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Week in review: Services take a vacation

A few major players in the Internet services arena take a holiday this week and leave millions of customers without access to popular Web sites and e-mail.

A few major players in the Internet services arena took their own holiday in this Labor Day-shortened week, leaving millions of customers without access to popular Web sites and e-mail.

For nearly two days, many customers of America Online and of AOL Time Warner's Road Runner high-speed Internet service were unable to access a number of Microsoft sites, such as Hotmail and MSN. Some customers also said they were unable to access news site MSNBC, authentication service Passport and small-business information site bCentral.

A Road Runner representative said the outage occurred as technicians at an AOL Time Warner network center were updating routing tables and also as Microsoft was doing some routine maintenance. However, in the past, the combination of those events has not prevented AOL customers from reaching Microsoft sites, the representative said.

Regardless of who's to blame, the problems between AOL and Microsoft were not entirely coincidental, according to sources familiar with the problem. A source close to Microsoft who asked to remain anonymous said the lockout stemmed from changes in a bandwidth "peering" agreement between AOL and Microsoft.

A Microsoft memo recited to CNET from a source close to the company said the software giant was in "negotiations with AOL over the matter," but did not elaborate on the nature of the talks. AOL and Microsoft declined to comment on the source's statement.

In an unrelated outage, Lycos customers were without e-mail access for most of the week, after what was supposed to be a routine server software upgrade went awry. The company earlier warned Lycos Mail and Lycos Mail Plus users that service would be down for part of Tuesday, because of routine site maintenance.

The interruption was scheduled to install updates to the company's database software that would improve backup capability. But the upgrade turned out to be more complicated than originally anticipated, requiring Lycos to rebuild the database.

Music's tough sell
CD sales are expected to take a big hit--and not the kind of hit the major labels would like to have--Forrester Research predicted. The firm said 20 percent of Americans engaged in music downloading, and half of the downloaders said they were buying fewer CDs. By 2008, 33 percent of music sales will come from downloads, with CD sales down 30 percent from their 1999 peak.

In the next nine months, at least 10 Windows-based music services will emerge, creating alternatives to illegal file sharing, the research said. Forrester predicted that by the end of 2004, Apple Computer and possibly Musicmatch will emerge as leaders, file sharing will be in decline, and downloads and on-demand subscriptions will bring in $270 million.

Sony hopes to get a piece of that pie with a new digital music service next year--a project that will see its music, movie and electronics divisions work closely together. The service appears to be conceived as a rival to Apple's successful iTunes digital music store, and as an attempt to stem its entertainment divisions' perceived losses to file-swapping services like Kazaa.

Although details remain scarce, the Sony service as described will be closely tied to the company's consumer-electronics and proprietary copy-protection technologies. The company did not provide information on pricing or business models, although the service was billed as a download service.

But individual file swappers shouldn't expect to get into the business. An online auction that sought to resell a music download that was purchased through iTunes was canceled by eBay for violating eBay's listing policies. The move stalls resolution of the question of whether Internet customers can resell songs they've purchased in digital form.

Web developer George Hotelling had put the song up for auction, hoping to highlight the problem. Under the "First Sale" doctrine, the owner of a lawful copy of a work is allowed to sell it without the permission of the copyright owner. But such a policy could cause complications if applied to works sold only in digital form.

Static on the line
AT&T accused MCI of racketeering, alleging that the company continues to secretly route phone calls through Canada even though it is under investigation for doing so by state and federal regulators. By law, phone companies are supposed to charge rivals the lowest possible prices to use their networks to complete calls. But in what AT&T dubs the "Canada Gateway Project," MCI is routing calls through cheaper networks up north but charging AT&T the full rate, according to the suit, which was filed in a Virginia federal court.

The lawsuit alleges that MCI engaged in "substantive racketeering through a pattern of multiple acts of mail fraud and wire fraud," according to an AT&T statement. MCI has said it is cooperating with several ongoing investigations and has denied similar allegations in the past.

Cell phone makers may be dialing a wrong number with products that have the built-in ability to record phone calls. The recording capability gives further proof of cell phone developers' ingenuity. But its development also serves as an illustration of the industry's tin ear when it comes to the legal and social effects of what experts call the most widely adopted and disruptive technologies ever created.

Whether such mobile bundling experiments will stick with consumers remains to be seen. But social complications could put the brakes on some features, especially if they prove popular. Though a recording feature could come in handy for cell phone users, it faces a major potential hurdle: the law, especially in the United States, where in general it's legal to record calls only if both parties agree.

Also of note
A federal appeals court ruled that attorneys violate the law when they try to subpoena e-mail messages to which they are not entitled...Apple landed a major customer for its Power Mac G5, with Virginia Polytechnic Institute and State University confirming that it will use 1,100 of the machines as part of a supercomputer cluster now under construction...The SCO Group is turning up the heat in its attempt to impose Unix license fees for Linux use: It plans to begin sending invoices to companies before the month is out...President Bush picked U.S. Department of Energy Chief Information Officer Karen Evans to become the administrator of information technology and e-government for the federal government.