The agreement appears to move the Internet industry in several ways.
First, it seems likely to bolster cable access against its nearest "broadband" competitor: digital subscriber line (DSL) technology.
Second, it accelerates consolidation between portals and other Net players. Two months ago, America Online purchased Netscape, shortly after Lycos bought Wired Digital. Last summer, Disney bought a minority share of Infoseek while NBC took a stake in Snap.
Perhaps most important, AT&T gained entry to the online world: The long distance telco is close to completing its acquisition of Tele-Communications Incorporated, which has a controlling stake in @Home.
In response, Net stocks took off like a rocket, but the flight was short-lived.
Elsewhere in portals
America Online too is aggressively seeking to stream its service through high-speed connections, as shown by last week's DSL deal with Bell Atlantic and according to the company. AOL's next target may be the heavens, through DirecTV's satellite network.
Lycos acknowledged it's looking for an investor. An executive said the portal is in "informal discussions"
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Snap will launch Cyclone, content intended for high-speed cable modem users. (The portal is a joint venture between NBC and CNET: The Computer Network, publisher of News.com. NBC is also an investor in CNET.) Not to be left out, front-running Yahoo is also working on content and features for higher-bandwidth access services, a project called "Turbo Yahoo," according to president Jeff Mallett.
Portal sites are rapidly emerging as an alternative to the traditional desktop, as users access calendars, address books, and email. Unlike traditional software, run locally, Web-based applications are accessible from any computer with a Net connection and aren't subject to local glitches or corporate network administrators.
A group of independent Internet service providers asked federal regulators to put on hold a proposal that would give big local telcos the green light to expand their high-speed Internet access businesses.
On the wireless front
AirTouch Communications accepted Vodafone's offer of close to $56 billion, ending a bidding war for the San Francisco-based mobile phone giant. The news came just hours after Bell Atlantic said it had dropped out of contention.
As SBC Communications and Ameritech move toward merging their operations, their core businesses are changing quickly: Both firms' fourth-quarter earnings showed the increasing importance of data, wireless, and overseas operations (as compared to than their traditional local phone businesses). To underline the point, SBC Communications said it will buy Comcast's cellular operations for $1.67 billion in cash and debt to expand its presence in the northeastern United States.
Meanwhile, the nation's leading local phone companies are scrambling to catch up to their national competitors in the wireless industry. The business is tipping toward companies who can offer countrywide coverage, and none of the Bells yet have this ability.
In the courtroom
Civil liberties groups and advocates of protecting children from harmful material online argued over the First Amendment's boundaries in cyberspace, in a Philadelphia courtroom deciding the future of the Child Online Protection Act. Witnesses against COPA have so far testified that some minors carry plastic, so credit cards can't be used as a means of enforcement, and that content legitimately published on news, sexual health, and gay sites could run afoul of the law.
AT&T and Tele-Communications Incorporated filed a federal lawsuit over Portland, Oregon's recent decision to deny the transfer of local cable television franchise licenses to AT&T from TCI as part of their pending merger.
Gateway sued Web America Networks for failing to provide adequate Internet services to Gateway customers, and announced it is now contracting with MCI Worldcom's UUNet to provide service to customers instead.
The legal battle between the Federal Trade Commission and Intel has been pushed back to March 9, a two-week delay that will allow both sides to better prepare their cases.
Microsoft group vice president Paul Maritz characterized as "untrue" claims by Netscape, Intel, and Apple Computer that Microsoft oppressed them with illegal, anticompetitive tactics. Since chief executive Bill Gates isn't scheduled to take the witness stand, it's up to Maritz to address many of the government antitrust charges against the world's largest software maker. Earlier in the week, Judge Jackson sharply questioned claims by Microsoft's economics expert that it doesn't wield a monopoly and can't restrict distribution of competing software.
Intel will release at least five new notebook chips next week, including advanced Pentium IIs with "integrated" secondary cache memory and first mobile Celerons. Later this year, the company will graduate to a more sophisticated, 0.18-micron manufacturing technology, a shift that will boost performance, cut costs, integrate still more functions onto the processor.
Intel also anticipates endowing Pentium III chips with circuitry dedicated to conducting electronic commerce and other security functions, a step that's expected to help spread of e-commerce applications. The company denied the move raises privacy issues.
The low-cost PC market has become the focal point of personal computing, proving that a lot has changed in the two years since these computers debuted, but still more changes loom for the young segment.
PalmPilot prices are on the rise, as retailers try to recoup the losses from holiday season promotions.
Dell and Compaq are trying to outdo each other in making upgrades and technology changes as painless as possible for large customers.
The race is on to create a universal fabric that will supplant today's ungainly networking technology, as Sun readies the introduction of its Jini technology. Microsoft, Hewlett-Packard, Lucent, and IBM are also trying to develop means of connecting everything from light switches to supercomputers in one ubiquitous network.
Consumers who own multiple PCs, surf the Web, and telecommute will help spur the growth of home networking this year, but widespread adoption may be years away, according to analysts and technology companies.
Intel will introduce hardware and software technology this spring that will allow multiple home PCs to interact on a telephone line-based network and share a single connection to the Internet.
Microsoft posted a 38 percent increase in revenue over the previous year and 74 percent increase in profits for its second fiscal quarter, notwithstanding antitrust woes. Earnings reports from Sun, IBM, and Gateway all topped expectations, reflecting the high tech industry's growth in late 1998. Lucent too beat the Street, as net income rose to a record $1.4 billion.
Also of note
Archie Comic Book Publications dropped efforts to shut down the Web site of 22-month-old Veronica Sams over alleged trademark infringement, ending yet another domain name dispute ? Network Solutions began excluding information from its database of domain names, in an effort to address a recent registration slowdown ? 10-year veteran Ron Sege will leave his executive post at 3Com to become executive vice president at Lycos ? Notorious Sanford Wallace is back in business, but says he's not spamming.