Australian Cybermalls News

Kerry Packer's Publishing and Broadcasting Limited (PBL) took up an option today to buy 25% of pay-TV channel Foxtel from News Limited for $160 million. The move has left Telstra as the major stakeholder in the venture with 50% ownership, and both PBL and News Ltd on 25%. Speaking at PBL:'s Annual General Meeting in Sydney yesterday, Mr Kerry Packer said that although Telstra had the option to dilute its equity down to 33%, leaving all three partners with equal stakes in the loss-making operation, it was his understanding that Telstra did not intend to take up that option. Foxtel recorded losses of $212 million in 1996-97 and $166 million in 1997-98. Mr Packer said that the owners felt pay-TV was unlikely to be profitable in Australia until the year 2000. Many Australians had subscribed to Foxtel (or its now defunct rival Galaxy) when pay-TV was first introduced in order to have their houses wired up at little or no cost in preparation for new digital services like high-speed Internet transmission.

Telstra has announced an ambitious 5-year, $1 billion plan to move Australia's voice calls onto the Net. The plan comes less than two years after Telstra argued vigorously that IP traffic would cause its exchanges to melt down unless it was allowed to introduce timed Net calls - a move that the Federal Government of the time strongly rejected. Under the new plan, Telstra will gradually convert its national infrastructure from existing switched digital links to IP and ATM technologies. IP technology - which forms the basis of the Net - allows voice, data and video traffic to be carried over a single network. By doing so, Telstra will be following the lead of several Scandinavian telcos who already put most of their international calls over the Net. Telstra has suffered a decline of up to 50% in its share of the mobile, long distance and overseas call markets since its monopoly was broken by deregulation in July last year. It also anticipates a similar backward slide as soon as its remaining monopolies in local calls and Internet infrastructure are broken in 1999/2000. As a result, the company said that it is is now looking for alternate revenue streams and sees itself becoming an information and service provider in the future.

A spat has erupted between Australia's official domain registry Internet Names Australia and its "unregulated" competitor NetRegistry over the sale of NetRegistry's .AU.COM subdomains. INA general manager Clive Florey has accused NetRegistry of providing "false and misleading" information to businesses trying to register domains, saying that INA have encountered a number of instances where consumers appear to have been given misleading or incorrect information about domains. He also accused NetRegistry of taking advantage of the immaturity of the market to sell the controversial sub-domains to companies who may be unaware that an .AU.COM purchase actually gives them ownership of nothing at all. INA manages the official .COM.AU domain on behalf of the Internet Assigned Names Authority (IANA). NetRegistry, set up late last year in anticipation of am official broadening of domain registries which has yet to occur, registered the .AU.COM domain on its own behalf and then began selling subdomains (such as tourism.au.com) shortly afterwards. In June this year NetRegistry sold more than 1,100 of the .AU.COM subdomains to Sydney "net entrepreneur" Kerry Henry for $200 each, and has now sold slightly more than 2,000 in total. However, NetRegistry has refuted INA's claims and said that all the company's customers have all domain name options explained to them at the time of purchase.

Many "name" sites on the Net are continuing to clock up massive losses for their owners, according to a flood of financial data that leaked to US markets yesterday. Earnings reports show that the Disney Channel has lost a staggering $US21.5 million since it began operations 18 months ago, while partner sports site ESPN.com has lost $7.2 million, presenting its owners ABC-Starwave with a combined near-$30 million black hole. Meanwhile, Ziff-Davis yesterday reported a loss of $US4.5 million on revenues of $US226 million for the latest quarter operations of its magazines-and-web-sites empire, while music retailers CD Now and N2K announced plans to merge yesterday following the continued failure of both sites to turn a profit. Meanwhile, TheGlobe.com, Healtheon and Net software company Vignette have all announced plans to scrap proposed IPO listings in the face of continuing bad profit figures from major Net sites and a general downturn on Wall Street. In Australia, the Sidewalk sites told the media today that they don't expect to see a profit for at least 24 months.

Complaints against the Australian ISP industry rose marginally last year while complaints against Australian telecommunications carriers continued to head for the stratosphere, according to the Telecommunications Industry Ombudsman (TIO), which released its annual report for the first year of full telecommunications deregulation last week. According to the TIO, who are responsible for processing complaints against carriers, there are now 535 registered players in the industry (up from 19 in 1997). The overwhelming majority of these new registrants are ISPs, who were required to register with the TIO following legislative changes to the scheme last year, along with several hundred more who have yet to do so. According to Ombudsman John Pinnock, complaints against all registered Australian ISPs only accounted for around 3.2% of all matters handled by the TIO last year, while complaints against unregistered ISPs (which couldn't be investigated) accounted for a further 7%. However, more than 89% of complaints were levied at the TIO's 19 registered telcos.Overall, the number of complaints to the TIO increased by more than 19% last year to 52,138 investigations.

Australian domain registry Internet Names Australia (INA) has announced that it will expand its service to offer international domains as well as the Australian .com.au, .net.au and org.au domains it presently services. INA will now also offer domain registrations for the UK, Malaysia, Germany and many other countries with the eventual aim of becoming Australia's "one stop" domain shop. The moves follows parallel moves in the USA to free up the international domain system and to expand the number of domain registration agencies beyond the present small group that currently dole out the world's domains. INA - formerly Melbourne IT - acquired Premium Partner status this year with US-based global domain authority Network Solutions, giving it access to a fast-track system for the registration of .com, .net and .org domain names. INA claims that its registration system is totally automated and provides the fastest turnaround times in the country, within most domains now capable of being secured within 24 to 48 hours.

Netscape's new 4.5 release of Communicator - which was officially unveiled on Monday this week - appears to be a runaway success for the company. According to Netscape officials, users have made hundreds of thousands of downloads over the last 72 hours and the pace currently shows no sign of easing up. The new release may also mark a distinct change of attitude in the formerly supine company, which has lost as much as 30% of its overall browser market share during the last two years in the face of Microsoft's unremitting assault with its competing Internet Explorer product. The new Communicator now welds itself as closely into the user's operating system as Explorer does, and provides many features which have yet to be incorporated in Explorer itself. These include a massively revamped email client, Smart Updates (which let the browser automatically download small patches and fixes across the Net to keep the browser perpetually updated rather than force users to download the entire product every time it's updated), and Smart Browsing technology which allows users to type any word or phrase into the browser and be sent to a related site from Netscape's database. The new browser also extends this model with Smart Links and What's Related, two other features designed to speed up online searches.

Internet-based research firm Jupiter Communications have released a report supporting many of Nielsen Media's recent research findings about the growth of online shopping. However, Jupiter's study concludes that price - not security - is the main reason more people aren't buying online. Jupiter's study found that 65% of Net users have yet to make an online purchase, but it also found that a large percentage of their sample indicated they would purchase goods online if web sites introduced more discounts. 77% of users who said they browse - but don't buy -when they go to commerce sites said that lower prices would get them to begin shopping online. The same held true for those who said they never go to e-commerce sites, where 64% said that lower prices would entice them to buy off the screen. Surprisingly, though, neither group rated security as a central concern, indicating a growing acceptance of secure online trading facilities amongst shoppers. In other news: Australian Cybermalls affiliate Barnes and Noble expanded their online inventory from 1.2 million to 4 million titles today. The giant bookstore chain has also opened new sections for rare and vintage books and unveiled a new, lightweight design for improved download speeds. In addition to books, Barnes and Noble also retail online magazine subscriptions to a large number of best-selling US titles and an expanding range of popular home and office software.

After a long debate, US legislators have agreed not to reduce the proposed tax-free period for Internet commerce enshrined in the Internet Tax Freedom Act, effectively giving the Net defacto global tax-free status until 2002. In the meantime, US Government officials will set up a commission to study tax issues and try to determine how much revenue the Net may be siphoning away from traditional taxing sources such as the US State and Federal Governments. In conjunction with many taxation authorities around the world, the committee will then also try to determine what sort of tax regimes may be necessary after 2002 to redress the leakage, and then look at ways that Net taxes might be implemented. The move is a victory for large US companies such as AOL and Yahoo, who argued that introducing taxes on the Net at the present time would stifle the growth of e-commerce. These companies have been taking advantage of the early US lead in the Net and e-commerce to set up regional services in various parts of the world (such as Australia) in an effort to ensure the absolute dominance of US companies in the electronic commerce market.

Slightly more than 25% of all the estimated 78 million US and Canadian consumers who logged onto the Internet between January and June this year made at least one online purchase, according to a new e-commerce survey released by Nielsen Media. The survey, which randomly sampled 5,000 US and Canadian online consumers aged 16 or over, found that books were the most popular item for online purchases, followed by computer hardware and software. Nielsen estimated that 5.6 million people purchased a book online during the first half of 1998 (up from 2.3m), 4.4 million purchased hardware (up from 2.0m) and 4 million purchased software (up from 2.8m). Travel and clothing purchases also grew well, recording 2.8 million and 2.7 million sales respectively (up from 1.2m and 0.9m). Consumers aged 35 or less purchased the most CDs (64%) and clothing (65%), while consumers over 35 bought 63% of all hardware, 59% of all software and 58% of books. Significantly, Nielsen also found that men are still the dominant buyers on the Net, accounting for 71% of all web purchases - the same consumer distribution pattern as 1997.

Telstra has begun trialing an ambitious scheme to provide an email address to every one of the 3,000,000 Australian households which currently have a home computer, regardless of whether they're one of the 800,000 currently attached to the Net or not. The new Telstra EasyMail service would offer people with a PC the ability to send and receive email for the price of a local call regardless of where they live in the country - and subscribers with an EasyMail address will also have the option of having it listed on the Telstra White Pages site and in a printed directory as well. The new system is planned to go on limited trial in Tasmania next month and is set for a national launch in December. A Telstra spokesperson said that the company was keen to roll out EasyMail because they believed email was an application that would benefit most people - and they expect to have as many as 800,000 households using the system by 2001.

Profaces - a New York company which specialises in providing high-quality make-up kits and brushes over the Net - opened at Australian Cybermalls today. Profaces is jointly owned by fashion photographer David Stahl and his partner, professional make-up artist Andrea McAleer. Both partners have extensive experience in the industry and their site offers visitors the opportunity to buy makeup kits and products across the Net at up to 45% below normal retail. "We're able to slash costs because of the significantly lower overheads involved in Internet trading," David Stahl said. "And because we offer a 100% money-back guarantee, we know that many customers are willing to try our range even though they can't directly see it - as you can in say, a department store - because the savings are so compelling. Besides, all the products in our range are excellent quality and offer real value for money, and we know from experience that most people are absolutely delighted when they receive their order from us!" Profaces - like all the online traders in Australian Cybermalls - use secure SSL ordering systems and are happy to ship orders world-wide.

Australian ISPs will only be liable for the content they broadcast to the extent that they played a part in the creation of any illegal or offensive materials under a new deal hammered out this week between the Federal Government and the Australian ISP industry. The agreement, which is expected to be passed into law during the next sitting of Parliament, will provide formal legal recognition of the difference between Internet service and content provision for the first time. It will also mean that Australian ISPs will not be held liable if illegal materials are broadcast through their systems without their knowledge. However, the proposed new rules would impel ISPs to remove or otherwise disable accounts once they became aware of illegal material being broadcast from their equipment or face legal penalties. The deal ends a two-year struggle between the Department of Communications and the Standing Committee of Attorneys-General, who had been trying to frame the intent of the agreement into correct legal terminology acceptable to all parties.

According to the Organisation for Economic Co-Operation and Development (OECD), Australia is at risk of dropping out of the Top 10 most computerised nations on Earth over the next decade due to lack of Government support for the IT industry and the absence of any cohesive industry plan. According to the OECD study - called Digital Planet - which measures the contribution of IT to the growth of both domestic and global economies, Australia currently ranks 9th in the world. However, it predicts that developing nations with larger populations will surpass the country in the next decade. Last year, Australian IT spending on hardware, software, services, telecommunications and internal IT staff accounted for 8.2% of GDP (up from 7.2% five years ago). Most of this was spent on salaries and consultant fees. Industry leaders say that the report provides a compelling argument for the Federal Government to establish an IT Minister and department.

In a move that will give some struggling ISPs a year's grace and help the company itself avoid the censure of industry regulators, Telstra today extended its planned phase-out period for copper wires by a year. The move will allow smaller ISPS (who currently pay $1500 a year for Permitted Attachment Private Lines (PAPLs) along with other users like security services, fire alarm services and some corporations an extra 12 months to gather the $15,000 a year they'll need for the new high-speed digital services that will replace PAPLs next year. According to Telstra, the gradual conversion of its network to fibre-optics means that it can no longer guarantee the continuous end-to-end copper connection that electric-current driven PAPLs require. This being so, Telstra argue that the lifespan of PAPLs is at an end. However, critics such as the South Australian Internet Association have pointed out that Telstra is currently trialing ADSL technology (asynchronous digital subscriber line) with a view to rolling it out into widespread use in 1999. ADSL can deliver data at up to 6 megabits per second - but it also requires copper phone lines to function.

America Online, the world's largest ISP, officially opened in Australia yesterday after more than a year's preparation. The online giant, which now holds the Number 1 position the US and UK and strong positions in Europe and Japan, believes that Australia is a highly attractive market as well because of the high penetration of PCs and Internet usage amongst consumers. However, industry experts believe that the company may find the Australian market considerably tougher to crack than it expects because all its traditional marketing tactics have already been copied by dominant local players OzEmail and Big Pond over the last two years. AOL, which claims 13 million subscribers world-wide, have launched the local service in conjunction with its European partner, German media company Bertelsmann AG. It's also lined up a long list of local content providers including Urban Cinefile, Outrage, NetRegistry, Greengrocer.com, travel.com.au and hyper@ctive. Contrary to industry expectations, however, AOL propose to offer only two options initially: a low-usage 3 hour, $9.95 monthly plan and a slightly higher 15-hour $29.95 monthly plan, with excess hours on both charged at $4. Given that most local ISPs in Australia currently charge between $1 and $2 per hour for dial-up access and both OzEmail and Telstra now offer generous flat-rate plans for around $45 per month, commentators believe that AOL will be offering very little incentive for users to swap. AOL is nonetheless confident that it can succeed in the local marketplace, and predicted that its entrance into the crowded market would spell the demise of many small Australian ISPs over the next few years.

The Web Standards Project, a new advocacy group formed in August to champion the standardisation of browser feature sets - announced today that it will join forces with compliance testing and standards consortium the Open Group in an effort to pressure Netscape, Microsoft and other manufacturers to abandon proprietary extensions to existing web standards. The new coalition believe that rivalry between the web companies and their unwillingness to adhere to the standards set by the World Wide Web Consortium are creating impossible workloads for Internet content developers and seriously limiting the growth of the Net - and that things are getting worse. According to an Open Group spokesperson, it has now become almost impossible for advanced content developers to create truly portable content because of the widely varying feature sets between browsers. This is compelling developers to either create multiple versions of their sites, or simply sacrifice parts of their audience on the altar of expediency. The new group's first collaborative effort - which will be announced at Internet World in New York - will be to make a testing suite freely available which will evaluate browsers against accepted standards and formats including HTML 3.2, the .GIF and .JPG image formats, .WAV and .AU audio formats, the Java Development Kit 1.1, and HTTP 1.0 and 1.1. A second initiative will be a follow-up suite that will measure support for HTML 4.0, CSS 1.0, the .PNG image format and the .MPEG video format. The Open Group already licenses its seal of approval for products that it deems compliant with industry standards and has not ruled out creating a similar mark for web products.

The ambitious Southern Cross cable project - which will allow Optus to provide an alternative network to compete against Telstra's current monopoly over the Australian leg of the Internet - came a step closer yesterday when it secured Australia's 24th telecommunications carrier licence. The project (a joint venture between 50% stakeholder Telstra New Zealand, 40% stakeholder Optus and 10% stakeholder Worldcom) will see the construction of an 80 Gb fibre-optic submarine cable connecting Australia and New Zealand with the USA via Hawaii. The new $A1.6 billion cable will break Telstra's current stranglehold over trans-Pacific Internet access and introduce full blooded competition for bandwidth pricing in Australia for the very first time. At present, a number of Australian ISPs who want to circumvent Telstra have begun buying spare bandwidth from satellites - but because of the latency delay of 1 to 2 seconds inherent in satellite communications, most of this is being used to refresh caches. As a result, consumers have seen little real benefit from it, ensuring that domestic Net access prices and hosting charges remain consistently high. The cable is expected to be completed by the end of 1999.

The US Senate expanded the Internet Tax Freedom Act today by including amendments aimed at protecting the privacy of children and ensuring more open and accountable Government. However, a final vote to pass the Act into law may not happen for another day or two. The two major amendments made to the bill are the Children's Online Protection Act, which will require parental consent before web sites can collect information from children aged 12 or below, and the Government Paperwork Elimination Act, which would require the US Government to post documents online and allow US citizens to use digital signatures to sign forms, giving legal standing to this formerly grey area. Two more much more contentious amendments may also be added to the bill before final voting: one that would limit minors' access to adult content on the Internet., and a second that proposes a tax on domain name registrations. The Internet Tax Freedom Act proposes to prohibit any new or discriminatory taxes on Net access and e-commerce for 2 years - a move that would make the US a buyers paradise for residents of countries operating under a GST or VAT.

In what may be mixed news for the television industry, two conflicting studies in the USA released late last week have reported that Internet-enabled households either watch the same amount of TV as non-Internet households or up to 15% less. The studies - carried out by AOL and the Discovery Network - polled 5,000 and 389 consumer households respectively. AOL's study (which, being larger, may be more representative of true market demographics) reported that US households with access to the Internet were 15% less likely to watch TV. By contrast, Discovery's survey found that while households with Internet access watched slightly more TV in 1997 than in 1996 as a whole, there was a distinct drop of almost 7 percent in the amount of time that 12 to 24-year-olds spent watching TV because of time spent on the Web. While both studies aver that it is still too early to say if the decline in the number of young viewers watching TV marks a turning point in media consumption habits, both agree that if this is the case then the Net may well assume as dominant a position in the everyday life of the 21st century as TV does today.

Australia's CSIRO has launched a new site to provide a reference source that they hope will ultimately deliver detailed information about land boundaries, water mains, electricity lines, property easements and other spatial data directly from the Internet. The new service - which is currently being trialed in the ACT under the name ACTMAPonline - was unveiled at Manufesto 98, the Science and Industry trade fair in Melbourne. It allows ACT residents to call up detailed information on their city through a map style interface directly from their browser without the need for plug-ins of any kind, and is already being hailed as a world first. The project originally began life at the CSIRO's Mathematical and Information Sciences division and is currently being run in conjunction with the ACT Government's Land Information Centre. It takes existing government data and transforms it into a fully searchable map-based information system. ACT residents simply select a location on the map and obtain information about the area. According to a CSIRO spokesman, one of the most attractive features of the new service is that zooming in on a map makes no difference to the quality, and future expansions to include water and electrical data are now in the pipeline.

The Australian Internet sustained another major dieback in September as the launch of new web sites failed to overcome a seasonal cleanout of defunct ones from search engine databases. According to the engines we monitor to construct our monthly Australian Internet Growth Index, all capitals showed a significant decline in sites during September. However, surviving sites are getting bigger. Our polling suggests that there are now over 1.18 million listed Australian web pages on the Net, with probably as many again on extranets and unlisted sites. The October 1st figures (with September 1st figures in brackets) are as follows:

Australian Internet Growth Index September 1998
(Figures Show Estimated Sites)

Brisbane - 2,043 (2,675)
Sydney - 7,076 (9,262)
Melbourne - 5,123 (6,679)
Adelaide - 1,843 (2,743)

Perth - 2,347 (2,921)
Hobart - 821 (1,192)
Canberra - 1,460 (2,250)
Darwin - 1,588 (2,425)

On September 1st Australian Cybermalls relocated to new servers in Toronto, Ontario. Our new home provides significantly better statistics than our previous one and we were surprised to discover that we've been under-reporting our site visitation figures by as much as 33% - probably for most of the last 18 months. During September Australian Cybermalls hosted 67,291 visitors, significantly higher than the 43,604 visitors who crossed our counter pages in August 1998. During the month we also displayed 261,706 pages of information on our servers and consumed 7.44 Gbytes of bandwidth.