I was just reading that Google offered to buy the social-commerce site Groupon.com for around $6 Billion...at first I swore the number must have been a typo. Google must be crazy to pay that much. Then I came across another article reporting that Groupon was going to reject the Google bid and remain an independent company. Right now my head is spinning. I can't decide who's crazier. $6 Billion seems like way too much money for a website/company whose sole source of revenue is derived from small business. Furthermore, according to nearly all reports I've read (which I will freely admit is not a comprehensive sample), nearly half of the businesses that have tried Groupon say they will not use the service again.
There is a fundamental issue with Groupon from the perspective of a small business. While the exposure and influx of new customers might seem like a positive in the short-term, one must consider the long-term cost. First off all, the business is discounting their respective product or service by 50% or more. On top of that, they need to pay Groupon 50% of the revenue they earn from the promotion. In essence, the company is giving up 75% of their revenue, destroying margins and eliminating profitability (except in a few select industries with extraordinary mark-ups).
Now, you could argue that it's ok to lose money on a promotion as long as the company is gaining customers and setting the stage for long-term growth and profitability. Unfortunately, that is not what happens in an overwhelming majority of the cases. As has been demonstrated by academic theory and real-world study, price-promotions generally harm long-term brand value (see here). In short, value consumers rarely become brand loyal consumers. They will hop from one phenomenal deal to the next seeking steep discounts along the way. These are not the kinds of consumers on whom you want to base your business.
Groupon is currently enjoying extraordinary success. The founders should be extremely proud of the business they have built and of the impact they have had on group buying and social media. Each day more and more consumers sign-up and take part in the daily Groupon. However, Google must recognize that the customers that Groupon needs to worry about are the small businesses. As the group coupon/group buying space matures competitors will emerge and small business will get smarter. I have serious doubts that the business can scale enough to cover a $6 Billion purchase price. I'd love to hear other thoughts.
Good Talk,
Tom
Friday, December 3, 2010
Tuesday, November 30, 2010
Electric Cars and Electric Rates - What Policy/Rate Changes Are Coming?
I've spent a lot of time thinking about the future of our electric grid and how it will change with the advent of a truly smart grid as well as the widespread adoption of electric cars. One of the biggest constraints of electricity generation and delivery is that we can not (to date) effectively store electricity. We either use it or lose it.
We're currently working on a smart grid that will allow energy to flow from the utility company to the consumer, and also the other way. This will allow those with wind mills or solar panels to sell energy back to the grid.
Electric cars rely on huge batteries to charge at night and then power the car during the daily commute. One of the really exciting things about widespread adoption (should it occur) is that we will have the largest collection of batteries in the history of man. If you charge your car fully over night (when electricity is cheaper), then drive a few miles to work you're not going to deplete the whole battery. There will be a lot of stored charge.
Imagine being able to plug-in at work and sell that electricity back to the utility at peak rates (after having paid off-peak rates to charge it over-night). For this to work, however, you will need a personal utility account (like a debit card). Otherwise, your employer would get the credit (since it's probably his plug).
There are, of course, other uses: What if you get to a friend's house for dinner and your car is running low? Should your friend have to pay for you to charge your car? Of course not!
We will need to separate the idea of a utility meter from a house/office. Currently utilities track premises. In general there is one premise per home. I think in the future it might look more like one premise per person.
There are also other options utility companies are looking at. According to a recent Wall St Journal article, some utilities are offering an "all you can eat" rate plan specifically for charging electric cars (Detroit-Edison), others are offering lower rates and free charging stations. This does not solve the problem of charging away from home, but it can provide incentive to move to an electric car. The same article suggests that someone driving a Nissan Leaf 100 miles a day (which admittedly seems like a lot) can save more $350 a month compared to driving a traditional internal combustion car getting 25 MPG.
I think the real interesting question is "how will governments respond to electric cars?" I imagine we'll see some free/heavily discounted public charging stations at least initially. Just as cities/states provide roads for our cars, I think it's reasonable that they will provide power to speed the adoption of electric vehicles (and by "free", of course I mean tax payer funded...)
I'll be interested to see what other policy changes emerge as a result of electric cars.
Good Talk,
Tom
[Source: http://online.wsj.com/article/SB10001424052748703882404575519641915241922.html]
We're currently working on a smart grid that will allow energy to flow from the utility company to the consumer, and also the other way. This will allow those with wind mills or solar panels to sell energy back to the grid.
Electric cars rely on huge batteries to charge at night and then power the car during the daily commute. One of the really exciting things about widespread adoption (should it occur) is that we will have the largest collection of batteries in the history of man. If you charge your car fully over night (when electricity is cheaper), then drive a few miles to work you're not going to deplete the whole battery. There will be a lot of stored charge.
Imagine being able to plug-in at work and sell that electricity back to the utility at peak rates (after having paid off-peak rates to charge it over-night). For this to work, however, you will need a personal utility account (like a debit card). Otherwise, your employer would get the credit (since it's probably his plug).
There are, of course, other uses: What if you get to a friend's house for dinner and your car is running low? Should your friend have to pay for you to charge your car? Of course not!
We will need to separate the idea of a utility meter from a house/office. Currently utilities track premises. In general there is one premise per home. I think in the future it might look more like one premise per person.
There are also other options utility companies are looking at. According to a recent Wall St Journal article, some utilities are offering an "all you can eat" rate plan specifically for charging electric cars (Detroit-Edison), others are offering lower rates and free charging stations. This does not solve the problem of charging away from home, but it can provide incentive to move to an electric car. The same article suggests that someone driving a Nissan Leaf 100 miles a day (which admittedly seems like a lot) can save more $350 a month compared to driving a traditional internal combustion car getting 25 MPG.
I think the real interesting question is "how will governments respond to electric cars?" I imagine we'll see some free/heavily discounted public charging stations at least initially. Just as cities/states provide roads for our cars, I think it's reasonable that they will provide power to speed the adoption of electric vehicles (and by "free", of course I mean tax payer funded...)
I'll be interested to see what other policy changes emerge as a result of electric cars.
Good Talk,
Tom
[Source: http://online.wsj.com/article/SB10001424052748703882404575519641915241922.html]
Monday, November 29, 2010
IT and Energy - Implications for Economics, Environment and National Security
The Lawrence Berkley National Laboratory estimates the cost of power outages in the United States at over $80,000,000,000 (that's $80 Billion) each year. The major outage in 2003 that blacked out large portions of the North East is estimated to have cost the city of New York over $1 Billion (or $36 Million per hour) and has an estimated overall cost of over $6 Billion (these figures include direct costs and indirect costs such as loss of inventory due to spoilages, lost business revenue etc). Clearly our aging power grid poses real risks to our economy. Given our reliance on computers (which require electricity) for everything from war fighting to financial transactions to public transportation, it's also easy to see that our aging infrastructure poses a real threat to national security. Our government has already discovered concrete plans by terrorist organizations to target our electricity grid.
So how can IT help? Broadband technologies coupled with cutting edge demand management software, outage monitoring sensors and improved data storage &a analysis can improve both the cost effectiveness and security of our energy grid. Currently the grid is a one way street. Energy flows from one of the thousands of utility companies to one of the millions of homes and business across the US. Each month the usage of that home or business is tabulated/read (either over a network or by a meter-reader) and a bill is prepared. When an outage happens, the utility is slow to find out and slow to respond.
In the future, a smart grid can help in all these areas. A smart grid turns our one way street into a two-way mutli-lane super highway. Electricity flows from the utility to the consumer, but also can flow from the consumer back to the grid (think solar panels, windmills, and electric car batteries) allowing for more effective peak demand management and creative revenue models.
Demand management software can keep the generation of electricity optimized. Currently, peak demand (or critical peak demand) requires utility companies to purchase expense electricity on the spot market or to fire up old, outdated, expensive, and heavily polluting plants that are kept only for emergencies. New software can help both customers and utilities manage demand by issuing load control commands (imagine the utility remotely turning off your air conditioner) and voluntary demand incentives (imagine getting a text message asking you to turn off your A/C in exchange for a credit on your bill). All of this can be automated and optimized.
Remote sensors along the grid can provide real-time information to the utilities companies about the health of the grid. The 2003 blackout was caused when one of the high-capacity lines in Ohio became over-taxed, causing it to heat up and sag (as the lines carry more power they get hotter which causes them to expand and sag). This particular line sagged too close to an untrimmed tree resulting in a "flashover" that cause and ambient surge. Ultimately the surge caused a cascading blackout affecting millions. A remote sensor on this part of the grid could have alerted the local utility (in this case FirstEnergy Corporation) and the line could have been shut down or throttled. (I'm intentionally ignoring the fact that better landscaping could also have prevented the blackout).
Finally, better data management through the smart grid can mitigate the effect of outages and reduce their overall impact and cost. Outage Management Systems (OMS) can proactively monitor a company's network and take action in the event of an outage. This will decrease response time and scope, leading to faster restoration of service.
IT is needed every step of the way to bring about a future smart grid. With over 3,000 utility companies in the United States interoperability standards will need to be developed (my guess is IP, but it could be something entirely different). Additionally, technologies for the consumer will need to be developed. I've had the privilege of testing some of the most cutting edge load control devices, thermostats, and in-home displays, and the information they provide will truly change consumer behavior. This provides a win for our economy, a win for the environment and a win for national security.
The National Broadband Plan, the 2008 stimulus bill, and other legislation has already highlighted the benefits of a smart grid and provided some early funding. Large scale programs are underway in TX, CA, FL and other states and soon, the technologies will be deployed in CT. The future is uncertain, the potential is great.
Good Talk,
Tom
[Sources: http://en.wikipedia.org/wiki/Northeast_Blackout_of_2003, http://www.elcon.org/Documents/EconomicImpactsOfAugust2003Blackout.pdf, http://www.lbl.gov/Science-Articles/Archive/EETD-power-interruptions.html ]
So how can IT help? Broadband technologies coupled with cutting edge demand management software, outage monitoring sensors and improved data storage &a analysis can improve both the cost effectiveness and security of our energy grid. Currently the grid is a one way street. Energy flows from one of the thousands of utility companies to one of the millions of homes and business across the US. Each month the usage of that home or business is tabulated/read (either over a network or by a meter-reader) and a bill is prepared. When an outage happens, the utility is slow to find out and slow to respond.
In the future, a smart grid can help in all these areas. A smart grid turns our one way street into a two-way mutli-lane super highway. Electricity flows from the utility to the consumer, but also can flow from the consumer back to the grid (think solar panels, windmills, and electric car batteries) allowing for more effective peak demand management and creative revenue models.
Demand management software can keep the generation of electricity optimized. Currently, peak demand (or critical peak demand) requires utility companies to purchase expense electricity on the spot market or to fire up old, outdated, expensive, and heavily polluting plants that are kept only for emergencies. New software can help both customers and utilities manage demand by issuing load control commands (imagine the utility remotely turning off your air conditioner) and voluntary demand incentives (imagine getting a text message asking you to turn off your A/C in exchange for a credit on your bill). All of this can be automated and optimized.
Remote sensors along the grid can provide real-time information to the utilities companies about the health of the grid. The 2003 blackout was caused when one of the high-capacity lines in Ohio became over-taxed, causing it to heat up and sag (as the lines carry more power they get hotter which causes them to expand and sag). This particular line sagged too close to an untrimmed tree resulting in a "flashover" that cause and ambient surge. Ultimately the surge caused a cascading blackout affecting millions. A remote sensor on this part of the grid could have alerted the local utility (in this case FirstEnergy Corporation) and the line could have been shut down or throttled. (I'm intentionally ignoring the fact that better landscaping could also have prevented the blackout).
Finally, better data management through the smart grid can mitigate the effect of outages and reduce their overall impact and cost. Outage Management Systems (OMS) can proactively monitor a company's network and take action in the event of an outage. This will decrease response time and scope, leading to faster restoration of service.
IT is needed every step of the way to bring about a future smart grid. With over 3,000 utility companies in the United States interoperability standards will need to be developed (my guess is IP, but it could be something entirely different). Additionally, technologies for the consumer will need to be developed. I've had the privilege of testing some of the most cutting edge load control devices, thermostats, and in-home displays, and the information they provide will truly change consumer behavior. This provides a win for our economy, a win for the environment and a win for national security.
The National Broadband Plan, the 2008 stimulus bill, and other legislation has already highlighted the benefits of a smart grid and provided some early funding. Large scale programs are underway in TX, CA, FL and other states and soon, the technologies will be deployed in CT. The future is uncertain, the potential is great.
Good Talk,
Tom
[Sources: http://en.wikipedia.org/wiki/Northeast_Blackout_of_2003, http://www.elcon.org/Documents/EconomicImpactsOfAugust2003Blackout.pdf, http://www.lbl.gov/Science-Articles/Archive/EETD-power-interruptions.html ]
Wednesday, November 24, 2010
Health Care and IT - National Broadband Plan
Recently the federal government released something called the National Broadband Plan that lays out the framework for a national effort to ensure that, as a country, we are making the most of available broadband technology. One of the challenges the National Broadband Plan hopes to tackle is the synergies between health care and IT. The plan is comprehensive in nature and lays out 5 key elements that will allow our health care providers to utilize current and future IT trends to provide better, cheaper, and more efficient care.
Ensure Access to Affordable Broadband by Rural Health Care Providers - the plan suggests that the FCC make use around $400Million in annual funds already authorized. The concern is that commercially available broadband is often priced too high to be affordable, or is simply insufficient to support modern health care needs.
Create Economic Incentives to Encourage Broad Adoption of IT and IT innovation - this tenant of the plan aims to increase the use of innovative IT products to improve the overall health care system. It supports Electronic Health Records and E-care. This part of the pan recognizes that broadband connectivity alone is not sufficient to get the most out of the current and future IT environment.
Use New Techniques in Data Analytics - Given the mass amounts of data generated and stored by modern IT systems, a move to broader adoption of health care IT will allow providers to make use of advanced analytics techniques. Spotting patterns in data may lead to better treatment and new cures.
Revise Standards around Licensing, Credentialing and Privileging - Many of these rules were written in the 20th century in a time before broadband and the technology of today. The National Broadband Plan aims to re-write these rules to speed the adoption of E-Care.
Protect Privacy - This is probably the biggest issue in Health Care IT. We will not see widespread adoption of electronic health records, E-Care, or health care IT until providers and patients are comfortable with the standards of privacy. In a time when we expose more and more information about ourselves online, most people are still not willing to share their medical information with anyone other than their provider and their insurance company.
These are the five major points of the National Broadband Plan as it relates to Health Care IT. In other posts I will examine the plan as it relates to other areas of national interest.
Good Talk,
Tom
Ensure Access to Affordable Broadband by Rural Health Care Providers - the plan suggests that the FCC make use around $400Million in annual funds already authorized. The concern is that commercially available broadband is often priced too high to be affordable, or is simply insufficient to support modern health care needs.
Create Economic Incentives to Encourage Broad Adoption of IT and IT innovation - this tenant of the plan aims to increase the use of innovative IT products to improve the overall health care system. It supports Electronic Health Records and E-care. This part of the pan recognizes that broadband connectivity alone is not sufficient to get the most out of the current and future IT environment.
Use New Techniques in Data Analytics - Given the mass amounts of data generated and stored by modern IT systems, a move to broader adoption of health care IT will allow providers to make use of advanced analytics techniques. Spotting patterns in data may lead to better treatment and new cures.
Revise Standards around Licensing, Credentialing and Privileging - Many of these rules were written in the 20th century in a time before broadband and the technology of today. The National Broadband Plan aims to re-write these rules to speed the adoption of E-Care.
Protect Privacy - This is probably the biggest issue in Health Care IT. We will not see widespread adoption of electronic health records, E-Care, or health care IT until providers and patients are comfortable with the standards of privacy. In a time when we expose more and more information about ourselves online, most people are still not willing to share their medical information with anyone other than their provider and their insurance company.
These are the five major points of the National Broadband Plan as it relates to Health Care IT. In other posts I will examine the plan as it relates to other areas of national interest.
Good Talk,
Tom
IBM's Decision to Adopt Firefox as its Default Internal Browser
If you read my recent post about corporate IT policy (and my employers refusal to allow Chrome) you'll know that I'm not a big fan of Microsoft Internet Explorer. I find it to be slow and somewhat prone to security holes. I found it interesting that back in July IBM made the decision to use Mozilla's Firefox as its default web browser for employee computer. In the announcement Bob Suter, IBM's vice president of Linux and open source software, called out five key reasons for the move:
The move seems to make sense for IBM, but what does it mean to the larger business community? In other words, why is this important?
First, it means approximately 400,000 employees of IBM will now automatically have Firefox installed on their machines. This is a fairly significant number of users and demonstrates that Firefox can be an appropriate enterprise-wide solution for web browsing (and that there are alternatives to IE).
Secondly, it is a big win for open source standards. Mozilla has kept Firefox steadfastly open-sourced with excellent documentation and wonderful security. As more and more applications move to the cloud we are all going to come to rely on open source standards both for security as well as interoperability and ease of use. IBM's adoption of Firefox is a big step in that direction.
Ultimately this move should benefit IBM employees with faster browsing and a better online experience. But, I think the move benefits all of us as this "endorsement" should spur interest and faith in open source solutions for other enterprise tools.
Good Talk,
Tom
Source: http://www.sutor.com/c/2010/07/ibm-moving-to-firefox-as-default-browser/
- Firefox is stunningly standards compliant, and interoperability via open standards is key to IBM’s strategy.
- Firefox is open source and its development schedule is managed by a development community not beholden to one commercial entity.
- Firefox is secure and an international community of experts continues to develop and maintain it.
- Firefox is extensible and can be customized for particular applications and organizations, like IBM.
- Firefox is innovative and has forced the hand of browsers that came before and after it to add and improve speed and function.
The move seems to make sense for IBM, but what does it mean to the larger business community? In other words, why is this important?
First, it means approximately 400,000 employees of IBM will now automatically have Firefox installed on their machines. This is a fairly significant number of users and demonstrates that Firefox can be an appropriate enterprise-wide solution for web browsing (and that there are alternatives to IE).
Secondly, it is a big win for open source standards. Mozilla has kept Firefox steadfastly open-sourced with excellent documentation and wonderful security. As more and more applications move to the cloud we are all going to come to rely on open source standards both for security as well as interoperability and ease of use. IBM's adoption of Firefox is a big step in that direction.
Ultimately this move should benefit IBM employees with faster browsing and a better online experience. But, I think the move benefits all of us as this "endorsement" should spur interest and faith in open source solutions for other enterprise tools.
Good Talk,
Tom
Source: http://www.sutor.com/c/2010/07/ibm-moving-to-firefox-as-default-browser/
Monday, November 22, 2010
New IT policy for the United States Army
The Army is rarely thought of as an organization relying on IT. We're more apt to associate the Army with mortars and guns and basic training, but the truth is that today's Army is a huge purchaser and user of Information Technology. Whether it's campaign coordination by the generals or real-time data updates to the soldiers on the ground, the increasing use of IT has become a definite advantage in the Army's war fighting ability.
Recently the LT. Gen Jeff Sorenson, the Army's Chief Information Officer, put out a memo announcing the Army's new policy on procurement and implementation of software solutions. The focus is around ensuring compatibility of systems across all Army units. The memo spells out a Common Operating Environment (COE) for the entire US Army. The memo states "Implementation of COE will decrease the time it takes to deliver relevant applications to the war fighters who need them, and decrease the cost of doing so."
The COE policy is part of a larger Army policy called Army Software Transformation (AST) that aims to move the Army's software procurement, implementation and management policies to the cutting edge and make our war fighters even more effective. Other aspects of AST include improved email (a move to Exchange Server), Active Directory, Enterprise Network Operations, Data Center Consolidation, and a move toward Agile development.
From General George Casey, US Army Chief of Staff: "We're building an Army that is a versatile mix of tailorable and networked organizations operating on a rational basis...to provide a sustained flow of trained and ready forces for full spectrum operations...and to hedge against unexpected contingencies...at a tempo that is predictable and and sustainable for our all-volunteer forces".
The new IT policies are helping to improve today's Army and make our soldiers more effective in fighting the new kinds of conflicts we're seeing in Afghanistan, Iraq and around the world. I'm confident our soldiers can rise to the occasion and create a world class IT organization.
Good Talk,
Tom
Sources:
http://www.federalnewsradio.com/index.php?nid=35&sid=2116410
http://ciog6.army.mil/ArmyEnterpriseNetworkVision/tabid/79/Default.aspx
http://ciog6.army.mil/LinkClick.aspx?fileticket=j4DkCajsfGQ%3d&tabid=79
Recently the LT. Gen Jeff Sorenson, the Army's Chief Information Officer, put out a memo announcing the Army's new policy on procurement and implementation of software solutions. The focus is around ensuring compatibility of systems across all Army units. The memo spells out a Common Operating Environment (COE) for the entire US Army. The memo states "Implementation of COE will decrease the time it takes to deliver relevant applications to the war fighters who need them, and decrease the cost of doing so."
The COE policy is part of a larger Army policy called Army Software Transformation (AST) that aims to move the Army's software procurement, implementation and management policies to the cutting edge and make our war fighters even more effective. Other aspects of AST include improved email (a move to Exchange Server), Active Directory, Enterprise Network Operations, Data Center Consolidation, and a move toward Agile development.
From General George Casey, US Army Chief of Staff: "We're building an Army that is a versatile mix of tailorable and networked organizations operating on a rational basis...to provide a sustained flow of trained and ready forces for full spectrum operations...and to hedge against unexpected contingencies...at a tempo that is predictable and and sustainable for our all-volunteer forces".
The new IT policies are helping to improve today's Army and make our soldiers more effective in fighting the new kinds of conflicts we're seeing in Afghanistan, Iraq and around the world. I'm confident our soldiers can rise to the occasion and create a world class IT organization.
Good Talk,
Tom
Sources:
http://www.federalnewsradio.com/index.php?nid=35&sid=2116410
http://ciog6.army.mil/ArmyEnterpriseNetworkVision/tabid/79/Default.aspx
http://ciog6.army.mil/LinkClick.aspx?fileticket=j4DkCajsfGQ%3d&tabid=79
Are Mobile Devices Creating a Problem for IT and HR?
Mobile smart phones are clearly one of the fastest growing technologies of the last decade. The ubiquitousness of Blackberries, iPhones, Droids, Evos and others have, in many ways, made life easier for everyone. We are now in near constant contact with clients, colleagues, friends, and family. From a productivity point of view this is a very good thing (we'll leave the psychological and emotional discussion until another time). We can be much responsive to the needs of those around us and we can be much better informed than at any time in the past. However, there is one issue that is beginning to creep up in companies around the world.
Most IT departments, especially at large companies, have a fairly well defined policy about the use of the companies' network resources and what types of behavior are permissible and what are prohibited. These policies vary from company to company and are enforced to vary degrees of effectiveness. I've worked with companies allow Facebook and YouTube at work, recognizing the needs of employees to take a mental break every now and then. I've worked at a company that allows only a predefined list sites necessary to conduct business (even sites like NYTIMES.com and Yahoo.com were blocked). And then I've worked at companies that fall somewhere in the middle (i.e. no business use for YouTube, but you might want to buy a gift for a boss/coworker on yahoo shopping). In all of these cases, my conversations with IT managers have made clear the policies are well thought out and consistent with the culture and values of the company. All offensive content is blocked at 99% of the companies I've worked with (1 had no web-filter at all and a very open culture).
But how do you deal with the little computers in our pockets that run on a cell phone signal? When employees can bring their own network to work, the risk to companies is much higher. Clearly, IT can manage the risk of viruses/malware to the network (after all, my Droid does not interact with my clients network very often). This risk is fairly straightforward and familiar to IT managers. But what about the risk of displaying offensive content? IT can't filter the browser on a privately owned smart phone. I'm sure we all know colleagues that have called up the latest YouTube sensation at lunch or on a break. I'm a sure a couple people even know colleagues that have shown pornography at work (thankfully, I've never been in that situation). From an HR point of view the risk of a sexual harassment claim or a hostile work environment claim (think offensive jokes, videos, etc) is increased by the increasing presence of our smart phones. Additionally, most of these smart phones have cameras. There is a real risk of employees photographing confidential information.
So what is the answer? Honestly, there is no easy answer. I know a couple employers that ban cell phones inside all their buildings (mostly employers involved with classified government work). This seems like an extreme measure and for some industries (sales and consulting come to mind) would cripple your work force. If there is a simple technology solution, I'm not aware of it. I think the solution will be a mix of carefully enforced policy and a culture of respect in the workplace. I, for one, will be interested to see how it plays out in the future.
Good Talk,
Tom
Most IT departments, especially at large companies, have a fairly well defined policy about the use of the companies' network resources and what types of behavior are permissible and what are prohibited. These policies vary from company to company and are enforced to vary degrees of effectiveness. I've worked with companies allow Facebook and YouTube at work, recognizing the needs of employees to take a mental break every now and then. I've worked at a company that allows only a predefined list sites necessary to conduct business (even sites like NYTIMES.com and Yahoo.com were blocked). And then I've worked at companies that fall somewhere in the middle (i.e. no business use for YouTube, but you might want to buy a gift for a boss/coworker on yahoo shopping). In all of these cases, my conversations with IT managers have made clear the policies are well thought out and consistent with the culture and values of the company. All offensive content is blocked at 99% of the companies I've worked with (1 had no web-filter at all and a very open culture).
But how do you deal with the little computers in our pockets that run on a cell phone signal? When employees can bring their own network to work, the risk to companies is much higher. Clearly, IT can manage the risk of viruses/malware to the network (after all, my Droid does not interact with my clients network very often). This risk is fairly straightforward and familiar to IT managers. But what about the risk of displaying offensive content? IT can't filter the browser on a privately owned smart phone. I'm sure we all know colleagues that have called up the latest YouTube sensation at lunch or on a break. I'm a sure a couple people even know colleagues that have shown pornography at work (thankfully, I've never been in that situation). From an HR point of view the risk of a sexual harassment claim or a hostile work environment claim (think offensive jokes, videos, etc) is increased by the increasing presence of our smart phones. Additionally, most of these smart phones have cameras. There is a real risk of employees photographing confidential information.
So what is the answer? Honestly, there is no easy answer. I know a couple employers that ban cell phones inside all their buildings (mostly employers involved with classified government work). This seems like an extreme measure and for some industries (sales and consulting come to mind) would cripple your work force. If there is a simple technology solution, I'm not aware of it. I think the solution will be a mix of carefully enforced policy and a culture of respect in the workplace. I, for one, will be interested to see how it plays out in the future.
Good Talk,
Tom
Saturday, November 20, 2010
Common Carriers and Net Neutrality (Part 9 in a multi-part series)
Until 2005 the United States imposed rules on common carriers (legacy telecom companies such as AT&T and Verizon) requiring them to sell bandwidth on their networks to other ISPs at discount prices. The idea was basically that the best way to ensure competition in the ISP space was to make incumbents sell their bandwidth to other ISPs at wholesale prices. This would allow the Earthlinks of the world to compete and, hopefully, create an environment where increased competition leads to lower prices and better service for the consumer. However, in 2005, the telecom companies successfully lobbied the FCC to change the rules.
The carriers argued that the rules unfairly penalized them simply because of the delivery mechanism they used. AT&T and Verizon delivered data services over old telephone wires. Because, as telephone companies, they were designated common carriers, the rules were different. Comcast, on the other hand, delivered data services over coaxial cable and was not subject to the FCC's rule about wholesaling bandwidth. In 2005, the SEC agreed with the legacy carriers and dropped the rule requiring discounted prices. Some say this decision by the FCC provided a rallying point for the net neutrality movement.
Other countries such as South Korea and Japan have largely maintained similar bandwidth sharing rules to the pre-2005 rules in the United States. One can question whether this is the reason some of these countries have much wider broadband adoption, much faster broadband speeds, and much lower prices. Should the FCC have maintained the pre-2005 rules? Did the rule change spark the call for net neutrality? Should Comcast be regulated as a common carrier? All questions worth exploring.
Good Talk,
Tom
The carriers argued that the rules unfairly penalized them simply because of the delivery mechanism they used. AT&T and Verizon delivered data services over old telephone wires. Because, as telephone companies, they were designated common carriers, the rules were different. Comcast, on the other hand, delivered data services over coaxial cable and was not subject to the FCC's rule about wholesaling bandwidth. In 2005, the SEC agreed with the legacy carriers and dropped the rule requiring discounted prices. Some say this decision by the FCC provided a rallying point for the net neutrality movement.
Other countries such as South Korea and Japan have largely maintained similar bandwidth sharing rules to the pre-2005 rules in the United States. One can question whether this is the reason some of these countries have much wider broadband adoption, much faster broadband speeds, and much lower prices. Should the FCC have maintained the pre-2005 rules? Did the rule change spark the call for net neutrality? Should Comcast be regulated as a common carrier? All questions worth exploring.
Good Talk,
Tom
Friday, November 19, 2010
Corporate Policy - Security vs Usability
I'm taking a break from my series on net neutrality to discuss IT policy at the company level (as opposed to the national/international level). Recently my firm was acquired by a much larger company and over the last week or so we acquired employees have been working through the elements of the transition. While both companies have been excellent in communicating changes and keeping a positive attitude throughout, there have definitely been some "hiccups".
As a consultants our primary concern is always client service. The merger, to the say the least, has been a distraction in serving our clients. We push through, but there is a noticeable impact to our clients as our time and effort is divided between their work and our own transition. This impact has been exacerbated by a slew of technology changes we must handle. We've gone from using Microsoft Outlook, a simple, easy to use and functional email program to Lotus Notes, a program without a major overhaul in 20 years. Our corporate IT policy does not allow Outlook and has stifled our creative efforts to use it (DAMO and other tools). Additionally, corporate policy mandates the use of Microsoft Internet Explorer and actively scans for installs of other browsers to delete them. Anyone who has used Chrome knows how much faster, easier and more intuitive it is. Lastly, we have an auto-backup program that backs up our machines on a daily basis. This is a great idea. However, the backup can not be scheduled person by person, it is randomized to efficiently utilize network resources. This can be a really big hassle when a consultant is using his/her machine to deliver a PowerPoint presentation and suddenly the backup utility kicks on and zaps the CPU/memory of the machine.
Each of these policies was set up with noble intentions. Outlook is not as secure as Lotus Notes and Notes has phenomenal back-end DB capabilities. IE is the corporate standard for browsers and minimizes compatibility risks. Regular backups are an essential part of any corporate risk mitigation/disaster recovery plan. However, the consequences of these policies have, perhaps, not been fully explored. Moving 600 consultants used to Outlook, Chrome, and on-demand backups to these new policies has severely impacted our ability to help our clients. We spend more time re-booting, more time fighting with our email and more time waiting for web pages to load. All this means we have less time (or less sleep) to help our clients. (This doesn't even include the consultants who were forced to give up their Macs for ThinkPads.
When designing IT policy (or integrating a new company with conflicting IT policies), it's important to keep the ultimate goal in mind. When policy or process impedes progress, a company must seriously re-evaluate. Now, it's been less than 2 weeks and I'm sure the learning curve is steep, but this a good example of the impact IT Policy can have on a business and it's customers.
Good Talk,
Tom
As a consultants our primary concern is always client service. The merger, to the say the least, has been a distraction in serving our clients. We push through, but there is a noticeable impact to our clients as our time and effort is divided between their work and our own transition. This impact has been exacerbated by a slew of technology changes we must handle. We've gone from using Microsoft Outlook, a simple, easy to use and functional email program to Lotus Notes, a program without a major overhaul in 20 years. Our corporate IT policy does not allow Outlook and has stifled our creative efforts to use it (DAMO and other tools). Additionally, corporate policy mandates the use of Microsoft Internet Explorer and actively scans for installs of other browsers to delete them. Anyone who has used Chrome knows how much faster, easier and more intuitive it is. Lastly, we have an auto-backup program that backs up our machines on a daily basis. This is a great idea. However, the backup can not be scheduled person by person, it is randomized to efficiently utilize network resources. This can be a really big hassle when a consultant is using his/her machine to deliver a PowerPoint presentation and suddenly the backup utility kicks on and zaps the CPU/memory of the machine.
Each of these policies was set up with noble intentions. Outlook is not as secure as Lotus Notes and Notes has phenomenal back-end DB capabilities. IE is the corporate standard for browsers and minimizes compatibility risks. Regular backups are an essential part of any corporate risk mitigation/disaster recovery plan. However, the consequences of these policies have, perhaps, not been fully explored. Moving 600 consultants used to Outlook, Chrome, and on-demand backups to these new policies has severely impacted our ability to help our clients. We spend more time re-booting, more time fighting with our email and more time waiting for web pages to load. All this means we have less time (or less sleep) to help our clients. (This doesn't even include the consultants who were forced to give up their Macs for ThinkPads.
When designing IT policy (or integrating a new company with conflicting IT policies), it's important to keep the ultimate goal in mind. When policy or process impedes progress, a company must seriously re-evaluate. Now, it's been less than 2 weeks and I'm sure the learning curve is steep, but this a good example of the impact IT Policy can have on a business and it's customers.
Good Talk,
Tom
Thursday, November 18, 2010
Real-Life Example of Net Neutrality Debate (Part 8 of a multi-part series)
'm taking this opportunity to underscore the real world implications of the net neutrality debate. So far I've only talked about the academic/theoretical implications, but the truth is, the debate and it's outcome will have an impact on all of us. On October 16th, that impact was felt across the New York region.
If you were a Cable Vision subscriber and happened to visit Hulu on Friday 10/16 to watch something from Fox you would have received a the following message:
Fox (and it’s owner News Corp) and Cable Vision are in a dispute over carriage fees for Fox’s signal on Cable Vision’s network. These kinds of disputes are more and more common in the world of cable television, but this is the first time I can think of that it has impacted Internet users. Net Neutrality regulation would have allowed Cable Vision subscribers to access Fox’s content on the web. The dispute between the two companies has been ongoing for a while now, however, the “negotiations” are clearing escalating. With the MLB playoffs and World Series and the Sunday NFL season on Fox, the stakes are clearly high. Fox and Cablevision ultimately reach a deal on October 18th, in time for 3 Million New Yorkers to catch game three of the world series.
Good Talk,
Tom
If you were a Cable Vision subscriber and happened to visit Hulu on Friday 10/16 to watch something from Fox you would have received a the following message:
Fox (and it’s owner News Corp) and Cable Vision are in a dispute over carriage fees for Fox’s signal on Cable Vision’s network. These kinds of disputes are more and more common in the world of cable television, but this is the first time I can think of that it has impacted Internet users. Net Neutrality regulation would have allowed Cable Vision subscribers to access Fox’s content on the web. The dispute between the two companies has been ongoing for a while now, however, the “negotiations” are clearing escalating. With the MLB playoffs and World Series and the Sunday NFL season on Fox, the stakes are clearly high. Fox and Cablevision ultimately reach a deal on October 18th, in time for 3 Million New Yorkers to catch game three of the world series.
Good Talk,
Tom
Wednesday, November 17, 2010
Rebuttal to the Business Argument Against Net Neutrality (Part 7 in a muli-part series)
In my last post I describe one argument that ISPs are using to combat net neutrality legislation. Namely, that tiered pricing is necessary to incentivize ISPs to continue investments in better infrastructure. As I stated, at first blush the argument seems logical. That by employing pricing leverage the ISPs can make more money and thus have more to invest in their networks. However, an astute student of economic will quickly see the logical fallacy of such an argument.
Increased pricing power leading to higher profits in no relates to capital expenditures or investment on the part of the ISP. In fact, their is economic theory to suggest that exactly the opposite is true. Let me explain why: When the ISP can have multiple pricing regimes to support discriminatory pricing, and the ISP needs/wants to increase profits, they simply increase the top rate (the tier one rate). Those companies/customers paying for tier one access clearly need priority treatment of their traffic and are thus willing to pay for it. This leads the ISP to higher profits. In a non-tiered system, however, the ISP does not have the luxury of raising prices for only those tier 1 customers. If they raise prices for everyone, they risk alienating those who do not value priority. Thus, The lack of a premium pricing revenue stream may increase incentives to invest in greater infrastructure to serve greater, flat-rate volume. “ISP’s incentive to invest on capacity under a discriminatory network can be smaller than that under a neutral regime where such rent extraction effects do not exist”* This would actually seem to suggest that a neutral net policy would support greater investment in future infrastructure enhancements.
Good Talk,
Tom
*Choi, J. P., & Kim, B.-C. (2008). Net Neutrality and Investment Incentives, CESifo Working Paper No. 2390.
Increased pricing power leading to higher profits in no relates to capital expenditures or investment on the part of the ISP. In fact, their is economic theory to suggest that exactly the opposite is true. Let me explain why: When the ISP can have multiple pricing regimes to support discriminatory pricing, and the ISP needs/wants to increase profits, they simply increase the top rate (the tier one rate). Those companies/customers paying for tier one access clearly need priority treatment of their traffic and are thus willing to pay for it. This leads the ISP to higher profits. In a non-tiered system, however, the ISP does not have the luxury of raising prices for only those tier 1 customers. If they raise prices for everyone, they risk alienating those who do not value priority. Thus, The lack of a premium pricing revenue stream may increase incentives to invest in greater infrastructure to serve greater, flat-rate volume. “ISP’s incentive to invest on capacity under a discriminatory network can be smaller than that under a neutral regime where such rent extraction effects do not exist”* This would actually seem to suggest that a neutral net policy would support greater investment in future infrastructure enhancements.
Good Talk,
Tom
*Choi, J. P., & Kim, B.-C. (2008). Net Neutrality and Investment Incentives, CESifo Working Paper No. 2390.
The Business/Economic Agrument Against Net Neutrality (Part 6 in a multi-part series)
Opponents of net neutrality (primarily Internet Service Providers (ISPs)) have argued that any legislation forcing them treat all traffic equally and prohibit them from traffic shaping, throttling, two-sided pricing, or blocking of content would adversely affect the ISPs’ ability to invest in infrastructure improvements and new technologies, and would ultimately be detrimental to the end users Internet experience. They argue that the ability to differentiate prices (tiered pricing) would incentivize ISPs to invest in improvements to their network and, conversely, that the inability to extract different rates from different types of content providers/users would disincentivize them from investing. The fundamental economic argument is that the more pricing power a producer/provider has the more investment that producer/provider is willing to make in future goods and services.
At first blush this makes a lot of sense. The more pricing power a company has the more money it makes and the more capable it is of making future investments. Warren Buffet is a huge proponent of the concept of pricing power in choosing investments (See’s Candies, American Express and Coca-Cola being but a few examples). A business with pricing power traditionally does very well in the markets place (as a counter-example look at newspapers in today’s market). However, we should be careful not to confuse financial success with economic incentive to increase business investment. In my next post I'll explain why tiered pricing (and pricing power) do not necessarily lead to more investment.
Good Talk,
Tom
At first blush this makes a lot of sense. The more pricing power a company has the more money it makes and the more capable it is of making future investments. Warren Buffet is a huge proponent of the concept of pricing power in choosing investments (See’s Candies, American Express and Coca-Cola being but a few examples). A business with pricing power traditionally does very well in the markets place (as a counter-example look at newspapers in today’s market). However, we should be careful not to confuse financial success with economic incentive to increase business investment. In my next post I'll explain why tiered pricing (and pricing power) do not necessarily lead to more investment.
Good Talk,
Tom
Tuesday, November 16, 2010
Fifth Ammendment Arguement Against Net Neutrality (Part 5 in a multi-part series)
Opponents of net neutrality have also argued that such regulation would constitute an unlawful “taking” of property. The 5th Amendment to the United States Constitution allows for the taking of private property by the government only with “just compensation” to the owner of the property in question. Opponents to net neutrality argue that the regulation, by forcing network owners to treat all content equally, deprives them of rightful ownership of these assets and, therefore, violates this clause. By taking away the ISPs ability to refuse access to their network (content blocking) or mandating the conditions under which access is permissible, net neutrality violates the 5th amendment rights of the ISP.
The case law around this argument is open to some interpretation. In Kaiser Aetna vs United States, the court held that the right to exclude access to ones property is an essential element of property ownership. “one of the most essential sticks in the bundle of rights that are commonly characterized as property [is] the right to exclude others.”
However, other case law has been less clear when the matter concerns the FCC. As professor Rob Frieden note:
“While reviewing courts have questioned the nature, type and rates of the FCC mandated common carrier interconnection and facilities-leasing requirements, the judiciary has not deemed the requirements confiscatory: ‘There is no evidence that the decision to adopt TELRIC [i.e., compulsory pricing of local exchange service elements on the basis of quite low Total Element Long Run Incremental Cost] was arbitrary, opportunistic, or undertaken with a confiscatory purpose. Indeed, the indications in the record are very much to the contrary.’"*
The Fifth Amendment argument, while compelling to some strict constructionalist interpretation of the constitution, will probably have a difficult time advancing in the courts. I think ISPs are going to need to rely on something else if they hope to derail net neutrality legislation.
Good Talk,
Tom
* From footnote 57 of “ Internet 3.0: Identifying Problems and Solutions to the Network Neutrality Debate” Rob Frieden
The case law around this argument is open to some interpretation. In Kaiser Aetna vs United States, the court held that the right to exclude access to ones property is an essential element of property ownership. “one of the most essential sticks in the bundle of rights that are commonly characterized as property [is] the right to exclude others.”
However, other case law has been less clear when the matter concerns the FCC. As professor Rob Frieden note:
“While reviewing courts have questioned the nature, type and rates of the FCC mandated common carrier interconnection and facilities-leasing requirements, the judiciary has not deemed the requirements confiscatory: ‘There is no evidence that the decision to adopt TELRIC [i.e., compulsory pricing of local exchange service elements on the basis of quite low Total Element Long Run Incremental Cost] was arbitrary, opportunistic, or undertaken with a confiscatory purpose. Indeed, the indications in the record are very much to the contrary.’"*
The Fifth Amendment argument, while compelling to some strict constructionalist interpretation of the constitution, will probably have a difficult time advancing in the courts. I think ISPs are going to need to rely on something else if they hope to derail net neutrality legislation.
Good Talk,
Tom
* From footnote 57 of “ Internet 3.0: Identifying Problems and Solutions to the Network Neutrality Debate” Rob Frieden
First Ammendment Argument Against Net Neutrality (Part 4 in a multi-part series)
ISPs (and their lawyers) will also argue against net neutrality on two constitutional grounds (either of these arguments is stronger than the business argument). ISPs argue that net neutrality violates both their 1st and 5th amendment rights. Interestingly there is precedence within existing case law to support each of these arguments. In this post I will examine only the 1st Amendment argument.
An illustrative example of net neutrality legislation is the bill put forth by Senator Byron Dorgan entitled “The Internet Freedom Preservation ActThe act, introduced in the second session of the 109th Congress reads, in part,
"Each broadband service provider shall (1) not block, interfere with, discriminate against, impair, or degrade the ability of any person to use a broadband service to access, use, send, post, receive, or offer any lawful content, application, or service made available via the Internet” (Internet Freedom Preservation Act, S.2917 12(a)(1)(2006), 2006).
ISPs argue that net neutrality, specifically the provision that requires them to treat all traffic equally, violates their rights under the 1stamendment. The entire premise of net neutrality (both as a concept and as legislation) is that the Internet should be open and non-discriminatory. This noble goal, in practice, will require that ISPs (generally private companies), therefore, behave in a non-discriminatory manner. Taking this concept a step further, and we arrive at the logical conclusion that ISPs must treat the traffic of a competitor the same way they treat their own traffic. ISPs argue that compelling them to deliver a message is as much as a violation of their 1st Amendment rights as prevent them from speaking would be. In the past the courts have agreed. In Pacific Gas and Electric Company vs Public Utilities Commission the court held that ““For corporations as for individuals, the choice to speak includes within it the choice of what not to say.”
Many IPSs and conservative think tanks have latched on to this argument as to why net neutrality legislation should be defeated. In the next post we'll look at another constitutional argument against net neutrality.
Good Talk,
Tom
An illustrative example of net neutrality legislation is the bill put forth by Senator Byron Dorgan entitled “The Internet Freedom Preservation ActThe act, introduced in the second session of the 109th Congress reads, in part,
"Each broadband service provider shall (1) not block, interfere with, discriminate against, impair, or degrade the ability of any person to use a broadband service to access, use, send, post, receive, or offer any lawful content, application, or service made available via the Internet” (Internet Freedom Preservation Act, S.2917 12(a)(1)(2006), 2006).
ISPs argue that net neutrality, specifically the provision that requires them to treat all traffic equally, violates their rights under the 1stamendment. The entire premise of net neutrality (both as a concept and as legislation) is that the Internet should be open and non-discriminatory. This noble goal, in practice, will require that ISPs (generally private companies), therefore, behave in a non-discriminatory manner. Taking this concept a step further, and we arrive at the logical conclusion that ISPs must treat the traffic of a competitor the same way they treat their own traffic. ISPs argue that compelling them to deliver a message is as much as a violation of their 1st Amendment rights as prevent them from speaking would be. In the past the courts have agreed. In Pacific Gas and Electric Company vs Public Utilities Commission the court held that ““For corporations as for individuals, the choice to speak includes within it the choice of what not to say.”
Many IPSs and conservative think tanks have latched on to this argument as to why net neutrality legislation should be defeated. In the next post we'll look at another constitutional argument against net neutrality.
Good Talk,
Tom
Monday, November 15, 2010
Non-Neutral Network (Part 3 of a Multi-Part Series)
So we've talked a little about the policy debate around net neutrality and a little about how the Internet works today, but what would a non-neutral network policy involve? Primarily 3 things: Quality of Service, Traffic Shaping, and Pricing Models.
Quality of Service: Historically the Internet operating on peering agreements between ISPs that utilized a "best efforts" agreement. In other words and ISP would agree to process the traffic from another network with its best effort, and, when all ISPs did this, the Internet operated fairly smoothly. In a non-neutral network world, these best efforts would be replaced by service level agreements and contracts. And, perhaps more importantly, ISPs would discriminate against certain traffic. This would inevitably lead to a tiered internet where an ISPs' preferred customers/partners received priority treatment of their packets and non-preferred customers/partners traffic was moved more slowly across the network.
Traffic Shaping: Traffic shaping goes hand-in-hand with Quality of Service. It is basically defined as any action to delay traffic moving across a network. It's really a tool to manage bandwidth. As traffic enters a network, the network can stall it (add latency) to free up space on the network and improve the overall flow or stream of data. Of course this greatly impacts the owner of the stalled traffic.
Pricing Models: Having a non-neutral network could allow for a plethora of pricing models. Currently ISPs generally charge the consumer on a per month, unlimited use, bandwidth constrained rate. (i.e. I pay X dollars a month and I get a 10Mbs connection - I can use it as often or as rarely as suits me, I can use it only to send emails, or I can watch Netflix and the price remains the same). In the future ISPs have talked about two-sided pricing where both the consumer (me) and the content provider (e.g. Netflix) are both charged when I access Netflix's content. They've also discussed tiered pricing based on service levels for both sides. A Non-neutral network allows for more creative pricing and might help ISPs better manage their cost/revenue models.
In my next post we'll examine an argument against net neutrality.
Good Talk,
Tom
Traffic Shaping: Traffic shaping goes hand-in-hand with Quality of Service. It is basically defined as any action to delay traffic moving across a network. It's really a tool to manage bandwidth. As traffic enters a network, the network can stall it (add latency) to free up space on the network and improve the overall flow or stream of data. Of course this greatly impacts the owner of the stalled traffic.
Pricing Models: Having a non-neutral network could allow for a plethora of pricing models. Currently ISPs generally charge the consumer on a per month, unlimited use, bandwidth constrained rate. (i.e. I pay X dollars a month and I get a 10Mbs connection - I can use it as often or as rarely as suits me, I can use it only to send emails, or I can watch Netflix and the price remains the same). In the future ISPs have talked about two-sided pricing where both the consumer (me) and the content provider (e.g. Netflix) are both charged when I access Netflix's content. They've also discussed tiered pricing based on service levels for both sides. A Non-neutral network allows for more creative pricing and might help ISPs better manage their cost/revenue models.
In my next post we'll examine an argument against net neutrality.
Good Talk,
Tom
Sunday, November 14, 2010
Net Neutrality Specifics (Part 2 in a Mutli-Part Series)
In my last post I talked at a very high level about the policy debate currently raging around net neutrality. It might help the reader to have a better understand of what exactly is being debated. And to do so, we need a better understanding of how the Internet works.
To most users of the Internet, the net is one, amazing end-to-end system that allows us to access google one minute, a florist in NYC the next, and a tailor in London the next. In truth, however, the Internet is actually composed of a number of smaller networks that work together almost seamlessly to get traffic from our computer to servers around the globe. You're probably fairly familiar with your Internet Service Provider (ISP), mine is Comcast (though on my mobile phone Verizon connects me to the Internet). When go online, what I'm doing in essence is sending a request (a packet of information) from my computers web browser onto Comcast's network where it is routed through their servers and then passed off to other ISP's servers until it ultimately reaches the servers at Google (or wherever I'm trying to surf to). The Google servers then send back packets of information across their ISP (and very likely other ISPs and backbone networks) to Comcast and ultimately back to my computer where my web browsers turns the packets into the Google homepage. (It's all entirely more complicated than that, but that's the basic idea).
So, if all of this works fine right now, why the debate about net neutrality? Well, the simple fact is that each day we're accessing more and more content online. We watch more movies, download more music, play more online games, make more VoIP calls. All of this puts a strain on the networks that make up the Internet and eventually, it means the ISPs need to install more capacity. Thinking back to the plumbing metaphor, imagine if you continually increased the amount of water flowing through your pipes. At first all is well, but eventually you'd need bigger pipes. Well, same thing on the Internet. And the ISPs are the ones who own the pipes and, in general, the ones responsible for maintaining and upgrading those pipes. What they are arguing is that if they should be able to charge customers different rates based on the type and/or amount of traffic they 1) Generate and 2) Consume. Obviously, the content owners like the current system where the pipes are "dumb" and treat all traffic the same.
We'll explore ways the ISPs can profit and manage traffic in the next post.
Good Talk,
Tom
To most users of the Internet, the net is one, amazing end-to-end system that allows us to access google one minute, a florist in NYC the next, and a tailor in London the next. In truth, however, the Internet is actually composed of a number of smaller networks that work together almost seamlessly to get traffic from our computer to servers around the globe. You're probably fairly familiar with your Internet Service Provider (ISP), mine is Comcast (though on my mobile phone Verizon connects me to the Internet). When go online, what I'm doing in essence is sending a request (a packet of information) from my computers web browser onto Comcast's network where it is routed through their servers and then passed off to other ISP's servers until it ultimately reaches the servers at Google (or wherever I'm trying to surf to). The Google servers then send back packets of information across their ISP (and very likely other ISPs and backbone networks) to Comcast and ultimately back to my computer where my web browsers turns the packets into the Google homepage. (It's all entirely more complicated than that, but that's the basic idea).
So, if all of this works fine right now, why the debate about net neutrality? Well, the simple fact is that each day we're accessing more and more content online. We watch more movies, download more music, play more online games, make more VoIP calls. All of this puts a strain on the networks that make up the Internet and eventually, it means the ISPs need to install more capacity. Thinking back to the plumbing metaphor, imagine if you continually increased the amount of water flowing through your pipes. At first all is well, but eventually you'd need bigger pipes. Well, same thing on the Internet. And the ISPs are the ones who own the pipes and, in general, the ones responsible for maintaining and upgrading those pipes. What they are arguing is that if they should be able to charge customers different rates based on the type and/or amount of traffic they 1) Generate and 2) Consume. Obviously, the content owners like the current system where the pipes are "dumb" and treat all traffic the same.
We'll explore ways the ISPs can profit and manage traffic in the next post.
Good Talk,
Tom
Saturday, November 13, 2010
Introduction to Net Neutrality (Part 1 of a multipart series)
Net Neutrality is one of the more hotly debated topics around federal policy (probably behind health care, taxes, and cap and trade) in the last 5 years. The basic idea of net neutrality (also, rarely, called Internet neutrality or network neutrality) is that the Internet should remain a free, unbiased medium that acts to convey messages and content from one party to another, and that it should not discriminate based on the type or source of the content (much like your plumbing does not discriminate based on the source of the water).
Proponents of net neutrality argue that Internet was born and grew up in an open culture where participants cooperated freely to ultimate benefit of all. They are argue that a tiered Internet or a discriminatory pricing regime would hamper growth and lead to profits for a few at the cost of many.
Opponents of net neutrality (most often Internet Service Providers - ISPs) argue that the only way to ensure future growth is to allow the owners of the network infrastructure (the "pipes") to properly manage their networks. This includes traffic shaping, tiered pricing, and quality of service agreements.
Overall, this is a complicated topic and one that I suspect will be debated for years to come. Over the next few posts I will explore the topic in more depth and hopefully allow my readers to come to their own conclusions.
Good Talk,
Tom
Proponents of net neutrality argue that Internet was born and grew up in an open culture where participants cooperated freely to ultimate benefit of all. They are argue that a tiered Internet or a discriminatory pricing regime would hamper growth and lead to profits for a few at the cost of many.
Opponents of net neutrality (most often Internet Service Providers - ISPs) argue that the only way to ensure future growth is to allow the owners of the network infrastructure (the "pipes") to properly manage their networks. This includes traffic shaping, tiered pricing, and quality of service agreements.
Overall, this is a complicated topic and one that I suspect will be debated for years to come. Over the next few posts I will explore the topic in more depth and hopefully allow my readers to come to their own conclusions.
Good Talk,
Tom
Monday, July 26, 2010
When Process impedes Progress
I'll be the first to admit that I'm not a very process oriented person. I'd much prefer you tell me my objective and get out of my way while I get it done. On the projects I manage I don't typically care if you work from home, work from the office or work from your neighbor's fishing boat, just make sure you get your work done. However, I understand that as firms grow and organizations expand the conflicting and competing priorities of employees and customers necessitates the development of processes to govern how things are done and in what manner scarce resources get allocated. From a management and a value point of view this makes sense. It ensures the allocation is given at least some thought and that a organization strives for efficiency in it's operations.
Imagine living in a house with one shower and 5 roommates. It would make sense to develop a process around who gets to use the shower based upon what time each has to be to class or work. Any conflicts are worked out among the roommates (usually by one agreeing to wake up 15 minutes earlier). This is an example of designing a process to reduce the chaos of the morning rush and make the house more efficient. I'm OK with processes like these.
But imagine a slight change in the process. Imagine now that on Sunday night you had to submit your request for shower times for the week to once person in the house designated the Quality Assurance roommate. Then imagine the quality assurance roommate compiling these requests and determining where conflicts result. (You and another roommate both want the shower at 6:30AM on Monday - let's assume you're unwilling to share...) The list of conflicts is sent out to all the roommates for discussion at the weekly Sunday Assignments Meeting. At this meeting any parties having requested conflicting times get 5 minutes each to make the case why they should have priority over someone else. At the end of the discussion all the roommates vote and the loser has to select a different open time. Additionally if a roommate fails to show up to the Sunday Assignments meeting he forfeits any contested time slots. This is a much more complicated process, but in the end it probably results in an equitable solution, despite the unnecessary overhead. I'm not a big fan of processes like this, but I've learned to live with them. They are often the most fair and orderly way to conduct business.
Now imagine a third scenario: This scenario is just like scenario two except for some small changes. First, everyone must make their case at the Sunday Assignments Meeting whether or not there is a conflict for their requested time slot. So if you want the shower at noon on Wednesday when everyone else is at work you'll still have to make your case in front of the group. Additionally, we'll add a lock to the shower that can only be removed by approval of a majority of the roommates. So now if you fail to show up to the meeting you're not allowed to shower ALL WEEK. When you petition the quality assurance roommate for an exemption because you have an appointment on Sunday he says, "Sorry, if you don't present at the meeting and give everyone else a chance to ask questions or object we won't know if there's a conflict. It's just not a risk we can afford to take." He seems to miss the fact that all time slots are submitted earlier Sunday This is an (extreme) example of a process run amok. The objective - equitable and efficient allocation of shower availability - has been completely subsumed by the process itself. We've lost the forest in the trees. What happens in this instance is the shower lies unnecessarily empty because someone missed a meeting and everyone suffers because one of the roommates has not bathed in a week.
When you design and implement processes, be sure to keep the objective in mind. Activity is no substitute for results and activity that impedes results is intolerable. Aim to make operations more efficient and NEVER have process that gets in the way of the goal. Where you end up is far more important than what road you take to get there.
Imagine living in a house with one shower and 5 roommates. It would make sense to develop a process around who gets to use the shower based upon what time each has to be to class or work. Any conflicts are worked out among the roommates (usually by one agreeing to wake up 15 minutes earlier). This is an example of designing a process to reduce the chaos of the morning rush and make the house more efficient. I'm OK with processes like these.
But imagine a slight change in the process. Imagine now that on Sunday night you had to submit your request for shower times for the week to once person in the house designated the Quality Assurance roommate. Then imagine the quality assurance roommate compiling these requests and determining where conflicts result. (You and another roommate both want the shower at 6:30AM on Monday - let's assume you're unwilling to share...) The list of conflicts is sent out to all the roommates for discussion at the weekly Sunday Assignments Meeting. At this meeting any parties having requested conflicting times get 5 minutes each to make the case why they should have priority over someone else. At the end of the discussion all the roommates vote and the loser has to select a different open time. Additionally if a roommate fails to show up to the Sunday Assignments meeting he forfeits any contested time slots. This is a much more complicated process, but in the end it probably results in an equitable solution, despite the unnecessary overhead. I'm not a big fan of processes like this, but I've learned to live with them. They are often the most fair and orderly way to conduct business.
Now imagine a third scenario: This scenario is just like scenario two except for some small changes. First, everyone must make their case at the Sunday Assignments Meeting whether or not there is a conflict for their requested time slot. So if you want the shower at noon on Wednesday when everyone else is at work you'll still have to make your case in front of the group. Additionally, we'll add a lock to the shower that can only be removed by approval of a majority of the roommates. So now if you fail to show up to the meeting you're not allowed to shower ALL WEEK. When you petition the quality assurance roommate for an exemption because you have an appointment on Sunday he says, "Sorry, if you don't present at the meeting and give everyone else a chance to ask questions or object we won't know if there's a conflict. It's just not a risk we can afford to take." He seems to miss the fact that all time slots are submitted earlier Sunday This is an (extreme) example of a process run amok. The objective - equitable and efficient allocation of shower availability - has been completely subsumed by the process itself. We've lost the forest in the trees. What happens in this instance is the shower lies unnecessarily empty because someone missed a meeting and everyone suffers because one of the roommates has not bathed in a week.
When you design and implement processes, be sure to keep the objective in mind. Activity is no substitute for results and activity that impedes results is intolerable. Aim to make operations more efficient and NEVER have process that gets in the way of the goal. Where you end up is far more important than what road you take to get there.
Tuesday, January 12, 2010
Mobile App Development Environment - What's the Future Hold?
I’m not a developer or a programmer of any kind (except for 18 weeks during 11th grade) but I have been paying fairly close attention to the development of mobile apps. 6 weeks ago I switched from a BlackBerry (RIM) to a Droid running the Android OS. The number of apps available for my Droid is just amazing. It’s like switching from night to day. And then of course there’s Apple and the iPhone and the 100,000+ apps available for that device.
I recently read a great article by Brad Burnham of Union Square Ventures about the competing dev environments. His analysis was spot on.
“Apple exercises too much control via the app store approval process (as well as app store placement and TV ads). RIM doesn’t really seem to care about developers (or making it easier to develop for the BB). Android could or is already splintering into too many devices with sufficient differences to make life hard for developers.” (I encourage you to read the whole post here.)
The question then becomes “Where does the development environment go from here?” Will Apple learn to cede control and open the platform? Will RIM stop ignoring the growing community of developers? Will Android either settle on a few top notch devices or figure out a way for apps to work seamlessly across different hardware?
Personally, I do not think the sheer number of Apps from Apple provides any real advantage. In reality the number of handsets sold will have a far greater impact on the health and vigorous the application environment will become. Developers will create applications that will reach the largest audience. Why would they want to be crowded out by 100,000 other developers? Also, how many apps are really necessary? Data show that users install on average 65 applications (Source here) for their iPhones. So, are the other 99,035 necessary? Sure, not all users install the same 65, but I’d be willing to be there is huge overlap.
I honestly can not see anything other than an open development standard emerging (and I’m loath to bet against Google), but I’m excited to see this all play out.
Good Talk, Tom
I recently read a great article by Brad Burnham of Union Square Ventures about the competing dev environments. His analysis was spot on.
“Apple exercises too much control via the app store approval process (as well as app store placement and TV ads). RIM doesn’t really seem to care about developers (or making it easier to develop for the BB). Android could or is already splintering into too many devices with sufficient differences to make life hard for developers.” (I encourage you to read the whole post here.)
The question then becomes “Where does the development environment go from here?” Will Apple learn to cede control and open the platform? Will RIM stop ignoring the growing community of developers? Will Android either settle on a few top notch devices or figure out a way for apps to work seamlessly across different hardware?
Personally, I do not think the sheer number of Apps from Apple provides any real advantage. In reality the number of handsets sold will have a far greater impact on the health and vigorous the application environment will become. Developers will create applications that will reach the largest audience. Why would they want to be crowded out by 100,000 other developers? Also, how many apps are really necessary? Data show that users install on average 65 applications (Source here) for their iPhones. So, are the other 99,035 necessary? Sure, not all users install the same 65, but I’d be willing to be there is huge overlap.
I honestly can not see anything other than an open development standard emerging (and I’m loath to bet against Google), but I’m excited to see this all play out.
Good Talk, Tom
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