Clips February 24, 2003

[Lillie Coney <lillie.coney@xxxxxxx>]

Clips February 24, 2003

ARTICLES

Small Businesses Wary of Internet Sales Tax Plan 
The Battle Over Online Sales Tax Turns Acrimonious
Bulk of $60 billion in federal IT spending goes to services 
Studios, Firms in Piracy Talks
Surgical Expertise, Undone by Error 
CMS sets health care e-payment standards
China Serves As Dump Site For Computers 
System break-in nets hackers 8 million credit card numbers
Faithful question the holiness of electronic tithing
Ratings Agency Says It Erred in Measuring Web Site Use
Broadband Companies Cheer Ruling
Santa Clara County faces key decision on electronic ballots
How the Protesters Mobilized
Trial Near in Patent Case on Key Internet Technology
E-Commerce Sales Rise in Fourth-Quarter


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Washington Post
Small Businesses Wary of Internet Sales Tax Plan 
By Brian Krebs
Friday, February 21, 2003; 10:56 AM 

A plan to require businesses to collect taxes on their online sales has left many small merchants worrying how they would comply with what they say amounts to a complicated and burdensome mandate.

Businesses that sell goods online are only required to collect sales taxes if they have a physical presence in the same state as the online buyer. But a group of more than 36 states, united under the banner of the Streamlined Sales Tax Project, seeks to change that rule by simplifying tax laws nationwide to make it easier to tax e-commerce transactions.

The prospect of filling out forms and mailing checks to the 45 states that levy sales taxes concerns Reyne Haines, founder and co-owner of JustGlass.com, an online sales portal for glass collectibles.

"This is really going to put the hurt on the little guys," he said. "With the costs and all the paperwork that would go into that, I could see where this could get to the point where many of our vendors feel it's no longer worth it for them."

Small businesses appear to have an ally in online auction giant eBay, which provides the online home for more than 75,000 entrepreneurs who earn $1,000 to $150,000 a month selling items through its service. While most of these sellers routinely collect sales taxes from customers who live in the same states where they have a physical business location, almost none of them do so across the board, according to eBay spokesperson Kevin Pursglove said.

"It's one thing for small sellers to handle tax laws in the state where they reside, but when that same seller then has to be responsible for understanding tax laws in 45 states and filing 45 separate tax returns, that puts the seller at a distinct disadvantage," he said.

Larger businesses have extensive systems in place for computing and collecting sales taxes in a multitude of states and jurisdictions, but an online sales tax mandate on small firms "could easily become bureaucratic nightmare," Pursglove said.

Tom Wynn, proprietor of bidabit.com - an online electronics store that gets much of its traffic through eBay - called the sales tax plan a nightmare in waiting. 

"This really isn't the right time to add new taxes because a lot of retailers are hurting right now. I could see (the agreement) forcing more people to buy locally, and that could put many of us out of business," Wynn said. 

Adding a small-business exemption to the Streamlined Sales Tax Project was ruled out by the participating states in their rush to achieve consensus on the plan, according to Utah Governor Mike Leavitt (R), a leader in the Internet sales tax effort.

"The idea was to create enough certainty that people could get the picture without trying to go into such elaborate detail that it precluded our ability to respond to these concerns going forward," he said.

Leavitt, a leading figure in the effort to reconcile tax laws to the realities of online commerce, said he supports exempting small businesses from collecting online sales taxes. He said that he and many others in the movement believe that Congress will only approve online sales tax initiative if such an exemption is included.

In Congress, Sen. Byron Dorgan (D-N.D.) is already making plans to introduce legislation this year that would approve the states' online sales tax plan with a small business exemption.

"We're conscious about the need to address the issue with respect to the small retailers who [are] not going to have the capacity to make the collection effort," Dorgan said.

Neal Osten, director of communications and interstate commerce for the National Conference of State Legislators, said Congress probably will exempt online stores that make less than $5 million in annual sales.

"This would effectively exempt most businesses that have only a relatively small amount of remote sales," Osten said. NCSL has been one of the key players in the Internet tax effort, helping the states draft legislation to implement the Streamlined Sales Tax agreement. 

The National Retail Federation, whose members include some of the nation's biggest retailers, supports adding a small business exemption to the agreement, said Maureen Riehl, the group's vice president of state and governmental relations. 

"We consider an exemption not only politically reasonable, but fair," Riehl said. "To force small retailers to deal with this could in fact just keep people from opening stores online, and that's not what we're trying to do."

The issue has split the members of the small business community's leading voice in Washington, the National Federation of Independent Business. The group, which has traditionally been one of the most formidable foes of new state and federal regulation, has declined to take a stance on online sales taxes because its members remain divided on the issue, according to spokeswoman Mindi Boyagian.

One member of Congress, Rep. Chris Cox (R-Calif.), is betting against the national online sales tax project altogether. "[It] won't take too many senators to stop [the plan] from happening and there are enough senators that are hell-bent on making sure it never happens that it won't."

The Republican Congress and President Bush hold a powerful hand in the debate over taxing Internet sales. A 1992 Supreme Court ruling makes clear that Congress must amend existing law to make it possible for sales taxes to be applied against all online sales.

To date, Congress has demurred several times on whether to allow states to require retailers to collect sales taxes on online purchases. Instead, Congress has twice chosen to extend a moratorium on new taxes that target Internet access taxes, as well as discriminatory or double-jeopardy taxes. Lawmakers, including Dorgan, have sought unsuccessfully to include provisions that would approve the simplification plan.

The states argue that the online tax effort does not involve new taxes, but is merely a better way to enforce sales tax laws already on the books. Most states have "use tax" laws that require people to file a special form for reporting the taxes they owe on items bought online, but such laws are notoriously difficult to enforce, and few people actually comply with them. 

But even if an exemption for small businesses is not included in the final plan, the Streamlined Sales Tax plan strives to minimize the collection burden on all retailers. Under the plan, sellers would be insulated from audits by the states for over- or under-collection of taxes, provided they contract with a state-approved tax software vendor, such as Salem, Mass.-based Taxware, a division of GovOne Solutions. The company calculates sales tax rates for sales across the country and handles the collection and remittance of those taxes to state authorities. Vendors could also choose to certify their in-house collection processes, an option more likely to appeal to larger retailers with substantial systems already in place. 

Leavitt said it's likely that the states will revisit their plan once 10 states representing 20 percent of the U.S. population ratify it -- a benchmark set by the participating states to determine when the online sales tax collections will actually begin on a voluntary basis by retailers. 

According to Leavitt, two issues likely to be revisited are developing a single tax return merchants could use in remitting online sales taxes to all 45 states, and determining whether and how much relief should be paid to businesses to compensate them for processing the sales taxes. Many states currently limit the amount to less than $100 per month.

Several large retailers are not waiting for the states and Congress to act. Wal-Mart, Toys R Us and Target recently began voluntarily collecting sales taxes on all Internet sales, a move influenced by the fact that applying the taxes will make it easier for their online customers to return or exchange items at their physical locations.
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New York Times
February 17, 2003
The Battle Over Online Sales Tax Turns Acrimonious
By BOB TEDESCHI

The online tax debate has suddenly become loud and bitter, with Wal-Mart Stores and Amazon.com as the leading antagonists. But the recent activity over Internet sales taxes may have only minimal impact on consumers and tax collectors, many retail executives and industry analysts say. 

That is because many of the biggest traditional merchants, including Sears, Roebuck; Gap; and Circuit City Stores, have long been collecting sales taxes from their online customers. And the biggest online tax resistors  Amazon, eBay and Dell Computer  seem unlikely to start collecting sales taxes any time soon.

The Internet tax debate has drawn considerable publicity in light of recent moves by a group of states to propose a simplified uniform tax code to stimulate collection of online sales taxes, as well as decisions by Wal-Mart, Target, Toys "R" Us and other big retailing chains to begin collecting such taxes. But online retailing analysts say the flurry of activity means more politically than economically, because Wal-Mart and the other new converts are not yet big e-tailers, while the states still have a long road ahead of them in efforts to bring companies like Amazon to heel.

Analysts say the online sales taxes from the recent new retail converts are likely to yield little more than $30 million in new online sales tax revenue this year  which would not amount to much as it is split up among the nation's 7,500 or so state and local tax jurisdictions. 

And "from the consumer's standpoint, this is just not a big deal," said Kate Delhagen, a retail analyst for Forrester Research, a technology consultanting firm, who said that customers who had already been paying sales taxes for online purchases seemed to care little about the incremental cost.

Ken Cassar, an analyst with Jupiter Research, agreed, noting that in a recent Jupiter survey, 82 percent of consumers said taxes had no effect on their online shopping. 

In any case, the largest portion of the $51 billion total online sales that Jupiter is forecasting is expected to go to big Internet-only retailers that have shown little inclination to collect sales taxes. 

Holdouts like Amazon resist collecting sales taxes because they say it would be too burdensome to collect and dispense them on behalf of so many different jurisdictions. And they currently have federal law on their side. 

The Supreme Court ruled in 1992 that a company selling only online, or through catalogs or by telephone, is not obliged to collect local sales taxes from customers, except in states where the merchants actually have a physical presence, like a warehouse or a call center. In taxation parlance, such physical presences establishes a "nexus" between the retailer and those states. 

Traditional merchants have long argued that their own online divisions are at a pricing disadvantage because they must either collect sales taxes in each state where they also have a store, or must adopt burdensome policies to avoid creating a nexus. For instance, Toys "R" Us had for years barred customers from returning online purchases to its stores, in part because doing so would constitute a nexus between the stores and the Web site. 

That is why traditional retailers, seeking to level the playing field, have tended to take sides with the states in efforts to create the same tax rules for all Internet merchants. The main force in this campaign is the Streamline Sales Tax Project, an organization representing 36 states and the District of Columbia. Among other goals, the group hopes to make it easier for companies to collect taxes around the country by having states agree to a common set of definitions about which types of items are taxable and which are not. 

Back in November, the group agreed on definitions for about 90 percent of the items on its list, paving the way for representatives to go back to their individual states to start working on legislation that would bring tax codes into compliance with the project's standards. Diane L. Hardt, the tax administrator for the Wisconsin Department of Revenue and the co-chairwoman of the Streamline Sales Tax Project, said last week that at least 31 states were in the process of drafting such legislation. 

Ms. Hardt predicted the next step would come this summer, when industry groups like the National Retail Federation and state organizations like the National Governors Association "will go to Congress to ask that those states that enacted tax simplification legislation be allowed to mandate tax collection from retailers that don't have a physical presence in their state." 

The sales tax advocates would then have a double-barreled argument for any federal legislators who might resist allowing states to mandate online sales tax collection: not only are states making it easier for retailers to collect taxes for remote purchases, but the nation's biggest retailers are already doing so. 

The opponents of online sales taxes say the recent move by Wal-Mart and others to begin collecting the taxes are meant to support such lobbying efforts. "It's a P.R. stunt," said H. Robert Wientzen, the chief executive of the Direct Marketing Association, a trade group for e-tailers and catalog and other direct-mail marketers. 

Mr. Wientzen argued that it might be easy for big retailers like Wal-Mart and Target to start collecting sales taxes from their customers "because they have huge tax departments worrying about this issue." But for small or moderate Internet companies "it would be a huge expense and a big deal," he said. "The real Internet companies would really have a tough time doing this." 

For Amazon, the decision by Target and Toys "R" Us to begin collecting sales taxes for online purchases puts it in a delicate position. Because Amazon operates online stores for both companies, it will have to collect sales taxes for them  even as Amazon continues to oppose mandatory sales taxes as too cumbersome for itself. 

Bill Curry, an Amazon spokesman, said the company already had a "sales tax engine"  software it uses to calculate taxes for Amazon customers in Washington State and North Dakota, where the company has physical presences. To collect sales taxes for Target and Toys "R" Us customers, Amazon takes the tax information the two retailers provide and plugs it into its sales tax engine. "It makes the calculation, we collect the tax, then send it on to the partner," Mr. Curry said. 

"That process sounds incredibly easy," he said, "but it's incredibly difficult." Target and Toys "R" Us "have had decades of experience collecting tax at their stores," he said, "so they pretty well know the tax rates on their merchandise." 

But Wal-Mart, the world's biggest retailer, offers a much different interpretation of the challenges. The company's Web unit did not rely at all on Wal-Mart's extensive experience with physical stores when it started collecting sales taxes for online purchases on Feb. 1, said David Bullington, Wal-Mart's chief tax officer. Mr. Bullington said the company's Walmart.com division had handled the entire process in six weeks, "and the total head count out there isn't that big to begin with." 

The key to the process, Mr. Bullington said, was software from a company he would not identify that tracks state and local sales taxes. The handful of companies that sell online tax calculators include Taxware, a unit of First Data/>, and CCH. Taxware's program costs, on average, $30,000 for a one- to three-year contract, according to a spokeswoman. 

Walmart.com's new system "isn't 100 percent perfect" in calculating the right taxes, Mr. Bullington said, "but you've got to start somewhere." 

Mr. Bullington said the company had decided to start collecting online partly because Wal-Mart had begun more fully integrating its stores with its online operations  allowing customers to buy items online and pick them up at the store, for instance.

That is a trend among traditional merchants, analysts say. "Bricks-and-mortar retailers are coming to appreciate that the benefits of integrating their store operations with their Web sites outweigh the cost of not collecting tax," said Mr. Cassar of Jupiter. 

But because the bulk of bricks-and-mortar companies already collect sales taxes online, Mr. Cassar said, the states may not find much new gold in Internet taxes any time soon. Given the current budgetary woes of state governments, though, even a little gold is enough to start a noisy fight.

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Government Executive
February 21, 2003 
Bulk of $60 billion in federal IT spending goes to services 
By Shane Harris
sharris@xxxxxxxxxxx 

Of the $60 billion the federal government spent on information technology in 2002, more than $54 billion went to contracts for technology services, according to an analysis released Friday. The findings underscore the government?s growing dependency on the private sector for technology support in the face of a shortage of skilled IT expertise and management in agencies.


Spending on serviceswhich range from outsourcing an agency?s entire IT operation to consulting or the development of softwareaccounted for more than 90 percent of the $60 billion in total federal IT spending, according to the study, which was compiled by research firm INPUT of Chantilly, Va.


That level of dependence has federal officials worried. A recent survey showed widespread concern among chief information officers that they lack enough program managers to oversee the growing legion of contractors maintaining government systemsand, in some cases, working alongside federal employees.


The Information Technology Association of America interviewed 35 CIOs at more than 30 federal agencies and legislative branch organizations who said they are understaffed and underfunded to meet their current responsibilities.


Office of Management and Budget officials agree that a shortage of skilled workers and managers is a major obstacle to the government?s effective use of technology. The Bush administration has called for consolidating IT systems across agencies to address the situation while improving electronic services to citizens.


The INPUT analysis shows that outsourcing of technology operations accounted for more than $24 billion in IT spending last year. That figure was driven largely by the cost of technology for the Coast Guard?s Deepwater fleet replacement program. Worth $17.2 billion, it accounted for about 98 percent of all outsourcing awards made by the Transportation Department, the Coast Guard?s former parent agency. The Coast Guard has now been moved to the Homeland Security Department.


The Commerce and Defense departments also awarded single outsourcing contracts worth several billion dollars, and the analysis said spending on those contracts skewed the outsourcing figure.


However, contracts for other professional services, such as engineering and consulting, software development and systems integration, were more widely distributed across agencies. Those contracts totaled almost $21 billion. In that category, spending on consulting and technology design was proportionately the highest. 


Spending on telecommunications and network services totaled $9.5 billion. The category includes local and long distance telephone service, network integration, videoconferencing and wireless communications.


Because of the Deepwater contract, the Transportation Department outspent all other departments and agencies by a hefty margin. It awarded $24.3 billion in IT contracts for goods and services. Commerce followed with $5.7 billion, and the Army, Defense Department and Navy rounded out the top five. The top five organizations spent a total of $44 billion on IT projects.


More than half of all the contract dollars were won by large systems integration firms, which in turn parcel out work to smaller subcontractors. 


In keeping with the trend in IT outsourcing, many companies are backing off software and hardware production and are trying to make themselves full-scope technology providers for their clients. That means they not only sell products, but install them and then manage their use.
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Chronicle of Higher Education
In Australia, Record Companies Seek to Scan College Computers for Music Files
By SCOTT CARLSON

Three record companies have asked a federal court in Australia to let their technical experts scan all computers at the University of Melbourne for music files, according to news reports. The companies are looking for evidence of copyright violations among students who swap digitized music files. 

Australia's biggest record companies, Festival Mushroom Records, Sony Music, and EMI Music, earlier asked the University of Melbourne, the University of Sydney, and the University of Tasmania to preserve on-campus computer files and e-mail accounts and let computer experts examine them. 

According to The Sydney Morning Herald newspaper, the University of Sydney and the University of Tasmania agreed to preserve the files for evidence, but did not agree to turn them over. 

The University of Melbourne, however, objected both to preserving the files and to handing them over. A hearing on the case in the Federal Court at Sydney adjourned on Tuesday and is to be continued on Friday. Judge Brian Tamberlin refused to issue an interim order requiring the university to preserve the files until then. 

The case in Australia coincides with increasing pressures on downloaders and institutions by the American record industry. Last week, the Recording Industry Association of America sent a brochure to Fortune 1000 companies requesting that they limit music swapping among their employees. 

In late November, officials of the American industry group revealed plans to increase the number of complaints it lodges with colleges when it believes students are using file-sharing programs in violation of copyright law. 

Amanda Collins, a spokewoman for the RIAA, said she couldn't comment on the situation in Australia because her group doesn't know about those three record companies' push or about how piracy problems are being dealt with there. "In the United States, we are pleased to be working with the university community to address the piracy problem constructively," she added. 
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Los Angeles Times
Studios, Firms in Piracy Talks
At issue is how to save anti-copying signals when they are converted from digital to analog.
By Jon Healey
Times Staff Writer

February 24, 2003

Trying to plug another potential hole in the anti-piracy dike, Hollywood studios have started a new round of private meetings with high-tech companies and consumer-electronics manufacturers to explore ways to stop unauthorized recordings.

This time, the issue is how to preserve anti-copying signals on a digital television show, online video or DVD when converted from digital to analog.

That kind of conversion, which has to happen before a digital program can be sent to the vast majority of TV sets, is inherently fatal to digital copy-protection techniques.

Years from now, when consumers have digital TVs that connect digitally to set-top boxes and recorders, the potential problem goes away. In the meantime, the studios' fear is that the mixture of analog and digital devices in homes will allow their movies and premium TV programs to be copied digitally and distributed freely via the Internet.

If that happens on a global scale, as it has in the music industry, the studios worry that they would lose the ability to sell programs to syndicators, overseas broadcasters and DVD buyers -- in other words, much of what they collect from a program after its first airing.

Some participants in the group, whose co-chairmen are from Philips Electronics, Microsoft Corp. and AOL Time Warner Inc.'s Warner Bros. unit, scoff at such dire predictions, arguing that today's Internet connections are too slow to enable widespread video piracy.

Nevertheless, there's no shortage of movies and TV shows already available for free online to those who know where to look for them. For example, numerous episodes from the first two seasons of HBO's "Six Feet Under" and a copy of the unreleased DVD version of "The Hours" are up for grabs from online sites that cater to video pirates.

"For those people who do suggest that audio-visual files are impractical to send over the Internet because of the size of the file and the speed of current Internet connections, here is a cautionary tale," said Andrew G. Setos, president of engineering at News Corp.'s Fox Group. "Ten years ago it took eight hours to download a song. Now it takes seconds."

The Analog Reconversion Discussion Group, as the inter-industry collective is called, says its purpose is simply to identify technological tools that may be relevant to the piracy issue. It's not supposed to select or even recommend any technologies, and it won't address such thorny policy questions as which programs can be protected and how severe the limits on copying can be.

Nor is the group operating under any timetable. Nonetheless, the studios are eager for results, and they warn that the group risks being irrelevant if it doesn't act promptly -- particularly with some members of Congress eager to legislate on piracy and digital TV.

Other participants, meanwhile, are wary of how Hollywood might use whatever findings come out of the group. Representatives of consumer groups and the computer industry, in particular, don't want the studios to characterize the group's work as setting the stage for the government to mandate anti-piracy technology in a sweeping array of devices.

Seth Schoen of the Electronic Frontier Federation, a group that advocates civil liberties online, said the 1998 Digital Millennium Copyright Act puts the burden on Hollywood to protect its programs. But the studios' anti-piracy initiatives would shift the burden onto manufacturers so that "whenever you make anything technical, you have to go and ask them, 'How do I design this so that it protects your interests?' "

The analog discussion group, which held its first meeting Feb. 12, arrives on the heels of a similar inter-industry dialogue about ways to block digital TV broadcasts from being retransmitted over the Internet. Although the Broadcast Protection Discussion Group left many disputed points unresolved in its final report last June, the studios are pushing the Federal Communications Commission to adopt regulations that would enforce the panel's core recommendations.

The broadcast discussion group confined its work to digital signals passed through digital connectors, which could rely on digital anti-copying techniques to deter files from being pirated on the Internet.

The vast majority of today's TVs are analog, however, and even digital TVs rely in many cases on analog connectors to receive digital TV broadcasts. Meanwhile, there's a growing number of devices in the home that can make a digital recording of an analog TV signal, ranging from set-top recorders to computers.

The new group will explore ways to use electronic watermarks and other signaling techniques that could remain embedded in a program after it's converted to analog. Many DVD recorders already incorporate one such technology, which hides copying restrictions within an unused portion of a standard TV picture.

One studio executive, who asked not to be identified, said the solution could focus just on analog-to-digital converters smart enough to know what a TV signal looks like.

"What we could do is design a system ... where the device that digitizes an analog video signal has a responsibility to protect it if it finds it's protected material," the executive said, adding that "the choice of methods should be very broad."
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Washington Post
Surgical Expertise, Undone by Error 
Chain of Miscommunication in Transplant Led to Teenager's Death 
By Shankar Vedantam
Monday, February 24, 2003; Page A01 


Jesica Santillan died Saturday at Duke University Medical Center, surrounded by an arsenal of medical technology, top doctors and a network of experts dedicated to transplanting her with organs that could save her life.

None of these measures, however, protected her from a misunderstanding between her doctor and a North Carolina organ bank. As a result, mismatched organs were transplanted into the 17-year-old and, despite heroic measures and a second transplant, she died.

It all began with so much hope on Thursday, Feb. 6, when organs she had awaited for three years suddenly became available. This account of the events that followed is based on chronologies issued by Duke University and Carolina Donor Services and interviews with transplant experts.

Late that Thursday, Carolina Donor Services received a call from the New England Organ Bank. Someone in that region had died, leaving organs available for transplant. 

Time is desperately short when valuable organs such as the heart and lungs become available. A nationwide network -- the United Network for Organ Sharing -- maintains an extensive list of patients waiting for particular organs. The New England bank ran a search through the network's computers: It evaluated patients scattered across the country, giving preference to those who had waited longest, whose medical condition was the most serious, who were geographically close enough for the organs to be transplanted without delay -- and who had the same blood type as the donor, type A. 

Two names popped up as potential heart recipients. Both were at Duke University Medical Center in North Carolina. Following standard organ-sharing procedures, the New England bank called its regional counterpart, Carolina Donor Services. 

The Carolina organ bank called Carmelo Milano, the Duke surgeon on call for adult heart transplantations. Since the organ-matched Duke patient was a child, Milano referred the call to James Jaggers, the surgeon in charge of pediatric heart transplants.

The bank said it gave Jaggers information about the organ. Jaggers told Carolina Donor Services that the child on the computer's list was not medically ready for the transplant. The conversation might have ended there, but Jaggers remembered another patient.

What about Jesica Santillan, who had been on the national waiting list for three years? Her family had brought her to North Carolina from Mexico because she had a congenital heart defect called restrictive cardiomyopathy. It was threatening to kill her soon. Jaggers told Carolina Donor Services that Jesica needed a pair of lungs, too. He gave them her name, assuming they would look up her details on the national list, according to Duke's account. The bank said it would get back to him.

Already, the seeds for disaster had been sown. The bank assumed Jaggers was aware the organs were of blood type A, since the bank had turned over all the information about the heart to Duke, according to its chronology. Besides, both recipients that the computer had identified at Duke, including the patient Jaggers said was not suitable, had type A blood.

Jesica had type O blood. 

Jaggers would say later he did not remember mentioning Jesica's blood type during the conversation. But since he had given the bank her name, he assumed that the bank would check the computerized list and make sure that patient and organs were properly matched. Jaggers has since taken responsibility for the misunderstanding. 

The Carolina bank then called another Duke doctor to ask about the second candidate from the computerized list. Duane Davis, a surgeon at the medical center's adult heart transplant unit, asked about the size of the heart and decided that it was not the right size for his patient.

Both the computer's initial choices -- which had been screened for blood type and other details -- had been eliminated. Minutes were slipping by. The bank called Jaggers back and told him the heart and lungs could go to Jesica. It is unclear whether there were other candidates on the computer list: Organ banks will sometimes give organs to patients not on the list to keep them from being wasted.

Both Jaggers and Carolina Donor Services assumed the other had checked the blood type, according to accounts from both sides. The bank had given Duke all the details about the organs, and Jaggers had given the bank Jesica's name and access to her medical details. Each implicitly relied on the other. 

And given the pressure of finding a recipient for fragile organs, neither apparently cross-checked. The hospital has since announced new measures to verify that patients and organs are properly matched. 

Jaggers would later remember talking with the bank about the organ donor's height, weight, organ function and cause of death -- mentally checking off each item to match Jesica. But there was a reason Jesica was not on the original computerized list: Her blood type was not a proper match. 

A Duke surgeon, accompanied by Carolina Donor Services staff, was dispatched to New England. The surgeon verified the organs were of good quality and relayed the message to Jaggers, who gave permission for the heart and lungs to be brought to North Carolina.

Meanwhile, Jesica was prepared for surgery at Duke's pediatric intensive care unit. A machine would do the work of her heart and lungs during the transplant, purifying her blood of carbon dioxide and pumping it back into her body. To prevent the blood from clotting, doctors gave Jesica blood-thinning drugs.

There was a risk that thinning the blood might cause bleeding inside her brain. Such bleeding can build up pressure and cause brain damage, even death. There was also the risk that periods of low blood pressure during the procedure would deprive her brain of oxygen, with the same risks of brain damage. 

Weather had already delayed the return of the team that had been sent to New England to retrieve the organs. As soon as the organs arrived at Duke, surgeons began the operation.

It was 4:50 p.m. on Friday, Feb. 7.

The doctors cut open Jesica's chest and lifted out her heart and lungs. Over several hours, they attached the new organs to her, unaware that they were placing her in the gravest danger. Meanwhile, the heart-lung machine kept her alive, even as it increased her risk of brain damage. The surgeons finished around 10 p.m. 

Then they got a call from Duke's Clinical Transplant Immunology Laboratory: The lab had determined that the organs were of the wrong blood type.

The doctors immediately knew what was happening inside Jesica. Her immune system would sense the new organs were different from her blood type, and it would develop antibodies, attacking the heart and lungs as if they were harmful.

Doctors pumped Jesica with drugs to suppress her immune system. They alerted Jesica's family to the mistake, and put her name back on the national waiting list -- as a candidate for a new heart and lungs. Over the next few days, Jesica's condition worsened. Her lungs deteriorated, and doctors had to place her on a mechanical ventilator.

On Wednesday, Feb. 19, a new heart and lungs were identified. This time, the national network's computer identified Jesica as a candidate. 

Giving two heart and lung transplants to the same person within a matter of days is completely extraordinary. But Anne Paschke, a spokeswoman for the network, said that Jesica's dire medical situation, not the intense media attention that had focused on the case, had moved her to the head of the list.

Before Duke doctors performed the second transplant, they had to establish that Jesica had a reasonable chance of survival -- otherwise the organs would go to a candidate more likely to benefit. The doctors concluded there was no serious brain damage from the first transplant, and decided to go ahead, according to Duke.

On Thursday, Feb. 20, surgeons transplanted the new organs. Again, the operation required that the teenager's blood be thinned and that a heart-lung machine purify and pump blood for her. 

By 10:15 that morning, the new heart and lung seemed to be working properly. But within 24 hours, doctors detected a sharp neurological decline. A brain scan found bleeding and swelling inside her brain. Doctors tried to drain the pressure, but it was too late. By Saturday, doctors declared there was no activity in her brain and removed life support. An autopsy was announced.

Sixteen days after her doctor first took a phone call to save her life, Jesica was dead.
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Computerworld
CMS sets health care e-payment standards
By Bob Brewin
FEBRUARY 21, 2003
Final rules can be found at: http://www.cms.hhs.gov/regulations/hipaa/cms0003-5/0003ofr2-10.pdf

The Centers for Medicare & Medicaid Services (CMS) yesterday published its final rules for electronic health care payment transactions (download PDF), adding what vendors and consultants see as yet another burden to an industry scrambling to meet new privacy and electronic security requirements (see story). 

Tommy Thompson, secretary of the U.S. Department of Health and Human Services, said in a statement that the new electronic transactions and code-set standards used by doctors, hospitals and insurers to manage payments under the Health Insurance Portability and Accountability Act will "make it easier for the health care industry to process health claims and handle other transactions." 


CMS has estimated that total savings to the health care industry resulting from streamlining transactions will be $29 billion. 

Those savings will take years to achieve and will come only after the health care industry incorporates the changes into its computer and electronic data interchange (EDI) systems, according to Richard Howe, president of Germantown, Md.-based Axiom Systems Inc., a health care IT company that specializes in systems integration and EDI. 

Howe said the new rules, which will go into effect on Oct. 16, will cost the industry millions of dollars in time and effort to incorporate into their systems. He could not provide an exact figure on the cost to the industry. But he said that the changeover will be expensive because the transaction guidelines -- which govern the basics of payments and the submission of claims -- are based on extremely detailed regulations that average 600 pages for each type of transaction. 

"Practically everyone in the industry will be impacted by these changes," Howe said. 

Not only are health care organizations required to incorporate the changes into their systems, but they also have to test interactions with other companies in the payment food chain -- a complex undertaking, given that there are only eight months between now and the required implementation date. "This is a terrible way to run a business," Howe said. "These changes came out much later than anticipated." 

Steve Lazarus, a health care consultant at Boundary Information Group in Denver, said the modifications are needed to correct problems that were discovered by health care organizations three years ago in earlier versions of the code sets. 

The updated code sets no longer require that hospitals use codes developed by the retail pharmacy industry to report and manage prescriptions, Lazarus said. Instead, hospitals can now use hospital pharmacy coding systems -- a simpler system, since retail pharmacies dispense drugs or prescriptions by the bottle or package, whereas hospitals dispense them in single-unit doses. 

Jon Zimmermann, vice president for e-health at Siemens Medical Solutions, a division of Siemens AG in Munich, Germany, called the shift from retail to hospital codes a "welcome change" but noted that the final transaction and coding standards have taken more than a decade to develop. 
*******************************
Washington Post
China Serves As Dump Site For Computers 
Unsafe Recycling Practice Grows Despite Import Ban 
By Peter S. Goodman
Monday, February 24, 2003; Page A01 

GUIYU, China -- This is the end of the road for the toxic detritus of the computer age.

In towns such as this one on China's southeastern coast, vast quantities of obsolete electronics shipped in from the United States, Europe and Japan are piled in mountains of waste. Even as entire communities, including children, earn their livelihoods by scavenging metals, glass and plastic from the dumps, the technological garbage is poisoning the water and soil and raising serious health concerns.

China's role as dumping ground for the world's unwanted gadgets is an outgrowth of efforts by wealthy countries to protect their own environments. Many governments are encouraging the recycling of computers to keep them out of landfills and prevent heavy metals from seeping into drinking water. But breaking computers down into reusable raw materials is labor intensive and expensive.

In the United States, where more than 40 million computers became obsolete in 2001 alone, according to a National Safety Council report, as much as 80 percent of the machines collected by recyclers are being disposed of for about one-tenth of the price through a far simpler means: They are being sold to Asian middlemen, put on ships and sent here.

Officially, China has its own ban on such imports, but the law is easily circumvented through payments to corrupt customs officials, according to industry sources.

The real costs are being borne by the people on the receiving end of the "e-waste." In towns along China's coast as well as in India and Pakistan, adults and children work for about $1.20 a day in unregulated and unsafe conditions. As rivers and soils absorb a mounting influx of carcinogens and other toxins, people are suffering high incidences of birth defects, infant mortality, tuberculosis and blood diseases, as well as particularly severe respiratory problems, according to recent reports by the state-controlled Guangdong Radio and the Beijing Youth newspaper.

"At the same time that we're preventing pollution in the United States, we're shifting the problem to somebody else," said Ted Smith of the Silicon Valley Toxics Coalition, an environmental advocacy group. "It's being exported and doing harm."

High Toll on Humans, Environment 
On a recent morning in Guiyu, in Guangdong province, hundreds of men squatted in concrete-block sheds, sifting through computers and printers and breaking them into scrap with their bare hands. Some inhaled black clouds of toner. A tractor carted a mass of wires to an alley, where women melted them in barrels to scavenge their copper before spilling the leftovers into the dead-black Lianjiang River. 

In a low building tucked at the bottom of a hill, a middle-aged woman leaned over a sheet of steel placed atop a charcoal fire, melting down capacitors pried from computers to harvest tiny amounts of gold. Ten feet away, a girl no older than 11 bent over a table, sorting through more circuitry.

"Today there's no school," said the boss, Zheng Conggong, 27, when asked why the girl was there. "Vacation." It was 10 o'clock on a Monday morning, a regular school day everywhere else in China. When the boss stepped away, the girl timidly confirmed that she works here every day, all day. Her fingers were quick and nimble, clearly well-practiced.

Nearly every crevice of the town showed evidence of the trade, from the strips of plastic and shards of glass choking the river to the piles of motherboards, hard drives and keyboards in front of nearly every home. The landscape was poisonous. Glass from monitors contains lead, which afflicts the nervous system and harms children's brains. Batteries and switches contain mercury, which damages organs and fetuses. Motherboards contain beryllium, the inhalation of which can cause cancer.

Trucks bring in drinking water from more than 10 miles away because the local supply is not potable. Near a riverbank that has been used to break down and burn circuit boards, a water sample revealed levels of lead 190 times as high as the drinking water standard set by the World Health Organization, according to a report released last year by the Silicon Valley Toxics Coalition and another U.S.-based environmental group, the Basel Action Network.

The environmental groups had their samples analyzed by the Hong Kong Standards and Testing Centre Ltd., according to their report. A sediment sample found levels of lead and other heavy metals such as chromium and barium hundreds of times as high as U.S. and European environmental standards for risk. The water test confirmed an earlier sample taken by a reporter for a Chinese-language publication in Hong Kong, Eastweek Magazine, which found even higher lead levels. 

The report by the two environmental groups, "Exporting Harm: The High-Tech Trashing of Asia," accused computer manufacturers of failing to assume responsibility for the pollution they cause by instituting their own recycling programs. It also criticized the United States for declining to ratify the Basel Convention, an international agreement signed by every other developed country that aims to limit the export of hazardous waste. As a result, recyclers in the United States are not in violation of domestic laws when they ship computer waste to poor countries in Asia.

New Entry Ports to Bypass Ban 
China's ban on imports of many types of discarded computers and electronics, which began last year, led the government to seize 22 shipping containers in the port of Wenzhou in September. But recent visits to areas that have been at the center of the e-waste trade revealed that it continues despite the ban, though more covertly. In Guiyu, one truck after another wound down the muddy track through town on a recent morning, bearing fresh loads of junked electronics. One bore stickers showing it had come from Italy, another from Korea and a third from Japan. In a concrete-block building loaded with circuit boards, one load contained a sticker from New Jersey. 

Many old computers were formerly shipped to Nanhai, a port outside the city of Guangzhou. But shipping agents there said customs officials have gotten strict since the ban. Much e-waste is now routed through Hong Kong, Taiwan and the Philippines on container ships, according to those involved in the trade, then trans-shipped to smaller ports in mainland China such as Shantou and Jiangkou, where customs officials are willing to look the other way in exchange for a share of the spoils.

Mark Dallura, head of Chase Electronics Inc. of Philadelphia, which buys discarded computers in the United States and then ships them to China via Taiwanese middlemen based in Los Angeles, said he has been in the trade for 15 years and has not been slowed by the ban.

"I sell it to [the Taiwanese] in Los Angeles and how they get it there is not my concern," Dallura said. "They pay the customs officials off. Everybody knows it. They show up with Mercedeses, rolls of hundred-dollar bills. This is not small time. This is big-time stuff. There's a lot of money going on in this."

Dallura said his company gets many of its old computers from recyclers scattered across the United States. They pick them up from well-intentioned citizens and businesses that hand them off at events organized by cities and counties aimed at keeping e-waste out of landfills. He acts as a broker, consolidating container shipments that he then hands off to the middlemen. Most weeks, he ships at least one container bearing 45,000 pounds of such waste.

A container full of computer monitors brings him a fee of $2,600, he said. During a recent week, he planned to ship four containers. Two were bound for Hong Kong, the other two for Nanhai, bearing mainframe computers not covered by China's ban.

"I could care less where they go," Dallura said. "My job is to make money."

Taicang City, a collection of industrial warehouses an hour's drive north of Shanghai in Jiangsu province, has long served as a distribution center for e-waste, according to those engaged in the trade. During a recent visit, stacks of keyboards and monitors could be seen along the walls of warehouses that have historically received them. Local motorcycle drivers said they continue to take buyers from all over eastern China to 15 such warehouses, and trucks arrive regularly with shipments from the port of Shanghai.

"The local government tolerates this stuff," said Ren Maohui, one such driver. "The government would rather tax the trade than put it out of business."

Ren said he recently took a buyer from Zhejiang province interested in procuring circuit boards to a warehouse controlled by a Taiwan-based firm, Suzhou Yuefa Nonferrous Metal Product Co. In a brief interview, the company's general manager said he could not remember when his last shipment of old computers was delivered. But Ren recalled a different account supplied to the buyer: "They didn't have enough, but they told him, 'Don't worry. We get foreign shipments every month. We'll get more.' "

E-Waste Recyclers' Role to Grow 
As the cycle of electronics obsolescence accelerates, the flow of e-waste to China seems likely to increase. More computers, for example, are being retired -- most of them in good working order, but unable to handle the latest software advance, from digital video-editing to graphics-intensive games.

The Silicon Valley Toxics Coalition estimates that from 1997 to 2007, as many as 500 million computers will have been discarded in the United States. In addition, a shift to high-definition televisions will probably lead to the disposal of more of the old cathode-ray-tube variety, which contain lots of lead. And as newer flat-panel monitors begin to be retired, the mercury they contain will find its way into the waste stream as well.

The Environmental Protection Agency estimates that discarded electronics account for 70 percent of heavy metals in U.S. garbage dumps. Massachusetts and California have banned the disposal of old computer monitors in landfills, and other states are considering similar laws. Large businesses are already barred from sending their old computers to landfills. The result is a growing role for electronics recyclers.

But as the EPA discovered in a survey in California, the cost of actually dismantling and reusing the materials in a computer monitor in the United States is about 10 times as high as the cost of shipping it to China. That neatly explains why the streets of Guiyu remain buried under mounds of old computers.

At the same time, China's transition to a market economy has sharply increased a gap in living standards between thriving coastal regions and impoverished interior areas. That explains why so many have come here from other places to try to harvest fortune out of the electronics refuse from abroad.

"It's a little bit dirty, but okay," said Wang Guangde, 27, a farmer from Sichuan, as he sat on the floor of a shed, taking apart printer drums.

"We need this work," said his friend, a farmer from Guizhou province. "If the government shuts it down here, it will just move somewhere else and we'll move with it."

The workers acknowledge the cuts on their fingers -- infections that do not heal. Stubborn, hacking coughs testify to the poorly ventilated places in which they breathe noxious fumes.

Mostly, they focus on the cash they are earning.

"It's dangerous, yes, but no money is more dangerous," said an 18-year-old woman named Lin, who came Guiyu from a neighboring province for work, as two children pulled discarded computer mice through the muddy street like toy ships. "No money means you'll die of hunger."
*******************************
Computerworld
System break-in nets hackers 8 million credit card numbers
By LUCAS MEARIAN 
FEBRUARY 24, 2003

A credit card transaction processing company last week confirmed that millions of card numbers were stolen recently when someone hacked into its computers. But it defended itself by saying the culprits may not have obtained any useful information. 
Omaha-based Data Processors International Inc. (DPI) acknowledged in a statement that it "experienced a system intrusion" four weeks ago. But it added that the stolen data "did not include any personal information that could relate a card number to an individual." 

The hackers didn't get the names, addresses, phone numbers or Social Security numbers of any cardholders, according to the statement. "It's still unclear if any usable data was compromised at all," said DPI, which processes credit card transactions for direct marketing and mail-order catalog companies. 

But even if a hacker had only a credit card number, getting the name, address and phone number of the cardholder wouldn't be an insurmountable task, according to Avivah Litan, a financial services analyst at Gartner Inc. in Stamford, Conn. For example, Litan said, information could be purchased online through so-called skip trace databases, which are used by bounty hunters and others to find personal information. 

Scott Jones, a spokesman for DPI, said the company wouldn't comment about any of the technical aspects of the system intrusion, which came to light early last week (see story). Jones also wouldn't discuss whether DPI had intentionally separated the card numbers from the personal data of consumers in its systems. But he did say that the company is working to improve its information security in response to the break-in. 

Analysts said the incident was the largest single case of online theft of credit information. A spokeswoman for MasterCard International Inc. put the total count of credit card numbers that were exposed to the hackers at about 8 million. 

Big Targets 

Purchase, N.Y.-based MasterCard said 2.2 million of its card numbers were taken, while Foster City, Calif.-based Visa International Inc. said the hackers made off with 3.4 million of its card numbers. New York-based American Express Corp. and Discover Card, a unit of New York-based Morgan Stanley Dean Witter & Co., were also affected by the intrusion. 

Richard Fischer, a partner at San Francisco-based law firm Morrison & Foerster LLP, advises Visa and other financial services firms on payment systems, e-commerce and data privacy issues. He said security is a game of one-upmanship with hackers and requires companies to constantly upgrade their technology. 

For example, credit card companies such as Visa and MasterCard use sophisticated computing algorithms to track transactions by cardholders and detect unusual buying patterns, Fischer said. 

MasterCard said that during the week of Feb. 3 it began to notify its member banks of the system break-in at DPI. Visa said its fraud team immediately notified all affected card issuers and is now working with DPI "to protect against the threat of a future intrusion." 

But neither the credit card companies nor DPI have disclosed any information about the thefts on their consumer Web sites. "Instead, they will monitor the accounts for any signs of fraud," Fischer said. "If there's any suggestion of unauthorized transactions, they're going to be contacting those individual customers." 
*******************************
USA Today
Faithful question the holiness of electronic tithing
February 24, 2003

FAIRBANKS (AP)  In parishes and congregations here, electronic tithing is growing. People are making contributions to their churches by credit card, debit card or automatic withdrawal. 

"It's the wave of the future," said George Bowder, director of finance for the Catholic Diocese of Fairbanks. "People can sit down and plan their gift-giving so once they plan it, it doesn't become a cumbersome project. People are actually going to our Web site and, under a secure process, pay a donation to their church by credit card or debit card." 

But in the next breath, Bowder says not everyone is ready to make the Sunday offering electronically. His wife, Wanda, is a member of First Presbyterian Church, and she prefers making her monetary gift at Sunday worship. 

"She says, 'I have a particular need to wrap my gift and put it in the basket so it is presented and offered at the offertory,' " Bowder explains. 

At First United Methodist Church, e-tithing is still a relatively new idea. 

"We've just begun to have conversations about it," said co-Pastor John Campbell. "It seems very practical and gives people options," he said, mentioning that some church members travel and winter outside during the winter months and continue to support the church. 

"This (e-tithing) would be a little easier for them," Campbell said. 

Zion Lutheran Church has been linked to a national Lutheran program called Simply Giving since 1999, and about 5% of the Zion congregation has donations automatically withdrawn from a savings or checking account. 

About 50% of parents of children enrolled at Fairbanks Catholic Schools pay school tuition and after-school care bills via credit or debit cards, reports Harriet Burke, school accountant. 

But Johnny McCoy, pastor of First Baptist Church of North Pole, minces no words in rejecting electronic tithing. 

"I am totally against it," he said. "It's probably better for the budget of the church, but I'd rather people bring their tithe to church and place it in the offering plate. 

"An offering is an act of worship," McCoy says. 

University Community Presbyterian Church, pastored by Murray Richmond, hasn't endorsed e-tithing either. 

"It's convenient, but there is something about having people giving money in the worship service that is important," Richmond said. "Giving is part of the worship. Eliminating that is losing something. I am not sure if in the long run it (e-tithing) enhances anything about the church." 

Andy Ekblad, pastor of First Presbyterian, also is ambivalent. 

"In one sense it is attractive," he said, adding that parishioners could gain air miles by using their credit cards. "But I wonder what we lose in that convenience?" 

Weekly offerings during worship are a symbolic gesture to God, Ekblad said, that says even though we are attached to material things we are giving it to God and saying "I want you (God) to have more power in my life." 

Electronic keyboards and electronic song selection are now part of some services at First Presbyterian, Ekblad said. But as for electronic tithing, the pastor still isn't sure. 

"We'll see what the future holds," he said. 
*******************************
New York Times
February 24, 2003
Ratings Agency Says It Erred in Measuring Web Site Use
By SAUL HANSELL

ComScore Media Metrix, one of the leading companies that measure Web site audiences, has discovered flaws in the methodology that it introduced in October, and it has restated its measurements for the last three months of 2002.

Web ratings services have faced questions about accuracy since they began trying to estimate audiences by projecting the behavior of a panel of presumably representative users. Despite their limits, ComScore's ratings, and those of its main competitor, Nielsen/NetRatings, are widely used by advertisers, investors, journalists and the Web sites themselves.

The biggest differences in ComScore's ratings, announced last week, come in its estimates of Web use at the workplace, always the most difficult to measure. Big companies in particular do not want employees to install the software that the ratings companies use to track Web site usage. When ComScore adjusted its formulas to account for the underrepresentation at big companies, its audience projections increased, in some cases sharply.

For instance, ComScore now estimates that Primedia's sites, mainly those run by about.com, had 56 million users in the United States in December, rather than the 44 million counted under its previous formula, a 25 percent increase. EBay's audience was increased 19 percent, to 54 million. The estimate for Terra Lycos was increased 21 percent, to 51.6 million users. That change moved Terra Lycos to the sixth-most-visited site in December, from seventh under the previous numbers, putting it in front of Google.

As with any ranking, being placed at No. 1 is an invitation to gloat. WeatherBug, a fast-growing service of AWS Convergence Technology, has noted in news releases that it is "the No. 1 source for weather information on the Web, according to ComScore Media Metrix."

ComScore's restated data, however, shows WeatherBug second to Weather.com, the site run by the Weather channel, owned by Landmark Communications.

"There was some bragging rights associated with being No. 1," said Andy Jedynak, the general manager of WeatherBug. "To the extent we have lost those, we are disappointed."

WeatherBug's bragging, of course, did not go down so easily at Weather- .com, which was still listed as the No. 1 weather site by Nielsen.

"It was annoying," the chief executive of Weather.com, Deborah Wilson, said, " I can't say that it undermined our sales efforts, but to have obviously bad data floating around was a nuisance."

The restatements result from the financial collapse last June of Jupiter Media Metrix, a company that combined Web audience measurement with Internet prognostication. As Jupiter was disassembled, it sold the Media Metrix business and its panel of Web users to ComScore, an upstart with a different technology that was created mainly to monitor products that Web users bought online.

However, the software program that Media Metrix had used to track Web audiences was not sold to ComScore but to Nielsen, ending a patent dispute between the two companies. 

ComScore very quickly had to start using its own monitoring technology. It also expanded the size of the Media Metrix panel of users at work, introducing in October what it called Media Metrix 2.0.

In response to complaints by its clients, the company has discovered some flaws in its new system. It decided to publish restated data for last fall rather than change its formulas from now on.

"We could have made these changes on a forward basis," Peter Daboll, president of ComScore's Media Metrix division, said. "We felt it was the right thing to do to make the changes to provide an accurate trend."

Marketers and adverting experts agreed that ComScore's approach ultimately improves the quality of the data available.

"It's kind of embarrassing to have to admit this," said Rex Briggs, the principal of Marketing Evolution, an online advertising research firm. "I applaud them for trying to make their measurements better." 

The impact of a restatement, even of this magnitude, Mr. Briggs added, is less now than it would have been a few years ago, when billion-dollar deals were made on the basis of Media Metrix ratings.

"Stock prices are no longer tied to the number of unique visitors you have," Mr. Briggs said. "Now investors have this little idea of being profitable."

Furthermore, these audience measures are not used to set Internet advertising rates, as they are in radio and television. Since broadcasters have no way to tell how many people are watching a given program, they must use Nielsen's television ratings to determine how much to charge advertisers. On the Internet, Web sites charge to display an advertisement a certain number of times. 

Still, some industry executives worry that the restatement will add further doubt about the online medium, which is still trying to establish its credibility with marketers.

"They have some explaining to do," said Geoffrey Ramsey, an analyst with eMarketer, a research firm that uses data from ComScore, Nielsen and other sources.

This uncertainty and potential undercounting of daytime audiences is especially problematic for news and information sites, which are used mostly by people at work.

"Daytime is prime time on the Internet," said Michael Zimbalist, executive director of the Online Publishers Association, a trade group. "The at-work numbers of the ratings companies are notoriously bad."

The biggest changes that ComScore made involved how it estimated work audiences. But there were other issues as well. For example, after the acquisition, ComScore changed its method for calculating how much time users spend on each site, in some cases cutting the numbers by far more than half.

Some publishers that boasted that their users spent an hour a month on their site, an unusually high amount of time, found the new system giving them credit for only 15 minutes. ComScore discovered that it had been allocating some of the time that users spend on some Web pages to the sites of advertisers rather than the Web publisher. Its revised system changes that.

Not surprisingly ComScore and Nielsen each insist that their methods are more statistically rigorous. ComScore says that its sample of people at work has 30,000 people, far more than the 7,000 claimed by Nielsen.

Nielsen, by contrast, says its work panel is chosen by placing phone calls to random telephone numbers, an expensive but methodologically superior method. ComScore uses various other methods to recruit its work panel, like sending e-mail messages to random names on lists it buys.

It does not help that Nielsen and ComScore are vastly different in their estimates of most sites' audiences. ComScore, for example, now says Yahoo had 107 million users in the United States in December. Nielsen counted only 81 million.

Some of that difference is because ComScore measures usage on college campuses and Nielsen does not. But the difference in the estimates of Yahoo's audience, 26 million users, far exceeds the total American dormitory population.

ComScore claims that its numbers are far closer to the internal counts generated by Web site operators. But William Pulver, chief executive of NetRatings Inc., the company that publishes the Nielsen/NetRatings measurements, argues that there are good reasons that a measurement service will count fewer people than a site's own computers.

"Just because numbers are higher doesn't mean they are more accurate," he said.

Many advertisers and publishers, however, say they are tired of such claims and counterclaims and want both rating services to submit to the sort of independent audits that are regularly conducted of the services that measure traditional media. Both ratings services have so far refused, saying the audits are expensive and apply standards that are not realistic for the Internet.

"There is no consistency over time or common guidelines applied to either of these services," Mr. Zimbalist said. "They need to be audited just like radio and television ratings."
*******************************
New York Times
February 24, 2003
Broadband Companies Cheer Ruling
By SIMON ROMERO and MATT RICHTEL

The decision by the Federal Communications Commission last week to retain many of the rules that govern local telecommunications markets but to exempt high-speed Internet services has given some Silicon Valley companies reason to cheer.

Under the ruling last Thursday, states will still have the right to order the regional Bell telephone companies to provide network access to their local competitors at relatively low wholesale prices. But because high-speed Internet, or broadband, services are exempt from those forced-access rules, some makers of broadband equipment  like Cisco Systems and Juniper Networks  look forward to a new wave of buying as competitors in broadband services arm themselves for battle.

And the semiconductor giant Intel, which had lobbied the F.C.C. heavily on the issue, also expects new opportunities  not only in selling chips used for broadband network equipment but also in chips for more powerful PC's, if more consumers are enticed to sign up for new and improved broadband services.

"If we increase broadband, we get more people online," Bill Calder, an Intel spokesman, said. "That's good for the industry, but it's good for us as the microprocessor supplier."

Big equipment suppliers to the local telephone industry, particularly Lucent Technologies and Nortel Networks, whose gear is used primarily for conventional network services rather than broadband, may have little reason to think the F.C.C.'s action would help end their long slump. And some analysts who track the telecomunications equipment market are not especially optimistic about the prospects for the Bells to significantly increase their spending even on broadband technology. 

That is because the telephone industry's main approach is to make broadband service available over digital subscriber lines, or D.S.L., which has not yet emerged as a consistently profitable business and has a lower market share than the main alternative, cable television modems.

"Any hope for meaningful capital spending incremental to a recovery have been dashed," Gabriel Lowy, an analyst at Crédit Lyonnais Securities, said. 

Compared with the telecommunications boom, when the carriers' investments in network technology grew an average of 17.7 percent a year from 1996 to 2000, Mr. Lowy said he now expected capital spending to remain contained  even below the 7.5 percent average annual growth rate of the 30 years before the surge in the late 1990's. 

Little wonder that shares of Lucent and Nortel, which fell on Thursday after the F.C.C. announced its order, drifted further downward on Friday, with Lucent closing down 7.9 percent, at $1.52, and Nortel declining 3.1 percent, to close at $2.18.

Asked on Friday about the impact of the F.C.C. decision on Lucent, Henry B. Schacht, who retired last week as the company's chairman, said simply, "It is too early to speculate."

Yet some analysts, including Nikos Theodosopoulos of UBS Warburg, predict that any additional equipment spending by the Bells would probably emphasize broadband over conventional voice services.

If that happens, he said, the beneficiaries could be businesses that specialize in making gear that enhances D.S.L. systems, like Alcatel, of France, and Advanced Fibre Communications, of Petaluma, Calif.

For such investments to occur, the Bell companies would have to make a serious commitment not only to D.S.L. but also perhaps to technology that allows high-quality video services over the fast Internet links. Such a change, however, would run counter to strategies the Bells have been considering  like SBC Communication's recent expression of interest in acquiring the DirecTV satellite television operations from General Motors.

The broadband enthusiasts in Silicon Valley, though, are thinking not only about the Bells' potential spending but about the prospects for a generally more vibrant broadband market, with higher spending by telephone and cable companies alike. In fact, various trade associations representing the computer, software and consumer electronics industries had banded together as the High Tech Broadband Coalition, which heavily lobbied the F.C.C. and was generally happy with the outcome of last week's decision.

"We will benefit," said Christine Heckart, who oversees marketing at Juniper Networks, a company in Sunnyvale, Calif., that is a major provider of equipment to broadband companies. "I would think there are few companies with more to gain from this," Ms. Heckart said of Juniper's response to the F.C.C.'s decision.

Another member of the broadband coalition is Next Level Communications, in Rohnert Park, Calif., north of San Francisco. Next Level is predicting increased demand for its technology, which allows telephone companies to use their existing voice lines to also offer broadband services, like interactive entertainment and Internet access, said Geoff Burke, its director of marketing. 

Mr. Burke said the F.C.C.'s decision gave the telephone companies the incentive to invest in services that compete with the cable companies, now that the telephone companies know they will not have to lease their broadband capacities to competitors. "This evens the playing field," he said. "It lets the phone companies compete head-to-head with cable."

This decision will accelerate the spread of broadband to homes, Mr. Burke said. "What you'll see is more processing power, more interactive entertainment and more networking equipment," he said. "That's what drives the Valley."
*******************************
Mercury News
Santa Clara County faces key decision on electronic ballots
By Katherine Corcoran
February 24, 2003

The future of electronic voting may be rewritten this week in Santa Clara County, where county leaders are weighing warnings that the touch-screen voting machines they want to buy are more prone to error and fraud than the systems they would replace.

National experts on computer security have raised alarming questions elsewhere about the validity of elections run on touch-screen machines, which currently don't produce a paper record a voter can use to check that the machine has recorded decisions accurately. But scientists didn't get far until they spoke up late last month in the heart of Silicon Valley, where the Santa Clara County Board of Supervisors delayed buying 5,000 ATM-like machines for 730,000 registered voters after hearing their concerns.

California Secretary of State Kevin Shelley followed up on the decision by convening a statewide task force on the security of touch-screen voting. And now, three voting machine vendors vying for Santa Clara County's $20 million contract are saying they will install a paper audit system at no extra cost if the county becomes the first jurisdiction nationally to require it.

What the supervisors decide Tuesday, when they're scheduled to adopt a new voting system, will ripple through other California counties and is likely to affect the overall move toward electronic voting, the most popular antidote to the hanging chad debacle of the 2000 presidential election.

``You're at the beginning of what's becoming the modern argument in voting systems,'' said Kimball Brace, president of Washington, D.C.-based Election Data Services political consulting firm and an expert witness in former Vice President Al Gore's court case to get a Florida recount in 2000. ``What we have out in your jurisdiction is the first cut of people saying, `Wait a minute, shouldn't you have a physical ballot in case there is a recount?' It hasn't come up elsewhere because a lot of people haven't thought about it, or comprehended the need for it.''

Skepticism voiced

But in Silicon Valley, where about 42 percent of households have someone working in the technology industry, people are more aware of the fallibility of computers. In fact, some of the best brains in the cyber world, who happen to reside locally, are also the loudest voices demanding that electronic ballots should also be printed on paper that voters can inspect. The county registrar would also keep a copy of the paper record to check the computer in case of irregularities or recounts.

Otherwise, they say, voters have no way to verify that the votes they punch on the screen are the same as those recorded by the computer, and officials would never know if an election had been stolen. Trusting the machine to self-audit, critics say, is akin to an IRS audit on someone who created his own receipts.

``It goes to the heart of our democracy,'' computer scientist Barbara Simons told supervisors last month. ``If we care about democracy, there's no more important issue before this board.''

Santa Clara County, like many other counties, is under court order to replace its punch-card voting system -- the same system that created so much havoc in Florida -- by the presidential primary in March 2004. After a nine-month process, the county staff recommended in January that supervisors negotiate a $20 million contract with Sequoia Voting Systems of Oakland, maker of electronic voting systems across the country, including in Riverside County in California.

Sequoia's systems don't produce paper ballots that voters can verify, and supervisors didn't ask for such a device in their bid proposal. Vendors and election officials say paper ballots aren't needed because the machines have internal safeguards, are certified by federal and state governments and tested repeatedly before and after elections.

``We still believe they're secure,'' Assistant County Executive Peter Kutras said Friday. ``There are not any issues that should cause concern in terms of voter confidence.''

Last-minute appeal

But just as supervisors were about to award the contract, they were stopped dead by an 11th-hour appeal from Stanford University computer scientist David Dill, who has collected 300-plus signatures from top scientists and technologists nationwide on a petition urging that the machines have a voter-verifiable paper backup. They say it would be easy for a computer programmer to alter the way the machine counted votes during an election and keep the change from showing up on a test. They also say voting software, like any other kind, is not immune to bugs.

``The election could be running smooth as silk,'' Dill said, ``only the wrong person is elected and no one can tell. No one can prove it.''

After the Florida debacle in the 2000 presidential election, state after state began moving to electronic voting machines. The number of registered voters casting their ballots electronically has more than doubled to 32 million people nationwide since the last presidential election. Last year, Californians approved $200 million in bond money to upgrade voting systems, just as a federal court, in a case brought by the American Civil Liberties Union of Southern California, outlawed punch cards such as the one used in Santa Clara County.

None of 510 counties nationwide using electronic voting machines last November required paper ballots be produced for voters to inspect at the time of voting. Though electronic voting ran smoothly in Riverside and Alameda counties, there were numerous problems in other states, from poll workers not knowing how to turn on the machines to votes registering for the wrong candidates. Rice University computer scientist Dan Wallach tried to raise the paper-audit issue in Houston after the county there adopted electronic voting machines, to no avail.

``There was a certain combination of voter apathy and the naive Utopian view that it's new, therefore it must be better,'' said Wallach, a computer security expert who made headlines as a Princeton graduate student when he found security flaws in Sun Microsystems' Java software, after the company claimed it was impenetrable. ``David Dill had the unique advantage of being in an environment where people get it.''

Vendors and election officials say problems occur with touch-screen machines not because of fraud, but because counties didn't spend enough time training poll workers and introducing voters to the new technology. Santa Clara County officials fear that's what will happen here if the supervisors take any more time on security problems.

Even if supervisors order a paper audit installed, they can't purchase equipment until the machines are certified by the secretary of state, which could take months. Meanwhile, county officials want to have enough time to get the new voting system working by the November municipal and school district elections, as a trial run for March 2004.

``We strongly recommend the board vote on Tuesday,'' Kutras said.

Whatever supervisors do, many people are sure to be watching.
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New York Times
February 23, 2003
How the Protesters Mobilized
By JENNIFER 8. LEE

WASHINGTON  Before the global protests against war in Iraq last weekend, organizers were already making conference calls and passing out fliers for their next set of demonstrations, including one scheduled for next Saturday, outside the White House.

But then, the worldwide protests drew millions of people onto the streets, from San Francisco to London, and the Bush administration hit some diplomatic roadblocks. Sensing delay in White House momentum, the organizers themselves paused and decided to make a strategic move, delaying the demonstrations from March 1 until March 15. They spread the news the old-fashioned way, through alternative radio stations and word of mouth, and the instantaneous way, through Web sites and e-mail messages.

Organizing a protest is fundamentally about logistics: where do people meet, how do they get on a bus, who will order portable toilets. Obviously, the Internet, like fax machines and copiers, has made the tasks easier. Before last weekend's protests, for example, people registered online for buses to New York. And a mass e-mail notice was sent out to New York protesters, informing them about public bathrooms in Midtown Manhattan and giving them a number to call in case of arrest. 

But the Internet has become more than a mere organizing tool; it has changed protests in a more fundamental way, by allowing mobilization to emerge from free-wheeling amorphous groups, rather than top-down hierarchical ones. 

In the 60's, the anti-Vietnam War movement grew gradually. "It took four and a half years to multiply the size of the Vietnam protests twentyfold," said Todd Gitlin, a sociology professor at Columbia University and longtime liberal activist.

The first nationwide antiwar march in 1965 attracted about 25,000 people. By 1969, the protests had grown to half a million. But increasing the numbers required weeks and months of planning, using snail mail, phone calls and fliers. 

"This time the same thing has happened in six months," Mr. Gitlin said. Even though momentum behind the demonstrations didn't grow until a month ago, after Secretary of State Colin L. Powell's presentation to the United Nations, more than 800,000 people turned out in 150 rallies in the United States last weekend, from 100 in Davenport, Iowa, to an estimated 350,000 in New York City. In Europe, more than 1.5 million protested. 

The protests had no single identified leader and no central headquarters. Social theorists have a name for these types of decentralized networks: heterarchies. In contrast to hierarchies, with top-down structures, heterarchies are made up of previously isolated groups that can connect to one another and coordinate. 

Because no central decision-making authority exists, protests can be localized and can appeal to new groups and individuals who don't live in areas where social protest information would typically reach. For example, Mothers Acting Up was started two years ago by four women around a kitchen table in Boulder, Colo., a liberal college town. But with their Internet site, www.mothersactingup.org, they have been able to reach 600 like-minded members across the country, many of whom participated in marches last week.

Technology also spreads word of rallies to countries where free expression is limited. In Singapore, where the government does not allow demonstrations at the American Embassy, cellphone text messages went out, exhorting recipients to gather at the embassy anyway. The text messages, which work like mass e-mail messaging to mobile devices, attracted at least a half-dozen placard-carrying demonstrators at the gates at the appointed time. The police rounded them up for questioning. 

"Whenever a new communications technology lowers the threshold for groups to act collectively, new kinds of institutions emerge," said Howard Rheingold, the author of "Smart Mobs: The Next Social Revolution," which documents self-organizing and leaderless movements. "We are seeing the combination of network communications and social networks." 

His book tells the story of how cellphone text messaging helped bring down Joseph Estrada, the Philippine president who was ousted after protests in 2001 over corruption. Text messaging advertised instant rallies, encouraged people to protest by wearing black and provided updates on the impeachment trial.

(In the same way, cellphone messaging is potentially alarming for the Chinese government. Officials do not have centralized control over the network and therefore cannot censor it, the way they do the Internet.)

E-mail lists have allowed individuals to create groups that defy geography and time. Thousands of people have joined hundreds of antiwar lists, and diverse streams of messages fly back and forth quickly, vastly different from the information flow in hierarchies. Since the beginning of the year, 300 messages have been posted on a popular antiwar list in Sydney, Australia, that has almost 900 members. The notes range from solicitations for donations to United Nations updates to appeals for local volunteers. 

This is mass mobilization, but also nimble mobilization. Protesting a war that hasn't begun requires a constant eye on the calendar of government action. And the movement's flexibility maximizes its impact, organizers say. A protest date can easily be moved, timed to affect the latest diplomatic maneuver.

"We are trying to stay a step ahead of the administration by our planning," said Damu Smith, chairman of Black Voices for Peace, one of hundreds of groups involved in last week's demonstrations. And staying ahead of the game "is absolutely strategically central in our ability to be effective in what we are doing." 

Military theorists are fond of saying that future warfare will revolve around social and communication networks. Antiwar groups have found that this is true for their work as well.

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New York Times
February 20, 2003
Trial Near in Patent Case on Key Internet Technology
By JOHN MARKOFF

SAN FRANCISCO, Feb. 19  The patent claims of a 74-year-old inventor over a technology that is the foundation of virtually all online commerce will come to trial next week in a court test that could force huge payments from some of the Internet's most powerful companies.

The legal challenge was filed two years ago against VeriSign Inc., RSA Security Inc. and four other companies by Leon Stambler, a retired electronics engineer who lives in Pompano Beach, Fla. He is contending that software they use to let Internet commerce companies authenticate their customers and secure communications with customers violates his patents.

Beginning in 1992, Mr. Stambler obtained seven patents covering the creation of a code to be used in electronic transactions, making it possible for one party to authenticate another and to create a secure transmission of data.

In 1999 he began contacting a wide range of technology and electronic commerce companies, asserting that his patents covered an Internet Web security standard known as the Secure Sockets Layer, or S.S.L., which was developed by Netscape Communications, now part of AOL Time Warner. The approach, which scrambles the data passing from a Web site to its customers, has become the industry-standard method for protecting Web communications and is widely used in all popular Web browsing software.

In February 2001, Mr. Stambler sued RSA Security, VeriSign, the First Data Corporation, the Openwave Systems Corporation and OmniSky in the United States District Court in Delaware. In September, he added a Canadian security company, the Certicom Corporation, to the lawsuit. Several of the companies have since settled with Mr. Stambler in response to the threat.

The patents have infuriated Internet security experts who contend the Stambler patents simply imitate the original work done by cryptographers at Stanford University and Massachusetts Institute of Technology during the 1970's and 1980's. The technology underlying Netscape used public algorithms licensed from RSA Data Security, a company started by the M.I.T. researchers, based in Bedford, Mass. 

"This is outrageous, there's nothing novel here," said Bruce Schneier, chief technology officer and founder of Counterpane Internet Security Inc. in Cupertino, Calif. "I believe this is a classic submarine patent." 

The phrase submarine patent refers to the practice popularized by a Nevada inventor, Jerome Lemelson, to take advantage of the patent application process by extending and continually broadening the scope of initial patent claims to encompass technologies created and commercialized by others. 

The United States patent process has recently been altered in an effort to try to restrict such tactics.

Internet technologists also say that the United States Patent Office is overburdened and is frequently not able to discover prior inventions that would invalidate new patent claims.

"The Patent Office is woefully overworked," said Jack Russo, an intellectual property lawyer at Russo & Hale in Palo Alto, Calif. "It is not uncommon to see stuff slip through."

Mr. Stambler, however, has had success in persuading several corporations to license his patents. First Data, a credit card processing company, has paid $4 million for access to the technology, according to a person close to the dispute. A spokesman for the company said it had taken a license on the patents but said that under the terms of the agreement the amount of the license was confidential. 

Such settlements frequently do not reflect the strength of the patent claims as much as a judgment made by defendants about what it might cost to go to court, Mr. Russo said.

"Patent litigation is fairly expensive and you will see people settle for what seems to be large sums," he said, adding that it was often simply based on an analysis of the potential risk.

Openwave and Certicom have also struck licensing deals with Mr. Stambler, according to Securities and Exchange Commission records. OmniSky, a wireless Internet company, has filed for bankruptcy protection and was recently acquired by EarthLink, the Internet service provider.

A spokesman for VeriSign said the company would not comment on pending litigation. 

A spokesman for RSA Security said, "We believe that Mr. Stambler's claims are without merit, and we intend to defend the lawsuit vigorously."

Telephone calls to Mr. Stambler in Florida went unanswered.
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Reuters Internet Report
E-Commerce Sales Rise in Fourth-Quarter
Mon Feb 24,10:12 AM ET

WASHINGTON (Reuters) - Retail sales over the Internet grew by 28.2 percent in the fourth quarter of 2002 compared to the same quarter a year earlier, rising to $14.33 billion, the Commerce Department said on Monday.


The gain was the smallest year-over-year increase since the second quarter's 24.5 percent gain, Commerce said in its quarterly report on sales of goods and services over the Internet or other electronic networks or by e-mail. Payment does not have to be made online for the transaction to be counted. 


Unlike most economic indicators released by Commerce, the data are not adjusted for seasonal or holiday-related variations, a limitation that sharply restricts their usefulness to analysts. Commerce began separately tracking e-commerce sales in late 1999. 


In comparison with the third quarter, sales grew by 29.3 percent in the last three months of 2002. Overall retail sales grew by a slower 5.1 percent compared to the third quarter. That brought e-commerce sales as a percentage of overall sales to their highest level since Commerce began its tracking, a minuscule 1.6 percent of total retail purchases. 

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Lillie Coney
Public Policy Coordinator
Association for Computing Machinery Public Policy Committee
Suite 510
2120 L Street, NW
Washington, D.C. 20037
202-478-6124 (phone)
202-478-6313 (fax)