The Daily Herald from Chicago, Illinois • Page 41

Page 4 BUSINESS Wednesday, November 5,1997 simplifies its basic interstate residential pricing plan Reuters NEW YORK Corp. said Tuesday it was "simplifying" its pricing plan for basic interstate residential calls and eliminating fees related to distance. Under the new formula, will split its interstate rates into three different time periods peak, off-peak and weekend. Calls will be priced at one rate dur- ing each time period, regardless of the distance called. An spokesman said the new pricing formula was "revenue neutral" for the company.

"Some people may pay more, some people may pay less. After all that balances out, it's revenue neutral," said spokesman Mark Siegel. The price changes take effect Saturday. The new pricing plan does not apply to customers who already are participating in a calling plan, such as the One Rate promotion, said. It is difficult to determine how individual phone bills will change since it "depends on when they make calls," Siegel said.

Under the new plan, per-minute prices for peak, off-peak and weekend calls are 28 cents, 16 cents and 13 cents, respectively. The new time periods are: "Peak," which runs from 6 a.m. to 5:59 p.m. Monday through Friday. "Off-peak," which extends from 6 p.m.

to 5:59 a.m. Monday through Friday. "Weekend," which includes all day Saturday and Sunday. The new pricing formula extends the time period for the highest rate by three hours. The lowest weekend rate has been extended to include all day Saturday and Sunday, instead of ending at 4 p.m." Sunday, Siegel said.

He gave the following examples of the effect of the new plan: A 10-minute coast-to-coast call made at 7:30 p.m. Sunday will cost $1.30 under the new plan, down from $1.80 previously. Safety-Kleen in Elgin became the target of an unsolicited takeover bid Tuesday by Laidlaw Environmental Services. The company Said it WOUld Consider the Offer. Daily Herald Tonga SAFETY-KLEEN: Laidlaw makes takeover bid Continuedfrom Page 1 through, Laidlaw will get a readymade network to collect hazardous waste from smaller customers like auto shops, factories, dry cleaners and printing businesses.

"It would take a lot of money to build the network that (Safety-Kleen) has got at this point," Hutchinson said. Bullock also indicated that Laidlaw may take a close look at Safety-Kleen's oil refining business, which has been a drag on its performance. Low oil prices and a price war in the oil recovery business hit Safe- ty-Kleen and its 7,300 employees hard this year, slowing its growth prospects. In August, Safety-Kleen Corp. dismissed President and Chief Executive Officer John "Jack" Johnson Jr.

because it was dissatisfied with growth and earnings figures.The company's second- quarter revenue grew 9 percent to $230 million but earnings were down 2 percent. For its third-quarter ended Sept. 6, Safety-Kleen's profit rose 8 percent to $15.1 million, or 26 cents per share, while revenue grew 8 percent to $230 million. Erotic Web sites first produce big phone bills, then settlement Associated Press WASHINGTON Thousands of people who ran up huge phone bills trying to download erotic pictures to their computers will get $2.74 million in refunds from companies that rerouted their calls through the eastern European country of Moldova. The Federal Trade Commission said Tuesday the refunds are part of two settlements it reached with several firms and individuals who used a supposedly free software program to connect more than 38,000 consumers to costly international telephone numbers in effect hijacking their computer modems.

Internet visitors to four sites on the World Wide Web were told they could access erotic photographs by downloading the program. Unknown to the customers, the program cut them off from their local Internet providers and reconnected them to a number assigned to Moldova, an eastern European country that borders Romania. The calls then were routed to a Canadian site that charged the much higher Moldova phone rates while the photos were transferred to the user's computer. Phone charges, up to $2 a minute, continued to mount until the computer was turned off, even if the customer had left the erotic Web sites. Some bills totaled several thousand dollars.

The case came to the FTC's attention when workers noticed an increase in calls to Moldova. The settlements would require the defendants to pay and MCI, which will issue credits to the victims, and to the FTC, which will issue refunds to customers of other long-distance carriers. AIR: Fares favor vacationers over business Continued from Page 1 takes to get on a given flight. Such tactical tools have transformed airline economics during the past year. Fare sales once were few and fleeting when traffic was strong and fares were high, as has been the case this year.

But with a firmer handle on the demand for high-fare business tickets, carriers have run almost continuous leisure sales and significantly expanded the supply of cheap, advance-fare seats. For business travelers, that has meant packed planes as well as high fares. Load factors the percentage of seats filled have run at record levels, more than 70 percent, and many popular flights are completely filled all the time. "Ten years ago I would have said to you we probably couldn't get load factors as high as they've been in 1997," says Robert Crandall, chairman and chief executive of American Airlines and its parent, AMR Corp. This fell, American will begin phasing in a new, even more powerful yield-management system that is expected to boost its annual revenue by as much as $200 million.

With surprisingly high traffic and fares in September, airlines are posting record third-quarter earnings. Unit revenues are at all-time highs, and 1997 will mark the third-consecutive year of record profits for the airline industry, a milestone reached only twice before in its regulated days. Airlines also have benefited from a strong economy, limited capacity increases and muted competition, particularly among Math formula makes fare manipulation possible The Wall Street Journal The ability of airlines to manipulate fares charged to various kinds of customers began evolving in the 1980s after airline deregulation in 1978. Early systems lacked computing muscle, and carriers either sold too many cheap seats and left behind big-ticket customers, or held back too many business seats and flew sparsely filled airplanes. But in 1988, Bell Laboratories patented a mathematical formula that could perform rapid calculations on fare problems with thousands of variables.

As a result, "high fares get higher and low fares get lower," says Robert Cross, whose Aeronomics Inc. sells yield-management systems to airlines. The resulting price spread can be staggering. Take Flight 2015, American Airline's 5:30 p.m. flight from Chicago to Phoenix.

Its 125 coach seats are divided among seven fere "buckets," with round-trip tickets ranging from $238 to six times as much $1,404. In the weeks before each flight, American's yield-management computers constantly adjust the number of seats available in each bucket, taking into account tickets sold, historical ridership patterns and connecting passengers likely to use the route as one Teg of a longer trip. If advance bookings are slim, American adds cheap seats. If business customers buy more tickets than expected, the yield- management computer takes seats out of the discount buckets and preserves them for last- minute bookings that the database predicts still will show up. With 69 of 125 coach seats already soM four weeks before one recent departure of Flight 2015, American's computer began to limit the number of seats in lower- priced buckets.

A week later, it to- taUy shut off sales for the bottom three buckets, priced $300 or less. To a Chicago customer looking for a cheap seat, the flight was "sold out," although advance-purchase fares still were available to New York-to-Phoenix customers connecting in Chicago, because the overall fare structure for that one-stop trip was higher and because American had lots of seats available on the connecting New York-Chicago flights. One day before departure, with 130 passengers booked for the 125- seat flight, American still offered five seats at full fare because its computer database indicated 10 passengers were likely not to show up or take other flights. Flight 2015 departed full and no one was bumped low-fare start-ups. But many executives say airlines simply have learned to more effectively price their product, instead of attacking each other to gain market share.

Major carriers have grown reluctant to undercut each others' fares, knowing retaliation can be expensive. Besides, airlines have found that business travelers are more swayed by convenient schedules and frequent-flier programs than by price. Because of such factors, and heavy demand, carriers have readily endorsed each others' business-fare increases rather than trying to undermine them. "We've evolved from one of these cataclysmic, World War 111 industries to some equilibrium that's good for shareholders and employees and communities," says Gordon Bethune, Continental Airlines' chairman and chief executive. "Yield management is good for airlines, but it certainly isn't good for travelers," says Nancy Barrows, chief operating officer of Woodside Travel Trust, a major corporate-travel agency.

"It's pushed business fares artificially high." The effects are most striking in airline hub cities, where one carrier can dictate pricing. In Denver, where UAL United Airlines is king, business fares are up 24 percent this year and leisure fares are down 51 percent. In Dallas, where American dominates, business fares are up 26 percent while leisure fares are down 20 percent, according to American Express. Airlines argue that if they were gouging customers and colluding on prices, they would be earning more money. With centralized system, no fare reduction goes unnoticed The Wall Street Journal Competitive pressures aren't likely to drive business fares down, thanks to Airline Tariff Publishing Co.

ATPCO is owned by a group of 24 international airlines, including the seven largest U.S. carriers. Every carrier sends its fare changes to ATPCO, whose centralized computer system sends a download seven times a day to computer-reservation systems used by travel agents and to the airlines themselves. ATPCO ensures that no pricing change goes undetected. A few carriers even allow their computers to automatically change fares based on ATPCO changes, though most require a human to sign off.

At Houston- based Continental, pricing experts meet three tunes daily to review ATPCO-reported fare changes. Consumer advocates argue that ATPCO lessens pressure to lower prices because it removes competitive fears. Carriers often initiate fare boosts late in the week, then watch to see if competitors will match over the weekend, when travel agencies are closed and few business tickets are sold. If that doesn't happen, increases typically are pulled Sunday night. During the first weekend in September, several airlines raised business fares 5 percent.

That Sunday night, however, United instructed ATPCO to roll back the increase in markets where it competes with Southwest Airlines, which hadn't matched the increase. When ATPCO mistakenly rolled back the increase in all United markets, major carriers like American immediately followed suit. Early Monday morning, United reinstituted the 5 percent increase in its non-Southwest markets. Within 24 hours, other major carriers had done the same. "It certainly looks like they have a way of getting everybody to do the same thing," says Pitts Carr, an Atlanta attorney who sued carriers for anticompetitive pricing practices in 1992.

SUCCESS: Company sees Windows of opportunity Continuedfrom Page 1 "We were ready to go," Harold said. "Sometimes I wish we had quit earlier." Bhatia and Harold introduced Install- Shield to the developer community during a 1990 Windows operating system conference in Bostcm. "We packed up a car and jammed everything in" for the trip, Harold recalls. "We were up the whole night woriting on a demo for tiie conference. Right at the end, we got everything together." Developers liked what they saw.

They had messages on their answering machine from people who had seen InstallShield at the conference before they even returned home. To build on the interest, they took out full-page advertisements in programming magazines. "The sates started to take off in 1994, 1995," Bhatia said. "Certainty in 1995, Microsoft's introduction of Windows 95 was a big event for us." Today the company has an attractive office in a Schaumburg office building and 110 employees. Sales have at least doubled each of the last three years.

Bhatia expects revenue to reach $23 million this year. Chester Wilson, development manager for Microsoft in Redmond, Wash, credits InstallShield's success with its customer-service focus. InstallShield also keeps up with the constant changes in technology. "They're really good at working with the product groups to figure out what's coming up," Wilson said By working with Microsoft during the early testing phase of new operating systems, such as Windows 95 and Windows NT, InstallShield is able to have its products available for the more far- reaching testing phase when software developers test and write software for the product It makes it more likely the software developers win use Microsoft and InstallShield products. Microsoft uses InstallShield software both for its internal software applications and in the products it sells, Wilson said Microsoft has its own product that has a similar function, but is more complex, Wilson said More software devel- opers wiUiin Microsoft are opting to use InstallShield "Their tool is much easier to use," he said Most of InstallShield's customers buy one of its off-the-shelf packages.

But the company recently created a consulting business to work with large customers with complex custom needs. The custom work now represents 10 percent of its business. For the future, Bhatia sees the company continuing to grow rapidly, although at a somewhat more tempered pace than it has. InstallShield's business plan foresees a public stock offering within the next 18 months to two years. a first milestone to growing and building an even larger software company," Bhatia said of taking the company public.

Issuing stock also will give the company the financial capital it needs to acquire new technologies, he said Bhatia and Harold also plan to keep the company here. They like their Schaumburg location because of its convenience. They also avoid some of the dynamics of a technology center like Silicon Valley, where programmers hop from job to job looking for better offers, Bhatia said 'Today, running a software company is possible anywhere," Bhatia said FREE: SEMINAR "CHOOSING THE RIGHT FRANCHISE" Featuring franchising expert Bob Povirers CmCAGO TUESDAY. 4 Hyatt Regency Oak Brook 7:00 PM" WEDNESDAY. Niw.

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