Paul Wallbank, talking about media and comms

Does small business really want high speed broadband?

Is big business getting all the benefits of high speed broadband?

One of the mantras of the digital economy is new technologies, such as the web and cloud computing, level the playing field for small businesses competing against large corporations. Could it be that belief is wrong?

The Australian Centre for Broadband Innovation last week released its Broadband Impacts report where it examined how high speed internet is changing communities. The results weren’t good for small businesses.

One of the key metrics the ACBI used was business use of websites, it’s shocking enough that only 70% of Australian corporations have an online presence but less than half of small businesses being on the web is disgraceful.

An interesting quirk in the above table indicates that there’s quite a few microbusiness using online sales services and one wonders if the question being asked by the Australian Bureau of Statistics is too limiting in its definition of websites.

The ABS defines businesses with a web presence as those with a website, home page or other web presence but excludes those listed solely as part of an online listing. A web presence was reported by 45% of Australian businesses as at 30 June 2012.

With this definition excluding social media and listing services, it probably does understate the number of Microbusinesses that have an online presence but not a website as defined by the ABS.

The relevance of broadband

In the context of broadband it’s worth noting that websites and online commerce don’t need high speed internet connections, so it’s hard to conclude that giving these businesses faster access is going to make a difference to the way they work.

Where high speed broadband and ubiquitous internet really make a difference is in business operations. As workers become more mobile and the internet of things rolls out, having access to reliable connections is going to become critical to most organisations. Again though, small business tracks poorly on this measure.

Overall the use of cloud services – which is what the bulk of these “new operational processes” will be – is pretty poor across the board although one suspects in the larger organisations various groups have changed their business practiced around services like Dropbox and Documents To Go without senior management being aware of it.

What’s particularly disappointing about this statistic is small businesses are the group most suited to using cloud services and those not adopting these technologies are missing a competitive advantage.

So who needs broadband internet?

These results beg the question – does small business really need high speed broadband access? If they aren’t doing things that could be done on a dial up modem, like registering domains or setting up websites, it’s hard justifying the investment of connecting SMBs to fibre networks.

While there’s no doubt high speed internet is essential to the economic future of communities and nations, we have to keep in mind that not all groups will take advantage of the new technologies. Some will be left behind and in Australia’s case, it may well be small business.

Silos and security in the internet of things

Is vendor lock in a bigger risk than security in the internet of machines?

Last week Deloitte launched its list of 500 fastest growing Asia-Pacific Technology companies.

At the Australian media briefing on the list and the company’s predictions for the telecommunications market in 2014 Deloitte’s Jolyn Barker and Eric Openshaw discussed the some of the implications of the report.

During the briefing Openshaw was asked about the risks of vendors creating their own Internet of Things standards to lock customters into proprietary platforms.

Openshaw isn’t convinced, “over time when technologies develop out of significant players in an attempt to create or extend a vertical stack, over time the market tends to revolt against that.”

“There’s usually one or two forces working against that, either the market revolts against it and insists on a new standard or the stack is too successful and regulators will come in and say ‘we don’t like your stack, dismantle it’ .”

His view is that in the long term issues of vendor lock-in and proprietary platforms fix themselves. “One way or another, these things can be problematic in the short run but typically over time they are resolved.”

Where Openshaw does see risks with lying in the security of machine to machine technologies.

“The security aspect just can’t be overstated in terms of how important it is,” says Openshaw. “When we have demonstrations now of being able to hack a pacemaker, that’s a problem.”

“So the security issues on these networks is important.”

The interplay between the software, network protocols and security is going to be complex and may well be what makes or breaks some vendors products.

It’s still early days to fully appreciate all the risks with the internet of machines, but securing networks and devices will be one of the most important tasks ahead for the industry.

How important is public transport to smart cities?

Public transit systems may be essential to a city’s success in the 21st Century.

One of things that stands out when discussing economic development with city governments is the importance of public transit for towns aspiring to be smart cities.

This was particularly notable in interviewing Gordon Innes, CEO of London and Partners, about British capital’s building upon the legacy of the 2012 Olympics and its quest become the digital capital of Europe.

At the centre of these developments is public transit, something mentioned by both Innes and Laurel Barsotti of the City of San Francisco.

Innes sees public transport as essential to London’s growth, “it’s absolutely critical to the physical growth of the economy.”

“In the run up to the Olympics nine billion was spend in upgrading the tube and Dockland Light Railway and that opened up all of East London’s economy in way because it wasn’t accessible or attractive for businesses.”

“Stratford now is the best connected train station in Europe,” declares Innes. “That part of the city and around the Docklands is much more accessible and that’s bringing in investors. It wouldn’t have happened if the transport infrastructure wasn’t there.”

In San Francisco, Laurel Barsotti sees a much more subtle advantage for the city in having, by US standards, a comprehensive public transit system in its bus, light rail and subway system.

“A lot of the entrepreneurs creating those companies are concerned their employees see people using their products,” says Barsott. “They want them riding the bus to and from work and see people interacting with their products.”

While in Barcelona, the public transport system is forming part of the local Smart City program where bus stops are Wi-Fi base stations and a fundamental part of the town’s communications network.

For cities, it may well be that having decent public transit systems is going to be the competitive difference in being a key part of the 21st Century economy.

Those parts of the world not investing in transport networks may find they are being left behind in the new economy.

Shops of doom

Some locations are the kiss of death of businesses.

“Location, location, location” is the mantra for real estate investors and property speculators, that rule is just as true for those setting up a shop or cafe.

When you pay attention to the retail strips or malls in your suburbs you’ll notice how some locations are doomed to fail.

The featured picture in this post is what should be a good location in the centre of a dining strip in an affluent Sydney suburb. Just fifty metres either side of the premises are successful and long running cafes.

However this spot has had five different business fail in the last three years and in the past decade hasn’t had a single stable tenant.

The question is what causes this? Is it because the landlord’s are greedy?

In some cases it is, the featured premises had a stable tenant in a very nice and well priced fish restaurant for many years. When the landlord jacked up the rent, the seafood cafe moved out and the place has struggled ever since.

Something many people have mentioned to me over the years is how difficult they find it to negotiate on price with landlords over commercial space with the owners very reluctant to budge on rents.

Often, the letting agents are prepared to throw in sweeteners like fitout costs, rental holidays or paying utilities but it’s very rare that the headline rent will be negotiated down.

Part of this could be due to the properties being valued as a multiple of their monthly rents; so if the leasing rate falls, so too does the property value which is bad news for the landlord and their bank.

When landlords get too greedy properties lie vacant for a long time. A good example is nearby to the featured property.

The bike shop that occupied this unit for about 12 months moved out over two years ago and before that it had been vacant for a long time. Despite being on a busy commuter strip in an affluent suburb, it’s a lousy location with poor visibility, truly awful parking and lousy amenities.

In a genuine free market the rent should fall until a business that can operate in such a low turnover location can afford it, that no entrepreneur can make the numbers work indicates the asking price is too high.

Although even the cheapest rents won’t help a truly blighted location which is why it might be a good idea to ask around the local shops and residents to see how a location has performed before signing that lease.

It would be a shame to doom your business because of a lousy choice of location.

How did San Francisco become the darling of the tech scene?

Regular visitors to San Francisco would notice how the city has changed in the last few years.

Companies that were setting up in Silicon Valley are now basing themselves downtown, the business community is energised and the seedier parts of the town are looking substantially spruced up.

To understand the change I interviewed Laurel Barsotti from the City and County of San Francisco as part of the Decoding the New Economy series of video clips.

Laurel is the council’s Director of Business Development and we discussed how the local government has worked with the community and business leaders to drive San Francisco’s economic growth.

The shift from Silicon Valley

A striking change in the tech industry is how the startup focus has shifted from Silicon Valley fifty miles away to downtown San Francisco. Laurel puts it down to a shift in the priorities of the sector.

“I think we benefited from a shift in the tech industry, being much more focused on design and user experience,” says Laurel.

“The people who are investing in that are people who want in San Francisco and people who want to live and work in the same city.”

“A lot of the entrepreneurs creating those companies are concerned their employees see people using their products, they want them riding the bus to and from work and see people interacting with their products.”

Changing the tax code

Like Barcelona, the Global Financial Crisis shook the city up, “with the economic downturn our whole city made jobs a top priority.”

Part of that review focused on the disadvantages of basing a business in San Francisco.

“It was bought to our attention that we were the only city in California that taxed stock options.” Laura says, “companies that wanted to go public were having to leave San Francisco to afford it.”

“We did an entire revision to our tax code which showed to investors they could count on San Francisco to be business friendly.”

Regenerating communities

Along with the problem of city taxes, the city was facing the problem of regenerating blighted neighbourhoods and the administration decided to address both problems together by offering incentives for businesses to setup in the mid-market district – I’d been warned not to call it ‘The Tenderloin.’

“We had a neighbourhood that was facing a lot of blight and we had not been able to successfully increase business and we had companies like Twitter telling us that our payroll tax was causing them problems and making it hard for them to grow in San Francisco,” Laura tells.

“So we combined those two problems and made it so a San Francisco company was able to move into a neighbourhood that needed more investment and business and it would be able to save some money while helping us improve the neighbourhood.”

The future for San Francisco

A common point when talking to city leaders and economic development agencies around the world is the focus on building a diverse economy and Laura sees that as part of the future for San Francisco.

In that vision includes manufacturing, biotechnology and tourism along with the internet based industries that are today’s investment and media darlings.

The focus though is on the city’s residents and how life can be improved for everyone, not just the business community and high tech investors.

“We are really focused on creating an economy for all,” says Laura. “We want to remain as diverse as possible.”

“Every San Franciscan, from no matter what socio-economic background, has a place that they can be.”

It’s tough in YouTube land

The problems for YouTube channel owners illustrates the business risks of relying on one social media service.

For owners of YouTube channels life has been tough in the last few months as Google plays with the service and its features.

The first irritant for YouTube administrators was the integration of Google Plus into the comments that now requires commenters to have an account on Google’s social platform.

Google’s reasoning for this is some transparency in YouTube’s comments will improve the services standards of conversation and there’s no doubt that YouTube comments truly are the sewer of the internet with offensive and downright deranged posters adding their obnoxious views to many clips.

Unfortunately the objective of improving YouTube’s comment stream doesn’t seem to have worked which casts the effectiveness of Google’s identity obsession into doubt, but it has had the happy – and no doubt totally unintended – effect of boosting user numbers for the struggling Google Plus service.

The latest blow for YouTubers has been Google’s copyright crackdown where the service is removing posts it claims are in breach of owners rights. Many channels, particularly game review services, are being badly hit.

Of course the Soviet attitude to customer service that Google shares with many other Silicon Valley giants doesn’t give these folk many options of getting their problems resolved.

All of which illustrates the risks of being dependent on one social media service which the poor YouTubers are finding this the hard way.

Watching this play out, it’s hard not wonder how vulnerable services like YouTube are to disruption, while they have the network effect of being the leader it’s not hard to see how alienating the people who create the platform’s content opens up opportunities for new players.

Cities of Industry

Governments are beginning to recognise manufacturing is part of any advanced economy, some though are struggling to abandon the last thirty years of ideology.

The latest Decoding The New Economy interview feature Laurel Barsotti, Director of Business Development at the City of San Francisco discussing how the city refound it’s entrepreneurial mojo.

A notable point about Laurel’s interview is how she has similar views to Barcelona’s Deputy Mayor Antoni Vives about the importance of industry to San Francisco.

For some time it was an article of faith in the Anglo-Saxon world that the west had become post-industrial economy where manufacturing was something dispatched to the third world and rich white folk could live well selling each other real estate and managing their neighbours’ investment funds.

“Opening doors for each other” was how a US diplomat described this 1980s vision according to former BBC political correspondent John Cole.

It’s clear now that vision was flawed and now leaders are having to think about where manufacturing, and other industries, sit in their economic plans.

Barcelona’s and San Francisco’s governments have understood this, but others are struggling to realise this is even a problem as they hang on to dreams of running their economies on tourism, finance and flogging their decidedly ordinary college courses to foreign students.

For some political and business leaders this is a challenge to their fundamental economic beliefs. It’s going to be interesting to see how they fare in the next twenty years.

Crowdsourcing jet engines

How high tech collaboration can drive industrial innovation

Crowdsourcing, harnessing the wisdom of crowds, has been a buzzword for probably the last five years.

It’s often cited as a way for companies and entrepreneurs to access skills that have been largely unattainable in the past.

Much of the talk about crowdsourcing has revolved around consumer or marketing projects, say designing logos, and all too often the conversation revolves around getting people to do creative projects for free – the real opportunity though may well lie in the industrial sector tapping into that group wisdom.

Open innovation and jet engines

An example of how the industrial sector is using crowdsourcing is GE’s Open Innovation project where the company is offering prizes for the best ideas in developing jet engine parts and advanced 3D printing techniques.

Like the Kaggle data analysis platform, GE’s project shows that crowdsourcing isn’t just about getting a cheap logo or comparing shoe designs, it can be used to develop high tech equipment.

Another example of high level crowdsourcing is the DARPA Robotics Challenge where the US military research agency found that enthusiastic amateurs, motivated students and wily entrepreneurs were able to get results that decades of consulting from major defense contractors could achieve as a New Yorker story on Google’s robotic cars describes;

In one year, they’d made more progress than DARPA’s contractors had in twenty. “You had these crazy people who didn’t know how hard it was,” Thrun told me. “They said, ‘Look, I have a car, I have a computer, and I need a million bucks.’ So they were doing things in their home shops, putting something together that had never been done in robotics before, and some were insanely impressive.” A team of students from Palos Verdes High School in California, led by a seventeen-year-old named Chris Seide, built a self-driving “Doom Buggy” that, Thrun recalls, could change lanes and stop at stop signs. A Ford S.U.V. programmed by some insurance-company employees from Louisiana finished just thirty-seven minutes behind Stanley. Their lead programmer had lifted his preliminary algorithms from textbooks on video-game design.

The maturing of various technologies like 3D printing, big data and collaboration software are making it easier to democratise and open the innovation process, as DARPA found this can also save costs and accelerate development cycles.

Balancing crowdsourcing

GE’s Chief Economist Marco Marco Annunziata sees engineering crowdsourcing as an opportunity to move faster and harness skills even companies as big as his struggle to find, “how much of the innovation process do you keep in house?” He asks.

That’s a balance many managers are going to consider as they find their markets evolving faster than the capabilities of their own designers and development processes. It may well be that many will find their future innovations come from outside their organisations.

Discussing Cryptolocker and Internet of Things security on ABC Radio

This morning with Linda Mottram on ABC 702 I’ll be discussing Cryptolocker ransomware and the security of the Internet of Machines.

If you missed the program, you can listen to the segments through Soundcloud.

Tuesday morning with Linda Mottram on ABC 702 I’ll be discussing Cryptolocker ransomware, the security of the Internet of Machines and the tech industry’s call for less internet surveillance.

It’s only a short spot from 10.15am and I’m not sure we’ll have time for callers, but one of the big takeaways I’ll have for listeners is the importance of securing your systems against malware, there’s also some security ideas for business users as well.

We’ll probably get to mention the ACCC’s warnings on smartphone apps and the current TIFF bug in Windows as well.

If you’re in the Sydney area, we’ll be live on 702 from 10.15, otherwise you can stream it through the internet.

Facebook’s advertising struggle

The next few years promise to be interesting for everyone in the social media industry, particularly Facebook’s shareholders and advertisers.

Facebook is further restricting the reach of brands on their social media platform reports industry news site Ad Age.

It’s not surprising that Facebook is doing this seeing their stock is currently trading at 120 times current earnings and sixty times estimated revenue. The income has to come from somewhere to justify those prices.

The social media service is quite blunt about it’s objectives in making brands pay more to get their message out on Facebook as Ad Age reports;

“We expect organic distribution of an individual page’s posts to gradually decline over time as we continually work to make sure people have a meaningful experience on the site.”

Facebook’s idea of a meaningful experience though might be very different from its users, who are showing their irritation with the service messing around with their news feed. It remains to be seen just how interested those posting on the site are in clicking on sponsored or promoted posts as opposed to finding updates from those they care about.

For smaller businesses, Facebook’s moves make it harder to use the service as an effective marketing or engagement platform as it means stumping up substantial amounts of money to get your messages in front of your customers and friends.

It’s going to be interesting to see how this pans out for Facebook and the social media marketing community. It may mean that social advertising is monopolised by big brands while small and local business finds other channels to get their message out.

One thing is for sure though, the idea that social media would replace the news media is beginning to look shaky as people’s feeds start to be dominated by messages they don’t want.

The next few years promise to be interesting for everyone in the social media industry, particularly Facebook’s shareholders and advertisers.

For smaller businesses, it’s clear that Facebook is no longer a cheap marketing platform.

Commoditising cafe Wi-Fi

Over the past decade the idea of offering Wi-Fi internet connections to customers has become standard in the hospitality industry, today it’s pretty well a commodity.

Not so long ago it was difficult to find a cafe that offered Wi-Fi and many of those that did either charged for it or were part of a provider’s networks that you had to be a member of.

Today, Wi-Fi has become pretty standard in cafes and places like airport terminals although interestingly the hotel industry has been slow to adopt it.

In the hotel industry a perverse rule of thumb seems to apply that the more expensive the property is, the pricier internet access will be as backpackers hostels invariable have free Wi-Fi while six star hotels charge anything up toe $30 a day for a connection.

While the hotel industry still has to be dragged into the 21st Century on this front, cafes seem to have reached a point where having Wi-Fi is no longer a commercial advantage but not having free internet is now a distinct disadvantage.

This was the point made by Nicholas Carr in his 2003 essay IT Doesn’t Matter where he suggested that computers, and other ‘infrastructural technologies’, don’t offer a competitive advantage once they are widely adopted.

For a brief period, as they are being built into the infrastructure of commerce, these “infrastructural technologies,” as I call them, open opportunities for forward-looking companies to gain strong competitive advantages. But as their availability increases and their cost decreases – as they become ubiquitous – they become commodity inputs. From a strategic standpoint, they become invisible; they no longer matter.

Carr’s proposition also implies that businesses who don’t adopt these technologies once they’ve become widespread risk being irrelevant and marginalised.

For cafes, this means that customers will be ignoring them unless they do offer Wi-Fi and it will be another cost of doing business for the proprietors of coffee shops.

Which begs the question of how do cafes differentiate themselves.

Perhaps the answer lies in the dog bowl shown in the photo, making a venue pet, or child, friendly may be one way to attract customers.

One thing’s for sure, just having good coffee and tea might not be enough to cut it in the future.

Microsoft and the zero day Tiff

The Windows TIFF exploit is a good reason for being careful with your email attachments.

One of the most dangerous things in computer malware is the Zero Day Exploit where an error in a program is used by the bad guys before it can the hole in software can be fixed.

A particularly irritating zero day exploit is the TIFF bug in Windows systems where users using Microsoft products can be fooled into opening what appears to be an image file but what turns out to be something more malicious.

Even more irritating with this bug is that Microsoft aren’t going to fix the problem in Windows XP systems until January’s patch Tuesday which means many people will be susceptible to this problem for nearly two months.

Zero day exploits are a good reason why every computer user needs to have an up to date virus checker and to take basic precautions before surfing the web or downloading email.

For Windows users it might be worthwhile taking extra care with email attachments for the next few weeks.