAA President Harris Miller said, "Competitive carriers should have the right to provide digital subscriber line (DSL) in precisely the same manner as the incumbent. That means that competitive carriers should also be able to provide their DSL service over an existing incumbent voice telephone line instead of running an unnecessary and costly second line."

ITAA supports provisions to encourage competition among telecommunications providers, including facilitating entry by competitive local exchange carriers (CLECs) and other providers into incumbent markets. The Association also believes essential safeguards are necessary to deter incumbents from using their monopoly power to impede the efforts of potential rivals.

"California consumers deserve telecommunications choice. Line sharing lets consumers have advanced digital subscriber line service without being forced to pay for unnecessary additional lines to get it. Citizens in a high tech state like California should demand the easiest possible access to modem speeds above 56 kilobytes per second," added ITAA Vice President and Counsel Mark Uncapher.

To read questions and answers about the Papan bill, AB 991, visit http://www.itaa.org/isec/ab991.htm.

5. ITAA URGES FTC TO LOOK TO EXISTING LAW FOR ONLINE PROTECTIONS

In recent comments to the Federal Trade Commission, ITAA said that in seeking to protect online consumer transactions, the federal government should first look to existing laws, treaties, self-regulatory initiatives and technological advances. ITAA cautioned against "precipitous action" to harmonize consumer protection laws internationally.

The FTC published a notice in the Federal Register last December seeking public comment in anticipation of a workshop on the online consumer protection issue.

ITAA President Harris Miller said in a letter that providing a safe environment for retail transactions on the Internet is imperative for ITAA members. Acknowledging that current approaches in some cases may need to be supplemented by government action, Miller encouraged the FTC to start by building an inventory of current approaches and avoid steps that could slow Internet growth.

"The reluctance of some consumers to engage in Internet commerce after such a short period should not be seen as a need for regulation. Free market responses, technological innovation and cultural change, rather than special government rules, are the best means to let individuals decide to shop online at their own pace." Harris N. Miller said.

Miller said that in striking the balance between consumer protection and Internet growth, there is no need to create an entirely new set of rules, although adjustments to existing protections may be necessary. "We believe in many instances, providing consumers with choices regarding their protection will become a market advantage and in many instances technology may solve some of the most difficult issues."

Earlier this week the Federal Trade Commission (FTC) voted 4-0 for the proposed rules implementing the Children's Online Privacy Protection Act of 1998. The proposed rule sets out no requirements for parental consent but suggests several approaches. For example, parents might sign and return a consent form by fax or mail, use a credit card, dial a toll-free number or e-mail their consent accompanied by a valid digital signature. The commission left the door open to other "e-mail based mechanisms" that might work. The proposal is designed to give parents control over whether their child's information can be disclosed to third parties and to prevent further use or future collection of personal information from their child, the commission said. A site could collect a child's e-mail address without parental consent to seek the parent's consent, or to respond to a specific request by the children, the commission said.

6. EU MOVES FORWARD ON TWO ELECTRONIC COMMERCE LAWS - ITAA had filed comments

Reprinted below is a Reuters story by Suzanne Perry. ITAA participated in the EU discussions. Most recently, on March 10th ITAA President Harris N. Miller sent comments to EU Commissioner Mario Monti that noting: "[L]egal certainty is a prerequisite for establishing trust for consumers in a new medium."

The European Union is moving forward on two long-awaited measures to make it easier to do business over the Internet. One is legislation designed to give legal status to "electronic signatures" used to ensure that online transactions are authentic and confidential.

EU telecommunications ministers, who had been deadlocked over the measure, have resolved their differences and are expected to agree to a text in Luxembourg. The other is a broader, more controversial electronic-commerce regulatory package, which a European Parliament committee was expected to endorse, clearing the way for approval by the full assembly in May.

Electronic signatures, produced through technologies such as cryptography, allow individuals to determine the origin of online data and to check whether it has been changed. The draft EU directive would make electronic signatures legally equivalent to handwritten signatures if they had been properly certified by third parties. When the 15 EU telecommunications ministers discussed the measure in November, they hit a deadlock over whether to set specific technical requirements for the hardware and software devices used to create and verify the signatures.

Countries including France, Germany and Italy argued in favor, while others -- Britain, Finland, the Netherlands and Sweden -- said the technology should be left to the market. EU officials said governments have now negotiated a compromise that will set out some requirements and recommendations that are not overly restrictive.

The text, for example, requires that signature-creation devices protect signatures against forgery and ensure that the secrecy of the codes that are used is "reasonably assured." The electronic commerce package aims to clarify the legal situation for consumers and companies who do business over the Internet, setting out rules in areas such as advertising, electronic contracts, liability and professional standards.

The main controversy involves who should regulate online sales -- the country of origin or country of reception. The legislation sets out the basic principle that companies should be regulated by the country where they are established. However, it would allow buyers to invoke their own country's consumer protection laws if they were unhappy with a purchase.

Governments could also unilaterally ban unsolicited junk mail, known as "spam" mail. The International Communications Round Table, which represents about 30 media and communications groups, is pushing the parliament to remove both exceptions.

It says the "country of origin" approach is essential since electronic commerce will be stifled if companies, especially smaller ones, have to follow 15 different national regimes. But the European Consumers' Organization (BEUC) disagrees, arguing that governments should also have the right to block advertising and marketing that violates their own laws. Otherwise, it says, operators could set up in countries with lower consumer protection standards and target other EU states.

Once the parliament approves the measure, it will go to EU governments for approval and then back to the parliament for a second reading before final adoption. The electronic signature legislation goes to the parliament for a second reading after EU telecoms ministers approve it.

7. ISP ACCESS TO CABLE INFRASTRUCTURE DIVIDES HIGH TECH TELECOM INDUSTRY

The debate over whether Internet Service Providers (ISPs) should have access to television cable network infrastructure under possible regulations is receiving growing attention. The question divides leading ISPs, such as AOL, MindSpring and Prodigy and cable providers. The question dominated an April 13th hearing of the Senate Commerce Committee. Currently cable companies can treat affiliated ISPs more favorably than competitors. Consumers seeking cable Internet access are required to pay for service from the cable companies affiliated ISP.

America Online Inc. Chairman Steve Case told Congress that the issue could be addressed with a "light touch" or regulation. Case said he opposed a broad, complex regulatory structure for the Internet, Case said Congress must address issues raised by convergence, including the cable industry's monopoly on offering broadband Internet access.

"I don't think imposing common carrier-like regulation on top of cable is the right way to go. We don't think that's necessary or appropriate," Case said. "We do believe that having some simple, nondiscriminatory approach is the better strategy."

Charles Brewer, chairman of MindSpring Enterprises Inc., said he doesn't agree that new regulation is necessary. Rather, Congress should send a signal to the Federal Communications Commission that it should enforce regulations that already exist. According to Brewer, said only one cable company has cooperated with MindSpring in allowing it to offer its services over the cable network. MindSpring has contacted at least 20 other cable companies and in every case has been denied even an open channel to discuss a possible business deal, Brewer said. "There is a strong mindset in the [cable industry] of running a closed, proprietary system," Brewer said. Opening its networks "just does not come naturally," he said.

Cable industry executives responded that imposing that requirement would drive away capital investors and block cable operators' efforts to deploy broadband services. When asked by one Senator "on what basis" it would offer access to unaffiliated ISPs, a cable representative from Cox Cable replied that "business arrangements should be made between different players" without government intervention. Sen. Bryan pushed on, asking whether AOL, for example, would have to pay more to access Cox's cable modem platform than would an affiliated ISP. Cox Cable’s representative explained that there would be "bilateral discussions to come to reasonable terms and conditions for these types of arrangements. But if you get the government into that, capital would dry up."

Several Senators commented that regulation of ISP access to cable infrastructure may be premature. Sen. Ernest Hollings (D-SC) said while the ISPs "might be right later on," he has more concerned about seeing more competition now "with the Bells." Sen. Ted Stevens (R-AL) said that the Telecommunications Act of 1996 was working and that new regulation was unwarranted.

8. FCC RELEASES REPORT ON TELECOM YEAR 2000 READINESS - Worried about International, and Smaller Companies

On Tuesday, March 30, 1999, the Federal Communications Commission, in conjunction with the Network Reliability and Interoperability Council, released its Y2K Communications Sector Report.

The Report analyzes the Y2K-readiness, as of January 1999, of the major industry sectors: wireless telephone, cable television, television and radio broadcast, and satellite. It also contains special sections related to the international telecommunications network and emergency services.

The Report (in .PDF Acrobat format) is available on the World Wide Web at the FCC's Year 2000 home page: http://www.fcc.gov/year2000/y2kcsr.html.

The FCC concluded that: "We remain concerned, however, about the smaller companies. Many of the small-and medium-size companies that have adopted a systematic approach to addressing Year 2000 have completion deadlines dangerously close to millennium rollover, leaving little time for delays from vendors or remediation as a result of problems discovered in the testing process. And whether in telephone, cable, broadcast or wireless, many small companies have not adopted a systematic approach to addressing Y2K, an approach that we believe is necessary to adequately address the problem."

Concering the "public telephone network" the FCC said:

"Our analysis of the public telephone network indicates that the largest local and long distance carriers are well on their way to being ready for Year 2000. These carriers are expected to be 100 percent ready, including having their contingency plans in place, by the second quarter of 1999. The seven largest local exchange carriers control approximately 92 percent of all U.S. access lines and the largest long distance companies account for 82 percent of total U.S. long distance revenues. The remaining carriers, which we define as medium/small, lag behind the large carriers in their remediation and contingency planning efforts and nearly half of the medium/small carriers surveyed by the Commission reported not having formal processes for managing Year 2000. These findings are of concern to us. We are particularly concerned that a large proportion of medium/small carriers appear to lack formal remediation and contingency plans and, therefore, may not be taking the necessary steps to become Year 2000-ready. "

On Customer telephone equipment, the FCC said:

"Telephone companies, however, are responsible for remediating only public networks; they are not directly responsible for customer equipment, such as telephones and fax machines, or private internal networks. Owners, such as residential customers and businesses, are responsible for ensuring that their own equipment and software are Year 2000-compliant. If this equipment does not work, consumers will not be able to access the telephone network even if the network experiences no Y2K-related problems."

On International telephone readiness, the FCC said:

"Because global telecommunications rely upon seamless interconnection of various domestic and foreign networks, the international dimensions of the Y2K problem are especially significant. Although U.S. telecommunications companies appear to be working diligently to prevent any Y2K disruptions, the international picture is less certain and the FCC remains concerned about whether enough is being done on a global basis to ensure that there are no significant network disruptions or failures. NRIC conducted an assessment of international telecommunications readiness, which covered 84 of the 225 countries in the world. The NRIC assessment study, a partial snapshot of the global Year 2000 problem, reported that the countries facing a "high risk" of network problems tend to be countries with lower "teledensity," and thus lower dependence on telecommunications services. It categorized the regions of Central and South America, the Indian Sub-Continent, and Sub-Sahara Africa as high risk. The regions of North America, Asia Pacific and Western Europe were categorized as low-to-medium risk. Moreover, the International Telecommunication Union prepared an assessment of its member-countries and private sector participants."

"Recent survey results found that 52 percent of 304 respondents who supplied specific dates expected to be Y2K-compliant by March 1999. The remaining percentage of respondents said they would be compliant by the end of this year."

9. ITAA E-LETTER RESEARCH: MERRILL LYNCH RESEARCH EXPLORES REVOLUTION GENERATED BY E-COMMERCE

Electronic commerce is a far-reaching business concept, not just a unique technology, according to an extensive Merrill Lynch special research study, "e-Commerce: Virtually Here." In a 150-page special report, Merrill Lynch analysts examine how e-commerce is altering the ways of doing business in 15 industries, from advertising to telecommunication services. The report also discusses e-commerce's implications for accounting practices as well as government regulation worldwide.

"It has already altered, and in many cases continues to significantly change, traditional business philosophies across a broad spectrum of industries, commerce and finance," said Rosemary T. Berkery and Andrew J. Melnick, co-directors of Global Securities Research and Economics.

The revolutionary changes prompted by e-commerce could also increase outsourcing, encourage divestiture of corporate business, and motivate companies in non-Internet industries to re-engineer themselves in order to take advantage of the new technology, the report showed.

"The e-commerce era is here," said Jeanne G. Terrile, coordinator of the project and author of the study's overview. "You can see it sometimes in expected, and at other times in surprising, guises."

The study also explains that information technology, which includes e-commerce, has shown exponential growth and already contributes meaningfully to the macroeconomic performance of the United States.

"This includes the gradual disappearance of inflation, strong productivity gains and continued growth in employment," Jack W. Lavery, a Merrill Lynch Senior Vice President and Director, added in a discussion of public policy and economic considerations. Overall, the Internet has the power to democratize, to break the link between quality and best content and to do it at decreased cost and increased effectiveness, the study said.

Companies in information-oriented industries such as banking, brokerage and publishing already have been profoundly affected by e-commerce, the study found. Other industries, such as freight forwarding and insurance, are now re-defining themselves. And, still others, such as real estate, should expect to feel e-commerce's influence as the Internet tends to "cannibalize" retail sales away from store-based retailers, reducing in some cases the underlying value of retail real estate, the study suggested.

Further, the study notes that, while very few ventures are making money on the Internet, companies and investors are left to cope with the extraordinary changes that e-commerce is delivering today to virtually every aspect of business.

"We view the growth of the Internet and e-commerce as a global mega-trend, along the lines of the printing press, the telephone, the computer and electricity," said Henry Blodget, Merrill Lynch's Internet analyst. "We believe it will affect dozens of industry sectors in the world economy over the next decade."

As a result, the study found a "valuation paradox" in which new Internet companies don't currently pay a penalty in the stock market for the losses they incur in building their e-commerce business.

High-valuations, in fact, give them an unusually low cost of capital, enabling them to return frequently to the market to obtain inexpensive funds to invest faster in new portals, technologies or ventures. They can also use stock to buy other companies.

"Traditional companies, however, are penalized with shrinking multiples for their losses in starting e-commerce businesses," Ms. Terille explained. "The practical effect is that these companies' cost of capital has therefore risen, making it more expensive for them to pursue. Internet strategies and that, in turn, could ultimately result in less competition in the Internet world."

Exploring various broad consequences, Merrill Lynch found e-commerce results in disintermediation, by eliminating the traditional middleman, usually the distributor, simultaneously giving rise to a new class of "info-mediaries" who find products for buyers, and buyers -- or a potential community of buyers -- for sellers. The Internet also creates a conflict between the need for scale and the need to be narrow. Because overhead doesn't increase in the e-commerce model when volume rises, "companies may wish to consider mega-mergers," the study showed. This is a path followed by many companies in pharmaceuticals, financial services and Internet commerce itself.

The goal of these mergers is to create a richer product line to sell an existing customer base, the Merrill Lynch study showed. In an effort to find the most efficient producers, companies may make greater use of outsourcing to the most-efficient, and in the process "Produce a wave of divestitures."

Currently, the Internet is borderless and the opportunity to sell via the Internet in a standardized way eliminates many natural barriers to entry in foreign markets, such as the high cost of retail space in London, or the extra security needed in Moscow. But, some barriers to entry in foreign markets are political, and fast-growing e-commerce may eventually attract more attention from tax and customs authorities here and abroad. Further, governments differ on how regulated the Internet should be and whether officials can get access to data in the interest of national security. The U.S. government's attitude toward Internet regulation has been one of laissez-faire, highlighted by a three-year state sales tax moratorium, started in 1998, on net sales. Europe has been more restrictive.

The prevention of cyberspace fraud, false advertising claims and inappropriate business practices are only some of the key legislative issues. Further, the protection of privacy, copyright laws and intellectual property are likely to be addressed, according to the analysts.

However, Merrill Lynch cautions "not everything that can happen will happen. The need for capital spending won't disappear." In essence, they believe "real life has boundaries even if the net doesn't."

Copies of the study, the fourth in a series of special reports on important topics for investors, are available in traditional form and on the Internet at http://www.e-commerce.research.ml.com/.

10. ITAA E-LETTER RESEARCH: MORE TAX PAYERS GO ON-LINE FOR HELP WITH TAX PREPARATION

This year, more Americans are turning to the Web for both tax filing and advice. The latest study by Ziff-Davis Inc. found that nearly 54% of U.S. adults on-line - versus 8% last year - who were involved with the preparation of their tax return used the Web or an on-line service to obtain tax-related information. This represents a seven-fold increase in just one year. The study, completed between March 31st and April 3rd, is based on the responses of more than 1,000 U.S. adults.

Of those who had filed a 1998 return, nearly one-third filed electronically. This represents a 38% increase over 1997. In addition, nearly six times the number of adults on-line (53%) downloaded tax forms or instructions for 1998 filings versus a year ago (9%). "The value of online activities such as electronic commerce is clear, but there were some questions as to how people would react to online tax advice and other tax related sites," said Aaron C. Goldberg, vice president and principal analyst at Ziff-Davis. "The increase over 1997 in Web use for tax advice, services and tax return preparation outpaces even the stellar gains we've witnessed for eCommerce. This study shows conclusively that U.S. adults are using the Internet for tax assistance and filing.

There was a very high degree of satisfaction among respondents that used the Web or on-line based services to prepare their taxes. More than three-quarters of respondents (77%) that used these on-line services reported they were satisfied with the results. And more than half of those adults reported they "got everything they needed with no trouble."

There are, however, a significant number of U.S. adults that are not using the Web for tax return preparation or filing. Key reasons include security concerns and the preference to use a professional tax specialist who handles the return. Even those who filed a tax return electronically have some concerns: 21% feel that filing electronically increases their chances of being audited by the Government. Regardless, the outlook for next year is impressive. More than half of on-line users expect to file on-line next year, and 40% plan to go on-line for information. More information on this study go to http://www.infobeads.com/default.asp?sid=tax.

11. ITAA FINANCE MARKETPLACE UPDATE ANNOUNCES FIRST WEBCAST OF 1999

ITAA’s Finance Marketplace Update are monthly Webcast series focusing on issues effecting CEOs, General Counsels and CFOs in the Information Technology (IT) industry. Cherry Tree & Company, an investment banking firm specializing in IT, will kickoff the ITAA Finance Marketplace Update series with a presentation (see details below) on "How to Create Additional Value."

The ITAA Finance Marketplace Update Webcasts are a FREE service for ITAA members and will focus on a new topic 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.

For those who are unfamiliar with ITAA Webcasts, they are the latest in "virtual seminars." ITAA utilizes the Internet to provide members with real-time, online presentations from industry experts without having to leave the office. Each presenter guides the participants through a PowerPoint-like presentation. With help from our sponsors, we are able to provide ITAA Members with timely presentations on various topics throughout the year.

"How to Create Additional Value"
May 12, 1999 - 2:00 to 3:00 pm
Sponsored by Cherry Tree & Company

With IT service firms witnessing pressure in the public markets, public and private companies alike are seeking to define and differentiate their value proposition. Kevin Green & David Henderson, Managing Partners at Cherry Tree & Co., an investment banking firm with an exclusive industry focus in IT services, will identify key determinants of value that effect and enhance one’s position in the marketplace. Within the presentation, Cherry Tree will address value enhancement from a number of perspectives, including scale, technology expertise, profitability metrics, vertical market focus/market niches, and proprietary tools. The analysis will draw on examples witnessed in today’s marketplace as well as general industry trends. Contact Josh Brown jbrown@itaa.org to register.