Internet | Paul Wallbank - Communications Professional

The rise of new business models

Mary Meeker’s 2017 State of the Internet report indicates new business models are evolving on the internet

As always Mary Meeker’s State of the Internet report hits us with mass of information, this year compressed onto a 355 slide Powerpoint presentation.

There’s a wealth of detail in the report but two big trends stood out – that global internet advertising spend will overtake TV ad revenues and music industry revenues have reversed a 16 year decline as subscription services gain market share.

Subscriptions becoming the main revenue source for music companies suggests ]new internet business models are slowly evolving although how that lessons can be applied to other industries remains to be seen.

In the world of advertising, that online is now attracting a greater spend than TV is a major milestone in the shifting marketplace. Although Facebook and Google’s dominance – Meeker estimates 85% of revenue growth is going to the two companies – will present challenge to advertisers and agencies.

Also notable is how mobile revenues and handset sales are slightly better than flat, indicating the biggest market of last decade is now mature.

There’s many other insights in this report so it’s worth spending a few hours on it to reflect on how some of these trends may affect your industry.

Internet Trends 2017 Report from Kleiner Perkins Caufield & Byers

Keeping the cyber utopian dream alive

So far the internet revolution has disappointed the cyber utopians. But we live in hope.

“I stand before you as a failure,” was how I opened my presentation at the Talking Justice conference last weekend. “If I were giving this talk ten or fifteen years ago, I’d have described how the web and social media were going to usher in a new era of democracy and accountability.”

“Like most of the cyber utopians, I was very, very wrong.”

Basically we were wrong because we didn’t see how the internet would concentrate rather than diffuse power or the extent of how new gatekeepers and monopolies would be replaced the old ones.

My friends and I were not alone, in a somewhat rambling interview with the New York Times Twitter co-founder Evan Williams describes how “the internet is broken” and how he thought the messaging service could make the world better.

“I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,” Mr. Williams says. “I was wrong about that.”

Instead Twitter has become home to trolls, harassment and misinformation, something that saddens Williams and most of us who thought the web would bring about a more open and fair society.

Hope isn’t completely gone though, we are still in the early days of social media and the internet so the current trends may only be a transition effect as audiences, markets, regulators and the community get to grips with the new medium.

There’s also Amara’s law which states we overestimate the effect of a technology in the short run and underestimate the effect in the long run.

So it’s best to be a pessimistic optimist where one accepts in the short run things are dire but over time things will turn out well.

We can only hope.

Alternatives to the National Broadband Network – ABC Nightlife

What are the alternatives to the National Broadband Network? For the February 2017 Nightlife we explore what to do if you can’t get the National Broadband Network.

If you missed the show, you can listen through the ABC Nightlife website. Sadly we didn’t get to half the topics but our callers, as well as the NBN PR guy, were fabulous.

Paul Wallbank joins Phillip Clark on ABC Nightlife across Australia from 10pm Australian Eastern time on Thursday, February 16 to discuss how technology affects your business and life.

Last week the NBN announced a third of the country was now covered by their services and the company’s CEO, Bill Morrow, said Australians really don’t want super fast internet. A few weeks before, Telstra announced a new service that will deliver gigabit broadband over their mobile network. We can expect their competitors to offer similar products soon.

At the same time we’re seeing a blast from the past as Nokia are rumoured to be soon releasing an updated version of their classic 3310 phone – are we going to see the ‘tradie phone’ making a comeback?

While the old phone is nice, many people need fast broadband so how is the NBN going and, if you can’t get it, what can you do? Some of the questions

So how is the NBN going?
Wasn’t the government’s revised plan going to mean the whole thing is going to be cheaper and faster than the original project?
Who can get it?
Is it as good as promised?
So what alternatives to the NBN are there?
Doing the sums on those mobile plans, using them can be a pretty expensive business?
It seems we’re going backwards. How does Australian broadband compare globally?
How is this affecting regional communities and businesses?

Join us

Tune in on your local ABC radio station from 10pm Australian Eastern Summer time or listen online at www.abc.net.au/nightlife.

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

A gigabit milestone for mobile networks

The rollout of Telstra’s gigabit 4G network is another step on way to the next generation of connected devices.

Yesterday communications vendors Qualcomm, Netgear, Ericsson and Telstra, unveiled their Australian gigabit LTE service that gives users high speed internet connections over the 4G mobile network.

Billed as a world’s first, Telstra will offer customers the Netgear supplied hotspots that can connect up to twenty devices over WiFi.

Listening to the Telstra spiel yesterday, it wasn’t hard to conclude the company is making a pitch for the market frustrated by the National Broadband Network’s tardy rollout and patchy service.

The service doesn’t come cheap though, as Finder’s Alex Kidman points out, an hour’s movie streaming on one device could easily cost $4500 dollars on Telstra’s current plans with one of the company’s executives emphasising the product is “aimed at the premium end of the market.”

Being aimed at the premium end of the market is shame for Qualcomm as their spokespeople were keen to show off the gaming, AR and VR potential of the Snapdragon CPUs driving these devices. It would be a brave or very affluent family that bought one of these devices for their kids given the data costs.

While the Telstra Gigabit LTE service might be an NBN replacement for deep pocketed customers, telco veteran John Lindsay points out the mobile network can’t support too many people doing so unless many more cells are deployed.

For the moment the Telstra service is going to be attractive for companies needing high speed. low volume connections in the central business district and as the gigabit LTE upgrades roll out across the country, it will be useful for travellers as well as frustrated NBN customers.

Ultimately the gigabit LTE product is another step toward the 5G networks that we’ll be seeing appear at the end of the decade, something that both the Ericsson and Telstra PR folk were keen to highlight.

The key message for consumers and businesses is the rate of innovation in the mobile communications market is not slowing and another generation of connected devices is coming that will change things as dramatically as the smartphone did.

A Chinese cure for internet addiction

As Chinese families send children to boot camps to solve internet and gaming addictions, the question of how we manage this online problem remains unsolved.

Internet and electronic games addiction is a problem that regularly surfaces in the media. In 2015 a Taiwanese man died after three solid days of gaming while in 2010 a South Korean couple allowed their three month child to starve while they concentrated on playing with a virtual child.

Some Chinese families have taken to dispatching their kids to boot camps to cure their addictions with the New York Times reporting how some are resorting to electrotherapy treatments to wean children off games and the web.

Three years ago the Times posted a fascinating and somewhat distressing video story on those Chinese boot camps with tearful teenage boys writing letters home telling their parents how they felt betrayed.

More telling are the comments by the Addiction Specialist Director of the Daixing rehabilitation camp, Tao Ran, who believes the parents are responsible for what their children’s addiction to what he calls ‘electronic heroin’.

“One of the biggest issues among these kids is loneliness,” he tells a parent group. “Did you know they feel lonely? So where do they look for companions? The Internet.”

The problem of internet and electronic game addiction is real – exacerbated by the incentives for developers and social media sites to maximise the time users spend on their platforms.

It’s also not just an issue for parents and children. For adults and business owners the lost time, productivity and health issues of spending too much time behind the computer are immense – not to mention the distorted view of the world that comes from a narrow slice of information and opinion.

While electroshock therapy certainly isn’t the answer, we do need to be asking questions about responsible and safe use of computers and the internet.

The Chinese response is an extreme, and probably unworkable, solution to the problem of electronic addictions however we will have to find ways to manage it.

When does a digital strategy matter?

Some businesses are obsessing too much about their digital strategy, a UK based business professor believes.

Should a business spend a lot of time on its digital strategy? A recent article in the Harvard Business Review suggests many businesses, and consultants, are focusing too much on the technology.

Freek Vermeulen, an Associate Professor of Strategy and Entrepreneurship at the London Business School, describes how strategists may be making a mistake in responding to digital disruption. He argues many industries are learning the wrong lessons from disruptors like Amazon, Uber and Google.

In Vermeulan’s view, the world is not a globalised as we’d like to think and the network effects that work so well in internet based industries don’t necessarily translate to other sectors.

As a consequence, businesses that work on the assumption their industries will be affect the same way as, say, the taxi industry with Uber or newspapers by Google and Facebook may well be making their own strategic mistakes.

Digital is changing the nature of competitive advantage in many businesses – just like major technological developments have done before. However, the change will not be uniform across all industries. Digital technology is affecting and will affect different businesses in different ways. Miss these nuances and your strategic decisions could lead you seriously astray.

That’s certainly true and how technology or a rapidly changing economy affects each industry, or business, is far from uniform.

One of the case studies Vermeulan uses is that of a consulting firm that has largely eschewed digital platforms and focused on its human assets – primarily the skills and connections of its associates and staff.

While that’s undoubtedly true of all consulting businesses to some degree, the use of digital tools and marketing is changing that industry dramatically as well.

Vermeulan is right in that some industries may want to respond more slowly than others to digital or economic changes, however a business that disregards them or reacts too slowly may not know what hit it.

Mapping digital divides

A survey of Australia’s digital divides shows access is improving but some of the gaps are growing

Earlier this year, Telstra released the Digital Inclusion Index along with its report on measuring Australia’s digital divide.

Last week in Sydney the company hosted a half day conference to look at the ramifications of the 2016 report.

Overall the report was good news with most indicators showing improvements although the gap between the connected and the most disadvantaged has widened since the first index was compiled in 2014.

In general, wealthier, younger, more educated, and urban Australians enjoy much greater inclusion. All over the country, digital inclusion rates are clearly influenced by differences in income, educational attainment, and the geography of socioeconomic disadvantage. And over time, some Australian communities are falling further behind.

The one factor the survey found that is declining nationally is affordability which the authors put down to Australians’ increasing reliance on the internet.

The Affordability measure is the only dimension to have registered a decline since 2014, but this outcome does not simply reflect rising costs. In fact, internet services are becoming comparatively less expensive – but at the same time, Australians are spending more on them.

Sadly affordability isn’t going to improve should the government’s proposed broadband levy of seven dollars a month become reality to subsidise rural users.

That such a levy would be proposed by a government that was opposed to a National Broadband Network and to ‘Big New Taxes’ while in opposition is an irony left for Australian political historians to discuss but it shows how comprehensively the NBN project has failed.

Even sadder is the NBN isn’t delivering for businesses as it increasingly becomes apparent the network being built will struggle to deliver 21st Century services to most of the nation.

That businesses are struggling to connect emphasises just how serious the digital divide is becoming for the economy – as supply chains in every industry become increasingly globalised regions that aren’t connected risk being isolated from their markets.

Policy makers have to consider the costs of those communities and groups being isolated from the modern economy. If we are going to be serious about building a twenty-first century society then we have to consider how disadvantaged groups and regions access global networks as well as making sure they have the skills to benefit from these technologies.

Mapping the areas of the disadvantage is a good first step but we have to look at how we address the segments of our society that are being left behind.

Trusting the web

With misinformation rife on the web, services like Google and Facebook will have to do more to make their services more reliable.

Following last week’s US election attention has fallen onto the role of Facebook in influencing public opinion and the role of rumours and fake news.

The CEO of Facebook, Mark Zuckerberg, says claims that his company’s news feed influenced the US election are nonsense but, as Zeynep Tufekci the New York Times writes, the platform has shown in its own experiments that the service does influence voters.

Sadly misinformation is now the norm on the web given anyone can start a blog and post ridiculous and outlandish claims. If that misinformation fits a group’s beliefs, then it may be shared millions of times as people share it across social media services, particularly Facebook.

Facebook’s filter bubbles exacerbates that problem as each person’s news feed is determined by what the company’s algorithm thinks the user will ‘like’ rather than something that will inform or enlighten them.

Those ‘filter bubbles’ tend to reinforce our existing biases or prejudices and when fake news sites are injected into our feeds Facebook becomes a powerful way of confirming our beliefs, something made worse by friends gleefully posting fake quotes or false news that happens to fit their world views. If you click ‘Like’, you’ll then get more of them.

Over time, Facebook risks becoming irrelevant if the news being fed from the site becomes perceived as being unreliable

For Facebook, and for other algorithm driven services like Google, the risks in fake news don’t just lie in a loss of credibility, there’s also the risk of regulatory problems when news manipulation starts affecting markets, commercial interests or threatens established power bases.

The fake news problem is something that affects the entire web and its users, for Facebook and Google it is becoming a serious issue.

Winning the gig

The US city of Chattanooga is showing how public broadband networks can be rolled out, and the benefits of doing it properly

A year back this blog asked if Chattanooga’s experience shows how city infrastructure can drive private sector investment.

“The Gig”, as Chattanooga’s civic leaders have branded the city’s broadband rollout, came about because the city decided to treat internet services as a utility like water and roads. Vice Motherboard reports how this has reaped dividends for the town.

As Vice’s Jason Koebler describes, Chattanooga’s unemployment rate has halved since the depth of the Great Recession and in 2014 was listed as having the third highest wage growth among the United States’ mid-sized cities.

There are downsides though, Koebler warns, and one point is that having good broadband on its own isn’t a sure fire bet.

“Like the presence of well-paved roads, good internet access doesn’t guarantee that a city will be successful,” he writes. “But the lack of it guarantees that a community will get left behind as the economy increasingly demands that companies compete not just with their neighbors next door, but with the entire world.”

The advantage Chattanooga had though was its electricity company was owned by the city which meant a major part of the existing infrastructure was already in public hands and made it relatively easier and cheaper to roll out the network.

What Chattanooga does show is a well planned and structured fibre roll out can be done, it is easy or cheap and takes sensible planning. The latter is something other broadband projects can learn from.

Uber opens its APIs

Uber makes its APIs available to the general community

Ride service Uber has raised the game for logistics and delivery services in opening a group of Application Program Interfaces for third party developers.

The four functions available in the Uber Rush package cover delivery tracking, quotes and history. They make starting a logistics service or adding functions to a business far easier.

While there is a downside in the risk of being locked into Uber’s service this move will give a lot of developers the opportunity to develop delivery tracking products, for incumbent postal and courier services, this API is bad news on a number of levels.

The revenge of the open web

The UK government saved £4bn by banning smartphone apps. That’s a small win for the open internet.

Ben Terrett, the former head of design at the UK Government’s Digital Service, tells GovInsider why the agency banned mobile phone apps with the British taxpayers saving £4.1bn over the following four years.

Instead the GDS insisted agencies built responsive web sites so pages would adapt to the devices they were being read upon, saving time and money being devoted to developing and maintaining individual apps for different platforms.

Apps are “very expensive to produce, and they’re very very expensive to maintain because you have to keep updating them when there are software changes,” GovInsider quotes Terrett.

For those of us who worry about the increasingly siloed and proprietary nature of the internet, Terret’s story is very good news. Apps are particularly problematic as they stunt innovation, lock users into platforms and give those who control the App stores – mainly Apple and Google – massive market power.

It’s no co-incidence Facebook are currently in the process of restricting web access to their messenger service. Locking users into their app gives them far more power over users and much more control over their data.

On the other hand, the open web means sites are more accessible and not subject to the corporate whims of whoever controls a given silo. It also means that any data collected is far more likely to be commoditised, something Facebook hates.

That government agencies and large corporations are realising the costs, risks and value they are handing over the gatekeepers by developing apps is encouraging. It would be good if they considered the other downsides of giving the web over to a small clique of companies.