IUI, o- AUG
THE COMPUTER I,AW AND SECURITY REPORT
they had bypassed by their software patch. So staff who had already been working for fifteen hours had to work on, preparing and recovering the network for the following day. Many of the staff worked for over 28 hours, non-stop, until the things were, from a technical point of view, back to normal. Now it was the turn of the public relations and marketing staff to go through the mill. Over the past six years AT&T has been fighting a rearguard battle to maintain its massive market share of the long distance telecommunications market. Its two main competitors, Sprint and MCl, have gained 20% of that market at AT&T's expense, leaving AT&T, who had 90% five years ago, with less than 70%. AT&T may not have been willing, or able, to join in the price wars for telecommunications traffic but they were able to sell, and deliver, on the basis of quality and reliability. A multimillion dollar advertising campaign had stressed their reliability. Now all of that was at risk. AT&T's competitors had a golden opportunity. They could not imply that they were more reliable as they too could be vulnerable to the same type of bug. Indeed, their technicians relied on technical data from AT&T after the event to try and ensure that it would not happen to them. There was no doubt however that those customers that fared best were those using more than one carrier. And this was AT&T's most vulnerable spot. US Sprint rushed out full page press advertisements. "An important message to everyone whose telephone is the lifeline of their business. Always have two lifelines." One of AT&T's first post-crisis public relations acts has been to try and compensate for its lost goodwill by offering discounts on long distance calls on Valentines day. But the company's aura of infallibility will not be so easily repaired. Spring and MCI report a surge of enquiries following the
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incident and MCI reports a substantial increase in calls over its network in the period following the disaster. Damage limitation measures continued. AT&T began to talk to its customers, reassuring them and trying to regain its reputation. They stressed the rarity of the incident, AT&T's excellent track record prior to the incident and the steps that they were taking to prevent a recurrence. THE CONSEQUENCES The long term costs to AT&T may never be calculated. For many years any future advertising messages based on reliability may trigger memories of this fatal day. The direct costs of the day's lost traffic are, however, known. It is estimated that the cost to AT&T was between $60,000,000 and $75,000,000 in lost revenues. But the cost to AT&T's customers could have been even greater. Casualties were high because the fault hit not only long distance calls but AT&T's freephone (800) customer response lines. Among the casualties were American Express Co's 800 service, Mastercard's point of sale authorisations. First Union Bank, who had to send employees home, and Pan Am, who estimates that it lost several hundred thousand dollars because customers could not get through to its reservations centre. Calling volumes at its three domestic centres dropped by between 20 and 25%. Echoing comments made by so many victims of computer disasters AI Castan, Pan Am's systems director of communications said "It's a very scary feeling to look out at a 600 to 800 agent centre and see scores of agents sitting idle because calls aren't coming in." The general consens~Js is that, with the single exception already noted, AT&T handled the crisis well. As a long-time AT&T customer put it, "Compared to the way Exxon handled the Valdez disaster, AT&T did one heck of a job." David Davies, Risk Management Editor
BOOK REVIEW
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COMPUTER LAW failed to develop sufficient standards to offer meaningful Bernacchi on Computer Law 1989 guidance from a business perspective. The 1989 Supplementation (Little Brown & Co)ISBN 0 316 092053 Supplement updates Chapter 3 on the basic legal and Little Brown & Co have published a supplement to technical issues. This is a major chapter of the work dealing Bernacchi on Computer Law which is a guide to the legal with intellectual property issues within the field of patents, and management aspects of computer technology. The copyright, trade secrets, semiconductor chip protection, treatise is an attempt, say the authors: "To extrapolate from trademarks and service marks. Sections also deal with the our collective experiences practical and meaningful development of an effective proprietary rights programme, guidance in a variety of areas that relate in different liability theories and the question of minimising degrees to computer based technology. These areas technological risks. Chapter 14, dealing with tax and include the legal and practical aspects of managing financial considerations, is also updated, with sections on information systems and technology; developing, the choice of investment vehicle; accounting and financial protecting apd marketing high technology products; and reporting considerations; revision of cost recovery and tax a host of related topics". The aim is to provide guidance credits by the TaxReform Act of 1986; leasing; tax sheltered to those directly involved with high technology products; financing - the demise of the R&D partnership; capital in particular, corporate executives, managers of information gains on disposition; distributing abroad; and state and systems, lawyers, accountants and consultants. The authors local taxation. note that despite the rapid development of the technology, Further details from Thomas W Lincoln, Senior Editor, US courts and legislators have still given very little guidance Law Division, Little Brown & Co, 34 Beacon Street, in dealing with the many problems posed by that Boston, Mass. 02108, USA. Tel: 617-227-0730. technology. Moreover, the computer-related industries have
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