EarthLink To Close Wifi Net in Philidelphia, More Shutters in the Pipe

EarthLink Inc. is pulling the plug on its troubled wireless high-speed Internet network in Philadelphia, once touted as a national model.EarthLink, which pinned its future on municipal Wi-Fi networks following rapid declines in its dial-up Internet access business, said Tuesday that it could not find a buyer for the $17 million network.

It also said talks to give the network to the city or a nonprofit organization had failed, even after offering to pay $1 million in cash and donate the Wi-Fi equipment.

City officials have said it would cost taxpayers millions of dollars each year to operate the network, which will shut down after June 12.

Also Tuesday, the company sued the city in U.S. District Court seeking to remove its Wi-Fi equipment from streetlights and cap its liability at $1 million.

"It's been an unfortunate situation," Earthlink Chief Executive Officer Rolla Huff told The Associated Press. "It was a great idea a few years ago, ... but it's an idea that simply didn't make it."

Huff said EarthLink will stay focused on serving people using dial-up Internet service and casual Internet surfers who want an economical plan.

Atlanta-based Earthlink plans to shutter a similar network in New Orleans on Saturday. The company has reached agreements with the cities of Corpus Christi, Texas, and Milpitas, Calif., which are taking over ownership of their networks. And it is in talks with Anaheim, Calif., over its network there, Huff said.

Huff said EarthLink's Wi-Fi assets are now part of the company's discontinued operations. He doesn't expect to take a charge against earnings for closing Philadelphia's network.

Four years ago, Philadelphia officials announced they would try to create one big citywide Wi-Fi hot spot to make high-speed Internet access the norm in poor neighborhoods.

The plan, announced with great fanfare, attracted attention from cities around the world and built Philadelphia's cachet among technophiles.

Under a contract finalized in early 2006 and approved by City Council two years ago, Earthlink agreed to charge $21.95 a month — and half that to low-income households.

EarthLink paid the full cost of building the network and pledged to pay the city rent for use of light posts where Wi-Fi equipment would hang.

EarthLink's goal was to create a direct Internet pipeline into homes so it would not have to buy capacity from phone companies. But the technology proved unreliable and difficult to deploy.

EarthLink later said that its Wi-Fi business model had not panned out.

It also wasn't a big seller. The company has 5,942 subscribers in Philadelphia out of a projected minimum of 100,000, according to its lawsuit. EarthLink said it is losing up to $200,000 a month operating the network because subscriber fees covered less than half of costs.

Doug Oliver, a spokesman for Mayor Michael Nutter, said EarthLink flip-flopped on whether it wanted Wi-Fi.

"Now they say, 'We don't want to do it. We're walking away and we're taking our marbles,'" he said. "We are left to respond the best way we can, in the best interest of the city."

Craig Settles, a technology business strategy consultant in Oakland, Calif., faulted EarthLink for rushing the recent negotiations with the city.

"EarthLink was putting a lot of pressure to be done and be gone, while the city has its things it has to deal with," he said. The talks were "not as lengthy as they make it seem to be."

Philadelphia officials recently said they want EarthLink to abide by the contract, but would rather not go to court to enforce it.

Councilman Frank Rizzo, an early opponent of the Wi-Fi network, said the network remains incomplete and EarthLink is vulnerable to litigation.

He also hasn't heard of anyone interested in buying EarthLink's network.

"Comcast and Verizon, they haven't even sniffed around," he said of the companies that provide cable and phone-based Internet access in Philadelphia.

Craigslist sues eBay, alleges corporate spy plan

Online classifieds leader Craigslist.com filed a countersuit on Tuesday against business rival eBay Inc, alleging eBay had used its minority stake in Craigslist to steal corporate trade secrets.n a lawsuit filed in California Superior Court in San Francisco, Craigslist challenged allegations in an eBay suit filed in Delaware state court in April that accused Craigslist of discriminating against eBay as a shareholder.

EBay's suit in Delaware Chancery Court charged Craigslist had used "clandestine meetings" to dilute eBay's 28.4 percent stake in Craigslist to 24.85, or less than a quarter of the company.

A spokeswoman for eBay was not immediately available to comment on Craigslist's countersuit.

In addition to unfair competition and fraudulent business claims, the countersuit accuses eBay of copyright infringement and using misleading advertising on Google to run ads for its rival Kijiji site that appeared to be Craigslist ads.

The lawsuit demands that eBay restore all shares of Craigslist owned by eBay or for the court to require eBay to divest its holdings in Craigslist. The suit asks for a cut of eBay profits and for punitive damages.

EBay, the world leader in online auctions and payment services, took a minority ownership stake in Craigslist nearly four years ago as part of a strategy to buy up classified advertising services both in the United States and Europe.

In 2004, eBay began to expand into the market through the acquisition of online classified businesses Marktplaats and later, LoQuo and Gumtree. In 2005, eBay launched its own free online classifieds site named Kijiji in nearly a dozen markets in Europe and Asia. A year ago, it entered the United States.

Kijiji operates in hundreds of German cities and is popular in countries ranging from France to Italy to India and Taiwan.

Craigslist's complaint alleges a plot by eBay to use its position as a minority shareholder in Craigslist and its position on the board to pressure Craigslist into a full-scale acquisition deal by eBay.

Barring that, Craigslist argues that eBay used its position to gather competitive information that led to the launch of eBay's rival classifieds business. It charges eBay code-named this its "Craigslist killer" in internal strategy discussions.

"In the months leading up to the launch of its competing Kijiji site ... eBay used its shareholder status to plant on Craigslist's board of directors the individual responsible for launching and/or operating Kijiji," the latest suit alleges.

MS Office for Mac Sales Soar, VBA Support To Return

Apple is selling more Macintosh computers than ever before -- and that's having unexpected benefits for Microsoft. Sales of Microsoft Office 2008 for Mac are triple the volume for the previous 2004 version of the productivity software and are the highest in the product's history, Microsoft announced Tuesday."The response has been amazing -- since we launched in January, the velocity of sales for Office 2008 is nearly three times what we saw after the launch of Office 2004," said Craig Eisler, general manager of the Mac business unit at Microsoft. The 2008 version launched at the MacWorld show this year.

"As we set our course for future versions, we are working closely with customers and will also expand our staff to ensure that Office for Mac remains the most powerful and compatible productivity suite for Mac customers," Eisler said.

SP1 Released

Microsoft also released Service Pack 1 for the Mac Office suite, featuring "suitewide updates for increased stability, increased security and overall performance improvements."

SP1 addresses compatibility issues between the Mac and Windows versions of Excel; improves Entourage support for Exchange Server, including the ability to remove attachments from Exchange messages and synchronizing to the server; and provides minor improvements for Word and PowerPoint.

Bloggers said the most notable addition in SP1 is support for Excel chart-formatting options that were available in previous versions of Office.

VBA Support To Return

Microsoft also said it will bring back Visual Basic for Applications support to the Mac in the next version of Office for Mac. A press release said Microsoft "recognizes that VBA language support is important to a select group of customers who rely on sharing macros across platforms." The prior version supported AppleScript and the Automator scripting tool.

The removal of VB was not due to any of the "conspiracy theories" floated around, such as that Microsoft was trying to "slowly kill the Mac" or drive users to Windows versions of the software, Erik Schwiebert, a software design lead in Microsoft's Mac business unit, wrote on his blog. The decision was driven by the technical difficulties of including VB for the latest version of Apple's operating system, he wrote.

While technical challenges remain, "for a while now I and several others have been working with a group of people who know a heck of a lot about the internals of VB," Schwiebert wrote, "and once we determined that we could achieve the revival of VB in the new schedule for the next version of Mac Office, we locked it into place on the feature list."

The high volume of sales for the current version indicates that a lack of VBA support isn't a big deal for most Mac users, Schwiebert said. As to when the next version will be released, the developer assured readers it will be less that four years.

Sale to HP will end EDS independence

Eight months into his tenure as CEO of Electronic Data Systems Corp., Ronald Rittenmeyer is overseeing the sale of the company, something he says he never planned."It just came together," Rittenmeyer said Tuesday during an interview.

The sale to Hewlett-Packard Co. is a milestone for a company that was started on a shoestring in 1962 by H. Ross Perot, who quit a sales job at IBM to work for himself. The company has remained independent for all but a few years when it was owned by General Motors Corp.

EDS will stay in Plano and keep "EDS" in its name, officials said. It even plans to continue sponsoring the annual EDS Byron Nelson pro golf tournament.

The company, which runs call centers and computer systems for big companies and government agencies, has a larger technology-services business than HP. Mark Hurd, HP's CEO, said EDS is "more mature" in that regard and has capabilities that HP's services unit lacks.

The impact of the deal on EDS' 137,000 employees is uncertain. Rod Bourgeois, an analyst with Sanford C. Bernstein & Co., said he expects some EDS jobs to disappear as the companies combine work forces.

In a conference call with analysts Tuesday, Hurd, in California, and Rittenmeyer, who was in New York, repeatedly used the word "synergies" to describe the benefits the combined company would see as it cuts overlapping costs.

"In terms of job cuts, we are continuing to streamline our work force at EDS," Rittenmeyer said during the conference call. "We've been doing that for some time ... there are always job adjustments."

In an interview with The Associated Press, Rittenmeyer said, "Employees who do a good job, who are good performers, don't have to worry about anything."

The CEO said the company is constantly evaluating employees and shedding underperformers.

"All this does is provide a catalyst for us to look perhaps a little deeper, a little wider," he said in the interview.

EDS practically invented the industry that came to be known as information-technology outsourcing. Perot, who went on to run for U.S. president in 1992 and 1996, hired many military veterans who generally came to work in white shirts, ties and short hair cuts.

Perot sold EDS to GM in 1984 for $2.5 billion. GM later bought out Perot's remaining shares for another $700 million, but it spun off EDS in 1996 for $500 million.

By then, it had been surpassed by IBM in technology-services revenue.

Rittenmeyer's predecessors Michael H. Jordan and Dick Brown each cut thousands of jobs and moved thousands more to low-cost countries, especially India. EDS now has 45,000 workers in what it calls "best-shore" locations, and plans to increase that number.

EDS has been the subject of takeover speculation for years. Deutsche Telekom AG was reported to be looking at it last year. Earlier rumors centered on Dell Inc. Neither company ever confirmed the reports.

Shareholders will vote on the HP deal. Rittenmeyer declined to say whether there were other offers.

"There are no obvious competing bids that may emerge," said David Grossman, an analyst with Thomas Weisel Partners, citing the $25 per share that HP will pay, which is about 30 percent higher than EDS shares traded Monday before news of the deal leaked.

The shares topped $70 in 2000 and 2001, but they haven't been at $25 since last July. Analysts said the EDS board might have decided a sale was the quickest way to get the price up.

"The board had a whole series of deliberations and conversations," beyond the challenge EDS faced lifting the stock price on its own, Rittenmeyer said in the interview. "I'm comfortable that our board made a decision with shareholders in mind first."

After Brown arrived in 1999, the company won many huge contracts and earned more than $1 billion a year from 2000 through 2002. But it lost $1.7 billion in 2003 due partly to a money-draining contract with the Navy, the stock plunged and the company faced shareholder lawsuits and a Securities and Exchange Commission investigation into its accounting practices.

Jordan, a retired Westinghouse CEO, was brought in to fix the problem contracts and cut costs. After two years of small profits, earnings grew in 2006 and 2007, and new work was coming in. Jordan stepped down in September, and Rittenmeyer was promoted from chief operating officer.

Civic leaders in Plano, where EDS moved from neighboring Dallas in 1993, are worried about the uncertainty surrounding a major taxpayer and supporter of its symphony and other nonprofits.

"The concern we'd have locally is the potential impact on the housing market with a loss of jobs," said Jamie Schell, the incoming chairman of the local chamber of commerce. "But maybe the result will be a more stable company."

For now, "it appears to be a great deal for the shareholders," said another chamber director, Jim Boswell, "and I'm sure many EDS employees living in Plano own EDS stock."

Apple now sells HBO shows on iTunes store

Apple Inc. has scooped up Time Warner Inc.'s HBO to feed television shows to its online iTunes store, reeling in one of the last holdouts among major channels and agreeing to a rare pricing concession to land hit shows like "The Sopranos," "Sex and the City" and "The Wire."The Cupertino, California-based company said HBO programming began appearing on iTunes Tuesday and the shows cost either $1.99 or $2.99 per episode, making HBO the only channel allowed to charge above the standard $1.99 for their episodes on iTunes.

Eddy Cue, Apple's vice president of iTunes, said the higher prices for some of HBO's shows — in particular "Deadwood," "Rome" and "The Sopranos" — are still cheaper than buying the DVD sets of the full seasons of those shows, which translates into prices two or three times higher per episode.

"I don't think it's a shift in strategy — I view this as an extension of the strategy we've had," Cue said in an interview.

HBO is also trying out a service of its own that allows cable customers with HBO subscriptions and high-speed Internet connections to download shows and movies and play them on personal computers, but it's not widely available.

Apple splits the revenues from iTunes sales with content providers, with most of the money going back to the movie studios, television channels and record labels whose work is sold through the Web site.

That's made iTunes a favorite of independent musicians and other artists whose works wouldn't be distributed as broadly without the service, but has rankled some big-media companies because of Apple's tight control over the pricing.

In a high-profile rejection of Apple's pricing tactics, NBC Universal stopped offering TV shows on iTunes last fall after a spat over its inability to set different prices for certain shows. NBC then defected over to Microsoft Corp.'s camp, offering its TV shows on Microsoft's rival service, Zune Marketplace, where the network was given more flexibility over pricing.

Cue said NBC is the only major channel currently not offering its shows through iTunes. The store currently carries 800 different shows and has sold more than 150 million episodes.

The iTunes store isn't a big cash cow for Apple, making up less than 10 percent of Apple's $24 billion in sales last year, but is a big driver of iPod and Macintosh computer sales.

Time Is Running Out In Chinese Earthquake

The time is running out as toll of the dead and missing soared while rescue workers searced systematically through squashed hoes and schools in a desperate attempt to find survivors of China's worst earthquake in three decades.The official death toll climbed past 12,000 in Sichuan province, where emergency workers reached the epicenter of the massive quake as night fell. The number appeared certain to rise far higher as rescue and recovery efforts moved forward.

Soldiers who hiked past blocked roads located only 2,300 of the 9,000 people of Yinxiu, a town near the epicenter in Wenchuan county, state TV quoted local emergency official He Biao as saying. At least 500 people were confirmed dead in the country, the official Xinhua News Agency reported early Wednesday.

Xinhua News Agency said 18,645 people were still buried in debris in and around Mianyang, a city about 60 miles east of the epicenter. People there spent a second night sleeping outside in the rain, some under striped plastic sheeting strung between trees. The government ordered people not to return to their homes, citing safety concerns, and posted security guards outside apartment complexes to keep people out.

Few lights were on in the city of 700,000, and people ate and chatted by candlelight.

"My heart was so uneasy last night, I couldn't sleep," said Wen Dajian, wrapped in a floral quilt lying on the rickshaw he uses to make a living hauling goods. "I'm still so scared tonight. There's no place for me to go."

The Sichuan Daily newspaper reported on its Web site that more than 26,000 people were injured in the Mianyang area.

Rescue teams brought people evacuated from the hard-hit town of Beichuan to Mianyang's sports stadium for food and shelter. Outside the railway station, police shouted in megaphones telling people where they could get free rice porridge.

Buses carrying survivors headed away from Beichuan, which was flattened by the quake. Footage on CCTV showed few buildings standing amid piles of rubble in a narrow valley. The six-story Beichuan Hotel sat listing, half its first story collapsed. Medical teams tried to treat the wounded in dirt courtyards littered with broken furniture and rubble.

Just east of the epicenter, 1,000 students and teachers were killed or missing at a collapsed high school in Beichuan county — a six-story building reduced to a pile of rubble about two yards high, according to Xinhua. Xinhua said 80 percent of the buildings had collapsed in Beichuan alone.

At another leveled school in the town of Juyuan, 900 students were feared dead. As bodies of teenagers were carried out on doors used as makeshift stretchers, relatives lit incense and candles and also set off fireworks to ward away evil spirits.

There was little prospect that many survivors would be found under the rubble. Only 58 people were extricated from demolished buildings across the quake area so far, China Seismological Bureau spokesman Zhang Hongwei told Xinhua. In one county, 80 percent of the buildings were destroyed.

Rain was impeding efforts and a group of paratroopers called off a rescue mission to the epicenter due to heavy storms, Xinhua reported.

But officials urged the public not to give up hope.

"Survivors can hold on for some time. Now it's not time to give up," Wang Zhenyao, disaster relief division director at the Ministry of Civil Affairs, told reporters in Beijing.

Thirty-one British tourists who were panda-watching in Wolong National Nature Reserve and initially reported missing were safe and in the provincial capital of Chengdu Tuesday night, the Chinese Foreign Ministry said in a statement. Kerry Zobor, the U.S.-based spokeswoman for the World Wildlife Fund, said they have not been able to contact the 12 WWF members visiting the reserve, or their tour operator.

"The communications are still disrupted and we're hoping to have an update by the end of the day," Zobor said Tuesday.

All the pandas were reported safe.

Premier Wen Jiabao, who rushed to the area to oversee rescue efforts, said a push was on to clear roads and restore electricity as soon as possible. His visit to the disaster scene was prominently featured on state TV, a gesture meant to reassure people that the ruling party was doing all it could.

"We will save the people," Wen said through a bullhorn to survivors as he toured the disaster scene, in footage shown on CCTV. "As long as the people are there, factories can be built into even better ones, and so can the towns and counties."

Some 20,000 soldiers and police arrived in the disaster area with 30,000 more on the way by plane, train, trucks and even on foot, the Defense Ministry told Xinhua.

Aftershocks rattled the region for a second day, sending people running into the streets in Chengdu. The U.S. Geological Survey measured the shocks between magnitude 4 and 6, some of the strongest since Monday's 7.9-magnitude quake.

Expressions of sympathy and offers of help poured in from the United States, Japan and the European Union, among others.

White House spokeswoman Dana Perino said President Bush spoke by phone with Chinese President Hu Jintao and expressed his condolences. She said the U.S. is offering an initial $500,000 in earthquake relief in anticipation of an appeal by the International Red Cross.

The Dalai Lama, who has been vilified by Chinese authorities who blame him for recent unrest in Tibet, offered prayers for the victims. The epicenter is just south of some Tibetan mountain areas that saw anti-government protests earlier this year.

Beijing Games organizers said the Olympic torch relay will continue as planned through the quake-affected area next month.

The Chinese government said it would welcome outside aid, and Russia was sending a plane with rescuers and supplies, the country's Interfax news agency reported.

But Wang, the disaster relief official, said international aid workers would not be allowed to travel to the affected area.

"We welcome funds and supplies; we can't accommodate personnel at this point," he said.

China's Ministry of Finance said it had allocated $123 million in aid for quake-hit areas.

The quake was China's deadliest since 1976, when 240,000 people were killed in the city of Tangshan, near Beijing in 1976. Financial analysts said the quake would have only a limited impact on the country's booming economy.

Obama Focuses on November, Clinton on West Virginia

Today's primary in West Virginia matters so little to the Democratic presidential nomination race that front-runner Barack Obama will spend the day in Missouri and Michigan, two battleground states in the fall's general election.
Obama, who has racked up a commanding lead in delegates to the nominating convention over rival Hillary Clinton, for the first time opted to spend the day of a primary election in states that have already voted.
``We're not going to have a lot of time to pivot'' after the primaries end, Obama said in Bend, Oregon, on May 10. Presumptive Republican nominee ``John McCain's been getting a free pass.''
A poll of likely Democratic voters by Boston-based Suffolk University May 10-11 gave Clinton a 36-point advantage in West Virginia. While victory in that primary won't much improve her chances of clinching the nomination, it may encourage her to continue her campaign, using tactics that could hurt Obama in November, said Clyde Wilcox, a government professor at Georgetown University in Washington.
``If Clinton wins by a huge margin, she may just try to fight on to the convention and will be tempted to use more negative arguments,'' Wilcox said. The back-and-forth between Clinton and Obama became especially pointed in the weeks before the April 22 Pennsylvania primary, which Clinton won, and Democrats have fretted the attacks would harm the party.

Google toू Launch YouTube products soon Will be More Close to Yahoo in Future

Google Inc expects to launch new products for its YouTube Web video service in the next few months and sees reason for closer cooperation with Yahoo Inc, Google Chief Executive Eric Schmidt said on Thursday.

Schmidt has said getting the video sharing site to make money is the Web search company's top priority for the year. He did not give details of the products, however, and they are not even in initial, or beta, testing.

At the company's annual shareholder meeting, Google co- founder Sergey Brin said YouTube and DoubleClick, an online advertising company bought by Google earlier this year for $3.1 billion, are still small businesses compared with its core search and advertising business.

"They both have potential, but for it to be a sizable part of our revenue, you're going to have to wait at least a couple of years," said Brin in response to a question about when those acquisitions would make a significant contribution to the company's bottom line.

Google bought YouTube for $1.6 billion in 2006.

The Web search leader played a large role in the takeover battle between Microsoft Corp and Yahoo. During a two-week test, it sold search advertisements on rival Yahoo last month as part of Yahoo's attempt to find an alternative option to Microsoft's offer.

Schmidt said the trial run provided good reason for the companies to discuss cooperation, but there was no deal yet.

"We view the test as successful," he told reporters before the Web company's annual meeting. "That's a good basis to talk to Yahoo some more."

The Google CEO, speaking later at the shareholder meeting, said the company will continue to growth faster outside of its home market. Google generated 51 percent of its revenue outside the United States in the March quarter, but Schmidt said he expects that figure to grow over time.

Without giving a specific time frame, Schmidt said he expects 65 percent of Google's revenue to come from abroad. Eventually, non-U.S. revenue could be even higher.

Google co-founders Brin and Larry Page also fielded a request from one shareholder who asked the pair not to split the company's stock, which closed at $583 on the Nasdaq.

"I think that's the first time we've had that request," Page said with a chuckle.

Brin played the straight man: "We have had no problem honoring that thus far and I don't expect that anything will change in that respect."

Samsung Launches HD Flash Camcorder With Slow-motion Video

Samsung has launched a high-definition (HD) video camera that can also snap high-resolution digital photos and take smooth slow-motion video.
The HMX20, which was shown in prototype form at CES in Las Vegas in January, can manage 1080p full high definition (1,920 pixel by 1,080 pixel resolution) and 8-megapixel images. It's also capable of snapping pictures while video is being recorded-- a feature that is becoming popular on cameras but is still not standard.

To frame shots there's a 2.7-inch widescreen monitor that swings out of the side of the camera much like most other camcorders.

A special feature is the 300 frames per second (fps) shooting mode for slow-motion video. Video is usually recorded at 30 fps and becomes jumpy when slowed down, but by recording at 300 fps it can be slowed down by as much as 10 times and still appear smooth.

The camera has a round body and is designed to be easily held in one hand. Its compact size is aided by the lack of a tape or optical storage disc drive. Instead it stores video and images on flash memory. It has 8G bytes of built-in memory and this can be extended with an SD or MMC memory card.

The camera has been announced for South Korea where it will cost 899,000 won (US$857). Launch details for other markets have not been set yet.

Apple Reportedly Agrees To Refunds In Mac-User Suit

Apple has reportedly agreed to give refunds of $25 to $79 in cash to as many as 2.3 million Mac users who bought replacement power adapters for the PowerBook and iBook, court documents revealed Friday.
The refund is part of Apple's proposed settlement of a class-action suit filed in 2006 over spark-prone adapters that shipped with the Mac computers. According to documents filed in U.S. District Court in San Jose, Calif., federal Judge James Ware gave preliminary approval March 24 to the agreement reached with plaintiffs, BloombergNews reported.

The suit claimed that Apple misrepresented problems with the adapters, the news agency said. The Mac maker recalled 570,000 of the devices, and offered replacements at no charge. A hearing on final approval of the deal is scheduled for Sept. 8, Bloomberg said.

The settlement was the second reported this week involving an Apple product. Apple Canada offered a total of $3.54 million (U.S.) in credits to Canadian iPod owners, in order to settle two lawsuits over the battery life of the portable music players.

The credits are being offered to owners of first-, second-, or third-generation iPods bought before June 24, 2004, The Gazette newspaper in Montreal reported. The lawsuits, one filed in Montreal and the other in Toronto, claimed that the rechargeable batteries in the devices died after three hours of use, while Apple advertised the iPods as running for eight hours between charges.

As many as 80,000 Canadians could be eligible for a credit, lawyer Philippe Trudel, who represented the plaintiff in the Montreal suit, told the newspaper. The credit of $44 (U.S.) per person would be usable at Apple's online store.

Apple has had to deal with other marketing-related lawsuits this year. In March, a class-action suit filed in federal court in San Jose, Calif., accused the company of deceptively marketing its 20-inch iMacs by grossly inflating the capabilities of the monitor. The plaintiffs claimed the monitors were inferior to previous generations of displays. The suit is pending.

eBay's Paypal Rule Causes an Uproar in Australia

EBay Inc. is exploring whether to require customers to use its online payment service PayPal, a move that has angered users and prompted antitrust scrutiny in Australia, where a PayPal-only rule takes effect next month.
It's unclear whether eBay will institute a similar policy in the United States and other countries. However, the online auction company often tries big changes in smaller markets before expanding them worldwide, and says it is open to that in this case.

"We are going to take learnings from it and apply them accordingly," said eBay spokesman Usher Lieberman.

EBay says it wants to reduce disputes and restore trust in its marketplace with the PayPal-only plan. Because eBay and PayPal can share information on each transaction, eBay says use of PayPal allows it to stop fraud more efficiently than outside payment services. Pressing that safety argument in a heated discussion with Australian users, an eBay executive compared the new rule to banning the sale of heroin on street corners.

But critics lament that PayPal is costlier than other payment options, and they suspect eBay is just interested in increasing PayPal's revenue. Australian banks say the plan will eliminate competition for the sake of exaggerated benefits.

"Competition will be restricted, innovation and development will be constrained, new entry will be discouraged and PayPal will be able to increase fees and charges to eBay users," the Australian Bankers Association said in a filing with regulators Thursday.

Because eBay sellers are commonly independent merchants who don't accept credit cards, PayPal acts as a go-between. Buyers use their credit cards and bank account information to make payments, and PayPal relays the funds to sellers' PayPal accounts, charging them 30 cents plus a commission — up to 4.4 percent in Australia. The second-most common method of payment on eBay Australia, bank transfers, cost 20 cents each.

Australia's bankers group says PayPal is not as immune to fraud as eBay claims. While PayPal does keep bank and credit card account information secret between trading partners, the bankers group decried that it does not verify identity as banks do.

EBay's financial reports indicate that PayPal, while hardly fraud-proof, is getting better at cracking down. Its loss rate is 0.24 percent, down from 0.33 percent a year ago. That means that for every $100 transacted with the service, PayPal has to eat 24 cents because of fraud. That is slightly lower than the rates seen in credit and debit card transactions involving the top 20 online retailers, said Avivah Litan, a payments security analyst with Gartner Inc.

EBay contends that when users opt for methods like bank transfers, their transactions are four times more likely to result in a disputed payment. EBay says reducing that risk will attract new buyers to the site.

And, the company adds, it doesn't stand to profit directly from the PayPal rule. It claims its investments in new buyer protections could outweigh any gains from increased PayPal fees. For instance, under Australia's new plan, if a buyer doesn't get what he or she paid for via PayPal, eBay will refund the buyer up to 20,000 Australian dollars ($18,600).

To make the PayPal rule possible, eBay has applied for — and automatically gets — immunity from Australia's anti-monopoly Trade Practices Act. But the Australian Competition and Consumer Commission, which is investigating, could revoke that immunity if it finds the plan will harm the marketplace. A decision is expected soon.

Critics say eBay is just trying to fatten its bottom line. Growth in eBay's core auction listings has slowed in recent quarters, pushing eBay to expand other parts of its business, which includes PayPal, classifieds sites and online telecommunications service Skype. And eBay has already taken other steps viewed as protecting PayPal, such as banning Google Inc.'s rival Checkout service on alleged safety concerns months after it was launched in 2006.

Sellers in Australia are "absolutely furious" and resent that they are subjects of an experiment, said Phil Leahy, president of the 600-member Australia chapter of the Professional eBay Sellers Alliance.

Leahy sells DVDs, movies and CDs through eBay, a high-volume, low-margin business. He says using PayPal instead of bank transfers would cost him $4,700 per month, based on his January sales numbers of $332,000. "It's the difference between making money and not making money," he said.

Leahy estimates Australian buyers use PayPal about 50 percent of the time — eBay would not confirm the figure — versus an 85 percent rate in the United States. He said bank transfers are used in 30 percent of transactions. The rest are conducted with bank and personal checks, money orders, or cash on delivery, all of which are banned under eBay's new plan unless the payments are exchanged in person. That happens rarely.

Shaun O'Brien, a seller of home theater accessories, said many Australians trust their banking system more than online services like PayPal. He worries buyers will leave when they are deprived of a choice.

"Australians here have been heavily educated against putting credit card details online," O'Brien said. "There are plenty of customers out there that refuse to use PayPal."

The Australian experiment could lead to a less-stringent step: Perhaps eBay will require all sellers to at least offer PayPal as a payment choice. No matter how it turns out, however, eBay surely has more big plans for PayPal, which has grown steadily since the auction company bought the payment service in 2002. Last year it accounted for $1.9 billion in revenue, 25 percent of eBay's total.

In fact, eBay's top e-commerce executive, Rajiv Dutta, PayPal's former president, said last year he was convinced PayPal would someday be bigger than eBay's better-known auction and marketplace business.

NY Rep. Vito Fossella Faces Public Criticism For Extra Marital Affair

Embarrassed by the confession he fathered a child from an extramarital affair, New York Rep.Vito Fossella is facing public calls for his resignation. Secluded with his family, he must decide if he wants to keep his job badly enough to grapple with the lingering questions and fallout from the scandal.
In admitting the affair and a secret child Thursday, the Republican lawmaker indicated he planned to stay in Congress for months to come, but there are signs he could be out much sooner: House Minority Leader John Boehner pointedly said he expected Fossella to make a decision about his future this weekend.

Fossella's personal life came apart at the seams after police stopped him for running a red light last week and charged him with drunken-driving. The arrest fueled scrutiny which led to revelations of an affair with a former Air Force officer, and a 3-year-old daughter with her.

Political consultant Mike Paul, a former aide to Republicans including former Mayor Rudolph Giuliani, said the pressure will be intense on Fossella to make some sort of decision by Monday.

"This weekend for him is a lot of soul-searching," said Paul. "Blood's thicker than water, but even blood sometimes takes a walk: Your wife can walk, your children can say they don't want to be with dad anymore," he said.

The Staten Island Advance, the paper that speaks directly to the bulk of Fossella's constituents, declared Friday that he "is finished" and must resign immediately. The New York Post declared it's "time to go."

But go where? Back to the home he shares with his wife and three children on Staten Island? Or back to his other child and her mother in Virginia? If Fossella tries to hang on — as many lawmakers have done in recent scandals — he will still have some hard questions to handle, like:

• If convicted of drunken-driving, does he end up serving jail time under Virginia's tough anti-DWI laws? A sitting congressman sitting in a cell is not a pretty sight for the Congress or Fossella's Republican Party.

• Did his wife know he had a child with another woman, and even if she did, will she stay with him now that the world knows?

• Did the congressman mix business with pleasure? The New York Daily News reported the other woman, Laura Fay, was part of a government trip to Europe with Fossella and other lawmakers years ago, raising the question of whether taxpayer dollars were in any way used to pursue the romance.

Fossella's spokeswoman said Friday he was in Staten Island with his family, and provided no further details.

If Fossella did step down, and that resignation took effect before July 1, New York's Democratic governor David Paterson would have the option of calling a special election to fill the seat for the rest of the year.