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INTERNET BECOMING BIG BUSINESS

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Peter Killcommons had completed medical school in the mid-1980s and was destined for a lucrative career as a doctor when he got bitten by the computer bug.

Today he is the founder of NexSys, a small but growing electronic network that already links 20 hospitals and medical centers to that global mega-network called the Internet.Through the NexSys network, physicians can send X-rays, magnetic resonance images and CAT scans coast-to-coast at the speed of light. Killcommons said that by using his electronic transfer network, doctors can get second opinions or expert advice faster and cheaper than sending filmed X-rays by mail.

"Everybody is talking about doing business on the Internet," Killcommons said. "We're already there."

The San Francisco entrepreneur, who earns monthly fees from subscribers of his medical data network, is among the pioneers creating businesses on the Internet, that network of networks that is heralded as the next business frontier.

"This is really the beginning of the wave for companies using the Internet as a business medium," said Torrey Byles, an analyst with BIS Strategic Decisions, a market research firm in Santa Clara, Calif.

"Very few people are actually doing serious business on the Internet right now," Byles said. "But everybody realizes it has huge potential and wants to start experimenting."

And no wonder. The Internet, which began as a defense research project in the late 1960s, grew during the 1970s and 1980s as a way of connecting scientists and engineers at major universities.

By the early 1990s the Internet was growing at an exponential rate, as business and home computers began plugging in. The Internet Society in Reston, Va., estimates that the Internet now comprises more than 30,000 specialized networks. Some are commercial systems like NexSys that collect fees for hooking others up to the Net. Many sub-networks are run by universities that provide Internet access to students and staff.

Together, these 30,000 networks link 3 million computers in more than 135 countries. The Society estimates that 15 million to 25 million people use the Internet in some way or other.

Michael Walsh, an analyst with Internet Information in Falls Church, Va., said the number of businesses that are hooked up to the Internet grows 10 percent each month.

"The preponderance (of new connections) are small companies that are looking to get electronic mail," Walsh said. "Very few have figured out how to do real commerce yet."

Bob Bruce is one of those who has already found a business niche on the Net. In fall 1991, Bruce quit his job as a computer programmer at UC-Berkeley to found Walnut Creek CD-ROM. The business had a simple premise.

"There's a whole lot of free software on the Internet, but it's not easy to get it," Bruce said. "I wanted to take that wealth of software and make it accessible to people by putting it on CD-ROM."

Today he employs 16 people at a plant in Concord. In a little more than two years, Bruce has published 35 CD-ROMs. He sells them to computer users who enjoy testing new software. As Bruce described it, a typical Walnut Creek CD-ROM might contain several thousand small programs - so-called "freeware" that computer hobbyists create and then post on the Internet for others to use.

"What we do is gather it all together, put it on a CD-ROM and sell it for about $35," Bruce said. "What we're really selling is the convenience of not having to go out on the Internet, look for the programs and download them yourself."

Bruce said when he publishes a new CD-ROM, he posts a message about it on the appropriate discussion group. A CD-ROM about OS/2 programs might be "advertised" with a message on an OS/2 newsnet group, for instance.

"A single message in the right forum is considered OK," Bruce said. "We've never had any complaints."

While start-up firms and technology pioneers are staking claims in cyberspace, big corporations are generally taking a more cautious approach, according to Lisa Thorell, an analyst with the market research firm Dataquest in San Jose.

"The Internet has real drawbacks as a business forum," Thorell said. "The chief one is that nothing you put on the Internet is private, and big companies are not about to put all their most sensitve stuff out there."

Enter CommerceNet, a nonprofit consortium that was founded in January in Palo Alto, Calif.

Armed with a $6 million federal grant, CommerceNet has signed up 45 corporate sponsors who will raise $6 million in matching funds. CommerceNet Executive Director Cathy Medich said this $12 million would be used to develop software and systems to aid the conduct of business on the Net, so that when people use credit cards to pay for services they can be sure hackers won't steal the code.

"If you're going to take orders on the Internet, you have to have a secure way of making the transaction," she said.

To improve the security of Internet communications, CommerceNet members will test new programs designed to keep hackers from reading electronic mail or tampering with corporate data bases.