I got this forwarded to me as a joke and I found it so hilarious that I wanted to share it with the rest of you. I have cleaned it up a bit so it reads better than a messy forward. Hope you have a laugh and brighten your day.

Most medium to large European companies plan to consolidate network security on a single hardware appliance in the next year, but cost is not the only driver.

Ninety per cent of IT directors polled in the UK, France and Germany say they will consolidate their networks in the coming months.

Reducing cost is one of the main reasons for the move, but simplified network security management is the biggest driver overall.

Rick Cole, IT manager at financial services firm B&CE, says the move to a single appliance for all network security is a "no-brainer".

The switch was prompted by B&CE’s need to upgrade its firewall security and capacity to support new e-commerce projects.

"I could not see the sense in getting to grips with several software products, when it could be done all in one package," says Cole.

B&CE plans to run its new firewall on a single Fortinet unified threat management (UTM) appliance and then gradually add all other network security applications.

Organizations are typically able to put e-mail filtering, web filtering, intrusion prevention, network gateway anti-virus, and access control applications on a UTM appliance.

IT staff will only have one network security management console to learn how to use, there will be improved visibility of network activity, and better reporting through consolidation.

Cole says administrative benefits include having a single point of contact for support and not having to manage several separate software licenses and service contracts.

Andy Hamilton, network manager at University College Oxford, says having only one set of skills to learn is a great time saver.

"Simplified training and quicker support from one company are definite benefits," he says.

Hamilton says improved security is another big benefit of having a single appliance from a single supplier.

"This means there are no interoperability issues. It is also easier to secure one box than multiple boxes," he says.

Improved security is one of the top three reasons survey respondents cite for network security consolidation, but it is the top reason given by UK respondents, ahead of improved management and lower operating costs.

Tony Dyhouse, director at Cyber Security Knowledge Transfer Network, says UTM means systems are combined, making security a simpler process.

"This means there is less reliance on experts because the product is simpler and more manageable. This is particularly useful for smaller companies that cannot afford the same level of security expertise as larger companies," he says.

Overall, lower costs is the second most important reason given for consolidating network security.

B&CE expects to cut operating costs by about half, and University College estimates that costs have dropped by a third.

Dyhouse says the recession has put great pressure on security managers to justify their expenditure.

"Moving to products which can offer multiple functions is a good way to show cost saving to the board," he says.

Richard Brain, technical director at security firm Procheckup, which operatives five UTMs, says advantages also include savings in power consumption and rack space.

Romain Foucherou, an analyst at IDC, says the recession has taught most organizations the value of a consolidated approach to network security, which frees businesses from rigid per-user licensing models.

"Once companies have invested in a single hardware appliance, new capabilities can be added with a simple hardware upgrade," says Foucherou.

This means organizations can be assured of future scalability as the business grows and the threat environment changes, without buying additional hardware.

However, Brain warns that consolidation carries the risk of having a single point of failure for all network security applications.

He also cautions against potential hidden costs. "Watch out for extras like support and 24-hour call out. This can be expensive," he says.

Foucherou says UTM appliances have come a long way in the past three years. Technological advances have enabled the security, reliability and throughput that enterprises demand.

This has been one of the main reasons UTM solutions have graduated from branch offices to enterprises, backed by a strong focus of suppliers on the higher end of the market.

Link

Mozilla is working on a fix for a "highly critical" vulnerability in is Firefox browser.

The vulnerability, which puts users at risk of remote code execution attacks, affects Firefox 3.5, but other versions may also be at risk.

Mozilla said an attacker can exploit the vulnerability by luring Firefox users to a malicious web page containing the exploit code.

The security hole is due to an error in the way JavaScript code is processed, according to the US Computer Emergency Readiness Team (US-CERT).

"Exploitation of this vulnerability may allow an attacker to execute arbitrary code. Additionally, exploit code is publicly available for this vulnerability," US-CERT warned.

Proof-of-concept exploit code was posted on Milw0rm.com, an exploit code aggregation site.

US-CERT said Firefox users should disable JavaScript. The organisation has also posted instructions on other ways of mitigating the risk until a fix is released.

Link

Microsoft has intensified competition with Google by announcing a free web-based version of its Office software.

Office 2010 will include stripped-down versions of Word, Excel, PowerPoint and OneNote in a strong response to competition from Google Apps.

Investors responded positively to Microsoft’s move, sending shares almost 3.8% higher to close at $23.23, according to the BBC.

The announcement comes less than a week after Google announced it was developing a free operating system, challenging Microsoft’s Windows operating system.

Google’s Chrome OS announcement came just weeks after Microsoft launched its Bing search engine, which is designed to challenge Google in the search arena.

Both companies are investing in online development in response to user demands for powerful web-based collaboration applications that are reliable.

Giving millions of Windows Live users free access to the Office web applications could put $4bn in revenue at risk, according to The Wall Street Journal.

But analysts say the move is a smart one to keep as many people as possible using Microsoft applications and is probably worth the risk.

The move is also unlikely to affect Microsoft’s overall business as the firm makes most of its money from business users of its productivity software.

Microsoft said it will experiment with placing advertising on the online applications before making them available, according to the Financial Times.

Microsoft plans an early release of web applications to thousands of testers later this year, followed by a public beta at the end of the year and a full release in early 2010.

Link

If a little is good, is more better? Unless you can’t help but spend money you don’t have, the answer is yes. Here are 6 reasons high credit limits are helpful.

We’ve known the basics of how credit scoring works for nearly a decade now. Yet I still hear from readers who think they can improve their credit, or their finances, by closing accounts or having their credit limits lowered.

This behavior stems, I believe, from the still-widespread myth that you can have too much credit.

Here’s the reality: There’s no such thing as too much credit, unless you’re a debt addict. If that’s the case — if you’ve never seen a credit card you couldn’t max out — then this column is not for you. You should cut up your cards, seek counseling and pay off your debt.

Most people, by contrast, handle credit more or less responsibly. Forty percent of cardholders regularly pay their balances in full, according to Federal Reserve statistics, and half of those who do carry debt owe $3,000 or less.

It’s those folks I’m talking to. And I’ll say it again: There’s no such thing as too much credit, particularly these days.

Here’s why:

• Having "too much credit" isn’t a negative for FICO scores. You might get dinged for opening the accounts, but the FICO scoring formula (the one used by most lenders) doesn’t penalize you for having too many once they’re opened. If you get a score and are told the reason it isn’t higher is because you have "too much available credit," you probably didn’t get a FICO score but one of its competitors. "We just went through the full list of reason codes for FICO scoring, and it contains nothing remotely like ‘too much available credit,’" said Craig Watts, a FICO spokesman.
• Lots of available credit typically helps your credit scores. Once they’re established, credit accounts typically improve your scores as long as you don’t pay late or max them out. The FICO credit-scoring system is very sensitive to the gap between the credit you use and your available limits. The bigger the gap — on each account and overall — the better for your scores. Closing accounts or asking for lower limits shrinks that gap and can hurt your scores.
• Your income isn’t a factor. I’ve read a lot of well-meaning but completely inaccurate advice about how you should limit your available credit to a certain percentage of your income (with the percentage varying by how much credit the particular writer has). This is nonsense. Credit-scoring formulas don’t even take income into account.
• Lenders may care, but they probably won’t. Before the advent of FICO scores, many lenders were suspicious of those with "too much credit," worried these borrowers would suddenly rush out, max out their cards and then default. FICO’s research indicates this fear was overblown — if you’ve handled credit responsibly in the past, you’re likely to continue to do so — but some lenders are still wary. If you run into one of those, you can placate them by closing accounts, but you risk damage to your credit scores.
• Credit card issuers have gone a little nuts. In their efforts to reduce their risk, many credit card companies have been slashing limits, raising rates and closing accounts. Now they’re threatening to add new fees. (Read "Banks have declared war — on you.") Some have taken more-drastic steps by targeting not just risky borrowers but good customers who have always paid on time. The people who are in the best position to fight back are those who can simply take their business elsewhere. If you have plenty of other established accounts, you can start using them instead and transfer any balances. Also, a lower limit on one card isn’t a credit-scoring crisis if you have lots of other cards.
• You don’t need to worry that much about fraud. Yes, identity theft is a real problem, but if one of your existing accounts is hijacked, you’re not responsible for the bogus charges if you report them within 60 days. If you have so many accounts you can’t keep track of them, you may want to winnow the herd, but most people can remind themselves to log in to their accounts every month or so to check their charges.

I’m often asked how many credit cards are optimal. Alas, FICO is mum about that. But FICO does say the typical U.S. adult has four to five credit cards. And some of us have a lot more.

I hesitate to use myself as an example because individual experiences can vary so much with credit scoring, but at last count I had between seven and 17 open, revolving accounts showing on my credit reports at the three major bureaus. (The bureaus are private businesses in competition with each other, and the information they report is often different.) My FICO scores typically range from the high 700s to the low 800s (the top score is 850; anything over 760 or so typically wins the best rates and terms). Clearly, my scads of available credit aren’t hurting my scores.

What does ding your scores, as I’ve said, is opening and closing accounts and maxing out your cards. So use the following guidelines:

• Apply for credit sparingly. Applications are counted as "hard" inquiries and typically lower your scores. Although the damage of one inquiry is usually slight — 5 points or less — applying for a bunch of accounts in a short period could tag you as high-risk, because you’ll seem suddenly desperate for credit.
• Close accounts sparingly. If you decide you must close accounts, shut down retail accounts first (those department store cards you got because of discounts), and try to keep open your major credit card accounts, particularly those with the highest limits.
• Use only a small portion of your available credit. Whether or not you pay your balances in full each month — and you should — you still want to use only a fraction of your available credit: 30% or less is good, 10% or less even better. The balance that’s reported to credit bureaus and used in your scores is typically the balance from your last statement. If you used 50% or more of your limit, even if you paid it off in full, you could be hurting your scores.
• Push back against credit limit cuts. If you’re a good customer with high credit scores, point that out to the offending issuer. If it doesn’t reverse its decision, take your business elsewhere.

Published July 13, 2009

Computer equipment recycling and refurbishing is an important part of an organization’s sustainable waste strategy. Businesses are encouraged to dispose of their IT equipment in an environmentally responsible way, and there are government regulations, such as the WEEE directive, designed to deal with hazardous waste.

Why recycle computer equipment?

Computer equipment recycling reduces the volume of waste which ends up in landfill sites, or gets dumped illegally.

It cuts down on the amount of raw materials needed for the manufacture of new products, and it also means more efficient and convenient recycling for the end user.

In addition, if computing equipment is refurbished, this can benefit people and organizations that cannot afford to buy new IT equipment.

What computer equipment can be recycled?

It is possible to recycle many parts of an IT system, particularly monitors, PCs and servers.

Computer peripherals, such as printers and scanners, can also be recycled, as can landline and mobile phones.

However, some elements of an IT system may need particular expertise to recycle, with PCs, for example, tending to have heavy metals in their circuit boards.

What materials are in a PC?

An average PC contains plastic (23%), ferrous metals (32%), non-ferrous metals (18%), electronic boards (12%) and glass (15%).

A single computer can contain up to 2kg of lead, and the complex mixture of materials make PCs very difficult to recycle.

How do you recycle your computer equipment?

Firstly, the Department for Environment, Food and Rural Affairs (Defra) advises companies to contact their waste contractor to get advice on how they need handle their waste, as it may vary from company to company.

That said, there are a large number of disposal specialists geared up to recycle computer equipment, and these are easy to find either from local council web sites, or through a search engine.

You can also dispose of computer waste by returning the product to the manufacturer, with computer makers such as Dell and HP offering recycling and asset recovery services to organizations to recycle unwanted computer equipment securely and responsibly.

Goods are ‘de-manufactured’, and sorted according to type or material. Materials like steel and aluminum can then be recycled to make new products, from car parts to plastic toys.

Meanwhile non-reusable substances are disposed of in an environmentally sound manner.

What laws deal with computer recycling?

The two main government directives are the DTI’s waste acceptance criteria (WAC) and the European recycling Waste Electronic and Electrical Equipment (WEEE) directive.

The WEEE directive recognizes that electronic equipment needs specialist handling and disposal.

Hazardous waste covers a broad range of materials, and computer hardware recycling can deal safely with things like lead, hexavalent chromium and mercury. The aim is to keep them out of landfill sites.

The WEEE directive overlaps with the WAC, which specifically covers the handling and disposal of computer equipment such as monitors, some PCs, fluorescent tubes and televisions.

Is there an alternative to recycling equipment?

Donating obsolete, but still functional systems to charities can be a mutually beneficial option.

Also, there are many organizations throughout the UK that take computer equipment and prepare it for reuse, where possible.

Many of these are not for profit organizations and social enterprises which may provide benefit to the local community through employment of long term unemployed, or donation of equipment or profits to individuals or organizations in need.

What about sensitive data on hard drives?

The 1998 Data Protection Act makes it a legal requirement for most businesses that deal with sensitive data to keep it backed up and secure.

So, organizations are urged to have a healthy and secure data strategy, and this may include using good encryption and security technology to protect the relevant data.

It also includes disposing of it in an adequate and thorough way if the computer equipment is passed on.

But be warned that reformatting the hard drive is not sufficient to permanently destroy all data. Seek professional advice on how to dispose of data properly, to make sure those credit card and private details don’t end up on eBay.

Waste resources:

   1. Environmental Services Association
   2. Waste information resource
   3. Defra’s information on the Weee Directive
   4. Defra’s information on the Waste (WAC) Criteria
   5. Wiki on computer waste

Arif Mohamed

The Apollo lunar landing programme, which culminated in Neil Armstrong and Buzz Aldrin’s moon walk on 20 July 1969, represents a technical achievement that has yet to be surpassed. The computer systems that helped them get there were among the most advanced of the time. Certainly, no more complex public software project
had been undertaken before the Apollo programme.

The Apollo Guidance Computer, developed at MIT for the lunar landings, was the first embedded system. It was also the first example of a fly-by-wire system. Such systems are used today on modern aircraft such as the airbus A-380. The pilots relied on computers controlled by safety-critical software to keep them alive and enable them to navigate the 384,400km to the moon, control the descent and launch of the lunar lander, and return safely back to Earth. Thousands of computer technicians and programmers were involved in the Apollo programme. The software development process Nasa used to co-ordinate these people is often cited as an example of software engineering, although the term was coined midway through the lunar project.

As the world celebrates the 40th anniversary of one of man’s greatest achievements this week, the idea of software projects being engineering projects has somehow been forgotten. Businesses are keen to gain a competitive edge by churning out software. Apart from in aerospace and some safety-critical -applications, speed of application development has become more important than quality. End-users accept computer bugs as a way of life. The British Computer Society is keen to raise the bar, with training, accreditation and certification, which it hopes will turn computer programming into a profession, with professional standards.

Microsoft’s Trustworthy Computing initiative shows that commercial software can be made less buggy. But will users accept the price of higher quality software, the longer development time and the potentially higher licence fee? They need to. As computer technology becomes embedded in human society, the effects of buggy code will become more obvious and damaging. Software must be engineered to a high quality.

Cliff Saran

IPS marketing

The Identity and Passport Service (IPS) is to embark on a marketing campaign to persuade businesses to check staff passports and national identity cards.

It announced today that it has contracted advertising agency Proximity, part of the BBDO network, to develop below the line promotional campaigns for ID cards, passports and the General Register Office (GRO) for the next three to four years.

The contract supplements an earlier contract with Abbot Mead Vickers BBDO for above the line work to promote passport applications for first-time applicants and renewals, the Passport Validation Service (PVS), the National Identity Service, including validation services based upon data held on the national register; and genealogical services from GRO.

The Central Office of Information (COI) was unable to say how much the contracts were worth.

The latest estimated cost of the IPS for the next 10 years is £4.95bn. This includes the issue of both passports and identity cards for UK citizens. About 70% of it will go to implement secure biometric passports.

Since 2005, accredited government departments and law enforcement agencies, such as UK Border Agency, Security Industry Authority (SIA), and the DVLA, have had direct web access to the passport database.

PVS is the first business to business identity service offered by IPS, and is part of the IPS mission to be the "trusted and preferred provider of identity services", the COI said.

Link

Google’s announcement that it is working on a lightweight operating system is as much about marketing as it is about technology.

After all, the technology is hardly new: at the heart of Google’s Chrome OS lies the Linux kernel; on top of that is Google’s existing Chrome browser, running in a new windowing system.  But to this lash-up of mostly pre-existing code, Google brings one, invaluable extra: its brand.

Google’s name means that people won’t need to think twice before buying first netbooks and, later, entry-level PCs, running Chrome OS; they won’t need to worry about whether it will be compatible with their files or easy to use.

They will just assume that Google has sorted everything out, because they trust the brand.  Some, of course, will be disappointed with details, but the majority will be content with the simplicity of the solution.  Google will be aided in this shift because the basic environment in which everything is run is the browser – and anyone can use a browser.

But the long-term consequences of this move are much greater than this relative ease might suggest.  With its Chrome OS, Google will make the operating system not just invisible, but irrelevant: the browser becomes the platform.

Netscape tried this a decade ago and failed; Google might succeed because of two important shifts in computing that it has been driving for a while, and which Chrome OS both depends on and will help propagate even more widely.

The first is cloud computing.  Already, Google can meet almost all the needs of average users through Web apps like Gmail and Google Docs; others are doubtless under development.  Low-cost and easy-to-use Chrome OS netbooks and PCs will offer people more reasons to move their computing into the cloud – and help Google to make more money from the ads they will encounter there.

The second shift is free software, which is now sufficiently mature that Google can use it to do most of the heavy lifting, and without trying to become a full-on operating system company.

The potential loser here is clearly Microsoft, which faces an invasion of its desktop heartland by a challenger that is already well known and totally dominant online.  Its loss of market share is unlikely to be dramatic, especially at the high end, but will add to the continuing erosion of Microsoft’s power and profits.

Apple, by contrast, will probably be little affected, because brand loyalty is higher – people love their Mac desktops in a way that Windows users do not.

In the world of GNU/Linux, distributions like Ubuntu that are aimed at the general user will find that they have to compete against the powerful Google brand, so life may well get harder for them.

But in one sense, whether it’s an existing distro or Chrome OS that achieves a greater market share among general users is irrelevant: either way, Google’s latest move is likely to provide a significant boost for open source on the desktop once Chrome OS moves from its current state of vapourware to the inevitable semi-eternal beta.

Link

Google is developing a fast, simple and secure computer operating system that is designed to work well on the web.

The operating system, called Google Chrome OS, is an open source, lightweight operating system that will initially be aimed at netbook PCs.

Google plans to open-source the operating system later this year and expects netbooks running Google Chrome OS will be available in the second half of 2010.

>> Photos: Top Ten Google Android Apps <<

Chrome OS is a natural extension of the Chrome browser, designed for people "who live on the web", said a blog posting by Sundar Pichai and Linus Upson of Google.

"It’s our attempt to re-think what operating systems should be," they said.

In a thinly veiled challenge to Microsoft, Google said the operating systems that browsers currently run on were designed in an era when there was no web.

"We are designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds," said Google.

Users of Chrome OS can also look forward to a minimal user interface to make room for web-based interactions and a secure architecture.

"We are going back to the basics and completely redesigning the underlying security architecture of the OS so that users don’t have to deal with viruses, malware and security updates," said Google.

Google Chrome OS is based on a Linux kernel, it will run on both Intel and ARM chips, and is aimed at enabling all web-based applications to work automatically.

Google has gradually been increasing the number of its web-based applications, such as Gmail and Google Docs, based on premise that these applications will replace traditional software.

Although initially aimed at netbook users who spend most of their time on the web, the Chrome OS is also being designed to work on full-size desktop PCs.

There are some areas where Chrome OS and Android for mobile phones and netbooks overlap, said Google, but the firm believes choice will drive innovation.

"We have a lot of work to do, and we’re definitely going to need a lot of help from the open source community to accomplish this vision," said Pichai and Upson.

Warwick Ashford

Computer programmer arrested for Goldman Sachs theft

A former computer programmer at investment bank Goldman Sachs has been charged with stealing computer codes used in the bank’s algorithmic trading systems.

The programmer, Sergey Aleynikov, a 39-year-old originally from Russia, was arrested on Friday.

He is accused of uploading the 32MB of code to a server in Germany.

Goldman Sachs would not comment.

Automatic trading software is increasingly important to investment firms as the number of trading venues increases and the volume of electronic trading grows.

PJ Di Giammarino, CEO at financial services think-tank JWG-IT, said: "Because of the data war out there, it is more and more down to IT systems and what messages you send them to tell them what to do and how the messages instruct them to do it."

"These codes, which have allegedly been stolen are fundamental to how Goldman makes money in electronic trading," added Di Giammarino.

The heavy reliance on computer systems to control trades at investment banks makes security a massive challenge.

In January last year French bank Societe Generale lost £3.6bn following unauthorised activity of a rogue trader who covered up fraudulent activity as a result of his understanding of the bank’s fraud control systems. Paris-based Jerome Kerviel used his knowledge of automatic checks, which are carried out on trades to check they are legitimate, to avoid being found out. He risked billions by betting on future trends in the stock market.

Karl Flinders

Apple will have to be quick to react to a software crack which makes it possible for unapproved software to be used on the new iPhone.

A teenager has moved away from normal hacker etiquette by making available an application that will enable users to download software onto iPhones even if it is not in the Apple App Store before Apple has a chance to create a fix.

He said he usually gives Apple a chance to work on the fix.

The jailbreaking tool has been made available to the public.

Hacker George Hotz said in his blog that he does not usually make these tools available to the public.

"Normally I don’t make tools for the general public, and rather wait for the dev team to do it. But guys, what’s up with waiting until 3.1? That isn’t how the game is played. We release, Apple fixes, we find new holes. It isn’t worth waiting because you might have the ‘last’ hole in the iPhone. What last hole this isn’t golf. I’ll find a new one next week."

In August 2007 Hotz demonstrated the first Hardware unlock of the iPhone using a technique that was developed by hackers. This allowed the iPhone to be used with any SIM card.

Apple is also working on a security patch for the iPhone to fix a vulnerability that could be exploited by cybercriminals.

The vulnerability in the way iPhones handle text messages was demonstrated by independent security adviser Charlie Miller at the SyScan security conference in Singapore. Miller demonstrated that he could use the vulnerability to temporarily disconnect an iPhone from the network, but did not give a detailed description of the attack method.

He has agreed with Apple to keep the details under wraps until the Black Hat security conference in Las Vegas on 25-30 July.

Link

An e-mail claiming to contain a link to "secret songs and photos" of Michael Jackson is one of the latest malware spam attacks to exploit the singer’s death, says security firm Sophos.

Just eight hours after Jackson’s death, cybercriminals unleashed the first wave of related spam, and the security firm has reported several spam attacks, scams and malware associated with the singer in the past week.

The latest spam e-mail (shown below) appears to come from sarah@michaeljackson.com with the subject "remembering Michael Jackson".

However, it contains a link to an attached zip file, which will infect a user’s computer with a mass-mailing worm if opened, warns Graham Cluley, senior technology consultant at Sophos.

"Opening the attachment exposes you to infection – and if your computer is hit you will be spreading the worm onto other internet users," said Cluley.

The Mal/ZipMal-B and Mal/VB-AD malware is also capable of spreading as an Autorun component on USB memory sticks, he warned.

Interest in Jackson has long been exploited by cybercriminals, said Cluley.

In 2004, a Trojan horse was spammed out claiming to contain photographic evidence of Jackson abusing a young boy.

The following year a malware campaign was spammed out claiming to contain breaking news that the music superstar had committed suicide.

Earlier this year, scammers managed to advertise their offers on Jackson’s official website promoting his planned concerts at the O2 in London later this year.

Link

Microsoft plans to release a "family pack" version of its Windows 7 operating system.

Family pack versions of Windows 7 can be installed on three computers in a single household, according to licensing terms in a leaked copy of the operating system, which is due for release next year.

Microsoft has declined to comment on the discovery reported by Canadian blogger Kristan Kenney, who found a reference to a "family pack" in a Windows 7 Home Premium license agreement.

According to Kenney, the installation and use rights state, "If you are a Qualified Family Pack User, you may install one copy of the software marked as Family Pack on three computers in your household for use by people who reside there."

But the provision appears to apply only to the Home Premium edition. The family pack reference is not included in the Professional and Ultimate editions, Kenney said.

The more flexible licensing agreement will be a marked departure from Microsoft’s one license per computer policy, if the software firm goes ahead with the plan.

A family pack option, would however, bring Microsoft in line with Apple licensing for its Mac OS X operating system, which allows for up to five computers per household.

Link

Apple is working on a security patch for the iPhone to fix a vulnerability that could be exploited by cybercriminals.

The vulnerability in the way iPhones handle text messages was demonstrated by independent security adviser Charlie Miller at the SyScan security conference in Singapore yesterday.

Miller demonstrated that he could use the vulnerability to temporarily disconnect an iPhone from the network, but did not give a detailed description of the attack method.

He has agreed with Apple to keep the details under wraps until the Black Hat security conference in Las Vegas on 25-30 July.

Apple has until then to fix the vulnerability, which Miller warned could potentially be exploited to execute code on an iPhone remotely.

If successful, criminals could potentially run code to monitor the location of the phone using GPS, turn on the phone’s microphone to eavesdrop, and add the phone to a botnet, according to Miller.

Miller, who has still to determine if this kind of attack can be carried out, has said in media interviews that the vulnerability could be "really serious" and that Apple is investigating.

Apple did not respond to requests for information about the iPhone vulnerability.

 Link

Bank customers used to the perks of free checking accounts — unlimited check writing, online banking, debit card use and ATM access, to name a few — might have to recalibrate their expectations soon. That’s because overdraft fees, which banks use to subsidize the expense of free checking accounts, have been under fire by consumer advocacy groups. (A quick primer: You spend $8 on lunch at Burger King and pay with your debit card. But there’s only $5 in your checking account. The transaction is still approved, but the bank slaps you with a hefty overdraft fee for the privilege.)

There have already been some changes to the way banks must disclose overdraft fees on statements, but now there’s a bigger push to require institutions to obtain accountholders’ permission before charging them overdraft fees on debit card purchases and ATM withdrawals. President Obama’s proposed Consumer Financial Protection Agency would likely address overdraft fees in some way.

Checking accountThat spells trouble for banks already hurting from the financial crisis. The bulk of revenue in bank retail deposits comes from penalty fees; economic research firm Moebs Services estimates that banks will rake in a total of $38.5 billion in overdraft revenue this year. In fact, a 2008 FDIC study concludes that 74% of all service charges on deposit accounts come from overdraft and insufficient fund fees, which typically range between $35 to $40 per incident. But there’s a small amount of consumers who shoulder most of the fee load: According to a May report from consulting firm Oliver Wyman, 68% of those fees come from just 5% of banking customers (who pay, on average, $1,614 each year). Meanwhile, 74% of customers pay no overdraft fees at all.

But with banks expecting roadblacks to fee income, some experts predict that the free-checking model might be on its way out. Aaron Fine, author of the Oliver Wyman report, recently told banking industry trade publication American Banker, “The industry has to change pretty dramatically because a substantial amount of the revenue that paid for free checking is likely to go away. That business model is not sustainable.”

For now, there are still plenty of free checking options out there, and many experts expect them to remain in some format so that banks can compete for customers. But Probity Financial Services, a small company based in Austin, Texas, partnered with Missouri’s Kennet National Bank in April to offer an alternative to those consumers who are tired of paying hundreds of dollars in overdraft fees each year. For $19.95 a month, you can set up a Probity online checking account that never charges overdraft fees, transaction fees, minimum balance fees and offers free online bill pay and ATM/debit card usage.

“We’re like Netflix for your checking account — you pay a fixed monthly fee and use it all you want,” says Probity CEO Tim Smith.

For those consumers who spend more than $240 a year on overdraft fees, Probity’s checking account is a good solution. Each customer is assigned an overdraft limit (no more than $500) based on credit and banking history. If the customer makes a purchase for more than what’s in his account, Probity covers the excess. To keep the account in good standing, the customer must deposit funds into the account within 60 days, or it will be closed. “The lion’s share of accountholders do bring the account into positive balance,” says Smith. He adds that most customers use direct deposit and typically just need the protection until the next paycheck comes in.

Still, $240 a year to avoid overdraft fees? Unless you’re one of those 5% of customers who spend more than $1,500 each year on those fees, there are still plenty of cheaper options to prevent overdraft pain. (And if you are one of those 5%, can you let me know how the heck that happened?) Many banks allow you to link your checking account to your savings account to cover overdrafts. And there are plenty of ways now to keep tabs on your account balances with email and text alerts. Free checking may be teetering, but it’s not going to vanish overnight.

Posted by Ismat Sarah Mangla
July 2, 2009 11:56 am

As High Scores Vanish, Borrowers’ Luck Runs Out

As banks tighten their lending standards, one number is playing an increasingly critical role in determining the financial fortunes of consumers: the credit score.

Lenders use them to decide whether to extend credit and at what interest rate. As lenders demand higher scores, more Americans are having trouble getting loans.

Others aren’t getting loans at all because their scores have dropped. They may have lost their jobs and not kept up with credit card and mortgage payments, or in some cases card companies have taken adverse actions against them. Eager to mitigate risks, card issuers have closed accounts or slashed credit lines, leaving customers with less available credit. Customers who have used up much of their credit then are closer to maxed out, which further hurts their scores.

To add to their crisis, people who try to take matters in hand and pay to find out their credit scores discover that it can be difficult to learn the score that lenders actually use to evaluate them.

"Credit scores have taken on a new degree of importance," said Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable, an industry group. "In the past it was a question of ‘What will your interest rate be?’, and now it’s ‘Will you even get a loan?’ "

As a result, credit is less available to both low-risk and high-risk consumers at a time when they — and the economy — need it the most.

"The consumer who desperately needs credit right now is in a very bad situation," said John Ulzheimer, president of consumer education for Credit.com. "The consumer who is remaining consistent, the market is passing them by . . . You have more cars sitting on car lots and you have houses with for sale signs."

Jane Graver is one of those desperate consumers. She once had a credit score of about 700, which before the credit crunch made her a desirable candidate for a loan. Most lenders use the FICO score, which runs on a scale of 300 to 850.

Faced with a divorce, serious illness and tough economy, Graver, a small-business owner, missed a few credit card payments and used up her home-equity line of credit. She was close to being maxed out. Last year, her score dropped to the mid-500s.

Now that lenders are demanding credit scores of 720 or higher, she is considered even more of a risk and cannot get a mortgage — or even find a landlord willing to rent her a home. Her house in Orange, N.J., sold at a price high enough to cover her mortgage and line of credit, but she is struggling with what to do next.

"It is difficult to cope," said the mother of two. "I am absolutely unable to get a mortgage."

As scores become increasingly important, they have also become increasingly perplexing. Consumers have free access to the credit reports used to determine their scores, but they have to pay to check them. With the heightened interest, many borrowers have been doing just that, buying their scores from a variety of Web sites, only to find out that they might be different from the ones lenders use, according to bank officials and consumer advocates.

"One of the things consumers have to understand about scores is that there are a number of different scores within the marketplace," said Norm Magnuson, vice president of public affairs at the Consumer Data Industry Association, a trade group.

The FICO score, which was developed by a company formerly known as Fair Isaac, is the dominant player in the industry. It is calculated based on the information contained in credit reports, which list a consumer’s debts and payment history. Three bureaus — TransUnion, Experian and Equifax — keep those credit reports.

However, to compete with the FICO score, the three bureaus united in 2006 to create VantageScore, which ranges from 501 to 990, which they sell to lenders.

Complicating matters is that Experian and TransUnion have developed their own scores, which the agencies call educational scores because they are intended to help consumers gauge their own creditworthiness. Lenders cannot even buy Experian’s score. They can buy TransUnion’s but tend to go with the FICO score instead.

On its Web site, FreeCreditReport.com, Experian gives people their Plus score if they pay $14.95 a month for a credit-monitoring service, which they can cancel after a seven-day trial period. They have to dig through the terms and conditions before getting to this disclosure: "The PLUS Score is not a so-called FICO score, and may differ for a variety of reasons."

TransUnion also offers a $14.95-a-month credit-monitoring service with a 30-day trial period on TrueCredit.com. That gives consumers access to the bureau’s scores. Like Experian, TransUnion discloses on its Web site that its score is not the same as a FICO score.

Equifax gives FICO scores to anyone who pays $14.95 a month for its credit-monitoring service.

Susan Henson, a spokeswoman for Experian, said the educational scores are still a good tool for consumers even if they are not what lenders use.

"The most important thing is they’re really measuring the same thing, which is that consumer’s level of risk, whether they are an extremely low-risk consumer or whether they are a high-risk consumer," she said.

But some consumer advocates say the educational scores are of little use and too expensive.

Ulzheimer likens them to faux designer bags. "It’s like selling a Gucci bag on the streets of New York," he said. It looks like the real thing, but it’s not.

"It exposes something two of the three bureaus don’t want people to know," he added. "They make a whole lot of money selling scores."

Indeed, the recession has been a boon for many of the Web sites that sell credit scores. Traffic on FreeCreditReport.com, for instance, grew 6 percent, to 6.6 million visitors, in March, according to ComScore, which tracks Web sites.

Sean Craig, a retail manager in Ashburn, was one Experian customer. When he first checked a few months ago, his Experian score was 720. Then American Express lowered his Blue Cash card limit to $5,900 from $11,300. His score dropped to 683, then to 681. When he called American Express to ask why his limit had been reduced, he was told he had too much debt and that his credit score was actually 570.

Craig assumed the Experian score was the one American Express used, but American Express was looking at his FICO score.

"I was shocked when I checked and it was 683. I was even more shocked when I saw it was 570," Craig said. "It’s driving me nuts. The whole thing seems utterly arbitrary."

Such big gaps between the educational scores and the FICO scores are not unusual.

"It’s a real problem," said Evan Hendricks, author of "Credit Scores and Credit Reports" and editor of Privacy Times. "People are trying to be good, intelligent, educated consumers. They want to see their score, their report. Then they get a ‘fake-o’ score, which is most likely inflated, while the lender is using the FICO score . . . People think they’re better off than they are."

Adding to the confusion is that even FICO scores can vary. That’s because the company regularly updates the formula it sells to credit bureaus. The lenders can choose to buy the new or an older version of the formula, and they sometimes settle on an older version if it is cheaper and easier. "The lenders using scores from an older version, they’re not using bad scores," said Craig Watts, a spokesman for FICO. "They’re still doing the job but not doing it quite as well as the newer version."

Watts recommends getting FICO scores at Equifax.com or myFICO.com.

Other credit score experts said a better gauge of a consumer’s financial health is the credit report. If they have paid bills on time, have no negative public records such as bankruptcies, and have used less than 30 percent of available credit, they probably have a good score, Magnuson said.

It’s clear that’s no longer the case for many Americans.

The average TransUnion credit score was 651 in the first quarter of this year, the same as it was the fourth quarter of 2008. But that was a six-point drop from the previous quarter. Experian reported a 5-point drop in the VantageScore, from 751 in the fourth quarter of 2007 to 746 in the fourth quarter of 2008.

Equifax, however, reported an increase in average scores from May 2008 to this past May, from 699.8 to 701.9, which officials attributed to three factors. First, credit card issuers are taking on fewer new customers so there aren’t as many inquiries on consumers’ credit reports. Many inquiries hurt scores. Consumers are holding on to cards they have had for a long time, which helps scores. Lastly, more Americans are saving and not using credit.

Lower scores leave people such as Graver in a precarious position. She is struggling to make her online specialty tea business, DuckyLife.com, a success. To do so, she might need a loan someday, and she probably won’t qualify. But her most immediate worry is a home. To Graver, having a lower credit score is "a nightmare."

I’ve "survived four life-threatening illnesses, six surgeries, divorce — and all as a single mom," she said. "Now I cannot find a place to live."

By Nancy Trejos
Washington Post Staff Writer
Sunday, June 21, 2009

It may be only a matter of time before you get a notice in the mail stating that your credit card borrowing limit has been reduced. Already, some cardholders have had their credit lines slashed despite spotless payment histories and excellent credit scores.

About one in five cardholders had their credit limits reduced recently, according to a July survey by Consumer Action, a San Francisco-based consumer advocacy group. Roughly the same percentage of cardholders also reported being very close to their limit on at least one credit card, according to that survey.

Bankrate’s own survey indicates fewer Americans have been affected so far — 6 percent of respondents said their credit line was cut, up slightly from 5 percent in August. But some financial analysts predict the consumer credit contraction is on the verge of becoming severe. Meredith Whitney, a banking analyst at Oppenheimer & Co., predicts card issuers will cut credit lines by $2 trillion-plus over the next 18 months.

"Our surveys have been showing this as a practice (lowering card limits) for at least three years," says Linda Sherry, a spokeswoman for Consumer Action. "I think it is stepping up somewhat in this economy."

Some of the factors that could trigger a credit line decrease include a decline in cardholder credit scores, late payments and account balances that are too close to credit limits, according to Consumer Action’s 2008 credit card survey.

Federal law requires that you receive a notice in writing of a change in your annual percentage rates (APR) at least 15 days’ prior to the effective date, but the 15-day rule does not apply to credit limit changes.

If your credit card company lowers your limit, all is not lost. You may have options, including persuading the company to reverse its decision.

Complain diplomatically
Johann Beukes, a software engineering manager for Bankrate Inc. based in North Palm Beach, Fla., logged on to American Express’ Web site recently to make a payment and discovered his credit line had been reduced by $5,000, despite the fact that he’s been a cardholder for more than 10 years and has a credit score north of 800.

"I called them up the next day and asked why they were doing this, since we’ve never had a late payment," he says.

After lodging complaints with three company representatives, Beukes finally was told that his credit line was lowered because American Express wants to reduce its risk because of the credit crisis. Nothing personal.

Beukes gave up trying to restore his credit line — for now. "I was told that I should call back again in about six months and request an increase," he says.

While some card issuers won’t reverse their policy, it doesn’t hurt to try.

"The technique of complaining in this current environment is particularly effective because the card industry has a black eye right now," says Curtis Arnold, founder of Cardratings.com.

Arnold estimates it costs around $300 in marketing fees to replace a lost cardholder. He says you should ask to speak to a manager if you find you’re not getting anywhere with a customer service representative — just be sure not to lose your cool. As the saying goes, you catch more flies with honey than vinegar.

There’s no guarantee it will work, but if you’re a good customer, your chances of success are better. A good payment history with your card issuer, good credit and the ability to pay off your balance could tip the exchange in your favor. So can a mild threat.

"If you threaten to take your business elsewhere, they’re usually going to listen," Arnold says. "They’re hurting financially, and they don’t want to lose your business."

Transfer your balance
"If you have excellent credit, you may be able to get a balance transfer deal to another credit card with a higher limit," Consumer Action’s Linda Sherry says.

Bankrate can help you find a balance-transfer deal based on your credit rating.

Use balance transfers to your advantage, especially if you can qualify for a zero-percent or low-interest rate offer. But make sure you understand how balance transfer fees work and how long an introductory rate lasts.

If your credit card company charges 3 percent to transfer $5,000, it costs you $150. If you don’t pay off the balance before the introductory period is over, you’ll end up paying interest on that $150 as well.

Consider dusting off an alternate credit card if it has a favorable interest rate and a low balance.

"If you already have another card you are saving for a rainy day, use it occasionally, as it might not be renewed if it is inactive for long periods of time," Sherry says.

Make sure you read and understand the terms of any credit card offer. One late payment could result in your introductory rate skyrocketing to a much higher variable rate or a default interest rate.

Search beyond big banks
Despite the credit crunch, there’s a tremendous amount of competition for good-quality accounts, according to Tim Kolk, managing partner of credit card consulting firm Brookwood Capital.

If you’re unhappy with how you’re being treated by your present credit card provider, you can sift through a wide variety of consumer plastic in Bankrate’s credit card database to find a card that meets your needs.

There’s a catch, of course. Your consumer clout will depend on how good your credit score is. In today’s environment, you’ll need a score of at least 700 to get the best credit card deals, Kolk says.

Make sure you carefully monitor any offers that arrive in the mail and don’t hesitate to use a little legwork on top of an online search. Sometimes the best deals can be found right in your own neighborhood.

"I think someone who is having a little trouble with a major national card issuer would be well served to go to their local banks and credit unions," Kolk says.

He says local banks and credit unions tend to know their customers better, and they’ve historically had better credit performance — meaning fewer defaults — than the big credit card issuers.

"For a decade, credit union charge-off rates were about 2 percent, when big banks went from 4 to 6 percent or 7 percent and bounced around. So that’s a pretty compelling advantage," he says.

Learn to use credit more wisely
"The bottom line is, credit card companies are tracking our spending habits, our debt, etc. Consumers don’t need to freak out about that, but we do need to proactively manage our credit more than ever," says Curtis Arnold, founder of Cardratings.com.

If the limit on one or more of your credit cards is lowered, it may mean that card issuers are starting to view you as a greater credit risk.

Some card issuers are adopting complex credit-scoring models that take into account where you live geographically and the stores at which you shop. They also may be looking at whether you use your credit card to pay for things like groceries — a sign that you may be experiencing financial trouble.

Monitor your credit reports often. Because you can request a free report every 12 months from each of the three credit reporting agencies, rotate among them so you can check it every four months. Take a look at how many of your accounts, if any, have high balances in relation to your credit line and whether the report contains derogatory information, such as late payments.

These would be telltale signs that you are on the radar screen for a credit line decrease or a bump in your interest rate.

Try to pay off balances each month and read the printed material that comes with your monthly statements. Credit card issuers often slip in important information about your account along with marketing offers.

Be sure to monitor your balance and keep it under 30 percent of your credit limit to prevent further dings on your credit score. Avoid exceeding your limit, because that can cost you plenty in over-limit fees, says Consumer Action’s Linda Sherry. If that happens, you also may face a high default rate.

Be wary of closing accounts
If you close your account in retaliation to the creditor, you may only be hurting yourself.

One factor that affects your credit score is the length of time your accounts have been open, according to FICO. An account in good standing will fall off the credit report within 10 years. When it drops off, you could decrease the average of your accounts.

Rita Cheng, a Certified Financial Planner and financial adviser at Ameriprise Financial Services in Bethesda, Md., says she thought about closing her account after Citibank cut her credit line and almost doubled her interest rate.

"I’ve been a customer since 1990. I never pay late and my credit score is outstanding, so I thought this was crazy," Cheng says.

Cheng knew that closing her account in frustration could ding her credit score. Instead she made several calls to Citibank and worked her way up the customer service chain until she reached someone willing to work with her.

"I actually got a credit line increase and was able to get 2.99 percent (financing) for nine months on all new purchases," she says. "I did not have to apply for a new card, have people look into my credit report or get testy."

If you decide to close an account, make sure you have the financial wherewithal to pay off a significant portion of any balances that remain on other cards; otherwise, your utilization will go up.

If you don’t make any payoffs, you may cause a ripple effect with other card issuers that suddenly perceive you as a bigger risk, and you may end up with further credit limit reductions or rate increases.

Save more, carry less debt
For some consumers, lower card limits may be a blessing in disguise. Using cash or a debit card rather than a credit card certainly will help boost your bottom line by limiting your debt exposure.

Tim Kolk, managing partner of credit card consulting firm Brookwood Capital, says groups that are more susceptible to getting in over their heads in credit card debt likely will benefit most from lower card limits.

"I think some groups, like students, are still trying to figure out how this stuff works," he says.

Kolk believes other people, such as recent immigrants and seniors on fixed incomes, are susceptible to going over their limits and getting slammed with fees and higher interest rates because they don’t fully understand the way the credit card industry works.

"Overall, our society has abused credit," says Curtis Arnold, founder of Cardratings.com. "For folks carrying debt, reduced credit lines should translate into lower balances and lower consumer debt, which is a good thing — no doubt about it."

Steve Santiago

The first version of the next operating system for the Apple iPhone has been released to developers.

iPhone OS version 3.1 is available for software developers to download to enable them to build compatible applications.

Version 3.0 of the software was released on 17 June and has been taken up by three-quarters of iPhone users, according to iPhone software maker Tapots.

Tapbots monitors hits made on its server as iPhones access its software and identifies which OS the iPhone making the hit is using.

The latest iPhone was launched on 19 June.

Author: Karl Flinders

June 30 (Bloomberg) — When Sharii Rey, a paralegal in Portland, Oregon, had her credit limit reduced by JPMorgan Chase & Co. earlier this month, she said it would hurt her 760 credit score. That’s not the bank’s problem, she was told. It’s FICO’s.

After Rey’s $42,500 credit line was cut to $12,000, her debt relative to available funds almost quadrupled. This so- called utilization rate is a large component of the FICO formula and a higher ratio can lower a score. Rey, 62, is concerned a new FICO score will squash her ability to borrow.

Congressman Luis Gutierrez, an Illinois Democrat, says the FICO formula, the most widely used by U.S. lenders, has flaws as banks decrease loans to consumers, regardless of individual risk profiles. At least 30 million Americans had their credit limits reduced arbitrarily during the second half of 2008, FICO estimates. In the first quarter, New York-based JPMorgan and Citigroup Inc. and Bank of America Corp. in Charlotte, North Carolina, slashed $320 billion from credit lines, according to a report by former Oppenheimer & Co. analyst Meredith Whitney.

“Reductions to a consumer’s line of credit based upon the lending institutions’ overall appetite for risk has little or no bearing on a consumer’s own risk of default,” said Gutierrez, chairman of the House Subcommittee on Financial Institutions and Consumer Credit.

An individual’s FICO score is based on factors that aren’t directly related to JPMorgan’s decision to lower a credit limit, said Paul Hartwick, a spokesman for the biggest U.S. bank by market value.

Scaled-Back Lending

Banks have scaled back lending during the deepest U.S. recession in five decades. The Federal Reserve’s quarterly survey of senior loan officers released May 4 showed about 65 percent of banks lowered credit limits on new or existing credit-card customers, compared with 45 percent in the January survey. Consumer credit, which includes credit card and auto loans, was $2.52 trillion in April, according to a Fed report released this month.

“The collapse of the economy raises serious questions about the credit industry’s reliance on credit scores,” said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group in Washington. “Are the scores as predictive as FICO swears they are?”

Scores based on models established by Minneapolis-based FICO, formerly known as Fair Isaac Corp., are used to gauge a consumer’s financial health. The scores, which range from 300 to 850, affect the ability to get credit cards, mortgages and insurance products, as well as the rates borrowers pay for them.

Founded in 1956

FICO was founded by Bill Fair, an engineer, and Earl Isaac, a mathematician, in 1956 and the FICO score is now used by 90 percent of the 100 largest U.S. banks. Mortgage lenders use the scores, which rank borrowers according to the likelihood of default in the next 24 months, in more than 75 percent of all residential mortgage originations, according to FICO.

“FICO scores have held up quite well in terms of predictive accuracy,” said FICO Chief Executive Officer Mark Greene, 54, a former economist at the Fed. “It’s not obvious to me that having the score change because of limit cuts is the wrong thing. The bank’s action may signal a riskier environment and the view that you are a riskier consumer.”

Mortgage-finance companies Fannie Mae and Freddie Mac use FICO scores when backing loans, which helps FICO keep its market dominance, said Ken Lin, chief executive officer and founder of San Francisco-based Credit Karma Inc., a Web site that offers free credit scores to consumers.

Fair’s Couch

Experian Group Ltd. in Dublin, Equifax Inc. of Atlanta and Chicago-based TransUnion LLC have their own versions of the FICO model that they sell to lenders. FICO relies on data from the companies to create its formulas.

The formula, which evaluates payment and credit history, utilization, new loans and types of credit in use, is updated every two to three years, said Ethan Dornhelm, who works with about 40 FICO scientists in San Rafael, California, about 30 minutes north of San Francisco. Fair’s leather tobacco-colored couch, where he used to lie in the 1970s while devising the model, is displayed in an office lobby.

The FICO 08 system, introduced in May 2007, refines previous models by limiting the effect of authorized users who artificially increase scores and separating chronic late payers from consumers who have isolated late payments, said Lisa Nelson, FICO’s vice president of global scoring. Borrowers who have higher utilization rates will receive fewer points, she said.

‘Fear for Enamel’

Rey, the paralegal, said she was counting on a credit “cushion” in case she was affected by the decline in the economy. She said she fears she won’t be able to buy a new home and car because her reduced FICO score will mean higher interest rates on the loans.

“I have been gritting my teeth so hard, I fear for the enamel,” Rey said.

Nationally, FICO score distribution has remained fairly stable with the median at about 720, according to a FICO study of Equifax data. Consumers are monitoring their spending habits more closely, said Tom Quinn, vice president of scoring at FICO.

Credit-limit cuts that didn’t follow customer actions such as late payments affected about 11 percent of consumers from April to October 2008, according to the FICO study. The median FICO score for this group was unchanged at 770, Quinn said.

Limits Running Down

“The emphasis on utilization rates when you’re not running up debt and instead limits are running down makes FICO scores much less reliable,” said Josh Frank, a senior researcher at the Center for Responsible Lending in Durham, North Carolina.

Ken Jett, a 42-year-old licensed mental-health counselor, keeps his 12 credit cards in his desk. He said he hasn’t used them since February because he’s concerned about his credit score that has already dropped to 683 from 720.

“My score is no longer a good glimpse of who I am, credit- wise, because it looks like my cards are maxed out and I’m a risky borrower,” said Jett, who’s based in St. Louis. “But nothing has changed in my credit-risk profile except for an arbitrary $25,000 limit cut.”

Job Losses

Gutierrez, the congressman, said he’s planning a subcommittee hearing on credit scores before the end of the year.

FICO’s first-quarter revenue from scoring operations fell 21 percent to $31.1 million from a year earlier, as fewer consumers applied for mortgages, auto loans and credit cards. Almost 550 FICO employees have lost their jobs since 2008 as earnings decreased, said Craig Watts, a company spokesman. The stock rose 5 cents to $15.46 at 4:01 p.m. in New York Stock Exchange composite trading. It has declined 8.3 percent year to date.

“Is FICO an accurate predictor of risk?” said Evan Hendricks, publisher of “Privacy Times,” a Washington-based newsletter and author of “Credit Scores & Credit Reports.” “It’s the worst system around, except for all the rest,” said Hendricks, taking a line from former U.K. Prime Minister Winston Churchill.

To contact the reporter on this story: Alexis Leondis in New York aleondis@bloomberg.net.
Last Updated: June 30, 2009 17:00 EDT

You probably already know how an inaccurate credit score can cause you problems — but what about your “identity score”?

Though most consumers aren’t familiar with this type of rating, it’s increasingly being used by everyone from car dealers and banks to utilities and wireless service providers. Much as a credit score attempts to put a number on how good someone is at paying their bills, an identity score measures the risk that a consumer isn’t who they say they are.

Companies that sell ID scores say their products serve as a weapon to combat that fraud by helping to predict the likelihood of identity theft, which by some estimates cost consumers and businesses $48 billion last year. Already, such scores are used before most credit-card transactions or loan applications are approved — and their use is expected to spread. Thanks to new regulations, most businesses will soon be required to use ID scores or some other type of methodology to confirm a customer’s identity.

But the growing use of identity scoring is raising some questions, too. Some privacy advocates say the expansion of efforts to compile incredibly detailed consumer dossiers is troubling. Others say the scope of identity theft has been exaggerated — in terms of losses to both businesses and consumers. And then there’s the issue of accuracy: If some of the data used to calculate a score are wrong — due to errors in one’s credit report, for example — the score will be wrong as well.

A bad identity score — justly or not — is likely to create a number of issues for consumers, ranging from the inconvenience of having to answer some annoying questions when applying for credit to having important purchases or bank transfers slowed or put on hold for a matter of days while thorough ID verification takes place.

Companies that calculate and sell these scores say they’re beneficial to businesses and consumers alike. As for privacy concerns, they say that consumers’ personal information is never sold or shared with third parties. Some also say identity scores measure identity risk much more accurately than credit scores measure credit risk.

“Credit scores and identity scores should not be viewed with the same lens,” says Thomas Oscherwitz, chief privacy officer at San Diego-based ID Analytics, one of the companies that provide identity scores. “They have different purposes and are calculated differently.” Heather Grover, senior director of product management at Experian’s fraud and identity solutions group, says that consumers can make sure their identity score is accurate by disputing any erroneous information in their credit reports.

While nowhere near as big as the market for credit scores, ID scoring is becoming a fast-growing field. Players include FICO, which offers its Falcon product for scoring credit-card transactions; Experian’s Precise ID, which is used to determine the fraud risk of new account applications; and ID Analytics’sID score, which is sold to companies directly and through partnerships with credit bureaus Equifax and TransUnion. It’s an industry estimated at $1 billion a year — just from the credit-card issuers alone, according to Brian Riley, research director at financial services research firm TowerGroup.

Thanks to federal regulations scheduled to take effect Aug. 1, that market is only expected to grow. This so-called Red Flags rule will require any business that conducts transactions or extends payment terms to consumers (such as lawyers, retailers or telecom outfits) to have a system in place to identify and resolve red flags that a transaction or application is fraudulent, says Oscherwitz of ID Analytics who helped draft the rules five years ago as a staffer at the Senate Judiciary Subcommittee on Terrorism, Technology and Homeland Security.

Identity scores are calculated based on how certain personal information, such as your name, Social Security number, address, birth date or phone number, is used in transactions or for credit applications. For instance, your score might be higher — signifying a higher risk — if you move around a lot. Other factors that can raise your score, according to companies that calculate them: changing your name (say, after getting married) or living in an apartment building, where many people share the same street address. Even using an out-of-state cellphone number when applying for a car loan can boost your score.

If a score is deemed too high, an account application or transaction gets flagged. As a result, the consumer may be asked seemingly random “challenge” questions. They’re meant to be questions that fraudsters are unlikely to be able to answer — but in some cases, they can tax the memory of the authentic consumer. You might be asked the house number where you lived seven years ago, for instance, or the color of the car you owned in college or the issuer of the mortgage on your first home. Further up the inconvenience scale, you might even be asked to visit a bank branch to show your personal identification or to fax information to prove your identity.

And then, of course, there’s the faulty information to contend with. David Szwak, a consumer credit attorney and partner at Bodenheimer Jones Szwak & Winchell in Shreveport, La., calls it the “garbage in – garbage out” problem. Some of the data used to calculate your identity score come from the “above the line” part of your credit report – which often contains errors.

“Almost every single report that I have seen has personal identification information that does not belong to that consumer,” says Szwak. “There are typographical errors, just plain old inaccurate addresses, multiple Social Security numbers on file.”

The result: Between 5% and 20% of applications for credit are flagged and less than 1% end up being fraudulent, says Andy Smith, a former vice president of business analytics at the fraud department of Capital One, the big credit-card issuer.

Smith says he often runs into such problems himself. “My last name is Smith, my father and brother’s names are David,” he explains. While trying to transfer a large amount of funds between trading accounts, he was unable to answer the questions correctly and was kicked out of the system for manual review. The transfer was delayed by three days.

While many consumers are likely to be unaware of the world of identity scores, some companies want to change that. ID Analytics, which says its ID Score is used by some of the biggest banks in the country, as well as major wireless service providers, is now making the score available to consumers at no charge through MyIDScore.com.

ID Analytics says consumers can use the score to assess their personal risk that their identity may have been stolen. But the company gets something out of it too: More information for its own database. In order to get the score, consumers must enter their name, address, phone number, date of birth. (Social Security numbers are by request, but providing it is optional.) The result is a three-digit number between 1 and 999 — lower is better — that assesses the level of risk that you’ve been a victim.

Mari Frank, a Laguna Niguel, Calif.-based attorney who specializes in privacy rights and identity theft, says consumers should be aware they’re sharing sensitive personal information in order to get their score, which the company can then use to improve its products, according to its privacy policy.

CEO Bruce Hansen says ID Analytics may use the information to improve its web site, but does not plan to use it in product development. The company also says consumers can opt out, though the instructions – which require sending an email – are buried in the privacy policy’s fine print. ID Analytics says it is working on adding an opt-out option next to the fill-in form within the next month.

And much like the use of credit scores and reports has expanded dramatically over the years, from lenders to insurers and even employers, the potential for identity authentication and scoring is unlimited. Smith, the former Capital One exec, is now building a similar model that predicts instances of insurance fraud. “Stopping fraud is not that hard,” he says. “Stopping it without dropping a whole bunch of inconvenience on your customers is the trick.”

Published June 19, 2009

If you have a credit card, you’ll benefit from some changes required by the recently passed Credit Card Accountability, Responsibility and Disclosure Act, also referred to as the Credit CARD Act.

What if you have a USAA credit card? USAA never used many of the practices targeted by this legislation, such as double-cycle billing, charging fees to make payments, offering subprime cards with high fees or imposing dramatic rate increases on existing balances. "So the law won’t impact USAA cardholders the way it will other bank cardholders," says David Bohne, president of USAA Federal Savings Bank.

"As a member-focused company, we’re committed to serving our members responsibly. In fact, we supported many provisions of the Credit CARD Act because they will protect consumers from onerous practices," explains Bohne.

The new law will require USAA to make some changes before it takes effect early next year. "But we’re well ahead of the rest of the industry when it comes to fair credit card practices," Bohne notes. Here are seven provisions of the new law and what they mean to USAA cardholders.

1. More Time to Pay Monthly Bills

Today: Some credit card companies send their monthly statements less than 21 days before the payment-due date. Then, if a payment is received one day late, they charge you a late fee and increase your annual percentage rates, or APR.

In the future: Card companies will be required to mail monthly statements at least 21 days before the payment is due.

For USAA cardholders: We already mail statements at least 21 days before the payment due date. Plus, if you miss your payment due date by a few days, we don’t treat it as late.

2. Same Due Date Each Month

Today: The payment due date can change each month. Your payment can be due on the 15th one month and on the 10th the next month. In fact, some credit card issuers have different due dates based on whether or not you pay your balance in full that month.

In the future: The payment due date on each statement will have to be on the same day each month.

For USAA Cardholders: The payment due dates on our statements are always 25 days after the billing date. However, since billing dates change based on the length of each month and weekends and holidays, payment due dates can vary each month by one or two days. USAA will need to make system changes so that payment due dates can be the same each month.

3. More Information about Minimum Payments

Today: Credit card statements display the minimum required payment but don’t tell you how long it will take to pay off your balance if you pay only the minimum payment.

In the future: Credit card statements will show how long it would take to pay off the balance making only minimum monthly payments and options for paying off balances in 36 months.

For USAA cardholders: We are in the process of redesigning our monthly statements to comply with the new law.

4. More Restrictions for Exceeding Credit Limits

Today: Some credit card issuers charge an over-the-limit fee each time you exceed your credit limit.

In the future: Before you can be charged an over-the-limit fee, you’ll need to "opt-in" or give your card issuer permission to complete transactions that will exceed your credit limit. If you sign up, you can still be charged for exceeding your limit. If you don’t sign up and make a charge that puts you over your limit, the card issuer may or may not decline the transaction. But either way, you can’t be charged an over-the-limit fee if you don’t sign up.

For USAA cardholders: We currently don’t charge over-the-limit fees for customers eligible for USAA membership.

5. More Favorable Terms For Paying Off Balances with Higher Interest Rates

Today: For accounts with different interest rates — such as cash advances, purchases or balance transfers — your payments typically go toward paying off balances with the lowest interest rates first.

In the future: Payments in excess of the minimum amount will be required to pay off balances with the highest interest rates first.

For USAA cardholders: Consistent with current industry practice, we apply credit payments toward balances with the lowest interest rates first. We are in the process of updating our payment policies.

6. Prohibition on Increasing the Interest Rates on Existing Balances

Today: Even when you’ve made all monthly payments on the account on time, some credit card issuers may increase interest rates on existing balances due to a change in your credit score, income or other factors.

In the future: Card issuers generally won’t be allowed to increase rates on existing balances but will be allowed to increase rates for future purchases after the first year. A penalty rate can’t go into effect unless you don’t make a required payment within 60 days of its due date. In that case, you’ll need to be given a 45-day notice that tells you why your rate was increased. The penalty rate must be decreased to the original rate after six months in a row of timely payments.

For USAA cardholders: We occasionally review interest rates for all members. Historically, we’ve avoided the types of dramatic rate increases that prompted the new law.

7. More Notice Before Rates Can Be Increased on Future Balances

Today: Some credit cards offer low, introductory rates that can become dramatically higher over time. In addition, some card issuers have increased their rates for certain consumers without much warning.

In the future: Rates can’t be increased during the first year after your account is opened. After the first year, you’ll have to be given at least 45 days’ notice before your rate can be increased. Plus, you’ll have the ability to close your account and maintain your current rate.

For USAA cardholders: In the past 25 years, we’ve rarely raised rates. When we have, we’ve provided at least 30 days’ notice and permitted members to reject the rate increase by closing the account.

Posted on Jun 12, 2009

NEW YORK (Reuters) – Visa Inc (V.N: Quote, Profile, Research, Stock Buzz), the world’s largest payment network, said on Tuesday that U.S. legislation curbing certain practices by credit card companies would force the industry to restructure as revenue expectations shrink.

"It’s going to cause the whole industry to rethink itself," Visa’s Chief Executive Joseph Saunders said in an interview. "It will result in less credit being offered to less people."

The bill, due to go into effect in February 2010, will restrict the ability of credit card issuers’ to raise interest rates on cardholders’ existing balances, to charge certain fees, and to impose penalties on consumers that the government deemed unreasonable.

Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), American Express Co (AXP.N: Quote, Profile, Research, Stock Buzz), Capital One Financial Corp (COF.N: Quote, Profile, Research, Stock Buzz), and Discover Financial Services (DFS.N: Quote, Profile, Research, Stock Buzz) have over 80 percent of the U.S. credit card industry.

The companies enjoyed hefty gains in recent years due to an explosion in credit, but now they are losing billions as debt-burdened Americans lose their jobs and default on credit card payments.

Americans owed more than $945 billion in credit card debt in March. And even though that has declined from $962 billion in December, credit card indebtedness is still up about 25 percent over a decade ago.

Visa is partially insulated from the global credit crisis because it processes transactions rather than lending funds. However, its revenue growth has slowed along with transaction volume as consumers try to reduce their indebtedness.

Saunders said any slowdown in credit card use would be offset by a secular change from cash and checks to electronic payments, and by increased use of debit cards. He said debit cards represented "a significant part of the company’s future".

Spending on debit cards surpassed credit volume in the United States in the first three months of 2009 for the first time in history.

Saunders said Visa does not expect to change its earnings or revenue forecast due to the legislation.

"It doesn’t look like we are going to fall off a cliff. It isn’t a tsunami. It is going to be an issue that we are going to have to deal with," he said.

"I don’t think it is going to particularly change our guidance or our notion of where we are going. Of course, if things never changed we would have had more transactions, but I don’t think that this does anything to slowdown the momentum of the change."

Visa expects annual net revenue growth of high single digits in 2009 and of between 11 to 15 percent in 2010. It also forecast annual adjusted diluted Class A common stock earnings per share will grow over 20 percent.

SLOW ECONOMIC RECOVERY

Saunders said he saw some signs of economic improvement in the United States, particularly stronger consumer confidence. but he said he did not expect a speedy recovery. He said the economy would be more solid in the first half of 2010.

"People are not doing things that they have normally done because they are concerned about employment, they are concerned about if they are prepared in the event that something happens," Saunders said, but added that "at some point in time, people will want to enjoy things they enjoyed in the past."

Visa posted better-than-expected quarterly earnings in April as the processing network company increased prices, slashed expenses and consumers used debit cards more.

However, Saunders reiterated Visa’s net income will come under pressure in the current quarter, as the company faces shrinking cross-border transactions, and a stronger dollar hurts revenue overseas.

Earnings should start to improve by the second half of 2009, as foreign exchange headwinds ease.

The company could also benefit as JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) is expected to shift part of its huge Washington Mutual debit card portfolio to Visa’s network from MasterCard Inc (MA.N: Quote, Profile, Research, Stock Buzz).

"I think that as a result of this our debit card business will grow," Saunders said.

(Reporting by Juan Lagorio; Editing by Toni Reinhold, Bernard Orr)
Tue Jun 2, 2009 9:27pm EDT
By Juan Lagorio

For decades, the credit card has symbolized the American way of life, but this recession may force both the symbol and the reality to change.

Spooked by plunging home prices and mounting job losses, consumers have cut back on credit card use, pumping less cash into an economy that depends on their ability and willingness to spend.

Meanwhile, Congress, reacting to complaints about credit card marketing practices, has tightened the rules on penalties and fees – spurring bankers to warn that consumer credit will become more costly and difficult to obtain.

The credit card issue is part of a larger problem of how to ensure that the financial system supplies enough credit to keep the economy moving without providing so much that it overheats and collapses.

Industry critics say soaring debt helped cause this recession, which has now unleashed economic forces that will end the free-spending behavior symbolized by credit cards.

"As a society, we’ll never be able to go back to the way things were," said Robert Manning, a professor of consumer behavior at Rochester (N.Y.) Institute of Technology and author of the anti-debt manifesto, "Credit Card Nation."

But James Chessen, chief economist for the American Bankers Association, said consumers rely on credit cards to enhance their lifestyles and will want credit available when better times return.

"The fundamental desire to buy things today and pay interest for the privilege will remain part of the culture," Chessen said.

Daniel Ray, editor in chief of CreditCards.com, said credit cards began as exclusive perks in the 1960s and 1970s but evolved into mass-market products in the 1980s and beyond thanks to the use of credit scoring technologies.

Using credit scores, he said, banks could tailor rates and terms to an individual’s likelihood of making or missing payments. Cards became easy to obtain, even for people with low scores, because banks could align rates and penalties accordingly.

"They created a multitude of products for a multitude of needs," Ray said.

Federal Reserve figures chart the expansion of credit card use.

Each month the Fed surveys the total revolving debt carried by consumers, about 90 percent of which is charge card balances.

Fed figures show that in September 1988, consumers carried $177 billion in such revolving debt. By September 2008, that figure had risen more than five-fold to $977 billion.

Since October, however, the Fed survey shows that revolving debt has dropped for six months in a row.

"This hasn’t happened for decades," Ray said.
Will retreat end?

This credit retreat could prove temporary or permanent. But Ray said the recent congressional legislation was intended to curb the marketing practices that enabled banks to expand card ownership over the last two decades.

"Issuers developed cards that were cheap up front and expensive on the back end," he said. "You could get zero percent for the first year, but after that, if you tripped up, the low introductory rate became very high in a hurry."

The bill signed by President Obama May 22 will prohibit banks from raising rates on existing balances unless a cardholder falls more than 60 days behind on minimum payments – eliminating so-called hair-trigger delinquencies – and make other changes, including requiring 45 days’ notice before increasing interest rates.

The banking industry, which fought the changes, now warns that the bill will force issuers to restrict access to cards and raise the overall cost of borrowing.

"They affect the ability of credit card issuers to change their prices based on risk," said Chessen, with the Bankers Association, predicting that the law will mean "less credit extended, particularly to people who may not have perfect credit histories."

But critics say banks targeted vulnerable consumers and then profited when they missed payments or exceeded credit limits.

"There’s a lot of anger out there; people have felt so manipulated," said San Francisco debt expert Erica Sandberg, author of the family finance guide, "Expecting Money."

But the credit card situation is just a microcosm of the larger wave of debt that has swamped the economy in the past 20 years.
Huge household debt

The Federal Reserve Bank of San Francisco recently issued a report on total household debt – everything from mortgages to credit cards. It showed that consumers doubled their debt load over the last two decades. By 2007, the average household had $1.33 in obligations for every $1 in personal disposable income.

"For many U.S. households, current debt levels appear too high," the report said.

Manning, the credit industry critic, said now that the recession has thrown millions out of work, that burden has become more difficult to sustain.

We have more debt than at any other time in history and less income to pay it back," he said. "That’s really where we are right now."

E-mail Tom Abate at tabate@sfchronicle.com.
This article appeared on page L – 1 of the San Francisco Chronicle
Tom Abate, Chronicle Staff Writer
Sunday, May 31, 2009

You’ve heard that credit scores and credit reports are important, but just how much do you know about them? Take our quiz and test your knowledge to see if you’re a credit expert.

You’ll get two points for each question you get correct — although a few questions may require more than one correct answer to get both points. Good luck!

[ TAKE the QUIZ ]

My Score: 20

Perfect score! Your friends have nicknamed you "FICO." Maybe you should be working for a credit bureau or at CreditCards.com.

This paper utilizes the population of personal bankruptcy filings in the state of
Delaware during 2003 and finds that household expenditures on durable consumptions,
such as houses and automobiles, contribute significantly to personal bankruptcy. Adverse
medical conditions also lead to personal bankruptcy filings, but other adverse events such
as divorce and unemployment have marginal effects. Over-consumption makes
households financially over-stretched and more susceptible to adverse events, which
reconcile the strategic filing and adverse event explanations.

PDF: Download Paper
Ning Zhu
University of California, Davis
Current draft: September 2008

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On April 14, President Obama gave a speech at Georgetown University, trying to explain why he was taking on so many economic issues so early in his administration. He argued that the country needed to break its bubble-and-bust cycle and cited the New Testament in calling for a new economic foundation for the nation. This foundation would be built on better schools, alternative energy, more affordable health care and a more regulated Wall Street, he said. Later that afternoon (shortly before the Obama family introduced its new dog, Bo, on the South Lawn of the White House), I sat down with the president to talk about how his agenda might change daily life in this country.

This was our third interview about the economy, the first two occurring during last year’s campaign. And while the setting was decidedly more formal this time — the Oval Office — the interview felt as conversational as those earlier ones. We sat at the far end of the office from his desk and spoke for 50 minutes. None of his economic advisers were there. As the conversation progressed, Obama spoke in increasingly personal terms. What follows is a lightly edited transcript of that interview.

At the end of our conversation, when I asked him if he was reading anything good, he said he had become sick enough of briefing books to begin reading a novel in the evenings — “Netherland,” by Joseph O’Neill.

I. The Future of Finance

The idea here is to look beyond the current moment and try to think about what American life is going to be like on the other side of the so-called Great Recession. And so I thought it might make sense to start where the trouble started — finance. People who want to get a sense for how you think about education and jobs and all sorts of other issues can get a really good sense for your thinking by reading “The Audacity of Hope,” or by reading your old speeches, where you basically lay out your learning curve. But there’s no chapter on finance in “The Audacity of Hope.” And so I wonder if you would be willing to describe a little bit of your learning curve about finance, and what you envision finance being in tomorrow’s economy: Does it need to be smaller? Will it inevitably be smaller?

THE PRESIDENT: Well, first of all, I think that we should distinguish between finance as the lifeblood of our economy and finance as a significant industry where we have a comparative advantage — right? So in terms of just growing our economy, we’ve got to have enough credit out there to fund businesses, large and small, to allow consumers the flexibility to make long-term purchases like cars or homes. So that’s not going to change. And I would be concerned if our credit market shrunk in ways that did not allow for the financing of long-term growth.

What that means is not only do we have to have a healthy banking sector, but we’re going to have to figure out what we do with the nonbanking sector that was providing almost half of our credit out there. And we’re going to have to determine whether or not as a consequence of some of the steps that the Fed has been taking, the Treasury has been taking, that we see the market for securitized products restored.

I’m optimistic that ultimately we’re going to be able to get that part of the financial sector going again, but it could take some time to regain confidence and trust.

What I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector were such a heavy part of our overall profitability over the last decade. That I think will change. And so part of that has to do with the effects of regulation that will inhibit some of the massive leveraging and the massive risk-taking that had become so common.

Now, in some ways, I think it’s important to understand that some of that wealth was illusory in the first place.

So we won’t miss it?

THE PRESIDENT: We will miss it in the sense that as a consequence of 25-year-olds getting million-dollar bonuses, they were willing to pay $100 for a steak dinner and that waiter was getting the kinds of tips that would make a college professor envious. And so some of the dynamic of the financial sector will have some trickle-down effects, particularly in a place like Manhattan.

But I actually think that there was always an unsustainable feel about what had happened on Wall Street over the last 10, 15 years, and it’s not that different from the unsustainable nature of what was happening during the dot-com boom, where people in Silicon Valley could make enormous sums of money, even though what they were peddling never really had any signs it would ever make a profit.

That doesn’t mean, though, that Silicon Valley is still not a huge, critical, important part of our economy, and Wall Street will remain a big, important part of our economy, just as it was in the ’70s and the ’80s. It just won’t be half of our economy. And that means that more talent, more resources will be going to other sectors of the economy. And I actually think that’s healthy. We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design.

And so I think what you’ll see is some shift, but I don’t think that we will lose the enormous advantages that come from transparency, openness, the reliability of our markets. If anything, a more vigorous regulatory regime, I think, will help restore confidence, and you’re still going to see a lot of global capital wanting to park itself in the United States.

Are there tangible ways that Wall Street has made the average person’s life better in the way that Silicon Valley has?

THE PRESIDENT: Well, I think that some of the democratization of finance is actually beneficial if properly regulated. So the fact that large numbers of people could participate in the equity markets in ways that they could not previously — and for much lower costs than they used to be able to participate — I think is important.

Now, the fact that we had such poor regulation means — in some of these markets, particularly around the securitized mortgages — means that the pain has been democratized as well. And that’s a problem. But I think that overall there are ways in which people have been able to participate in our stock markets and our financial markets that are potentially healthy. Again, what you have to have, though, is an updating of the regulatory regimes comparable to what we did in the 1930s, when there were rules that were put in place that gave investors a little more assurance that they knew what they were buying.

There was this great debate among F.D.R.’s advisers about whether you had to split up companies — not just banks — you had to split up companies in order to regulate them effectively, or whether it was possible to have big, huge, sprawling, powerful companies — even not just possible, but better — and then have strong regulators. And it seems to me there’s an analogy of that debate now. Which is, do you think it is O.K. to have these “supermarkets” regulated by strong regulators actually trying to regulate, or do we need some very different modern version of Glass-Steagall, (1)

THE PRESIDENT: You know, I’ve looked at the evidence so far that indicates that other countries that have not seen some of the problems in their financial markets that we have nevertheless don’t separate between investment banks and commercial banks, for example. They have a “supermarket” model that they’ve got strong regulation of.

Like Canada?

THE PRESIDENT: Canada being a good example. (2) And they’ve actually done a good job in managing through what was a pretty risky period in the financial markets.

So — that doesn’t mean that, for example, an insurance company like A.I.G. grafting a hedge fund on top of it is something that is optimal. Even with the best regulators, if you start having so much differentiation of functions and products within a single company, a single institution, a conglomerate, essentially, things could potentially slip through the cracks. And people just don’t know what they’re getting into. I mean, I guarantee you that the average A.I.G. insurance policyholder had no idea that this stuff was going on. And in that sense I think you can make an argument that there may be a breaking point in which functions are so different that you don’t want a single company doing everything.

But when it comes to something like investment banking versus commercial banking, the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution and more on the functions that they’re carrying out is probably the right approach to take.

II. The Ticket to the Middle Class

Staying on the Great Depression, it led to a surge in high-school graduation. A high-school diploma during that decade or two went from being elite to the norm, and it became a ticket to the middle class. I’m curious what you think today’s ticket to the middle class is. Do you want everybody aspiring to a four-year-college degree? Is a two-year or vocational degree enough? Or is simply attending college, whether or not you graduate, sufficient to reach the middle class?

THE PRESIDENT: We set out a goal in my speech to the joint session that said everybody should have at least one year of post-high-school training. And I think it would be too rigid to say everybody needs a four-year-college degree. I think everybody needs enough post-high-school training that they are competent in fields that require technical expertise, because it’s very hard to imagine getting a job that pays a living wage without that — or it’s very hard at least to envision a steady job in the absence of that.

And so to the extent that we can upgrade not only our high schools but also our community colleges to provide a sound technical basis for being able to perform complicated tasks in a 21st-century economy, then I think that not only is that good for the individuals, but that’s going to be critical for the economy as a whole.

I want to emphasize, though, that part of the challenge is making sure that folks are getting in high school what they need as well. You know, I use my grandmother as an example for a lot of things, but I think this is telling. My grandmother never got a college degree. She went to high school. Unlike my grandfather, she didn’t benefit from the G.I. Bill, even though she worked on a bomber assembly line. She went to work as a secretary. But she was able to become a vice president at a bank partly because her high-school education was rigorous enough that she could communicate and analyze information in a way that, frankly, a bunch of college kids in many parts of the country can’t. She could write —

Today, you mean?

THE PRESIDENT: Today. She could write a better letter than many of my — I won’t say “many,” but a number of my former students at the University of Chicago Law School. So part of the function of a high-school degree or a community-college degree is credentialing, right? It allows employers in a quick way to sort through who’s got the skills and who doesn’t. But part of the problem that we’ve got right now is that what it means to have graduated from high school, what it means to have graduated from a two-year college or a four-year college is not always as clear as it was several years ago.

And that means that we’ve got to — in our education-reform agenda — we’ve got to focus not just on increasing graduation rates, but we’ve also got to make what’s learned in the high-school and college experience more robust and more effective.

I was in West Virginia recently talking to some college students, and these are kids in college, fully intending to graduate, and yet they were still telling me they’re not sure whether a college education is worth it. They’re going to be graduating in a recession. They’re worried their jobs will go to China. You hear these things all the time. What would you say — there are a large number of very thoughtful people who have those concerns — what would you say to them?

THE PRESIDENT: Well, look, I’d start off by saying just look at the statistics. The unemployment rate for high-school graduates is at least three times what it is for a college graduate. So it’s true that in this recession you’re seeing white-collar jobs impacted. Even before the recession, it’s true that you saw some outsourcing of white-collar jobs. But if you’re working the odds, your likelihood of getting a job that pays you a good, solid middle-class wage is vastly increased upon graduating from college — unless you’re LeBron James. And so I think the evidence (3) speaks for itself.

Now, what is true is that a postgraduate education that isn’t giving you skills that are measurable in some way, that provide you with some differentiation, means that you’re going to have a little bit of a harder time. I would argue that anybody — that young people generally are going to benefit from a good, solid liberal-arts education. That’s what I got.

If you’re only going to go to school for two years, though, then making sure that you’re enrolled in a program where at the end of that journey you can see a job or a career or a field that’s growing instead of contracting certainly can make some sense.

But, again, I think the big challenge that we’ve got on education is making sure that from kindergarten or prekindergarten through your 14th or 15th year of school, or 16th year of school, or 20th year of school, that you are actually learning the kinds of skills that make you competitive and productive in a modern, technological economy.

That’s why I don’t just want to see more college graduates; I also want to specifically see more math and science graduates, I specifically want to see more folks in engineering. I think part of the postbubble economy that I’m describing is one in which we are restoring a balance between making things and providing services, whether it’s marketing or catering to people or servicing folks in some way. Those are all good jobs, and we’re not going to return to an economy in which manufacturing is as large a percentage as it was back in the 1940s just because of automation and technological advance.

And there are advantages to service jobs, right? Less injury —

THE PRESIDENT: Less injury, less strain. And I’ve always claimed that if a Wal-Mart associate was getting paid 25 bucks an hour like the autoworker, then there’s no reason for complaint.

Although I do think that there’s a culture of making things in a factory that appeals to people and that I understand. Whenever I’d walk into a factory during the campaign and would see these big turbines — things that, you know, you’d say, well, this is neat stuff — in a way you wouldn’t when you walk into a retail store.

But the broader point is that if you look at who our long-term competition will be in the global economy — China, India, the E.U., Brazil, Korea — the countries that are producing the best-educated work force, whose education system emphasizes the sciences and mathematics, who can translate those technology backgrounds or those science backgrounds into technological applications, they are going to have a significant advantage in the economy. And I think that we’ve got to have enough of that in order to maintain our economic strength.

III. The New Gender Gap

Those factories are obviously filled disproportionately with men. There’s a way in which that reminds me of your grandparents, even though I know your grandfather wasn’t a factory worker. You talk about the fact that your grandmother outearned your grandfather. And in a way your family was a forerunner of a much larger trend: There’s still sexism, there’s still a pay gap, clearly, but the pay of men has stagnated, and the pay of women has gone up.

I think there are a lot of men out there today, working at G.M. and Chrysler and other places, who feel the same kind of dejection (4) that your grandfather did. What do you think the future of work looks like for men?

THE PRESIDENT: I think it’s an interesting question, because as I said, you know, you go in to factories all across the Midwest and you talk to the men who work there — they’ve got extraordinary skill and extraordinary pride in what they make. And I think that for them, the loss of manufacturing is a loss of a way of life and not just a loss of income.

I think a healthy economy is going to have a broad mix of jobs, and there has to be a place for somebody with terrific mechanical aptitude who can perform highly skilled tasks with his hands, whether it’s in construction or manufacturing. And I don’t think that those jobs should vanish. I do think that they will constitute a smaller percentage of the overall economy. And so what we’re going to have to do is, with a younger generation, find new places for that kind of work.

The possibilities are there, though. I spoke during the campaign of this company that I visited, McKinstry, in Seattle, where you’ve got a bunch of welders and tradesmen who are now retrofitting buildings. They’re not performing the same kind of manufacturing that their fathers might have, but with similar skill sets they are now making hospitals and schools and office buildings much more energy efficient, and then that’s providing enormous value to the economy as a whole.

In shaping our recovery package, one of the things I was pushing very hard was the smart grid (5) as a big project similar to the Interstate that could have some enormous ramifications for energy utilization. One of the biggest constraints that we’ve got in building a smart grid in addition to siting issues, which are sort of classic political jurisdictional battles, is actually we don’t have enough trained electricians to lay down those lines. Now, you can’t tell me that there aren’t a whole bunch of men and women out there who are interested in those jobs. But somehow we have not done a good job of matching up the training with the need out there. And that’s one of the things where government can help, help to guide and steer our education process in a way that meets future needs and not just the needs of the past.

Would you also encourage men to become more comfortable working in fields that they traditionally have not? I mean, nursing is a very well-paying field. There’s a shortage there.

THE PRESIDENT: I mean, nursing, teaching are all areas where we need more men. I’ve always said if we can get more men in the classroom, particularly in inner cities where a lot of young people don’t have fathers, that could be of enormous benefit.

Now, as you and I both know, in a lot of those fields they have been underpaid because they were predominantly women’s fields. And so part of what we have to do is to recognize that women are just as likely to be the primary bread earner, if not more likely, than men are today. As a consequence, eliminating the pay gap between men and women, and the pay gap between fields, becomes critically important. And we’ve already taken action, for example, with the Lilly Ledbetter bill (6) to try to move in that direction.

I think that if you start seeing nursing pay better and teaching pay better, and some of these other professions, you’re going to see more men in those fields, although there’s a little bit of a chicken and an egg — if you start getting more men in those fields, then the stereotypes about this being a woman’s field and all the gender stereotypes that arise out of thinking that somehow they’re not the primary breadwinner, those stereotypes start being whittled away.

Did Michelle ever make more than you did?

THE PRESIDENT: Oh, sure.

Probably only for a brief time, because I was working three jobs most of the time that I was in the State Senate. I was still practicing law and I was still teaching. So when you kind of put everything together, I think I was still making a little bit more. But when I started campaigning for the U.S. Senate and I had to drop some of those jobs, then she carried us for a couple years.

IV. Where the Economists are Coming From

I want to talk broadly about policy. When you and I spoke during the campaign, you made it clear that you had thought a lot about the economic debates within the Clinton administration. And you said that you wanted to have a Robert Rubin type and a Robert Reich type having a vigorous debate in front of you. And clearly you have a spectrum of Democrats within your economic-policy team.

THE PRESIDENT: But I don’t have Paul Krugman or Joseph Stiglitz. (7) (Laughter.)

No, this wasn’t about them. But they have made it clear that they are not working in your administration, haven’t they?

But in your inner circle, it really is dominated by Rubin protégés. And I’d be interested if —

THE PRESIDENT: You know, the — I mean, look, Larry Summers and Tim Geithner obviously worked at Treasury under Rubin.

And Peter Orszag, I think.

THE PRESIDENT: And Orszag — fair enough. You know, Christy Romer didn’t.

Jared Bernstein doesn’t — and Jared sits here every morning as part of my economic team. And Austan Goolsbee doesn’t. (8)

I mean, the truth is that what I’ve been constantly searching for is a ruthless pragmatism when it comes to economic policy. It is probably true that, given the financial crisis that had arisen, that the fact that both Tim and Larry had familiarity with financial crises was a plus, because I thought that we needed some people who could hit the ground running and would be comfortable dealing with some very large and difficult economic issues. And frankly, that list is pretty small, because the last Democratic president we had was Bill Clinton; he was on the scene for eight years, and for a big chunk of that time, Bob Rubin was his primary economic-policy maker. So it’s not surprising that anybody who had experience in those fronts was going to be coming out of a shop that would have been influenced by that.

Keep in mind, though, I mean, I have enormous respect for somebody like Joe Stiglitz. I read his stuff all the time. I actually am looking forward to having these folks in for ongoing discussion. Somebody who has enormous influence over my thinking is Paul Volcker, who is robust enough that, having presided over the Carter and Reagan years, he’s still sharp as a tack and able to give me huge advice and to provide some counterbalance.

The last point I’d make, though, is I think that — and I may have mentioned this to you — but now that I think about it, maybe it was post-election. When I first started having a round table of economic advisers, and Bob Reich was part of that, and he was sitting across the table from Bob Rubin and others, what you discovered was that some of the rifts that had existed back in the Clinton years had really narrowed drastically.

They agree a lot more than they used to, but not entirely.

THE PRESIDENT: Not entirely. But, I mean, the fact is that Larry Summers right now is very comfortable making arguments, often quite passionately, that Bob Reich used to be making when he was in the Clinton White House. Now Larry might not like me saying that —

Larry Summers is the new Bob Reich —

THE PRESIDENT: — that he’s become a soft touch. But, no, I think that one of the things that we all agree to is that the touchstone for economic policy is, does it allow the average American to find good employment and see their incomes rise; that we can’t just look at things in the aggregate, we do want to grow the pie, but we want to make sure that prosperity is spread across the spectrum of regions and occupations and genders and races; and that economic policy should focus on growing the pie, but it also has to make sure that everybody has got opportunity in that system.

I also think that there’s very little disagreement that there are lessons to be learned from this crisis in terms of the importance of regulation in the financial markets. And I think that this notion that there is somehow resistance to that — to those lessons within my economic team — just isn’t borne out by the discussions that I have every day.

If anything, the only thing I notice, I think, that I do think is something of a carry-over from Bob Rubin — I see it in Larry, I see it in Tim — is a great appreciation of complexity.

And a willingness to admit what you don’t know, in many cases.

THE PRESIDENT: Yes, exactly. And so what that means is that, as we’re making economic policy, I think there is a certain humility about the consequences of the actions we take, intended and unintended, that may make some outside observers impatient. I mean, you’ll recall Geithner was just getting hammered for months. But he, I think, is very secure in saying we need to get these things right, and if we act too abruptly, we can end up doing more harm than good. Those are qualities that I think have been useful.

V. Postreform Health care

You have suggested that health care is now the No. 1 legislative priority. It seems to me this is only a small generalization — to say that the way the medical system works now is, people go to the doctor; the doctor tells them what treatments they need; they get those treatments, regardless of cost or, frankly, regardless of whether they’re effective. I wonder if you could talk to people about how going to the doctor will be different in the future; how they will experience medical care differently on the other side of health care reform.

THE PRESIDENT: First of all, I do think consumers have gotten more active in their own treatments in a way that’s very useful. And I think that should continue to be encouraged, to the extent that we can provide consumers with more information about their own well-being — that, I think, can be helpful.

I have always said, though, that we should not overstate the degree to which consumers rather than doctors are going to be driving treatment, because, I just speak from my own experience, I’m a pretty-well-educated layperson when it comes to medical care; I know how to ask good questions of my doctor. But ultimately, he’s the guy with the medical degree. So, if he tells me, You know what, you’ve got such-and-such and you need to take such-and-such, I don’t go around arguing with him or go online to see if I can find a better opinion than his.

And so, in that sense, there’s always going to be an asymmetry of information between patient and provider. And part of what I think government can do effectively is to be an honest broker in assessing and evaluating treatment options. And certainly that’s true when it comes to Medicare and Medicaid, where the taxpayers are footing the bill and we have an obligation to get those costs under control.

And right now we’re footing the bill for a lot of things that don’t make people healthier.

THE PRESIDENT: That don’t make people healthier. So when Peter Orszag and I talk about the importance of using comparative-effectiveness studies (9) as a way of reining in costs, that’s not an attempt to micromanage the doctor-patient relationship. It is an attempt to say to patients, you know what, we’ve looked at some objective studies out here, people who know about this stuff, concluding that the blue pill, which costs half as much as the red pill, is just as effective, and you might want to go ahead and get the blue one. And if a provider is pushing the red one on you, then you should at least ask some important questions.

Won’t that be hard, because of the trust that people put in their doctors, just as you said? Won’t people say, Wait a second, my doctor is telling me to take the red pill, and the government is saving money by saying take the blue —

THE PRESIDENT: Let me put it this way: I actually think that most doctors want to do right by their patients. And if they’ve got good information, I think they will act on that good information.

Now, there are distortions in the system, everything from the drug salesmen and junkets to how reimbursements occur. Some of those things government has control over; some of those things are just more embedded in our medical culture. But the doctors I know — both ones who treat me as well as friends of mine — I think take their job very seriously and are thinking in terms of what’s best for the patient. They operate within particular incentive structures, like anybody else, and particular habits, like anybody else.

And so if it turns out that doctors in Florida are spending 25 percent more on treating their patients as doctors in Minnesota, and the doctors in Minnesota are getting outcomes that are just as good — then us going down to Florida and pointing out that this is how folks in Minnesota are doing it and they seem to be getting pretty good outcomes, and are there particular reasons why you’re doing what you’re doing? — I think that conversation will ultimately yield some significant savings and some significant benefits.

Now, I actually think that the tougher issue around medical care — it’s a related one — is what you do around things like end-of-life care —

Yes, where it’s $20,000 for an extra week of life.

THE PRESIDENT: Exactly. And I just recently went through this. I mean, I’ve told this story, maybe not publicly, but when my grandmother got very ill during the campaign, she got cancer; it was determined to be terminal. And about two or three weeks after her diagnosis she fell, broke her hip. It was determined that she might have had a mild stroke, which is what had precipitated the fall.

So now she’s in the hospital, and the doctor says, Look, you’ve got about — maybe you have three months, maybe you have six months, maybe you have nine months to live. Because of the weakness of your heart, if you have an operation on your hip there are certain risks that — you know, your heart can’t take it. On the other hand, if you just sit there with your hip like this, you’re just going to waste away and your quality of life will be terrible.

And she elected to get the hip replacement and was fine for about two weeks after the hip replacement, and then suddenly just — you know, things fell apart.

I don’t know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she’s my grandmother. Whether, sort of in the aggregate, society making those decisions to give my grandmother, or everybody else’s aging grandparents or parents, a hip replacement when they’re terminally ill is a sustainable model, is a very difficult question. If somebody told me that my grandmother couldn’t have a hip replacement and she had to lie there in misery in the waning days of her life — that would be pretty upsetting.

And it’s going to be hard for people who don’t have the option of paying for it.

THE PRESIDENT: So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right?

I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.

So how do you — how do we deal with it?

THE PRESIDENT: Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place. It is very difficult to imagine the country making those decisions just through the normal political channels. And that’s part of why you have to have some independent group that can give you guidance. It’s not determinative, but I think has to be able to give you some guidance. And that’s part of what I suspect you’ll see emerging out of the various health care conversations that are taking place on the Hill right now.

VI. Out of the Rough?

Do you think this recession is a big-enough event to make us as a country willing to make some of the sorts of hard choices that we need to make on health care, on taxes in the long term — which will not cover the cost of government — on energy? Traditionally those choices get made in times of depression or war, and I’m not sure whether this rises to that level.

THE PRESIDENT: Well, part of it will depend on leadership. So I’ve got to make some good arguments out there. And that’s what I’ve been trying to do since I came in, is to say now is the time for us to make some tough, big decisions.

The critics have said, you’re doing too much, you can’t do all this at once, Congress can’t digest everything. I just reject that. There’s nothing inherent in our political process that should prevent us from making these difficult decisions now, as opposed to 10 years from now or 20 years from now.

It is true that as tough an economic time as it is right now, we haven’t had 42 months of 20, 30 percent unemployment. And so the degree of desperation and the shock to the system may not be as great. And that means that there’s going to be more resistance to any of these steps: reforming the financial system or reforming our health care system or doing something about energy. On each of these things — you know, things aren’t so bad in the eyes of a lot of Americans that they say, We’re willing to completely try something new.

But part of my job I think is to bridge that gap between the status quo and what we know we have to do for our future.

Are you worried that the economic cycle will make that much harder? I mean, Roosevelt took office four years after the stock market crashed. You took office four months after Lehman Brothers collapsed. At some point people may start saying, Hey, why aren’t things getting better?

THE PRESIDENT: It’s something that we think about. I knew even before the election that this was going to be a very difficult journey and that the economy had gone through a sufficient shock and that it wasn’t going to recover right away.

In some ways it’s liberating, though, in the sense that whether I’m a one-termer or a two-termer, the problems are big enough and fundamental enough that I can’t sort of game it out. It’s not one of these things where I can say, Oh, you know what, if I time it just right, then the market is going to be going up and unemployment will be going down right before re-election. These are much bigger, much more systemic problems. And so in some ways you just kind of set aside the politics.

What I’m very confident about is that given the difficult options before us, we are making good, thoughtful decisions. I have enormous confidence that we are weighing all our options and we are making the best choices. That doesn’t mean that every choice is going to be right, is going to work exactly the way we want it to. But I wake up in the morning and go to bed at night feeling that the direction we are trying to move the economy toward is the right one and that the decisions we make are sound.

David Leonhardt is an economics columnist for The Times and a staff writer for the magazine.
By DAVID LEONHARDT
May 3, 2009

The systems development life cycle (SDLC) is a structured approach to the development of a business system. This approach often includes planning, analysis, design, implementation, and support. Although virtually every company that uses SDLC and every textbook that teaches SDLC has its own slightly different variation of the methodology, most agree that the SDLC includes the following phases:

• Planning—Identify problems, opportunities, and objectives.
• Analysis—Determine information requirements, analyze system needs, and prepare a written systems proposal.
• Design—Design and build the system recommended at the end of the analysis phase and create the documentation to accompany the system.
• Implementation—Install the system and prepare to move from the old system to the new system; train the users.
• Maintenance—Correct and update the installed system as necessary.

The idea of phases is critical to the SDLC concept. The intent of SDLC is for phases not to be disjointed steps in a big plan, but overlapping layers of activity. A second critical concept is that of the cycle. After a system has been maintained for a period of time, it is relatively common to restart the planning phase— hence, another cycle—in an attempt to seek a better solution to the problem.

One technique used to model a corporation’s network environment is to create connectivity maps. More precisely, three different modeling techniques can be used, depending on what type of network you are modeling: wide area connectivity maps, metropolitan area connectivity maps, and local area connectivity maps.

In order to create a wide area connectivity map, the modeler begins by identifying each site or location in which the company has an office. Each fixed site is denoted by a circle; mobile or wireless sites are indicated by circles containing the letter M; and external sites, such as suppliers or external agents, are denoted by circles containing the letter E. A solid line between two sites indicates a desired path for data (or voice) transmission. If a company desires a metropolitan area network connection between one of its offices and another business, such as an Internet service provider (ISP), it can use a metropolitan area connectivity map to outline this connection and define the desired network characteristics. To examine the nodes in a wide area connectivity map in more detail, an analyst can expand each individual site into a local area connectivity map. The local area network design can then be performed in one or two stages, depending upon the level of detail desired. If only an overview of a local network is desired, then the analyst can create a local area overview connectivity map. If more detail is desired, the analyst can create a local area detailed connectivity map.

Analyzing and designing a new computer system can be time-consuming and expensive. While the project is in the analysis phase, and before a system is designed and installed, a feasible solution must be found. The term “feasible” has several meanings when it’s applied to computer-based projects. The technical feasibility of a system is the extent to which the system can be created and implemented using currently existing technology. A system’s financial feasibility is the extent to which the system can be created, given the company’s current finances. When a system demonstrates operational feasibility, it operates as designed and implemented. A system’s time feasibility is the extent to which the system can be installed in a timely fashion and meets organizational needs.

To determine the cost of a system, it is necessary to include all possible costs. But to get a comprehensive understanding of the cost of the system, you must also calculate the recurring costs of the proposed system. Once the one-time and recurring costs have been established, it is time to determine the benefits that will result from the proposed system. When calculating benefits, you will need to include both tangible benefits and intangible benefits. Now that the costs and benefits have been determined, you can apply them to a payback analysis. When performing a payback analysis calculation, you should show all dollar amounts using the time value of money. This means that if something is going to cost one dollar one year from now, you need to put away less than a dollar today to pay for it. This also means that if something is going to cost one dollar one year from now, you need to put away less than a dollar today to pay for it. A payback analysis helps you to determine the approximate time for a project payback, or return on investment (ROI), to occur.

If you design a system for a company, and the system is not capable of supporting the traffic generated within the company, response times will be sluggish, and users may not be able to complete their work on time. Capacity planning involves trying to determine the amount of network bandwidth necessary to support an application or a set of applications. Capacity planning is a fairly difficult and time-consuming operation. A number of techniques exist for performing capacity planning, including linear projection, computer simulation, benchmarking, and analytical modeling.

Linear projection involves predicting one or more network capacities based on the current network parameters and multiplying those capacities by some constant. Some systems, however, do not follow a linear projection. If you apply a linear projection to these systems, you may produce inaccurate predictions. In these cases, an alternate strategy is required. A computer simulation involves modeling an existing system or a proposed system using a computer-based simulation tool and subjecting the model to varying degrees of user demand (called load). Computer simulations are difficult to create, mainly because it is easy to make mistakes in the modeling process and difficult to discover them. Benchmarking involves generating system statistics under a controlled environment and then comparing those statistics against known measurements. Unfortunately, like simulation, this process can also suffer from possible errors. Analytical modeling involves the creation of mathematical equations to calculate various network values.

Creating a baseline for an existing computer network involves measuring and recording a network’s state of operation over a given period of time. Creating a baseline actually involves capturing many network measurements over all segments of a network, including numerous measurements on workstations, user applications, bridges, routers, and switches. Baseline studies can be started at any time but are most effective when they are initiated during a time when the network is not experiencing severe problems, such as a node failure or a jabber. Therefore, before you begin a baseline study, you must extinguish all immediate fires and try to get the network into fairly normal operation. Because you will be generating a large number of statistics, you will want to have access to a good database or spreadsheet application to keep the data organized. Once the database or spreadsheet has been set up, you are ready to begin your baseline study.

The next question is, on what items are you going to collect baseline information? You may find it useful to collect information on items such as system users, system nodes, operational protocols, network applications, and network utilization levels. Once you have collected and analyzed network utilization data, you can make several important observations. First, you can detect when a network may be reaching saturation. A second observation you can make is when peak periods of network use occur. Making observations about peak periods of network use is easiest when you graph network activity data. Examining the amount of traffic on each node also yields valuable information about network performance. Once you have performed the baseline study, don’t stop observing the network. For a baseline study to be really effective, you need to maintain it.

Once the analysis and design phases of network development are completed and the computer network is in place and operating, it is the network administrator’s responsibility to keep it running. Keeping a network running involves making repairs on failed components, installing new applications and updating the existing ones, keeping the system’s existing users up to date, and looking for new ways to improve the overall system and service level.

Because many network administrators are dealing with both computers and people, they need the skills necessary to work with both. A checklist of skills for the network administrator would include a wide platform of technology skills, including, but not limited to, knowledge of local area networks, wide area networks, voice telecommunications systems, data transmission systems, video transmission, basic hardware concepts, and basic software skills. A network administrator should also have interpersonal skills, including the ability to talk to users in order to service problems and explore new applications. Along with interpersonal skills, a network administrator also needs training skills, which involve the ability to train users or other network support personnel. To make effective use of limited resources, a network administrator should also possess a number of common management skills, including budget management, statistical, time management, project management, and policy creation and enforcement skills. To learn new skills and demonstrate proficiency within a particular area, the network administrator can obtain certification.

Computer networks are in a constant state of change. To support changes to a network, a network administrator needs funding. If properly generated, statistics can be used to support the request for a new system or modifications to an existing system. Four statistics, or measures, that are useful in evaluating networks are mean time between failures, mean time to repair, availability, and reliability. Mean time between failures (MTBF) is the average time a device or system will operate before it will fail. Mean time to repair (MTTR) is the average time necessary to repair a failure within the computer network. This time includes the time necessary to isolate the failure. The third statistic, availability, is the probability that a particular component or system will be available during a fixed time period. A component or network with a high availability (near 1.0) is almost always operational. For simplicity, however, you can calculate availability by simply subtracting the downtime from the total available time and then dividing by the total available time. The fourth statistic, reliability, calculates the probability that a component or system will be operational for the duration of a transaction of time t. Reliability is defined by the equation: R(t) = e^(–bt). A reliability of exactly 1.0 means the network or device is reliable 100 percent of the time.

The two categories of diagnostic tools are the tools that test and debug the network hardware, and the tools that analyze the data transmitted over the network. Finally, the command center and the help desk should be considered.

Tools that test and debug network hardware range from very simple devices to more elaborate, complex devices. Three common testing devices are electrical testers (the simplest), cable testers, and local area network testers (the most elaborate). An electrical tester will show if voltage is on a line, and if so, how much voltage. Cable testers are slightly more elaborate devices. They can verify connectivity and test for line faults, such as open circuits, short circuits, reversed circuits, and crossed circuits. Local area network testers can operate on Ethernet and token ring networks, whether they have switches or not. Some local area network testers have a display that graphically shows a network segment and all of the devices attached to it.

The second category of diagnostic tools covers tools that analyze data transmitted over the network. These tools include protocol analyzers and devices or software that emulate protocols and applications. One of the most common of these tools is the traffic analyzer or protocol analyzer. Each packet’s protocol is analyzed, and statistics are generated that show which devices are talking to each other and which applications are being used. This information can then be used to update the network, so that it operates more effectively.

To assist network administrators and information technologists in doing their jobs, businesses have control centers for their computing services. It contains, in one easily accessible place, all the network documentation, including network resource manuals, training manuals, baseline studies, all equipment documentation, user manuals, vendor names and telephone numbers, procedure manuals, and forms necessary to request services or equipment. The control center can also contain a training center to assist users and other information technologists.

One of the more important elements of a control center is the help desk. Whether it’s called upon to address hardware problems, answer questions about running a particular software package, or introduce the company’s users to new computing services, the help desk is the gateway between the user and computing and network services. When users know a friendly person is available to turn to for any computing problems, much less computer system and computer user friction exists.

A network management protocol facilitates the exchange of management information between network devices. This information can be used to monitor network performance, find network problems, and then solve those problems—all without having any network personnel physically touch the affected device. Simple Network Management Protocol (SNMP) is an industry standard designed originally to manage Internet components; it is now also used to manage wide area network and telecommunications systems.

SNMP is based on the following set of principles. Network objects consist of network elements such as servers, mainframe computers, printers, hubs, bridges, routers, and switches. Each of these elements can be classified as either managed or unmanaged. A managed element has management software, called an agent, running in it and is more elaborate and expensive than an unmanaged element. A second type of object—the SNMP manager software—controls the operations of a managed element and maintains a database of information about all managed elements. The database that holds the information about all managed devices is called the Management Information Base (MIB). The information stored in the MIB can be used to repair or manage the network, or simply to observe the operation of the network. Managed elements are monitored and controlled using three basic SNMP commands: read, write, and trap. The read command is issued by a manager to retrieve information from the agent in a managed element. The write command is also issued by a manager but is used to control the agent in a managed element. By using the write command, a manager can change the settings in an agent, thus making the managed element perform differently.

More often than not, the SNMP manager requests information directly from a managed element on the same network. But what if a manager wants to collect information from a remote network? Remote Network Monitoring (RMON) is a protocol that allows a network administrator to monitor, analyze, and troubleshoot a group of remotely managed elements. RMON is defined as an extension of SNMP. RMON can be supported by hardware monitoring devices, through software, or through a combination of hardware and software. RMON can collect several basic kinds of information, such as number of packets sent, number of bytes sent, number of packets dropped, host statistics, and certain kinds of events that have occurred. A network administrator can find out how much bandwidth or traffic each user is imposing on the network and can set alarms in order to be alerted of impending problems.

Yonkers, NY — Everyone knows that if you hit another car, your auto insurer will probably raise your premiums. But Consumer Reports warns that even drivers who have spotless driving records and have never had an at-fault accident may be faced with higher premiums if they run into a new breed of credit score used by insurers.

Known as credit-based insurance scores, these numbers are computed from bill-paying and loan data collected by the major credit bureaus. They have become as important in determining annual premiums as driving records and neighborhoods.

Consumer Reports’ investigation found that scores and their uses vary among insurers and that credit-based insurance scoring could cost many drivers hundreds of extra dollars.

Credit scores used by insurance companies weigh credit data differently from traditional lender scores. As a result, insurance scores can penalize even those consumers who use credit reasonably.

No standards; Little disclosure

Few insurers routinely disclose scores or what role they play in setting premiums. Consumer Reports sought and obtained scoring models filed with regulators in Florida, Michigan, and Texas used by 9 of the 10 largest U.S. auto insurers. CR found that there are no standards. Each company uses different models and weighs different credit-report information. Some big companies find scoring useful only for new customers, not renewals, while others may use it for both. Moreover, CR notes that the credit data from which the scores are derived have a reputation for being inaccurate and out of date. Despite such problems, most states allow insurance scoring, and efforts to limit or ban it have been met with aggressive lobbying by insurers.

Advocates from Consumers Union, the publisher of Consumer Reports, have been urging legislators and regulators in several states to ban the use of credit scoring to underwrite homeowners and auto insurances policies. Those efforts have met with opposition from insurers. This year, insurance industry lobbyists helped to squelch legislation to end credit scoring in Colorado, Delaware, and Minnesota. More information about Consumers Union’s advocacy position on the issue is available here.

TEST CASE: Scoring can cost the same driver hundreds extra

To see how insurance scores affect premiums, CR worked with an actuary to calculate premiums charged by preferred/standard-risk companies run by eight of the largest U.S. insurers operating in Florida. The actuary calculated a “neutral” score for a 28-year-old single man with a clean driving record in Orlando, FL who owns a 2005 Toyota Camry LE. With a neutral score, the hypothetical customer would pay roughly the same annual premium at Nationwide and GEICO, about $1,150. But with the worst possible insurance scores, the premium would increase 29 percent to $1,468 at GEICO and 47 percent to $1,706 at Nationwide.

How to polish your score to get a lower premium

Consumer Reports’ analysis shows that consumers can take steps to protect themselves when applying for a car-insurance policy:

Shop harder than ever before: Because each insurer calculates scores differently, only by getting quotes from several insurers are consumers sure to find a low rate.

Use credit that insurers favor: Scoring models prefer oil-company credit cards. They also like national bank credit cards such as American Express, Discover, MasterCard, and Visa.

Ask about your score: Farmers and Progressive both give details but only if asked.

Ask for exceptions: Progressive says that is may rescore you if your score has been adversely affected by divorce, Hurricanes Katrina or Rita, job loss, the death of a family member , or serious medical problems.

CONTACT: Alberto Rojas (914) 378-2434 or Lauren Hackett (914) 378-2561
July 29, 2006

One very common technique is to deliver an e-mail or Web page that contains a malicious piece of code called a mobile malicious code or a Trojan horse. A computer virus is a small program that alters the way a computer operates without the knowledge of the computer’s users and often does various types of damage by deleting and corrupting data and program files, or by altering operating system components, so that computer operation is impaired or even halted. A computer worm is a program that copies itself from one system to another over a network, without the assistance of a human being.

Denial of service attacks (or distributed denial of service attacks) bombard a computer site with so many messages that the site is incapable of performing its normal duties. In e-mail bombing, a perpetrator sends an excessive amount of unwanted e-mail messages to someone. If these e-mail messages have a return address of someone other than the person actually sending the e-mail, then the sender is spoofing. Smurfing is the name of a particularly nasty automated program that attacks a network by exploiting Internet Protocol (IP) broadcast addressing and other aspects of Internet operation. A ping storm is a condition in which the Internet ping program is used to send a flood of packets to a server to make the server inoperable.

Another popular attack method is to abuse or take advantage of valid user accounts and the permissions associated with those accounts. One more common attack method is to try to guess or intercept valid IDs and passwords from authorized users. Another type of attack that involves tricking the user into supplying confidential information is called pharming. In this attack, a Web user seeking to visit a particular company’s Web site is unknowingly redirected to a bogus Web site that looks exactly like that company’s official Web site.

The physical protection of a computer system or a computer network consists of protecting the equipment from physical damage. Causes of physical damage include fire, floods, earthquakes, power surges, and vandalism. Some equipment, obviously, has to be in the open for public access. In this case, the equipment should be locked down. Another matter of common sense is that expensive computer systems should not be placed in the basements of buildings. Rooms with a large number of external windows are also not advisable. To prevent electrical damage to computing equipment, high-quality surge protectors should be used on all devices that require an electrical current. In addition, computer devices should not be on the same circuits as electrical devices that power up and down and cause power fluctuations, such as large motors. Finally, devices that are susceptible to damage from static electricity discharges, such as memory cards and printed circuit boards, should be properly grounded.

Surveillance may also be considered a form of physical protection. Some companies use a form of surveillance called intrusion detection, or an intrusion detection system, which involves electronically monitoring data flow and system requests into and out of their systems. In addition to video surveillance and intrusion detection, an interesting surveillance technique built on the concept of a honeypot is available.

Controlling access to a computer network involves deciding and then limiting who can use the system and when the system can be used. Local area networks and database systems provide much flexibility in the assigning of access rights to individuals or groups of individuals. Access rights define the network resources that a user or set of users can access. A company’s computer network specialists, along with database administrators and someone at the top levels of management, such as the Chief Information Officer (CIO), often work together to decide how the company should be broken up into information access groups. Then they resolve each group’s access rights and determine who should be in each group. It is also possible to limit access to a system by the time of day or the day of the week. It may also be wise to limit remote access to a system during certain times of the day or week.

Perhaps the most common form of protection from unauthorized use of a computer system is the password. Anyone accessing a computer system, banking system, or voice mail/e-mail system is required to enter a password or personal identification number (PIN). Too often, passwords become known, or “misplaced,” and fall into the wrong hands. Occasionally, a password is written on paper, and the paper is discovered by the wrong people. More often, however, the password is too simple, and an intruder guesses it. The standard rules that you should follow when creating or changing a password include:

• Change your password often.
• Pick a good password by using at least eight characters, mixing uppercase and lowercase if the computer system is case-sensitive, and mixing letters with numbers.
• Do not choose passwords that are similar to your first or last names, pet names, car names, or other choices that can be easily guessed.
• Do not share your password with others; doing so invites trouble and misuse.

Because a password has so many weaknesses, other forms of identification have emerged. Biometric techniques that observe and record some aspect of the user, such as voiceprints, fingerprints, eyeprints, and faceprints, appear to be the wave of the future.

What precautions can we take to ensure that this data is not corrupted or intercepted by the wrong people? Encryption is commonly used to secure data. Basic encryption techniques are available that include substitution ciphers and transposition ciphers. More advanced techniques, such as the Advanced Encryption Standard, digital signatures, public key infrastructure, and steganography are also available.

A monoalphabetic substitution-based cipher replaces a character or group of characters with a different character or group of characters. The polyalphabetic substitution-based cipher is similar to the monoalphabetic cipher, but it uses multiple alphabetic strings to encode the plaintext, rather than one alphabetic string. Possibly the earliest example of a polyalphabetic cipher is the Vigenére cipher. For the Vigenére cipher, a 26 x 26 matrix of characters is created.

A transposition-based cipher is different from a substitution-based cipher in that the order of the plaintext is not preserved. Rearranging the order of the plaintext characters makes common patterns unclear and the code much more difficult to break. Let’s consider a simple example of a transposition cipher. Choose a keyword that contains no duplicate letters, such as COMPUTER. Over each letter in the keyword, write the number that corresponds to the order in which that letter appears in the alphabet when compared to the other letters in the keyword. For the keyword COMPUTER, C appears first in the alphabet, E is second, M is third, O is fourth, and so on. Take a plaintext message such as “this is the best class i have ever taken” and write it under the keyword in consecutive rows going from left to right. To encode the message, read down each column starting with the column numbered 1 and proceeding through to the column numbered 8. Reading column 1 gives us TESV, and column 2 gives us TLEE. Encoding all eight columns gives the following message: TESVTLEEIEIRHBSESSHTHAENSCVKITAA.

One of the inherent problems with protecting a single key is that it means that only one key is used to both encode and decode the message. But what if two keys are involved—one public and one private? Data encrypted with the public key can be decoded only with the private key, and data encrypted with the private key can be decoded only with the public key. This concept of two keys, public and private, is called public key cryptography. It is also called asymmetric encryption. Important protocols that use asymmetric cryptography include SSL, TLS, and IPSec.

The Data Encryption Standard (DES) is a commonly employed encryption method used by businesses to send and receive secure transactions. The standard came into effect in 1977 and was reapproved in 1983, 1988, and 1993. The encryption techniques are based upon substitution- and transposition-based ciphers. The Advanced Encryption Standard (AES) was selected by the U.S. government to replace DES. More precisely, the National Institute of Standards and Technology selected the algorithm Rijndael in October 2000 as the basis for AES. The Rijndael algorithm involves very elegant mathematical formulas, requires only one pass, computes very quickly, is virtually unbreakable, and operates on even the smallest computing devices.

A digital signature is a security procedure that uses public key cryptography to assign to a document a code for which you alone have the key. Digitally signing an electronic document involves sending the document through a complex mathematical computation that generates a large prime number called a hash. The original document and the hash are inextricably tied together. One drawback to this system is that if someone discovers the user’s private key, a digital signature could be forged. In an effort to create an encryption scheme that could be used by the average person, an entrepreneur named Philip Zimmermann created encryption software called Pretty Good Privacy (PGP).

Public key infrastructure (PKI) is the combination of encryption techniques, software, and services that involves all the necessary pieces to support digital certificates, certificate authorities, and public key generation, storage, and management. A digital certificate, or simply a certificate, is an electronic document, similar to a passport, that establishes your credentials when you are performing transactions on the World Wide Web. Many certificates conform to the X.509 standard. All certificates are issued by a certificate authority. A certificate authority (CA) is either specialized software on a network or a trusted third-party organization or business that issues and manages certificates. A certificate revocation list (CRL) is a list of certificates that have been revoked before their originally scheduled expiration date.

Techniques used to secure communications include:

• Spread spectrum technology
• Guarding against virus
• Firewalls
• Wireless security techniques

The two basic spread spectrum techniques commonly used in the communications industry today are frequency hopping spread spectrum and direct sequence spread spectrum. The idea behind frequency hopping spread spectrum transmission is to bounce the signal around on random frequencies rather than transmit it on one fixed frequency. Anyone trying to eavesdrop will not be able to listen because the transmission frequencies are constantly changing. It turns out that the signal does not actually bounce around on random frequencies; it only seems to do so. The transmitter actually follows a pseudorandom sequence of frequencies, and the intended receiver possesses the hardware and software knowledge to follow this pseudorandom sequence of frequencies.

The second technique for creating a spread spectrum signal to secure communications is direct sequence spread spectrum. Direct sequence spread spectrum spreads the transmission of a signal over a wide range of frequencies using mathematical values. The original data is input into a direct sequence modulator, it is exclusive-ORed with a pseudorandom bit stream. Thus, the output of the direct sequence modulator is the result of the exclusive OR between the input data and the pseudorandom bit sequence. When the data arrives at the intended receiver, the spread spectrum signal is again exclusive-ORed with the same pseudorandom bit stream that was used during the transmission of the signal. The result of this exclusive-OR at the receiving end is the original data.

A firewall is a system or combination of systems that supports an access control policy between two networks. The two networks are usually an internal corporate network and an external network, such as the Internet. A firewall can limit users on the Internet from accessing certain portions of a corporate network and can limit internal users from accessing various portions of the Internet. What types of transactions will a firewall stop, and what types of transactions will it not stop? It is possible for a firewall system to stop remote logins as well as inbound or outbound e-mails and file transfers. It is also possible for a firewall to limit inbound or outbound Web page requests. Firewalls, unfortunately, do not protect a network from all possible forms of attack. Because a virus can hide within a document, it will probably not be detected by a firewall if its host document is allowed into the system. A firewall also will not protect a computer or network properly if it is possible for an intruder to avoid the firewall and enter the system through an alternate route.

The packet filter firewall is essentially a router that has been programmed to filter out certain IP addresses or TCP port numbers. These types of routers perform a static examination of the IP addresses and TCP port numbers, then either deny a transaction or allow it to pass, on the basis of information stored in their tables. A proxy server is a computer running proxy server software, whose function is much like that of a librarian who controls access to books in a library’s rare books room. To keep costly books from getting damaged by vandalism or careless handling, many libraries do not allow patrons to enter their rare books room. Instead, a patron fills out an information request slip and hands it to a librarian. The librarian enters the rare books room and retrieves the requested volume. The librarian then photocopies the requested information from the book and gives the photocopies to the patron.

One of the biggest growing pains of wireless local area networks is security. Because virtually anyone can have a wireless laptop or other wireless device, it is almost impossible to control who can connect into a wireless local area network and from where.

The first security protocol for wireless LANs was Wired Equivalency Protocol (WEP). Although WEP was a step in the right direction, it suffered two serious drawbacks. First, WEP used weak encryption keys that were only 40 bits in length. Second, the keys were static, not dynamic. Fortunately, WEP has been replaced by a new standard, Wi-Fi Protected Access (WPA). WPA keeps the 40-bit-sized encryption keys of WEP but has one significant improvement: the inclusion of the Temporal Key Integrity Protocol (TKIP) and IEEE 802.1x features, which together provide dynamic key encryption and mutual authentication for wireless clients. A new standard, IEEE 802.11i, addresses both weaknesses of WEP by allowing the keys, encryption algorithms, and negotiation to be dynamically assigned, and by adopting the AES encryption based on the Rijndael algorithm with 128-, 192-, or 256-bit keys.

Having a well-designed security policy in place will make the jobs of network support staff clearer. A well-designed security policy will make enforcement more straightforward, and it will allow the staff to react properly to specific security requests. The staff employees will know what the network users can and cannot access, and where they can and cannot go. The policy will also make clear the goals and duties of network employees when they must enforce security with respect to requests from the outside. If a good security policy is available, the corporate users themselves will have a better understanding of what they can and cannot do. This understanding will, one hopes, assist the network staff members in conducting their jobs and will allow the company to maintain security in an increasingly less secure world.

There are some things I do like about celebrity financial adviser Suze Orman. But do her 1-size-fits-all answers really fit you?

There doesn’t seem to be much middle ground with Suze Orman. Her fans adore her. She drives other people right up the wall.

I knew that before I wrote a column disagreeing with her recent about-face on credit card debt. (She said that if you don’t already have a "fully funded" emergency account, you should pay only the minimums on any credit card debt until you do. I think that’s good advice for some, but bad for others.)

What surprised me, though, was how many people — Suze lovers and haters alike — interpreted my criticism of her advice as criticism of her.

Haters bashed her books, her popularity, even her clothes, for heaven’s sake, assuming I agreed. Defenders ripped into me for being envious of her fame. (Fame? Not so much. Massive net worth? Oh, yeah.)

Just for the record: I don’t hate Suze. I don’t always agree with her, either. Apparently, I’m one of the few people in America who occupies that lonely middle ground.

First, let me tell you what I like about Suze:

She got her CFP. If you’re going to take financial advice from anybody, whether she’s a celebrity or not, it should be from someone who at a minimum has training in comprehensive financial planning. People who get the Certified Financial Planner mark understand that there are many moving parts to a person’s finances and they learn about the importance of addressing all of them: debt, cash flow, investing, insurance, retirement, taxes, college savings, estate planning. People who lack this training often don’t know what they don’t know. They can give lopsided advice that favors their area of expertise but ignores the many other factors that affect your situation.

She’s not pushing get-rich-quick schemes. Although I’ll quibble on the details, overall Suze’s advice is sound, basic financial planning that will create wealth over time. She’s not touting stocks, commodity schemes or any other shortcuts to wealth. She isn’t trying to foist products for the wealthy (cash-value life insurance or annuities, for example) onto the middle class.

She’s got the touch. Suze connects with people in a way no other personal finance author ever has, or perhaps will again. Her books are mega-best sellers and her PBS specials have raised millions for public television because many, many people like what she has to say and the way she says it.

And that, I say, is a good thing. I’ve heard from so many people who love Suze because they were clueless about money and she made it understandable to them. Anyone who gets people started on the right path — to examine their spending, pay down their debt, start saving for retirement and get adequate insurance — is OK in my book.
Why Suze doesn’t need to follow her own advice
I’m also not at all bothered by the fact that most of her wealth is in low-risk municipal bonds.

Suze detractors are livid that she lectures her readers on the importance of investing in stocks when she has the bulk of her money elsewhere.

Yeah, well, I guess she also could drive a Taurus, clip coupons and fly coach. Here’s the thing: She doesn’t have to.

True financial planning is about taking the appropriate amount of risk. Those of us still saving for retirement need the inflation-beating returns stocks offer over the long run, and so we have to put up with the volatility stocks give us in the short run.

But if you’ve already made $30 million, why volunteer for that kind of risk? You don’t need big returns unless you’re trying to build some kind of dynasty for future heirs, which she’s not.

At those lofty levels of wealth, Suze’s primary concerns are likely to be preservation of her capital and reducing her tax bill. Given that, the municipal bonds in which she’s invested are a perfectly appropriate choice.

Great advice — for the right people
One criticism that does have merit is that Suze isn’t big on nuance. Of course, neither is her audience. They want to be told what to do, not listen to a long treatise about the potential advantages and drawbacks of various financial moves.

The problem with one-size-fits-all answers, though, is that they often don’t.

Let’s return to Suze’s advice about paying only the minimums. Yes, credit card companies are aggressively slashing limits, meaning that the credit you counted on tiding you through an emergency might not be there.

But not everyone is equally vulnerable. Someone with a steady job, high FICO scores and a ton of home equity needn’t worry as much about a credit card company cutting his limit as someone facing a layoff with maxed-out cards and lousy credit scores.

The fact that neither has an emergency fund is less important than their overall financial flexibility — the other resources they can tap into a crisis. The guy about to lose his job has fewer such resources and should make cash savings a priority. The other guy can rely on his home equity or just go get another credit card.

That’s the peril of offering personal finance advice to the masses, as Suze does and as I do. When it comes to personal finance, there is typically no single right answer. We can help you get started, but we’re no substitute for an experienced, objective financial planner who can look at your particular situation and offer individualized advice.Liz Pulliam Weston is the Web’s most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What’s at Stake." Weston’s award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

By Liz Pulliam Weston
MSN Money, Published May 15, 2009

The basic telephone system, or plain old telephone service (POTS), has been in existence since the early 1900s. During most of those years, POTS was an analog system capable of supporting a voice conversation. It wasn’t until the 1970s that POTS began carrying computer data signals as well as voice signals.

The local loop is the telephone line that leaves your house or business and consists of either four or eight wires. The central office (CO) contains the equipment that generates a dial tone, interprets the telephone number dialed, checks for special services, and connects the incoming call to the next point. A local access transport area (LATA) is a geographic area such as a large metropolitan area or part of a large state. A subscriber loop, such as the wire that runs between a house and the central office, has a unique telephone number associated with it. A trunk does not have a telephone number associated with it, because the trunk can carry hundreds of voice and data channels. A telephone number consists of three parts: the area code, the exchange, and the subscriber extension.

Telephone systems were originally designed to transmit the human voice. In practice, the telephone system actually allocates 4000 Hz to a channel and uses filters to remove frequencies that fall above and below each 4000-Hz channel. Any data transmission that is performed over a standard telephone line must fit within the fairly narrow band of 4000 Hz, which means the data transmission rate will also be limited.

Prior to 1984, AT&T (American Telephone and Telegraph) owned all the long-distance telephone lines in the United States, a majority of local telephone systems, and Bell Laboratories. In the 1970s, the federal government took AT&T to court, citing antitrust violations. AT&T lost the case, and in 1984 the court’s ultimate ruling, known as the Modified Final Judgment, required the divestiture, or breakup, of AT&T into separate companies. This breakup allowed AT&T to keep the long-distance lines and Bell Labs, but the company had to divest itself of all local telephone companies. At the time, AT&T consisted of 23 Bell Operating Companies (BOCs), which provided local telephone service across the country. As part of the divestiture, the 23 BOCs were separated from AT&T and were reorganized into 7 Regional Bell Operating Companies (RBOCs).

A number of other outcomes of the 1984 divestiture completely changed the landscape of the U.S. telephone system. For one, the United States was divided into the local access transport areas (LATAs) we just learned about. These LATAs determined when a telephone call was local or long distance. The breakup also allowed long-distance telephone companies other than Bell Telephone, such as MCI and Sprint, to offer competing long-distance services.

After the 1984 Modified Final Judgment the local telephone companies became known as local exchange carriers (LECs), and the long-distance telephone companies became known as interexchange carriers (IECs or IXCs).

A local exchange carrier offers a number of services, including Centrex, private and tie lines, and many other telecommunications services such as call waiting and conference calls. With Centrex, Businesses are spared the expense of having to keep up with fast-moving technology changes, because the telephone company is providing the hardware and the services, and the business is simply paying a monthly fee. An alternative to Centrex is the Private Branch Exchange (PBX). A PBX handles all in-house calls and places calls onto outside telephone lines. A PBX can also offer many telephone services such as voice mail, call forwarding, and dialing plans that use the least expensive local and long-distance telephone circuits. Private lines and tie lines are leased telephone lines that require no dialing.

An interexchange carrier, or long-distance telephone company, can also offer a large number of services, including credit card and calling card dialing; 700, 800, 888, and 900 access; international access; and operator and directory assistance.

A second major event in the recent history of the telecommunications industry occurred in 1996, with the passing of the Telecommunications Act of 1996. New providers of local telephone services were called competitive local exchange carriers (CLECs), and they could include interexchange carriers, cable television operators, small companies with virtually no equipment, and even the electric power company. The reasoning behind the development of CLECs was fairly straightforward and meant to better accommodate the way phone services were already being delivered.

Unfortunately, allowing all of these new local telephone providers into a market causes problems for the telephone lines. It is prohibitively expensive for a new telephone provider to install new telephone lines into each home and business. To solve this problem, ILECs must give CLECs access to their telephone lines. Furthermore, the ILECs must give competitors access to telephone numbers, operator services, and directory listings; access to poles, ducts, and rights-of-way; and physical co-location of equipment within ILEC buildings—and they must give these services at wholesale prices. Another interesting provision of the 1996 Telecommunications Act is that an ILEC must sell the CLECs access to the local dial tone at 17 to 28 percent less than the standard price.

When they were originally introduced many years ago, dial-up modems were capable of data transfer speeds of merely 150 to 300 bits per second. Fortunately, modem technology improved quickly, and soon data transfer speeds jumped to 1200 bps, then 2400 bps, and eventually reached what was thought to be a peak speed of 33,600 bps. Approximately two years after the 33,600-bps modem became available, the 56,000-bps, or 56k, modem was introduced.

The new 56k modems are a hybrid design, combining analog signaling and digital signaling. The upstream connection from modem to remote end still uses conventional analog signaling and modulation techniques, and thus is limited to a maximum transmission speed of 33,600 bps. The downstream link, however, is where the 56k modem really stands out. Instead of using analog signaling, the 56k modem employs digital signaling. When the telephone company transmits a digital 64-kbps telephone signal, the signal is transmitted digitally from one switching center to another. But when a telephone signal is transmitted into our homes and small businesses, it must be adjusted so that it can traverse the local loop. Before the telephone signal is transmitted over the local loop, the central office converts the digital signal to an analog signal. When the analog signal enters your house, your computer’s 56k modem converts the analog signal back to digital data, because computers manipulate digital data. When an analog signal is converted to digital data, quantizing noise is introduced. The presence of this noise is the reason it is not possible to transmit a 64-kbps data stream into the local loop. But a smaller data stream, of approximately 56 kbps, is possible. As it turns out, receiving a 56,000-bps signal is not possible either. Because noise is a bigger factor, the signal slows down more, to approximately 53,000 bps.

Private lines and tie lines are leased telephone lines that require no dialing. They are permanent direct connections between two specified points. Consider a company that has two offices in the same city that are always transferring data back and forth. To connect these offices, the company could use a dial-up telephone line with two modems, but because many telephone companies charge for all calls made, a dial-up line would be very expensive. A leased line might offer a less expensive alternative, and it will always be connected—which means an employee in one office never has to dial a telephone number to contact an employee in the other office.

The most popular example of a leased line service was the T-1. A T-1 service is an all-digital connection that can transfer either voice or data at speeds up to 1.544 Mbps (1,544,000 bits per second). Depending on the user’s wishes, the T-1 line can support up to 24 individual telephone circuits, 24 individual data lines at 56,000 bits per second each, or various combinations of these options. Like all leased line services, a T-1 connection is a point-to-point service and is always active. IntraLATA T-1 lines typically cost approximately $350 to $400 per month, while interLATA T-1 lines can cost as much as $1200 per month plus $2.50 per mile for the connection.

Digital subscriber line (DSL) is a technology that allows existing twisted pair telephone lines to transmit multimedia materials and high-speed data. The transfer speed of a particular line depends on one or more of the following factors: the carrier providing the service, the distance of your house or business from the central office of the local telephone company, and whether the DSL service is a symmetric connection or an asymmetric connection. The first of these factors, the carrier, determines the particular form of DSL technology and the supporting transmission formats, which are chosen by each carrier individually. The effect of the second factor, distance, on the transfer speed of a line is relatively straightforward: the closer your house or business is to the central office, the faster the possible transmission speed. The third factor affecting transfer speed is the type of connection: symmetric or asymmetric. A symmetric connection is one in which the transfer speeds in both directions are equal. An asymmetric connection has a faster downstream transmission speed than its upstream speed. An asymmetric service is useful for an Internet connection in which the bulk of the traffic (in the form of Web pages) comes down from the Internet to the workstation. Most residential DSL services are asymmetric.

Digital subscriber line comes in a variety of formats. Often collectively referred to as xDSL, six DSL formats are in use today:

• Asymmetric digital subscriber line (ADSL)—A popular format that transmits the downstream data at a faster rate than the upstream rate.
• Consumer DSL (CDSL)—A trademarked version of DSL with speeds that are a little slower than typical ADSL speeds.
• DSL Lite—A slower format compared to ADSL; also known as Universal DSL, G.Lite, and splitterless DSL
• High bit-rate DSL (HDSL)—The earliest form of DSL, this format provides a symmetric service with speeds usually equivalent to a T-1 service (1.544 Mbps).
• Very high data rate DSL (VDSL)—Also known as very high-speed DSL and very high bit-rate DSL, this is a very fast format (between 51 and 55 Mbps) over very short distances (less than 300 meters).
• Rate-adaptive DSL (RADSL)—RADSL is a format in which the transfer rate can vary, depending on noise levels within the telephone line’s local loop.

A cable modem is a high-speed communications service that allows high-speed access to wide area networks such as the Internet via a cable television connection. Technically speaking, a cable modem is a physical device that separates the computer data from the cable television video signal. Most cable modems are external devices that connect to the personal computer through a common Ethernet network interface card, which is either provided by the cable company or purchased at most stores that sell computer equipment. Cable modems provide high-speed connections to the World Wide Web and other Internet services, and the demand for them is growing rapidly.

A disadvantage of cable modems—quite possibly their only disadvantage—is related to a new trend. As traffic on Ethernet-based local area networks increases, overall throughput decreases (the ability to send or receive a complete message). Thus, as more customers within a local geographic area, such as a small number of neighborhood blocks, subscribe to cable modem service, traffic will increase to the point where throughput may suffer noticeably.

Frame relay is a packet-switched network that was designed for transmitting data over fixed lines (not dial-up lines). The frame relay service can be either a local service or a long-distance service. Once the service is established, the customer needs only to transmit his or her data over a local link to a nearby frame relay station. The frame relay network is then responsible for transmitting the user’s data across the network and delivering it to the intended destination site. A frame relay service provides many attractive alternatives to leased lines. One of the first noticeable characteristics of a frame relay network is its very high transfer speeds. The data transfer speeds can be very fast, up to 45 Mbps and sometimes even higher. Another advantage associated with frame relay is that their error rates during transmission are low. Last, frame relay networks are reasonably priced.

The permanent connection that is necessary to transfer data between two endpoints is called a permanent virtual circuit (PVC). When a customer establishes a permanent virtual circuit with a frame relay carrier, both customer and carrier agree on a data transfer rate called the committed information rate (CIR). Both frame relay and the Internet are packet-switched networks with widespread availability. Unlike the Internet, frame relay guarantees throughput and minimum delay. Frame relay was originally designed and used to transfer packets of data between two sites more cost effectively than leased lines could. Voice over Frame Relay (VoFR), as defined in the published standard FRF.11, allows the internal telephone systems of companies to be connected using frame relay PVCs. One of the latest developments in frame relay networks eliminates the disadvantage that a frame relay connection is not, like the Internet, dynamic in nature. A switched virtual circuit (SVC) enables frame relay users to dynamically expand their current PVC networks and establish logical network connections, on an as-needed basis, to endpoints on the same network or through gateways to endpoints on other networks.

Asynchronous Transfer Mode (ATM), like frame relay, is a very high-speed, packet-switched service that is offered by the telephone companies. ATM has several unique features that set it apart from frame relay and other packet services. In ATM, all data is sent in small 53-byte packages called cells. ATM networks were designed to simultaneously support voice, video, and data. Before ATM can transfer any data, you must first create a logical connection called a virtual channel connection (VCC). This VCC must be created over a virtual path connection. A virtual path connection (VPC) is a bundle of VCCs that have the same endpoints. When a VCC transmits user-to-network control signaling, the connection is called the user-network interface. When a VCC transmits network management and routing signals, it is called the network-network interface.

With ATM, the customer specifies a desired class of service for every VCC that is set up. ATM has defined four classes of service:

• Constant bit rate (CBR)—CBR is the most expensive class of service and is similar to a current telephone system leased line.
• Variable bit rate (VBR)—VBR is used for real-time applications and is similar to frame relay service.
• Available bit rate (ABR)—ABR is also used for traffic that may experience bursts of data, called “bursty” traffic, and whose bandwidth range is roughly known, such as that of a corporate collection of leased lines.
• Unspecified bit rate (UBR)—UBR is also capable of sending traffic that might experience bursts of data, but there are no promises as to when the data may be sent— and if congestion problems occur, congestion feedback is not provided (as is provided with ABR).

ATM has a number of significant advantages. ATM can support a wide range of applications with varying bandwidths, at a wide range of transmission speeds. Cell switching, which is performed by ATM’s high-speed, hardware-based switches that route cells down the appropriate path, is so fast that it provides short delays and high bandwidths. ATM’s different classes of service allow customers to choose service type and pricing individually for each data connection (VCC). Finally, ATM is extremely versatile. It can carry voice, packet data, and video over the same facilities. ATM also has a number of disadvantages. It is often more expensive than other data transmission options. Due to the complexity of ATM, the learning curve for setting up and managing the network is high. Lastly, compatible hardware and software may not be widely available.

Although convergence is an important trend in many areas of data communications and computer networks, it has had a particularly noticeable impact on the telecommunications market. We are seeing a number of telephone companies merging into single entities. Another important convergence issue is the speculation that data services such as frame relay and ATM may eventually give way to Ethernet.

Computer-telephony integration (CTI) is an emerging field that combines more traditional voice networks with modern computer networks. CTI integrates the PBX phone switch with computer services to create modern voice and data applications that run on computer systems. Using CTI has three advantages. First, it creates new voice/data business applications that can save companies time. Second, it makes optimal use of current resources. Third, it saves money. These advantages mean that businesses can realize many benefits from CTI applications. For example:

• Unified messaging
• Interactive voice response
• Integrated voice recognition and response
• Fax processing and fax-back
• Text-to-speech and speech-to-text conversion
• Third-party call control
• PBX graphic user interface
• Call filtering
• Customized menuing systems

This week, Microsoft confirmed that it would soon be releasing a free antivirus product that can run Windows versions all the way back to XP. That puts the company on target to deliver the product, code named Morro, that they announced last November to replace the paid OneCare product that meet its end this month.

It’s been a long trip to this point for Microsoft. When Windows viruses began to cause a problem in the mid-1990s, Microsoft all but ignored the problem, creating a lucrative business for companies like Symantec and McAfee in the process. Microsoft started to address the problem with the free Windows Defender, which evolved from their purchase of the GIANT AntiSpyware product in late 2004. The Malicious Software Removal Tool, delivered through Windows Update, is a batch scan-and-clean tool that targets specific high-prevalence viruses. Neither product is a full-spectrum solution to prevent users from catching viruses in the first place. The lack of full antivirus protection in Windows has meant that users and businesses need to pay an additional $50 to $100 a year to keep a PC secure.

Finally, it seems like Morro will deliver the final piece. Microsoft will be offering full-spectrum protection from both virus and spyware threats without an extra cost. I wonder how that will change the typical user’s out-of-box experience. Many PC makers get a significant cut of the money earned by convincing users to sign up for a third-party antivirus. Those offers often exploit users by lowballing the initial subscription price, then renewing at a much higher price. Free may be good for users, but PC makers may not feel the same way.

This doesn’t mean the end of the road for security companies like Symantec and McAfee. Large businesses will want reporting, remote management, and customizability that a free consumer product like Morro won’t deliver. Third-party security companies will also do their best to convince PC users that Morro is not good enough for even consumer or small business use. I am looking forward to seeing how good it really is.

Posted by Dave Methvin, Jun 14, 2009 10:03 PM
http://www.informationweek.com/blog/main/archives/2009/06/microsoft_free.html?print=true

Your Nutrition IQ is High

Good for you! You definitely know your way around the grocery store (or the farmer’s market or the menu or the … you get the idea). Hopefully you’re putting this amazing knowledge into practice every day, while making sure you’re giving yourself a delicious treat now again. Everyone needs to splurge!

Click here for the answers to the Nutrition IQ quiz!
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What’s Your Nutrition IQ? (Take It and Compare to Mine)

HAI continues to track credit card and banking legislation, an issue that affects all of our members, as both the House and Senate take on the credit card industry this week by considering legislation that would curb certain credit card practices that consumer activists have labeled abusive.

The Senate Banking Committee will mark up Chairman Christopher Dodd’s (D-Connecticut) bill to prohibit banks from raising interest rates for any reason, limiting such action to specific instances such as expiration of a teaser rate or a default on the account. The bill would limit penalty rates to six months if there are no other violations, prohibit penalty fees upon a payment mailing seven days prior to due date, and require that statements must be mailed out within 21 days of a due date.

Dodd’s bill would also eliminate double-cycle billing, where an institution assesses interest on the entire amount charged during one month unless the bill was paid in full.

The House Financial Services Financial Institutions Subcommittee will mark up a similar bill sponsored by Congresswoman Carolyn Maloney (D-New York).  The Federal Reserve last year issued rules cracking down on some questionable practices, but consumer groups said it did not go far enough and were upset that they would not be implemented until July of 2010. The Maloney Bill would implement such changes 90 days after enactment.

HAI reports a retailer coalition has launched a campaign to persuade eight House Financial Services Committee members to endorse an effort to curb the fees that banks charge merchants for using a credit or debit card. The lawmakers being targeted are junior members on the panel and lawmakers from swing districts. The merchants are protesting the fee, which averages 1.75 percent, that they are charged for using Visa and MasterCard networks to process each debit- and credit-card transaction, arguing that they have no say in the pricing and that rules are arbitrary. The fees totaled $48 billion in 2008. Banks dispute the contention, saying that merchants are looking to reduce their costs, not pass savings on to consumers.

In the last Congress, the coalition pushed a measure that would require Visa and MasterCard to negotiate with them on lowering the fee. The House Judiciary Committee approved it, 19-16, but it was stalled in a jurisdictional spat with House Financial Services Chairman Barney Frank. Since then, however, Frank has indicated an expanded interest in the issue because of the similar factors behind it and behind subprime mortgages.

Posted on Monday, March 30, 2009 by rotornews

The Internet Protocol (IP) provides a connectionless data transfer service over heterogeneous networks by passing and routing IP datagrams. To be passed and routed on the Internet, all IP datagrams or packets that are passed down from the transport layer to the network layer are encapsulated with an IP header that contains the information necessary to transmit the packet from one network to another.

Consider the example of a workstation performing a network operation such as sending an e-mail message to a distant workstation. Suppose both workstations are on local area networks, and the two local area networks are connected via a wide area network. As the local workstation sends the e-mail packet down through the layers of the first internal network, the IP header is encapsulated over the transport layer packet, creating the IP datagram. The appropriate MAC layer headers are encapsulated over the IP datagram, creating a frame, and this frame is sent through LAN 1 to the first router. Because the router interfaces LAN 1 to a wide area network, the MAC layer information is stripped off, leaving the IP datagram. At this time, the router may use any or all of the IP information to perform the necessary internetworking functions. The necessary wide area network level information is applied, and the packet is sent over the WAN to Router 2. When the packet arrives at the second router, the wide area network information is stripped off, once again leaving the IP datagram. The appropriate MAC layer information is then applied for transfer of the frame over LAN 2, and the frame is transmitted. Upon arrival at the remote workstation, all header information is removed, leaving the original data.

The primary function of Transmission Control Protocol (TCP) is to turn an unreliable network (such as the one created by IP) into a reliable network that is free from lost and duplicate packets. To make a network more reliable, TCP (as well as most transport layer protocols) performs the following six functions:

• Create a connection—The TCP header includes a port address that indicates a particular application on a machine. Used in conjunction, the port address and the IP address identify a particular application of a particular machine. When TCP creates a connection between a sender and a receiver, the two ends of the connection use a port number to identify the particular application’s connection.
• Release a connection—The TCP software can also dissolve a connection after all the data has been sent and received.
• Implement flow control—To make sure the sending station does not overwhelm the receiving station with too much data, the TCP header includes a field, called the Window value, that allows the receiver to tell the sender to slow down. This Window value is similar in operation to the sliding window used at the data link layer.
• Establish multiplexing—Because the TCP header includes a port number instead of an IP address, it is possible to multiplex multiple connections over a single IP connection. This multiplexing can be done by creating a different connection that has a port number different from a previous connection.
• Perform error recovery—TCP numbers each packet for transmission with a sequence number. As the packets arrive at the destination site, the receiving TCP software checks these sequence numbers for continuity. If a loss of continuity occurs, the receiving TCP software uses an acknowledgment number to inform the sending TCP software of a possible error condition.
• Establish priority—If the sender has to transmit data of a higher priority, such as an error condition, TCP can set a value in a field (the Urgent Pointer) that indicates that all or a portion of the enclosed data is of an urgent nature.

The Internet Control Message Protocol (ICMP), which is used by routers and nodes, performs error reporting for the Internet Protocol. All ICMP messages contain at least three fields: a type, a code, and the first eight bytes of the IP datagram that caused the ICMP message to be generated.

User Datagram Protocol (UDP) is a no-frills transport protocol that does not establish connections, does not attempt to keep data packets in sequence, and does not watch for datagrams that have existed for too long. Its header contains only four fields—Source Port, Destination Port, Length, and Checksum—and it is used by a small number of network services, such as DNS that do not need to establish a connection before sending data.

Address Resolution Protocol (ARP) takes an IP address in an IP datagram and translates it into the appropriate medium access control layer address for delivery on a local area network.

The most popular protocol that handles dynamic assignment is Dynamic Host Configuration Protocol (DHCP). When a workstation running the DHCP client software needs to connect to the Internet, the protocol issues an IP request, which prompts the DHCP server to look in a static table of IP addresses. If this particular workstation has an entry, then that IP address is assigned to that workstation. But if the static table has no entry, the DHCP server selects an IP address from an available pool of addresses and assigns it to the workstation.

Network Address Translation (NAT) lets a router represent an entire local area network to the Internet as a single IP address. When a user workstation on a company local area network sends a packet out to the Internet, NAT replaces the IP address of the user workstation with a corporate global IP address.

A virtual private network (VPN) is a data network connection that makes use of the public telecommunications infrastructure but maintains privacy through the use of a tunneling protocol and security procedures. A tunneling protocol, such as the Point-to- Point Tunneling Protocol (PPTP), is the command set that allows an organization to create secure connections using public resources such as the Internet. It is an extension of the Internet’s Point-to-Point Protocol (PPP), which is used for communication between two computers using a serial connection.

The World Wide Web is a vast collection of electronic documents containing text and images that can be accessed by simply clicking a link within a browser’s Web page. The browser uses HTTP to transmit and receive Web pages and HTML to display those Web pages.

Hypertext Markup Language (HTML) is a set of codes inserted into a document that is intended for display on a Web browser. The codes, or markup symbols, instruct the browser how to display a Web page’s text, images, and other elements. The individual markup codes are often referred to as tags and are surrounded by angle brackets (< >). Most HTML tags consist of an opening tag, followed by one or more attributes, and a closing tag. Closing tags are preceded by a forward slash (/). Attributes are parameters that specify various qualities that an HTML tag can take on.

Rather than functioning as a single specification, dynamic HTML (DHTML) is a collection of newer markup tags and techniques that can be used to create more flexible and more powerful Web pages. HTML pages are simple, static text documents that browsers read, interpret, and display on the screen. In contrast, dynamic HTML pages have additional functionality that allows them to be, among other things, interactive.

eXtensible Markup Language (XML) is a subset of SGML and is a specification for how to create a document—the specification covers both the definition of the document and the contents of the document. That is, whereas HTML determines only how the content of a document is to be displayed by a Web browser, XML also defines the content of the document. The syntax of XML is fairly similar to that of HTML; however, a number of very important differences exist. First, XML is extensible, which means a user can define his or her own tags. Second, XML is much less forgiving than HTML. XML documents have many more precise rules for the creation of tags and the elements within a document.

When referencing an Internet site, we often refer to its domain name. Computers, however, do not use domain names. They use 32-bit binary addresses called IP addresses. To make IP addresses a little easier to understand, these 32-bit binary addresses are represented by dotted decimal notation. This dotted decimal notation is created by converting each 8-bit string in the 32-bit IP address into its decimal equivalent. But even the decimal equivalent to the IP address is not convenient for us. The Domain Name System (DNS) is used to convert the binary forms into English-based domain names, and vice versa.

DNS is a large distributed database of Internet addresses and domain names. This distributed database consists of a network of local DNS servers, mid-level DNS servers, and higher-level DNS servers. To keep the system manageable, the DNS database is distributed according to the top-level domains: edu, gov, com, mil, and so on. Converting a domain name into a binary IP address can be simple or complicated. The level of complexity depends on whether or not a local network server on the originating local area network recognizes the domain name. If a network server cannot resolve an address locally, it will call upon a higher authority. A local DNS server will send a DNS message to the next higher DNS server until the address is found, or it is determined that the address does not exist. If the address does not exist, an appropriate message is returned.

The Internet consists of many commonly used network applications. Electronic mail, or e-mail, is a standard requirement for most business operations and can transfer standard text messages and include MIME-encoded attachments. Protocols such as Simple Mail Transfer Protocol (SMTP), Post Office Protocol version 3 (POP3), and Internet Message Access Protocol (IMAP) support the operations of e-mail.

File Transfer Protocol (FTP) is useful for uploading or downloading files across the Internet. FTP was one of the first services offered on the Internet. Remote login using Telnet allows an individual to log in to a remote computer site and perform operations as if the user were physically located at the remote site. VoIP (Internet telephony) offers an inexpensive alternative to long-distance calling, but with questionable quality. The Internet was not designed to transfer realtime data, which is a capability that is necessary to support interactive voice. Nevertheless, many businesses are embracing VoIP internally as a way to deliver combined voice and data applications. The VoIP gateway can perform the digitization, compression, and encapsulation required, and it controls the setup of VoIP calls between the calling device and the called device.

A listserv is a popular software program used to create and manage Internet mailing lists. Listserv software maintains a table of e-mail addresses that reflects the current members of the listserv. When an individual sends an e-mail to the listserv address, the listserv sends a copy of this e-mail message to every e-mail address stored in the listserv table. Streaming audio and video are the continuous downloading of a compressed audio or video file, which is then heard or displayed on the user’s workstation. Streaming audio and video require support protocols such as Real-Time Protocol (RTP) and Real-Time Streaming Protocol (RTSP). Finally, instant messaging is growing in popularity as a way to maintain real-time communications between multiple users. instant messaging (IM) allows a user to see if people are currently logged in on the network and, if they are, to send them short messages in real time.

The term that has come to represent a business’s commercial dealings over the Internet is e-commerce. To understand the important issues and trends associated with this intersection between technology and business, let’s subdivide e-commerce into the following four areas:

• E-retailing—the electronic selling and buying of merchandise using the Web.
• Electronic data interchange (EDI)— the electronic commercial transaction between two or more companies.
• Micro-marketing—the gathering and use of the browsing habits of potential and current customers, which is important data for many companies.
• Internet security—The security systems that support all Internet transactions are also considered an important part of e-commerce.

One feature of the Web that many businesses use and that has received a good deal of negative publicity is the cookie. A cookie is data created by a Web server that is stored on the hard drive of a user’s workstation. This data, called state information, provides a way for the Web site that stored the cookie to track a user’s Web-browsing patterns and preferences.

An intranet is a TCP/IP network inside a company that allows employees to access the company’s information resources through an Internet-like interface. Using a Web browser on a workstation, an employee can perform browsing operations, but the applications that can be accessed through the browser are available only to employees within the company. When an intranet is extended outside the corporate walls to include suppliers, customers, or other external agents, it becomes an extranet.

The Internet is not a static entity. It continues to grow by adding new networks and new users every day. One of the biggest changes to affect the Internet will be the adoption of a new version of the Internet Protocol, version IPv6. Several notable differences exist between IPv6 and the current IPv4. The first concerns addressing. IPv4 uses 32-bit addresses, IPv6 calls for addresses to be 128 bits long. Significant changes were also made to the IP header between version 4 and IPv6. In IPv6, the IP header contains eight fields, plus the payload (data) and optional extension headers. IPv6 offers better security, with two extension headers devoted entirely to security. Finally, IPv6 provides more choices in type of service. This last improvement to the IP protocol relates to quality of service (QoS), which is an important part of modern networks. It is a very useful tool if a user can specify a particular level of service, and the network can support that level.

In addition to the transition from IPv4 to IPv6, a plan is in the works to implement a newer, very high-speed network that will cover the United States, interconnecting universities and research centers at transmission rates up to a gigabit per second (1000 Mbps). The new high-speed network is called Internet2. Internet2 has targeted a number of primary application areas, including digital libraries, tele-immersion, and virtual laboratories. A digital library is an electronic representation of books, periodicals, papers, art, video, and music. With Internet2’s virtual laboratories, it is possible to create realistic lab surroundings without the expense of brick-and-mortar facilities.

Your IQ Score is: 131

You are gifted with the natural fluency of a writer and the visual and spatial strengths of an artist. Those skills contribute to your creative and expressive mind. Insightful linguists can take complex concepts and articulate them to just about anyone. You have a gift with words and insight into processes and the way people think. These talents enable you to explain things clearly to people. Helen Keller is a great example of an Insightful Linguist. Blind, deaf and mute, she was still able to put things together in her mind and to understand complex ideas. She could do that because she was able to conceptualize ideas internally. Though she could not literally see, she had the visual and spatial skills necessary to understand patterns on an abstract level. She learned to read, write and ultimately became a writer on issues of social justice. You have an uncanny ability to work your way out of sticky situations using your talent with words. Crossword puzzles, debates — you’re particularly well equipped to come out on top since you can read people well. Like Charles Dickens, your verbal skills go far beyond having a good vocabulary. Dickens’ genius was in the artful and descriptive way he crafted sentences. Also Dickensian, is your keen eye for detail and your adeptness for identifying the best way to express an idea based on your given surroundings and circumstances. Your ability to communicate your vision clearly will take you far. So enjoy being perceptive, and make the most of your abilities as an insightful linguist.

View My Test Q Profile
The Classic IQ Test (Take It and Compare to Mine)

After a number of delays, credit score creator FICO (formerly known as Fair Isaac) finally introduced its updated scoring model in late January 2009. That new credit scoring model — known as FICO 08 — is designed to more accurately predict consumer borrowing behavior, such as the likelihood that a borrower will be able to repay a loan.

In order to do that, FICO has re-weighted some of the key elements that go into the calculation of a consumer’s credit score. Using scenarios provided by FICO, the following examples show what impact the new FICO 08 scoring model could have on the credit scores of similar borrowers who fall into one of three categories: higher-risk consumers, thin-file consumers who lack significant credit history and mainstream consumers.

Click through the scenarios below to see how the existing credit scores of Jose and Alicia, Jennifer and Bill, and Isabel and Fred change under the FICO 08 model.

http://www.creditcards.com/credit-card-news/fico-08-formula-affect-consumer-credit-score-1270.php
By Anna Bleker and Jeremy M. Simon
Published: March 30, 2009

A local area network is typically confined to a single building or set of buildings that are in close proximity (as in a campus). A network that expands into a metropolitan area and exhibits high data rates, high reliability, and low data loss is called a metropolitan area network (MAN). A network that expands beyond a metropolitan area is a wide area network. Wide area networks share a few characteristics with local area networks—they interconnect computers, use some form of medium for the interconnection, and support network applications. Substantial differences exist, however, between wide area networks and local area networks. For example, wide area networks include both data networks (such as the Internet) and voice networks (such as telephone systems), whereas local area networks in most cases include only data networks

Many of the same technologies and communications protocols found in local area networks (and wide area networks) are used to create metropolitan area networks. Yet MANs are often unique with respect to topology and operating characteristics. A few characteristics distinguish MANs from LANs. MANs cover much greater distances than LANs do. A second characteristic that distinguishes MANs from LANs (but not necessarily from WANs) is that most MANs can recover very quickly from a link or switch/router failure. A third characteristic that distinguishes many MANs from both LANs and WANs is that some MAN topologies are based on a ring. Last, a feature that is beginning to appear in MANs but that neither LANs nor WANs currently have is the ability of a user to dynamically allocate more bandwidth on demand.

Metropolitan area networks are based upon either SONET or Ethernet backbones. SONET backbones consist of fiber-optic rings, while Ethernet backbones are mesh networks. A Metro Ethernet service provides an Ethernet interface to a business and can transfer data at high rates over metropolitan areas.

Wide area networks cover larger geographic areas than both local area networks and metropolitan area networks, and they are based on potentially different physical sub-networks—circuit-switched, packet-switched, and broadcast. A sub-network is a collection of nodes and interconnecting telecommunications links.

A circuit-switched network creates a dedicated circuit between sender and receiver, and all data passes over this circuit. One of the best examples of a circuit-switched network is the dial-up telephone system. When someone places a call on a dial-up telephone network, a circuit, or path, is established between the person placing the call and the recipient of the call. This physical circuit is unique, or dedicated, to this one call and exists for the duration of the call. The information (the telephone conversation) follows this dedicated path from node to node within the network.

A packet-switched network transmits fixed-sized packages of data called packets. Packet-switched networks fall into two subcategories—datagram networks and virtual circuit networks. The datagram packet-switched network transmits each packet independently of every other packet. Each packet is considered a single entity and is not part of a larger grouping of packets. As each packet arrives at a node, a decision is made as to which path the packet will follow next. This dynamic decision making allows for great flexibility should the network experience congestion or failure. The virtual circuit packet-switched network creates a virtual circuit using routing tables and transmits all packets belonging to a particular connection over this virtual circuit. When the data arrives with the address of that particular virtual circuit, the router simply sends the data out the router connection that is associated with that virtual circuit. When the data transfer is complete, the temporary path is dissolved.

A broadcast network transmits its data to all workstations at the same time. Broadcast networks are more often used in local area networks than in wide area networks.

The network application that runs over a sub-network can be either connection oriented or connectionless. A connection-oriented network application provides some guarantee that the information traveling through the network will not be lost and that the information packets will be delivered to the intended receiver in the same order in which they were transmitted. To provide this service, a logical connection is established before any data transfer takes place. For example, consider the following scenario. A bank wants to transfer a large sum of money electronically to a second bank. The first bank creates a connection with the second bank. As part of establishing this connection, the two banks agree to transfer the funds using data encryption. After the first bank sends the transfer request, the second bank checks the request for accuracy and returns an acknowledgment to the first bank. The first bank will wait until the acknowledgment arrives before doing anything else. All packets transferred during this period are part of this connection and are acknowledged for accuracy. If this is the only electronic transfer, the first bank will say goodbye, and the second bank will acknowledge the goodbye.

A connectionless network application does not require a logical connection to be made before data is transferred. Thus, a connectionless application does not guarantee the delivery of any information or data. A common example of a connectionless network application is DNS, a program that converts a URL, such as www.cs.depaul.edu, into an IP address. When you request a Web page using its URL, no connection is created between you and the DNS system. You simply click the browser button, and DNS converts the URL of the request into an IP address and sends the request along.

Selecting the optimal route for the transfer of a data packet through a network is a common service of many networks. This optimal route is obtained by combining two or more of the many routing algorithms and techniques available today. One possible way to select an optimal route through a network is to choose a path whose total path costs have the smallest value. This technique is based on Dijkstra’s least-cost algorithm and is a common method for determining the optimal route.

Centralized routing is a technique for providing routing information that dictates that the routing information, which is generated by a method such as the least-cost algorithm, be stored at a central location within the network. Whenever any router in a network needs routing information, this central location is queried and the routing results are returned. These days, centralized routing is rarely used in wide area networks.

Another technique for providing routing information, distributed routing allows each node to maintain its own routing table. When a data packet enters the network at node x, that node consults its own routing table to determine the next node that should receive the packet. One of the primary advantages of distributed routing is the fact that no single node (or central router) is responsible for maintaining all routing information. One disadvantage of distributed routing is related to the problems that arise if the routing tables need to be updated.

Centralized and distributed routing are methods for sending routing information. Regardless of whether routing information is centralized or distributed, when networks change, routing information needs to change too. Adaptive routing is a dynamic technique in which routing tables react to network fluctuations, such as congestion and node/link failure. When a problem occurs in a network with adaptive routing, the appropriate information is transmitted to the routing tables, and new routes that avoid the problem areas are created. Unfortunately, adaptive routing can add to network congestion.

The opposite of adaptive routing is fixed routing. With fixed routing, routing tables are created once, typically when the network is installed, and then never updated again. While this method is simple and eliminates the need for routers to talk to one another (thus avoiding additional traffic), it can also yield networks with out-of-date information and thus inefficient or slow routing.

Flooding states that each node takes the incoming packet and retransmits it onto every outgoing link. For example, assume a packet originates at Node A. Node A simply transmits a copy of the packet on every one of its outgoing links. Thus, a copy of the packet (the first copy, or copy 1) is sent to Nodes B, C, and D. When the packet arrives at Node B, B simply transmits a copy of the packet to each of its outgoing nodes (D, E, and G). Likewise, Node C will transmit a copy of the packet to each of its outgoing nodes (F and G). Node D will also transmit a copy of the packet to each of its outgoing nodes (B, E, F, and G).

To prevent the quantity of copied packets from becoming overwhelming, two common-sense rules can be established. First, a node need not send a copy of the packet back to the link from which the packet just arrived. Second, a network limit, called the hop limit, can be placed on how many times any packet is copied. Each time a packet is copied, a counter associated with the packet increases by one. This counter is called the hop count. When the hop count equals the network hop limit, this particular packet will not be copied anymore. For example, suppose the network has a hop limit of 3. When Node A first sends copies to B, C, and D, each of the three copies has a hop count of 1. When the packet arrives at Node C, copies with hop counts of 2 will be sent to F and G. When the copy arrives at Node F, two copies with hop counts of 3 will be transmitted to D and G, and the packets that arrive at D and G with hop counts of 3 will go no farther.

When a network or a part of a network becomes so saturated with data packets that packet transfer is noticeably impeded, network congestion has occurred. Congestion may be the result of too much traffic, network node failure, network link failure, or insufficient nodal buffer space. If the network cannot quickly detect the point of failure and dynamically route around this point, it may experience a wide range of congestion problems, from a small slowdown on an individual link to total network collapse. Even if the network were to begin the rerouting process, it might still experience congestion because one less network path would be available. Remedies for network congestion include implicit congestion control, explicit congestion control, flow control, preallocation of nodal buffers, and connection admission control parameters. When an application is simply observing its own throughput and not relying on any special types of signals coming from the network, this is called implicit congestion control. When the network signals the transmitting station to slow down, this is called explicit congestion control. In buffer preallocation, before one node sends a series of n packets to another node, the sending node inquires in advance whether the receiving node has enough buffer space for the n packets. If the receiving node has enough buffer space, it sets aside the n buffers and informs the sending node to begin transmission.

Quality of service (QoS) parameters can be used by network users and the service providers to establish acceptable guidelines for the proper transfer of data. These guidelines can cover transmission speed, level of errors, and overall network throughput. Unfortunately, only one network technology successfully supports connection admission control and quality of service, and that is Asynchronous Transfer Mode. Most ATM systems can provide a range of services from high-speed constant bit rate down to slower-speed bit rate on demand.

Wells Fargo said early Friday that it would merge with Wachovia — including the troubled Charlotte bank’s banking operations — in a $15.1 billion all-stock merger.

The announcement comes only four days after Citigroup reached an agreement in principle to buy Wachovia’s banking operations for about $1 a share, at the government’s behest and with a guarantee to absorb most of the losses on Wachovia’s massive loan portfolio. That deal, which Wachovia now appears to be spurning, would have left the Charlotte bank with only its securities and retail brokerage businesses.

Wells Fargo, based in San Francisco and considered one of the strongest banks amid the market turmoil, said that the deal requires no assistance from the Federal Deposit Insurance Corporation or any other government agency. It will raise up to $20 billion by issuing new shares, primarily common stock.

“Today’s announcement creates one of the strongest financial firms in the world and is great for all Wachovia constituencies: our shareholders, customers, colleagues and communities,” Robert K. Steel, Wachovia’s chief executive, said in a statement. “This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support.”

Wells Fargo had expressed interest in buying Wachovia as late as Sunday, but suddenly withdrew from negotiations to buy the company, citing concerns over some of the bank’s loan portfolio. Citigroup then received the blessing of the FDIC to acquire Wachovia’s banking operations — but the government agency allowed the banking giant to absorb only the first $42 billion of Wachovia’s riskiest mortgages, in return for $12 billion in preferred stock and warrants.

In its statement, Wells Fargo trumpeted its intention to buy Wachovia without such assistance.

“This agreement is an outstanding opportunity for Wachovia common and preferred shareholders and debt holders, team members and customers, for the Charlotte and St. Louis communities and indeed all of the communities that Wachovia serves, and for the U.S. government and our banking system,” Richard Kovacevich, Wells Fargo’s chairman, said in a statement.

By acquiring Wachovia, Wells Fargo will now gain the big retail banking network it has long sought. Though it has long been well-regarded by bank analysts and observers — and counts Warren E. Buffett as one of its largest shareholders — the firm has not had a significant presence east of the Mississippi.

Wachovia’s retail banking management team is also considered among the strongest in the industry, so much so that Citigroup said earlier this week that it had planned to consolidate its own operations into Wachovia’s.

Under the terms of the deal, Wachovia shareholders will receive 0.1991 shares of Wells Fargo common stock. Based on Wells Fargo’s Thursday closing price of $35.16 a share, that amounts to $7 a share. In addition, three Wachovia directors will join Wells Fargo’s board.

Wachovia shares, which had plummeted below $2 before its Citigroup deal was announced, climbed back, closing at $3.91 on Thursday. They surged more than 53 percent in premarket trading on Friday to $6.53.

The big question about Wachovia has been its loan portfolio, which has been saddled with billions of dollars in troublesome adjustable-rate mortgages it acquired from its merger with Golden West Financial in 2006. Loans like “Pick a Pay” mortgages, which allowed borrowers to defer some of their monthly payments, began to crumble as homeowners fell behind on their obligations. (Wachovia ended the program earlier this year.)

Wells Fargo said Monday that it would mark Wachovia’s assets down to fair value, a potential sticking point for other banks because of the charges that would incur. A big-enough capital-raising campaign would alleviate pressure on Wells Fargo.

Wells Fargo will maintain Charlotte as an important hub of Wachovia’s operations, making it the headquarters for the combined company’s East Coast operations. St. Louis will remain the headquarters of Wachovia Securities (as it was the home base of A.G. Edwards, the retail brokerage that Wachovia bought in 2007.)

The merger would involve $10 billion in costs, Wells Fargo said.

http://dealbook.blogs.nytimes.com/2008/10/03/wells-fargo-to-merge-with-wachovia/?pagemode=print
October 3, 2008, 7:12 am

HIGH school seniors, thrilled at receiving fat envelopes from the colleges of their choice last month, must now figure out how to pay for the privilege of attending these institutions. For many, this will mean a journey into private student loan land, where financial fog and fine print reign.

At around $20 billion, the private student loan market is less than one-third the size of various federal lending programs. But students may have to rely more heavily than usual on banks and other private lenders this year because two alternative sources of tuition funding — the 529 plans and home equity balances — have been slammed by declining stock market and property values.

According to the Project on Student Debt, the average graduate leaves college shouldering $21,900 in student loans. These loans cannot be discharged by filing for personal bankruptcy.

Student Lending Analytics, a company that helps universities analyze lending programs, estimates that today’s average private loan has an annual interest rate of 11 percent. Many of the loans have rates that fluctuate, so costs for those borrowers will go up when prevailing interest rates rise.

As with all borrowing, making the right decision on a student loan is paramount. But lenders make this harder than it should be.

The top three private lenders are Sallie Mae, which underwrote $6.3 billion in loans during 2008; Citibank, with $1.8 billion in loans last year; and Chase, which made $1.1 billion in loans during 2007.

But disclosures on various lending practices differ vastly. For example, lenders do not disclose all fees charged in the servicing and collection of student loans, and loan contracts do not always include benefits that are promised in lender advertisements — like the possibility of a lower interest rate after graduation.

Most troubling, some lenders ask students to sign promissory notes obliging them to pay off their loans before they are told what interest rate they will be charged.

“This is a very opaque market where established lenders want to win on brand name and not on price,” said Tim Ranzetta, the founder of Student Lending Analytics. “The Federal Reserve is looking to improve the transparency, but until it does, it is business as usual.”

To assess various offerings, Mr. Ranzetta applied for student loans from seven of the largest lenders. He reviewed the disclosures during and after the application and combed through the promissory notes the lenders provided.

He said he was surprised by what he found. The range of interest rates on fixed-rate loans was wide — 7 percent to 12 percent — and the larger lenders charged the highest rates. In the fine print of the promissory notes, he discovered that some lenders — Chase, PNC Financial and SunTrust Bank — can raise interest rates by two to three percentage points if a borrower is late with a single payment.

Thomas A. Kelly, a Chase spokesman, said the language in the note comes from a contract used by a company the bank bought several years ago. But Chase has not raised the interest rate for borrowers when they are late, he said.

Hugh Suhr, a spokesman at SunTrust, said that raising the rate had never been automatic and that the bank’s primary interest was in working with borrowers toward resolutions.

There are also differences in how lenders apply excess payments made by borrowers. Say a monthly loan payment is $200 but a borrower submits $400. Most lenders apply the extra amount first to any late fees that have been charged, then to accrued interest and finally to principal. But for its private loans, Sallie Mae applies excess money only to future payments, making it tougher for a borrower to pay down principal faster. Sallie Mae said if students made a special request, it would apply excess payments to principal.

Fixed-rate loans aren’t the only options available to borrowers. But costs on variable-rate loans, based on a specified interest rate index like the prime rate, are high, Mr. Ranzetta found. Loans of this type made by Chase can reach 13.57 percent, while at Sallie Mae they come in at 14 percentage points over the London InterBank Offered Rate, which is currently just under 2 percent.

With short-term interest rates in the cellar, the profits on such loans are immense. Meeting with investors last December, Sallie Mae officials said that its average interest-rate spread on variable loans was 10 percentage points.

Martha Holler, a Sallie Mae spokeswoman, said, “Although we could narrow our range of private loan interest rates and also narrow our lending, we feel strongly that we should serve as many students as we can.”

Mr. Kelly at Chase said: “These loans are unsecured and the rate is tied to the credit history of the borrowers.” (Most students, of course, haven’t had much time to build up their credit histories.)

While some borrowers may think that variable-rate loans allow them to benefit from low interest rates, that goes only so far. Wells Fargo, for example, puts a floor of 4.75 percent on the prime rate index it uses to price its loans. As a result, when the prime rate falls below that point, Wells’s borrowers don’t see their costs decline.

Lisa B. Westermann, a Wells Fargo spokeswoman, said the interest rate floor was a result of “historic low interest rates and the economic environment, which has created higher lending costs and losses resulting from defaulted loans.” The bank took this approach, she said, instead of charging a higher rate over the life of the loan.

ARMED with his findings, Mr. Ranzetta has created a rating system for student loans at studentlendinganalytics.com/SLA/ratings.html. His company does not receive financial support from lenders or financial services firms; it relies solely on consulting fees from universities it works with.

As the Federal Reserve ponders new disclosure rules for student lenders, Mr. Ranzetta says he thinks regulators should require lenders to disclose any interest rate adjustments that would occur as a result of late payments or other events. He also suggests that the Fed make lenders detail all fees charged over the life of the loan, such as those levied when a borrower cannot make payments.

Lenders should also include a plain-English disclosure of loan terms in the lending process, Mr. Ranzetta said, and incorporate a loan’s advertised benefits in the promissory note to make them contractual obligations. Making sure borrowers know they cannot erase student loans in bankruptcy is another must, he said.

Last week, the House of Representatives passed legislation that would protect consumers from deceptive credit card practices and opaque disclosure. Scrutiny should now turn to private student loans, especially those that take advantage of young adults who are naïve about finance and the perils of debt.

http://www.nytimes.com/2009/05/03/business/03gret.html?pagewanted=print
May 3, 2009
By GRETCHEN MORGENSON

An operating system is the program initially loaded into computer memory when the computer is turned on; it manages all the other programs (applications) and resources (such as disk drives, memory, and peripheral devices) in a computer. An operating system can perform a number of services, most of which are crucial to the proper operation of a modern computer system. One of the most important services is determining which applications run in what order and how much time should be allowed for each application before giving another application a turn. An equally important and difficult task for the operating system is handling the very complex operations of input and output to and from attached hardware devices. A modern operating system must also provide various levels of operating system security, including directory and file security, memory security, and resource security. Finally, an operating system must communicate about the status of operations.

A network operating system (NOS) is a large, complex program that can manage the common resources on most local area networks, in addition to performing the standard operating system services mentioned previously. The following table summarizes the functions of a network operating system.
Network Operating System Functions
Manage one or more network servers Maintain a file system of data sets, applications, user profiles, network peripherals Coordinate all resources and services available Process requests from users Prompt users for network login, validate accounts, apply restrictions, perform accounting functions
Manage one or more network printers
Manage the interconnection between local area networks
Manage locally connected users
Manage remotely connected users
Support system security
Support client/server functions
Support Web page development and Web server operations

Novell was founded in 1983 and was one of the first developers of network operating systems. Novell NetWare is a network operating system with a powerful directory service (NDS) and is very good at performing file and print serving. It is currently found in Versions 3, 4, 5, and 6. An interesting feature shared by all versions of NetWare is that the user interface is virtually invisible to the user. Version 3’s introduced the bindery. The bindery is a structure (similar to a database) that contains the usernames and passwords of network users and groups of users authorized to log in to that server. Version 4 introduced NetWare Directory Services (called Novell Directory Services in later versions), which replaced the bindery. NetWare 5 retained the NDS distributed database of network resources. With NetWare Version 6 added the ability for any authorized client anywhere on the Internet the ability to print and use storage services from a NetWare 6 server without having previously loaded a single byte of Novell’s Client32 software onto his or her machine.

One of the most noticeable features of Windows NT Version 4 was the choice of user interface. Windows NT Version 4 also offered the Microsoft Management Console and administrative wizards. One noticeable difference between Windows NT Version 4 and NetWare 4, 5, and 6 was NT’s directory structure. The NT domain was a container object that contained users, servers, printers, and other network resources. In addition to the relative inflexibility of the domain models, the instability of the operating system was another area that many network professionals felt was a weakness of Windows NT Version 4. Windows 2000 incorporated Microsoft’s answer to the highly popular NetWare NDS directory system—Active Directory. The most recent version of the Windows network operating system is Windows 2003. Windows 2003 offers many new features that network administrators may find useful. It also appears that Microsoft has adopted a new policy that Windows 2003 will be the core operating system for future generations of Microsoft products.

Unix is a popular operating system that can be found on single-user workstations but primarily functions well on mainframe computers and network servers. It is a relatively streamlined system, which explains why it operates quickly. Because Unix is one of the older operating systems and has grown in processing power over many years, it is quite stable. Unix runs on the widest variety of hardware of any network operating system. One of the biggest drawbacks of Unix is the user interface.

Linux, while based on the Unix concept, is a complete rewrite of the Unix kernel and borrows additional functions from the well-established Free Software Foundation’s GNU toolset and from the even larger free software community. Linux shares many of the same advantages and disadvantages of Unix and performs similarly to Unix as a network operating system. One of the biggest advantages of Linux is that it is free. Another advantage is the size of the code. Currently, Linux software is commonly used to support e-mail servers, Web servers, FTP servers, file/print servers, firewalls, proxy servers, and Domain Name System (DNS) servers.

Apple has created the Mac OS X Server (essentially the tenth version of the Macintosh operating system). This server is capable of supporting both Macintosh and Windows workgroups and is based on software created by the open-source community. In other words, Mac OS X Server is based on the Unix concept, and thus shares some characteristics with both the Unix and Linux operating systems, such as fast, efficient, and stable code. The operating system also incorporates a number of well-known open-source software applications, such as the Apache Web server, Kerberos security, SpamAssassin, OpenLDAP directory services, and the Samba file and print server. Finally, the designers of Mac OS X Server have gone out of their way to make sure their network operating system is compatible with a wide variety of devices.

The following table helps us comparing and contrasting the different network operating systems previously described.

A network operating system needs a host machine from which to operate. A network server is the computer that stores software resources such as the network operating system, computer applications, programs, data sets, and databases, and either allows or denies workstations connected to the network access to these resources.

Network servers range in size, from small microcomputers to mainframe computers. Typically, the network server is a powerful microcomputer workstation with redundant components. Redundant is a key word here—the network server has redundant disk drives, redundant power supplies, and even redundant cooling fans. The network server workstation typically houses hundreds of megabytes of random access memory, one or more large-storage hard disk drives (each drive providing hundreds of gigabytes of storage), and at least one high-speed microprocessor. The hard disk drives typically are hot swappable and have an interface, such as the Small Computer System Interface. Most servers also feature a powerful set of management software. With respect to the hardware side of a server, many of the higher-power network servers support not one but multiple processors.

A newer addition to the server family is the server appliance. A server appliance is a single unit or box that supports many networking functions such as Internet sharing, intranet Web serving, firewall security, FTP file transfer services, file and print serving, e-mail service, and virtual private network configurations. A small company with up to 50 users may find this type of server the perfect tool. Another new type of server that appeared at the turn of the century is the server blade. A server blade is a server that has no cabinet or box, but resides on a single printed circuit card. A company that desires to install many servers in a relatively small location can install multiple server blades in a card frame.

Redundant array of independent disks (RAID) is a collection of techniques for interfacing multiple hard disk drives to a computer. Some of the more common RAID techniques include:

• RAID-0, in which the data is broken into pieces, and each piece is stored on different disk drives. This technique is known as striping and has no redundancy of data—so, if one disk drive fails, some of the data is lost. The advantage of this technique, however, is the speed at which data can be read or written across multiple disks at the same time.
• RAID-1, in which the data is stored on at least two disk drives, in duplicate, to provide a level of redundancy (or fault tolerance), should one disk become corrupted.
• RAID-3, in which the data is redundantly stored across multiple disk drives (striping), and error-checking information concerning the stored data is kept on a separate disk. This error-checking information can be used to detect errors and possibly reconstruct the data should some of it become corrupted.
• RAID-5, in which data is broken into pieces (stripes) and stored across three or more disks. Parity information (error-checking code) is stored along with the striped data, not on a separate disk. RAID-5 is the most popular of the RAID techniques.

Utilities are software programs that operate in the background and support one or more functions to keep the network running at optimal performance. Antivirus software is designed to detect and remove viruses that have infected your memory, disks, or operating system. Spam, or unsolicited commercial bulk e-mail, has become a major nuisance to corporate users as well as individuals. Antispam software is used to block this unwanted e-mail and is available at many levels. Antispyware software can locate and clean the spyware programs found in a computer’s memory and hard disk drive. Backup software allows network administrators to back up data files currently stored on the network server’s hard disk drive. The primary goal of crash protection software is to perform crash stalling, or to try to keep the operating system running long enough to perform a graceful exit. Network-monitoring software incorporates a fairly large number of network support tools. Sniffers can “listen” to traffic on a network and determine if invalid messages are being transmitted, report network problems such as malfunctioning NICs, and detect traffic congestion problems. Remote access software allows a user to access all of the possible functions of a personal computer workstation from a mobile or remote location. Security assessment software is designed to scan an IP address or range of IP addresses for any type of security weakness. Uninstall software works with the user to locate and remove applications that are no longer desired.

One of the fastest growing segments of the software market is Internet software, the tool set to support Internet-related services. Browsers allow users to download and view World Wide Web pages. Web server software is the application or set of programs that stores Web pages and allows browsers from anywhere in the world to access those Web pages. When users wish to create one or more Web pages that will be stored on a Web server, Web page publishing software helps them prepare the necessary files.

The licensing agreement that accompanies a software product is a legal contract and describes a number of conditions that must be upheld for proper use of the software package. Several forms of user licenses exist: single-user licenses, interactive user licenses, system-based licenses, site licenses, and corporate licenses.

Under the terms of one of the most common user licenses, a single-user-single-station license, the software package may be installed on a single machine, and then only a single user at one time may be using that machine. A single-user-multiple-station license is designed for the user who might have a desktop machine at work and a laptop machine for remote sites, or another desktop machine at home. An interactive user license, operating system user license, and controlled number of concurrent users license all refer to essentially the same situation. A site license allows a software package to be installed on any and all workstations and servers at a given site. No software installation counter is used. A corporate license allows a software package to be installed anywhere within a corporation, even if installation involves multiple sites.

An uninterruptible power supply (UPS) is a valuable device in the event of a power failure. A UPS is a battery backup device that can maintain power to one or more pieces of equipment for short periods of time (usually less than one hour). Tape drives are excellent backup devices. It is quite common to install a tape drive into a network server so that modified files can be backed up one or more times a day. Printers tend to evolve at a rate faster than that of other network devices. Today, the printer market has essentially shrunk to just two basic formats— ink-jet and laser. Media converters are handy devices if it is ever necessary to connect one type of medium with another. Like computer peripherals, the computer workstation itself has evolved over the years. Workstations now support hundreds of megabytes (even gigabytes) of random access memory and have hundreds of gigabytes of hard disk storage. Some applications, however, do not require a workstation with a disk drive (thin client). Any software that operates on the thin client is downloaded from the network server to the thin client. The idea behind the thin client is to minimize workstation maintenance and reduce hardware costs. Security is also improved in a thin client system, because it is not possible to insert a CD-ROM or DVD for uploading or downloading software or data.

Experian’s refusal to let consumers see their FICO scores, even for a price, hands more power to lenders. Lawmakers might end this outrage — if we give them a push.

After years of inaction and neglect, Washington is finally getting serious about protecting people from abusive credit card practices. Consider:

• President Barack Obama last week summoned credit card executives to the White House and signaled that credit card reform is on his agenda.
• Meanwhile, the "Credit Cardholders’ Bill of Rights" is heading for another vote in the House of Representatives.
• Regulators already have imposed significant new restrictions on card issuers, although those won’t go into effect until mid-2010.

Reforms are long overdue. But all sides are missing a golden opportunity to protect people from abusive credit bureau practices, specifically the bureaus’ ability to cut off our access to our own FICO credit scores.

In February, I wrote about how Experian suddenly had decided not to sell FICO scores to consumers anymore, although it continues to sell the scores to lenders. That decision, which has yet to be challenged by regulators or lawmakers, conceals from consumers a vital piece of their credit information.

You no longer have any idea, before you apply for a mortgage, what kind of interest rate to expect. That’s because most mortgage lenders use the middle of your three credit bureau FICO scores to determine rates and terms. Without access to all three FICOs, you can’t know what your middle score might be.

You’re also at a disadvantage if you are dealing with a lender that subscribes to only one bureau and you live in the western half of the U.S. Lenders that use just one bureau tend to use the one that specializes in their region: for Experian, it’s the West and Midwest; Equifax dominates the South and TransUnion the Northeast.

And it’s simply unfair that information gathered specifically about you and used for profit is unavailable to you, yet can affect so many corners of your life.
Without a FICO, you’re running blind
You can still buy a credit score from Experian; it just won’t be the FICO score that most lenders employ. Instead, you’ll be sold Experian’s in-house "consumer education score," which isn’t used by lenders, or a VantageScore, which doesn’t even use the same scale as the FICO. (The classic FICO ranges from 300 to 850, while the VantageScore runs from 501 to 990.)

Experian is taking advantage of a loophole in the federal law that ensures your access to credit scores but fails to specify which credit scores you should get. The Fair and Accurate Credit Transactions Act effectively pretends that all credit scores are the same, when nothing could be further from the truth.

And let me be clear: Knowing your FICO scores has never been more important than it is today. People with high FICO scores (generally, 740 and above) still have access to phenomenally cheap credit, including ultralow mortgage rates, inexpensive auto loans and superior credit cards with rich rewards.

If their credit card companies raise their rates or lower their credit limits — widespread practices lately — these good-credit folks can effectively fight back by threatening to take their business elsewhere.

People who don’t know their FICOs are at a distinct disadvantage. They don’t know how they’re viewed by lenders, so they don’t know if they’re being quoted appropriate rates or if they have leverage to get a better deal.

Progress, but not nearly enough
This is a lot like the bad old days of the previous century, when FICO scores were in widespread use but you weren’t allowed to know yours. Lenders knew the score, in other words, but you couldn’t; the power was all in their hands.

This has got to stop. Not only should your access to your FICO scores be assured, it should also be free. You shouldn’t have to pay to see credit information about yourself, ever, and that includes any score that’s used to evaluate you.

I’ve been trying to do my part to re-establish your access to your FICO scores by prodding lawmakers, including Rep. Carolyn Maloney, D-N.Y., who has sponsored the Credit Cardholders’ Bill of Rights.

But the reaction I’ve gotten tells me lawmakers still don’t grasp the FICO’s central role in your finances.

Maloney spokesman Jon Houston, for example, told me the congresswoman was aware of the issue but that ensuring your access to your FICOs was not a priority.

"It’s not on the list," Houston said. "It is on the radar."

But what Houston said next caused me to despair. In lieu of securing access to your FICOs, he noted that the Credit Cardholders’ Bill of Rights contains a provision that will help people manage their credit by allowing them to set lower credit limits than what their issuers want to give them.

If you know anything about credit scores, you know they’re highly influenced by credit utilization — how much of your available credit you’re using. Lower limits are typically bad for your credit scores, not good. That means that instead of empowering consumers, the provision would just help those ignorant of credit scoring screw themselves.

So now I turn to you, dear readers. If anything is going to get done on this issue, it’s up to you.

If you agree that you have a right to your FICO scores and that they should be free, contact Rep. Maloney, who’s been at the forefront of credit issues in Congress, or your own lawmakers (here’s a link to find your House representative and another to find your senators). Tell them something like this:

Experian credit bureau has decided to stop selling FICO credit scores to consumers, depriving me of an essential part of my credit picture. Please change the law to protect my access to my FICO scores and to ensure I can get FICO scores from all three bureaus for free.

Published April 27, 2009
http://articles.moneycentral.msn.com/Banking/YourCreditRating/demand-to-see-your-credit-score.aspx?page=all
By Liz Pulliam Weston
MSN Money

A bipartisan group of legislators is pressing the Treasury Department to close a loophole that has allowed banks to seize Social Security and disability benefits from customers’ accounts despite federal rules intended to protect these benefits from creditors.

The loophole also has enabled some banks to seize from customers their recent $250 Economic Recovery Payments, payments to disabled veterans, and supplemental benefits to impoverished individuals from the Social Security Administration.

Federal law says creditors can’t take Social Security, disability, veterans’ and children’s survivor benefits to pay a debt. But the federal law doesn’t say how money deposited directly into bank accounts is to be protected — a gap that has given banks the ability to seize such funds.
More

• Read about the $250 Economic Recovery Payments.
• Read the letters from Sens. Herb Kohl and Claire McCaskill and from four House members to Treasury Secretary Timothy Geithner.
• See the bill proposed to withhold funding to promote banks’ direct-deposit program until the Treasury takes steps to protect Social Security benefits.
• Protecting Your Social Security and Pension from Creditors

And when banks receive garnishment orders from debt collectors, they freeze customers’ accounts and collect fees, including a charge to freeze the account, as well as overdraft and other charges — all of which can be taken from Social Security benefits.

The Treasury and Social Security Administration, along with banking regulators, developed proposed regulations early this year that close the loophole. But the regulations are in limbo.

In separate letters in May to Treasury Secretary Timothy Geithner, members of the Senate Special Committee on Aging as well as House members including Barney Frank urged that the Treasury issue regulations to stop banks from freezing benefits and seizing fees.

In a recent hearing before being confirmed as the Treasury’s assistant secretary for financial institutions, Michael Barr said one of his first priorities will be to issue "a joint regulation to solve the problem of account freezes and garnishment of exempt funds." Mr. Geithner wasn’t immediately available for comment.
Closing a Loophole

The children of Nicole Murphy, above, had their Social Security survivor benefits seized when a creditor garnished the account for the children’s unpaid medical bills.

Some customers whose accounts are frozen often don’t know their benefit money isn’t supposed to be snatched.

Bank of America Corp. froze the accounts of Ellistine and Roosevelt Thompson, a disabled couple in their 60s in Macon, Ga., whose only source of income is from Social Security.

Because the Thompsons had no access to their money, they couldn’t retain a lawyer. Bank of America turned over all the benefits, some of which they set aside for their burial, to a debt collector pursuing a debt from the mid-1990s.

The couple learned from a TV news program that creditors can’t take Social Security benefits. They contacted Georgia Legal Services Program, which last year sued the bank seeking the return of the couples’ money.

A Bank of America spokeswoman declined to comment on the case, saying the court had placed a confidentiality order on it, adding: "Banks are required by law to honor garnishment orders or risk being held in contempt. We freeze accounts because the law says we must when we receive an order to do so."
Closing the Loop

Steps to protect your Social Security, disability, veteran’s or pension benefits:

• Don’t commingle Social Security and exempt benefits with nonexempt funds.
• Don’t get a loan or credit card from the bank where your Social Security or pension is deposited.
• If sued, go to court and demand proof of the debt.
• If your bank account is frozen, file an exemption claim within 10 days.

In a related matter involving Bank of America, the California Supreme Court was expected to rule as early as Monday on a case involving whether banks can take Social Security benefits to pay overdraft and other fees, not related to garnishments. The case, filed on behalf of elderly and disabled Californians receiving direct deposit of Social Security, accuses the bank of violating a state law that bars banks from tapping Social Security benefits; the bank argued that federal law pre-empts the state law.

Bank fees for handling garnishment orders and freezing accounts can total hundreds of dollars, leaving the person in debt to the bank.

In April, for instance, U.S. Bancorp seized the Social Security survivor benefits of two children in Kalispell, Mont., when a creditor garnished the account for the children’s unpaid medical bills (the family has no health insurance). The benefits are the family’s primary source of income, following the death of the children’s father in 2007.

Unaware that the account was frozen, the children’s mother, Nicole Murphy, 32, used a debit card to pay for gas and groceries for Easter. Each purchase triggered an insufficient-fund fee of $37.50. When the children’s account fell below zero, the bank debited a negative balance fee of $8 a day.

A lawyer with Montana Legal Services Association helped Mrs. Murphy unfreeze her account. But the bank again froze the account. On May 7, the U.S. Treasury deposited into the account a $250 Economic Stimulus payment, which the government sent to low-income households. But the payment was unavailable to the family because the account was frozen, and because the bank’s fees had created a negative balance.

A U.S. Bancorp spokeswoman says the bank is legally required to honor garnishment orders; it’s up to the customer to work it out with the creditor and the court. If money is determined to be exempt, the bank releases it and refunds overdraft fees, she says. After being contacted by The Wall Street Journal, U.S. Bancorp credited $674 in overdraft charges back into the Murphys’ account.

Under the proposed Treasury regulations, banks would be forbidden from freezing accounts that contain direct deposits of exempt funds, and couldn’t take fees from exempt funds if the fees are a result of a garnishment, according to a person familiar with the matter. If the funds are commingled with nonexempt funds, the banks would have to apply a formula to exclude the protected amounts. The rules would protect banks from lawsuits from debt collectors and account holders.

But the Treasury hasn’t released the proposals. Now, legal-aid lawyers say Social Security recipients are bailing out of the direct-deposit program to protect their benefits from the banks.

Allene Bellendier, a disabled 70-year-old widow, used to have her Social Security benefit deposited directly into her SunTrust Banks Inc. account.

But she closed her account last year after the bank froze it twice. Though she was able each time to get the account released with the help of a legal-aid lawyer, the process took weeks, leaving her without money for food, medicine or mortgage payments. When her food ran out, she says, she searched the house for loose change and found a few dollars in a piggy bank she was saving for Christmas presents.

She had a heart attack and says she lost nearly $600 in penalties and fees to companies where she had bounced checks as a result of the hold. Mrs. Bellendier now has her granddaughter cash the check at Wal-Mart; Mrs. Bellendier buys money orders to pay her monthly bills.

SunTrust declined comment.

In May, legislators introduced a bill to withhold funding to promote banks’ direct-deposit program until the Treasury takes steps to protect Social Security benefits.

"Until adequate protections are in place, the Treasury should not be promoting a payout system that puts seniors’ and veterans’ benefits at risk," says Sen. Herb Kohl (D., Wis.), one of the bill’s sponsors.

By ELLEN E. SCHULTZ
Write to Ellen E. Schultz at ellen.schultz@wsj.com
Printed in The Wall Street Journal, page C1

There’s no excuse when you fall for certain myths. The one proclaiming Barack Obama is a Muslim? You could have quashed that one by checking Snopes.com. Bill Gates sharing his fortune with those who forward an e-mail? That’s been debunked on About.com’s Urban Legends since 1999.

But the legends that grow up around credit cards aren’t quite as easy for the average person to research and refute. Credit card issuers can be pretty closelipped about their practices, and even those who proclaim themselves experts in the field can get it wrong.

So I talked to spokespeople from Visa, MasterCard, American Express and Discover to get the scoop on their policies, and with Fair Isaac, creators of the FICO credit score, for details on how cards really affect your score.
The myths and the reality

Myth No. 1: Your credit card account isn’t opened until you activate it using the issuer’s toll-free number.

Several readers have changed their minds about opening new credit cards after they’ve applied, then asked if they could undo the damage to their credit scores by not calling to activate the card.

Sorry, but the ding to your credit scores — typically 5 points or less — happens as soon as the issuer pulls your credit reports, which is usually within seconds of receiving your application. The account shows up as active on your credit reports shortly after the card is approved.

You do need to call the activation number, though, if you ever want to use the card. That number is typically listed on the removable sticker on the front of your card when it arrives in the mail.

Myth No. 2: You can stop unsolicited credit card offers by sending them back in the postage-paid envelopes.

Judging by my e-mail, some of you have developed a hobby trying to irritate credit card companies. You write "take me off your mailing list" repeatedly over the unsolicited applications they send you, then stuff the paperwork into the postage-paid envelope — sometimes adding other junk mail to increase the volume and cost the issuer more in postage.

Sorry, but all your efforts are for naught. Yes, you might cost the credit card company a few pennies, but it would cost them far more to track down your name on their mailing lists and remove it, so your envelope just winds up in the garbage.If you want to cut the number of unsolicited credit card offers you receive, you need to get off the mailing lists before they’re compiled. Here’s how:

• Sign up with the credit card bureaus’ opt-out service. This service removes you from the marketing lists they sell to credit card issuers and can be reached at 1-888-5-OPT-OUT or OptOutPrescreen.com. You’ll need to provide your Social Security number and a few other pieces of identifying information.
• Opt out of "information sharing" every chance you get. Anytime you use your credit card, make a donation or sign up for a new service, your information could be sold to a credit card marketer. Ethical companies give you a chance to opt out. Take it.
• Follow up with those who sell your data. Sometimes you won’t be able to tell who sold you out; other times, it’s obvious. I raised hell with the Greater Los Angeles Zoo Association after I bought a family membership and promptly received an application for a GLAZA-themed card.

Myth No. 3: Merchants may require identification, such as a driver’s license, when you pay with a credit card.

Merchants’ agreements with Visa, MasterCard, American Express and Discover specifically forbid them from requiring identification. Your signature is supposed to be enough.

Furthermore, merchants’ contracts with Visa and MasterCard are supposed to prevent them from even asking for ID. American Express and Discover don’t prohibit asking but strongly discourage it.

Merchants typically ask for ID because they’re trying to reduce their own fraud costs. But if a clerk memorizes or writes down vital information from your driver’s license — your address or date of birth, for example — you’re the one who could be at greater risk of identity theft.

Myth No. 4: You can deter identity theft by writing "Ask for ID" instead of your signature on the back.

See above. You’ll certain deter use of your card, because merchants aren’t supposed to accept one that’s not signed on the back, and that could affect you as much as any thief.

Myth No. 5: No-limit credit cards allow you to buy whatever you want.

Most credit cards come with credit limits, but some cards advertise having "no preset spending limits." With high-end Visa cards, for example, customers are allowed to exceed their credit limits; with traditional American Express charge cards (the green, gold, platinum and black versions), there is supposedly no preset limit at all.

Except that all cards have limits, said Curtis Arnold, the founder of CardRatings.com and author of "How You Can Profit From Credit Cards."

"No-preset-spending-limit cards are more marketing hype than anything," Arnold said. "These cards do have a credit limit that is typically based on your income and spending patterns."

At American Express, the actual limit on your charge card — the kind that’s supposed to be paid in full every month — can vary based on your financial circumstances, your credit history and your record as a customer, explained Desiree Fish, an American Express spokeswoman.

If, for example, you’re a good customer who typically spends $3,000 to $5,000 and you want to charge a $50,000 luxury car to your card, you’d be smart to call Amex first to make sure the transaction would be approved.

If, on the other hand, you’re in possession of an American Express Centurion Card, a black version that usually isn’t even offered to folks who charge less than $250,000 a year, you probably needn’t worry about getting approval for the same transaction — unless "your people" forgot to pay last month’s bill.

Myth No. 6: If you pay your credit cards in full and on time, you don’t need to worry about your cards’ effect on your scores.

Paying your balances in full is good for your wallet, and paying on time is good for your credit scores. But you can still mess up your credit even if you’re diligent in doing both.

How? By using up too much of your credit limit. Your credit scores are incredibly sensitive to how much of your available credit you use, especially on your credit cards.

And the balance used for these calculations is typically the balance that shows on your most recent credit statement. So if you’ve charged $9,000 on a card with a $10,000 limit, your scores will reflect the fact that you’re using 90% of your available credit, even if you pay off the balance the day you get the bill. Such a misstep can knock dozens of points off your scores.How to fix this? Ask for higher limits, spread your purchases among several cards or make two payments each month — one just before the account’s statement closing date and another just before the due date. The first payment will reduce the balance that is reported to the credit bureaus and is used to calculate your credit scores. The second payment ensures your account won’t be marked late, since many issuers require some kind of payment between the statement closing date and the due date, even if a payment was made earlier in the billing cycle.

Myth No. 7: High credit card limits are bad for your credit scores.

I’ve heard this one repeated by folks who should know better, including mortgage brokers and other lending professionals.

Here’s a tip: If you’re told the reason your credit scores aren’t higher is because you have "too much available credit," that pretty much means you have great scores. Typically the only reason you’d hear this "negative" is because there’s nothing else wrong with your credit.

You certainly shouldn’t ask a credit card company to lower your credit limits or shut down cards, since either action could hurt your credit scores, unless a lender specifically requires you to do so as a condition of getting a loan. Even then, you should try to keep your oldest and highest-limit cards open.

But you also shouldn’t run out and open a bunch of new credit card accounts without considering the consequences. Each new account application can ding your scores and represents another set of rates, due dates and terms you’ll have to track. Apply for credit sparingly, and don’t worry if your issuer rewards your good credit habits with a higher limit. It knows you can probably handle it.

Myth No. 8: A credit card company can’t change my rate unless I mess up.

Credit card issuers lately have been vigorously disabusing customers of this notion, as I wrote in "The credit card party is officially over." Many borrowers have seen their rates double or triple even though they haven’t been late with a payment or suffered any other credit setbacks.

For now, credit card companies can alter virtually any rate or term with just 15 days’ notice. Their freedom to do so will be ending soon, though. In July 2010, federal regulations will kick in that ban rate increases on existing balances, except in limited circumstances, such as when a borrower skips a payment.

Myth No. 9: Rewards cards are pretty much the same.

This myth takes different forms, including "the best rebate you can get is about 1%" or "you have to pay an annual fee to get a rewards card" or "the rewards aren’t worth the effort to redeem."

It’s all bunk, said Arnold, of CardRatings.com. Consumers who shop around will find big differences among rewards cards. Today, the best cash-back rewards cards have no annual fee, and you should expect a rebate in excess of 1%. Check out "The 15 most rewarding credit cards" for some insight on what you may be missing.Liz Pulliam Weston is the Web’s most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What’s at Stake." Weston’s award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/9BigCreditCardMyths.aspx?page=all
9 big credit card myths
Liz Pulliam Weston @ MSN Money
Updated March 19, 2009.

A single internal local area network is often not sufficient to support the needs of its users. The network may not be capable of supporting a large number of users, or it may not be able to provide users access to the resources they need, because those resources are located on a different internal local area network or on an external wide area network. In these situations, having multiple local area networks or a local area network that has access to a wide area network might provide better service. Interconnecting multiple networks or multiple segments of networks is called internetworking, and the large diversity of networks in existence makes this a complex process.

Given all this complexity, why would anyone want to connect two or more networks? In fact, several valid reasons exist for internetworking. Consider, for example, a company that has two local area networks, one for the research department and one for the design department. If the company could interconnect the two networks, it would be possible for the employees in research to share data and resources with the employees in design, and vice versa. In addition, multiple repositories of data could be created, to which both research and design have access, to which only research has access, and to which only design has access.

Internetworking isn’t just for large corporations. Suppose you have two or more personal computers in your home for family use. Suppose also that you have installed a Small Office/Home Office network so that the computers can share data, software, and peripherals such as a high-quality printer. The next step would be to provide the home network with an interface to the Internet so that all the home computers could access Internet resources.

Many devices are available for performing the interconnection of two or more networks. We will classify these devices into four basic categories: hubs, bridges, switches, and routers. Although in the past these terms have meant different things to different people, most people these days have reached a common ground on definitions and functionality. You should, however, be aware that these interconnecting terms are a little flexible. Some manufacturers that produce network interconnection devices are particularly guilty of stretching the naming conventions. The basic operation of a bridge is filtering.

Let’s define a hub as a device that interconnects two or more workstations in a star-wired bus local area network and broadcasts incoming data onto all outgoing connections (in other words, no routing or selective forwarding is performed). The hub simply accepts a frame and immediately forwards it. It does not examine or modify the contents of the frame.

Most hubs can be sorted into one of two categories: managed hubs and unmanaged hubs. A managed hub possesses enough processing power to be managed from a remote location. The management operations performed on a hub include inventory management (knowing what devices are where on the network), traffic and environmental monitoring, and power management. An unmanaged hub contains little or no intelligence at all and cannot be controlled from a remote location. Their sole function is to allow the interconnection of two or more workstations in a local area network.

The location of a hub is often dictated by the type of cabling used to connect the workstations to the hub. Hubs continue to become more intelligent, modular, and customizable every day. Despite these advancements in design, one characteristic that all hubs seem to continue to share is their low cost.

Let’s define a bridge as a device that interconnects two local area networks that both have a medium access control sublayer. The bridge acts as a filter. The bridge, using some form of internal logic, determines if a data frame’s destination address belongs to a workstation on the current network. If it does, the bridge does nothing more with the frame, because it is already on the appropriate network. If the destination address is not an address on the current network, the bridge passes the frame on to the next CSMA/CD network, assuming that the frame is intended for a station on that network.

Designed for CSMA/CD LANs, the transparent bridge observes network traffic flow and uses this information to make future decisions regarding frame forwarding. Upon installation, the bridge begins observing the addresses of the frames in transmission on the current network and creates an internal port table to be used for making future routing decisions. The bridge takes the source address from the frame and places it into an internal table. After watching traffic for a while, the bridge has a table of workstation addresses for that network. If a frame arrives at the bridge with a destination address that does not match any address in the table, the bridge assumes the frame is intended for a workstation on some other network and passes the frame on to the next network.

Another form of bridge is the remote bridge. A remote bridge is capable of passing a data frame from one local area network to another when the two local area networks are separated by a long distance and a wide area network connects them.

A switch is a combination of a hub and a bridge; it can interconnect multiple workstations (like a hub) but can also filter out frames, thereby providing a segmentation of the network (like a bridge). Switches can significantly decrease interconnection traffic and increase the throughput of the interconnected networks or segments, without requiring additional cabling or rearranging of the network devices. Another important advantage of a switch is that it is designed to perform much faster than a bridge, especially switches that use cut-through architecture. Finally, a switch can have several ports, unlike a bridge, which has only two ports. To support each of these ports efficiently, the main hardware of the switch has to be fast enough to support the aggregate or total bandwidth of all the ports.

Depending on user requirements, a switch can interconnect two different types of CSMA/CD network segments: shared segments and dedicated segments. In shared segment networks, a switch may be connected to a hub (or several hubs), which then connects multiple workstations. In dedicated segment networks, a switch may be directly connected to a workstation, and the switch connects to the hub. Each workstation then has a private or dedicated connection.

One of the more interesting applications for a dedicated segment network and a switch is creating a virtual LAN. A virtual LAN, or VLAN, is a logical subgroup within a local area network that is created via switches and software rather than by manually moving wiring from one network device to another.

Whether shared or dedicated segments are involved, the primary goal of a switch is to isolate a particular pattern of traffic from other patterns of traffic or from the remainder of the network. Because many local area networks have a high degree of inter-server communication, this use of a switch can effectively reduce overall network traffic. Switches can be used in combination with routers (or remote bridges) to further isolate traffic segments in a local area network.

Because a workstation cannot transmit data if it hears another workstation already transmitting, a CSMA/CD network is a half-duplex system. The bandwidth of a CSMA/CD network would double if it were a full-duplex system in which both sender and receiver could talk simultaneously. In addition, no collisions would occur on an individual segment, which would simplify the CSMA/CD algorithm. The full-duplex switch allows for a CSMA/CD network to simultaneously transmit and receive data to and from a workstation.

The most common function of a router is to transmit data frames between two networks, one of which has a medium access control sublayer, while the second network does not. A common use of a router is to interconnect a local area network, such as a CSMA/CD LAN, with the Internet. To perform the routing, the router cannot just look at the MAC-layer addresses. Instead, the router must dig further into the data frames for the IP address. More specifically, it examines the network-layer addresses and uses those to perform the routing. The byproduct of digging deeper into the data frames for network routing information is increased processing time

What sequence of events occurs when a CSMA/CD data frame is converted by a router to an Internet data frame? A data packet originates in an upper-layer application, such as an e-mail program. The data packet is passed to the transport and network layers of the CSMA/CD LAN, and the appropriate transport and network headers are inserted. After the network information has been inserted, the packet is given to the medium access control sublayer, where CSMA/CD header and trailer information is added (including the NIC address of the router). The packet is then placed onto the medium of the CSMA/CD network, where it travels to the router. Upon receiving the packet, the router does not need the MAC header and trailer, so they are removed. Now, the router will extract the destination network address from the network header and determine that the packet has to go out on the Internet. The router then adds the appropriate wide area network header (if any is needed) to the packet, and sends the packet out of the router and onto the Internet. From there, the packet will make its way through the Internet to its final destination.

Routers are similar to switches in that both are getting more advanced every day. A common feature found in many routers is some form of firewall protection. A firewall is a system or combination of systems that supports an access control policy between two networks. Some of the newer routers also contain switches, thus combining the services of a router with the advantages of a switch. Modern routers can also accept data in one format and convert the data to another format. The more advanced routers can also perform management functions such as monitoring network traffic, providing accounting information, and incorporating quality of service functions. Quality of service (QoS) is the concept that data transmission rates, error rates, and other network traffic characteristics can be measured, improved, and (one hopes) guaranteed in advance.

Routers and routing play an extensive role in wide area networks such as the Internet. As data packets move across the Internet, they pass from network to network. The connection points between these networks are routers. Each router examines the data packet and determines the packet’s next step along its journey.

A local area network is a communications network that interconnects a variety of data communications devices within a small area and transfers data at high transfer rates with very low error rates. The phrase “data communications devices” covers computers such as personal computers, computer workstations, and mainframe computers, as well as peripheral devices such as disk drives, printers, and modems. “Within a small geographic area” usually implies that a local area network can be as small as one room, or can extend over multiple rooms, over multiple floors within a building, and even over multiple buildings within a single campus-area. Local area networks differ from many other types of networks in that most broadcast their data to many or all of the workstations connected to the network.

A local area network performs file serving when it’s connected to a workstation with a large storage disk drive that acts as a central storage repository, or file server. A local area network software called a print server provides workstations with the authorization to access a particular printer, accepts and queues prints jobs, prints cover sheets, and allows users access to the job queue for routine administrative functions. Most local area networks provide the service of sending and receiving e-mail. This e-mail service can operate both within the local area network and between the local area network and other networks, such as the Internet. A local area network can interface with other local area networks, wide area networks (such as the Internet), and mainframe computers. Many higher-speed local area networks provide the capabilities of transferring video images and video streams. In manufacturing and industrial environments, local area networks are often used to monitor manufacturing events and report and control their occurrence. Depending on the type of network and the choice of network operating system, a local area network may support distributed processing, in which a task is subdivided and sent to remote workstations on the network for execution.

In addition to performing these common activities, a local area network can be an effective tool in many application areas. One of the most common application areas is an office environment. A second common application area for a local area network is an academic environment. A third common application area for a local area network is manufacturing.

One of the biggest advantages of local area networks is their ability to share resources in an economical and efficient manner. With respect to communications, each workstation in a local area network can send and receive messages to and from other workstations and networks. This intercommunication allows users to send e-mail, access Web pages, send print jobs, and retrieve database records. An additional advantage is that component evolution can be independent of system evolution, and vice versa. Two other advantages of local area networks are high transfer rates and low error rates. Finally, because local area networks can be purchased outright, the entire network and all workstations and devices can be privately owned and maintained.

Local area networks have a number of disadvantages. For one, local area network hardware, the operating systems, and the software that runs on the network can be expensive. Despite the fact that a local area network can support many types of hardware and software, the different types of hardware and software may not be able to interoperate. Another disadvantage is the potential for purchasing software with the incorrect user license. An important disadvantage that has often been overlooked in the past is that the management and control of the local area network requires many hours of dedication and service. Finally, a local area network is only as strong as its weakest link.

The workstations within a local area network today are interconnected in two basic configurations, or topologies: the star-wired bus and wireless. But this has not always been the case. Originally , four configurations were available: bus/tree; star-wired bus;, star-wired ring; and wireless.

The bus/tree topology, often simply called the bus topology, was the first topology used when local area networks became commercially available in the late 1970s, and it essentially consists of a simple cable, or bus, to which all devices attach. When a device transmits on the bus, all other attached devices receive the transmission. Two different signaling technologies can be used with a bus network: baseband signaling and broadband signaling. It is also possible to split and join broadband cables and signals to create configurations more complex than a single linear bus. These more complex bus topologies consisting of multiple interconnected cable segments are termed trees.

The most popular configuration for a local area network is the star-wired bus topology, or simply, star topology. Today’s modern star-wired bus topology acts like a bus but looks like a star. To be a little more precise, the topology logically acts as a bus, but it physically looks like a star. In a star-wired bus topology, all workstations connect to a central device such as the hub. The hub is a nonintelligent device that simply and immediately retransmits the data it receives from any workstation out to all other workstations (or devices) connected to the hub.

With respect to logical design, the star-wired ring topology is a circular connection of workstations. The star-wired ring is essentially a marriage of the star-wired topology and topology that was used in the 1980s and is known simply as ring topology. Because star-wired ring topologies support baseband signals, the star-wired ring is capable of supporting only one channel of information. Physically, a star-wired ring looks much like a star-wired bus design, with all its workstations connected to a central device. This central device is not a hub, however, but rather a multistation access unit.

A local area network that is not based primarily on physical wiring but uses wireless transmissions between workstations is a wireless LAN. By attaching a transmitter/receiver to a special network interface card on a workstation or laptop, and similar hardware on a device called an access point, it is possible to transmit data between a workstation and network server at speeds into the millions of bits per second. Note that most wireless local area networks are actually combinations of wireless and wired technologies.

In order to create a wireless local area network, a few basic components are necessary. The first component is the user device. The second component is the wired local area network. The third component is the control module, or access point, which is the component that communicates with the wireless user device. Wireless local area networks are typically found in three basic configurations. The first is the single-cell wireless LAN. At the center of the cell is the access point, which is connected to the wired LAN. The second type of wireless LAN configuration is the multiple-cell layout. In this configuration, multiple cells are supported by multiple access points, as in a cellular telephone network. The third wireless LAN configuration is the peer-to-peer, or ad hoc, layout. With this configuration, no access point exists at the center of a cell. Each user device communicates directly with the other user devices.

When wireless LANs first appeared, organizations were slow to accept them. To promote acceptance, the IEEE 802 suite of protocols was created to support the many different types of wireless local area networks in existence. Basically, the 802.11 specification defined three different types of physical layer connections: infrared; spread spectrum; and spread spectrum with frequency hopping.

A medium access control protocol is the software that allows a workstation to place data onto a local area network. The two basic categories of medium access control protocols for local area networks are contention-based and round-robin protocols.

A contention-based protocol is basically a first-come, first-served protocol—the first station to recognize that no other station is transmitting data and place its data onto the medium is the first station to transmit. The most popular contention- based protocol is carrier sense multiple access with collision detection (CSMA/CD). With the CSMA/CD protocol, only one workstation at a time can transmit, and because of this, the CSMA/CD protocol is basically a half-duplex protocol. A workstation listens to the medium to learn whether any other workstation is transmitting. If another workstation is transmitting, the workstation wanting to transmit will wait and try again to transmit. A collision occurs when two or more workstations listen to the medium at the same moment, hear nothing, and then transmit their data at the same moment. The type of algorithm that tries to avoid collisions is called carrier sense multiple access with collision avoidance (CSMA/CA). If a user device wishes to transmit and the medium is idle, the device is not allowed to transmit immediately. Instead, the device is made to wait for a small period of time called the interframe space (IFS). If the medium is still idle after this interframe space, the device is then allowed to transmit. CSMA/CA is used by wireless LANs.

A round-robin protocol is a protocol in which each workstation takes a turn at transmission, and the turns are uniformly distributed over all workstations. The token ring local area network uses the star-wired ring topology for the hardware and a round-robin protocol for the software. It operates on the principle that to transmit data onto the ring, your workstation must be currently in possession of a software token. Because the token ring does not experience any collisions, overall throughput remains high even under heavy loads. This capability of token ring to give every workstation a turn is attractive and is valuable for applications that require uniform response times.

In order to better support the unique nature of local area networks and to create a set of industry-wide standards, the IEEE produced a series of protocols under the name 802. One of the first things the IEEE 802 protocols did was to split the data link layer into two sublayers: the medium access control sublayer and the logical link control sublayer. The medium access control sublayer defines the layout or format of the data frame, simply called the frame.

The IEEE 802.3 standard for CSMA/CD uses the following frame format. The preamble and start of frame byte fields combine to form an 8-byte flag that the receiver locks onto for proper synchronization. The destination address and source address are the 2- or 6-byte addresses (of these, the 2-byte is less common) of the receiving computer and sending computer. More precisely, each network interface card in the world has a unique 6-byte (48-bit) address. When CSMA/CD sends data to a particular computer, it creates a frame with the appropriate NIC address of the intended computer. The data length is simply the length in bytes of the data field, which is the following entry. The PAD field adds characters to the frame (pads the frame). The minimum size frame that any station can transmit is 64 bytes long.

Ethernet was the first commercially available local area network system and remains, without a doubt, the most popular local area network system today. The wired version of Ethernet is based primarily on the star-wired bus topology and uses the CSMA/CD medium access protocol. The IEEE created a set of individual standards specifically for Ethernet or CSMA/CD local area networks, all under the category of 802.3. The original 802.3 standards include 10Base5, 10Base2, 1Base5, and 10BaseT. One of the most common standards for broadband (analog) Ethernet is the 10Broad36 specification. In response to the demand for faster Ethernet systems, IEEE created the 100-Mbps Ethernet 802.3u protocol (called Fast Ethernet) and includes 100BaseTX, 100BaseT4, and 100BaseFX. The next set of Ethernet standards to be developed was based on 1000-Mbps transmission speeds, or 1 gigabit (1 billion bits) per second. These standards define the new Gigabit Ethernet (IEEE 802.3z) and includes 1000BaseSX, 1000BaseLX, 1000BaseCX, and 1000BaseT. The most recent Ethernet standard to receive attention is 10 Gbps Ethernet. This standard is also known as IEEE 802.3ae and includes 10GBase-fiber, 10GBase-T, and 10GBase-CX.

Token Ring was created and popularized by IBM, which was one of the few manufacturers of token ring products. IBM Token Ring uses the starwired ring topology and token ring access method. The IEEE 802.5 standard defined a token ring specification for three data transmission rates: 4 Mbps, 16 Mbps, and 100 Mbps. The 100-Mbps token ring (IEEE 802.5t) is designed for workstation-to-MAU connections using either Category 5 twisted pair wire or fiber-optic cable.

Although many people liked the token ring local area network for its deterministic protocol and its high throughput under heavy loads, many other people were not happy with its slow 4-Mbps and 16-Mbps transmission speeds. In an attempt to marry a deterministic access protocol with a high transmission rate, the Fiber Distributed Data Interface (FDDI) ring was created. The FDDI protocol resembles a token ring network that has been lifting weights. With a data transmission speed of 100 Mbps, network distances up to 200 km, and a possible interconnection of 500 stations, an FDDI network is a vastly updated token ring network.

“Wireless Ethernet” is actually another term for the following three formats: IEEE 802.11b, IEEE 802.11a, and IEEE 802.11g. 802.11b transmits data at a theoretical speed of 11 Mbps, while both 802.11a and 802.11g transmit data at a theoretical speed of 54 Mbps. However, a new protocol is on the horizon—the IEEE 802.11n standard. While still in the design stage, 802.11n is said to be capable of 100 Mbps wireless transmissions. In order to support such high speeds, this new standard will probably use a technology called multiple input multiple output. Multiple input multiple output (MIMO) is a technology in which both the mobile device and the access point have multiple, smart antennas that help to reduce signal interference and reflections.

White noise is a relatively continuous type of noise and is much like the static you hear when a radio is being tuned between two stations. It is always present to some degree in transmission media and electronic devices and is dependent on the temperature of the medium. To remove white noise from a digital signal, the signal must pass through a signal regenerator before the noise completely overwhelms the original signal. Removing white noise from an analog signal is also possible and involves passing the noisy analog signal through an appropriate set of filters.

Impulse noise, or noise spike, is a noncontiguous noise and one of the most difficult errors to detect, because it can occur randomly. The difficulty comes in separating the noise from the signal. Typically, the noise is an analog burst of energy. If the impulse spike interferes with an analog signal, removing it without affecting the original signal can be extremely difficult. If impulse noise interferes with a digital signal, often the original digital signal can be recognized and recovered.

Crosstalk is an unwanted coupling between two different signal paths. This unwanted coupling can be electrical, as might occur between two sets of twisted pair wire (as in a phone line), or it can be electromagnetic (as when unwanted signals are picked up by microwave antennas).

Echo is the reflective feedback of a transmitted signal as the signal moves through a medium. Much like the way a voice will echo in an empty room, a signal can hit the end of a cable, bounce back through the wire, and interfere with the original signal.

Jitter is the result of small timing irregularities that become magnified during the transmission of digital signals as the signals are passed from one device to another. Causes of jitter can include electromagnetic interference, crosstalk, passing the signal through too many repeaters, and the use of lower-quality equipment.

Attenuation is the continuous loss of a signal’s strength as it travels though a medium. It is not necessarily a form of error, but can indirectly lead to an increase in errors affecting the transmitted signal. Attenuation can be eliminated with the use of amplifiers for analog systems or repeaters for digital systems.

You can prevent the occurrence of many types of transmission errors by applying proper error-prevention techniques, as follows:

• Install wiring with the proper shielding to reduce electromagnetic interference and crosstalk.
• Use telephone line conditioning or equalization (provided by the telephone company), in which filters are used to help reduce signal irregularities.
• Replace older equipment with more modern, digital equipment; although initially expensive, this technique is often the most cost-effective way to minimize transmission errors in the long run.
• Use the proper number of digital repeaters and analog amplifiers to increase signal strength, thus decreasing the probability of errors.
• Observe the stated capacities of a medium, and, to reduce the possibility of errors, avoid pushing transmission speeds beyond their recommended limits.

Reducing the number of devices, decreasing the length of cable runs, and reducing the transmission speed of the data may also be effective ways to reduce the possibility of errors.

The most basic error-detection techniques are parity checks, which are used with asynchronous connections. Its main disadvantage is that parity checks let too many errors slip through undetected. Simple parity, which is the easiest error-detection method to incorporate into a transmission system, comes in two basic forms: even parity and odd parity. The basic concept of parity checking is that a bit is added to a string of bits to create either even parity or odd parity. With even parity, the 0 or 1 added to the string produces an even number of binary 1s. With odd parity, the 0 or 1 added to the string produces an odd number of binary 1s. If a transmission error causes one of the bits to be flipped, the error can be detected if the receiver understands that it needs to check for even parity.

Longitudinal parity tries to solve the main weakness of simple parity—that all even numbers of errors are not detected. To provide this extra level of protection, longitudinal parity needs to use additional parity check bits. The first step of this parity scheme involves grouping individual characters together in a block. Each character in the block has its own parity bit. In addition, after a certain number of characters are sent, a row of parity bits, or a block character check, is also sent. Each parity bit in this last row is a parity check for all the bits in the column above it.

The cyclic redundancy checksum (CRC), or cyclic checksum, method typically adds 8 to 32 check bits to potentially large data packets and yields an error detection capability approaching 100 percent. The CRC error-detection method treats the packet of data to be transmitted as a large polynomial. The transmitter takes this message polynomial and, using polynomial arithmetic, divides it by a given generating polynomial, and produces a quotient and a remainder. The quotient is discarded, but the remainder (in bit form) is appended to the end of the original message polynomial. When the data plus remainder arrive at the destination, the same generating polynomial is used to detect an error.

Simple parity example: If the 7-bit ASCII character set is used, a parity bit is added as the eighth bit. Suppose, for example, that the character “k”—which is 1101011 in binary—is transmitted and even parity is being applied. In this case, a parity bit of 1 would be added to the end of the bit stream, as follows: 11010111. If you send 11010111 but 01010111 is received, the receiver will count the 1s, see the odd number, and know an error exists. The main problem with simple parity is that it can detect only an odd number of erroneous bits per character. Note that when the 7-bit ASCII character set is used, a parity bit is added for every 7 bits of data, resulting in a 1:7 ratio of parity bits to data bits. Thus, simple parity produces relatively high ratios of check bits to data bits, while achieving only mediocre (50 percent) error-detection results.

Longitudinal parity example: Suppose you send the following block (the right most bit is the parity bit for the row):

Row 1: 1 1 0 1 0 1 1 1

Row 2: 1 1 1 1 1 1 1 1

Row 3: 0 1 0 1 0 1 0 1

Row 4: 0 0 1 1 0 0 1 1

Parity : 0 1 0 0 1 1 1 0

If one bit is altered in Row 1, the parity bit at the end of Row 1 signals an error. In addition, the parity bit for the corresponding column also signals an error. If two bits in Row 1 are flipped, the Row 1 parity check will not signal an error, but two column parity checks will signal errors. This is how longitudinal parity is able to detect more errors than simple parity. Note, however, that if two bits are flipped in Row 1 and two bits are flipped in Row 2, and the errors occur in the same column, no errors will be detected.

The CRC method is almost foolproof. In cases where the size of the error burst is less than r + 1, where r is the degree of the generating polynomial, error detection is 100 percent. The following table summarizes the performance of the CRC technique.
Type of error     Error Detection Performance
Single-bit errors     100 percent
Double-bit errors     100 percent, as long as the generating polynomial has at least three 1s (they all do)
Odd number of bits in error     100 percent, as long as the generating polynomial contains a factor x + 1 (they all do)
An error burst of length < r + 1     100 percent
An error burst of length = r + 1     very near 100%
An error burst of length > r + 1

Once an error has been detected, the three possible control options are: do nothing, return an error message, and correct the error. The “doing nothing” option is used by some of the newer transmission technologies, such as frame relay. Frame relay assumes that fiber-optic lines will be used, which significantly reduces the chance for errors. If an error does occur, a higher-layer protocol will note the frame error and will perform some type of error control.

The option of returning an error message to the transmitter is the most common response to an error and involves using Stop-and-wait protocols and sliding window protocols. A Stop-and-wait protocol allows only one packet to be sent at a time. Before another packet can be sent, the sender has to receive a positive acknowledgment (ACK). If the data arrives with an error, the receiver responds with a negative acknowledgment, such as NAK or REJ (for reject). If the sender receives a NAK, it resends the previous data packet. A sliding window protocol allows multiple packets to be sent at one time. A receiver can acknowledge multiple packets with a single acknowledgment. A typical size for the sliding window is 7. This means that the sender can transmit up to 7 packets without receiving an acknowledgment.

Error correction is a possibility if the transmitted data contains enough redundant information so that the receiver can properly correct the error without asking the transmitter for additional information. This form of error control requires a high amount of overhead and is used only in special applications in which the retransmission of data is not desirable. A Hamming code is a specially designed code in which special check bits have been added to data bits such that, if an error occurs during transmission, the receiver may be able to correct the error using the included check and data bits.

Let’s say we want to transmit an 8-bit character, for example, the character 01010101. Let’s number the bits of this character b12, b11, b10, b9, b7, b6, b5, and b3. Now add to these data bits the following check bits: c8, c4, c2, and c1, where c8 generates a simple even parity for bits b12, b11, b10, and b9. The check bit c4 will generate a simple even parity for bits b12, b7, b6, and b5. Check bit c2 will generate a simple even parity for bits b11, b10, b7, b6, and b3. Finally, c1 will generate a simple even parity for bits b11, b9, b7, b5, and b3.

Note that c8 “covers” bits b12, b11, b10, and b9, which are 0101. If we generate an even parity bit based on those four bits, we would generate a 0. Thus, c8 equals 0. c4 covers b12, b7, b6, and b5, which are 0010, so c4 equals 1. c2 covers b11, b10, b7, b6, and b3, which are 10011, so c2 equals 1. c1 covers b11, b9, b7, b5, and b3, which are 11001, so c1 equals 1. Consequently, if we have the data 01010101, we would generate the check bits 0111. This 12-bit character is now transmitted to the receiver. The receiver accepts the bits and performs the four parity checks on the check bits c8, c4, c2, and c1. If nothing happened to the 12-bit character during transmission, all four parity checks should result in no error. But what would happen if one of the bits is corrupted and somehow ends up the opposite value? For example, what if bit b9 is corrupted? With the corrupted b9, we would now have the string 010000101111. The receiver would perform the four parity checks, but this time parity errors would exist. More precisely, because c8 checks b12, b11, b10, b9, and c8 (01000), there would be a parity error. c4 checks b12, b7, b6, b5, and c4 (00101), and thus would produce no parity error. c2 checks b11, b10, b7, b6, b3, and c2 (100111), and would produce no parity error. c1 checks bits b11, b9, b7, b5, b3, and c1 (100011), which would result in a parity error. Notice that if we examine just the check bits and denote a 1 if there is a parity error and a 0 if there is no parity error, we would get 1001 (c8 error, c4 no error, c2 no error, c1 error). 1001 is binary for 9, telling us that the bit in error is in the ninth position.

Ever get mad at someone or just need to vent or just beat something up to make yourself feel better? Well, you don’t have to admit it for all of us to know we have. Now there is a virtual world in which you can pick on someone and vent your feelings and no one gets hurt.

You can reach my brute here and pick a fight with him any time you want and vicariously take out your anger at me. Create your own character, its simple, quick and free and you don’t even have to sign up. Then get to fighting, its fun and quite addictive really.

Check me out: Major Mike’s Brute and pick a fight with me, it will be fun. You can find the name of my pupils by checking out my dojo and to check out each of them, type:

http://[put their name here].mybrute.com

Some of the high ranking officers are as follows:

• Major J’s Brute
• Lt. Leo’s Brute
• Lt. Heidi’s Brute
• Sgt. Lucius’s Brute
• Lil Citrine’s Brute

Since you can fight the same person only once a day, come pick a fight with me first and then try my other formidable pupils, you might surprise yourself.

Frequency division multiplexing (FDM) is the assignment of nonoverlapping frequency ranges to each “user” of a medium. To allow multiple users to share a single medium, FDM assigns each user a separate channel. A channel is an assigned set of frequencies that is used to transmit the user’s signal. In frequency division multiplexing, this signal is analog. Frequency division multiplexing is used in many fields of communications, including broadcast television and radio, cable television, and cellular telephones. Videoconferencing is another common application in which two or more users transmit frequency multiplexed signals, often over long distances. A few companies also use frequency division multiplexing to interconnect multiple computer workstations or terminals to a mainframe computer.

In general, the device that accepts input from one or more users is called the multiplexor. The device that is attached to the receiving end of the medium and splits off each signal to deliver it to the appropriate receiver is called the second multiplexor, or demultiplexor. To keep one signal from interfering with another signal, a set of unused frequencies called a guard band is usually inserted between the two signals, to provide a form of insulation.

Time division multiplexing of a medium involves dividing the available transmission time on a medium among the users. Time division multiplexing has two basic forms: synchronous time division multiplexing and statistical time division multiplexing.

Synchronous time division multiplexing accepts input from a fixed number of devices and transmits their data in an unending repetitious pattern. What would happen if one input device sent data at a much faster rate than any of the others? An extensive buffer (such as a large section of random access memory) could hold the data from the faster device, but this buffer would provide only a temporary solution to the problem. A better solution is to sample the faster source multiple times during one round-robin pass. What happens if a device has nothing to transmit? In this case, the multiplexor must still allocate a slot for that device in the high-speed output stream, but that time slot will, in essence, be empty. As with a simple connection between one sending device and one receiving device, maintaining synchronization across a multiplexed link is important. To maintain synchronization between sending multiplexor and receiving demultiplexor, the data from the input sources is often packed into a simple frame, and synchronization bits are added somewhere within the frame

T-1, ISDN, and SONET/SDH telephone systems are common examples of systems that use synchronous time division multiplexing.

In T-1 multiplexing, the frames of the T-1 multiplexor’s output stream are divided into 24 separate digitized voice/data channels of 64 kbps each. Users who wish to use all 24 channels are using a full T-1, while other users who need to use only part of the 24 channels may request a fractional T-1. The T-1 multiplexed stream is a continuous repetition of frames. Each frame consists of 1 byte from each of the 24 channels (users) plus 1 synchronization bit. If one of the 24 input sources has no data to transmit, the space within the frame is still allocated to that input source. The input data from a maximum of 24 devices is assigned to fixed intervals.

ISDN multiplexing, which is the synchronous time division multiplexing technique used to support ISDN, comes in two basic forms: Primary Rate Interface (PRI) and Basic Rate Interface (BRI). PRI was designed for business applications and, like T-1, it multiplexes 24 input channels together onto one high-speed telephone line. BRI, the interface more often used by consumers to connect their home and small business computers to the Internet, multiplexes only three separate channels onto a single medium-speed telephone line. Two of the three channels—the B channels— carry either data or voice, while the third channel—the D channel—carries the signaling information that controls the two data/voice channels.

Synchronous Optical Network (SONET) and Synchronous Digital Hierarchy (SDH) are powerful standards for multiplexing data streams over a single medium. They are two almost identical standards for the high-bandwidth transmission of a wide range of data types over fiber-optic cable. SONET and SDH have two features that are of particular interest in the context of multiplexing. First, they are both synchronous multiplexing techniques. A single clock controls the timing of all transmission and equipment across an entire SONET (or SDH) network. Second, SONET and SDH are able to multiplex varying speed streams of data onto one fiber connection. SONET defines a hierarchy of signaling levels, or data transmission rates, called synchronous transport signals (STS). Each STS level supports a particular data rate and is supported by a physical specification called an optical carrier (OC).

Statistical time division multiplexing (Stat TDM) transmits data only from active users and does not transmit empty time slots. To transmit data only from active users, the multiplexor creates a more complex frame that contains data only from those input sources that have something to send. Since not all sources transmit data, some type of address must be included with each byte of data, to identify who sent the data and for whom it is intended. For example, if the multiplexor is connected to four stations, then the addresses can simply be 0, 1, 2, and 3 for stations A, B, C, and D. In binary, the values would be 00, 01, 10, and 11, respectively. If the multiplexor transmits more than one byte of data at a time from each source, then an alternate form of address and data is required. To transmit pieces of data of variable sizes, a length field defining the length of the data block is included along with the address and data. Finally, the sequence of address/length/data/address/length/data… is packaged into a larger unit by the statistical multiplexor.

Wavelength division multiplexing (WDM) multiplexes multiple data streams onto a single fiber-optic line. It is, in essence, a frequency division multiplexing technique that assigns input sources to separate sets of frequencies. Wave division multiplexing uses different wavelength (frequency) lasers to transmit multiple signals at the same time over a single medium. The wavelength of each differently colored laser is called the lambda. Thus, WDM supports multiple lambdas. The technique assigns a uniquely colored laser to each input source and combines the multiple optical signals of the input sources so that they can be amplified as a group and transported over a single fiber.

A single fiber-optic line can support simultaneous transmission speeds such as 51.84 Mbps, 155.52 Mbps, 622.08 Mbps, and 2.488 Gbps. In addition, a single fiber-optic line can support a number of different transmission formats such as SONET, Asynchronous Transfer Mode (ATM), and others, in various combinations. Wavelength division multiplexing is also scalable. When WDM can support a large number of lambdas, it is often called dense wavelength division multiplexing (DWDM). This additional power does not come without a price tag, however. Coarse wavelength division multiplexing (CWDM) is a less expensive technology because it is designed for short-distance connections and has only a few lambdas, with a greater space between lambdas.

Discrete multitone (DMT) is a multiplexing technique commonly found in digital subscriber line (DSL) systems. DMT essentially combines hundreds of different signals, or subchannels, into one stream; unlike the previously discussed multiplexing techniques, however, DMT is designed such that all these subchannels are destined for a single user. The real power of DMT is the fact that each of the subchannels can perform its own quadrature amplitude modulation (QAM). For example, one form of DMT supports 256 subchannels, each of which is capable of a 60-kbps QAM modulated stream. Thus, 256 x 60 kbps yields a 15.36-million-bps system. Unfortunately, because of noise, not all 256 subchannels can transmit at a full 60-kbps rate. Those subchannels experiencing noise will modify their modulation technique and drop back to a slower speed.

Code division multiplexing (CDM) is a relatively new technology that has been used extensively by both the military and cellular telephone companies. Whereas other multiplexing techniques differentiate one user from another by either assigning frequency ranges or interleaving bit sequences in time, code division multiplexing allows multiple users to share a common set of frequencies by assigning a unique digital code to each user. Code division multiplexing is based upon a class of modulation techniques known as spread spectrum technology.

Spread spectrum technology is a technique used in the communications industry for modulating a signal into a new signal that is more secure and thus more resistant to wire-tapping. This technology falls into two categories—frequency hopping and direct sequence.

Let’s create an example using three mobile users: A, B, and C. Suppose mobile user A has been assigned the binary code 10010101, mobile user B the code 11100011, and mobile user C the code 00110011. If mobile user A wishes to transmit a binary 1, it transmits instead its codecode—10010101. If mobile user A wishes to transmit a binary 0, it transmits the inverse of its code—01101010. Actually, the mobile user transmits a series of positive and negative voltages—a positive voltage for a 1 and a negative voltage for a 0. Now, for example, let’s say mobile user A transmits a binary 1, mobile user B transmits a binary 0, and mobile user C transmits a binary 1. The receiver receives all three signals at the same time and adds the voltages. Then, to determine what each mobile user transmitted, the receiver multiplies the sums by the original code of each mobile user. If the result is greater than or equal to +8 in this 8-bit example, the value transmitted must have been a binary 1. Otherwise, the user transmitted a binary 0.

XYZ Corporation has two buildings, A and B, separated by a distance of 300 meters, or roughly 1000 feet. A 3-inch diameter tunnel runs underground between the two buildings. Building B contains 66 text-based terminals that need to be connected to a mainframe computer in Building A. The text-based terminals transmit data at 9600 bits per second. What are some good ways of connecting the terminals in Building B to the mainframe computer in Building A? Do any that maximize the throughput through the connection?

The four possible scenarios for connecting the terminals and mainframe computer are:

• Connecting each terminal to the mainframe computer by using separate point-to-point lines. Each line will be some form of conducted medium.
• Connecting all the terminals to the mainframe computer by using one multipoint line. This one line will be some form of conducted medium.
• Collecting all the terminal outputs, and using microwave transmissions, free space optics, or Wi-MAX to send the data to the mainframe computer.
• Collecting all the terminal outputs using multiplexing, and sending the data to the mainframe computer over a conducted-medium line.

A multiplexing scheme provides the most efficient use of a small number of cables running through the small tunnel. If a high-quality cable such as fiber-optic wire is used, it will minimize noise intrusion and allow for the greatest amount of future growth. The microwave/free space optic solution is also attractive, but may cost more than a pair of multiplexors and connecting cables. Wi-MAX might be a very interesting solution—one we will have to keep an eye on in the near future.

With a lossless compression technique, no data is lost due to compression. If a compression technique does lose some of the data as a result of the compression process, then it is referred to as a lossy compression technique.

One of the more common and simpler examples of lossless compression is run-length encoding. A second technique that can be used to compress data when a lossless compression is necessary is the Lempel-Ziv technique. This technique is quite popular and is used by programs such as pkzip, WinZip, gzip, UNIX compress, and Microsoft compress.

Music and video have properties that can be exploited in order to perform an effective compression. Let’s consider music for instance. When one is listening to music, if two sounds play at the same time, the ear hears the louder one and usually ignores the softer one. Also, the human ear can hear sounds only within a certain range. Consequently, the sounds that usually occur at the extremes of the normal hearing range cannot be heard well or at all by the human ear. Audio engineers take advantage of these (and other) facts to compress music through techniques called perceptual noise shaping, or perceptual encoding. If the perceptual encoding is performed well, the compressed version of an audio stream sounds fairly close to the uncompressed version even though some of the original data has been removed.

Run-length is a compression technique that replaces any repetitions of the same bit or byte that occur in a sequence of data with a single occurrence of the bit/byte and a run count, or simply with a run count. Run-length encoding is used in compressing video images as well as compressing other documents that have repeated characters. For example, consider the following string: 000001000000000110000000000000001000011000000000000000000001000000. A compression technique based on run-length encoding would compress the 0s by first counting the “runs” of 0s—that is, it would start by counting the 0s until a binary 1 is encountered. If no 0s exist between a pair of 1s, then that pair would be considered a run that contains zero 0s. Performing this on our data string, we find the following runs: 5 9 0 15 4 0 20 6. The next step in this compression technique would be to convert each of the decimal values (5, 9, 0, 15, and so on) into 4-bit binary values, or nibbles.

MP3, which is an abbreviation for MPEG (Moving Picture Experts Group) Audio Layer-3, is a common form of audio compression. After employing a perceptual encoding, the MP3 encoder produces a data stream that has a much slower data rate than that of conventional CD-quality music. This kind of reduction in data leads to a 10 to 1 compression ratio for a typical song. Thus, the compression process reduces both the amount of data as well as the data transfer rate of the music within the music-generating device.

JPEG is a technique that is very commonly used to compress video images. The process of converting an image to JPEG format involves three phases: discrete cosine transformation; quantization; and run-length encoding. To perform the discrete cosine transformation, the image is broken into multiple 8 by 8 blocks of pixels, where each pixel represents either a single dot of color in a color image or a single shade of black and white in a black and white image. The second phase in the conversion of an image to a JPEG file is the quantization phase. The object of this phase is to try to generate more zero entries in the 8 by 8 block. To do this, we need to divide each value in the block by some predetermined number and disregard the remainders. Finally, the third phase of the JPEG compression technique is to take the matrix of quantized values and perform run-length encoding on the zeros. In this phase, we take advantage of the fact that we would achieve longer runs of zeros if we encode on a diagonal.

An interface standard can consist of four parts, or components, all of which reside at the physical layer: the electrical component, the mechanical component, the functional component, and the procedural component. All of the standards currently in existence address one or more of these components.

The electrical component deals with voltages, line capacitance, and other electrical issues. The mechanical component deals with items such as the connector or plug description. Questions typically addressed by the mechanical component include: What is the size and shape of a connector? How many pins are found on the connector? What is the pin arrangement? The functional component describes the function of each pin that is used in a particular interface. The procedural component describes how the particular circuits are used to perform an operation.

The EIA-232F is an interface standard for connecting a computer or terminal (or DTE) to a voice-grade modem (or DCE) for use on analog public telecommunications systems. The EIA-232F interface standard is actually a composite of several other standards: the ITU V.28 standard, which defines EIA-232F’s electrical component; the ISO 2110 standard, which defines the mechanical component; and the ITU V.24 standard, which defines the functional and procedural components. The electrical component of EIA-232F incorporates ITU’s V.28 standard, which describes the electrical characteristics for a connection between the DTE and DCE. EIA-232F incorporates the ISO 2110 standard to define its mechanical component. To define functional and procedural components, EIA-232F incorporates the ITU’s V.24 standard. V.24 defines a list of 43 interchange circuits that can be used by other standards for defining an interface. Finally, it is worth noting that an EIA-232F interface is what we call a full-duplex connection.

The Universal Serial Bus (USB) is a modern standard for interconnecting many types of peripheral devices to computers. More precisely, USB is a digital interface that uses a standardized connector (plug) for all serial and parallel type devices. USB is a relatively thin, space-saving cable to which devices can be added and removed while the computer and peripheral are active—a feature that makes USB hot pluggable. It is possible to connect one USB peripheral to another. It is also possible for the USB cable to provide the electrical power required to operate the peripheral. Finally, data transfer over a USB cable is bidirectional, but only one device may transmit at one time. The mechanical component of USB strictly specifies the exact dimensions of the interface’s connectors and cabling. Four types of USB connectors are specified— a connector A, a connector B, a mini-connector A, and a mini-connector B.

A full-duplex connection is one in which both sender and receiver may transmit at the same time. Some systems, for various reasons, allow only one side or the other (that is, either the sender or the receiver) to transmit at one time. This type of connection is an example of a half-duplex connection.

FireWire is a type of interconnection between peripheral devices and a microcomputer. FireWire is an easy-to-use, flexible, and low-cost digital interface that is capable of supporting transfer speeds of up to 400 Mbps. FireWire is similar to USB in that it is hot pluggable. FireWire supports two types of data connections: an asynchronous connection and an isochronous connection.

SCSI, which stands for Small Computer System Interface and is pronounced “skuzzy,” is a technique for interfacing a computer to high-speed devices such as hard disk drives, tape drives, CDs, and DVDs. SCSI was designed to support devices of a permanent nature. Consequently, SCSI is a systems interface and correspondingly, SCSI optimizes the interaction between the input/output device and the central processor of a computer. Another, newer variation on the SCSI interface is the iSCSI. iSCSI, or Internet SCSI, is a technique for interfacing disk storage to a computer via the Internet.

InfiniBand is a serial connection or bus that can carry multiple channels of data at the same time. It can support data transfer speeds of 2.5 billion bits (2.5 gigabits) per second and address (interconnect) thousands of devices, using both copper wire and fiber-optic cables. Fibre Channel is similar to InfiniBand in that it too is a serial, high-speed network that connects a computer to multiple input/output devices. Fibre Channel also supports data transfer rates up to billions of bits per second, but it can support the interconnection of up to 126 devices only.

In an asynchronous connection, a single character, or byte of data, is the unit of transfer between the sender and receiver. The sender prepares a data character for transmission, transmits that character, then begins preparing the next data character for transmission. An indefinite amount of time may elapse between the transmission of one data character and the transmission of the next character. To prepare a data character for transmission, a few extra bits of information are added to the data bits of the character to create a frame: a start bit, a stop bit, and a parity bit. An asynchronous connection has advantages and disadvantages. On the positive side, generation of the start, stop, and parity bits is simple and requires little hardware or software. On the negative side, given that seven data bits (ASCII character code set) are often combined with one start bit, one stop bit, and one parity bit, the resulting transmitted character contains three check bits and seven data bits, for a 3:7 ratio.

With a synchronous connection, the unit of transmission is a sequence of characters. This sequence of characters may be thousands of characters in size. Similar to the way start, stop, and parity bits frame the data bits in an asynchronous connection, a start sequence (flag), a control byte, an address, a checksum, and an end sequence (flag) frame the data bits in a synchronous connection. Three ways are used to maintain synchronization in synchronous connections:

• Sending a synchronizing clock signal over a separate line that runs parallel to the data stream.
• If transmitting a digital signal, use a Manchester code.
• If transmitting an analog signal, use the properties of the analog signal itself for self-clocking.

An isochronous connection is a special kind of data link connection used to support various types of real-time applications. A real-time application is unique in that its data must be delivered to a computer at just the right speed. If the data is delivered too slowly, then the music will distort, or the video will break up. If the data is delivered too fast, the receiving computer may not be able to buffer the data, which may result in the data being lost. Both USB and FireWire can support isochronous connections. Before any data transfer can begin, however, the proper isochronous resources must be allocated within the connection. Another issue that is resolved between sender and receiver is that error checking should be disabled on both ends.

One type of connection that is based upon synchronous and asynchronous connections is the terminal-to-mainframe computer connection. The two types of terminal-to-mainframe connections are point-top-point and multipoint connections. If multiple devices are to share a single line, something special must be done so that more than one device does not try to transmit at the same time. A technique called polling, which allows only one terminal to transmit at one time, successfully controls multiple terminals that share a connection to a mainframe computer.

Roll-call polling is the polling method in which the mainframe computer (primary) polls each terminal (secondary), one at a time, in round-robin fashion. An alternative to roll-call polling is hub polling. A primary that performs hub polling polls only the first terminal, which then passes the poll to the second terminal, and each successive terminal passes the poll along. When the primary wishes to send data to a terminal, it uses a process called selection. In selection, the primary creates a packet of data with the address of the intended terminal and transmits the packet. Only that specific terminal recognizes the address and accepts the incoming data. A primary can also use selection to broadcast data to all terminals.

If control simplicity is your primary goal, point-to-point connection of terminals is clearly superior to multipoint connections. With point-to-point connections, polling is not necessary because there is only one terminal per line. Another disadvantage of multipoint connections in which several terminals share one connection is that each terminal has to wait while another terminal transmits. On the other hand, although point-to-point connections make more efficient use of transmission time, they also require more expensive hardware.

The credit industry has been a mess to say the least. There isn’t a person in this country who is not affected by it and much of the frustration comes from the way the companies do what they want without any concern to how it affects the people. Many have talked about getting it under control but the fact is that politicians get money from the lobby to sell out American people and so it is unlikely that anyone chest thumping for change will actually accomplish it. However, all the power to the president and we wish him the best of luck and here are some issues of concern.

The momentum for tighter regulation of credit card issuers continues to grow, with President Obama promising to push for stronger legal protections for consumers.

In a meeting with the heads of 14 major banks last week, President Obama said he’d support legislation that bans unfair rate increases and fees, pushes for clear and transparent contract terms and card statements, and increases industry accountability.

All of this comes at a time when two main pieces of legislation are working their way through Congress. One of which, a proposed Cardholders’ Bill of Rights from Rep. Carolyn Mahoney, D.-NY, has already cleared the House Financial Services Committee by a decisive 48 to 19 vote. The bill would strengthen consumer protections offered by Federal Reserve rules and possibly speed up the date they go into effect (which, for now, is July 1, 2010). Also, Sen. Chris Dodd (D., Conn.), chairman of the Banking, Housing and Urban Affairs committee, has proposed a bill dubbed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act that would offer even more consumer protections, including banning practices such as “any time, any reason” interest rate increases. (Last week, Sen. Dodd also called for an emergency freeze on credit card rates to be imposed by the Fed.)

What should legislators and regulators be focusing on right now? SmartMoney has been reporting card issuers’ practices throughout the financial crisis. Here are eight of the most controversial issues for consumers.

1. Cutting card holders’ credit limits — even below their balance

The issue: As SmartMoney has reported, credit-card companies have been slashing borrowers’ credit limits in an effort to contain their rising default rates, in some cases to below the borrowers’ outstanding balances. The targets? Their best customers, says Dennis Moroney, research director and senior analyst for Tower Group, a research and advisory services firm focused exclusively on the financial-services industry. “They’re reducing lines on the [people with] better scores so that they can minimize the impact on the FICO score deterioration,” he says. (The higher one’s credit score, the more likely it is they are using a small portion of their available credit, which means their score will suffer less if the limit on one or more of their cards is lowered. Read more on this below.)

Impact on cardholders: Reducing one’s limit close to or below the outstanding balance may not only trigger an over-limit fee, it can also hurts the cardholder’s credit score. That’s because the credit utilization ratio, or the amount of credit used relative to the available limit, determines 30% of your credit score.

The fix: Under the new Fed rules, issuers have to give 45 days’ notice if the reduction brings the cardholder close to their outstanding balance, says Linda Sherry, spokeswoman for advocacy group Consumer Action. But these rules don’t take effect until July 1, 2010. Maloney’s bill would let consumers set “hard” credit limits that cannot be exceeded in the first place.

2. Raising interest rates, even for the best customers

The issue: The Fed may have brought short-term interest rates close to 0%, but credit-card issuers have been lifting interest rates across the board. “At a time when banks are receiving federal aid and can borrow from the Federal Reserve at almost [no cost], it just does not make sense that interest rates should be that high,” says Nick Bourke, manager of the Safe Credit Cards Project at the Pew Charitable Trusts, a nonprofit group. A recent survey by the organization found that 93% of credit cards offered by the largest 12 issuers have contract terms that allow them to hike rates at any time, for any reason.

Impact on cardholders: Borrowers will take longer to pay off debts – and will pay more interest as they do so. To crunch the numbers yourself, use SmartMoney’s “How Much Interest Will You Pay?” worksheet.

The fix: The Fed rules prohibit banks from increasing rates in the first year after opening a credit card. Afterwards, a 45-day notice is required. Dodd’s Credit CARD Act would ban “any time, any reason” rate increases.

3. Penalty APRs as high as 32%

The issue: Even the most responsible credit card user could get hit with a 30% or higher penalty rate if they pay a day late or exceed their limit by $1. According to the Pew Charitable Trusts survey, 87% of cards allowed such automatic penalty increases, while the median penalty rate was 27.99%.

Impact on cardholders: Consumers end up paying high interest on past purchases.

The fix: The Fed prohibits such rate increases, except when a payment is more than 30 days late. Under Dodd’s CARD Act any rate increases would only apply to subsequent purchases.

4. Banks make consumers pay down low-rate balances before high-rate debt

The issue: Issuers apply consumer payments to low-rate balances while their high-rate balances keep growing.

Impact on cardholders: Anyone who takes advantage of a low-rate promotion, such as a 0% APR balance transfer, will pay more than 0% if they use the same card for purchases at a regular rate. “Any payment you send in will go to the 0% balance while your purchases keep running up high interest charges,” says Bourke.

The fix: Fed rules require payments exceeding the minimum to be allocated to highest-rate balance, or to all balances on a pro-rated basis. Dodd’s CARD Act would require allocation of the whole payment to the highest rate balance.

5. Shutting down people’s accounts

The issue: In an effort to limit their risk exposure, banks have been closing unused credit cards. Consumers who dust off such a card in hopes of keeping it may run into a surprise. “If someone is inactive for a long period of time and out of the blue the card comes out of the kitchen drawer and they start using it, chances are things have changed, and not in a good way,” says Tower Group’s Moroney.

Impact on cardholders: Closing an unused credit card can lower your score, since it lowers your available credit and increases your credit utilization ratio.

The fix: So far, there is little to address this in the Fed rules and proposed bills.

6. Cutting back rewards

The issue: Scaling down on rewards programs, some issuers have been quietly slipping in expiration dates for rewards points, cutting back promotional programs and asking cardholders to spend more points or miles for free flights. (For more details, read our story.)

Impact on consumers: It may do no monetary harm, but is unfair to consumers who may favor one card over another because of its rewards program, says Sherry.

The fix: The Fed doesn’t address rewards programs. Dodd’s