Category: Internet

One street, five networks – the madness of rethinking the NBN

One suburban street shows the madness of changing the NBN fibre to the premises policy.

In Technology Spectator today I write about how Australia is risking repeating the mistakes the colonies made with railway gauges on much more grand scale with telecommunications technologies.

With talk of re scoping the National Broadband Network project, despite being four years into a ten year undertaking, it’s important to understand just how foolish this would be an what a mess it will create.

To illustrate this, I’ve gone for a walk along a Sydney street on the Lower North Shore. This suburb is less than 5km from the city’s central business district.

The pillar at the end of the street

At the end of this typical suburban street is a little gray, well guarded but battered pillar. This box is important as it contains the connections to the local telephone network and its replacement will house the distribution equipment for a fibre network regardless of what type is installed.

 

Interestingly, just the presence of the pillar and the associated manholes nearby indicates there is already fibre in the neighbourhood, one aspect in the NBN debate that’s overlooked is that optical fibre is standard for telco backhaul and distribution networks.

The only reason fibre hasn’t already been rolled out to homes and businesses is the sunk cost of the copper cables. When it’s necessary to replace an entire copper system as in New York after Hurricane Sandy or in South Brisbane after the local phone exchange was sold, then fibre is what telcos will install as its cheaper to maintain.

Plain old telephone lines

Walking down the street we find the first example are those who are going to be stuck with the old copper network under a fibre to the node solution.

an old telephone pole shows the poor standard of Aussie comms

What’s notable about that pole is its shocking state – in itself it illustrates just how Australia’s telecommunications networks have been allowed to run down with the underinvestment of the last twenty years.

There’s a very chance the householders connected to those phone lines won’t be able to sustain a reliable  ADSL or FTTN connection because of the state of the wires.

Remember, this pole isn’t in some remote part of rural Australia, should you be brave enough to climb it you’d have a wonderful view of the Sydney Harbour Bridge, North Sydney and the city. Its state illustrates that underinvestment is just as much a problem in the suburbs as it is in the bush.

Using the Pay-TV network

One the alternatives being touted is using the Pay TV network cables – know as Hybre Fiber Coaxial, or HFC – to carry the broadband signal.

poor quality HFC Pay TV cable connection

Here’s an example of the Foxtel installations and the poor work quality stands out immediately. The connection on the left is notable for its rain catching properties which doesn’t bode well for what’s happening to the coax cables in the duct lurking beneath the footpath.

As an aside, the sort of poor quality workmanship found in the cable rollout is another risk to the NBN as it appears NBNCo is repeating Foxtel’s mistake of screwing the installation contractors into the ground on their rates. The result is really low quality work which won’t stand the test of time.

Making HFC even less useful is the fact that most Australian properties can’t connect to it.

In one of the best of examples of the drooling incompetence of Australia’s political ‘elite’, the 1990s Keating government managed to engineer a situation where the two cable companies rolled out their networks to the same places – 30% of the country got two networks while the rest received nothing.

The real problem though with the HFC network is that most Australians who can get it haven’t bothered – take up rates in the areas cable is available struggle to hit 50%. So an Abbot government would actually have to pay to connect households to a service they’ve never wanted.

Probably the cruellest part of all with the HFC proposal is the coax network itself is approaching the end of its life and most will be replaced with fibre within a decade. So we’re not saving a cent, just kicking costs down the road.

Apartment living

Even if you lived in that thirty percent of the country that did get pay-TV cable along their street, you were out of luck if you lived in an apartment or townhouse as few strata committees were interested in paying Foxtel install cables and Optus was never interested in MDUs – Multi Dwelling Units in telco-speak.

townhouses-connected-to-telco

A little way down the street from the houses photographed above are a group of town houses. Under the current NBN plans, this complex will get fibre. Under the coalition’s it will be stuck with copper.

The worst case scenario is a “fibre to the basement” solution where the fibre is run into the building’s distribution frame and then it’s up to the owners to make the connection using the existing copper phone lines.

In many cases it will never happen as strata managers and committees would keep putting it off, or they’d choose the lowest cost option which would exacerbate the poor work of the overworked NBN contractors.

Tower living

Next door to those townhouses is an eight story apartment block. These people risk being the biggest losers in the new telco environment.

apartment-tower

The problem for tower block dwellers is the low quality of the buildings and the lack of space for fibre telco risers. Under the fibre to the premises proposal some of these blocks are going to pose serious challenges to NBNCo.

Should the fibre to the basement proposal go ahead, many of the notoriously penny pinching owners corporations won’t complete the installation.

It’s highly likely that many Australian apartment dwellers are going to find themselves on wireless or LTE (mobile phone) connections for the foreseeable future as both the telco policies and poor building standards are going to deny them access to high speed fibre. This is going to have financial consequences for many landlords.

The risk for businesses

Most Australian businesses which occupy office buildings or industrial estates and they are going to be affected in the same way as apartment dwellers. The solution proposed by the coalition is that they should pay for their own fibre connections. Some will, many won’t and we’ll end up with another set of connections in our commercial districts.

One street, five networks

So just on one suburban street we could have people connecting through the old copper network, the HFC pay TV network, fibre to the basement, wireless and direct fibre for those who can afford it.

This is madness.

What’s even greater madness is that we’re four years into the National Broadband Network project and we’re talking about changing the scope for what’s been billed as one of the biggest infrastructure projects in Australian history.

Praying the luck continues

The Technology Spectator starts off with a comparison to the railway gauge madness of the 1850s. There’s an interesting parallel today.

Two weeks ago, the Australian Financial Review reported that millions had been spent on lawyers and consultant fees on Sydney’s North Western railway yet no work has been done.

On the same day, Business Insider published a story on the extensions to New York’s Long Island Railroad.

Around the world governments from New York to Nairobi are getting on with building infrastructure. In the meantime Australia struggles with building tram lines.

When we do decide to build a major project we get four years into it and decide to change our minds.

The nation dodged a bullet despite having made bad choices with roads and railways in the nineteenth and twentieth Centuries. Australia prospered despite those poor decisions.

If we can’t get telecommunications right then we better hope the luck continues through the 21st Century.

Will the top level domain milk cow save Melbourne IT?

The new global top level domains promise to be a rich cash cow, but is it enough to save Melbourne IT?

Beleaguered domain registration company Melbourne IT hopes the new breed of global top level domains will be its salvation after a decade of indifferent returns and a wallowing shareprice.

When the top level domains – known by their geeky acronym of gTLDs – were proposed five years ago they smelled like a revenue grab and so it has turned out.

To date 1930 organisations have applied for one of the top level domains, with a $135,000 evaluation fee that’s a juicy 260 million dollar pot to be shared between ICANN and the various domain registrars. No wonder Melbourne IT’s management is drooling.

One of the assurances of ICANN when the top level domains were announced was that trademark ownership would be part of the expensive evaluation process. That Melbourne IT is now spruiking gTLDs as a defensive intellectual property tactic is a notable backflip from ICANN’s earlier position.

The trading names aspect of the new global TLDs is going to be problematic for the registers and ICANN, a quick look at the applicant list for the new names sees domains like Tennis, Fail and Compare being applied for.

Good luck with defending those names in court – although having a spurious claim on the global use of the word ‘tennis’ will no doubt keep an army of Tennis Australia’s well paid lawyers occupied for years.

Even more delicious is Telstra’s claim to the domain name ‘yellowpages’. Despite being a declining business the Yellow Pages trademark is fiercely defended by various incumbent phone and directory companies around the world so it’s hard to see how that application will get passed without strong objections.

The real tragedy in the Melbourne IT story is how the company has gone nowhere for over decade after being the darling of the stock market when it was floated in 1998.

Melbourne IT shareprice

When Melbourne IT floated, it attracted controversy with it’s shares being priced at 2.20 and opening at $8.80. A stag gain of 300% for the insiders who got shares.

Despite the beliefs of those brainwashed by government privatisation campaigns in the 1990s, a staggering stag (pardon the pun) is money straight of the pocket of the listed company’s existing shareholders – Melbourne University in this case – and is evidence of either gross incompetence or malfeasance by the board and its advisors.

Given the Victorian government’s Auditor-General cleared the Melbourne IT board of any wrongdoing, the only explanation for the company’s botched float is gross incompetence.

The company’s share price since is clear evidence that gross incompetence remains a problem within the organisation’s leadership.

Whether the strong demand for global Top Level Domains can drag Melbourne IT out of it’s long term mediocrity remains to be seen but with the management’s track record it’s difficult to be optimistic.

Disclaimer: I was a director of a company that was a Melbourne IT reseller. There’s a long blog post in the poor, 1995 IT systems used by MelbourneIT and those might be related to the company’s poor performance over the last decade.

Would you know if you’ve been hacked?

With 200,000 new malware threats each day, keeping ahead of the online bad guys is impossible. We need to be smarter.

“I report to head office in Moscow” is a line which either means you’re in a James Bond movie or at a lunch briefing with the Russian security company Kaspersky.

While the James Bond movie would be fun, the Kaspersky lunch was an interesting briefing on their new security product.

A notable aspect of the discussion was the explosion in malware – there are over a hundred million malicious programs circulating on the internet with over 200,000 new threats every day.

“We struggle to keep up,” says Kaspersky Lab ANZ Managing Director, Andrew Mamonitis.

That a security company with 2,700 specialists struggles to keep up with the evolving threats emphasises the scale of the task facing a network administrators and IT managers.

It’s a task beyond all but the biggest companies.

Sometime ago I suggested every computer user should assume their computers are compromised and managers should work work on limiting what intruders can do to system.

With staff bringing their own devices to work, those risks are multiplied as some devices will almost certainly be infected with malware.

There are some basic things that computer users should do to make their systems harder to break however it’s almost impossible to protect against a zero-day exploit or the efforts of a sophisticated and determined hacker.

With our homes and motor cars, we realise it’s almost impossible to keep determined thieves out, so we take precautions like alarms, immobilisers and basic security such as keeping valuables out of plain view.

That attitude is what we now need with our computer technology, any hope of keeping your office server impregnable from outside attack is long gone.

People like us – could poor hiring practices bring down Silicon Valley?

Are poor hiring practices putting Silicon Valley at risk?

A strange little story appeared in Business Insider a few weeks back, 9 Things Your Resume Needs if you want to be Hired by Apple or Google is a curious view into the mindset of Silicon Valley.

Purporting to be an extract from a book written by a former recruiter who claims to have worked for Apple, Google and Microsoft, the story exposes a weakness in Silicon Valley and the technological elite which may cause the very disruptions they have unleashed to work against them.

The nine items are fascinating for the elitist, US-centric view of the world they portray and each is worth investigating on their own.

If you graduated from an elite college, your chances of getting an interview vastly improve

Yes, where you went to school does matter to the tech giants. Of course there are exceptions, but McDowell says an Ivy League or other top university will get you noticed.

There’s not much more to add to this, except to note that the vast majority of students whose families can afford such an education are from the upper middle class.

The Googles and Apples like to see relevant internship experience.

If you waited tables when you were 19, that isn’t attractive.

If you are lucky enough to get into a an Ivy League school on a scholarship or manage to scrape together the money you may still not make the cut.

To the author, only those with sufficient wealth to participate in unpaid internships are going to get jobs at the top Silicon Valley companies.

Your major matters

Sorry liberal arts people or chemical engineers, you’ll need another way in to Google or Apple.

This is an interesting one, Silicon Valley boosters often talk about the creative process and how coders are artists however according to the recruiter that’s just lip service.

She encourages students to pick majors that are directly relevant to Google or Apple. Finance, accounting, marketing or computer science majors have the best shot of being noticed by a tech recruiter.  At the very least, minor in one of those fields.

A focus on finance, accounting and marketing is the same as any old corporation – you could be going for a job with AT&T, Goldman Sachs or the government with qualifications like that. So much for unique.

Dissing chemical engineering is particularly interesting as Chem Eng graduates have passed one of the toughest university degrees. Whats more, the demands of mobile computing devices means battery technology is one of the most pressing issues facing Silicon Valley at the moment. Chemical Engineers are the folk who will solve this problem.

Big tech companies like to see people giving back to their communities.

Volunteering can be a great way to buff up your resume. That said, McDowell warns: “don’t serve soup in a soup kitchen.”

Instead she suggests hunting for a sales or marketing position, or offering to help a charity with its website and design.

This is a really obnoxious statement – basically saying we want to you volunteer, but we don’t want you to help people.

Just how many sales and marketing people are needed by soup kitchens, volunteer fire brigades or community pantries is open to debate.

A bigger issue with this mentality is that it favours bureaucrats and paper shufflers rather than doers. Which again is something anathema to the public statements of Silicon Valley’s leaders.

They also like good spellers and speakers.

Writing and communications skills aren’t just necessary for media jobs. They’re important in any career you’ll have.

Well, duh.

If you are buddies with college professors, that’s a plus.

Professors aren’t just impressed by how you do in their classes.  McDowell suggests helping them with research projects, asking for help and attending office hours, or becoming a teaching assistant.

That doesn’t hurt, but it’s pretty basic vanilla advice and again it’s tough luck if you have to do a shift at the local fast food restaurant so you can feed yourself.

Show you understand multiple positions at Google or Apple

If you want to work at one of the top tech companies, it helps to have at least a basic understanding of multiple positions in the organization.  McDowell calls this being a Generalist.

On one hand this advice makes sense but on another many technical roles are not generalist positions.

Generally having a knowledge of the company’s structure and roles is going to look good to any interviewer, assuming you can get past the gatekeeper at the recruitment company.

Entrepreneurs have a better shot of being hired.

This is a funny one, if you’re a real entrepreneur then the thought of working in cubicle at Apple or Microsoft while answering to a middle manager straight out of a Dilbert cartoon ranks with getting hot pine needles thrust under  your toenails.
One of the conceits of modern corporate life is that they value entrepreneurs and the free-wheeling spirits – the truth is they don’t and the first true hint of entrepreneurialism among the ranks will be smothered quickly with a deluge of paperwork.
Funnily enough, being a successful tech entrepreneur is a path to getting a good job at a tech company although it’s more likely to happen as an acqui-hire than through a recruiter.

Good news: Your GPA doesn’t matter very much

Most people think tech companies, Google in particular, harp over candidates’ GPAs. McDowell says there is little truth to that rumor.

This is only good news if you’ve ticked most of the other boxes, which means you’ll be considered if you’re middling graduate from Stanford or Harvard but forget it if you went elsewhere, regardless of how good your marks are.

The danger of recruiters

What the Business Insider story really illustrates are the risks of relying on third party recruiters as gatekeepers to filter out new employees.

Regardless of how good the recruitment consultant is they are going to apply their own cultural filters and biases onto the selection process and as a result knock out most good candidates.

More importantly, a company risks developing a monoculture if the recruitment process is too effective at filtering out people who don’t fit a narrow stereotype.

A new breed of officemen?

Reading the Business Insider story leaves one with the feeling that many of these companies are beginning to look like IBM in the 1960s – monocultures more concerned about the colour of an employee’s tie and choice of shirts rather than the talents they bring to the organisation or the value they can add to customers.

This is probably the greatest risk of all to the tech industry, that they end up with an insular group of people with fixed mindsets.

Should that happen, then the wave of disruption Silicon Valley has unleashed on the world will end up being the industry’s undoing as smart kids working out of garages in Michigan or slums in Delhi will out innovate the staid, comfortable incumbents.

It’s also interesting to consider how many other industries are now suffering after several decades of similar recruiting practices where leading businesses are now dominated by insular, unworldly monocultures.

Image courtesy of Alexfurr on SXC.HU

ABC Nightlife February 2013

For February’s ABC Nightlife segment Tony Delroy and I are looking at software prices, the new breed of smartphones for seniors and the future of the telco industry

Paul Wallbank joins Tony Delroy on ABC Nightife across Australia to discuss how technology affects your business and life. For February 2013 we’ll be looking at the software rip-off, smartphones for seniors and Telstra’s roadmap for the mobile economy.

The show will be available on all ABC Local stations and streamed online through the Nightlife website.

Some of the topics we’ll discuss include the following;

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

Tune in on your local ABC radio station or listen online at www.abc.net.au/nightlife.

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

Exciting but vague

A blank page for everyone is how Tim Berners-Lee sees the World Wide Web, this opens opportunities for inventors from all walks of life.

On Tuesday Tim Berners-Lee rounded off his Australian speaking tour with a City Talks presentation before 2,000 people at a packed Sydney Town Hall.

After an interminable procession of sponsor speeches, Berners-Lee covered many of the same topics in his presentations at the Sydney CSIRO workshop the previous week and the Melbourne talk the night before.

These included a call for everyone to learn some computer coding skills – or at least get to know someone who has some, wider technology education opportunities, more women in computing fields and a warning about the perils of government over-surveillance.

On government monitoring Internet traffic, Berners-Lee has been strident at all his talks and correctly points out most of our web browsing histories allow any outrageous conclusion to be drawn, particularly by suspicious law enforcement agencies and the prurient tabloid media.

Who owns the ‘off switch’ is also a concern after the Mubarak regime cut Egypt off the Internet during the Arab Spring uprising. The willingness of governments to cut connectivity in times of crisis is something we need to be vigilant against.

The web’s effect on the media was discussed in depth as well with Sean Aylmer, editor-in-chief of the Sydney Morning Herald, saying in his introduction that Berners-Lee’s invention had been the defining feature of Aylmer’s career.

While the web has been traumatic for a generation of newspapermen, Berners-Lee sees good news for journalists in the data explosion, “how do we separate the junk from the good stuff?” Asks Tim, “this is the role for journalists and editors”.

One person’s junk is another’s treasure though and the web presents one of the greatest opportunities for people to “write on their blank sheet of paper.”

When asked about what he regretted most about the web, Berners-Lee said “I’d drop the two slashes,” repeating the line from Melbourne the night before.

At each of his Australian speeches Berners-Lee has paid homage to his mentor at CERN, Mike Sendall. After Sendall passed away, his family found the original proposal for the Hyper Text Markup Language (HTML) which formed the basis for the world wide web.

“Exciting but vague” was the note Sendall made in the margins of Berners-Lee’s proposal.

Vague and exciting experiments was what drove people like James Watt and Thomas Edison during earlier periods of the industrial revolution. Tomorrow’s industries are today’s vague and strange ideas.

Do kids really need laptops in school?

Computers are seen as essential to education, but are we mistaking the tools for the methods.

Are laptop computers really essential to educating our kids? Fairfax media reports this weekend that the Australian Federal government’s laptops in education scheme is near collapse.

What stands out from the story are the quotes from educators;

Chatswood High School principal Sue Low said her school was providing laptops to students in year 9 but the uncertainty over future plans was unsettling.

“Laptops are now just as much of the culture of education as are pens and paper,” she said. “To not have certainty over how we will administer laptops to our students is very disruptive, and we need that certainty as soon as possible.”

Some schools have come up with their own solution to the problem. One NSW school has made arrangements with a private provider under which parents can buy a laptop for $1341 or rent-to-buy for $90 with monthly payments of about $50.

That computers are important is not a debate, but are we putting to much emphasis on the tools and not enough on what education is trying to achieve?

One educator said a decade ago that they could teach an 80 year old to use a computer in a few hours, but an illiterate 15 year old may be lost for life. This is truer today than it was then.

Computers are flooding our lives with information and the tools to gather that information are intuitive and don’t need 12 years of school to master.

What we are all need are the critical and mathematical skills to filter out the dross and misinformation that floods onto our screens.

Old and young have the belief that if something is on the web, then it must be true. The biggest challenge for parents and teachers with the web is convincing kids that cutting and pasting huge slabs of Wikipedia into an assignment isn’t research.

Not that this is just a problem in the classroom – plenty of politicians, business leaders and time poor journalists have been caught out plagiarising Wikipedia and other websites.

In recent times I’ve been to a lot of ‘future of media’ events where the importance of ‘data journalism’ has been raised. What really sticks out listening to these is how poorly equipped both young and old journalists are to evaluate the data they’ve gathered.

This isn’t just a problem in journalism – almost every occupation needs these skills. We could argue those skills are essential for citizens who want to participate in a modern democracy.

Computers, and coding skills, are important but we risk giving students the skills of today rather than giving them the foundations to adopt the skills of tomorrow.

We also risk making technological choices that risk education departments, schools and kids being locked into one vendor or system.

Giving every child a laptop is not a replacement for them having the critical, literacy and numeracy skills to participate in 21st Century society.

Can Yahoo! disrupt the disruptors?

Business partnerships require bringing something of value to the relationship, Yahoo first has to define its strengths before searching for partners.

Yahoo! CEO Marissa Mayer packed out the room for her interview at the World Economic Forum this week where she spoke about some of the challenges her and the company face.

One of the areas she sees for Yahoo! is in collaborating with other tech industry giants.

Mayer also is making a point of collaborating with companies such as Apple Inc., Google and Facebook, instead of competing.

“It ultimately means there’s really an opportunity for strong partnerships,” she said.

The problem for Yahoo! is that it doesn’t have a lot to offer companies like Apple, Google or Facebook – they are steaming along on their own and have moved ahead of the areas which Yahoo! dominated a decade ago.

Generally in the tech industry partnerships are more the result of the sector’s also-ran coming together in the hope that their combined might will overcome the leader’s advantages.

It’s the same philosophy that thinks tying the third and fourth placed runners legs together will make them faster than the winner.

A good example of this is Microsoft’s tie up with Nokia over the Windows Phone. If anything, the net effect has put Windows Phone and Nokia even further behind Apple and Google in the handset market.

Even when two tech companies have united to exploit their individual strengths, the results usually end in tears. Probably the best example of this was the IBM and Microsoft joint venture to develop the OS/2 operating system which eventually sank under IBM’s bureaucrat incompetence and Microsoft’s disingenuous management.

Those two examples show how partnerships only work when each party has something valuable to contribute and all sides are committed to the venture.

Marissa Mayer’s task is to find Yahoo!’s strengths and build on them, then she’ll be in a position to enter partnerships on an equal basis.

Whether its worth entering into partnerships with the big players though is another question. It may well be that Yahoo! has more to offer smaller businesses and disruptive startups.

Entering into a desperate alliance with Apple or Facebook could possibly be the worst thing Yahoo! could do, the company is no longer a leader and now needs to be a challenger or a disruptor.

Facebook’s locking competitors out of data feeds is an example of how complacent the big four internet giants are becoming, Yahoo! are in the position to upset that comfortable club.

The value of partnerships is that we all have weaknesses and strengths, a properly thought out venture builds on the various parties’ strengths and covers their weak spots. Right now Yahoo! has more weaknesses than strengths.

2013 – the year of the incumbents

Deloitte consulting’s technology, media and telecommunications predictions for 2013 sees smartphones, tablet computers and televisions causing a data crunch.

Bigger, quicker and more congested are the predictions from consulting firm Deloitte’s 2013 Technology, Media and Telecommunications survey.

In Sydney last Friday, the Australian aspects of the report were discussed by Clare Harding and Stuart Johnston, both partners in Deloitte’s Technology, Media and Telecommunications practice.

Most of the predictions tie into global trends, with the main exception being the National Broadband network which Stuart sees as addressing some of the bandwidth problems that telecommunication companies are going to struggle with in 2013.

Technology predictions

For the technology industry, Deloitte sees 2013 as being a consolidation of existing trends with the trend away from passwords continuing, crowdfunding  growing, conflict over BYOD policies and enterprise social networks finding their niches.

Some technologies are not dead; Deloitte sees the the PC retaining its place in the home and office, with over 80% of internet traffic and 70% of time still being consumed on desktop and laptop computers.

Deloitte also sees gesture based interfaces struggling as users stick with the mouse, keyboard and touchscreen.

Media predictions

Like 3D TV two years ago, the push from vendors is now onto smart TVs and high definition 4K televisions. As with 3DTV, much of the market share of smart and hard definition TVs is going to be because television manufacturers will include these features in base models.

Deloitte’s consultants see 2013 as one where “over the top” services (OTT) like Fetch TV and those provided by incumbents delivered start to get traction on smart TVs with 2% of industry revenues coming from these platforms.

Catch up TV is the main driver of the over the top services with 75% of traffic being around viewers watching previously broadcast content. This will see OTT services firmly become part of the incumbent broadcasters’ suite of services.

The bad news for some incumbents is the increase in ‘cord cutters’ as consumers move from pay-TV services to internet based content.

Smartphone and tablet computer adoption which is expected to treble will be a driver of OTT adoption as viewers move to ‘dual screen’ consumption, the connections required to deliver these services will put further load on already strained telco infrastructure which is going to see prices rise as providers respond to shortages.

Telecommunications predictions

The telecommunications industry is probably seeing the greatest disruption in 2013. With smartphones dominating the market world wide as price points collapse.

One of the big product lines pushed at this year’s CES was the “phablet” – while the Deloitte consultants find it interesting hey don’t seem convinced that the bigger form factors will displace the standard 5″ screen size during 2013.

As a consequence of the smartphone explosion is that apps will become more pervasive and telcos will try and build in their own walled gardens with All You Can App to lock customers onto their services.

With smartphones moving down market, largely because of the cost benefits for manufacturers, Deloitte also predicts many new users won’t access data plans given they’ll use the devices as sophisticated ‘feature phones’.

Data usage will continue to grow, particularly with the adoption of LTE/4G networks, although much of the growth will still be on the older 2 and 3G networks as lower income users choose plans which don’t require high speed data.

The looming data crunch

There is a cost to booming data usage and that’s the looming shortage of bandwidth, Deloitte sees this as getting far worse before it gets better.

With bandwidth becoming crowded, prices are expected to rise. In the United States, the “all you can eat” nature of internet plans is being replaced with “pay as you go” while in Australia data plans are becoming stingier and per unit costs are rising.

The London Olympics were cited as an example of how the shortages are appearing – while the Olympic site itself was fine, outside events like the long distance cycle races strained infrastructure along the route. We can expect this to become common as smartphones push base station capacity.

Where to in 2013

Deloitte’s view of where the telecom, technology and media industries are heading in 2013 is that incumbents will take advantage of their market positions as technology runs ahead of available bandwidth.

In Australia, governments might be disappointed as telcos internationally aren’t interested in bidding huge amounts for bandwidth. As Stuart Johnston says “globally what we’re seeing is that carriers are not as willing to spend. It’s not the cash cow that governments are expecting.”

For government and consumers, we’re going to get squeezed a little bit harder.

While things do look slightly better for telcos, broadcasters and other incumbents there’s always the unexpected which eludes all but the most outrageous pundits, it’s hard to see what the disruptive technologies of 2013 will be but we can be sure they are there.

The main takeaway from the 2013 Deloitte report is that smart TVs, 4K broadcasting, tablet computers and smartphones are going to be the biggest drivers for the technology, media and telecommunications industry for this year. There’s some opportunities for some canny entrepreneurs.

What happens when software is wrong

A phone company software glitch puts one man’s life and the safety of thousands at risk. It reminds us that computers are not always correct.

The Las Vegas Review Journal yesterday told the story of Wayne Dobson, a retiree living to the north of the city whose home is being fingered as harbouring lost cellphones thanks to a software bug at US telco Sprint which is giving out the wrong location of customer’s mobile devices.

While it appears funny at first the situation is quite serious for Mr Dobson as angry phone owners are showing up at his home to claim their lost mobiles back.

Making the situation even more serious is that 911 calls are being flagged at coming from his home and already he has had to deal with one police raid.

While the local cops have flagged this problem, it’s likely other agencies won’t know about this bug which exposes the home owner to some serious nastiness.

That a simple software bug can cause such risk to an innocent man illustrates why we need to be careful with what technology tells us – the computer is not always right.

Another aspect is our rush to judgement,  we assume because a smartphone app indicates a lost mobile is in a house that everyone inside is a thief. That the app could be wrong, or we don’t understand the data to properly interpret it, doesn’t enter our minds. This is more a function of our tabloid way of thinking rather than any flaws in technology.

The whole Find My Phone phenomenon is an interesting experiment in our lack of understanding risk; not only is there a possibility of going to the wrong place but there’s also a strong chance that an angry middle class boy is going to find himself quickly out of his depth when confronted by a genuine armed thief.

For Wayne Dobson, we should pray that Sprint fixes this problem before he encounters a stupid, violent person. For the rest of us we should remember that the computer is not always right.

Pennies for Apps – how Apple and Google dominate online income

Apple and Google dominate our online revenues while the creators of content fight over pennies. Is this a passing phase?

“App Store tops 40 billion downloads” trumpets Apple in a media release curiously timed to coincide with the opening of the Consumer Electronics Show.

While impressive, those figures aren’t great for developers. As writer Ed Bott points out they are getting 17.5 cents per download.

Making things worse, that return is trending downwards. Tech site Giga Om put the return at 20 cents a year earlier.

Giga Om also points out App Store returns are skewed towards the big successful game apps, meaning the majority of app developers are scratching for pennies.

This phenomenon is also happening with online advertising as Google Adsense partners find their income dwindling for pay for click adverts.

On top of declining revenues, there’s the cut that Google and Apple take. In the App Store, Apple’s take is 30% while Google pocket over 50% of Adsense revenue.

Working for pennies has become the norm for for creators like musicians, writers and app developers in the digital economy. The long tail is fine, but it barely pays the bills for all but a few outliers. Everyone else needs a day job.

In some respects this isn’t new – writers, poets, musicians and painters have generally starved in their garrets throughout history – but the Twentieth Century model of intellectual property, record labels and broadcast empires offered at least a decent living to many.

Right now the 21st Century model seems to be that creators can go back to starving, while the big four online conglomerates make the profits previously shared around by the movie studios, record labels and book publishers.

Maybe though the rivers of gold which are making Apple and Google’s managers rich may turn out to be just as vulnerable as those of the newspapers they’ve displaced.

It may well be that the current dominance of the App Store and Adsense are a transition effect as we move to other business models. It’s difficult to see right now, but we can’t rule it out.

Is Facebook the new Microsoft?

Are the internet giants – Google, Facebook, Apple and Amazon following the same path as Microsoft did in the 1990s?

One of the problems with dominating your field is that to find new growth opportunities involves becoming distracted with your core business and damaging your reputation. This is what hurt Microsoft over the last decade and now threatens the internet’s big four.

App.net CEO Dalton Caldwell wrote an open letter to Facebook CEO Mark Zuckerberg describing how the social media giant is trying to wipe out competitors through bullying them into being acquired.

If a business doesn’t succumb to Facebook’s seduction, then they risk being wiped out by the social media giant setting up their own version of the product which they can push out to a billion subscribers.

Jason Calacanis explores this strategy with Facebook’s launch of Poke, designed to compete with the instant messaging service Snapchat.

In many ways this is the same model that Microsoft employed in the 1990s as it worked towards dominating the desktop computer market – bully innovators into selling to them and, if that fails, copy the product and crush the opposition.

It worked for Microsoft because they controlled the distribution channels through their tight relationships with computer manufacturers.

Microsoft created their own applications, or features in their products, which would be bundled onto Dell, Gateway or Compaq computers. Once users had functionality built into Windows or Microsoft Office then they didn’t have to buy a third party app.

Bundling network protocols destroyed the business models of LANtastic and Novell, in the browser wars Microsoft killed Netscape by putting Internet Explorer on the desktop and in the office suite predatory pricing killed WordPerfect and Lotus while resulting in acquisitions of companies like Visio.

This way of business cemented Microsoft’s domination of their desktop, office productivity and server markets at the turn of the century. It was a true river of gold that continues to flow today.

Unlike the personal computer software markets, bullying or buying your way into market dominance doesn’t work online as the barriers to entry that protected Microsoft from competitors are nonexistent on the web.

Both AOL and Yahoo! learned this the hard way as their acquisition sprees through the dot com boom didn’t prevent them from sliding into irrelevance.

A good example of how hard it is for the Internet giants to execute a plan for world domination is the rise and fall of Google’s Knol as described by Seth Godin, who thought his own Squidoo startup would be crushed by the Internet giant. It turned out not to be so.

For the web incumbents the fundamental problem are, as Jason says, that they are not focusing on their core businesses and they have plenty of Plan Bs as Seth Godin described.

The manager who fails with Knol or Poke moves onto another division with a pat on the back and a safe claim on their bonus. The startup founders on the other hand are fighting for survival.

All four of the Internet’s giants have similarities to Microsoft in the 1990s as every single one dominates its niche and wonders how to expand outside their core business – for Google, and possibly the other three, there’s the added problem of managerialism as a large cadre of managers worries more about maintaining privileges over competing in the marketplace.

Managerialism ended up crippling Microsoft and continues to do so today, whether Facebook and Google can avoid that fate remains to be seen.

A bigger problem for Facebook is losing trust – Microsoft’s conduct, particularly with WordPerfect and Netscape in the late 1990s made a generation of developers and entrepreneurs cautious about dealing with the company.

For many that suspicion remains and is one of the barriers the company now has to overcome in the smartphone and cloud computing markets where it is one of the crowd of scrappy challengers.

In the social and online worlds, collaboration is one of the keys to success. If Facebook, or any of the others, lose the trust of the community then they’ll become irrelevant a lot faster than WordPerfect or LANtastic did.

Becoming irrelevant is the real worry for Facebook’s tenured managers and their investors.