Paul Wallbank | Paul Wallbank - Communications Professional

Did online democracy ever exist?

The idea of democracy in an online world dominated by private interests is a misnomer.

“Democracy is dead” proclaim online pundits as Facebook closes down their corporate governance feedback pages.

The question though is whether democracy really exists online; the internet is largely a privately run operation which makes the hysteria about the International Telecommunication Union’s attempts to impose standards on the web all the so more fascinating.

As a consequence of almost every internet service being run by private organisations, rights and concepts like “democracy” are pretty well irrelevant and have been since the first connection to ARPANET.

When we use services like Facebook, or even our internet provider’s email account, we are only being allowed to do so within the companies’ interpretation of their terms and conditions.

Often those interpretations are wrong or bizarre as we see with Facebook’s War on Nipples and often the results of misinterpretation are costly for businesses.

But we have little recourse as these sites are private property and the owners can do pretty well what they like within the law.

Just a like a shopping mall, if the managements of Amazon, Google or Facebook want you to leave their service then you have no choice but to do so.

We can squeal about rights online, but in reality we have few.

That’s something we should keep in mind when investing our time or business capital into any particular platform.

Life in the mob

At a time of easily generated moral hysteria, it’s best to keep your head rather than joining the mob.

The reaction to last week’s tragic passing of a nurse over a hoax phone call shows how hysteria and cynicism in new and old media fuel each other.

Having created villains, in this case the two hapless Sydney radio hosts, the mainstream media creates a moral outrage to stir up the mob which in turn generates more headlines.

As with the Hillsborough tragedy, this allows those in positions of responsibility the opportunity to avoid scrutiny and accountability.

In this case we see the hospital management demanding action being taken against the Sydney duo while conveniently ducking questions about why poorly paid nurses are expected to act as switchboard operators on top of their already considerable responsibilities.

Now we’re seeing calls to make practical jokes illegal – no doubt there’ll be a wave of teenage boys being prosecuted for making prank phone calls when panicked politicians pass poorly drafted laws to deal with the ‘problem’.

Our taxes at work.

Your mission in life is to use your brain and not to be one of the torch bearing mob.

If it’s you the mob are looking for, then it’s best to lie low until another headline or something shiny distracts them.

Are bloggers immune from the law?

Bloggers and social media users don’t have the resources of newspapers and broadcasters. Does this give them a legal advantage?

Last week Lord Justice Leveson of the British inquiry into the culture, practice and ethics of the press gave his first public speech since handing down his report to the UK Parliament.

In this speech, Lord Leveson claimed that bloggers and social media users have an advantage over traditional media channels because they don’t respect the law. This is nonsense and detracts from the importance of the UK inquiry.

Speaking to the Communications Law Centre in Sydney last Friday, Lord Leveson gave his perspectives on how privacy is evolving as the media struggles with a 24 hour news cycle and the rise of the Internet.

One particular point he made was how the differing economics of traditional media and internet channels affected moral judgements.

“online bloggers or tweeters are not subject to the financial incentives which affect the print media, and which would persuade the press not to overstep society’s values and ethical standards.”

This view seems flawed – the reason for the UK inquiry into the ethics of the press was because the reporters at some of the nation’s top selling newspapers were overstepping society’s standards. They were doing this in the pursuit of profit.

At the other end of the scale, Leveson’s implication is that because most bloggers and social media users aren’t making money from their operations this makes them more prone to flaunting the community’s laws and morals.

What that view overlooks is that those bloggers, Facebook posters and Twitterers don’t live in magical castles sipping the fragrant, rainbow coloured milk of bejewelled unicorns – they have day jobs that pay for their online activities which often makes them far more aware of societal norms than those locked in the hyper-competitive and insular world of professional journalism.

Later in his speech Leveson expanded on this theme with a comment about the jurisdiction of bloggers and their servers.

The established media broadly conforms to the law and when they do not they are potentially liable under the law. In so far as the internet is concerned there has been and, for many, there remains a perception that actions do not have legal consequences. Bloggers rejoice in placing their servers outside the jurisdiction where different laws apply. the writ of the law is said not to run. It is believed therefore that the shadow of the law is unable to play the same role it has played with the established media.

This view is clearly at odds with reality as again it was the widespread failure of the ‘established media’ in conforming to UK law made Leveson’s inquiry necessary.

Bloggers and other internet users being somehow immune to legal consequences is a clearly not the case.

A good example of this are the various British computer hackers and webmasters who’ve found themselves facing extradition to the US for actions which are either not illegal in the UK or would face minor penalties.

Probably the best example of Internet users facing the full force of the law is the persecution of Paul Chambers who was prosecuted and convicted for making threats against an airport in an innocuous tweet that the local police and airport management thought was irrelevant.

The force of the law that was thrown against Mr Chambers was impressive compared to the somewhat reluctant efforts of bringing charges against the dozens of journalists, editors and crooked policemen exposed by the Leveson inquiry.

At the heart of the difference between the traditional media and the online communities is a power and economic imbalance. Despite the declining fortunes of newspapers, they are still politically powerful, influential and well resourced. Which is a good reason why prosecutors, police and politicians are reluctant to hold them account for their excesses.

On the other hand the vast bulk of bloggers are not; they don’t have a masthead to hide behind or a large, well funded legal team to defend them which actually makes them an easier target for litigation and criminal charges.

Some bloggers may believe they are immune from the law, but the reason for that is because they are ignorant of the legal system’s reach. Some of them will pay for that ignorance.

The idea though that bloggers and social media users have some legal advantage over traditional media outlets because of their comparative poverty and location of their servers is simply wrong.

If anything the advantage is firmly in favour of those working for big business. This is the real lesson of the UK media scandals of the past two years.

Transferring risk to the customer

The business model of many web startups transfers unacceptable risks to their users.

AirBnB is one of the poster children for the “collaborative consumption” model of internet businesses where people can put their spare resources, in this case rooms, out into the marketplace.

Like most web based businesses though the customer service is poor and the proprietors try to push responsibility for the platform’s use back onto the site’s users.

A good example of this is an article this week in the New York Times where AirBnB hosts risk fines and eviction for breaching their leases or local accommodation laws.

When Nigel Warren rented out his New York apartment while he was out of town, he returned to find he was facing eviction and up to $40,000 in fines. Fortunately he avoided both but AirBnB did little to help him except to point him in the direction of the terms and conditions which required him to obey all local laws.

The New York Times asked AirBnB for comment and received corporate platitudes about how their service helps struggling home owners but no real response to the risks of falling foul to local government, landlords, building owners or insurance problems by sub-letting their residences.

Failing the customer service test is not just AirBnB’s problem, Vlad Gurovich was scammed by a buyer on eBay and now he finds PayPal is chasing him for outstanding money.

This is a pretty typical problem for PayPal and eBay customers – as Vlad has found, the various seller protections often prove to be useless when dispute resolution favours scammersand PayPal’s philosophy of shutting down accounts unilaterally and without appeal exposes sellers to substantial risks.

Interestingly, PayPal’s president David Marcus claimed earlier this year that he was trying to change this culture within the company. It seems that’s not going well.

PayPal, eBay and AirBnB are alone in this of Soviet customer support model – Amazon, Google and most web2.0 businesses have this culture.

In many ways it’s understandable as dealing with customers is hard. In the view of the modern business world, cutting deals is glamorous while looking after customers is a grubby, low level task that should be outsourced whenever possible.

Pushing the risks onto users also makes sense from a business perspective, that makes the billion dollar valuations of these services look even better.

For the founders of these services, none of this is a problem. By the time the true costs and risks are understood, the founders have made their exit and the greater fools who bought the businesses have to deal with the mess.

While the greater fools can afford to carry the costs, the real concern is for users who may found themselves out of money and out of a place to live.

That’s why the founders of these businesses need to be called to account for their ethical lapses.

Stumbing into recession

An obsession with surpluses and satisfying the ratings agencies is going to have harsh consequences for Australians

The Committee for Economic Development Australia (CEDA) today released its 2012 Big Issues survey looking at the responses of 7000 business people on the issues confronting Australian industry in 2012.

One of the notable results is that business people don’t care about government surpluses. A third are neutral on the question “do you believe maintaining a government surplus is important” while 35% disagree that it is a high priority.

Yet despite the electorate and business saying the deficit is not a priority, the politicians still obsess about maintaining their surplus.

Now Australia’s mining boom has come to an end – along with the blue sky economic assumptions that underlie both sides of politics’ spending plans – governments are desperately trying to fudge the books and continue the pretense that their budgets are in the black.

Driving this obsession with avoiding deficits is the religious belief among Australia’s political classes that Triple – A credit ratings from the discredited Wall Street ratings agencies is more important than educating the nation’s children, caring for the country’s sick or building the infrastructure to compete in the 21st Century.

The real danger with this deficit obsession is that there is a very high possibility that state and Federal governments are going to tip Australia into a recession driven by European style austerity. Already we see this developing as various states start slipping backwards according to the ABS’ latest accounts.

Another interesting result from the CEDA report is how business’ view the Australia in the Asian Century report with nearly 80% of respondents saying the issue is important or critical.

It is questionable whether Australian business is prepared to face the realities of an Asian Century as David Llewellyn-Smith writes at the Macro Business Blog, Australia’s businesses are looking more at getting help from the government to cut domestic costs rather than sell into Asia. That inward focus of Australian business since the mid-1990s is the topic for another blog post.

The sad thing is that the government aspects of Asian Century report is stillborn as surplus obsessed politicians carve into skills training and innovation programs in a vain attempt to balance the books while failing to reform the tax system or address the middle class welfare that’s squandered most of the returns from the last decade of prosperity.

Australia’s politicians are very soon going to have to decide who they govern on behalf of, the corrupt and incomptent ratings agencies or the people who vote for them and pay the taxes which support them and their political parties. For some, this might be a tough choice.

How the film industry cons governments

Do government incentives really build a sustainable movie industry?

“I would never make a movie where I didn’t get an incentive and I don’t ever intend to” states Michael Benaroya, producer of the movie Margin Call, in a New York Times story on movie studio subsidies.

While we focus on the cost of subsidies to motor manufacturing, one sector that beats all others for playing governments for suckers is the global film industry.

“Incentives” are a huge factor in determining where studios will film their latest blockbuster, Australia’s learning this the hard way as rent seekers looking for fat subsidies parade Hollywood stars in an effort to convince publicity hungry ministers that giving fat payments to the major production houses is good for jobs.

The problem with this is that these susbidies aren’t that great for employment – Accompanying the New York Times’ video is a story on how Michigan’s dream of building a film industry has foundered.

“Film is one of the few industries that’s really well subsidised and that’s a really attractive thing” Michael Benaroya says in the video.

Before Michael even made the movie, he sold the rights to the New York production subsidies to investors. Who says financial engineering is the purview of Wall Street?

The question for governments, taxpayers and those who want to build a sustainable movie industry in their city, state or country is do you want to attract “entrepreneurs” like Michael Benaroya who are shopping around the world for the best deal.

New York might be the flavour today, but tomorrow it might be Sydney, Toronto or Prague. If the incentives aren’t fat enough then the movie productions may not come back for decades.

In the meantime the crews, production assistants and catering companies who make up most of the employment on a major production move onto other jobs so the skills and industry infrastructure is lost.

The biggest challenge is for governments, it’s estimated that New York state gives away over $400 million in subsidies and it’s difficult to see how that sort of expenditure can be justified as politicians face cuts to basic spending in today’s austere times.

For the taxpayers, we need to be demanding fair value and real long term plans behind the subsidies doled out to the film, motor manufacturing and other industries.

During the good times it was easy for opportunist politicians to dole out money to rent seekers for a media opportunity or to boost votes in a key electorate, but today that spending has to be strategic with real value and outcomes.

As Michael Benroya shows, when an entire industry is based around government subsidies and incentives the leaders are those who know how to manage the bureaucracy and fill in the forms properly. Is that what we want our industries to become?

If the answer is ‘yes’, then the next question is ‘can we afford it?’

Is Australia missing the Indonesian opportunity?

Mary Meeker’s state of the internet report emphasises the opportunities in South East Asian markets.

Mary Meeker’s annual State of the Internet Report looks at the trends driving the online economy. One area that should be of concern is that Australian entrepreneurs are overlooking one of the world’s biggest growth markets that is sitting right on the nation’s doorstep.

Early in Mary’s overview, on slides 5 and 7, she shows the growth of various markets. Indonesia is the second biggest growth market for internet users – 58% year on year to 55 million – and eighth in the world for smartphone growth with a 36% increase last year taking total users to 27 million.

Given the penetration of both smartphones and the internet are low with only one quarter of Indonesians connected to the internet and less than one mobile phone in ten currently being a smartphone, there is massive potential for the savvy entrepreneur.

While there’s a steady stream of stream of Australian app developers and entrepreneurs heading to Silicon Valley, London and a few to Singapore there’s very few looking to their biggest neighbour.

This ignoring of Indonesia is one of the many omissions in the Australia in the Asian Century report; despite being one of Australia’s closest neighbours with the world’s fourth largest population and an economy growing at over 6% per year, both businesses and governments tend to overlook the nation.

For Australia, the tragedy is that Indonesia has a lot offer businesses that do more than just dig up coal and iron ore.

Perhaps now the mining boom is over, entrepreneurs and governments might start to take markets like Indonesia, and other South East Asian countries more seriously. It’s an omission that’s currently costing the country dearly.

Twenty years of text messages

A BBC interview with the inventor of the SMS service illustrates how fast technology changes.

When the mobile phone arrived we thought that text, particularly those clumsy pagers people used, would be dead.

Little did we know that an overlooked part of the newer digital cellphone technology would see short messaging become a key part of the phone system and a major income generator for telephone companies.

Short Messaging Services – or SMS – was an add on to the digital Global System for Mobile communications (GSM) standard which became the second generation (2G) of mobile phones.

While intended as a control feature on the phone networks, SMS took off as a popular medium in the mid 1990s and soon became a major profit centre for mobile carriers.

The Twentieth anniversary of the first SMS being sent passed last week and the BBC has a great interview, conducted by text message, with Matti Makkonen who came up with idea.

One of the notable things in the interview is Matti’s humility – he doesn’t like being called the inventor or founder of text messaging as he explains,

I did not consider SMS as personal achievement but as result of joint effort to collect ideas and write the specifications of the services based on them.

We can only imagine what would happen if the idea of SMS messaging was invented today, there’d be an unseemly struggle over patents while hot young Silicon Valley entrepreneurs would pitch venture capital firms with plans for niche services that will make a billion dollars when sold to Yahoo! or HP.

As it was, SMS services were insanely profitable for the telcos. In the early days, text messages were being charged at over a dollar each – for a service that cost the carrier almost nothing.

Over time those handsome profits have been eroded as SMS became bundled into all-you-can-eat packages and then the internet introduced new mediums to send short messages.

While SMS isn’t going away while mobile phones are an important part of our business and personal lives; the service isn’t going to be as critical, or as profitable as it was over the last twenty years.

Short Messaging Services are a great example of how individual technologies rise, evolve and fade with time. They are also a good lesson on how quickly a premium, highly profitable service can become commodified.

Repelling the online break and enter merchants

Romanian crime gangs have broken into business systems in Australia and the US, how can you stop them from stealing your customers’ credit card data?

Last week’s bust of a gang of credit card thieves by the Australian Federal Police is a warning to businesses on the need to take computer security seriously.

In Australia a Romanian crime gang targeted small retail businesses’ computer system and stole customers’ credit card details. They would then use the data to create fake credit cards.

A year ago US Authorities broke up a similar gang who had targeted Subway computer franchises which netted the gang over $10 million before they were caught.

In both cases the gangs used remote access software that was included with their victim’s Point Of Sale (POS) equipment. Once logged into the target’s computers, the bad guys were able to install key logging and monitoring software so they could steal credit card details as they were entered into the system.

There’s a number of lessons in both the Australian and US experiences for big and small business on securing systems safely.

Use secure passwords

It’s almost boring to say this, but you need strong passwords for your systems and networks. Make sure you change all default passwords on the systems so they aren’t easily guessed or broken into.

Secure your systems

The Subway hack happened because of sloppy security, you can harden your systems by following good practices such as updating your systems, having malware protection and proper access policies.

Both the Australian and US incidents happened on Windows computers. The crooks were able to get into the computers and then install software because the victims were running in Administrator mode which allows anybody on the computer to control the system.

Daily use should be in limited user mode which stops people from installing software or changing system settings andAdministrator accounts should only be used for system maintenance and have very strong passwords which are different to the normal limited user profile.

Turn off remote access

Another common factor in the US and Australian incidents is the use of remote access software so technicians can check things and managers can login in from home and other sites.

Unless these are properly set up they are a serious security risk. Unless you or your supplier knows exactly what they are doing, these can open a door from the public Internet straight into your system.

Do not use them unless you are 100% confident in yours, or your suppliers’, ability to run these properly.

Comply with standards

Another factor in these incidents is that systems haven’t complied with the PCI-DSS security standards for card payments. Again if you don’t understand these – and they are complex – find a POS vendor or payments processor who does.

Basically, the standard requires that customers’ card details are not stored on your systems and that devices for processing payments are kept separate from other equipment in your shop or office. Following these basic rules would avoid many of the problems.

Consider cloud services

Many of the problems businesses confront with security is because they don’t have the skills or resources to deal with the ever evolving security threats.

Moving POS systems and other business critical functions onto cloud services addresses many of these issues so it is worthwhile considering ditching expensive, unreliable and sometimes insecure server or desktop based systems and move to cloud services that use tablet computers or smartphones.

Whichever choice you make, it’s important to be engaging suppliers and consultants you can trust because if your customers can’t trust you with their details, then you are out of business.

Protecting yourself on Facebook

A follow up to listeners’ questions from December’s 702 Sydney morning program

One of the topics we looked at in yesterday’s ABC 702 Morning show was how to protect yourself on Facebook.

We had a number of callers struggling with controlling spam and scams that seem to be coming from their Facebook details. To fix this, you need to lock your personal details so they can’t be seen by the public.

The detailed instructions on how to lockdown your Facebook page are available on the Netsmarts website.

Our next ABC Mornings spot will probably be in late January. We’ll let you know when it’s approaching.

702 ABC Mornings – Hacking 102

This month’s 702 Sydney tech spot looks at how security is evolving

A number of callers asked about protecting their Facebook pages and information from hackers and spammers. Details are on the Netsmarts webpage

On 702 Sydney Mornings with Linda Mottram, we’re revisiting security and how it affects businesses and consumers after some stories of serious security breaches in everything from shops to pacemakers.

We’re looking at some pretty important issues, including how four million hotel locks are open to hackers and thieves.

Even more scary is the risk that pacemakers can be hacked. This story is a cautionary tale on good intentions being bought undone by bad security practices.

For businesses, the risk of having customers’ credit card details hacked is a serious issue. Two years ago the US fast food chain Subway had a major breach when criminals managed to break into franchisees’ Point Of Sales systems.

Recently the Australian Federal Police broke up a similar crime gang operating out of Romania.

A misconception about computer security is that all hackers are evil. The reality is most aren’t and a good example of this is Random Hacks of Kindness where geeks get together to find ways of using tech to improve society. We’ll look at last weekend’s Melbourne event.

Join us on 702 Sydney from shortly after 9.30am. We’d like to hear your views, comments or questions so call in on 1300 222 702 or SMS on 0467 922 702 or tweet with @702Sydney in the message.