Still More DSL Woes; Plus Net Taxation and Privacy

Some thoughts for the Investors Notebook this long holiday weekend ...

In California, PacBell has been irritating some of its customers with a new program to effectively limit its DSL subscribers' connection speeds to Usenet newsgroups. Perverse, that in the middle of a hot-and-heavy PacBell ad campaign using the slogan "Always fast, never shared," aimed squarely at customers' concerns about the potential slowdown in cable-modem connections when a lot of folks in the neighborhood are logged on, PacBell would choose to compromise performance on its own side of the street.

Customers are especially irritated because they were led to believe that when they signed up for their DSL lines, they were guaranteed certain levels of transmission speed.

No, no, say the spokespeople for PacBell, a subsidiary of SBC Communications (SBC:NYSE - news - boards). First, the slowdown is being applied only to users of Usenet newsgroups, they say. Second, the slowdown is being implemented through fiddling with the PacBell servers which deliver that Usenet content, not specifically to individual users' connections.

So what? Usenet is a legitimate part of the Net. If it seems a little shaggy and old-fashioned now, it was nonetheless a driving force in establishing the Net as a fundamental part of so many of our lives ... and lots of people still subscribe to, and turn frequently to, Usenet's thousands of fascinating newsgroups.

In any case, so what? Where does a carrier get off deciding what's good for us and what's bad for us, what we should get to see at the speed we've paid for, and what we'll have to use throttled-back?

Stinks, PacBell. Stinks. Period.

Fortunately, no reports yet of SBC using this sleazy tactic in other areas.

---

If you've been following the Net taxation wars, you probably know that there is a devious effort to undermine the Internet Tax Freedom Act, passed by the U.S. House of Representatives in May. That law-in-the-making would extend the existing moratorium on Net taxation for another five years.

The "Tax 'em high!" crowd doesn't lose gracefully, so Rep. Byron Dorgan, (D., North Dakota), has been assembling a stink bomb he's calling the Internet Simplification and Equity Act.

Old trick: Wrap stuff intended to subvert popular laws already passed -- or at least, in the process -- in motherhood and the flag. Hey, who could be opposed to "simplification"? And "equity"?

Hah. Read the draft, and you find that Dorgan's bill, while appearing to endorse the Internet Tax Freedom Act, would in fact eviscerate it by requiring that businesses serve as the states' de facto tax collectors on "remote" sales -- in other words, sales made over the Internet, by Web users in states other than the one in which the seller is based.

In other words, exactly the opposite of the Tax Freedom Act's intention.

The battle is far from over -- we'll be haggling over this for years -- but for investors holding Net retailers, this stinker bears watching.

---

More on Net taxes. The Eurocrats are getting downright mean.

They've already taxed European Union citizens on Web purchases from one EU country to another -- certainly their prerogative -- but now they want the U.S. government to force American companies doing business on the Web to collect and remit sales taxes, at the European rates and on their terms, on all sales made by U.S. e-merchants to residents of the EU countries.

Whoa, Brussels. This is truly nutzoid. Two questions:

• First, does anyone in the European Commission really believe the U.S. government is going to tell American businesses, doing business in America, to become tax collectors for Europe Inc.?

• Second, does anyone in the EC bureaucracy think this is even remotely enforceable?

I think this is a remarkably revealing move by the Euro bureaucrats. And they do not paint themselves in glory with it.

---

Congratulations to CNet for breaking an important story that's been right under the noses of the rest of us: As failed dot-coms' assets are put on the block, some companies are moving in to buy those closed shops' files of confidential customer information.

Boo.com, Toysmart.com and CraftShop.com, CNet says, either have sold or are trying to sell the valuable stores of customer information they built. Fashionmall.com, which in June boasted that among the important Boo.com assets it had picked up were the customer records of 350,000 Boo users, sounds unapologetic, and unrestrained, in how it'll use that data.

FashionMall.com CEO Ben Narasin says he'll write emails to those 350,000 Boo.com customers, asking if he can continue to send them more email. Feeble response, Ben.

And the liquidator for Toysmart.com brazenly advertised in the The Wall Street Journal that it was entertaining offers for its customer list and database. Recovery Group, managing that sale, says it already has several bids for the records.

In all three cases, the failed e-businesses had made specific representations to their customers about the privacy of their data. I guess that goes out the window in bankruptcy sales.

I often think too much is made of privacy on the Net. As Sun Microsystems (SUNW:Nasdaq - news - boards) CEO Scott McNealy has often said to those protecting privacy matters, "You don't have any privacy any more. Get over it." That's a little harsh, but there is a kernel of truth there.

Still, this is a dismaying turn of events. I'm beginning to think maybe I should worry more about Net privacy issues than I have been. What do you think? Are you worried? Is privacy, in this sense, an obsolete concept? How much attention should we pay to who "owns" our personal data?

---

Coming soon: a midyear update on my "25 Stocks for 2000" list, published here in January. Then, the first episodes of "Jim Seymour's Bottom-Fishing Journal," as I paw through the entrails of once-high-and-mighty stocks laid low during the April massacre, looking for some that are worth buying. And finally, finally, the columns on midsize and small-company optical-networking outfits I promised when I began talking about investing in the photon revolution a couple of months ago.

It's going to be a busy July here on RealMoney.com and TheStreet.com, no matter the impact of the summer doldrums likely to anesthetize much of Wall Street, as everyone decamps for the beach.

---

Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in any securities mentioned in this column, although holdings can change at any time. Seymour does not write about companies that are current or recent consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at [e-mail].