ECONOMIST

E-business is taking root just about everywhere—but some countries are pioneers, others laggards. Which are faring best in e-business, and what characterises their success? The answers can be found in the 2002 edition of the Economist Intelligence Unit's e-readiness rankings.

‘E-readiness’ is shorthand for the extent to which a country’s business environment is conducive to Internet-based commercial opportunities. It is a concept that spans a wide range of factors, from telephone penetration to online security to intellectual property protection.

‘Despite the dotcom bust, the Internet is still reshaping the way companies do business, and countries' e-readiness will be a vital feature of the global competitive landscape,’ says Daniel Franklin, Editorial Director of the Economist Intelligence Unit.

Covering the world's 60 largest markets, the rankings provide a useful guide for companies seeking to invest in technology-savvy countries, as well as governments looking to reap the benefits of the digital age. The US leads the pack, as it did in 2000 and 2001. However, due partially to changes in methodology, and mostly to developments in countries’ infrastructure, regulatory environment and economy, there have been significant shifts further down in the rankings. The Netherlands has moved into second place from tenth in 2001, for example, and northern Europe now claims most of the other top spots, thanks not only to sophisticated IT infrastructures and high mobile-phone penetration, but also to smart government policy and a good overall business environment. Asia, Latin America and Africa trail further behind, but a few standouts in each region have made significant gains: Venezuela, for instance, improved its ranking from 47th in 2001 to 37th in the current rankings.

Among the main conclusions suggested by the new rankings:

• Western economies take the lead. North America and Western Europe dominate the top ten places in our rankings, with Australia the lonely outsider. These countries score highest both because consumers and businesses have embraced the Internet, and because their economic and political stability and openness to foreign investment make them good bets for all kinds of business, particularly e-business.

• Other regions have pockets of promise. Outside of Western Europe and North America, e-business is less uniformly developed. Singapore and Hong Kong lead the pack in Asia, taking 11th and 13th place, respectively, while Vietnam and Pakistan languish at the bottom of the heap, in 56th and 57th place. The same is true of Latin American, where advanced Chile ranks 28th, while Ecuador stumbles into 50th place. In the Middle East and Africa, Israel alone ranks among the rankings’ top 30 countries.

• Bigger is not always better. The US may rule the roost, but many of the world’s largest economies, including Japan, Germany and France, are outpaced by smaller, more agile competitors, such as the Netherlands, Switzerland and Sweden. What sets these countries apart is the broad accessibility and affordability of the Internet, thanks to state-of-the-art IT infrastructure and high per capita income.

• Business culture is decisive. The US tops the rankings because of the degree to which the Internet has become embedded in commercial culture. Nowhere is so much business conducted over the Internet so routinely. This explains why the US scored highest in the category for e-business supporting services (the consulting and IT services and back-office solutions used to facilitate online business) as well as in the social and cultural category (which considers, among other things, the degree of innovation and entrepreneurship in business). It also explains why Singapore and Hong Kong rank as the most competitive telecoms markets in the world, and among the best equipped, yet don’t figure among the top ten countries. While high-grade infrastructure is important, more important is how people use it.

• Infrastructure is still evolving. Even top-ranked countries have not yet satisfied consumer demand for fast, cheap, secure and reliable Internet connectivity. High-speed, broadband services are not universally available and Internet-ready mobile phones are still in their infancy—even in mobile-crazed Scandinavia.

• Governments have wide influence. Internet business thrives when governments have a clear strategy—and money to spend—to develop IT infrastructure. But that’s not the only area for official involvement. Successful e-business depends on a strong legal framework that protects private property and encourages entrepreneurship. Increasingly, it also requires Internet-specific legislation. In the crucial category of legal and policy environment, Australia comes in first, followed by Sweden, Switzerland, Finland and the UK. Other countries—even those without a strong e-business culture, such as Mexico and Chile—are enacting smart Internet legislation, recognising that good laws promote industry growth.

This year, working in association with IBM’s Institute for Business Value, the Economist Intelligence Unit adjusted the rankings framework to take into account the shift away from the dotcom era’s emphasis on e-commerce to the new imperatives of corporate efficiency, security and global connectivity. The Economist Intelligence Unit was solely responsible for scoring the 60 countries.

The six categories that feed into the rankings (and their weight in the model) are: connectivity and technology infrastructure (25%); business environment (20%), using the 70 indicators covered by the Economist Intelligence Unit’s for 60 countries; consumer and business adoption (20%); social and cultural infrastructure (15%); legal and policy environment (15%); and supporting e-services (5%).

04/16/2003 - <a href=www.latintrade.com>LatinTrade.com-Source: BNamericas

Venezuelan cable TV and broadband Internet services provider Intercable will concentrate on maintaining its client base this year and does not expect to invest in expansion, a company spokesperson told BNamericas. Intercable expanded to capital Caracas late last year and closed 2002 with a nationwide client base of 350,000 TV subscribers, as well as almost 20,000 pure Internet users. But plans to launch telephony service, starting in Caracas, are on hold, corporate image manager Juan Carlos Gomez said.

As a result of the two-month general strike started last December users have tended to drop the premium services Intercable offers, rather than abandoning the company altogether, he said. Corporate services have also been hit hard because of the number of enterprises forced to close down after the strike. The company now aims to ensure client loyalty by offering budget plans with lower speed access, and by formulating promotions targeted at specific user groups. Intercable, a subsidiary of US-based investment group Hicks, Muse, Tate & Furst, offers cable TV in 70 cities, and Internet access in its home town Barquisimeto, as well as Maracaibo, Valencia, La Guaira, Guarenas, Maracay and Merida.

Wednesday, 04/16/03    |    Middle Tennessee News & Information By KEITH RUSSELL <a href=www.tennessean.com>tennessean.comStaff Writer

Six years ago, passing motorists would spot Wayne Sanderson tinkering with the electric power lines along Interstate 65 and report his suspicious activity to Nashville Electric Service officials.

Today, that initial tinkering has the former Nashville Tech electrical engineering professor helping lead an Alabama company on the cusp of delivering high-speed Internet service directly over electric power lines.

The technology has long been considered a sort of Holy Grail — a ''third'' wire that could expand broadband service into rural areas where cable and digital subscriber line, or DSL, providers don't reach.

Among the concept's biggest fans is Michael Powell, the chairman of the Federal Communications Commission.

''This is within striking distance of being the third major broadband pipe into the home,'' Powell was quoted as saying last week at a demonstration of the technology in Maryland.

And Sanderson's PowerComm, based in Huntsville, Ala., is right in the thick of it. Earlier this year, the company began its first field test, a project to offer broadband service at speeds similar to DSL along power lines to a small residential subdivision in Cullman, Ala.

Oversimplified, Internet traffic is sent along the power lines using parts of the electromagnetic spectrum not used for other purposes, such as radio and TV signals. The content, whether it's a piece of data, video or a phone call, then makes its way to a PowerComm customer using a modem. Eventually, the company expects to be able to allow a customer to connect to the Internet by literally plugging into a wall outlet.

If all goes well, PowerComm hopes to launch service in northern Alabama and other Southeastern communities served by the Tennessee Valley Authority. Utilities could either offer the service directly to customers, or partner with an existing Internet service provider.

Initial monthly service in Cullman is expected to cost about $30, but PowerComm officials believe they may eventually get that down to $20.

No Middle Tennessee utilities are close to offering the service, but some are interested to see how the field tests pan out. Larry Kirk, general manager at Murfreesboro Electric, recently sat in on a presentation Sanderson made to the local chapter of the Institute of Electrical and Electronics Engineers.

''That's an issue we're very interested in,'' Kirk said. ''Hopefully they can get it perfected.''

NES officials are also watching the developments with interest, though the utility has no active plans to get into the broadband business.

''We're certainly interested in it from an NES standpoint, both for our customers' use and our own internal use,'' said Leonard Leech, chief engineer for NES.

Leech added that NES wasn't necessarily inclined to use its power grid to get into the Internet business.

Rather, the utility is interested in being an ''enabler'' by helping spread broadband service to areas where it isn't available.

''We'd like to make sure that whatever needs to happen as far as economic development, that we appropriately use our infrastructure to the maximum advantage of citizens.''

Leech has actually been a longtime supporter of Sanderson and PowerComm, which was started after Sanderson, a Nashville native, was laid off from his job in the mid-1990s as an engineer at telecommunications equipment maker Motorola. He was teaching at Nashville Tech but was interested in doing something more.

''Motorola downsized, and I decided to do something more entrepreneurial,'' Sanderson recalled.

Finding a way to deliver broadband over power lines intrigued him. The concept had been tried in the early 1990s in Europe but never took off.

Sanderson called Leech and received the utility's blessing to work on the project using the local power grid.

Subsequent testing was conducting on power lines in Sanderson's hometown of Fayetteville, Tenn.

In 2001, Sanderson partnered with Steve Turner, a former colleague at Motorola, to found PowerComm.

While starting in small Cullman, about a three-hour drive from Nashville, Turner believes the potential for offering broadband over power lines is literally global in scale. As proof, Turner notes PowerComm has already been contacted by utilities in China, Malaysia, Venezuela, India, Ukraine and the Czech Republic.

''The market is so huge,'' said Turner, PowerComm's president and chief executive officer, ''and there is a relatively small number of people who are finding a way to do this.''

The technology also has non-consumer uses, ranging from allowing utilities to electronically read meters to helping protect the homeland from terrorist threats. Already, Turner said PowerComm is working to deploy video cameras attached to power lines that can help customers keep an eye on critical infrastructure, such as hydroelectric dams.

Despite the opportunities, longtime observers of efforts to introduce high-speed Internet services on power lines say a dose of caution is in order. Not the least of which is that companies still must prove the technology actually works.

''I definitely think power line has the potential to be very revolutionary, but it is technology that is still relatively unproven,'' said Seth Libby, an analyst with the Yankee Group research firm.

<a href=www.smartmoney.com>smartmoney.com-Dow Jones Newswires April 14, 2003

EL SEGUNDO, Calif. -- Hughes Electronics Corp. (GMH) posted a much narrower first-quarter net loss, largely because of the year-earlier adoption of new accounting rules regarding goodwill amortization.

Nonetheless, the firm reported better-than-expected results, thanks largely to continued strengthening of its DirecTV business in the U.S.

The satellite-services provider reported a net loss of $50.9 million, compared with a year-earlier net loss of $837.7 million. Hughes doesn't provide per-share figures because it is a tracking stock of General Motors Corp. (GM).

The prior year's results included a $681.3 million goodwill write-down and $24.9 million losses from discontinued operations.

Revenue rose 10% to $2.23 billion from $2.02 billion.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, soared to $305 million from $164.5 million.

When the company released its fourth-quarter results in January, Hughes projected first-quarter revenue of $2.1 billion and Ebitda of $175 million to $225 million.

Meanwhile, Hughes also posted its first operating profit in four years -- $41.9 million. The company defines operating profit as revenue minus operating costs, depreciation and amortization.

"An outstanding first-quarter performance by DirecTV U.S. drove Hughes' strong first-quarter revenue and Ebitda growth," President and Chief Executive Jack A. Shaw said in a prepared statement. "The DirecTV U.S. performance is a direct result of our profitable growth strategy that focuses on attracting long-term, high-quality subscribers who provide us with exceptional financial returns."

DirecTV's U.S. revenue jumped 17% to $1.71 billion, and the home-satellite operator added a net 275,000 subscribers, both of which Mr. Shaw noted were better than anticipated. Ebitda surged to $230.4 million from $93.7 million. Hughes had forecast revenue of $1.63 billion and Ebitda of $160 million.

Total U.S. subscribership as of March 31 was 9.8 million, up 11% from a year earlier. Average monthly revenue per users increased 4.2% to $59.10, "primarily due to increased customer purchases of local-channel and premium-programming packages, as well as additional fees from the increased number of customers that have multiple set-top receivers," said Hughes.

As for DirecTV's struggling Latin America business, which filed for bankruptcy last month, it lost 54,000 net subscribers in the first quarter "primarily due to the economic turmoil following the general strike in Venezuela," putting total subscribership in the region at 1.6 million, down 7%.

Revenue slumped 15% to $140 million, largely the result of the subscriber losses and the 2002 devaluation of the currencies of Brazil and Venezuela.

PanAmSat Corp. (SPOT), which is 81%-owned by Hughes, reported net income Friday of $30.9 million, or 21 cents a share, up from $21 million, or 14 cents a share, a year earlier. Revenue fell 3.6% to $199.8 million from $207.1 million.

Going forward, Hughes is forecasting second-quarter revenue of $2.25 billion to $2.3 billion and Ebitda of $250 million to $300 million. DirecTV U.S. is projected to generate revenue of $1.75 billion and Ebitda of $225 million.

Hughes also raised its 2003 revenue forecast to $9.5 billion to $9.6 billion from $9.3 billion to $9.5 billion. Ebitda is now projected to be $1.15 billion to $1.2 billion, versus the company's January estimate of $1.1 billion.

DirecTV's 2003 revenue target was raised to $7.3 billion from $7.1 billion, while Ebitda is now anticipated to be $900 million, compared with the earlier forecast of $800 million to $850 million. Subscribership is projected to grow by 800,000 to 850,000, not the 750,000 to 800,000 first estimated.

It was announced Wednesday night that News Corp. (NWS) agreed to acquire a controlling 34% stake in Hughes for about $6.6 billion in cash and stock, ending a three-year pursuit by Rupert Murdoch's media conglomerate to buy a stake in the satellite broadcaster.

The deal calls for News Corp. buying GM's 20% stake in Hughes, plus an additional 14% stake from Hughes shareholders and GM's pension and other benefit plans, for $14 a share. Investor reaction has been cool to the proposal, as Hughes' shares have dropped below $11 from the $11.48 the stock was at before the deal was announced.

-Kevin Kingsbury; Dow Jones Newswires; 609-520-4367 (END)

<a href=reuters.com>Reuters Mon April 14, 2003 12:43 PM ET (Adds analyst quote, details, share price)

NEW YORK, April 14 (Reuters) - Hughes Electronics GMH.N on Monday said its first-quarter loss narrowed and its revenue rose on stronger-than-expected results at its DirecTV unit, the No. 1 U.S. satellite broadcaster.

The improvements led the company, in which Rupert Murdoch's News Corp NCP.AX NWS.N agreed last week to buy a controlling stake, to raise its financial and subscriber estimates for 2003, and suggested to one analyst that consumer spending could be recovering.

"This is the first concrete evidence of strong consumer demand we've been hearing about for communications items ranging from satellite TV and radio and cell phones," Cowen analyst Tom Watts said.

Hughes said its loss narrowed to $50.9 million from $837.7 million last year. The El Segundo, California-based company, which trades as a tracking stock of parent General Motors GM.N , does not report an earnings-per-share figure.

The improvement was primarily due to impairment charges last year related to its now-defunct fast Internet service DirecTV Broadband and DirecTV Latin American, the bankrupt broadcaster in which Hughes has a 75 percent stake.

First-quarter revenue rose 10 percent to $2.23 billion from $2.02 billion last year, compared with a Wall Street consensus of $2.14 billion, from a range of $2.1 billion to $2.18 billion, according to Multex.

Hughes said its earnings before interest tax, depreciation and amortization (EBITDA) rose to $305 million from $164.5 million last year. EBITDA is a measure of cash flow often used to track the performance of media companies as it excludes charges associated with the capital intensive satellite industry.

Analysts polled by tracking company Multex on average expected Hughes to post EBITDA of $208.53 million, in a range of $183.1 million to $242 million.

Hughes said it expects to report revenue of $9.5 billion to $9.6 billion in 2003 compared with its previous estimate of $9.3 billion to $9.5 billion. It also raised its EBITDA estimates to $1.15 billion to $1.2 billion from an earlier forecast of $1.1 billion.

The company raised its 2003 expectation for net new DirecTV subscribers, including customer turnover, to 800,000 to 850,000 from previous estimates of 750,000 to 800,000 subscribers.

DirecTV ended the quarter with a total of 11.4 million subscribers, including rural areas where the broadcaster resells its service.

Excluding its rural resellers, which lost 30,000 subscribers in the quarter, DirecTV signed up 275,000 new subscribers, Hughes said.

DirecTV Latin America, which suffered from regional turmoil including a strike in Venezuela, ended the quarter with 1.5 million subscribers, down 7 percent from the end of the first quarter last year, the company said.

DirecTV's revenue rose 16 percent to $1.7 billion from $1.47 billion last year due to subscriber growth and an increase in average revenue per subscriber (ARPU),Hughes said.

DirecTV's ARPU increased $2.40 to $59.10 in the quarter as more customers bought local channels and premium programming and paid additional fees for multiple set-top boxes.

Hughes shares were up 38 cents, or 3.6 percent, at $10.90 in midday trade on the New York Stock Exchange. This compares to a 52-week high of $17 and a year low of $8.