August 1998

INTERNET
AOL at 13 Million: Finally A 'Mass Market' (CyberTimes)
AOL Passes 13 Million Subscribers (Telecom AM)
Patent for Online Patents (CyberTimes)

MERGERS/RADIO
Riding Radio Merger Wave, Chancellor Will Buy Capstar (NYT)
CBS Plans Spinoff to Bolster it's Stock (ChiTrib)
Intermedia Forsees Additional Deals To Provide Data Service To Baby
Bell (WSJ)

FCC
Telecom Officials Complain of FCC Slowdown (Telecom AM)

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

AOL PASSES 13 MILLION SUBSCRIBERS (Telecom AM)
AOL AT 13 MILLION: FINALLY A 'MASS MARKET'?(CyberTimes)
Issue: Issue: Online Services
America Online (AOL) announced Aug. 27 that it had exceeded 13 million
members worldwide. AOL's system can now handle 750,000 simultaneous users,
up from 400,000 last year. The latest software update for AOL was released
July 30 and has been downloaded by 5 million members already. Bob Pittman,
president-COO, said the adoption of the new software is the "fastest-ever
adoption rate of any online product." (Kegger tonight at Steve Case's, man)
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/
[SOURCE: New York Times (CyberTimes), AUTHOR: Lisa Napoli]
http://www.nytimes.com/library/tech/98/08/cyber/articles/28aol.html

PATENT FOR ONLINE PATENTS
Issue: E-Commerce/Intellectual Property
As mentioned in a summary earlier this week, the U.S. Patent and Trademark
Office awarded Nat Goldhaber, the founder of CyberGold Inc., a patent for
online "attention brokerage." This move has fueled a debate over the use of
patents in the Internet age. Some see patents as a reward for creativity.
Others see the government as awarding patents to protect innovative business
models, and they fear that this will stifle competition in electronic
commerce. "This is a very significant trend," said Mark Lemley, a law
professor at the Univ. of Texas who specializes in intellectual property. He
said he finds patents disturbing, especially when they cover online business
models. What particularly troubles Lemley and other critics is that if
companies can obtain patents for business models then other potential
competitors could be kept from getting into the game which in turn could
hamper competition.
[SOURCE: New York Times (CyberTimes), AUTHOR: Matt Richtel]
http://www.nytimes.com/library/tech/98/08/cyber/cyberlaw/28law.html

==============
MERGERS/RADIO
==============

RIDING RADIO MERGER WAVE, CHANCELLOR WILL BUY CAPSTAR
Issue: Radio/Merger
Radio merger mania started about two years ago with deregulation. It has now
reached a new level with Chancellor Media Corp. announcing yesterday that it
plans to buy Capstar Broadcasting Corp. for $2.3 billion in stock plus
nearly $1.8 billion in assumed debt. The combined company would surpass CBS
as the nation's largest chain of radio stations. Chancellor would have 463
stations with more than 65 million listeners in 105 markets and revenues of
about $2.3 billion. [What?!? diverse local ownership? what is that?]
[SOURCE: New York Times (C4), AUTHOR: Allen R. Myerson]
http://www.nytimes.com/yr/mo/day/news/financial/chancellor-capstar.html

CBS PLANS SPINOFF TO BOLSTER ITS STOCK
Issue: Ownership
CBS Corp will sell ~20% of its radio and outdoor advertising operations by
year-end in an initial stock offering. The spinoff will be renamed Infinity
Broadcasting -- the name of the radio company before CBS purchased it from
Mel Karmazin, now president and COO of CBS, for $3.8 billion. Mr. Karmazin
will be chairman and CEO of Infinity Broadcasting. While the stock market
plunged 300 points yesterday, CBS stock rose $2.06. CBS was purchased by
Westinghouse for $5.4 billion in 1995. The combined company then decided to
concentrate on its media holdings and sell off its industrial operations.
Gaines writes, "Now the company has decided that all media aren't the same,
and a second split is under way."
[SOURCE: Chicago Tribune (Sec 3, p.3), AUTHOR: Sallie Gaines]
http://chicagotribune.com/textversion/article/0,1492,SAV-9808280376,00.html

INTERMEDIA FORESEES ADDITIONAL DEALS TO PROVIDE DATA SERVICES TO BABY BELLS
Issue: Telephony
Intermedia Communications Inc., a telecommunications company that offers a
full range of services, from long-distance to Internet access, is planning
partnerships with more of the Baby Bells once it is granted regulatory
approval for it's agreements with Ameritech and US West. David Ruberg,
Intermedia's chairman, and chief executive, says that the company would like
to provide data-transmission services for BellSouth, SBC and Bell Atlantic
as well. "We see no reason why we can't partner with the other three as
well," says Ruberg.
[SOURCE: Wall Street Journal (B5A), AUTHOR: Craig Karmin]
http://wsj.com/

===
FCC
===

TELECOM OFFICIALS COMPLAIN OF FCC SLOWDOWN
Issue: Regulation
"A lot of folks perceive the Commission as not functioning well," Cellular
Telecommunications Industry Association Senior VP Brian Fontes said of the
Federal Communications Commission. He's not alone in his opinion. FCC
operations have slowed and important decisions have been delayed, industry
officials say. "Industry representatives attributed the slowdown to a
variety of factors -- heightened congressional demands that require
time-consuming reports, the arrival of four new commissioners at once, more
differences of opinion among commissioners than in the past and lack of
strong leadership," TelecomAM reports.
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/

*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*
The Benton Foundation -- and especially the co-writers of Headlines -- would
like to thank Betsy Puckett for her hard work and dedication over the last
year. Today is Betsy's last day and we wish her all the best in her new
position.

"Bye, Betsy. We miss you already!"

EDUTECH
To Help Wire Schools South Dakota Turns to Prisons (CyberTimes)

INTERNET
Study Says 70 Million American Adults Use They Internet (NYT)

CABLE
TCI's cable phone on hold (ChicagoTrib)

LABOR/JOBS
US West and CWA Trade Charges While SNET Fights Back
With Ads (TelecomAM)

PRIVACY
Privacy Double-Cross (WP)

CORPORATE
U.S. Investigating Microsoft's Role in Intel Decision (NYT)
A Struggling Adobe Rejects Bid by Quark (NYT)
CBS Considers Cost-Cutting Measures As Programming Expenses
Skyrocket (WSJ)

WIRELESS
For Paging Industry, a Bet on Two-Way Gadgets (WSJ)

=======
EDUTECH
=======
TO HELP WIRE SCHOOLS SOUTH DAKOTA TURNS TO PRISONS
Issue: Edutech
The South Dakota Department of Corrections is involved in a novel project
designed to connect the state's schools to the Internet at relatively low
costs, while teaching criminals a marketable job skill. Crew members
participating in the project, called Wiring the Schools, are nonviolent
convicts currently serving time for minor offences in South Dakota state
prisons. They work pulling cable, installing electrical outlets and doing
the other work necessary to connect the state's classrooms to the Internet.
"It was better than sitting, just doing time. You got to learn a lot," said
Tony M.Janssen, who participated in the program while he was serving a
sentence for a drunk driving conviction. Raymond W. Christensen, coordinator
of the effort, said the program was launched around two years ago at the
suggestion of Governor William J. Janklow.
[SOURCE: New York Times (CyberTimes), AUTHOR: Pamela Mendels]
http://www.nytimes.com/library/tech/98/08/cyber/education/26education.html

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

STUDY SAYS 70 MILLION AMERICAN ADULTS USE THE INTERNET
Issue: Internet Use
A survey of online use released yesterday reports that more than one-third
of Americans over 16 use the Internet. This is an increase of more than 18
million people in the nine month study period through June 1998. The study
conducted by Nielsen Media Research and CommerceNet, estimates that the
largest increases are among blacks and American Indians, and among young
adults and women over 50. According to the study, 40.1 million men and 30.1
million women use the Internet and said percentage growth among the two
groups during the nine-month period was about equal. "Last fall, we thought
there might be a slight leveling off," said Loel McPhee, research director
at CommerceNet. "This isn't the case with the numbers we're seeing now. My
guess is we'll continue to grow until we hit the 50 percent mark"
[SOURCE: New York Times (BusTech), AUTHOR: The Associated Press]
http://www.nytimes.com/library/tech/98/08/biztech/articles/26traffic-sid...

=====
CABLE
=====

TCI'S CABLE PHONE ON HOLD
Issue: Cable/Telephony
TCI launched local phone service in a Chicago suburb two years ago. But in a
community of 75,000 people, only 500 households have switched from dominant
provider Ameritech. And even though AT&T wants TCI's cable telephony to be a
competitor in the local phone service market, TCI will be pushing high-speed
Internet access across its lines in the coming months. AT&T is waiting for
technology that will create a state of the art data network and allow the
company to charge super-low rates and still make money. TCI is currently
upgrading its network with fiber optics so it can provide more pay-per-view
channels and high-speed Internet access. If the proposed AT&T-TCI merger
goes through, Chicago will be the biggest market with the combined company's
infrastructure in place.
[SOURCE: Chicago Tribune (Sec 3, p.1), AUTHOR: Jon Van]
http://chicagotribune.com/textversion/article/0,1492,ART-13671,00.html

==========
LABOR/JOBS
==========

US WEST AND CWA TRADE CHARGES WHILE SNET FIGHTS BACK WITH ADS
Issue: Labor/Jobs
Talks continue on two fronts -- between the Communications Workers of
America (CWA) and US West, and CWA and Southern New England Telephone
(SNET). In US West territory, incidents of vandalism are on the rise and are
disrupting service. Rallies by workers are trying to prevent managers and
temporary workers from entering facilities. In Connecticut, the players are
competing through advertising -- workers expressing regret for the
inconvenience and SNET claiming that it is bargaining in good faith.
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/

========
PRIVACY
========

PRIVACY DOUBLE-CROSS
Issue: Privacy/Internet (Editorial)
Last week's Federal Trade Commission settlement with the GeoCities Web site
demonstrated that the government can enforce privacy standards on the
Internet. GeoCities was accused of misleading its 2 million clients about
the use of their personal information, telling customers that their data
would be released to a third party only with their permission. While the
government cannot regulate how Internet companies use consumer information,
they can prevent them from lying about it.
[SOURCE: Washington Post (A18), AUTHOR: Washington Post Editorial Staff]
http://www.washingtonpost.com/wp-srv/WPlate/1998-08/26/009l-082698-idx.html

=========
CORPORATE
=========

U.S. INVESTIGATING MICROSOFT'S ROLE IN INTEL DECISION
Issue: Antitrust
"Microsoft Corp. and Intel Corp. are so intertwined, so seemingly dependent
on each other for their success, that they are often referred to as a single
entity -- 'Wintel' -- in recognition of the degree to which Microsoft's
Windows operating system and Intel's microprocessors dominate the technology
of personal computing." But the government is now investigating whether
Microsoft used its power in the market to force even Intel, "its only real
peer," to shelve new technology efforts because they conflicted with
Microsoft's ambitions. This current look into Microsoft's past business
dealings directly relates to the federal government and state accusations
that Microsoft has used unfair business practices to protect its monopoly in
operating systems and to extend that monopoly into the new markets for
Internet software and commerce.
[SOURCE: New York Times (A1,D4), AUTHOR: Steve lohr & John Markoff]
http://www.nytimes.com/library/tech/98/08/biztech/articles/26microsoft.html

A STRUGGLING ADOBE REJECTS BID BY QUARK
Issue: Takeover Bid/Merger
Quark Ink., the graphic software publisher, said yesterday that it had
offered to acquire rival company, Adobe Systems Inc., at a premium to
Adobe's current stock price. Adobe turned down the offer. While Quark said
it was disappointed by Adobe's response and that it would continue to seek a
friendly transaction, it held out the possibility of a hostile takeover.
[SOURCE: New York Times (D1,D5), AUTHOR: John Markoff]
http://www.nytimes.com/yr/mo/day/news/financial/adobe-quark.html

CBS CONSIDERS COST-CUTTING MEASURES AS PROGRAMING EXPENSES SKYROCKET
Issue:Coorporate/ Television
The broadcast networks, concerned about their future in light of continual
strong performance by cable, have been paying astronomical prices for
popular shows in hopes of keeping audiences. NBC recently agreed to pay $13
million for each new episode of "ER". CBS, ABC and FOX just struck a $18
billion deal for the rights to NFL football. Despite this record spending on
sports and entertainment programming, network viewership continues to
decline. As a result, CBS Corp. is reviewing possible ways to cut costs and
increase profitability. While CBS reported a quadrupled net income in the
second quarter, executives feel under pressure to consider staff reductions,
outsourcing and other cost saving measures. No specific targets have been
set, and it will certainly be a challenge to cut heads and while keeping
the professional network look.
[SOURCE: Wall Street Journal (B2), AUTHOR: Eben Shapiro]
http://wsj.com/

======
Wireless
======

FOR PAGING INDUSTRY, A BET ON TWO-WAY GADGETS
The new trend in pagers is two-way devices. "To be a player in the future,
you're going to have a nationwide, two-way network," says wireless analyst
Darryl Sterling. Several communications companies including SkyTel,
BellSouth, and American Mobile Satellite Corp, already offer some form of
two-way data service. These pagers allow users to send messages back and
forth at the push of a button. Doug Brackbill and Steve Cox use this "high
tech form of passing notes" to consult with each other during marketing
meetings. Backbill compares it to baseball players exchanging signals during
a game; "We'll use them to confer privately on terms we're discussing with a
potential partner."
[SOURCE: Wall Street Journal (B1), AUTHOR: Stephanie Mehta]
http://wsj.com/

*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*=*

EDUCATION TECHNOLOGY
Schools get hooked on technology (ChiTrib)
Voice of Experience Dissents (ChiTrib)

TELECOMMUNICATIONS REGULATION
Court Rules City Has Right to Charge Franchise
Fees to Competitors (TelecomAM)
Bliley Expresses Concern About Reported $5 Billion of
Missing LEC Equipment (TelecomAM)

TELEVISION
Gore Commission Seeks New Delay (B&C)
FCC Wants HDTV Glitch Solved Soon (NYT)
After Drought, Networks Put More Women in Top Posts (NYT)

OWNERSHIP
FCC Flags Radio Deals for Further Analysis (B&C)
Cable Asks FCC to Raise Cap (B&C)

INTERNET
Marketers Ponder How to sell Soap Without the Operas (NYT)

SECURITY/ENCRYPTION
IBM Discovers Web-Hacking Preventative (WSJ)
2 Researchers Believe They Can Block Hackers (ChiTrib)

INTERNATIONAL
China Plans For a 'Smart Card' System Using Technology
From Schlumberger (WSJ)

JOURNALISM
Surfing the Web for News in a Blockbuster News Week (NYT)
Press Liability (ChiTrib)

LABOR
Phone Workers In Connecticut Start Strike (NYT)
Phone Workers Strike in Conn. (WP)

====================
EDUCATION TECHNOLOGY
====================

SCHOOLS GET HOOKED ON TECHNOLOGY
Issue: Ed Tech
Thirty schools in the Chicago area have been touted as "high-tech schools."
But, Poe reports, researchers say filling a school with the latest equipment
is only the first step in bringing kids into the a new era of education. The
technology must be used to help children learn which means an emphasis on
teacher training. "It seems there has been lots of emphasis on what schools
have bought lots of technology," said Andres Henriquez, a senior research
associate at the Center for Children in Technology in New York. "But what is
thought of least often is how that infrastructure is going to be integrated
with the school curriculum and how teachers will be trained." [For more on
technology in the classroom, see The Learning Connection
http://www.benton.org/Library/Schools/]
[SOURCE: Chicago Tribune (Sec 4, p.6), AUTHOR: Janita Poe]
http://chicagotribune.com/textversion/article/0,1492,ART-13515,00.html

VOICE OF EXPERIENCE DISSENTS
Issue: Ed Tech
Clifford Stoll, an astronomer and computer whiz, wrote a book called
"Silicon Snake Oil" about the failings of the Internet -- the massive
amounts of unsorted, untrustworthy information on the system and the
isolation it can bring. Mr. Stoll is now working on a book arguing *against*
computers in schools. The link below takes you to a recent interview with
Mr. Stoll.
[SOURCE: Chicago Tribune (Sec 4, p.4), AUTHOR: Dallas Morning News]
http://chicagotribune.com/textversion/article/0,1492,SAV-9808240005,00.html

=============================
TELECOMMUNICATIONS REGULATION
=============================

COURT RULES CITY HAS RIGHT TO CHARGE FRANCHISE FEES TO COMPETITORS
Issue: Role of Local Government
The U.S. District Court ruled August 14 that Dearborn, Michigan, has the
authority to charge right-of-way fees to competitive local exchange carriers
(LECs), even though the incumbent Ameritech doesn't have to pay them. In a
related case, Judge Lawrence Zatkoff of the
U.S. District Court, Eastern Michigan, agreed with Ameritech that it has
"vested state franchise rights" and no "reasonable jury could find Ameritech
is required to enter into a franchise agreement with the City of Dearborn
pursuant to its regulatory ordinance."
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/

BLILEY EXPRESSES CONCERN ABOUT REPORTED $5 BILLION OF MISSING LEC EQUIPMENT
Issue: Telephone Regulation
House Commerce Committee Chairman Thomas Bliley (R-VA) is "deeply concerned"
about the preliminary FCC audit indicating that major local exchange
carriers (LECs) can't find $5 billion worth of equipment recorded in their
books. Rep Bliley said that if carriers inflated their recorded investments,
consumers could be "overcharged millions of dollars" and there could be a
negative effect on competition. By September 4, Chairman Bliley wants the
FCC to answer detailed questions about what type of equipment is being
audited, when audits will be completed, what role the states have been given
in the audit procedure, how rates could be affected if carriers are missing
property recorded on the books, and what other FCC proceedings are affected
by the accounting records.
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/

==========
TELEVISION
==========

GORE COMMISSION SEEKS NEW DELAY
Issue: Public Interest/Digital Broadcasting
The Gore commission has been working to determine what the public interest
obligations of digital broadcasters should be. The commission now wants more
time and has asked the Administration to extend its report deadline from
October 1st to sometime in mid- or late December, said one commission
member. Members of the commission are meeting again on Sept. 9th to review a
preliminary draft of its final proposal. They expect the draft to include
suggestions for a voluntary code of conduct to be administered by the
National Association of Broadcasters (NAB). It will cover four program
areas, including: education, localism, minority interests and public
affairs. The code would also call for broadcasters to report on public
interest activities on a regular basis. "In some relatively clear and
explicit way, there has to be some accountability of the performance on
meeting the needs that have been ascertained," says Charles Benton, Chairman
of the "nonprofit media watchdog group" the Benton Foundation and a member
of the commission. While the NAB has not taken an official position on such
a code, it did make clear its opposition to it at a meeting earlier this summer.
[For more on the Commission see http://www.benton.org/Policy/TV/piac.html]
[SOURCE: Broadcasting&Cable (p.19), AUTHOR: Paige Albiniak]
http://www.broadcastingcable.com/

FCC WANTS HDTV GLITCH SOLVED SOON
Issue: HDTV
William Kennard, Chairman of the Federal Communications Commission, has
written a letter to industry leaders expressing his concern over a small
technical glitch that threatens to postpone the launch of HDTV broadcasts
that are scheduled to begin on Nov. 1, 1998. The problem involves a cable
needed to carry digital signals from set-top cable converter boxes to HDTV
sets. Chairman Kennard's letter demanded a quick solution to the compatibility
problem which would prevent cable subscribers from receiving digital
programming. He wrote, "I call on your industries to communicate to the
American public that these solutions will be available and to redouble your
efforts to enable the American public to receive digital broadcast
programming over cable for display on first generation sets."
[See the letter http://www.fcc.gov/Speeches/Kennard/Statements/stwek862.html
[SOURCE: New York Times (D4), AUTHOR: Joel Brinkley ]
http://www.nytimes.com/library/tech/yr/mo/biztech/articles/24fcc.html

AFTER DROUGHT NETWORKS PUT MORE WOMEN IN TOP POSTS
Issue: Gender/Employment
While it may have "been a bad year for women in television," as reported in
Aug. 3 Broadcasting & Cable's in reference to the recent departures of
several women from powerful roles in the industry, August has brought a
change in tide, with some high profile promotion of female executives. CBS,
NBC, and Disney have all placed women in top executive positions this month.
Most people are pleased to see the return of women to top jobs, but there
are skeptics who fear that these new appointees are not like the outspoken
pioneers who preceded them. Kay Koplovitz, founder and former president of
the USA network, offers cautious enthusiasm: "It's clear from these
appointments that the company still resides with the chief executive, and
those are still men." She adds that "the good news is we're finally
starting to see a shift in comfort level and confidence level of the men
making decisions, and they have confidence now in both men and women. I'm
thrilled to see it."
[SOURCE: New York Times (D1), AUTHOR: Lawrie Mifflin]
http://www.nytimes.com/yr/mo/day/news/financial/tv-women-media.html

=========
OWNERSHIP
=========

FCC FLAGS RADIO DEALS FOR FURTHER ANALYSIS
Issue: Competition/Public Interest
Officials at the FCC have invited public comments on the competitive impacts
of radio deals that could possibly give one or two companies a dominant
share of a local radio market. In a public notice this month, regulators
"flagged proposed deals in three markets and asked for comments on their
potential impact on local competition." In the notice, the Commission said,
"We request that anyone interested in filing a response to this notice
specifically address the issue of concentration and its effect on
competition and diversity in the market at issue." "In seeking the public
comments, regulators are pointing to their obligation to ensure that
approved deals serve the public interest."
[SOURCE: Broadcasting&Cable (p.18), AUTHOR: Chris McConnell]
http://www.broadcastingcable.com/

CABLE ASKS FCC TO RAISE CAP
Issue: Cable/Ownership
A number of cable operators have responded to an FCC proposal to alter its
restrictions on the number of cable companies that a company can own. The
current regulations set the limit at 30 percent of homes passed nationwide.
Tele-Communications Inc. (TCI) said that regulators should raise the cap to
40 percent and Time Warner called for raising the limit to 35 percent.
They, along with AT&T, argue that relaxed caps could help cable compete with
local phone companies to offer high-speed data services. A collection of
groups object to loosening the caps, including the Assoc. of Independent
Video and Filmmakers, the Consumer Federation of America and Consumers
Union. "The case for lower limits is stronger than ever," the groups said,
pointing to expanding coverage among the largest multiple system operators.
"While increased consolidation has undoubtedly allowed the cable industry to
benefit from economies of scale, these benefits have not reached the public."
[SOURCE: Broadcasting&Cable (p.19), AUTHOR: Chris McConnell]
http://www.broadcastingcable.com/

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

MARKETERS PONDER HOW TO SELL SOAPS WITHOUT SOAP-OPERAS
Issues: Internet/Advertising
The big unanswered question during the two-day Procter & Gamble Co.
conference on advertising and the Internet seemed to be, "Mr. Whipple, where
are you now?". The Internet is the first medium that has actually decreased
viewership of television and surfers of the Web have shown little
interest in the more traditional ad-style of serial storytelling. So now
high-powered industry execs are trying to figure out how to "sell soap
without soap operas." Participants in the conference struggled with issues
such as technical matters and whether banner advertisements and other online
vehicles can ever achieve the emotional resonance of a little boy in a Crest
television commercial bounding up to say "Look Ma! No cavities!" "I can't
think of one slogan developed on the Net that everybody knows," says Seth
Godin, the chief executive of Yoyodyne, an Internet promotion company. "It's
not a medium for the Great Big Idea." Though the Internet is often said to
be the first medium that enables marketers to interact with consumers one to
one, "it has yet to reveal itself as a means for mass marketing the communal
dreams in which a box of detergent or a can of soda comes to symbolize a way
of life."
[SOURCE: New York Times (D1, D7), AUTHOR: Saul Hansell]
http://www.nytimes.com/library/tech/98/08/biztech/articles/24advertising...

===================
SECURITY/ENCRYPTION
===================

IBM DISCOVERS WEB-HACKING PREVENTATIVE
Issue: Privacy/Encryption
International Business Machines Corp. is planning to announce today a new
system for sending information securely over the Internet. "The new method
promised to address a potential vulnerability in encryption systems used by
many Web sites to protect credit-card numbers and other personal information
while en route over the Internet." IBM executives have sought to
portray their latest development as a great benefit to electronic commerce,
but they stress that the encryption systems currently in use are practically
invulnerable to hackers. "I'm still buying books on-line all the time, so
obviously I'm not worried," said Charles Palmer, the senior manager of IBM
Research's network security and cryptography group.
[SOURCE: New York Times (B5), AUTHOR: Rebecca Quick]
http://www.nytimes.com/

2 RESEARCHERS BELIEVE THEY CAN BLOCK HACKERS
Issue: Security/Encryption
Zurich-based mathematicians Victor Shoup of IBM Research and Ronald Cramer
of the Swiss Federal Institute of Technology have developed a system for
securing information against computer hacker attacks. The researchers plan
to give away their findings for free to boost the integrity of Internet
electronic transactions and online privacy. "Businesses and consumers can
have greater confidence in Internet transactions because we've effectively
closed down the only way around a cryptosystem's main line of defense," Jeff
Jaffe, general manager for IBM's security products and services, said in a
statement.
[SOURCE: Chicago Tribune (Sec 1, p.6), AUTHOR: Reuters News Service]
http://chicagotribune.com/textversion/article/0,1492,SAV-9808240168,00.html

=============
INTERNATIONAL
=============

CHINA PLANS FOR A 'SMART CARD' SYSTEM USING TECHNOLOGY FROM SCHLUMBERGER
Issue: International
China's consumer market is about to become the most ambitious testing ground
for "smart cards" to date. The People's Bank of China plans to distribute as
many as two million smart cards, plastic payment cards that have an embedded
computer chip, next year. The cards and electronic machines that process
them will be provided by Schlumberger Ltd., the New York technology and
oil-industry services business. Schlumberger will also train consumers and
clerks is how to use them.

==========
JOURNALISM
==========

SURFING THE WEB FOR NEWS IN A BLOCKBUSTER NEWS WEEK
Issue: Journalism/ Internet
Last week brought a noticeable increase of visitors to World Wide Web news
sites. A record amount of traffic was reported on both Monday,
during President Clinton's testimony, and during Thursday's military strikes. In
addition to seeking out the up-to-the-moment information on the Web, people
are also eager to share their opinion online. "The promise and expectation
of the Internet is the ability to reach out and touch everyone," says Jim
Schulte, editor of USA Today's online edition. "That's the whole strength.
Everyone gets their 2 cents in."
[SOURCE: New York Times (D3), AUTHOR: Lisa Napoli]
http://www.nytimes.com/library/tech/yr/mo/biztech/articles/24surf.html

PRESS LIABILITY
Issue: Journalism
"The more perceptive among us are coming to understand the Monica Lewinsky
saga for what it really is -- this year's O.J. Simpson story. With the
advent of CNN, cable talk shows and Internet scandal sheets, there must
always, from now on, be an 'O.J.' story." McCarron criticizes the press who
suggested that last week's bombings were 'Wag-the-Dog'-type chapters in this
year's OJ story. "Sooner or later, if enough of you complain loud enough, we
will get better. We can't get any worse."
[SOURCE: Chicago Tribune (Sec 1, p.13), AUTHOR: John McCarron]
http://chicagotribune.com/

=====
LABOR
=====

PHONE WORKERS IN CONNECTICUT START STRIKE (NYT)
PHONE WORKERS STRIKE IN CONN. (WP)
Issue: Labor/Local Telephone
In the latest local telephone strike of the summer, over 6,000 workers form
the Southern New England Telecommunications Corporation (SNET) began
picketing the Connecticut company on Sunday. Workers struck after the break
down of contract negotiations in which the union was asking for better
health-care benefits and more competitive wages. The Communication Workers
of America (CWA), who represents the striking workers, claims that SNET
employees are receive 20-25 percent less than industry average for the same
work. CWA workers reached a settlement with Bell Atlantic after a two-day
strike earlier this month, while about 34,000 CWA members are reaching the
second week of a strike against Denver based US West.
[SOURCE: New York Times (A17), AUTHOR: Amy Waldman]
http://www.nytimes.com/yr/mo/day/news/national/regional/ct-phone-strike....
[SOURCE: Washington Post (A7), AUTHOR: Bloomberg News]
http://www.washingtonpost.com/

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Let me get this straight -- "[The Internet]'s not a medium for the Great Big
Idea." But television is. OK.

UNIVERSAL SERVICE
FCC Limits School Fund for Internet (ChiTrib)

TELEPHONE REGULATION
Eighth US Appeals Court Upholds FCC Access Charge Order (TelecomAM)
Internet Service Providers Victorious on Access Fees (NYT)
Justice Department Recommends Against BellSouth Long
Distance Bid (TelecomAM)

TELEVISION
HDTV: High Definition, High in Price (NYT)
Image Doctors Who Even Deliver News Reports (NYT)

RADIO
FCC Takes a Harder Look at 'Microradio' Stations (NYT)

MINORITY OWNERSHIP/ADVERTISING
FCC Probes Claims of Advertiser Bias (WP)

INTERNET CONTENT/CHILDREN
A Serious Defense of Free Speech by the Comic Book Industry (WP)

FREE SPEECH
Teaching Parents How To Protect Children Online (NYT)

SPECTRUM/AUCTIONS
FCC Sets Re-Auction of C-Block Licenses for March 23 (TelecomAM)

JOURNALISM
Columnist Barnicle Quits as New Allegations Surface (ChiTrib)

=================
UNIVERSAL SERVICE
=================

FCC LIMITS SCHOOL FUND FOR INTERNET
Issue: Universal Service
Suburban schools in the Chicago area may have to delay projects to wire
classrooms or find extra money in their budgets. Cuts in the Federal
Communications Commission's erate program mean that only the neediest
schools will receive discounted services. The Chicago public schools have a
good chance of receiving the nearly $23 million they have requested under
the program. About 83% of Chicago Public Schools students qualify for the
federal school lunch program. The FCC will focus funds for wiring projects
to schools with 50-100 percent students eligible for the lunch program.
[SOURCE: Chicago Tribune (Sec 2, p.1), AUTHOR: Mark LeBien]
http://chicagotribune.com/textversion/article/0,1492,SAV-9808200241,00.html

====================
TELEPHONE REGULATION
====================

EIGHTH U.S. APPEALS COURT UPHOLDS FCC ACCESS CHARGE ORDER
Issue: Telephone Regulation
The Federal Communications Commission's batting average got a little bit
better yesterday when the 8th U.S. Appeals Court of St. Louis, ruled that
the Commission had acted "reasonably" in reforming the access charge
structure last year. The three-judge panel said in a unanimous decision that
its job wasn't to determine whether the FCC "made the best choice" but
rather "whether the FCC made a reasonable selection from among the available
alternatives." There were three main challenges to the FCC's order: 1)
BellSouth, Cincinnati Bell, SBC and U S West complained that the transition
from implicit to explicit subsidies occurred too fast and left them without
enough money to support universal service -- the LECs
contended that the FCC decision to continue capping the SLC creates another
implicit subsidy, and also questioned why the FCC exempted purchasers of
unbundled network elements (UNEs) from contributing to universal service
support through access charges; 2) Bell Atlantic and Ameritech, joined by
the BellSouth group, questioned the FCC's decision to exempt information
service providers (ISPs) from paying access charges; and 3) MCI, Cable &
Wireless and LCI complained that the FCC should have prescribed lower access
charges through regulatory
action rather than relying on a market-based approach. The court ruled that
1) the FCC was acting under the jurisdiction of the 1996 Telecom Act when
that it decided that "competitive pressures in the local exchange market
will not threaten universal service during the interim period" until the
permanent mechanism has been fully implemented;" 2) capping residential SLC
does not create an implicit subsidy; 3) exempting purchasers of UNEs from
paying interstate access charges doesn't violate the Telecom Act; 4) the FCC
has taken the position on the ISP exemption for 14 years and the Court
agrees with the agency that it's not clear that the ISPs use the network in
the same manner as long distance companies, which do pay access; and 5) the
Commission has the authority to choose a market-based approach to lowering
access fees if
it wants. The decision upholds the new structure that includes a flat-rated
presubscribed interexchange carrier charge (PICC) and an increased
subscriber line charge (SLC) for
nonprimary residential and multibusiness lines. [Read FCC Chairman Kennard's
response at http://www.fcc.gov/Speeches/Kennard/Statements/stwek864.html]
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/
see also:
APPEALS COURT UPHOLDS FCC PLANS ON TELEPHONE FEES
[SOURCE: Washington Post (E2), AUTHOR: Associated Press ]
http://www.washingtonpost.com/wp-srv/WPlate/1998-08/20/210l-082098-idx.html
U.S. APPEALS COURT UPHOLDS FCC RULES INTENDED TO LOWER LONG-DISTANCE RATES
[SOURCE: Wall Street Journal (B7), AUTHOR: John Simons]
http://wsj.com/

INTERNET SERVICE PROVIDERS VICTORIOUS ON ACCESS FEES
Issue: Regulation
Internet Service Providers won a huge victory yesterday when an appeals
court upheld an FCC decision to exempt the providers from paying local phone
companies the access fees that the local companies charge long-distance
carriers. The ruling was a blow to the Baby Bells and other local phone
companies, which had argued that the Internet Service Providers use the same
local phone lines as long-distance carriers to connect consumers to global
networks and should thus be subject to the same fees. The local companies
also argued that on a per-customer basis, Internet users drain local phone
networks more than long-distance users, because Internet connections usually
last for hours as opposed to minutes. In another set-back for local phone
companies, the court also upheld FCC regulations established to reduce the
$23 billion in access fees paid by long-distance carriers to $1.7 billion.
The commission estimated that the savings passed on to the average
long-distance customer would be about $2 a month. [Wow, curiously close to
the amount needed to fund universal service programs like the erate]
[SOURCE: New York Times (D2), AUTHOR: Andrew Ross Sorkin]
http://www.nytimes.com/library/tech/98/08/biztech/articles/20phone.html

JUSTICE DEPARTMENT RECOMMENDS AGAINST BELLSOUTH LONG DISTANCE BID
Issue: Long Distance
The Department of Justice has recommended that the FCC deny BellSouth's bid
to offer long distance service to Louisiana customers. The company contended
that the growing use of PCS service by residential consumers in Louisiana
offered enough competition to satisfy the 1996 Telecom Act's checklist
requirements. "Many of the problems that we identified in [BellSouth's first
petition] still have not been resolved," said DoJ Antritrust Chief Joel
Klein. He said BellSouth is making progress but "much remains to be done to
ensure that Louisiana local markets are open to competition as required by
the Telecommunications Act." Bell South responded by saying it is clear that
the DoJ "is not supporting the intent of
Congress, federal courts or even the Administration's goal of lowering
prices, spurring competition and giving American consumers more choices."
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/

==========
TELEVISION
==========

HDTV: HIGH IN DEFINITION, HIGH IN PRICE
Issue: Digital TV
Last year, when manufacturers were lobbying the FCC to pass rules on
digital-television, several major companies said the sets would cost $1,000
to $1,500 more than the conventional high-end projection sets. They
estimated that the most expensive ones would cost $4,000 to $5,000. Now for
the sticker shock -- the least expensive ones now on the market will cost
$8,000! Manufacturers explain the price jump, saying that some on the
components used to build these sets cost more than they had originally
expected. But in addition to the cost of the HDTV set, in order to receive
high-definition programming, owners of these monitors will also have to buy
at digital tuner box -- costing about $1,700! With prices like these,
television stations that are spending millions to make the transition to
digital broadcasting, starting Nov. 1, are saying that the money is being
wasted because no one will be able to afford such expensive sets. The
Federal Government is eager to speed the transition to digital television
because once the transition is complete and almost everyone has a digital TV
set, the old channels will be taken back and auctioned for other uses. The
proceeds from those auctions, currently estimated at $6 billion, are already
being calculated into Federal budget projections. But many believe that the
general public will not embrace HDTV monitors until prices fall by 90
percent or more. Mark Know, a senior manager for Samsung Electronics
Company, estimates that an HDTV will probably sell for $3,000 by 2002.
That's certainly better than $8,000, but according to Todd Thibodeaux, a
senior economist with the Consumer Electronics Manufacturers Assoc., most
consumer electronics products only reach true mass acceptance after the
price falls below $500. [...hmmmm, TV set or car, TV set or house, TV set or
schooling, TV set or...]
Mr. Brinkley appeared this morning on C-SPAN's Washington Journal. For those
of you with cable TV, tomorrow's Washington Journal show (from 7:30-10am ET)
will focus on digital television. Guests will be:
Steve Effros, President/ Cable Telecommunications Assn.
Gary Shapiro, President/Consumer Electronics Manufactureres Assn.
Paul Misener, Chief of Staff to FCC Commissioner Harold
Furtchtgott-Roth
[SOURCE: New York Times (E1,E8), AUTHOR: Joel Brinkley]
http://www.nytimes.com/library/tech/98/08/circuits/articles/20hdtv.html

IMAGE DOCTORS WHO EVEN DELIVER NEWS REPORTS
Issue: Public Broadcasting
In recent years, public broadcasters' have begun carrying ever more
expansive commercials, which go directly against the rational for what used
to be known ("in more wishful times") as noncommercial television. Granted,
public broadcasting, being continually faced with a lack of funding, needs
the money. But is that any reason for nonprofit broadcasting to sound more
and more like for-profit broadcasting? As originally conceived, it was hoped
that public broadcasting would supply programs that would otherwise not make
it in the marketplace, and it would respect its audience by eliminating the
"hokum" of advertising -- instead being a commercial-free, hypocrisy-free
zone. Unfortunately, there is currently no observable surge of resistance to
this filtering in of commercials. While at present PBS programs are not
constantly interrupted by "messages," the direction appears to be dire and
commercialization seems to be a bow to reality. The nation doesn't want a
purer form of television enough to pay for it, and thus the merger of PBS
ideals with business interest seems to be inevitable. "The question is
whether PBS programmers can remain uninfluenced by corporate largess in
their choice of subjects to play up and those to avoid."
[SOURCE: New York Times -- 8/19/98 -- (B2), AUTHOR: Walter Goodman]
http://www.nytimes.com/

=====
RADIO
=====

FCC TAKES A HARDER LOOK AT 'MICRORADIO' STATIONS
Issue:
In the past year, the FCC has closed down more than 250 unlicensed radio
stations. Many of the operators have closed their stations voluntarily but
feel that it is an infringement upon their rights to free speech. But while
the FCC may be aggressively pursuing and shutting down microradio stations,
it also is considering licensing radio stations that broadcast below 100
watts of power, compared with 50,000 watts for major stations. Since the
enactment if the Telecommunications Act of 1996, the radio industry has been
on a consolidation trend, leaving control of most stations in the hands of
powerful media companies. FCC Chairman, William Kennard, has said he is
deeply troubled by this trend. "With consolidation, radio has become the
province of multibillion-dollar corporations," Kennard said. "The loss of
small religious stations and local programming is very unfortunate."
[SOURCE: New York Times (E7), AUTHOR: Matt Richtel]
http://www.nytimes.com/library/tech/98/08/circuits/articles/20pira.html

==============================
MINORITY OWNERSHIP/ADVERTISING
==============================

FCC PROBES CLAIMS OF ADVERTISER BIAS
Issue: Minority Ownership/Advertising
Officials from the Federal Communications Commission (FCC) have announced
that they will begin investigating allegations that advertisers
discriminated against radio and TV stations that are either owned by or
attract substantial minority audiences. For many years, minority
broadcasters have charged advertisers with paying less for airtime on
minority stations or avoiding them altogether. "Advertisers simply don't
place the same value on black consumers as on white consumers," says Robert
Holding, chief executive of BET Holdings INC. In response to the
long-standing concern over differential treatment, the FCC will launch an
inquiry into factors that influence advertising buying decisions.
[SOURCE: Washington Post (E1), AUTHOR: Paul Farhi]
http://www.washingtonpost.com/wp-srv/WPlate/1998-08/20/192l-082098-idx.html

===========
FREE SPEECH
===========

A SERIOUS DEFENSE OF FREE SPEECH BY COMIC BOOK INDUSTRY
Issue: Free Speech
In the next few weeks a book called "Free Speeches," published by Oni Press
in conjunction with the Comic Book Defense League (CBDL), should be
available in bookstores across the country. The book is comprised of
speeches and illustrations that advocate free speech and criticize
censorship. Comic books have often been the targets of obscenity charges
because of the long-standing perception that comics are a medium aimed
solely at children. The CBDL was created to help defend the rights of comic
book creators and sellers against such legal attacks. It is their belief
that comics should be protected by the same constitutional rights as
literature, film, or any other art. For more information about "Free
Speeches" or the CBDL, you can check out its web site at http://www.cbdf.org.
[SOURCE: Washington Post (B4), AUTHOR: Bill Radford (from The Gazette)]
http://www.washingtonpost.com/

=========================
INTERNET CONTENT/CHILDREN
=========================

TEACHING PARENTS HOW TO PROTECT CHILDREN ONLINE
Issue: Children
In a Seattle classroom, vice detective Leanne Shirey is teaching parents how
to protect their children from online predators. She warns parents of how
easy it is for children to find trouble on the Internet, even when they are
not looking for it. "They can decide, ooops, I'm in the wrong place, if they
want to learn about the White House and end up in a porn site," notes Terri
Dowling, parent of a 14-year old Internet user. Detective Shirey suggests
that Internet safety classes like hers are "something every police
department could offer within two years for free."
[SOURCE: New York Times (E3), AUTHOR: Tina Kelley]
http://www.nytimes.com/library/tech/98/08/circuits/articles/20ugee.html

================
SPECTRUM/AUCTIONS
================

FCC SETS RE-AUCTION OF C-BLOCK LICENSES FOR MARCH 23
Issue: Spectrum/Auctions
The FCC set March 23 for the re-auction of C-block licenses surrendered
under the debt relief rules adopted last fall or held by the agency pending
the new sale while FCC Chairman William Kennard again asked Congress to
adopt legislation "to clarify that licenses to use the public
airwaves are not private property that can be tied up in bankruptcy
litigation." At least three large C-block bidders are in bankruptcy
proceedings -- General Wireless, NextWave Telecom, Pocket Communications.
Businesses with less than $40 million in gross revenues will get a 15
percent bidding credit, and bidders with less than $15 million in revenue
will have a 25 percent credit, the agency said, following a similar format
used in the F-block auction. [See the FCC's news release
http://www.fcc.gov/Bureaus/Wireless/News_Releases/1998/nrwl8036.html and
Chairman Kennard's statement
http://www.fcc.gov/Speeches/Kennard/Statements/stwek863.html]
[SOURCE: Telecom AM]
http://www.telecommunications.com/am/

==========
JOURNALISM
==========

COLUMNIST BARNICLE QUITS AS NEW ALLEGATIONS SURFACE
Issue: Journalism
A week after avoiding an attempt to fire him, Boston Globe columnist Mike
Barnicle has resigned amid allegations that he fabricated a 1995 story.
There are also reports that the Boston Phoenix, an alternative weekly, will
publish a story Thursday accusing Barnicle of plagiarizing a 1961 book for a
1986 column. Announcement of Barnicle's resignation was met with cheers in
the Boston Globe news office.
[SOURCE: Chicago Tribune (Sec 3, p.1), AUTHOR: Sallie Gaines]
http://chicagotribune.com/textversion/article/0,1492,SAV-9808200370,00.html
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