INTERNET'S 'FATHER' COUNSELS PATIENCE WITH PROJECTS

DENISE ZIMMERMAN

NEW YORK -- Disappointment likely awaits retailers expecting their Internet projects to turn a profit this year because fewer than 5% of users will make purchases over the network.

But the volume of electronic commerce may explode in 1997 and 1998, and that's enough reason to gain experience now, said Vinton Cerf, who co-developed the Internet computer networking protocol.

"I don't think you should treat the Internet as a source of revenue, generating sales very much in 1996," Cerf told retailers at last week's National Retail Federation convention here. He projected that the $200 million in business conducted over the Internet in 1995 will not change markedly this year.

"Treat it as another medium for getting communication out to people. Establish a presence," he added. "Get the experience early on before it hurts, before you make big mistakes. Make little ones instead."

Cerf, who is known as "Father of the Internet," is senior vice president of data architecture at the Data & Information Systems division of MCI Telecommunications Corp., Washington, where he directs Internet initiatives.

The rapid growth of the Internet -- which has been doubling in size annually since 1988 -- and the resolution of data security and software issues will create a better climate for electronic commerce, he said.

"By 1997 or 1998, it will be a very different picture because the cryptology [security] problems will be put to bed, software will be much more widely available, every computer will be outfitted with Internet capability and cable modems will have come along so high-speed applications will be easy to supply," he said.

Cerf said the growing number of businesses registering "domain names," or Internet addresses, underscores the perceived commercial potential of the vast network. Currently, there are more than 120,000 domain names registered to businesses and that figure rises by about 1,500 daily.

Some businesses have registered numerous domain names in the interest of protecting their trademarks, he added, citing the 120 domain names, including "pimples.com" and "diarrhea.com," registered by Procter & Gamble, Cincinnati.

"They've taken all their trademarks and registered them as domain names," Cerf said. "I would urge against that. The correct thing to do is to be looking at domain name registrations and raise trademark objections when someone uses your trademark in a domain name."

Cerf said electronic mail is, by far, the most popular application on the Internet, yet the medium poses questions about doing business.

"We still haven't established whether an e-mail exchange is [legally] binding," he said. "The reason that's important to you is if somebody places an order by sending an e-mail message, it's not clear whether you should treat that as a binding order or not."

He said when digital signature technology becomes readily available, e-mail communications can be securely tied back to the individual holding a data encryption key. "Until that time, significant orders need to be confirmed by another means."

Cerf described the Internet as "simply a new technology that will take its place. It will find applications for which it is well-suited but this is not going to replace everything else.

"It's not a mass medium in the conventional sense of the word. If anything, it's a very peculiar medium because it allows you to find special audiences. Its strength may turn out to be its ability to pinpoint certain audiences by drawing them to places of interest."