AT&T and America Online are reportedly considering a deal to grant AOL, and possibly other Internet service providers, "enhanced access" to AT&T cable systems.
Citing executives close to the companies, The New York Times said Monday that the pair could be working toward a pact that would diminish the role in the industry of Excite@Home (ATHM), which provides Internet links over cable lines.
Also:
Cisco plans huge KPMG investment
Net stamp pair gain approval
Real puts a price on Jukebox
Pro-China hacker hits Taiwan
EMC agrees to buy Data General- - - - - -
AT&T has a 58 percent voting stake in Excite@Home, which it gained when it acquired then AtHome-investor TCI. But before that deal was completed, AtHome had agreed to acquire Excite.
In recent months, AT&T (T) and AOL (AOL) have feuded over access to cable systems, with AT&T insisting that since it's paying billions for upgrades, it should retain complete control over who uses the lines. But The Times said both companies realize that a deal could enable them to take advantage of each other's technical and marketing strengths.
Excite@Home may have received warning of developments two weeks ago at a board meeting when AT&T Chairman C. Michael Armstrong, an Excite@Home director, reportedly expressed concern that AtHome's business of using cable modems to connect Internet users might not be a "great strategic fit" with Excite's Web portal service, according to a person at the meeting.
The source quoted Armstrong as saying it might make more sense for AtHome to focus on high-speed communications links, while considering selling or spinning off Excite's Web content business, The Times said.
- Back to topBoosting bean-counting: Cisco Systems said it plans to invest more than US$1 billion in KPMG – a 20 percent stake in the consulting and accounting firm – to help expand its Internet-based services.
Under the agreement, KPMG will hire 4,000 service professionals and engineers over the next 18 months, and build six technology centers.
"We chose to make an investment in KPMG's consulting business because KPMG understands how the Internet will reshape the future of all businesses," said John Chambers, president and chief executive of Cisco, in a statement.
Cisco (CSCO), Lucent Technologies (LU), Nortel Networks of Canada, and other data-networking and telecommunications equipment companies are racing to develop next-generation communications gear that will transmit data, voice, and video using Internet Protocol. In this case, Cisco will provide the hardware while KPMG will offer the support, services, and software needed to move business functions such as sales tracking, procurement, and others onto the Web.
The deal could run into regulatory problems, however. The Wall Street Journal, citing unnamed Securities and Exchange Commission officials, said the SEC could determine that the relationship poses conflict-of-interest problems for the auditing arm of KPMG. KPMG doesn't audit Cisco, The Journal said, but Cisco's many alliances with other companies could eventually overlap with KPMG's public-auditing functions.
6. Back to topGoing postal: Stamps.com and privately held E-Stamp said Monday they have received approval from the US Postal Service to sell stamps on the Internet. The move marks the first time in 80 years that the federal agency has allowed a company to offer a new form of postage to customers.
In separate statements, [Stamps.com](http://www.stamps.com/) and [E-Stamp](http://www.estamp.com/) said they were the only two companies to receive regulatory approval for online postage sales.
Using the Stamps.com service, customers can log onto the company's site and print stamps with an ordinary laser or ink jet printer, requiring no hardware. The company said it will start offering the service as a test to consumers in Hawaii, California, and Washington, DC. After 12 months of testing, it will begin distribution nationally.
E-Stamp said online postage is available to consumers immediately. Its service requires software and a small device about the size of a roll of stamps that connects to a personal computer. Once connected to the E-Stamp site, consumers can buy postage using a credit card and download up to $500 of postage. Using the hardware, customers do not have to stay logged on to print stamps.
5\. [Back to top](#top)__Getting Real, for a price:__ RealNetworks ([RNWK](https://www.wired.com/stocks_quotes.asp?symbol=rnwk)) on Monday said it would begin selling an upgrade to RealJukebox, its popular free software for recording digital music.
Some 7 million people have already downloaded the free beta version of RealJukebox. RealJukebox Plus, at $29.99, offers a range of tools and technical support for high-quality music recording and customization while using smaller chunks of computer memory than the free version. Both versions of RealJukebox allow music downloads to next-generation portable music players such as RCA LYRA and Creative Nomad.
3\. [Back to top](#top)__Hack diplomacy:__ With tensions between Beijing and Taipei already running high, a hacker Sunday inserted pro-China messages on Taiwan government Web sites.
"Only one China exists and only one China is needed," read a message on the site for Control Yuan, an important Taiwan agency. In apparent references to President Lee Teng-hui's controversial call for "special state-to-state" ties between Taiwan and China, the message said Taiwan was and would always be an inseparable part of China.
The same messages – in Chinese and English – were placed in several other government Web sites, a Control Yuan official said on Monday. "It looks like it was the same person, who claimed to come from Hunan province," said the official, who declined to be identified.
4\. [Back to top](#top)__EMC calls for CLARiiON:__ Data-storage system provider EMC has agreed to buy Data General, maker of CLARiiON computer-network storage systems, for $1.1 billion in stock, the companies said Monday.
The deal values Data General ([DGN](https://www.wired.com/stocks_quotes.asp?symbol=dgn)) at about $19.58 a share ([EMC](https://www.wired.com/stocks_quotes.asp?symbol=EMC)), the companies said. Data General shares closed at $13.19 Friday on the New York Stock Exchange.
The merger pact comes one week after IBM ([IBM](https://www.wired.com/stocks_quotes.asp?symbol=ibm)) agreed to buy Mylex ([MYLX](https://www.wired.com/stocks_quotes.asp?symbol=mylx)), a maker of controllers and adapters used in data-storage systems, for $240 million. EMC is regarded as the market leader in this business.
Data General's CLARiiON storage products are recognized as among the most advanced mid-range storage systems on the market, and its research and development could find uses in EMC's existing products, the companies said.
*Reuters contributed to this report.*
