Clips May 13, 2003

[Lillie Coney <lillie.coney@xxxxxxx>]

Clips May 13, 2003

ARTICLES

HHS readies health architecture
Smart cameras to watch Canadian borders
Videoconferencing for emergencies
Democrats grill homeland CIO
Study finds investment in e-gov is still a government priority 
Web portal is communications hub for terrorist drill 
OPM appeals GAO decision on Recruitment One-Stop 
SEC sues spammer for Internet fraud
Draft of Bill On Mass E-Mail Is Called Weak 
Wyoming ranks high in student-to-computer ratio
Company Sues MasterCard Over Fees for Online Sales
Military Hardware Is Adapted to Fight SARS
China checks SARS rumor messages 

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Federal Computer Week
HHS readies health architecture
BY Judi Hasson 
May 12, 2003

The Department of Health and Human Services is working on an enterprise architecture plan that would include every federal department dealing with health care issues.

In discussing what could become the biggest enterprise architecture plan in the federal government, HHS' chief information officer Melissa Chapman said the idea is still in the planning stages but estimated it could be initiated in the next six to 12 months.

The plan would develop an enterprise architecture for federal health systems across departments, incorporating agencies such as the Defense Department; the Department of Veterans Affairs; the Bureau of Customs and Border Protection, which deals with food importation; and the Environmental Protection Agency, which handles health issues relating to the environment.

"A federal health architecture would integrate component bases across government," Chapman said. "For the first time, we would use the federal enterprise architecture to get it done."

The plan also would include partnering with patient advocacy groups and private-sector health organizations, such as the American Red Cross, to develop the best architecture plan possible. In the next few weeks, she said, a request for information will be issued calling for ideas from private industry about how to get this done.

Chapman said an enterprise architecture for health systems would allow agencies to accurately track the availability of the nation's blood supply. It would also help establish data standards that would allow agencies to more easily share information.

Felix Rausch, executive director of the Federal Enterprise Architecture Certification Institute, said the idea could work as long as Chapman identifies the most important people in every department to help plan the architecture.

"What you come out with is top-line architecture," said Rausch, who with Chapman participated in a session on enterprise architecture at last week's CIO Summit in Savannah, Ga., sponsored by FCW Media Group.

Creating an enterprise architecture is one of the major requirements for agencies seeking money for fiscal 2005. And many in the high-tech field believe an architecture is the best way to effectively solve problems as varied as tracing the source of a health epidemic and finding the snipers who shot 13 people in the Washington, D.C., area last fall.

"How do we get from paper and pencil to fully utilizing this technology?" asked Dr. Claire Broome, senior adviser to the director for integrated health information systems at the Centers for Disease Control and Prevention. 

Broome, who spoke at the Savannah conference, outlined how CDC's Public Health Information Network depends on interoperability to keep track of potential outbreaks and spot real ones.

"We have a huge data management challenge," she said.
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Federal Computer Week
Smart cameras to watch Canadian borders
BY Judi Hasson 
May 12, 2003

The U.S. Bureau of Customs and Border Protection is stepping up security on the border with Canada by deploying intelligent software for hundreds of video cameras that can see and analyze unusual activities or movements in real time.

The bureau, part of the Homeland Security Department, awarded a contract to ObjectVideo, a Reston, Va., company that develops software that provides real-time computer video analysis. ObjectVideo will install the new video surveillance system at ports of entry along the U.S./Canadian border  the longest contiguous border in the world. 

The award is part of a larger project to use state-of-the-art technology to tighten border control in the wake of the Sept. 11, 2001, terrorist attacks.

Clara Conti, ObjectVideo's chief executive officer, said the software allows users to program the system to look for specific objects or any activity out of the ordinary  a person climbing a fence, for example, or an unusual object at the border.

It's surveillance by exception. The system sifts through the vast majority of routine images, so users can focus on causes for concern.

The software evaluates surveillance videos as they are captured, so the bureau can respond immediately if something suspicious is found.

"When something happens, there is a computer or wireless alert," Conti said.

A bureau official described the contract value as a "substantial amount" but declined to say how much.

"It is not a camera," the official said. "It is a processing unit behind the scenes gathering data for video feeds with artificial intelligence."

ObjectVideo will begin installing its technology, Video Early Warning, at ports of entry in Washington state. 

The technology uses artificial intelligence known as computer vision to detect and identify objects captured on video. It enables bureau officials to use manpower more efficiently. Instead of relying on an individual to monitor a computer screen, the software does it for the agency.

ObjectVideo was founded in 1998 by three former research scientists from the Defense Advanced Research Projects Agency who were experts in computer vision, an area of artificial intelligence. The company has similar contracts with other civilian agencies and the Defense Department.

***

Seek and find 

Potential applications of computer vision include:

* Personnel protection  Monitoring restricted areas, such as parking lots, for unauthorized objects, including vehicles or packages. 
* Asset protection  Detecting unauthorized motion of watched objects.

* Access control  Monitoring movement of people through access points.

* Intrusion detection  Monitoring perimeters for unauthorized access.
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Federal Computer Week
Videoconferencing for emergencies
BY Dibya Sarkar 
May 12, 2003

Norwegian-based company Tandberg LLC today is unveiling two new briefcase-size videoconferencing units geared for field use by civilian emergency workers and military personnel.

Based on open architecture, the highly secure Tandberg Tactical 6000 and 2500 systems include a 15-inch screen, headset, camera, microphone and speakers. The rugged units are enclosed in heavy-duty aluminum cases and measure 18 by 21 by 8 inches.

The company says both systems contain the highest level of standards-based encryption  Advanced Encryption Standard and Data Encryption Standard with the ability to integrate Type 1 encryption devices. Both can connect to satellite, leased-line or other external networks and both work on multiple network protocols, such as IP or ISDN.

The 2500 system can perform up to speeds of up to 384 kilobits/sec with ISDN service and 768 kilobits/sec with IP service. The 6000 system has bandwidth of up to 2 megabits/sec for ISDN and 3 megabits/sec for IP.

Cost ranges from $21,490 to $34,490 per unit.

Robert Widlandky, Tandberg's director of product marketing, said the units could help at onsite briefings during emergencies. For example, police, fire and emergency medical workers could use it to relay pictures of earthquake damage in real time. In military training exercises out in the field, officials could use it for routine communication or to display maps.

In the past, the company has sold the "guts and intelligence" of the unit, he said, but never as a whole package. Users had to integrate other components, such as a screen or camera. This marks the first time, a standalone, all-integrated unit is available.

Widlandky said while videoconferencing has been prevalent in military and intelligence circles, state and local agencies are only now starting to learn more about such communication devices.

"We're seeing a lot more interest than we have in the past," he said. Such systems have become more affordable with the use of IP, he said, adding that state and local organizations are realizing the benefits of such systems. He said cutting down on travel costs is a driver, but not a main one. Many are using videoconferencing for training as well.
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Federal Computer Week
Democrats grill homeland CIO
Cooper criticized for delayed terrorist watch list, slow integration of agencies
BY Sara Michael 
May 12, 2003

Democrats criticized the Homeland Security Department and its chief information officer last week for failing to move more swiftly to consolidate terrorist watch lists and share information about potential terrorists with law enforcement agencies.

Rep. Henry Waxman (D-Calif.), the ranking member on the House Government Reform Committee, criticized the Bush administration for its "pingpong approach" in addressing the problem. The lack of a centralized watch list allowed several of the Sept. 11, 2001, terrorists to enter the United States even though their names were on a CIA list.

Responsibility for the lists has been passed from the White House to the FBI, back to the White House and then to DHS, Waxman said. "This is not a recipe for success."

Watch lists are maintained by a number of agencies including the departments of State, Justice, Defense, Transportation and Treasury. They are designed to provide information about known or suspected terrorists. When an individual applies for a visa or enters the United States, for example, government officials check the name against the lists to determine if the person should be denied entry or apprehended while in the country. 

A primary goal for DHS is to consolidate the lists so that every agency has access to all the names. Testifying before the panel at the tense hearing, Steve Cooper, DHS' chief information officer, said a coalition of intelligence officers are working under the guidance of the newly formed Terrorist Threat Integration Center to figure out how to merge the lists.

"They are at work to define the process to which your question can be answered," Cooper told Rep. John Tierney (D-Mass.), who asked him who was in charge of merging the lists. "Shortly, we will have answers," Cooper said.

"You're kidding me.? I'm just stunned," Tierney shot back. "To find out now we're almost two years [after the Sept. 11 terrorist attacks] and this is still not done is just staggering. This is an abject failure of leadership."

Waxman condemned White House officials for disregarding the General Accounting Office's efforts to contact them during an investigation on the issue. GAO's report, released last month, concluded that the Bush administration has yet to fix the problem of agencies' maintaining and hoarding separate lists. 

Last week, Cooper told Federal Computer Week that a consolidated watch list would be ready in the next few weeks, but he declined to elaborate.

Information sharing is a major focus for the department, Cooper told the lawmakers, and it is making slow, but steady progress toward merging the systems and cultures of the 22 components that are now part of DHS. Officials are working on a departmentwide enterprise architecture and expect a workable plan by September.

Rep. Stephen Lynch (D-Mass.) also criticized DHS, focusing on officials' efforts to overcome resistance to sharing information. "I appreciate all your work in information technology, but there is a human fault," he said. "What are we doing to work for a change in that culture of secrecy and obsessive control of information in those agencies?"

Cooper said the department has begun to tackle the cultural barriers among the components by creating integrated teams to agree on a shared vision of DHS and tactics for sharing information. He said the teams are creating memoranda of agreement that outline specific requirements for information sharing, but the agreements do not include incentives for sharing or penalties for not sharing.

"We've had some good dialogue. We've actually been able to reach some agreements," Cooper said. "We are actually spelling out the mechanisms that will get us to the integration we are talking about."

Committee Chairman Rep. Tom Davis (R-Va.) noted that DHS inherited the information problems, including the disparate watch lists, and that watch lists had already existed in many of the agencies. He also commended DHS officials' deliberate focus on developing an enterprise architecture, rather than spending money without a solid plan.

***

Watch list to dos 

In a report released last month, the General Accounting Office outlined several recommendations to promote the integration of a dozen terrorist watch lists:

* Define an architecture for the lists that addresses national security issues and privacy protections.

* Capitalize on state, local and private-sector information sources.

* Adopt standard policies for sharing watch lists and address legal and cultural barriers to sharing.

* Align strategies with agencies' enterprise architectures.

* Report to Congress by Sept. 30, and every six months thereafter, on the status of the efforts and any legislative action needed to accomplish them.
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Government Computer News
05/13/03 
Study finds investment in e-gov is still a government priority 
By Jason Miller 

Even in this time of tight budgets, government?s commitment to reaching citizens through e-government is strong, according to a new report by the General Services Administration?s Interagency Advisory Board. 

The report, High Payoff in Electronic Government, said that focusing technology?s use on citizens? needs helps programs ?achieve maximum payoff.? 

The board, within GSA?s Office of Citizen Services and Communications, provides guidance on emerging IT issues for agency technology personnel. The board?s members include three CIOs from federal, state and local governments, GSA IT experts and representatives of the Federation of Government Information Processing Councils. Though dated March 31, the board?s report was released yesterday. 

The researchers looked at federal, state and local e-government programs as well as those in other countries. The study found that governments cannot use traditional return on investment analyses because they do not fully measure the impact of e-government. Instead, governments need to develop new metrics to determine the effect e-government programs have on the public, the study said. 

E-government, the researchers found, has five benefits for the public: 


Reduces costs of government operations 


Encourages economic development by promoting tourism and fulfilling business needs 


Consolidates and integrates systems, which saves money and makes information easier to find and use 


Increases access to all levels of government 


Improves the government?s service to citizens. 

To view the report online, go to www.gsa.gov/cm_attachments/GSA_PUBLICATIONS/High-Payoff-finalreport_R2D7J7_0Z5RDZ-i34K-pR.doc.
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Government Computer News
05/13/03 
Web portal is communications hub for terrorist drill 
By Richard W. Walker 

Government emergency response workers this week are using a Web portal to exchange vital information during Topoff2, the national terrorist attack exercise in Chicago, Seattle and Washington. 

Run by the Homeland Security Department and the State Department, the Topoff2 drill is testing the readiness of federal, state and local agencies? ability to respond to attacks coming from weapons of mass destruction. 

The five-day exercise includes a simulated radioactive dirty bomb attack on Seattle and a biological attack on Chicago. It?s the second such drill the federal government has overseen; the first was held prior to the terrorist attacks in 2001. 

The portal, built by Extranet Secure Portals Group LLC of Arlington, Va., lets federal, state and local officials coordinate their responses to the mock attacks. 

The portal is intended to help overcome traditional stovepipe barriers to collaboration across levels of government, Topoff2 officials said. 

?This is a password-protected, Web-based architecture that allows all the important responders to participate and get the data they need to do their jobs,? Topoff2 co-director Theodore Macklin, a member of Homeland Security?s Office for Domestic Preparedness, said yesterday. 

Officials also are testing new software that will improve data sharing among federal, state and local responders. 

Lack of interoperability was exposed in the Sept. 11, 2001, terrorist attacks as a major weakness in the ability of government entities to manage responses to emergencies. 

?We?re testing new tools for communications and rapid information sharing between and among those agencies and groups that need to have the information and need to have it quickly,? Macklin said. He declined to identify the software ?at this particular time.? 

In Arlington, Va., about 80 workers from 26 federal agencies in a master control cell are using notebook PCs to access the portal and coordinate their responses to the terrorist scenarios in Chicago and Seattle. 

?The first responders in Seattle and Chicago are the soldiers on the ground, but they need to be supported,? Macklin said. ?The federal government?s job is to support the response to these attacks and identify and pursue the terrorists. It?s all about coming to understand that federal, state and localand internationalentities must work in partnership. That?s the only way we can defeat terrorism in the homeland.?
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Government Computer News
05/12/03 
OPM appeals GAO decision on Recruitment One-Stop 
By Jason Miller 

The Office of Personnel Management last week asked the General Accounting Office to reconsider the bid protest decision it handed down regarding the contract for OPM?s Recruitment One-Stop e-government project. 

GAO recently ruled that OPM should re-evaluate all vendors? bids to determine whether the proposed services are within the scope of the winning company?s schedule contract. It also recommended that OPM reopen discussions with all companies in the competitive range and re-evaluate revised offers. 

The ruling, on behalf of Symplicity Corp. of Arlington, Va., put the Recruitment One-Stop project in limbo. 

OPM in January awarded a five-year contract for revamping the federal Web site, www.usajobs.opm.gov, to TMP Worldwide Government Services of New York, the company that runs Monster.com. OPM could extend the contract to 2013 through option years, officials said. The potential value of the contract is $62 million over 10 years. 

OPM, TMP and Symplicity did not return phone calls seeking comment on the reconsideration. 

A GAO official said it is unusual for agencies to file for a reconsideration. The official said about 90 percent of all appeals are filed by protestors. GAO has not yet assigned the case to an attorney. 

The official added there is no timetable for GAO to decide on the appeal, and it may want OPM to submit a 10- to 30-page document furthering its argument on why GAO?s decision is incorrect.
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Computerworld
SEC sues spammer for Internet fraud
By LINDA ROSENCRANCE 
MAY 13, 2003

The U.S. Securities and Exchange Commission (SEC) filed fraud charges yesterday against a 20-year-old Kentucky man who raised more than $100,000 in an online investing scheme. 
According to a statement from the SEC, between May 2002 and February 2003, K.C. Smith of Oak Grove, Ky., allegedly set up two Web sites -- which have since been taken down -- and sent out approximately 9 million spam e-mail messages to potential investors promising them double-digit monthly returns, which were backed by a phony investment company, Kryer Financial. 

Smith could not be reached for comment. 

Regulators also alleged that Smith said the investments were insured by the U.S. Deposit Insurance Corp. (USDIC), another entity he had invented. According to the SEC, Smith created a Web site for the USDIC, featuring the SEC's official seal. 

According the SEC complaint, filed in the U.S. District Court, Eastern District of Tennessee, Northeastern Division, none of the money Smith raised through the Web sites was invested and none of it was insured. The SEC said Smith used the money to pay for his living expenses. 

The complaint also alleged that Smith promoted the fictitious investment opportunities in 9 million spam e-mail messages and that he took careful steps to conceal his identity, including calling potential investors on disposable cellular telephones, using stolen service provider accounts to access the Internet, and collecting investor funds through online payment services that maintain payee confidentiality. 

SEC spokesman John Stark said the SEC learned of Smith's activities through complaints made by consumers at its Complaint Center. 

Stark said yesterday that Smith, while neither admitting nor denying the allegations, agreed to a settlement calling for him to repay the $102,554 to the investors and $4,956 in interest. Stark said Smith has also agreed not to commit any more violations in the future. 

Stark said SEC officials opted not to ask for any further monetary penalties because the commission decided Smith could not afford to pay those penalties.
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Washington Post
Draft of Bill On Mass E-Mail Is Called Weak 
A Key Point: Is It 'Spam' If Sender Is Legitimate? 
By Jonathan Krim
Tuesday, May 13, 2003; Page E01 

Lobbyists for the marketing, retailing and Internet service industries have been working closely with two powerful House committee chairmen to craft federal legislation to curb junk e-mail, creating a bill that state law enforcers and several consumer groups say would do more to protect mass e-mail advertising than to combat spam.

According to participants in at least three meetings in recent weeks, e-mail marketers prevailed in adding provisions that would supersede tougher state anti-spam laws, would prohibit consumers from suing spammers and would give companies the right to send e-mail to anyone who has done business with them in the past three years.

"If I thought that everything that was legal under this bill would end up in my mailbox, I'd jump off the Capitol building," said one industry participant. But he said the bill, which could be introduced as early as this week, is a necessary compromise between fraudulent and offensive spam and legitimate marketing.

A May 9 draft of the bill was obtained by The Washington Post. The legislation will be co-sponsored by Reps. W.J. "Billy" Tauzin (R-La.), who heads the House Energy and Commerce Committee, and F. James Sensenbrenner Jr. (R-Wis.), chairman of the Judiciary Committee. Tauzin and Sensenbrenner have significant clout in the Republican-controlled House, giving their bill a leg up over other proposed legislation and attracting active industry lobbying. 

Sources said Tauzin and Sensenbrenner staffers ran meetings that included the Direct Marketing Association, the U.S. Internet Service Providers Association, America Online, Microsoft Corp., Yahoo Inc. and the National Retail Federation. A Consumers Union representative attended some of the meetings, as did staffers for Rep. John D. Dingell (D-Mich.), the top Democrat on the Energy and Commerce Committee.

Two participants said the bill initially was to have been modeled after the federal "junk fax" law that bans all unsolicited fax marketing. 

Instead, the draft would require commercial e-mail to allow users to "opt out" of future mailings and to provide accurate electronic and physical addresses of the senders. It also would prohibit the "harvesting" of e-mail addresses that spammers using special software obtain from Web pages.

For years, e-mail marketers fought off any federal attempt to regulate spam, fearing that lumping legitimate e-mail marketing in with messages selling body enhancement, diet fads and get-rich-quick schemes would squelch what has become the most successful form of Internet advertising.

As spam has escalated to an estimated 40 percent of all e-mail, however, legitimate marketers have seen their messages overwhelmed by the tide of unsavory junk mail, and they have sought to legally separate the two. Meanwhile, online e-mail providers such as AOL, Microsoft and Yahoo have fought to contain spam and have sued some senders. The bill would allow Internet providers to sue but would bar all others from doing so.

But online providers also seek to make money from their large numbers of users by marketing to them, and they want to protect their ability to do it. 

In one recent example, Microsoft's Hotmail service sent an e-mail to its members with the subject line "MSN Hotmail fights back against spam." The e-mail is a collection of advertisements for Mother's Day gifts, computers and Microsoft services, including the company's efforts to stop spam. 

A Microsoft spokesman said the message was one of the company's regular newsletters to its members.

But anti-spam groups argue that those messages prove their point that spam is any unsolicited commercial e-mail, regardless of how "legitimate" the vendor might be.

"This is yet another bill . . . attempting to get rid of the porn and the scams, but really clearing the way for legitimate companies to spam," said John Mozena, co-founder of the Coalition Against Unsolicited Commercial E-Mail, or CAUCE. 

Mozena argues that while most spam is now generated by about 200 bad actors, legitimate companies will actively begin to take their places after federal rules are established on what they can and cannot do.

State attorneys general think the proposed bill is riddled with loopholes, in addition to preventing states from enacting and enforcing tougher laws.

Paula Selis, a senior attorney with the Washington State attorney general's office, said her state bans deceptive subject lines, something the proposed bill would not do. 

Selis, who said that comments from the National Association of Attorneys General were not solicited by the committees, added that the bill is weaker than current laws limiting telemarketing, which allow for tough state regulations.

And she worries that much of the bill's wording is vague.

For example, the draft legislation would give any company with a "pre-existing" relationship with customers the right to send them e-mail for three years.

But that relationship includes providing customers with information. Selis said that consumers who visit certain Web sites that capture information about them could be sent unsolicited mail. 

Chris Hoofnagle, a lawyer with the Electronic Information Privacy Center, described as "absurd" a part of the bill that allows subsidiaries or "lines of business" to be treated separately.

Thus, he said, a company with several hundred divisions or affiliates, such as huge financial institutions, could e-mail consumers from each of those units and require users to opt out of mailings from each one.

A spokesman for AOL, which has publicly supported tough state anti-spam laws, said that preempting state laws was important so that e-mail marketers have regulatory "clarity" and do not have to deal with a patchwork of state rules. The key, he said, is to banish fraudulent spammers.

Tauzin spokesman Ken Johnson said he would not comment on bills that have not yet been introduced. But he said that 20 outside groups were involved in the talks on the bill, and that "we met with everyone who asked for meetings."

A spokesman for the Direct Marketing Association did not return calls seeking comment.
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USA Today
Wyoming ranks high in student-to-computer ratio

CASPER, Wyo. (AP)  Wyoming lags behind other states in using computer technology in schools for testing, Education Week magazine reported. 
But the state ranks high for student access to computers and the Internet, and at 78% has the nation's second-highest rate of students using computers during instruction. 


"What this study has shown is we are just as dedicated to providing access to technology as every other state in the union," State Superintendent of Public Instruction Trent Blankenship said in a prepared statement. "This is a significant achievement for Wyoming considering the rural nature of many of our districts and our low density." 

Wyoming was among the first states to link every school to one another through the Wyoming Equality Network, Blankenship said. It also is one of just a few states that make video conferencing available at every high school. 

The Education Week report, "Technology Counts 2003," was compiled using 2002 data. It ranks Wyoming fourth for the ratio of students to computers. 

Wyoming averaged 2.5 students per computer statewide and 1.9 students per computer in high-poverty schools, those in which more than half of students are eligible for free or reduced-cost lunches. 

The national averages are 3.8 students per computer and 4 per computer in high-poverty schools. 

In high-minority schools, the state and national averages were the same with 4.1 students per computer. Those schools are ones in which more than half the students are minorities. 

When the report looked at numbers of students per Internet-connected computer, Wyoming again placed in the top four with 3.9 students per computer. Nationally there are 5.6 students per Internet-connected computer. 

All Wyoming schools have at least one classroom with Internet access, said Mike Hamilton, director of data and technology for the Wyoming Department of Education. 

The Education Week report, relying on 2002 data, stated 95% of Wyoming's schools were so connected. 

"One of the golden nuggets Wyoming education has is the Wyoming Equality Network, which connects 98% of the schools in Wyoming to a T1 line," Hamilton said. 

A T1 line can carry more information, faster than regular lines. 

Twelve states have a computerized exam or pilot project under way to evaluate effectiveness of computer-based testing, the survey found. 

In five states, computerized testing was designed to partially meet requirements under the new federal law. 

"The new testing requirements for the (federal) No Child Left Behind Act of 2001 are spurring school districts and states to seek more efficient ways to assess students and help them prepare for high-stakes exams," the report said. 

Computerized testing also can provide immediate results. 

Natrona County School District 1 has begun to pilot use of "adaptive" testing, said Mike Flicek, the district's director of assessment and research. 

Adaptive testing administers harder or easier questions based on a student's progress on an exam. 

For example, if a student incorrectly answers one test question, the computer automatically adjusts and offers a slightly easier problem for the student to solve. If a student has an easy time with the test, the computer automatically increases the level of difficulty until the student's level of ability is well-matched. 

Such technology, however, could violate the No Child Left Behind requirements because students must be tested at grade level on state standards. 

"With adaptive testing, a 7th grader, for instance, might be bumped up to questions at the 8th grade level or dropped down to the 6th grade level," the report said. "As a consequence, debate is growing about whether adaptive testing can meet the purposes of the federal law, and if it doesn't, how the technology should be modified to meet the requirements." 

Natrona County does not use results of its adaptive tests for federal reporting. Instead it uses the statewide Wyoming Comprehensive Assessment System (WyCAS) tests.
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New York Times
May 13, 2003
Company Sues MasterCard Over Fees for Online Sales
By JENNIFER BAYOT

Paycom Billing Services, a company that processes credit card and check transactions for online merchants, sued MasterCard International yesterday, asserting that MasterCard violated antitrust laws and charged excessive fees.

The suit, filed in Federal District Court in Los Angeles, seeks at least $23 million in damages. It signals that Internet vendors might pursue their own antitrust accusations against the card network. Last month, MasterCard settled a class-action case brought by retailers, agreeing to pay $1 billion and to reduce its debit card fees, among other concessions. Visa USA, a co-defendant in the case, reached its own settlement two days later.

"The publicity from that lawsuit has caused Internet retailers to question how Visa and MasterCard treat them," said Joseph Cohen, a partner at Beirne, Maynard & Parsons, a Houston law firm. "It's sort of like a shark who sees blood in the water."

The lawsuit by Paycom, which is based in Marina del Ray, Calif., asserts that MasterCard uses its market power to charge Internet vendors excessive fees. Under MasterCard's rules, online merchants pay much more than traditional retailers to accept credit card transactions, as much as three or four times as much, according to The Nilson Report, which tracks payment systems. 

The higher fees apply whenever a customer cannot physically present a card to make a purchase. 

MasterCard has said the higher rate reflects the amount of fraud on the Web. According to Celent Communications, a research firm in Boston, fraudulent transactions account for more than 2 percent of online card spending, compared with 0.1 percent for in-store charges.

Most of Paycom's billing clients are sex-related Web sites, which industry experts say are more prone to fraud and "chargebacks," the term for purchases that customers deny making. Paycom says it processes about two million transactions a month.

David Robertson, publisher of The Nilson Report, said Internet companies were plagued by "friendly fraud," in which "your perfectly valid cardholder can deny a transaction he willingly made."

MasterCard, based in Purchase, N.Y., said it could not comment on the lawsuit because it had not yet been served with Paycom's complaint. 

Paycom's lawsuit also includes a frequent grievance of online merchants: that they must pay for any losses on fraudulent transactions. In contrast, any fraud associated with in-person transactions is absorbed by the credit card issuers.

Christopher Mallick, Paycom's chairman, predicted that other Internet companies would join the lawsuit or file their own.

"I can see this  or something like this  turning into a class action," he said. "There are thousands and thousands of merchants being affected by this."

Paycom said it had excluded Visa from its lawsuit because Visa had worked harder to reduce fraud, instead of leaving merchants to shoulder much of the cost. Mr. Mallick added that Visa's penalties for chargebacks were more reasonable. "Although restrictive, we think they're fair," he said. 

Over the last two years, both Visa and MasterCard have created products that authenticate online transactions. When online vendors use the new systems, called MasterCard SecureCode and Verified by Visa, their customers must type in passwords to make purchases, much as they use personal identification numbers at teller machines. The merchants are then no longer liable for fraud; instead, the card companies agree to pay for losses.
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New York Times
Military Hardware Is Adapted to Fight SARS
By WAYNE ARNOLD

INGAPORE, May 11  Authorities in Singapore have adapted devices originally developed for a military purpose  seeing enemies in the dark  to help combat the spread of SARS.

The new version of the device, called an infrared fever sensing system, detects passengers' body temperatures, spotting people with a fever  one of the symptoms of SARS  without having to touch them or even make them stop walking. The system, which is said to be is easy to use, was developed in a week.

Now, instead of having to pass a phalanx of inquisitive nurses, passengers arriving in Singapore simply walk past a camera. Those who appear to have a fever are taken aside for a closer look by a technician. 

The device has become so coveted by immigration authorities and other officials around the world who are hoping to spot infectious people that the creators of the system are planning to begin commercial production, in partnership with the Solectron Corporation of Milpitas, Calif. 

Development of the system began with a telephone call in early April from the Ministry of Health to Singapore's Defense Science and Technology Agency, asking for a more efficient way of screening incoming passengers for fever. 

"The problem wasn't new to us, because we were watching the TV," said Tan Yang How, the agency's division manager for sensor systems. Aside from being slow and intrusive, the use of nurses to screen all incoming passengers was a waste of skilled medical staff. "Nurses are needed back in hospital," Mr. Tan said. The agency in turn asked the Singapore Armed Forces to lend 50 of its thermal imaging scanners, used to help weapons systems locate targets that cannot be seen otherwise.

Together with Singapore Technologies Electronics, the manufacturer of the scanners, more than 30 engineers at the agency worked to modify the devices for the new purpose. Two flat-panel displays were added, along with an adapter to allow it to be plugged into an ordinary electrical socket. Engineers then took software originally designed to interpret thermal data to find cracks in rail lines and adapted it to search for hot people.

The finished product, which rolled into the airport a week later, is housed in a stainless steel trolley rather like a hot-dog stand. In place of an umbrella, the trolley has a camera covered in a black cowl, with only the lens protruding. One display screen sits on top of the trolley, and another is on a stand facing oncoming travelers.

The camera "sees" the warmth of objects relative to the ambient temperature, and translates that information into a video image of people walking by. The customized software is set to display anything cooler than 93.2 degrees as black. Normal exposed skin in the mid-90's registers as lime green, brightening to yellow as it gets warmer. Anything at 99.5 degrees or above, like a feverish forehead, glows bright red in the image. 

The system is remarkably sensitive, able to discern temperatures to within one-half a degree at a range of 15 feet. It can see warm bodies much farther away, though less precisely. 

Of course, not every fever is a sign of SARS, and a fever is not the only reason a person might redden on the screen, according to Ace Cheong, an operator of one of the devices. 

A sunburn, a few drinks of alcohol or just some brisk exercise might raise skin temperature enough to earn a trip to the special cubicle nearby for an encounter with an oral thermometer, Mr. Cheong said. He said that having eaten mutton or smoked a cigarette recently can also produce a red response. 

Singapore has 25 of the devices on trolleys deployed at Changi Airport, at ferry terminals and at the two causeways linking the city-state to neighboring Malaysia. It has lent several more to officials in Hong Kong and Canada.

But Singapore Technologies Electronics has bigger plans, according to Tay Hun Kiat, who heads the company's operations in Asia and the Pacific.

With orders for 110 more units in hand, the company has contracted with Solectron to begin producing commercial versions in a factory that now makes servers and circuit boards for Hewlett-Packard and I.B.M. The first off the line will sell for about $50,000 apiece.
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MSNBC
China checks SARS rumor messages 
Beijing cracks down on mobile phone messages

BEIJING, May 13  China has cracked down on rumors about SARS that are being spread through mobile phone messages with a tracking system used to guard against perceived threats to the government, industry sources said Tuesday.

      THE SYSTEM, set up ahead of a pivotal leadership transition in the Communist Party last November, pinpoints users who send more than 100 text messages in an hour over China Mobile and China Unicom?s networks, the sources said.
       Authorities can read the message in as little as 15 minutes after isolating the sender, one source familiar with the system told Reuters.
       ?The government told carriers to have it all in place in time to patrol illegal information before the 16th Party Congress,? he said.
       ?They caught a few Falun Gong practitioners then,? he said, referring to followers of a banned spiritual movement that has challenged the government in massive protests.
       ?Now, they are using it to find rumor mongers.?

      Police have detained at least 12 people for spreading rumors about Severe Acute Respiratory Syndrome, which has killed 252 people in China and infected more than 5,000, almost two thirds of the world total.
       Beijing has borne the brunt so far and the detentions are a fresh sign police are cracking down on scuttlebutt to keep a lid on the panic over SARS that has sparked scattered riots.
       Rumors spread by the mobile short messaging system (SMS) have ranged from Beijing officials being poised to impose martial law to crop dusters spraying the city with disinfectant by night. Another advised people to drink and smoke to ward off SARS.
       Mobile phone operators, vendors and Beijing?s Internet Supervision Bureau all declined to comment on the tracking system.
     But an executive at a Shanghai-based firm which has written tracking software for the government said: ?China wants to monitor SMS the way it watches the Internet.?
       Telecoms equipment vendors like Huawei Technologies Co Ltd and ZTE Corp as well as Finland?s Nokia have sold tracking systems to carriers, sources said.
       About 60 million Chinese surf the Internet and some 90 million send regular text messages.
       The administration already censors the Internet, television, radio, publications and sometimes screens telephone calls for content deemed objectionable.
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