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Part One
  • Business
    Part Two
  • Federal
    Part Three
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    Where the Industries Stand
    In today's networked world, no office is an island. Whether a company makes it through January 2000 unscathed by the Y2K computer bug will depend on the smooth functioning of computer systems at myriad other organizations, such as those that provide package delivery, electric power, phone service, payroll checks and sewage treatment. As a result, the Year 2000 readiness of the nation's key economic "sectors" – specifically the energy, telecommunications and financial services industries – has emerged as a priority for everyone from regulators in Washington to small-business owners in Hawaii. The following is a closer look at those three critical sectors.
    For telephone companies, fixing the date problem is proving to be a Herculean undertaking. Many billing software systems, which have tens of millions of lines of computer code, require comprehensive revisions. Microchips "embedded" in electronic switches and other equipment need testing. Interconnection points with other carriers must be examined.

    The country's largest phone companies, including AT&T Corp. and Bell Atlantic Corp., say they are well along in their repair work. AT&T, for instance, has repaired 72 percent of the affected systems, said John Pasqua, a vice president in charge of AT&T's Year 2000 program. The glitch impacts less than 20 percent of the company's systems and less than 1 percent of the firm's total computer code needs fixing, he said. Still, the project isn't cheap for AT&T; It spent $113 million on the effort last year and plans to shell out $350 million this year, much of it for testing.

    "We must investigate every one of our systems," Pasqua said. "That's not a drop in the bucket."

    The Federal Communications Commission expects large carriers such as AT&T to enter the new millennium largely unscathed, but regulatory officials say they are concerned about many of the country's 1,300 small rural phone companies, many of which do not have a dedicated Y2K staff. The FCC and industry executives also are alarmed by the laggardly rate of repairs in many other countries. The Gartner Group, a consulting firm, estimates that as many as 10 percent of the world's 800 million phone lines will be connected to non-compliant phone networks.

    Like their telecommunications counterparts, utility companies face distinct challenges in fixing mainframe software, finding embedded devices in power plants and ensuring that the transmission networks they share with other firms work properly.

    For most companies, the mainframe side of the equation has been relatively straightforward; they started working on the issue more than a year ago and have a clear idea of just what needs to be done. It's the embedded chips that give industry executives and analysts pause: A typical coal-fired electric power plant can have hundreds of devices that rely on microchips, from temperature regulators to fire alarms.

    Washington Gas Light Co., for example, has found about 300 different types of embedded systems in its storage, distribution and metering facilities. But the company is still contacting manufacturers and performing tests to see what will and what won't work in 2000.

    Despite the embedded-chip problem, officials at Washington Gas, Virginia Power and Potomac Electric Power Co. maintain that their repairs are on schedule. Each plans to have most critical systems fixed by year's end and to devote most of next year to testing.

    Some legislators and analysts, however, question whether the sector as a whole is moving quickly enough. Only two of the 10 largest U.S. utility companies have fully completed checking their embedded systems, according to a survey recently conducted by a Senate committee. "Quite honestly, I think we are no longer at the point of asking whether there will be any power disruptions, but we are now forced to ask how severe the disruptions are going to be," said Sen. Christopher Dodd (D-Conn.).

    Of the country's critical sectors, the financial-services industry is the farthest ahead in tackling the date glitch, technology specialists say. In some cases, the problem was addressed years ago, because of the need to issue loans and trade securities that expire 30 years in the future. On other systems, banks started making fixes in the early 1990s, realizing the importance of date-related calculations to their day-to-day operations.

    NationsBank Corp., for instance, started checking its systems in October 1995. The bank, which has devoted 300 full-time employees and 1,900 part-timers to the task, is halfway through the repair work and expects to be finished by the end of the year, said Robert H. Large, the company's Y2K director.

    Among the systems it's playing close attention to are automated-teller machines. "It was one of the earliest things we've looked at," Large said. "We've identified all the software and hardware changes we need to make."

    On Wall Street, the securities industry last week completed a initial test of its systems with only minor problems. Early next year, brokerage firms will conduct a full-scale simulation of stock trading in January 2000.

    – Rajiv Chandrasekaran

    © Copyright 1998 The Washington Post Company

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