The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, two telephone stories, the long distance price war, and a Paul Solman report on the telephone future, then a look at today's important election in East Timor, and a NewsHour encore about a string quartet. It all follows our summary of the news this Monday.

NEWS SUMMARY

JIM LEHRER: A price war was underway today in the long-distance telephone business. AT&T announced it will cut rates to 7 cents a minute plus a monthly fee. That was in response to cuts earlier this month by rivals MCI WorldCom and Sprint. We'll have more on the story right after the News Summary. High winds and driving rain hit coastal North Carolina today. They came from the edges of Hurricane Dennis; 100-Mile-an-hour winds knocked out power to 50,000 customers. Forecasters said the eye of the storm was unlikely to make landfall. Dennis kept on an East-Northeast track. It was expected to stall Tuesday several hundred miles offshore. It could threaten Northeastern states as it starts moving again later in the week. Firefighters tried to control fast moving flames in the West today; 200,000 acres of brush and timber have burned from Washington State to California. One fire, 85 miles Northeast of Los Angeles, scorched some 17,000 acres. It destroyed one home and thirty other structures. The fire started Saturday and was fueled by strong winds and high temperatures. The people of East Timor voted on their future today; the choice was either independence from Indonesia or autonomy within it. The U.N. monitored the balloting. It estimated turnout of registered voters at 90 percent, despite recent violence. The U.N. said it would need seven days to tally the votes. The Indonesian justice minister accused it of favoring the pro-independence movement. And the U.N. denied that. In Washington, State Department Spokesman James Foley said this:

JAMES FOLEY, State Department Spokesman: The United States welcomes this successful vote, noting that it is a very important step in the U.N.-administered transition of East Timor to a new status. As we move into the next phase, which is the vote counting itself, which I believe begins in about two days, we call on all sides to accept the results of the poll, regardless of the outcome and to exercise restraint.

JIM LEHRER: The voting was largely peaceful, but one death was reported; a U.N. election monitor was killed by a mob outside the capital. We'll have more on this story later in the program tonight. Buford O. Furrow was arraigned on a federal murder charge today in the death of a Philippine-American postal worker. A federal judge entered a "not guilty" plea on the white supremacist's behalf. Furrow allegedly confessed to killing the letter carrier after shooting up a Jewish day care center in suburban Los Angeles August 10th. He wounded five people, including three young boys. He will also face state charges. A two-year decline in the number of AIDS deaths slowed in 1998, and appeared to be leveling off. That was the word today from the Federal Centers for Disease Control and Prevention. An official said drug resistance among some AIDS patients was causing their treatment to fail. The CDC is sponsoring a three-day conference in Atlanta on the latest advances in fighting HIV. On Wall Street today, the Dow Jones Industrial Average dropped 176 points or 1.6 percent to close at 10,914. The NASDAQ Index was down 46 points at 2712. And that's it for the News Summary tonight. Now it's on to pricing and other futures of the telephone; the elections in East Timor; and an unusual string quartet.

FOCUS - PRICE WAR

JIM LEHRER: Media Correspondent Terrence Smith begins our two-part look at the telephone business.

TERENCE SMITH: At a press conference this morning announcing his company's new long distance rate plan, AT&T Chairman Michael Armstrong said, "It's amazing how complicated this industry can make saying, 'hello.'" To help us try to uncomplicate "hello," we're joined by Dennis Kneale, the former technology editor at the "Wall Street Journal," now an executive editor at "Forbes" Magazine, and Jeff Kagan, an Atlanta-based telecommunications industry analyst, whose clients include many phone companies. Welcome to you both. Dennis Kneale, are we in a full-scale price war now?

DENNIS KNEALE: Well, I think we are. What AT&T did today just suddenly slashed its lowest prices by another 30 percent, and it expressed a real willingness it go 50 percent lower, and prices are going to go even lower still once their archrivals, the Baby Bells, get into the market. For consumers it becomes a matter of will you be alert enough to catch it?

TERENCE SMITH: Jeff Kagan, what's the significance of this, both for the industry and for the consumer?

JEFF KAGAN: Well, first of all, I guess I'd like to also just touch on the price war issue. I don't really think this is as much of a price war as a resettling of the prices at a new level.

TERENCE SMITH: What's the difference between the two?

JEFF KAGAN: Well, the difference is a price war has no goal in mind other than just to scoop up as much market share as you can, no matter what the cost is. But every few years, as the cost of providing service goes down, you have the opportunity to have the prices find a new level. We saw this happen a few years ago when the prices fell to about 10 cents per minutes, 15 cents per minute. It's happening now it because the access fees that the long distance fees pay to the Baby Bells has been cut. It will happen again in another year or two. And I don't think we're going to see an endless, downward spiraling of the prices. I think we're going to see it find its level around 5 cents to 7 cents per minute, 24 hours a day. And it will stay that way for a year or two and then we'll see it drop again. One thing is for sure -- the price of long distance has come down significantly. In 1984 the price of long distance was 35 cents to 40 cents per minute when Ma Bell broke up. And now we're looking at 5 cents to 10 cents a minute. The long distance industry has come a long way, baby.

TERENCE SMITH: Dennis Kneale, what do you think Michael Armstrong was really saying when he talked about the complexity of the business? Was it an argument for simplicity?

DENNIS KNEALE: It sure was. I mean, there are so many pricing plans, and consumers are so confused. You know, 25 or 30 percent of customers aren't on a discount plan at all. It's a matter of what time you call and what time zone you're in when you're calling and all kinds of... the dial-around services where you dial 10-10-345, et cetera, et cetera. And he just wants to take a simpler approach...7 cents a minute, no matter what day it is, weekends, weekdays, any time of the day. A 30 percent price cut, though, is pretty significant. I do think that prices...you know, in four or five years, you might see prices go to zero. Long distance might be free if you buy our Internet access, our cellular service, our cable service, our local telephone service -- we'll throw in long distance free. Consumers will benefit here and the companies are going to be having to deliver on that.

TERENCE SMITH: Jeff Kagan, is it possible to say what it actually costs one of these companies to provide you with a long distance call?

JEFF KAGAN: No, it's difficult because you've got a lot of legacy systems and a lot of new technology mixed in. You've got costs that you pay historically that don't necessarily have any real correlation of what the cost is of providing service today. You see that with the Baby Bells; you see that with the long distance companies. It's very difficult to do that. But the cost of providing service is going down. I think Dennis is right. I think we're going to see the cost of providing service get to be so low that the long distance companies will eventually give it away for free if you buy a larger bundle that they make money on. Now, I've asked Mike Armstrong this from AT&T this morning on the call, and I've asked other telecom executives, and they say no way. They say they're not going to be giving away long distance. But you really what you need to do is put on your visionary cap and you have to realize that if it's only going to cost a penny or two or three for long distance, you can afford to give away a lot of long distance if a customer will sign up for the local phone service, The Internet service, the wireless phone service, the cable TV. And it might not just be the long distance service that's given away for free. Maybe you, as a customer, will say I want my cable service for free so that you buy the bundle that has cable for free; you have to pay for long distance and everything else. I think we're moving toward bundling. We're moving toward the battle of the bundle. And it's getting to the point where the cost of providing these services are going way down. Each company is providing a wide range of services. You're seeing a convergence going on in what used to be previously separate segments and these companies can afford to now bundle economically and give one thing away that's low cost to get to you buy a bunch of other things they make money on.

TERENCE SMITH: All right. Dennis Kneale, you mentioned a significant percentage of the customers don't make use of these plans. Is that because they're not sufficiently high volume customers? Or do they just not understand?

DENNIS KNEALE: Well, one thing is if you're a low-volume customer, you just don't care. But also it's just hard to even track all this stuff and all the changing prices. Can any of you out there right now pick up the phone and call AT&T to demand you want to get on the new 7 cent plan? I'm not even sure what the phone number is. It's just a lot harder than you think. On your earlier question, though, to follow up, what is the real cost? The newer the player, the lower the cost. Quest Communications is stringing the nation with fiber and its actual cost it said to us is maybe a penny or two per minute. And that's just right now before they've kind of earned out the investment of building all of that network. So it will go even lower still. It's just that the consumer now is going to have to be more activist and more aggressive than ever before. You can call any of the long distance players and they'll quote you different prices and suddenly if you ask and follow up with a new question, they'll say, yeah, I can do that. I was going to sign up for AT&T's 15 cent a minute plan and I was told to ask about ten cents and I said what about the dime a minute plan? They said we have that. They weren't even advertising it.

JEFF KAGAN: It's up to the customer. The customer really needs - I think Dennis has hit it right on the nose. The customer needs to be able to take charge. And I think once a year they are should take a look, because I guarantee you, with all the new services that are rolled out every year, every year you're outdated. You need to either sign up for a new service, even within the same carrier that you're already using or with another carrier. Don't just sit it on.

DENNIS KNEALE: There's something like 16 million households right now every year surf back and forth among the different plans. You give me $ 100 check, I'll switch to you. Hey, you give me some free months of service, I'll switch to you.And that number needs to grow if consumers want to benefit from this current price adjustment, shall we call it.

TERENCE SMITH: Right. Paul Kagan, there were complaints already today from consumer groups that there's a catch in all of this. There's a minimum price every month. And the consumer groups complain that that's unfair to charge people that, whether or not they use long distance.

JEFF KAGAN: Well, first of all, it's Jeff Kagan.

TERENCE SMITH: I'm sorry.

JEFF KAGAN: That's quite all right.

TERENCE SMITH: Forgive me, Jeff.

JEFF KAGAN: Paul is a friend out in California. He's in the business, too, so we get confused sometimes. We have to remember that a price war was -- back in the 80's was simple, straight, permanent prices that were being shaved. The margins were being shaved. It was a blood bath for the carriers. They're not going to get back into that kind of a mode again. What happened was the last round of price cuts, which brought us down to about 10 cents a minute, you had to pay $ 3 or $ 4 or $ 5 a month to get that 10 cents a minute. That's not going away. Long distance companies have historically had to spend more money sending a bill to a customer than many customers ever spent. So they would lose hundreds of millions of dollars on many of the customers because they just didn't spend more than a dollar or two a month. So what that charge does is allows the long distance companies to remain profitable. The customers don't have to sign up with a plan that has a monthly service charge. They can sign up for the 25 cent a minute plan if they have only spend $ 1 or $ 2 or $ 3 a month. But if the customer is spending enough to save some money, you can easily make... and if you can make up that monthly charge, then 5 cents a minute is a whole lot better than 25 cents.

TERENCE SMITH: Dennis Kneale, very quickly, will all this lead to an increase in caller volume?

DENNIS KNEALE: That's a good question actually. AT&T is certainly making that bet. And I know that once I switched over to 10 cents a minute and then I adopted AT&T's Digital One-Rate cellular phone call plan, I started making a lot more calls. And so I think for a certain slice of the consumer population out there, sure it will.

TERENCE SMITH: Dennis Kneale and Jeff Kagan, thank you both very much.

DENNIS KNEALE: Thank you.

JEFF KAGAN: Thanks.

FOCUS - FUTURE PHONES

JIM LEHRER: Now, part two of our telephone story. Our business correspondent, Paul Solman, of WGBH-Boston has been looking into what's ahead.

PAUL SOLMAN: AT&T's vision of the telephone's fantastic future as of 30 years ago.

SPOKESMAN: First, there's an intercontinental business conference; a touch of a button, and picture phones bring the conferees together. Even printed material is exchanged among the group by telephonic machine.

PAUL SOLMAN: A vision of the telephone's future as of today from M.I.T..

MICHAEL COEN: Welcome to the Intelligent Room. Please come in.

PAUL SOLMAN: Researchers like Michael Coen are creating their version of the future as we speak. Instead of using a traditional telephone or typing into a computer, say, here at M.I.T.'s so-called "Intelligent Room" you're surrounded by technology that hangs on your every word.

MICHAEL COEN: And what you'll notice is the camera on the coffee table in front of us is going to turn to look at me. So if I was teleconferencing with somebody, they'd be able to see me on the television as soon as I sat down in here.

PAUL SOLMAN: While the rest of us are overwhelmed with telecom choices, long distance, cell phones, andcable, mavericks like these are going straight to the Internet and beyond.

MICHAEL COEN: Tell me about Baghdad.

PAUL SOLMAN: There's Baghdad.

MICHAEL COEN: Zoom out.

PAUL SOLMAN: Funded by the Pentagon to literally think outside the box, Coen is mixing TV, the telephone, the Internet and more to create a total information environment.

MICHAEL COEN: Computer.

COMPUTER: I'm already listening. What's your question?

MICHAEL COEN: Does Iraq have ballistic missiles?

COMPUTER: Does Iraq have ballistic missiles?

MICHAEL COEN: And the room will display the answer.

PAUL SOLMAN: Oh, my goodness! These are the systems? These are actual missiles?

MICHAEL COEN: Yes. These are the particular missiles.

PAUL SOLMAN: The names of Iraqi missiles.

MICHAEL COEN: Yes.

PAUL SOLMAN: Now for high tech visionaries, the whole point is to invent the

future -- and let someone else worry about the mess. But for many of us low-tech mortals

the pace of change is already a bit much. Wasn't it easier when long distance was strictly between us and AT&T, with no competitors to barrage and confound us?

ANNOUNCER: Every day new communications companies enter the picture.

PAUL SOLMAN: A special bane these days is cell phones. With so many plans you could easily sign up for the wrong one -- and seem like an idiot -- or that's how the number two executive at Bell Atlantic made me feel when I complained about my long-term contract with its costly calls.

PAUL SOLMAN: You're right. I didn't buy a bundle of minutes. I just have the service

itself.

JIM CULLEN: Okay.

PAUL SOLMAN: That's my mistake?

JIM CULLEN: What do you do with the phone if you don't buy minutes?

What are you doing with it, decoration?

PAUL SOLMAN: Well, --

JIM CULLEN: Paul, you have a basic problem as a consumer here.

ANNOUNCER: Introducing AT&T's Personal Network.

PAUL SOLMAN: Meanwhile, Bell Atlantic's chief cell phone rival in the Northeast, good old AT&T, has its

siren song.

COMPUTER: White's residence. Barry speaking. Talk to me baby.

PAUL SOLMAN: Ma Bell's chief financial officer tried to help me through its panoply of plans.

DAN SOMERS: Simply, $ 89.99 A month, $ 99.99 A month, $ 119 you get a phone, you buy a bucket of minutes, you don't pay roaming charges.

PAUL SOLMAN: This is the personal network?

DAN SOMERS: No, this is Digital One rate.

PAUL SOLMAN: See, I'm already confused.

PAUL SOLMAN: Now, you might think veteran business correspondents would be plugged in enough to current technology to make such choices. Hello? But honestly, I, at least, am as overmatched as any of you. Hi. Even though AT&T itself told us this was all coming as at the World's Fair in my native New York City back in 1964.

SONG: In a place where electronic wonders abound; A marriage of sight to a drama of sound; A wonderful coupling of vision and speech; And a ride to the future and the past within reach.

PAUL SOLMAN: The point is, today's technology has been in the cards for decades.

SPOKESPERSON: Someday people may want to see as well as talk over the telephone. What we are doing here is trying out one model of a picture phone.

PAUL SOLMAN: 35 years later...

DAVID NAGEL, Chief Technology Officer, AT&T: There you are. How are you?

PAUL SOLMAN: Fine. How are you? The image is jerky, the handset vestigial, but it will be better and another option for us consumers within a few years from AT&T via a TV cable.

PAUL SOLMAN: So this is a cable TV system.

DAVID NAGEL: That's right. We're using the TV receiver as just a cheap and ubiquitous-- everyone has them-- display device.

PAUL SOLMAN: Of course, for some, this means more to think about. Am I going to have to make up, as I do for an interview on the NewsHour, where I have to hide my hot spots on my bald head?

DAVID NAGEL: Well, it doesn't look so bad on this end.

PAUL SOLMAN: That is tremendous relief.

DAVID NAGEL: People will develop-- I believe, over time-- an etiquette for how they do it. Some people may turn their cameras off. Some people will just adapt to it in other ways. But, you know, people did the same thing with telephone. I remember as a child, my mother had a very different voice on the telephone than she did in person.

PAUL SOLMAN: And if I move to do something untelegenic, I can just block the camera or turn it away or something.

PAUL SOLMAN: Okay, we'll adjust to video phones. And it sure will be nice to see the grandkids when you talk to them. But what about all the other innovations already sketched by AT&T back in the 60's?

SPOKESMAN: Junior is getting help with his homework. The program comes from an education center and is carried on a special TV circuit via telephone wave guide, a hollow tube that can carry hundreds of television programs and telephone calls at one time.

PAUL SOLMAN: Well, today with the huge so- called broad band capacity that TV cable provides, such visions are just around the corner. The good news: Movies whenever you want them to manipulate as you please. The bad news: More choices you may not want at all. On the other hand, for you NewsHour junkies...

JAY WILPON, Researcher, AT&T Labs: So let's say you've got this now big cable, big broad band piped in your house. One of the things you might want to be able to do is to look through, let's say, past stories of the "MacNeil/Lehrer Report."

PAUL SOLMAN: No, it's actually "The NewsHour with Jim Lehrer" now.

JAY WILPON: I'm sorry. I'm showing my age. So what we actually do in there is have a speech recognizer in there that actually listens to all of "The NewsHour" reports that we had over time, and I can actually...

PAUL SOLMAN: Boy.

JAY WILPON: And you can have a favorite word or something that we might want to look for.

PAUL SOLMAN: Try the word kooky, k-o-o-k-Y.

JAY WILPON: And we can search for all the programs in "The NewsHour" and there is one.

PAUL SOLMAN: Yeah. Then that could be the right one.

JAY WILPON: You did a piece on alternative medicine-- is that the piece?

PAUL SOLMAN: Yeah, because you can see this woman has got her cap on in the operating room and she's actually transferring her energy to the blood of a heart patient who's having surgery.

JAY WILPON: I'm glad I'm not on that... So let's see if that's in fact it.

PAUL SOLMAN: Okay. Now wait a second. So now up... there's the woman and she's blessing the blood.

PAUL SOLMAN: (to woman) Do you understand that it looks almost kooky for you to be doing that?

WOMAN: (answering) I guess it does.

JAY WILPON: Very good.

PAUL SOLMAN: Wow.

JEFF WALDHUTER, Technology Director, Bell Atlantic: PBS.Org.

PAUL SOLMAN: At Rival Bell Atlantic, meanwhile, they thought we were kooky to fall for cable, when their plain old copper wires, supped up and connected to the internet, should suffice.

JEFF WALDHUTER: With our system there will be unlimited content. Anybody could become a provider of entertainment in the future by upgrading their server.

PAUL SOLMAN: And so what happens is, this copper wire that suddenly can get me to the Internet really fast, will then gain me access to their servers as long as they upgraded the big computers to do exactly what I wasdoing with AT&T except through the internet.

JEFF WALDHUTER: Right.

PAUL SOLMAN: In other words, another choice. Not just between TV cable and supped up phone wires, but between content providers. AT&T will use its own huge computers to feed all sorts of stuff over its cable, including things that are still on the drawing board.

COMPUTER IMAGE: I love this broad band stuff. Through a cable modem, I was able to find all that stuff and download it in less than a second.

PAUL SOLMAN: By contrast, Bell Atlantic's strategy is to let others worry about the content. Firms like Disney, Sony, PBS, will store TV programs, movies and the like, on their giant computers. Bell Atlantic will simply connect you to them via the internet. Is that better than a cable TV hookup? Who knows. Let's just hope they all pity the poor consumer.

DAN SOMERS: Not the poor consumer, the consumer.

PAUL SOLMAN: But the overwhelmed consumer.

DAN SOMERS: Yeah. Sometimes I think they're a bit overwhelmed.

PAUL SOLMAN: Well, I speak personally...

DAN SOMERS: You and I are always overwhelmed by the technology.

PAUL SOLMAN: Is that a good thing or a bad thing?

DAN SOMERS: I think it's a great thing. You know, one pipe into the home, one connection on all the time. Do whatever you want to do. Order something on E-commerce, watch a movie. We sort of like to think of it more as like the new AT&T on all the time.

PAUL SOLMAN: Oh, great. The telephone. The Internet. The TV -- on all the time. If we weren't already anxious enough, this could absolutely paralyze us. But no matter how overwhelmed we may feel, why worry? In a capitalist economy like ours, as M.I.T. Marketing Professor Nader Tavassoli, we only get what we're willing to pay for, what we presumably want.

NADER TAVASSOLI, Sloan School of Management, M.I.T.: Because money and making money off of technology is what pushes it, and people are not going to put their money behind a new technology unless they have done the research, they think people will embrace it.

PAUL SOLMAN: Embrace it. Embrace what? With all these plans, choices, not to mention the hot spots, I, at least, needed help. And not from the folks selling this stuff. So we return to M.I.T.'s Intelligent Room.

COMPUTER: I'm the computer center. Please lie down on the couch.

PAUL SOLMAN: Doctor, I'm worried about the future.

PAUL SOLMAN: Unfortunately, that's as far as the room is currently programmed to go. So I voiced at least some of my anxiety to the room's chief programmer, Michael Coen. Too many choices. Too much to learn and in the case of his technology, issues of privacy and basic humanity.

PAUL SOLMAN: I mean, all these cameras watching, the depersonalization of walking to this voice synthesizer.

MICHAEL COEN: Let me ask you a question. Would you let the government put bells in your home that anyone in the world could ring any time of the day or night every day of the week?

PAUL SOLMAN: Oh, I get it -- the telephone.

MICHAEL COEN: Yes, exactly. And not only is it a bell, these are bells with microphones attached. Aren't you worried that people from anywhere could eavesdrop on you at any time of the day? And of course you'll say to me the telephone can't be abused that way, and I'll say, "yes, it can, but you've been socialized not to worry about it." So it may well be that my generation and people living today won't be comfortable with this technology, but I think you can bet on it, that their children aren't going to notice it any more than you are the telephone in your home.

PAUL SOLMAN: In fact, the Intelligent Room itself may be just a glimmer of the telecom future we'll have to adapt to, says Nader Tavassoli. Maybe, in the hand of researchers at M.I.T., AT&T or somewhere else, telephony could someday even become telepathy.

NADER TAVASSOLI: Way out in the future, I wouldn't even have to call somebody. Just based on my thoughts, based on my needs, a software might recognize it, download it, change the air conditioning, have a certain kind of dinner ready when I come home, play a certain song on the radio.

PAUL SOLMAN: And if you think that's far out, how about a life that's pure telephony?

NADER TAVASSOLI: Here in the artificial intelligence lab, the question is, can you through information recreate a person, a soul? And maybe at that point it's my brain in a fish tank hooked up to the Internet. You know, I might be having fun on the web, I might be interacting with others, playing virtual games, competing as part of a video game. Who knows?

PAUL SOLMAN: Right. Who knows what's in store? After all, we were amazed in searching AT&T's archives that it had promised Internet shopping 30 years ago.

SPOKESMAN FROM THE PAST: Later in the afternoon, pat is browsing around a dress shop on her picture phone.

PAUL SOLMAN: All this future shock suggested one last question: We're overwhelmed by all the choices that telecom future seems to offer, but can people avoid the hassle entirely and just turn their backs on the computer-driven world of telecom?

NADER TAVASSOLI: Oh, the computer already has hypnotized them into voting yes in terms of technology, yes.

PAUL SOLMAN: Might it be that technology sort of sneaks up on us? It does sucker us in in a certain way.

NADER TAVASSOLI: I believe so. Any technology, any... anything that adds value to our lives or that are perceived to add value, it changes the way we, you know, think about it.

PAUL SOLMAN: In the end, then, we may think we want what telecommunications technology has to offer because the technology itself has convinced us there's no alternative.

SPOKERSPERSON: It's for you.

PAUL SOLMAN: In which case, our choosing among Bell Atlantic, AT&T and who knows how many others, might not be that much of a choice at all, because as AT&T foresaw decades ago, not many of us are liable to go in on our own.

CARTOON CHARACTER: Confidentially, I think the idea has questionable sociological ramifications.

JIM LEHRER: Still to come on the tonight, the East Timor elections and a string quartet.

FOCUS - UNCERTAIN DESTINY

JIM LEHRER: Kwame Holman begins our East Timor coverage.

KWAME HOLMAN: For the people of East Timor, the last few weeks have been a period of violence and suffering... and celebration. For the first time in more than 400 years, residents here may be on the verge of forming an independent state, and ending a generation of civil war.

COMMANDER ULAR, Falintil Pro-Independence Group: (speaking through interpreter) Today is a great day for us and for our people. This is another step closer to bring peace to our people. We want peace in our lives as East Timorese people.

KWAME HOLMAN: The Eastern half of this Southeast Asian island was a colony of Portugal dating back to the 1500's. The Western portion was part of the Netherlands until the end of World War II, when it became a part of the newly established Republic of Indonesia. On the Eastern side, however, Portuguese colonial rule lasted until 1975. But when the Europeans left, Indonesia invaded. A year later, majority Muslim Indonesia took control of predominantly Catholic East Timor. It has been a bloody occupation. An estimated 200,000 East Timorese have died under the Indonesians; 10,000 directly from military force, the rest from famine and disease. Over the years, many have supported secession from Indonesia, including a band of rebel guerrillas that's been fighting the pro-Jakarta army for more than 20 years; dissidents Jose Ramos-Horta and Bishop Carlos Belo, co- recipients of the 1996 Nobel peace prize for their peaceful pursuit of self-determination; and the United Nations, which never has recognized Indonesia's annexation of East Timor. Earlier this year, following heavy diplomatic pressure, Indonesian President B.J. Habibie scheduled a U.N.-sponsored referendum that would let the people of East Timor vote on secession. But that sparked an angry reaction from militia groups who want East Timor to remain part of Indonesia.

ILIDIO BATISTA, Commander of Militia: (speaking through interpreter) After we found out that Indonesia was talking about independence, a lot of groups of pro-independence supporters were starting to terrorize us. But we are all here now ready to stand against them in the civil war. We are ready to die for Indonesia.

KWAME HOLMAN: In the months leading up to today's referendum, the militias have attacked East Timorese civilians in their homes and in the streets. They tried to intimidate voters, according to one woman who chose to remain anonymous.

WOMAN: (speaking through interpreter) They said that if you choose independence, your children won't go to school anymore.

MAN: (speaking through interpreter) There's terror everywhere, killing, arrests. Let me say this: East Timor is like hell.

KWAME HOLMAN: Last week, as more than 10,000 people demonstrated for independence, clashes with militia groups broke out. At least six people died. Nevertheless, today's vote went ahead. By day's end, some 90 percent of East Timor's 430,000 registered voters took to the polls. That included 13,000 living abroad, notably Jose Ramos- Horta, the Nobel Laureate. And despite the death of the East Timorese U.N. monitor who was attacked and stabbed by an unidentified mob, U.N. workers described the referendum as free and fair.

JAMSHEED MARKER, U.N. Special Envoy: Today the eagle of liberty has spread its proud wings over the people of East Timor.

IAN MARTIN, U.N. Assistance Mission in East Timor: It's clear we've had a very high turnout indeed. We've only had a very small number of polling centers where we had some local security problems that led us to close centers, but in most cases briefly and they all reopened.

KWAME HOLMAN: U.N. officials will spend the next week counting and verifying the ballots. Later this year, the collective will of the people of East Timor is scheduled to be ratified by Indonesia's parliament.

JIM LEHRER: Now to Constancio Pinto, a native of East Timor, and the representative of the National Council of East Timorese Resistance to the United Nations and North America. And Edward Masters, U.S. Ambassador to Indonesia during the Carter administration, and currently president of the United States-Indonesia Society.

Mr. Pinto, U.S. State Department spokesman said today the election, in addition to what the U.N. people said on the ground there, he said today "the election was a success because of this high turnout." Would you use the word success as well to describe it?

CONSTANCIO PINTO: Yes, I agree with that point of view. And I would say this is a success and it is a victory for us, for East Timorese and also for Indonesia.

JIM LEHRER: A victory just because of the turnout, even before the result is known?

CONSTANCIO PINTO: Yes, this big turnout shows that the people of East Timor has, in fact, exercised their right to self-determination.

JIM LEHRER: Ambassador Masters, you agree?

EDWARD MASTERS: I do agree. I think everybody won in these elections. They were remarkably open. They were remarkably peaceful.

JIM LEHRER: What is your explanation for that? All of the terror and the death and all of that, the violence that led up to this, and yet the people voted anyhow -- why?

EDWARD MASTERS: Well, I think a lot of the violence before the election was designed to intimidate people from going to the polls. It didn't work. Obviously they turned out in very large numbers, and obviously they wanted to express their views; they wanted to have a say in their own future.

JIM LEHRER: What's your reading, Mr. Pinto, of why the violence, intimidation, didn't work?

CONSTANCIO PINTO: Well, it didn't work, first of all, it's because of the immense restraint of the East Timorese people not to engage in any conflict, tried to confront the conflict with patience. They understand that with patience we can win. And that's why despite the attack in every places of East Timor, there's no... any response from the East Timorese citizens and from the people.

JIM LEHRER: Mr. Ambassador, how would you characterize these militia people, the people who were conducting the terror to try to intimidate the voter?

EDWARD MASTERS: Well, they're obviously people who want to feel very strongly that they want to remain a part of Indonesia. There's no question that they were supported by the Indonesian military...

JIM LEHRER: The official military of the government...

EDWARD MASTERS: The official military, yes. I think there's no question about that. If you asked me to produce evidence, I don't think it exists. But I think you have to assume that the official military supported it. I don't think the civilian leadership of Indonesia supported it. It was President Habibie who declared that, in January that there would be a free election and I think he stuck to that. But I think there are elements within the military that felt very strongly, 20,000 of their comrades were casualties in the war, in the guerrilla fighting. They were concerned about the precedent that if the vote in East Timor went in favor of independence, it might have an impact in other areas of the country. So I think they were supporting the militia. It was a -

JIM LEHRER: And the government, President Habibie couldn't stop them from doing it?

EDWARD MASTERS: I think he could not stop them.

JIM LEHRER: Go ahead.

EDWARD MASTERS: Excuse me, I was going to say, what we have in Indonesia now is a fairly weak transitional government. The present government has done a lot of good things. They've opened up the political system, freed political prisoners, they've opened up the press. There have been several hundred new newspapers now. But I don't think he's in firm control of all elements of the government.

JIM LEHRER: Mr. Pinto, would you agree with the ambassador's analysis of who the militia is and who supports them?

CONSTANCIO PINTO: Yes. I support the point of view of ambassador. I think the Indonesian civil government, there is goodwill to solve the East Timor problem. But there are some irresponsible people in East Timor who tried to undermine efforts of the central government to solve the East Timor problem. And I would also like to add that it's the group that continued to support the militia and orchestrated all the violence in East Timor aren't the groups thathave some kind of economic interest in East Timor and for some reason they also tried to protect their own pride.

JIM LEHRER: Sure. All right, now. Beginning with you, Mr. Pinto, is there any question in your mind that this vote that was so overwhelming today in terms of turnout is going to go for independence rather than autonomy under Indonesia?

CONSTANCIO PINTO: I would say 75 to 90 percent of East Timorese people vote for independence.

JIM LEHRER: And what do you base that on?

CONSTANCIO PINTO: Well, I base on the experience that people have so far since 24 years of oppression. I don't think that those who... their parents, their mothers, their children have been murdered by the Indonesian government ... Indonesian soldiers... would vote for autonomy.

JIM LEHRER: You agree with that, Mr. Ambassador, that it's pretty much a foregone conclusion that independence is won today?

EDWARD MASTERS: I certainly think so. I'd hate to have to put a percentage on it, but I have no doubt that it will go in favor of independence.

JIM LEHRER: Is that good for East Timor in your opinion, Mr. Ambassador?

EDWARD MASTERS: It's hard to say. My guess would be economically it may not be. East Timor is a very poor area, very limited resources. It might be that economically they would be better off as a part of a very large, growing Indonesia. But that isn't going to happen. I think that point has been passed. The decision is made on political grounds, on security grounds, psychological grounds.

JIM LEHRER: Now, much has been said going into this election, Mr. Ambassador that, which ever way it went and in view of Mr. Pinto and everything I read today said the same thing, it's clear the overwhelming majority of the people are going to vote for independence... but if that is the result, will the government, at least the part they can control, accept those results?

EDWARD MASTERS: I think they will. President Habibie said they will, Foreign Minister Alatas just within the last day or two reaffirmed they will accept the results. I understand that Habibie is going to make a statement tomorrow in which he will not only reiterate the acceptance of the results but will pledge that Indonesia will handle the transition in a responsible way. In other words, it won't cut and run.

JIM LEHRER: Can they control those militias though? How are they likely to react?

EDWARD MASTERS: Good question. And it may well be that they can't. The feelings run very high among these groups on both sides. As you probably know, when Indonesia moved in, in 1975, there was a civil war going on -- between the two factions, pro-integration and pro-independence. Those two factions are still there. And I wouldn't be at all surprised there would be continued difficulty.

JIM LEHRER: Mr. Pinto, you agree with that?

CONSTANCIO PINTO: Well, I'll say that yes -- the question of East Timor in 1975 up to now is between East Timorese and Indonesia. Yes, there was some factions in 1975, but that's disappeared in 1975, as soon as Indonesia invaded East Timor. The militias that are now -- threaten the population and call themselves as a group, this is created by Indonesia. Last year when... or after the President Habibie announced that he would give independence for East Timor. But I think the militia, I hope that they will accept the result. We have offered them all assurances that there will be a general amnesty for everyone, every East Timorese, regardless of the political crimes they have committed in the past. So I think that if they collaborate with us, there won't be any problem.

JIM LEHRER: But most of the things that I read today, Mr. Pinto, predicted a blood bath after this that, the militia will not accept this result; they will not go quietly and peacefully.

CONSTANCIO PINTO: Well, yes, they have said many times since yesterday and last week, this is what we also are very concerned about. And that's why we now continue to call the international community, the United Nations and the United States to quickly deploy the U.N. Peacekeeping Force in East Timor in order to keep the peace that is now flourishing in East Timor.

JIM LEHRER: You want troops put in there from the outside?

CONSTANCIO PINTO: In East Timor, yes.

JIM LEHRER: In East Timor. And, Mr. Ambassador, what do you think of that idea? Is that going to happen?

EDWARD MASTERS: It could happen, but it's going to take time. It will take at least a couple of months to put together a U.N. Peacekeeping Force. The agreement worked out by Indonesia, the U.N. and Portugal in May was that Indonesia would have the responsibility for maintaining security. Now, there have been lapses in that. There have been problems. There has been support for the militia. But I think we have to give them a chance to see, partly because the U.N. isn't going to be able to be in there for a couple of months anyhow, but meanwhile I think these assurances that they will maintain the peace, there have been some changes of military commanders in East Timor that I think is a good sign. Some of the hardliners have been moved out. And I think we have to bear in mind also, if I may say so, that it isn't only the militias that have threatened not to accept the results. The pro-independence group has also. So there could be problems, which ever way it goes.

JIM LEHRER: How many... just for planning purposes... how many outside troops would it take to maintain peace in East Timor?

CONSTANCIO PINTO: Well, it depends on the decision of the U.N. Security Council. Everything has to be decided by the U.N. Security Council.

JIM LEHRER: Yes, but how many, whether they go along with the request or not, what in your opinion -- how many people would it take, how many armed troops would it take to maintain peace in your country, Mr. Pinto?

CONSTANCIO PINTO: Well, I would say as many as possible.

JIM LEHRER: I mean, several... 50,000, 60,000?

CONSTANCIO PINTO: Yes, 50,000.

JIM LEHRER: How many?

CONSTANCIO PINTO: Maybe 50,000.

JIM LEHRER: 50,000 troops? You agree, Mr. Ambassador it would take that many?

EDWARD MASTERS: I'm not sure it would take that many but it would take a lot because the feelings, as I said, runs very high.

JIM LEHRER: We'll see what happens. Gentlemen thank you very much.

EDWARD MASTERS: Thank you.

CONSTANCIO PINTO: Thank you.

ENCORE - STILL PLAYING

JIM LEHRER: Finally tonight, a NewsHour encore. Last December Elizabeth Farnsworth reported on an unusual string quartet called Kronos, as it celebrated 25 years of music-making.

(Violin and Viola Playing)

ELIZABETH FARNSWORTH: In the years since the group began in 1973 Kronos has redefined what it means to be a string quartet. (music playing in background) They respect and sometimes play the more traditional string quartet repertoire - music by Haydn and Mozart, for example - but new music, often from Africa or Asia, is the group's passion. It's a passion audiences apparently share. Kronos is one of the classical world's biggest draws in CD and in live concert. At this sold-out concert November 1st in San Francisco, Kronos premiered an opera by Vietnamese-American composer P. Q. Phan, an opera without voices. Each instrument took on a particular role throughout the work. (music playing in background) The quartet also played "Waterwheel," a signature piece which they commissioned from Sudanese composer Hamza El Din. It's a tribute to his village, lost to flooding when the Aswan Dam was built. He accompanied them on drum and lute. (music playing in background) One reviewer wrote that Kronos has blown the whole concept of chamber music off the shelves and onto the charts. Their clothes and style set them apart from most other string quartets and help attract younger fans. They finished every one of the last ten years with a CD on Billboard's Top Ten Classical Chart. In 1994, the magazine "CD Review" named Kronos one of the top ten performers of the previous decade, along with the three tenors and Madonna. During intermission in San Francisco fans were enthusiastic.

FAN: They have a distinct style. They have a distinct quality. And they've also got - there's sort of a rock star thing about them too.

FAN: Well, I think these people have been great for years and years and years. They've been doing wonderful stuff. They've committed maybe 400 works, I find out, they commissioned. And I thought there was brilliant stuff in there.

ELIZABETH FARNSWORTH: Last month, in honor of their 25th anniversary, the group released a 10-CD retrospective featuring, among other early works, "Black Angels." (music playing in background) It's a searing, anti-Vietnam War quartet written in the early 1970s by composer George Crumb for amplified strings and percussion. The music inspired violinist David Harrington to found Kronos.

ELIZABETH FARNSWORTH: What was it about the George Crumb piece, "Black Angels," that show - that hit you so hard, made you want to start a string quartet?

DAVID HARRINGTON, Kronos: Well, in 1973, I heard this piece by accident late one night. And I would advise anybody that has a chance to hear "Black Angels" to hear it late at night by accident and turn it up really loud too, because it's scary, and it's wild, and it's beautiful. And it challenges your ideas about life and music and everything. And that's what happened to me. And this was at a time when the world didn't make any sense to me. And I couldn't find any music that felt right. All of a sudden there was this music, and I felt like I had a voice, and I had to play that piece. And in order to do that, there had to be a group that would practice every day and would really devote itself, because it's a very complex undertaking to realize that music. (music in background)

ELIZABETH FARNSWORTH: You had long loved the music of string quartets, right?

DAVID HARRINGTON: Yes, since I was 12 years old, when I first heard the Budapest quartet on record. Some kids play in garage bands and some kids play in polka bands, and some kids play in string quartets. And that's what I did. And for me, the sound of the string quartet has become the sound that I think with, I think, and so for me, it's become a very personal form of expression.

ELIZABETH FARNSWORTH: From the beginning, Harrington commissioned new works. He and the other members of the quartet, Joan Jeanrenaud on cello, Hank Dudd on viola, and John Sherba on second violin, work closely with each composer, as they did with P. Q. Phan on his opera.

SPOKESMAN: It would be a lot easier to hit the "B", just the "B."

ELIZABETH FARNSWORTH: Since 1973, the group has commissioned and premiered 400 string quartets from composers spanning six continents and four generations, more than twice the number by Haydn, Mozart, Beethoven, Schubert, and Brahms combined.

ELIZABETH FARNSWORTH: Describe the genesis of the P. Q. Phan piece.

DAVID HARRINGTON: It was about four years ago in Iowa City. We were playing there, and Phan came to one of our concerts, and we started talking afterwards, and it became really clear to me that I should hear this guy's music. And so he sent some tapes. And immediately it seemed to me that here was a composer with just an amazing amount of skill and ability, and later he and I met again, and we began to talk about personal things. And it became quite clear to me at that point that he was trying to avoid his past. He had basically tried to forget about his earlier life, and I think I remember saying to him that the only way we're really going to grow through experiences is to use them and confront them and somehow deal with them.

ELIZABETH FARNSWORTH: You edit - in a sense - you get music from a composer and then you and the other musicians kind of work with the composer and edit, is that how it works?

DAVID HARRINGTON: For us, musical notation is not an exact form of communication, we value the voice, the body language, the experiences of composers to help broaden our own ideas of life and music. And so for us what we do is assemble evidence, human evidence that is expressed in music, and try to examine some of the mysteries. (music in background)

ELIZABETH FARNSWORTH: What about your sound, how is it different from the sound that you would have made playing in a string quartet, playing Haydn in a string quartet in 1971?

DAVID HARRINGTON: Well, you know, I think if Haydn would have come in contact with African music and tangos and Asian opera music, and I think that he would have had a very much different sound than he had in his quartets.

ELIZABETH FARNSWORTH: You have a certain sound. It's very difficult for some listeners, as you know. Partly the music is - some of the music is very modern in ways that they're not used to.

DAVID HARRINGTON: If our sound needs to be uneasy and brash and rough, then it will be as brash and rough as we can make it. If it needs to be soothing and comforting, it will be as soothing and comforting as we're capable of doing. (music in background) For me, music exists in notes, and a note - it's possible to put your entire life's experience and knowledge into notes with a great deal of focus and concentration. And it doesn't happen very often. In fact, for me, it's maybe happened three or four times in my whole career when I felt that "a" note was getting close to a certain real essence of expression. (music in background) It's those moments, those real high moments of focus that we look for, I think.

RECAP

JIM LEHRER: And again, the major stories of this Monday: AT&T joined a long- distance rate war with rivals M.C.I. WorldCom and Sprint; Hurricane Dennis headed out into the Atlantic after its western edge hit the North Carolina coast with high winds and driving rain; and in East Timor, voters were choosing between independence or remaining part of Indonesia. We'll see you on-line, and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.