What the new government means for the IT sector

With Labor now in government and the ministry announced it’s time to review what their policies mean for the IT and communications sectors.

Broadband, education and regional development were major issues in this election so there are some serious policy differences to those of the previous government.

One encouraging result for these policies is the relevant opposition spokespeople have become the ministers for those portfolios, the most important being Stephen Conroy retaining the communications portfolio. This means we have an incoming minister who is aware of the major issues in the sector.

Labor’s biggest emphasis was on education with the promise of a computer for every senior secondary student, encouragement for science and maths students, a tax deduction for parents of students and programs to encourage skilled and vocational training.

National Secondary School Computer Fund

Every child between years 9 and 12 will have their own government provided computer. This is a big headline issue as school computers are a concern for most parents whether they are in the state, independent or Catholic education systems.

The reality is most schools already have the bulk of these facilities. The real challenge is supporting the infrastructure and providing the resources for teachers to properly use these powerful tools. Rolling this out is going to be a short term boost for the IT industry.

Education rebate

Every family can claim half of their education costs up to $750 for primary and $1500 for secondary students. This can include computers, software and Internet access. This proposal is great for laptop and software vendors and its no coincidence Harvey Norman shares surged on the Monday after the election. We can expect to see small and large service providers and vendors get another short term boost out of this.

Skilling Australia

The proposal of a new training system is welcome given the problems we currently have with vocational training. But on one level this is a worry; will we see another duplication of the existing state based TAFE system like the coalition’s Australian Training Colleges program?

The encouraging part of this particular announcement is business will have a large say in the training policies. Industry has a much more acute understanding of where vocational training is needed than government.

The proposal to fund training up to Certificate III level is welcome, but some fields will need training to Cert IV, diploma and even degree and post grad level.

Overall this is good news for the IT industry, but we need to make sure we are adequately represented in the proposed industry skills councils.

Trades training centres in every secondary school

We can expect to see more techs, web designers being produced. This is good for addressing the immediate skill shortages at the lower ends of the ICT industry. Again the industry needs to make sure they are represented in the development of these centres and the allocation of resources.

Financial incentives for university students

There’s a mixed bag of ideas here with the aim of encouraging students into teaching, nursing, science and maths degrees. This is a critical investment in Australia’s future as it’s essential we get more people into these courses. This will be a long term gain for the industry.

The broadband rollout

While this is the biggest ticket item, and probably the sexiest, it does have serious effects for the nation’s development. One question is how far the previous government’s OPEL scheme has developed as we may end up with either duplication or most of the subsidy going to the OPEL partners.

Online safety

Another program that will pick up from the previous government’s policy is the cyber-safety plan. The biggest difference between the parties is Labor’s commitment to provide a family safe “clean feed”. This is going to take negotiation and may well end up being a subsidy for the incumbent telcos.

Enterprise Connect

This is not strictly speaking an IT policy, but Enterprise Connect will have an effect on IT Investments and tech innovation. The regional focus of many of the programs will be an opportunity for many businesses in those locations to invest in ICT.

Reform of the energy rating system

Another peripheral program to the IT industry are the changes to the energy rating system. Green IT will be one of the major issues facing the ICT sector in the next five years. While IT equipment was not mentioned in Labor’s policy it’s difficult to see computers not being subject to this program in the next few years.

The emphasis on education is good for the long term future of the ICT industries, for the short term the equipping of students with computers and the rollout of broadband is very good for vendors and service providers.

In the medium term, the provision of technical training in high schools addresses the skills shortages that are already biting Australian employers. There is no shortage of keen young kids that want to have a career in IT. Giving them the opportunity to develop this interest is an extremely good thing for the industry.

The long term view is probably the most important of these policies. Australia has slipped badly in technical and scientific education, the very fields that will be critical in the first half of the 21st century. Hopefully, it’s not too little too late.

One of the problems with the date of the election was its proximity to the Christmas break, as a consequence it’s unlikely we’ll see any solid government action until well into the new year.

We should always remember what politicians promise and what they deliver are often two different things. Even the most well intentioned promises may figure out differently when put into practice. We’ll be watching with interest as these policies are put into place.

TIO annual report

The Telecommunication Industry Ombudsman’s 2007 annual report is a less than proud moment for the Internet industry.

The headline is an 84% increase in complaints about ISP behaviour. But this is only part of the story, the details are even more disturbing.

The most notable jump was in complaints about excess data charges. This is only going to get worse as more people start using VoIP and downloading videos. It’s exacerbated by the swing towards ISPs counting uploads and downloads towards their download limits.

One item that jumps out of the report is the confirmation ISPs don’t keep proper records of conversations with customers. While the TIO points at smaller providers our experience is the bigger providers are not better.

The biggest increase was complaints about debt collection procedures where customers have been listed as defaulting on an Internet bill without any notice from the ISP. This probably relates to a couple of sizable and incompetent ISPs going broke late last year.

As we saw with the One.Tel liquidation, the record keeping of these companies is disgraceful and it’s highly unlikely they can prove any debt when challenged. Not that this stops them trying to recover what they claim is owed.

In the category of customer service, ISPs were by far the worst performer. The biggest category of complaint was inadequate or incorrect advice. This is barely surprising

Direct debit problems continue. Part of the problem here is with the banks who consider direct debit requests to be more important than their customers. The TIO points out this a breach of banking code of conduct.

Given ISPs can’t get their billing right and don’t give records it does appear that giving a direct debit authorisation to them is a risky thing to do.

This report is a wake up call to ISP and the entire IT industry. Things have to improve. Some of the areas we need to look at are;

  • better training
  • improved record keeping
  • proper QA and procedures, especially for escalating customer complaints
  • clearer and more concise bills

The silly thing is all of these would have positive return for ISPs. By providing better information to customers and staff, they will reduce costs and probably improve sales.

The broadband explosion

For a typical exciting Sunday afternoon, I’ve been trolling through the Telstra annual report.

One statistic that leaps out at me is the growth in consumer broadband subscribers of nearly 60%, even if we assume all the 373,000 customers who ditched their dial up plans went over to broadband, that’s still a whopping 35% growth in customers.

According to the Australian Bureau of Statistics, the nine month growth in consumer broadband connections from June 2006 to March 2007 (not quite the same period) was 46%.

The decline in dial up connection was 26% over the nine months, as opposed to Telstra’s decline of 36.3% over the twelve months.

Interestingly, Telstra’s dial up decline would have been greater if their systems allow customers to transfer their existing dial up email address to broadband. As it stands, they have to retain their dial up account and we steer customers to Bigpond’s Casual User Plan as a cheap way of doing this.

So Telstra’s performance isn’t out of the line with the industry. What it does show is the massive take up of broadband. It’s also profitable, as Telstra’s report also shows their income has grown by over 66%.

Over the next few weeks I’ll have a look at how other providers are doing. It will be interesting to see how others are performing.

Commander takeover

The failure of a communications company is due to weak management.

The saga of Commander’s slow demise raises some questions about the ability of Australia’s technology companies to meet the needs of the small to medium sized business market.

Commander, or Plestel as they were previously known as, were the monopoly provider of small business telephone systems prior to deregulation. At the time of being spun off from Telstra they had a marvellous position in the market.

For most small businesses, the term “Commander System” was synonymous with small business telephones and PABX systems and they had a ready made customer base of over 100,000 small businesses.

You’d think with hundreds of thousands of customers, an incumbent position and such a level of name recognition, it would be impossible to mess up a business like this.

Somehow, through a combination of overcharging and poor service, Commander’s management blew it. In the last nine years their customers have fled to other providers.

This year the share price has fallen from over $2.00 to around 40 cents. The 42c closing share price last Friday was half their issue price when they were floated in December 2000.

The final humiliation was their 18 day suspension from the stock exchange due to the auditors not being prepared to sign off the annual report.

So it’s funny we now see Australian IT reporting AAPT and Optus are looking at buying the company. The rationale being that Optus and AAPT have failed to get into the SMB market.

Commander failed because management didn’t understand the small business market and the economics of selling to the sector. Optus and AAPT have continually struggled with exactly the same issues.

So it’s hard to see how Optus or AAPT buying Commander could add anything to either company’s expertise (0r lack of it) in this field.

The other prospective buyers of Commander are various private equity groups. AVCAL, the Australian Private Equity & Venture Capital Association Limited, cite Commander as one of their success stories.

One hopes the next owner of Commander’s going to give AVCAL a real success story to crow about.

Should Australian tech startups head to Silicon Valley?

Paul Graham’s VC blog has a provocative story on why startups should move to Silicon Valley to improve their chances of success. This raises the question should Australian startups follow his advice.

My view is a firm “yes”. Not only are Australian investors inexperienced in finding and nuturing startups but they are notoriously reluctant about putting money into anything remotely innovative or “outside the box”.

So it’s probably even more important Australian innovators to go the US than it is for their British, Irish or Indian counterparts.

What’s always amazed me with Australian investors is how they will keep backing known dogs. The best example was One.Tel where the founders repeated the mistakes they’d made in previous ventures but we’re able to keep the investor’s cash coming in because they were the right people who’d gone to the right schools.

For an unknown kid without connections and with a truly original idea (and One.Tel was certainly not an original idea) it’s difficult to see how they’d have any reason not to be on the first plane to San Francisco.

Interestingly, Paul Graham’s follow up blog post on the future of startups says “you don’t beat the incumbents; you redefine the problem to make them irrelevant”.

It’s going to be interesting to see how the incumbent Australian investors are going to deal with the new economy. Will they just sit on their behinds and enjoy the blessings of the current commodities boom and wait for the next housing boom? Or will they learn new tricks?

Or will a new generation come along and redefine the problem?

A ship of fools

To accompany the launch of their new protect yourself website eBay Australia have released a survey claiming an amazing 93% of Australian Internet users don’t understand what phishing is and 72% engage in behaviour that increases their risk of falling victim to an online scam.

This is truly mind boggling given the amount of publicity that is given to these scams.

More depressingly, the press release claims that one in three Internet users believes that only dumb people fall for phishing attempt.

You can see why the smart scammers do so well with attitudes like this. We look at one of the good scams at our PC Rescue and Cranky Tech sites.

We’ll probably make this the main story for the next ABC Nightlife spot. It looks like we have a long way to go in educating people on Internet security.

Anatomy of an Internet scam

We talk a lot about Internet scams, here’s a first hand account of how they work.

A clever little scam fell into our laps tonight. It’s the typical sort of trick that can fool anyone with an Internet connection, in this case it used Skype, but it could have been an email, a pop ad or pretty well anything any computer encounters while on the net. So we decide to follow this one to see how it works.

This was done on an a fully patched Windows XP computer running in Limited User Mode with Mozilla Firefox as the web browser. This is our preferred configuration for safe surfing.

Despite this, the computer was still fully backed up and we ran regular spyware and virus scans between each step. We strongly recommend never to click on any link, email or adverts you think might be suspicious.

The trap

You’re sitting at your computer when you notice a strange icon in the corner of your screen. It’s Skype, the Internet phone program, telling you there’s a Skype Chat message for you. The message comes from Security Center ® (Offline) Skype™ Chat and it warns WINDOWS REQUIRES IMMEDIATE ATTENTION.

We should pause here to point out if you have Skype Chat enabled you will be getting messages popping up like this on a regular basis. We’ve discussed this problem on our July ABC Nightlife spot and we’ve added the solution to our IT Queries website. You should set Skype to only accept messages from your friends.

It’s also important to note here that this message looks official. Many people think that they are too clever to be caught by these scams. What they overlook is that while many scammers are dopes, some are very clever and this one will fool a lot of intelligent people.

Following the link

At the bottom of the message is a link directing you to “a patch” that will fix the problem. Click this and you are taken to a website called “Online Alert”

This website is allegedly owned by a Sergei Machorin of Moscow. We can safely bet that Sergei, if he exists, has no idea he’s the owner of this site.

Rather than downloading a patch, which would fix the problem, Online Alert starts a fake malware scan of the computer’s hard drive. After several minutes this will report your computer is infected with the following files.

  • Backdoor:Win32/NT Root
  • Backdoor: Win32/Sivuxa
  • Trojan.Caijing

All of these are fake. In fact, if you run the test on an Apple Mac you’ll get exactly the same result.It’ll even claim the c: drive is infected.

Of course, they aren’t telling you this for nothing, at the bottom of the page there is a button to “fix this problem”, so we clicked it.

The fix takes us to a page offering to download and install a cleaner program called Scan and Repair 2007 for a mere 19.95 USD. And here you are stuck.

If you choose just to close the screen you’ll find yourself locked in a loop where you can’t get out of the purchase screen until you kill the process or shut down Windows.

Naturally we didn’t pay the 19.95 and we just killed Firefox instead. Many people though would be worried about shutting down their computer with this thing still open.

The Result

This is a pretty garden variety scam and it could be a lot worse. This site could easily have tried to install something malicious. We tested this also on Internet Explorer and Firefox in a Limited User profile and there is no evidence of this scam trying to load spyware.

Overall it’s a fairly primitive little scam. The “online scan” is fairly simple. But to give credit to the scammers, the Skype warning, the webpages and the online scan are all quite convincing looking mock ups of a real thing.

Who falls for this?

Lots of people. The fact the warnings and websites look so convincing means that even experienced users can be fooled into clicking on links or thinking their computer is infected. There’s an idea that only stupid people fall for these tricks. This is not the case and even if it were, the numbers still make it attractive for the scammers.

Why do they do this?

The scammers receive a commission on every copy of Scan and Repair 2007 they sell. Given they’ve sent this warning out to millions of people they only need a tiny proportion to buy the product to make a tidy sum. It’s easy money for someone with the right skills.

The F-Prot’s Mikko Hypponen believes malware is the fastest growing sector of the IT industry. We agree and while this isn’t an example of true malware like a Trojan or virus, it still shows the profits that can be made with just a modest bit of effort.

We’ve found over the years that most people that fall for these scams are not stupid. The crooks who try this stuff are no fools and anyone who thinks they are smarter than the crooks is probably going to be caught out. All of us need to take care on the net.

Why you should be careful of IT articles.

Trevor Cook raises an interesting point about IT journalism in his Corporate Engagement blog.

While he’s been a bit provocative with his description of the IT media being “low end” he does flag an important issue that Australian IT users should be aware of; that many reviews and articles are barely warmed over press releases.

In fact some technology journalists and publications are notorious for going the next step and just slightly rewriting overseas articles.

When you are reading an article on the latest and greatest IT products keep this in mind. If it appears the writer hasn’t used the product and is merely parroting some media release then you should be careful. Many of the articles have been ripped straight off the wire.

It should be emphasised that this isn’t usually the journalists fault, it’s usually because the publication is under resourced and simply can’t generate original content. Reprinting press releases is an easy and cheap way to pad out content.

Personally, I like publications like Australian Personal Computer that does take the time to properly review products and cast a skeptical eye over the often inflated claims of IT vendors.

When making decisions on buying technology, don’t just rely on what you read in the paper.

Fourth Estate Domain, 2 October 2007

This month’s Sydney FED featured Richard Webb, CEO of Blue Freeway. As usual it was well attended night and we should thank Sally Mills for organising these valuable events.

Blue Freeway’s an interesting beast. They have pulled together a number of disparate companies with the aim of offering a “one stop shop” for interactive and digital marketing.

It’s certainly an attractive model and a number of others are looking doing likewise.

The problem I see with this model is that it becomes a jack of all trades and struggles to do any of them well. The alternative is you end up with the dreaded “siloing” where each business unit doesn’t communicate with the others.

Richard addressed this in his discussion. His solution is strong branding, my suspicion is that it will need some very strong management as well.

There were many other issues raised but I’ll have to wait for the podcast as I didn’t take notes and things started getting hazy later (thanks to Sally and Hazel for the drinks).

Choosing a broadband connection

You need to be careful when choosing a broadband connection

The ongoing spat between Telstra and the Federal government is a symptom of the problems Australians face when going online.

To protect their revenues and investment, Telstra had to slow the adoption of the Internet in Australia. To do this they introduced a unique pricing policy with their broadband Internet packages which still affect us today.

Rationing data through punitative excess use charges meant that customers were exposed to big bills. It also meant smaller ISPs using Telstra’s wholesale Internet plans couldn’t offer unlimited plans like their overseas counterparts. Those excess use fees have proved pretty profitable for Telstra.

A few years back Bigpond CEO Justine Milne said that around half his broadband customers upgrade to more expensive plans. This is barely surprising, as the cheaper plans leave all but the lightest user with a big excess use bill. So it’s important to choose the right plan.

The right plan for you depends upon what you are going to use your broadband connection for. If you have teenage kids, you can expect to have massive music and video downloads, if you have have friends and relatives overseas you might find yourself using Voice over IP. The most important deciding factor is how much data you will send and receive, this determines your plan and it’s cost.

Data Allowances

Every time you go on the net, you transfer data. Every connection, every email and every web page involves data moving between your computer and the net. A light Internet user can expect to use around 400Mb a month, a typical user a Gb per month and a heavy user (those teenage kids again) over 5Gb a month.Most broadband Internet plans include a data allowance. If you go over that allowance you will either be capped, which means your connection is slowed or start paying excess fees. Those fees vary dramatically between 0.5 and 20c per Mb.

The cheapest plans generally offer a 200Mb allowance. The Telstra $29.95 plan charges 15c for each additional Mb. The light 400Mb a month user that does little more than check email and read a few web pages would end up with a monthly bill of around sixty dollars. For sixty dollars a month, you can get a much better plan with Telstra and an even better plan with one of their competitors.

Remember these assumptions are based upon a light user. If you have teenagers, or you like listening or watching streaming media your usage will be much higher. To help you figure out how much data you will use, Telstra have a usage calculator, use this to figure how much data you can expect to use then double the amount to be safe.

Capping

One way to avoid huge bills to choose a plan that caps your usage when you go over the monthly limit. Most broadband providers offer these plans. One thing to watch is the speed when you exceed these plans.

While speed caps protect against massive bills, they are frustrating. It’s best to choose a plan with a generous allowance that means you won’t get frustrated. Remember you will use double what you expect.

Speeds

With broadband plans you can choose what upload and download speeds you want. Naturally the faster you choose, the more you pay.This is another area where the unsuspecting consumer needs to be careful. Many of the cheap plans are the slowest available.

The slowest speed is 256/64, which means the download speed is around six times faster than a dial up modem, while the upload speed is only a little faster.When comparing plans, it’s important to make sure plans are of a similar speed. Faster is definitely better.

Pre Selection and Bundling

A lot of the cheap plans are linked to you agreeing to use that company for telephone calls. While they can be good deals the plans are insanely complex. Customers don’t like them and I agree.

Contract Lengths

Many plans try to lock you into a contract, just like a mobile phone. The longer you committ to, the cheaper the price so many cheaper plans have long contracts. With broadband prices are dropping all the time, getting locked into a two year contract may not be a good deal.

Installation

A number of providers are offering free installation. Read the fine print as this offer may only apply if you sign up to a longer contract or more expensive plan. For the average user, we’d recommend getting the ISP to send a tech out to install it for you, even if you have to pay an extra $200.

Free Months

Some providers are offering a number of ‘free” months. Like the “free” installation offers you’ll pay for these over the extended contract length or won’t get the cheaper or more flexible plans. Read the fine print.

Free equipment

Another “freebie” to get you in. All broadband connections require a special modem. For cable connections this is included as part of your plan. ADSL customers can supply their own modems.

Most ADSL providers will sell you a modem as an extra. While they tend to be more expensive than buying your own, we recommend buying their modem as it becomes more difficult for the ISP to play the traditional blame shifting game if anything goes wrong. This usually adds around $200 to the setup cost.

Like the other “free offers” a free modem may cost you more over the length of the contract. Keep reading that fine print.

Comparing providers

Telstra Bigpond is not the only provider. ADSL is a very competitive market and there are a lot of providers offering good deals. Broadband Choice is the site to visit when you want to find who can offer the best broadband deals.

Broadband is the best way to connect to the Internet but the plans are complex and are often designed to catch the unwary. Make sure you understand what you are getting into before you sign a contract. Shop around to find the best deal for you and remember that if it is too good to be true, it may well be.

The first post

This is the first post on the Australian technology blog.

The aim of this blog is look at the technologies that are affecting Australian homes and businesses and how they are using that technology.

The blog’s going to compliment our IT Queries, Cranky Tech and PC Rescue websites. While those will continue, this blog will fill the gaps between them.

In the next few weeks I’ll be looking at some of the wireless Internet offerings and the Federal government’s new free web filters.

Join us for the ride, we hope we can help you make sense of where technology is taking us and how to get the most from it.