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Technology Stocks : Discuss Year 2000 Issues

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To: John Mansfield who wrote (3045)12/26/1998 4:57:00 AM
From: John Mansfield  Read Replies (1) of 9818
 
'PRODIGY,AOL,COMPUSERVE,ETC Y2K THREATENED? COMPLIANT?

asked in the TimeBomb 2000 (Y2000) Q&A Forum

Sorry if this has already been answered elsewhere,but I didnt find it. Does anyone know if power and
phones survived, would the internet service providers be up and running? Any word on how Y2K
affects them and how they are progressing if it does? Also, will non compliant customer computers
endanger their service or websites that the non compliant computer visits?

-- Ann Fisher (zyax55b@prodigy.com), December 26, 1998

Answers

Not a simple question to answer. I do not know the Y2K compliance status of AOL, Compuserve, et
al. However, we are all in the same boat. That is, it is not enough for a company to be internally
compliant (and the definition that I'm choosing to use here simply means that enough of their internal
systems are functional to provide continuity of service -- all other factors being ignored). Their 'mission
critical' vendors of products and services must also be compliant (same definition).

Companies like AOL (like most companies) are 100% reliant upon their vendors. Imagine a scenario
where electricty and telecommunications stay on but banking has serious disruptions. They process
thousands of credit card transactions daily. If this system fails, how long can AOL continue to operate? I
would imagine they could get by for at least a few days. Maybe alternate sources of banking services
will be available. Maybe not. Maybe they could even survive an complete operational outage for a few
days. Customers would probably not leave them in droves if they could reasonably be expected to be
back online within a week or two. On the other hand, if AOL were to experience a 3 month outage
while Joe's ISP down the street was humming along fine, well, I think you know what this would mean.

Imagine another scenario where electricity stays on everywhere EXCEPT for a where their major
operations headquarters is located (Virginia say). If this were an isolated outage of short duration, you're
looking at a minor inconvenience. If the outage were prolonged, then other arangements would need to
made. Moving a major operations center is a huge job even during 'normal' times. It might be impossible
during Y2K. If a prolonged outage occurs in an isolated region (say the DC and Virginia area),
EVRYONE will be attemping to move their operations (if only temporarily) to a more viable area.

Another scenario can be imagined where electricity, telecom and banking all continue to function but
where other problems have occurred resulting in civil unrest making it dangerous for employees to come
to work. No employees, no service.

There are just too many unknowns here to make prognostications on a specific company. Certainly the
'iron triangle' (electricity, telecom, banking) is absolutely essential. Lose any of the three for a prolonged
period and all bets are off. But there are numerous other problems which could occur short of that,
either regionally or locally which, while not catastrophic to the general population, could indeed be fatal
to businesses in that location.

If one telecom provider in my area fails and another can provide service, and if the failed one cannot
seize their window of opportunity to recover, the business whose service didn't fail will reap a harvest of
new customers. Of course, if thousands of customers in single location suddenly want to switch
providers, it could still take months to get your phone service restored. I think the same thing holds true
for the large ISPs as well.

The future of any one single company which is itself reasonably compliant (internally) will be determined
by the compliancy of its vendors, the regional problems which actually occur, the size of the company,
the number of outside vendors it uses, the availability of alternate source for products and services, the
market it serves, the reaction of its customer base, it own contingency planning, the reaction of the
general population in its theatre of operation, the reaction of the government, how well it is organized,
how well it can execute contingency plans within its window of opportunity, etc, etc, etc, It is an
equation with 10,000 variables and 1 million unknowns. This is the ugly, intertwined nature of the beast.

All other things being equal (which they are not) I think the larger, more technologically dependent
companies will see the most trouble here. It's an economy of scale thing. If my business consists of 3
people, 6 mission critical suppliers and I can move one county to the north and continue operating. I'll
have a much better chance of doing so quickly than will a company with 100,000 employees and 5,000
suppliers. The problem here is that many small and medium sized businesses have adopted (either
explicitly or implicitly) a 'fix on failure' approach to Y2K. Some larger businesses have been addressing
the issue for longer (though not nearly long enough). Still, it's much, much easier to turn a small bass boat
quickly than an aircraft carrier. Ask IBM.

-- Arnie Rimmer (Arnie_Rimmer@usa.net), December 26, 1998.

# # # 19981226

Dear, Ann Fisher:

My last Y2K project ( 3-months duration ) involved ~$300,000,000 revenue dependent upon
CompuServe connectivity. My client declined ( IOW: brushed off [ Troll Maria ] ) stern warnings about
CompuServe not responding adequately to their corporate Y2K-readiness and electric( Detroit
Edison-DTE )/telephone utility SEC 10-Q's.

I was ( ethically ) compelled to include these documents and my opinions ( captured in my notes from
meetings and telephone conversations ) for the Y2K-archives of this Fortune 500 company. One can
only do so much.

What more does one have to say ( document ) in order to demonstrate corporate "don't want to hear it"
shortsightedness? It is anathema to spoil the "smiley face," "rosey outlook," and DWGI outlook for the
fortunes of the Fortune 500 stock values.

I can only *sigh* at the ineptitude by management to perceive ( via denial ) real Y2K-risks to their
business and employees.

Regards, Bob Mangus # # #

-- Robert Mangus (rmangus@mail.netquest.com), December 26, 1998.

Think about it, some ISP's provide lousy service, dial-ups as is. What happens if the phones go down in
certain areas, no postal service, intermittent power etc? Any ISP's that stay up will be swamped by
users IMHO. Ergo lock-up, things grind to a halt. Remember AOL 2 years ago??? Try phoning abroad
today, Xmas day??? No chance.

-- Andy (2000EOD@prodigy.net), December 26, 1998.

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