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February 2, 1999

Is Y2K Already Taking A Toll?

by T.E. Blair

As the clock ticks down to the new millennium, the topic of the Y2K bug becomes more prevalent. Companies, government agencies and individuals are working to ensure that they will be prepared for January 1, 2000. Electricity, telecommunications, 911 Services, cellular phones, pagers -- all run on computerized devices or systems that will be affected by the Y2K problem. Even devices you may not have considered to be affected, such as televisions, VCRs, security systems, microwaves, automobiles -- anything that uses a computer chip or component might be affected, causing an array of problems. But have Y2K problems already begun?

Two vastly different points of view are taking shape regarding Y2K. Some people believe that predictions have been grossly exaggerated. They believe predictions of a global disaster are the work of doomsday groups and overzealous individuals. Others believe that if only half of the predicted disasters occur, the world will still find itself in a state of chaos. It is these individuals who are sparking just one of the problems already affecting the world. Exaggeration or not, many individuals are stockpiling for the future. Food and other perishable items are hot commodities. Whether from a food shortage or a revisited depression, many feel it is "better to be safe than sorry." This stockpiling trend has many worried that panics may develop.

While some businesses may benefit from the Y2K panic, others are being negatively affected. Systems & Computer Technology Corp. (SCT), for example, suffered a 27 percent decline in its earnings. The company attributes its losses to delays in software purchases while customers solve their Y2K problems. Other similar companies might see the same trends, with larger corporate customers concentrating funds into Y2K preparation rather than investment in computer technology. Because of this, trading volumes have already increased for SCT, at an average nearly nine times higher than those of last year.

Preparation has been heralded as the best course of action. But preparation for possible Y2K problems has also begun to take its toll. The two solutions, expanding the date fields to four digits or manually converting computers and software to the proper century, both take manpower and money. Computer technicians must prepare for all of the dates that may cause malfunction. In addition to the first day of the year 2000, there are several dates in 1999 that must be addressed. The first may be coming up sooner then most people expect. Some computer programs and software packages were designed with a default testing date of 99/99. Some computers may interpret this date to be the ninety-ninth day of 1999, placing it at April 10th. Others will interpret this date as 9-9-99, or September 9th. In some Global Positioning System (GPS) transceivers, a re-initialization date was set for August 22, 1999. On this date, GPS location devices will think that it is January 6, 1980. And finally, along with the first day of the year 2000, there is the anomaly that 1900 was not a leap year but 2000 is. Additionally, not only must all components of the computer and software be made compliant, but any system that it interfaces or exchanges data with must also be compliant to avoid contamination.

The consulting firm Gartner Group has estimated that "up to $600 billion will be spent worldwide to rewrite 250 billion lines of code." But these preparations and changes are costing some companies more than just money. In a recent press release, Prodigy Communications announced that they will be shutting down the "Prodigy Classic" service in October. Company officials said that the costs of making their service Y2K compliant were simply not justified, and notified customers that it could not avoid the effects of the Y2K problem and must shut down. Prodigy's CEO, Samer Salameh, sent an e-mail message explaining that the company's nine- year-old service was "built using proprietary technologies that predate current Internet standards," and that the company's engineers were "unable to make them Y2K compliant."

For others, the cost of preparation has led to stronger measures. Arizona Senator John McCain has introduced a bill to offer companies making good-faith efforts to solve the Y2K glitch some protection from lawsuits. This type of bill is also being considered in Colorado, where bankers, stockbrokers, credit unions and trust companies are asking Colorado legislature to protect them. These are only the first of what is expected to be an onslaught of such bills. Why, if companies are preparing for Y2K problems, are such measures needed?

"Even if complete measures are taken, fifteen percent of compliant hardware and software may still fail," says one member of the Y2K committee in Solvay, New York. "It doesn't mean that these institutions aren't trying to be prepared, it's just that there are so many variables to consider."

In addition, although many companies and government agencies are testing, upgrades to equipment might be necessary. Even new computers and computer components may not be compliant. So where, finally, will all this money come from? How much of the costs will be deferred to taxes, and what will the cost be to the average person?

In what is bound to be a year of discoveries, we can only hope that the doomsday predictions are exaggerated. But it is clear that we are already feeling some of the effects associated with the turning of the millennium.

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