NETSCAPE THREATENS MICROSOFT LAWSUIT : LIMIT ON NET ACCESS RAISES ANTITRUST ISSUE.

Byline: John Markoff The New York Times

Netscape Communications' bitter software marketing war with Microsoft escalated into a threat of legal action Tuesday.

In a letter to Microsoft and the Justice Department, Netscape accused Microsoft of antitrust violations for placing limits on the number of Internet connections that can be made to a single copy of Microsoft NT Workstation software.

The limits, specified in Microsoft's customer-licensing agreements, impinge on Netscape's ability to sell one of its own software products for use with NT Workstation, the letter states.

Netscape has been promoting use of its $295 Fastrack Server software, in conjunction with Microsoft's $319 NT Workstation, as an affordable way for corporate customers to operate servers, or data storehouses, on the Internet. But the Microsoft stipulation, which sets a limit of 10 simultaneous Internet connections with NT Workstation, is forcing customers seeking an Internet server to obtain a more expensive version of the Microsoft product, called NT Server.

That product, when bundled with Microsoft's own Internet server product, sells for $699 - a package price that Netscape says it cannot compete with if NT Server and Netscape's Fastrack must be purchased separately.

No Justice Department official who had seen the Netscape letter could be reached for comment late Tuesday.

NT Workstation and NT Server are both computer operating systems, which are a class of software that any customer needs before using an application software program like Netscape's Fastrack.

Gary Reback, the Silicon Valley lawyer who wrote the letter and who has made previous antitrust accusations against Microsoft, said the company was using its dominance in operating-system software to wrest an unfair advantage over competitors.

He said he wrote the letter in response to Microsoft's recent letter to Netscape, accusing it of deceptive advertising in asserting that Fastrack and NT Workstation were the most affordable way to create an Internet server.

Reback said Microsoft's usage restrictions on NT Workstation were an unwarranted attempt to undermine Netscape's pricing advantage. ``It's like saying, `I'll sell you a car but you can't drive it more than 70 miles per hour,' '' he said.

Microsoft executives contend that Netscape was failing to acknowledge that NT Workstation and NT Server were two distinct products, with different designs. ``It sounds like we need to do some more work with Netscape to educate them,'' said Jonathan Roberts, a Microsoft director for product marketing.

Roberts said NT Workstation was primarily designed for single-user desktop computers, while NT Server was intended for systems in which many users retrieved files simultaneously.

For each program to work as intended, they need to be ``tuned'' by Microsoft engineers, Roberts said, adding that such alterations could not be made by customers.