Mastercard’s PayPass is the latest move in the battle to control the online payments industry as consumers move from plastic cards to using their mobile phones and Internet devices.

One of the interesting aspects of PayPass is how it is a direct challenge to PayPal who in turn recently launched their PayPal Here service which threatens incumbent credit card services like Mastercard and Visa along with upstarts like Square.

While its early days yet in the mobile payments space as consumers slowly begin to accept using smartphones and tablet computers to pay for goods and services, its clear the industry incumbents are moving to secure their positions in the market place.

It’s going to be interesting to see how this develops, many merchants will be hoping this competition starts to drive down transaction costs.

Paper is messy, difficult to file or store and cruel to the environment. So being able to move and save information electronically made sense.

Despite the promises of the last twenty years, the quest for the paperless office seemed lost.

While the networked PC gave us the ability to get rid of paper, its advanced word processing functions and graphic capabilities along with the data explosion of email tempted us into generating more paper.

To compound the problem, over the last thirty years paper manufacturers found cheaper ways to make their product which meant the price of paper dropped dramatically just as we found more ways to use it.

So rather than delivering on the promise of eliminating paper, computers generated more than ever before.

Just as it seemed all was lost in IT’s War On Paper, the tablet computer came along. Coupled with cloud computing services and accessible fast wireless Internet, suddenly it appears we might just be on the verge on delivering on those promises of the last twenty years.

At a suburban football game I saw this first hand as I watched the ground officials electronically filing match information with their league.

“This used to be a pile of paperwork that used to take until Tuesday to be filed and collated” the ground manager told me, “today it’s done within half an hour of the game ending with almost no paper involved.”

For amateur sports clubs, money isn’t so much the problem as time. There simply are never enough volunteers to meet the workload of getting a team on field.

This is true with almost any community based organisation – from volunteer firefighters to community kindergartens organisers struggle with rosters and finding helpers.

In business the same resource constraints exist except we know we can fix these problems by paying a worker to do it. The problem there is few businesses have unlimited funds to employ filing clerks and form fillers to handle the paperwork.

By killing paper in the office, we’re making business and the economy more efficient. We’re about to deliver on that promise.

Bill Gates once wrote that in the short term we overpromise what technology can deliver while in the long term we underestimate its effects.

This is true of the paperless office – now that promise is being delivered the effects on business and government will be profound.

Is your business prepared for these changes?

Those trends are going to affect local businesses – particularly the home based service providers – in a serious way as the local web designer and bookkeeper find themselves undercut by freelancers in countries where an Australian day rate is a month’s pay.

With those thoughts in mind I went along to a round table discussion with crowdsourcing advocate Ross Dawson, Freelancer CEO Matt Barrie and Design Crowd founder Alec Lynch to hear them discuss some of the issues around the concept ahead of their half day workshops in Sydney later this months.

Having read Ross’ recent book, Getting Results From Crowds, many of the concepts and arguments are familiar but its worthwhile considering how the trend of a globalised workforce is changing.

The benefits of crowdsourcing services

Crowdsourcing services like Design Crowd and Freelancer have benefits traditional outsourcing services don’t have.

Alec Lynch describes these as reduced expense, speed and risk. A broad range of cheap, accessible suppliers mean businesses aren’t locked into costly contracts with the attendant risks while they can bring projects to fruition in days.

Until recently, globalisation only bought benefits for major corporations with manufacturers contracting work out to China, back office functions to India and software development to Eastern Europe.

The rise of web based services where smaller, one off projects could be paid for by credit card has bought global outsourcing into the small and medium sized business markets.

Now local businesses are affected by business practices that, until recently, were the concern of those working for large organisations.

This is bad news for local service businesses; the suburban web designer or bookkeeper is now finding themselves competing with individuals who, as Matt Barrie points out, have a very good weeks’ income for the equivalent of a day’s pay in Australia.

Basically the same forces that drove most low value manufacturing offshore are now driving services and white collar jobs the same way.

Responding to the threat

There are major downsides for clients using these project based outsourcing services; for instance designing a logo is only part of a much bigger branding exercise which in turn has to be considered against the orgainisation’s longer term objectives.

Often, most of us don’t know what we don’t know and that’s the real reason why we hire an expert to explain why a logo should look a certain way, an expense should be allocated to one specific cost centre and not another or why we should one software package over another.

When we outsource our services, particularly to a low cost provider, we lose that expert insight and end up with someone just carrying out a task; it is up to us to supervise something we probably don’t understand ourselves.

Part of that supervisory role is project management, in the design field managing creatives can be like herding cats. This is why experienced project managers are worth their weight in gold.

Like many essential skills, project management is one of those which most of us don’t have and is chronically undervalued but when a business is outsourcing to a freelancer in Estonia or Eritrea then this service is essential.

Providing those skilled supervisor and management roles is where the opportunities lie in a crowdsourced market place.

In many ways, we’re seeing the end result of the post-industrial society. Just as we offshored the manufacturing industries through the 1970s and 80s then the low skilled office work in the 1990s and 2000s, we’re now outsourcing local services to low cost countries.

Whether ultimately this is a good thing or not is a big question but for local businesses, the trend is clear and much of the basic work is going offshore. Those who choose to whinge rather than adapt will be left behind.

The challenge for a city like Newcastle is great as in many ways the city’s economy is a microcosm of Australia’s – a massive restructure of the local economy over the last forty years has left the region with a consumer driven suburban society and the massive coal resources of the region have made the city the biggest coal exporting port on the planet.

Much of the wealth flowing out of the port to India and China isn’t being distributed into the city and the Newcastle central business district is suffering from years of underinvestment and neglect by the business community and governments of all levels.

So the rollout of the National Broadband Network offers an opportunity for the city and the local economy to reposition itself. The question on the panel is how?

Waiting for Godot

The first aspect is that waiting for a government agency or telephone company to come to town is risky; recent history shows Newcastle gets no favours from state or Federal governments so expecting the region to be a priority for the National Broadband Network is unrealistic.

Indeed this has proved the case so far with no planned rollout locations for the NBN announced in the Hunter region to date.

At present higher speed Internet access comes through ADSL over the telephone lines and Telstra’s 4G mobile network in the downtown part of the city.

So it’s up to the community to create the conditions and demand for faster broadband.

Building the infrastructure

One way to make Newcastle more attractive to the providers of high speed internet is to make the supporting infrastructure easy to access. The local council can work on this by making streets, building and underground services like conduits accessible and available.

Part of encouraging investment in the local telecoms infrastructure includes an attitude from council that doesn’t put unnecessary barriers in the way of developments.

This isn’t to say local residents’ views should be over-ridden; if a city is going to be successful then it need the support of the residents.

Who funds the network?

While the city waits for the NBN or expanded 4G services to arrive, what happens in the interim? Should local and state governments build a temporary Wi-Fi network to cover the Central Business District?

If so, why just the CBD? Why not key industrial, commercial and shopping centres in the suburbs? Over the last forty years, Newcastle residents have shown they prefer to work and shop outside the city centre.

Of course the biggest question is who is going to pay for such an interim network. Putting the load on already stretched local governments guarantees the project will be strapped for capital.

Open data, open processes

An area where local governments can encourage growth is by being open and innovative themselves.

By making data available they encourage local developer communities and attract entrepreneurs who see a welcoming environment.

More importantly, having open procurement and recruitment processes that encourage local business to apply for government work and suggest innovative ways to work is one way industries in the region can be encouraged.

Connecting communities

Even with the best infrastructure you’re not going to build a vibrant economy without the community working together.

If we look at successful industry clusters such as Silicon Valley or the Pearl River Delta today, or historical successes like Birmingham in the 18th Century, we see industries built around a small core of determined entrepreneurs utilising local resources.

For Birmingham this was access to coal, iron ore, skilled labour and waterways to ship the products out. Silicon Valley’s role developed because of its access to high technology defense spending, good quality education facilities, a highly educated workforce and a free wheeling capital market.

Cities like Newcastle have to identify what the local economy’s strengths are and how these can built upon. It needs government, business and educational groups to be co-operating.

A liveable city

The key to all successful cities is making them attractive to entrepreneurial, skilled and younger workers. In some respects Newcastle has aspects that can attract these groups.

For Newcastle, and other centres, the challenge is to use their advantages to attract the human talent that will build the networks that matter.

The phone itself is quite nice – Windows Phone 7.5 runs quite fast with some nice features such as integrated messaging and coupled with good hardware it’s a nice experience. Those I know who use Windows Phones are quite happy with them (I’m an iPhone user myself).

Whether its enough to displace the iPhone and the dozens of Android based handsets on a market where both Nokia and Microsoft have missed opportunities remains to be seen.

The battle is going to be on a number of fronts – at the telco level, in the retail stores and, most importantly, with the perceptions of customers.

Probably the biggest barrier with consumers is the perceived lack of apps, to overcome this Nokia have bundled in their Maps and Drive applications while Microsoft include their Mixed Radio streaming features along with Microsoft Office and XBox integration.

As well the built in services, both parties are playing up their application partners with services like Pizza Hut, Fox Sports and cab service GoCatch. Although all of these are available on the other platforms.

While application matter, the real battle for Nokia and Microsoft is going to be in the retail stores where the challenge shouldn’t be underestimated.

Apple dominate the upper end of the smart phone market and Android is swamping the mid to low end. How Windows Phone devices fit remains to be seen.

In Australia, if they going to find salvation it will be at the tender hands of the telco companies.

The iPhone is constant source of irritation for the telcos as not only do Apple grab most of the profit, but they also “own” the customer.

On the other hand, Android devices are irritating customers who are bewildered by the range of choices and frustrated by inconsistent updates that can leave them stranded with an outdated system.

So the Windows Phone does have an opportunity in the marketplace although one suspects commissions and rebates will be the big driver in getting sales people at the retail coal face to recommend the Microsoft and Nokia alternatives.

Overall though, it’s good to see a viable alternative on the market. For both Microsoft and Nokia the stakes are high with the Lumia range – it could be Nokia’s last shot – so they have plenty of incentives to get the product right.

Microsoft has consistently missed the boat on mobile computing since Windows CE was launched in 1996 while Nokia were blind-sided by the launch of the iPhone in 2007 and have never really recovered.

To make things worse for Nokia, the market for basic mobile phones where they still dominate is under threat from cheap Android based devices. So even the low margin, high volume market isn’t safe.

For both, the Lumia range is critical. 2012 is going to be an interesting year in mobile.

As part of Facebook filings in advance of their public float they published the key agreements with their developer partners including that with games provider Zygna, technology journalist Tom Foremski has a disturbing look at Facebook’s conditions that illustrate the costs and risks.

In terms of the costs, Tom identifies Clause 2.1 of Facebook’s “Statement of Rights and Responsibilities” – shown as Annex 1 in the Developers  as probably the biggest price for all content creators;

… you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (“IP License”). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

So by sharing something on Facebook, you grant Facebook the right to do what they like with what you’ve created. That’s something worth thinking about.

For anybody trying to make a living off Facebook, it’s important to consider they also retain the right to throw you off the service at any time. From clause 4.10 of the Statement Of Rights Annex;

If you select a username for your account we reserve the right to remove or reclaim it if we believe appropriate (such as when a trademark owner complains about a username that does not closely relate to a user’s actual name).

So get into a trademark dispute with a big corporation – and often their lawyers cast a very wide net on potential similar spellings – and your account is shut down.

There’s also the specifics of the Zynga agreement that should concern anyone investing in the games company. Right at the beginning of the agreement we see this clause;

The parties further acknowledge that Zynga is making a significant commitment to the Facebook Platform (i.e., using Facebook as the exclusive Social Platform on the Zynga Properties and granting FB certain title exclusivities to Zynga games on the Facebook Platform). In exchange for such commitment, [*] the parties have committed to set certain growth targets for monthly unique users of Covered Zynga Games.

So Zynga is closely tied into the fortunes of Facebook, we knew that on a business level but now we know just how deep and binding the agreements are.

We should be clear, all the major social media and online services have similar clauses on intellectual property and copyright infringements; there’s no shortage of businesses who’ve been caught out by eBay or Paypal and plenty of people found their Google accounts shut down by their obsession with real names.

For all businesses the message is clear – be careful before committing totally to one online platform or another. Should you end up in a dispute, or find you’ve backed the wrong service, it may be a very costly process to get your company off that platform.

So what is the NBN and what does it do? Here’s some of the points we discussed and a recording of the  program can be heard at www.abc.net.au/nightlife.;

What is the NBN?

The National Broadband Network is intended replace the existing copper wire telephone network that was rolled out across the nation over the Twentieth century.

Eventually the network will provide fast data access across the country replacing the older voice based network. The intention is to meet the increasing demands for data.

It will provide fibre optic cable to most of the country and where fibre optic connections are too expensive those areas will be connected to the network through wireless or satellite services.

What are these different ways of connecting up?

The biggest part of the network will be fibre optic cable where the connection is going to come along the street, just like the existing telephone wires. These are going to connect to a box outside the building.

For those on wireless and satellite, they will get dishes or receivers that will plug into their home telephone or computer network.

There are different types of wireless

There certainly are and this is where there is a lot of confusion. The NBN is going to use 4G or LTE telephone wireless, which is what Telstra have started to roll out in regional centres and CBDs and Optus will be starting in the Hunter Valley around Easter.

Most of us are using 3G networks on our phones which is what the bulk of the mobile phone networks are.

Another type of wireless is the Wireless Local Area Network. These are what we connect our home or office computers to. These plug into the existing services like the existing ADSL internet connections or the NBN’s fibre network. We shouldn’t confuse these with the mobile phone technologies being used by the NBN or phone companies.

Who is running the NBN?

The organisation set up to build the NBN is NBNCo. They are setting the standards, negotiating access to existing infrastructure and building the network. Their head office is in North Sydney but major operations are also based in Melbourne.

In turn they are hiring contractors around the country to build the network, run the cables and connect buildings to the new services. Most of us will deal with those contractors or the companies that are selling NBNCo’s services.

How is National Broadband Network going to work?

We won’t deal with NBNCo directly, instead companies like Telstra, Optus, Vodafone and iiNet will buy services from them and then onsell them to us.

Telstra are playing an interesting game on competing. They are already offering 4G services in regional areas where NBNCo hasn’t announced rollouts and they are planning to upgrade their cable TV network to the DOCSIS 3.0 standard that gives speeds similar to the NBNs proposed service.

What happens if you don’t let them connect you

Then there’s a problem. The copper telephone network is going to be turned off in areas where fibre optic cables are installed so if you aren’t connected to the new system, you won’t have access.

Anyone who’s done some building or landscaping work knows it isn’t cheap and that’s what building owners who don’t allow access will have to pay for access later.

In Tasmania a few property owners who were just outside the NBN area asked about getting connected up and apparently the costs blew their minds.

One of the things to watch out for is uncooperative building managers preventing NBN contractors from accessing their premises leaving all the residents disconnected when the phone network is turned off.

Will it really cost $14,000 to wire up your house?

No but there will be a cost to connect the building’s existing phone lines and power supply to the NBN’s Network Terminal Device (NTD) that will be bolted to the outside of the building.

The NTDs are designed to plug into existing phone systems and data networks so it shouldn’t be necessary to spend a fortune on connections or upgrades.

One area where there might be problems is in buildings that have substandard wiring. Licensed electricians and cablers will refuse to work on systems that don’t comply with standards so building owners may find they are faced with big bills to bring their systems up to standard.

Does the system work if the power goes out?

Yes, the basic cabling doesn’t need power, although the repeaters and local exchanges will – just like the phone network. Where the system does need power is at the NTDs which will come with a battery providing two to three hours power.

If the NBN gets hit by lightening, does it stop working?

Lightening is an incredibly powerful force. It doesn’t matter whether we’re talking about telephones, power or fibre optic networks – anything that is hit by lightening is going to be damaged.

We should keep in mind that the wireless alternative to fibre is more prone to lightening strikes as base stations are at high points.

Electrical storms, and other natural forces, are a fact of life that we have to work around. The existing systems are just as prone to interruptions.

Is it running behind schedule?

Yes, as of the beginning of 2012 the project seems to be about six months behind. With only 4,000 connections at the end of last year instead of the 30,000 expected by the middle of last year.

NBNCo are putting this down to delays in finalising negotiations with Telstra and other existing fibre providers.

Why do we need a government run national network?

The NBN is the culmination of three decades of bad policy out of Canberra. We should remember that the Howard government struggled with how to provide high speed broadband access to the bush.

We’ve had a mix of ideological beliefs and rubbery figures that have found Australia in the situation where the core telecoms network has in effect had to be re-nationalised.

How much is it really going to cost?

There’s still the $43 billion dollar number on the table, which comes from a KPMG study in 2010 although the government claims their investment is going to $27 billion.

Of that 27 billion, the government expects to recoup it by 2034 based on a 7% return.

In contrast the opposition are claiming the real cost is $50 billion as they are including the cost of buying Telstra’s infrastructure back.

The real number is anyone’s guess. The track record of both political parties and Canberra’s bureaucrats on estimating costs on projects like this is less than impressive.

Is it really worth the money?

We should keep in mind a lot of this money was going to be spent by Telstra or the other providers anyway over the next two decades as the copper telephone reached the end of its life.

The risk was we would see something like the cable TV rollout where the big players fought over the most lucrative parts of the country and ignored the rest. The NBN avoids that.

There are real concerns though as the NBN is running behind schedule, the procurement processes – particularly the construction contracts – appear to have been poorly handled and there has been little discussion about the technology options.

Overall though, this is an opportunity to get the 21^st Century infrastructure right. Where Australia failed with the roads in the 20^th Century and the trains in the 19^th, we can get this one right.

You can leave comments below or add them to Nightlife’s Facebook page. We’d also like to hear your views during the program.

If you want to know when the NBN will be rolled out to your district, NBNCo have a series of maps detailing their rollout plans.

Our next program will be mid-March. Watch the events page or subscribe to the Digital Times newsletter for the word of upcoming radio spots.

Creating another version of Windows risks further confusing the marketplace given Microsoft already has between its four different versions of Windows and six flavours of Office.

Although Apple haven’t suffered at all by having different operating systems. Mac OSX is more popular than ever and iOS dominates its markets.

Perhaps its time for Microsoft to copy something else Apple did and have a clean break – rework all the Windows code and build a new system.

Apple did this when they introduced OSX in 2001. Among other things it didn’t support floppy disks, the Apple Device Bus, floppy disks or the networking standards used by the older systems. At the time there were howls of protest from long suffering Apple true believers who had invested a lot into the earlier versions of Mac OS.

Despite the protests and early hiccups – we sometimes forget that the first version of OSX, named Cheetah, was terrible – Apple’s clean break with the past was a great success.

Microsoft’s selling point has been backward compatibility; software designed for one version of Windows is expected to work on the next version.

Backward compatibility is the reason for the spyware epidemic of the early 2000s as Microsoft ignored Windows XP’s security features so that they wouldn’t have to ditch older code in other products like Office.

Similarly, the contradiction of redesigning the Windows operating system while minimizing disruption to existing users was one of the reasons why Microsoft Vista was such a disaster.

Perhaps it’s time for Microsoft to bite the bullet and bring Windows into the 21st Century.

Whatever they decide to do, they better hurry as Apple and Google are carving out dominant positions; waiting until 2013 or 14 for the next version of Windows and Windows Phone may be too late in a market where Microsoft is quickly becoming irrelevant.

The financial details that we’ve speculated over are now public and we can now make more than informed guesses about what Facebook is worth.

What jumps out when first looking at Facebook’s financial figures is the exponential growth in their revenue from 153 million dollars in 2007 to $3,700 million last year. A twenty-fold increase over four years.

Expenses though haven’t grown at the same rate going from 277 million to 1.95 billion over the same period. Like all bigger social media and web 2.0 companies, sales and marketing is the biggest expense.

The Google Experience

The closest comparison to Facebook is Google’s float in 2004. Google floated at a market capitalisation of 23 billion dollars on a reported revenue in their SEC statement of 389 million.

At the time, Google’s profit margins were substantially lower with costs coming in at 234 million. These figures alone indicate Facebook today is a better prospect that Google was at the time of being floated.

Google today is valued at $190 billion on a revenue of $38 billion and a profit of $25 billion. On those measures, Facebook investors will be expecting that exponential growth to continue.

Growing Income

How Facebook continues to grow their revenue is the big question. Currently over half of their revenue comes from advertising in the United States and the bulk of the rest from Canada, Australia and Western Europe.

If online advertising continues to grow spectacularly, as a  2010 Morgan Stanley research paper illustrated then  Facebook, as the biggest social medial platform, will get a large slice of that $50 billion global market opportunity. This in itself would justify their valuation.

One of Facebook’s biggest growth opportunities comes from games. Already Zynga, the developers of Farmville and Mafia Wars, contribute 12% of Facebook’s revenues.

The global games business is valued at 60 billion dollars and much of this market is moving to web based, online platforms. Facebook’s 30% cut of income from games on their service is another lucrative revenue stream with few operating costs.

While advertising remains Facebook’s main income stream, other payments from games and online payments went from almost 0 in 2010 to nearly 17% of income at the end of 2011.

The threats

This isn’t to say Facebook doesn’t face any threats in their businesses. The concentration of income from North America, Europe and Australia exposes how the service is a first world phenomenon, although they have high penetration rates in some countries like Chile and hope to achieve similar in India.

Social media though is a fast moving field and there are plenty of opportunities for upstart businesses to displace Facebook just as MySpace faded away.

In their established markets there’s the question of how sustainable social media as an advertising platform is; until recently social media was a novelty to most households and still is to businesses and advertisers.

User fatigue is possible in the mature markets and Facebook – along with other social media services – not achieve the advertising revenue they hope.

Privacy issues are also another concern; as users realise the value of their private information it may be that they demand more for it than seeing where their friends are drinking or playing an online game for free.

Overall though, Facebook does appear to be worth the 50 billion dollar valuation when compared to other similar businesses like Google and is probably more sensibly priced than recent other IPOs like Groupon and Zynga.

Whether the service will deliver on its promise remains to be seen, but those are the risks when investing in new industries.

Despite the risk of impending disaster, I had a play with Google search and found the results to be far better than the established sites like Yahoo! and Altavista. Millions of others agreed.

Quickly Google became the definitive search engine. If you were serious about finding information on the web then Google was the way you found it.

For a while we wondered how Google would make money, it turned out that linking advertising to the search results was immensely profitable and the company quickly became one of the richest in the world.

Today, Google’s decided their searches will be something else. Rather than being a trusted source they’ll tell us what our friend think.

Which is great if our friends are trusted sources on Aristotle, post colonial South American politics, how to book sleepers on the Trans-Siberian or the best pie shop in Bathurst. But it’s kind of tricky if they aren’t.

As much as I love and enjoy the company of my friends both online and offline, not many of them are authorities in anything – except possibly pie shops.

This the flaw at the heart of integrating search and social media, they are two different things and we have different expectations for them.

As Pando Daily’s MG Seigler puts it; “Evil, Greed, And Antitrust Aren’t Google’s Real Problems, Relevancy Is.”

For most of my online searches, my friends views and ideas aren’t relevant. If they are, I already know how to find them.

The prediction is that tinkering with search will not end well for Google, it’s hard to disagree if we lose confidence in their results.