|Published by NetAction||Issue No. 94||August 1, 2003|
With a 71% share of all web browsers in use, Netscape was the undisputed industry leader in July of 1997 when NetAction published the results of our first survey of consumer choice in web browsers. The report warned that Microsoft's marketing strategy of bundling Internet Explorer (IE) with its operating system was preventing consumers from choosing which browser they used to access the web, and that the company's plan to integrate its browser into its operating system would further limit consumer choice.
Not surprisingly, Internet Explorer now has more than 90% of the web browser market and Netscape Communications - which was subsequently purchased by America Online (AOL) - has effectively been marginalized. In mid-July, AOL disclosed that its Netscape subsidiary had laid off 50 employees involved in the browser's development. The layoffs followed news of a deal between AOL and Microsoft guaranteeing that for the next seven years Internet Explorer would be the default browser for AOL subscribers.
The layoffs also coincided with the official separation from Netscape of the open-source Mozilla project, which moved to the newly-established Mozilla Foundation. As a nonprofit organization, the Mozilla Foundation will promote the Mozilla web browser and other open-source applications.
As NetAction advisory board member Judi Clark observed, "Given that Microsoft announced it would NOT be developing Internet Explorer further for the Mac, and Apple's Safari isn't using Netscape's engine, AND that Microsoft really wants to marginalize anything open source, I'd say it's doing a good job of closing the market for itself."
If you're wondering what any of this has to do with Internet activism, consider the potential ramifications for nonprofit organizations and grassroots groups that rely on the Microsoft operating system and Microsoft applications.
Organizations that want to make the most effective use of new technologies are going to have to upgrade their operating system and application software on a regular basis. The vast majority of nonprofit organizations use some version of the Windows operating system and rely on Microsoft applications like Word or Excel. These are expensive products, and even in the best of times nonprofit groups must work to keep their costs down.
Fortunately, Techsoup.org's DiscounTech program enables many nonprofits to purchase software at a substantial discount. For many years, qualifying organizations could purchase a certain number of applications and software licenses on an annual basis. This made it relatively easy to keep up with advances in technology.
But Microsoft changed the rules earlier this year, and groups may now only purchase the company's software at a discount every 2 years. Although Techsoup.org describes this as an "enhanced" software donation program, it would be more accurate to call it a diminished donation program. For some groups that have relied on Microsoft because the DiscounTech donation program made its products affordable, waiting an extra year to upgrade software won't be an option. In those cases, the increased cost of software will mean less money for other purposes (and increased profitability for Microsoft).
Clearly, Microsoft's marketing strategy for Internet Explorer worked. Netscape is all but forgotten and Microsoft is now targeting open-source software in hopes of derailing efforts to promote no- or low-cost alternatives to its own products. This has implications for any organization that maintains a web site.
"Which companies will be guiding web development? What happens when (nonprofit groups) design their site for a majority market, but those sites don't function on non-Windows computers? Think about financial services (such as online donations), registration processes, etc. How does this effect the variably-abled Internet users?"
Organizations that have made substantial investments in Windows-based PCs may be locked in for now, but looking ahead it would be wise to consider alternatives when it's time to replace outdated software and/or hardware.
Much has changed in the seven years since Congress passed the landmark Telecommunications Act of 1996: more Internet users have access to broadband; more people are using cell phones, more consumers are bypassing the phone company altogether with Voice over Internet Protocol (VoIP) technology.
But - perhaps ironically - when it comes to telephone service very little has changed. The vast majority of consumers are still getting local phone service from a regional Bell company, and the Bells still aren't competing for each other's customers.
Will consumers ever see meaningful competition in local phone service? Not if pro-Bell regulators and legislators continue to roll back the provisions of the 1996 Act that were meant to promote a more competitive telecommunications marketplace.
In our latest white paper, "Tauzin-Dingell: Helping to Disable the 1996 Telecommunications Act," NetAction advisory board member Judi Clark looks back at the recent legislative and regulatory efforts to dismantle the 1996 Act, and forward to the prospects for further erosion of the Act's pro-competitive provisions.
The paper examines the ongoing dispute between the regional Bell companies and competitive local service providers over compensation for calls that are initiated through one phone company and terminated through another. The so-called "reciprocal compensation" agreements between the Bells and competitive companies were the subject of much regulatory and legal wrangling when the Bells realized that under the terms they negotiated they would owe millions of dollars to their competitors.
It looks next at the efforts over several years of Louisiana Rep. Billy Tauzin and Michigan Rep. John Dingell to enact legislation to protect the Bells from the pro-competitive provisions of the 1996 Act. The final section of the paper examines the Federal Communications Commission's February 2003 announcement of its intent to issue new rules that free the Bells from competition in the broadband market but uphold competitive in local phone service.
With friends in Congress like Tauzin and Dingell, and an FCC intent on saving a dying industry, "We don't have an entirely unregulated communications monopoly yet; but the Bells are working on it," the paper warns.
NetAction Notes is a free electronic newsletter, published by NetAction. NetAction is a California-based non-profit organization dedicated to promoting use of the Internet for grassroots citizen action, and to educating the public, policy makers, and the media about technology policy issues.
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