* Internet could get clogged during a pandemic

* SEC needs to make sure regulated companies have plans

By Maggie Fox, Health and Science Editor

WASHINGTON, Oct 26 (Reuters) - Securities exchanges have a sound network back-up if a severe pandemic keeps people home and clogging the Internet, but the Homeland Security Department has done little planning, Congressional investigators said on Monday.

The department does not even have a plan to start work on the issue, the General Accountability Office said.

But the Homeland Security Department accused the GAO of having unrealistic expectations of how the Internet could be managed if millions began to telework from home at the same time as bored or sick schoolchildren were playing online, sucking up valuable bandwidth.

Experts have for years pointed to the potential problem of Internet access during a severe pandemic, which would be a unique kind of emergency. It would be global, affecting many areas at once, and would last for weeks or months, unlike a disaster such as a hurricane or earthquake.

H1N1 swine flu has been declared a pandemic but is considered a moderate one. Health experts say a worse one -- or a worsening of this one -- could result in 40 percent absentee rates at work and school at any given time and closed offices, transportation links and other gathering places.

Many companies and government offices hope to keep operations going as much as possible with teleworking using the Internet. Among the many problems posed by this idea, however, is the issue of bandwidth -- especially the "last mile" between a user's home and central cable systems.

"Such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic," reads the GAO report, available here

"The Department of Homeland Security is responsible for ensuring that critical telecommunications infrastructure is protected."

BLOCKING WEBSITES

Private Internet providers might need government authorization to block popular websites, it said, or to reduce residential transmission speeds to make way for commerce.

The Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security, a group of private-sector firms and financial trade associations, has been working to ensure that trading could continue if big exchanges had to close because of the risk of disease transmission.

"Because the key securities exchanges and clearing organizations generally use proprietary networks that bypass the public Internet, their ability to execute and process trades should not be affected by any congestion," the GAO report reads.

However, not all had good plans for critical activities if many of their employees were ill, the report reads.

Homeland Security had done even less, it said.

"DHS has not developed a strategy to address potential Internet congestion," the report said.

It had also not even checked into whether the public or even other federal agencies would cooperate, GAO said.

"The report gives the impression that there is potentially a single solution to Internet congestion that DHS could achieve if it were to develop an appropriate strategy," DHS's Jerald Levine retorted in a letter to the GAO.

"An expectation of unlimited Internet access during a pandemic is not realistic," he added.

(editing by Philip Barbara)

www.reuters.com/article/latestCrisis/idUSN26207501