• High-Tech Industry News
• Survey of Fixed to Mobile Telephone Substitution
• Microsoft Settles Several Major Outstanding Lawsuits
• Featured Book: Spam Kings
• Crossword
• Masthead

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High-Tech Industry News

Verizon, the largest regional Bell operating telephone company in the US, announced plans to start introducing fiber-optic connections for residential telephone & data services in six Eastern states. The company, which has already been installing its new high-speed lines in parts of Texas, California & Florida, is extending its construction to parts of Virginia, Delaware, Maryland, Massachusetts, New York & Pennsylvania. The company expects to make available its fiber-optic service—which will offer substantially faster connections than existing cable lines or telephone digital subscriber lines (DSL)—to at least one million homes by the end of 2004, & two million more homes in 2005. The regional Bell operating telephone companies have been moving to replace more of their aging copper networks with fiber-optic lines as a way to compete with cable companies. The cable companies are introducing their own telephone services on their broadband data lines. The phone companies hope the faster; more versatile fiber connections will allow them to sell voice, data & ultimately video services. They are hoping that consumers will want to download videos rather than go to their local video rental shop. While Verizon is stringing fiber-optic lines all the way to consumers' homes, one of the rival Bell regional operating companies, SBC, is only installing fiber to neighborhood hubs & using existing copper cables to connect the homes. By doing this, SBC is hoping to save installation costs, but it will also produce a more limited product. The company plans to reach 18 million homes in its territory with these high-speed connections by the end of 2007. It is of course not known how many customers will order these services once they become available. Verizon says it will start selling video services some time next year, but it has not said what kinds of programming it plans to offer & at what cost to consumers. Consumers may be unlikely to abandon cable providers who already provide TV service for similar services from the telephone companies, unless the new offerings are cheaper & at least as good.

Intel has announced that it was scrapping a plan to enter the digital television chip business, in a retreat from its push into the consumer electronics business. The cancellation should ease competition for Texas Instruments, which has had success with its chips that are used in rear-projection televisions. The withdrawal announcement stated that for the investment that would be required & the returns that they could get & the timeline to get to those returns, it doesn't make sense for them to pursue this particular technology. A little less than one year ago, Intel announced plans for an aggressive push beyond the personal computer & into consumer electronics with new chips for big-screen high-definition televisions (HDTV). At the time of the company’s entry into the consumer electronics industry an Intel spokesperson said that they would take advantage of a novel technology for television displays—combining liquid crystals, a mirror-like surface & a silicon chip. It now appears that Intel has abandoned this effort.

Verizon Wireless announced that it would pay $3billion in cash for a group of spectrum licenses owned by Next Wave Telecom, a move that should significantly help it expand coverage for new subscribers. The extra licenses will give Verizon Wireless, the second-largest mobile telephone provider in the US, room to grow in 23 markets, including New York, Boston, Washington DC & Los Angeles. A total of 73million people live in these four metro markets alone. The licenses will also give Verizon greater ability to compete with Cingular Wireless, which became the biggest mobile telephone carrier when it completed its purchase of AT&T Wireless in 2004 October. The companies said that the deal for the licenses would be completed by the middle of 2005, when Next Wave is scheduled to leave bankruptcy protection. Next Wave has fought for control of the licenses in question with the federal government for over six years. Next Wave was the big winner in a giant spectrum auction held by the US Government through the FCC in 1996 but was unable to make the payments forcing it into bankruptcy in 1998. The FCC tried to recoup the licenses based on the fact that Next Wave was unable to pay for them but the courts said no several times. The spectrum sale to Verizon Wireless is subject to approval by the US Bankruptcy Court & the Federal Communications Commission (FCC). After a battle of five years in the courts, in 2003 the US Supreme Court ruled that government could not take back Next Wave's licenses even if they did not fully pay for them. In fact there was only about 10% of the cost of the licenses that was paid before Next Wave filed for protection under chapter 11 of the bankruptcy laws. In July, Next Wave sold some licenses in New York & New Jersey to Verizon Wireless for $930million. In 2003, Cingular bought Next Wave licenses in 34 other markets for $1.4billion. Verizon Wireless said it would pay for the purchase from Next Wave with cash from its continuing operations. Verizon Wireless, which is owned by Verizon Communications & Vodafone of Great Britain, added an industry leading 1.7million new customers in the third quarter of 2004. The company now has 42.1million subscribers. The additional spectrum will give Verizon Wireless enough capacity to add millions of customers as well as high-speed data services, which the company is now introducing.

Many of the largest banks are now taking proactive action to alert their customers about phishing (pronounced fishing). It actually refers to email that looks like it's from a trusted source, often a financial institution—but in reality is an attempt to lure people into providing personal or sensitive information to phony Internet sites. The collected information is then used to commit fraud or sold to others to commit fraud. The name phishing comes from the fact that the phony Internet sites are fishing for sensitive information. They will usually send out millions of fraudulent email messages hoping for some small percentage return. Attempts to close down most of the phony Internet sites is difficult as they usually spread out all over the globe. The warning emails usually cite several things that you can do to help protect yourself from becoming a victim of phishing. These include:

• Never type sensitive information into a popup window regardless of how legitimate it looks.
• Do not respond to emails that ask you to verify your sensitive information.
• Be highly suspicious of any grammatical or spelling errors as these usually indicate a fraudulent message.
• Whenever you receive a suspicious looking email message from an organization that you deal with insure that you contact the organization involved to determine how to deal with it.

Citibank has one of the most active anti-phishing programs. They can be reached at (888)285-9696. US Government recommendations to protect yourself can be found at the following two Internet sites:

• www.nipc.gov/warnings/computertips.htm
• iisw.cerias.purdue.edu/home_computing/topten.php

Microsoft continues to show strong results. The world’s largest maker of software was buoyed by continued strong worldwide sales of personal computers (PC). In the quarter that ended on 30 September 2004 the company reported an increase of 12% from the prior year. the company said it had a 10% increase in sales of operating systems (OS) for PCs, which it attributed to a similar rise in the number of PCs sold worldwide over the same period a year earlier. Microsoft is involved in three areas of the software business:

• OS software for PCs
• Software for powerful computers called servers
• Productivity software, i.e. Office, Word, Excel

The major growth area of the three in their business for the quarter was in the software for servers. That area of their business grew 19% during the quarter. The sales of OSs for PCs grew by about 10%. That was about the same rate of growth as the PC business had as well.

In a recent piece in the WSJ, The Jungle, page B8 2 November 2004, Erin White writes that despite all the people who have gotten into trouble through email many people continue to do it. By doing it she means sending something that should not be sent to the person to whom it is sent. She cites cases that have seen people fired just because they press reply all instead of reply. She also pointed out that many people think of email as a secure communication between them & the person they are sending the message to. This is often not the case as it can be read along the way from one computer to another. In the article a golden rule for email communication is cited—do not hit the send button unless you would be comfortable having your mother, or a competitor, reading what you have just written on the front page of a newspaper. Another example that was cited in the piece was that a woman sent an email message to a beauty products company complaining that her dog had eaten the company’s shampoo & became ill. She wanted to be paid for the cost of the vet & emotional distress. The customer service rep forwarded the message to the legal department that returned it to customer service writing that the woman was an idiot. The customer service rep wrote back to the woman but accidentally included the legal department’s comments. The woman became so furious she wrote to the CEO. If she was an idiot she is now an idiot with somewhat more money. In the end the company paid her several thousand dollars & no longer responds to customer complains via email, they only use telephone or regular USPS mail. The WSJ article did not say if the customer service rep was still working at the company. The WSJ article cited other examples as well but they are too numerous to list here. Just remember to be aware what you are sending & to whom via email for once you hit send, if you are online, it is gone & there is no pulling it back.

Starbucks has announced a further venture into its customer-centered technologies. It will serve, along with the coffee in its shops, a vast digital library of songs that its customers can listen to and download using Hewlett Packard tablet PCs and burn the music onto CDs that they can buy with their credit cards. The Hear Music media bars are at 15 Starbucks cafes in Seattle and at 30 cafes in Austin TX at this time. Starbucks worked with a range of HP hardware and software to create the system. The company chose HP Tablet PCs for its in-store listening stations, adding attractive aluminum frames and stronger headset cables to make them more durable. Touch-screen technology eliminates the need for an external keyboard. Store visitors can sit at a bar or a regular chair to view and hear music selections on a custom application running on the PCs, perusing a store-based database of more than 150,000 songs from a variety of genres that will be updated regularly. The songs will be stored on HP workstations, which will also support the creation of the professional-quality CDs. The cafes will also have HP printers that customers can use to print CD covers and inserts with personalized graphics. The first seven songs on one CD will cost $8.99, and each additional song will cost 99 cents. Customers will pay with their credit cards, which they can swipe themselves at each listening station. The credit information will be sent over Starbucks' in-store Wi-Fi networks, which were first developed in 2001 with T-Mobile. Even though the Wi-Fi connection exists, the PCs are hard wired to the music database via copper wire Ethernet connections for security reasons. HP and Starbucks would not disclose the cost of the system. Each store will have three to six listening stations. The system should be expanded to many more of the cafes in 2005. this fall

New research reveals that consumers are increasingly giving up their fixed line telephones

A global research study, conducted for Nokia, has identified a trend for consumers to move from their fixed landline telephones to use their mobile handsets for all or most of their voice calls. Fixed-to-Mobile Substitution (FMS) as the trend is called is occurring across the four major markets surveyed—Great Britain, USA, Germany & South Korea—with upwards of 45 million consumers estimated to now make all their voice calls from their mobile telephones in these four markets.

Among the first global surveys of FMS as a consumer trend, the research also suggests mobile could challenge fixed line connections for data access in the home as well. On average, those who claim they are certain or very likely to adopt a wireless service for data expect this to happen in 1 to 2 years. Interest is greatest among the young & those who already have broadband Internet access at home.

The research confirms consumer FMS is an ongoing evolution. The landline remains the connection of choice for longer calls from the home, with the exception of shorter calls to friends & to other mobile telephones, although differences do emerge by market.

The rational motivations for maintaining a landline subscription focus on price perceptions, for example 69% of respondents in Britain considered cost to be the key reason for choosing fixed calls ahead of mobile calls, more than any other country. But, the need for a landline for data & greater perceived reliability of the landline phone are important criteria in the minds of US & German consumers.

Emotional reasons to keep a landline telephone exert a surprisingly strong force on consumers. These center on the association of the landline telephone with the home & the closeness of the call experience.

The research reveals that in order to encourage greater FMS at home the mobile telephone needs to be strongly associated with value for money, good sound quality & reliable reception. Regardless of some reservations, there exists a general view among the respondents to the survey that the future will inevitably be wireless.

The perception is that wireless technology will improve, the quality & reliability issues will become less important & that data will be available through a wireless network for home Internet users. For these reasons the perceived value of the landline subscription is decreasing.

A perception of a higher price differential between a mobile & landline telephone also needs to be addressed in all markets. However, in many instances respondents were unaware of the actual price differential between their landline & mobile telephones. Several anticipated that, on comparing the total cost of their mobile subscription with the overall cost of their landline subscription, the price differential would be minimal & might actually favor the mobile.

A significant number, in particular in South Korea, consider they would not take out a new landline subscription on moving their house or flat. In fact among the South Korean sample, 65% of the respondents make all or most of their voice calls from a mobile telephone.

Within each market however, there are demographic differences that should be considered when developing FMS marketing campaigns. It seems women are more likely to use landlines for the majority of their calls.

Two groups can be identified:

• those who predominantly used landlines rather than mobiles were more likely to be women aged 35+ & homeowners
• those who use landlines exclusively were more likely to be women & aged 50+.

The most fertile market for FMS is the young professional group, who use their mobile telephone for most of their voice calls; are more likely to be male; middle to high income, & make a large volume of voice calls.

The quantitative fieldwork for the study was conducted during the second quarter of 2004. There was a total of just over 6,250 samples in the four markets surveyed.

Microsoft settles with some of its competitors to blunt the anti-trust case against it in Europe

Microsoft announced that it has reached legal settlements with two of its biggest adversaries in the software industry, Novell & the Computer & Communications Industry Association (CCIA). A major part of the agreement has Microsoft paying $536 million to Novell & an undisclosed amount to the trade group to resolve all outstanding antitrust complaints between the two groups & Microsoft.

Novell & the CCIA were two of the most prominent organizations pushing competition regulators on both sides of the Atlantic to take antitrust action against Microsoft. Their withdrawal from the legal fight against Microsoft follows similar settlements with Sun Microsystems in 2004 April & Time Warner (AOL) in 2003 May.

Microsoft seems to be hoping that with fewer big companies opposing it, the European Union's (EU) antitrust case against the company will be weakened & may in fact virtually collapse.

Microsoft's general counsel, Brad Smith, stated that after these recent settlements, that there is clearly less need for the EU persist with litigation on behalf of competition, when virtually all the competitors are now saying that their issues have been resolved to their satisfaction.

But the EU's competition regulator vowed to continue its fight, which is now in the appeals stage. In 2004 March, the EU found Microsoft guilty of abusing the dominant position of its Windows operating system (OS) & ordered the company to change the way it sells the program & pay a fine of 497million euros ($641million at current exchange rates).

A spokesperson for the commission in Brussels said that the out of court settlements don't change any elements of Microsoft's conduct in the marketplace that have occurred & have been the cause of the action by the EU. She further stated that the withdrawal of Novell & the CCIA from the appeal process would not affect the way the court would judge the case.

Real Networks, which makes software that competes with Microsoft's Media Player, which is provided along with the Windows OS, is still supporting the EU in its legal case. Real Networks' deputy general counsel said that Microsoft's settlements with Novell & the CCIA do not change the anticompetitive conduct condemned by the commission. He also said Real Networks was not in talks with Microsoft about reaching a similar settlement.

The legal settlement with Novell does not oblige Microsoft to license or share any of its technology or intellectual property rights with Novell, nor does it include any admission of wrongdoing.

Novell said its settlement involved only litigation concerning its OS NetWare, & that it would continue legal action against Microsoft for the harm caused to its word processing program Word Perfect, which was overpowered by Microsoft's rival Word program.

The CCIA said it was settling for the good of the industry, adding that Microsoft had now joined the trade group that it battled with across courtrooms for so many years. We expect that our relationship with Microsoft will enable us to address important issues impacting millions of people & the future of our industry said the chief executive of the association.

With Microsoft on board, the CCIA should be more effective in promoting greater Internet access around the world.

The withdrawal of Novell & the CCIA from the EU’s side in the continuing appeal might influence the way the court views the case. The CCIA is now actively seeking additional companies to enter the case against Microsoft.

Featured Book

Since Spam—email trying to sell you something, much like direct mail—is so much a part of every email user’s life this book should prove to be interesting. The items that the Spammers are usually trying to sell you are porn, pills, sexually enhancement tools & lower cost mortgages.

The book points out that one of the Spammer covered was grossing over $600,000 a month selling herbal male enhancement products via the Internet. The book’s author, Brian McWilliams, points out that the only reason that the major Spammers are willing to put up with the wrath & attacks of so many people & organizations is that they earn a lot of money doing it.

It was amazing that when the customer list was examined it was filled with people who should have known better than to purchase such a product. The list included business managers, CEOs, military personnel, housewives, schoolteachers & many others.

The Spam problem will be very difficult to control as long as demand remains so high. A return of a fraction of one percent is all that is needed to be a successful promotion. Remember that when a credit card company sends out the pre-approved solicitations for new account holders if they obtain a rate of return of over ½ of one percent it is considered successful.

The root cause of Spam is considered to be the furtive shoppers that are on the Internet. Furtive shoppers are usually defined as people who want convenient, anonymous access to shady products like porn, fake Rolex watches, drugs w/out prescriptions, cable de-scramblers & free government grants. These people create most of the demand that draws the Spam out.

Besides having bios on many current Spammers the book covers some of the technical sleight-of-hand & sleazy business practices that Spammers use.

Another aspect of the Spam problem that the book covers is anti-Spam cyber-activists. The FTC has asked Congress to create a bounty system for people who help catch Spammers. At this time anti-Spammers hunt down the Spammers as unpaid volunteers.

The book is Spam Kings, Brian McWilliams, O’Reilly, $22.95, hardback, ISBN:0-596-00732-9, 333 pages, order@oreilly.com / www.oreilly.com / (800)998-9938. It should be noted that Brian McWilliams is a veteran investigative journalist in the field of business & technology. He has worked for:

• Computer world
• Inc
• PC World
• Salon
• Washington Post
• Wired News

He has appeared on:

• BBC Radio
• Fox News
• Here & Now
• Marketplace
• NBC Nightly News

The book also covers many of the effects of the Can-Spam Act. S Marder