Kamis, 29 Oktober 2009

A web guy and a telecom guy talk about net neutrality

It was a nondescript bar in the American Midwest, the sort of place where working men drop in at the end of the day to unwind before they head home. You wouldn't expect to find two senior business executives there, and as I sat in the empty bar at midday I wondered if maybe my contact had given me a bad lead. But then the door opened and a general manager from one of the leading web companies walked in, followed by a senior VP from one of the US's biggest mobile network operators. I hunched down in the shadows of a corner booth and typed notes quietly as they settled in at the bar.

Bartender: What'll you have?

Telecom executive: Michelob Light.

Web executive: I'll have a Sierra Nevada Kellerweis.

Bartender: Keller-what?

Web executive: Um, Michelob Light.

Telecom executive: Thanks for coming. Did you have any trouble finding the place?

Web executive: All I can say is thank God for GPS. I've never even been on the ground before between Denver and New York.

Telecom executive: I wanted to find someplace nondescript, so we wouldn't be seen together. The pressure from the FCC is bad enough already, without someone accusing us of colluding.

Web executive: No worries, my staff thinks I'm paragliding in Mexico this weekend. What's your cover story?

Telecom executive: Sailboat off Montauk.

Web executive: Sweet. So, you wanted to talk about this data capacity problem you have on your network...

Telecom executive: No, it's a data capacity problem we all have. Your websites are flooding our network with trivia. The world's wireless infrastructure is on the verge of collapse because your users have nothing better to do all day than watch videos of a drunk guy buying beer.

Web executive: Welcome to the Internet. The people rule. If you didn't want to play, you shouldn't have run the ads. Remember the promises you made? "Instantly download files. Browse the Web just like at home. Stream HD videos. Laugh at an online video or movie trailer while travelling in the family car."

Telecom executive: That was our marketing guys. They don't always talk to the capacity planners. Besides, who could have known that the marketing campaign would actually work?

Web executive: Don't look at me. I've never done a marketing campaign in my life. I think you should just blame it on A--

Telecom executive: You promised, no using the A-word.

Web executive: Sorry. But I still don't see why this is a problem. Just add some more towers and servers and stuff.

Telecom executive: It's not that simple. The network isn't designed to handle this sort of data, and especially not at these volumes. Right now our biggest problem is backhaul capacity -- the traffic coming from the cell towers to our central servers. But when we fix that, the cell towers themselves will get saturated. Fix the towers and the servers will fall over somewhere. It's like squeezing a balloon. We have to rebuild the whole network. It's incredibly expensive.

Web executive: So? That's what your users pay you for.

Telecom executive: But most of them are on fixed-rate data plans. So when we add capacity, we don't necessarily get additional revenue. It's all expense and no profit. At some point in the not-too-distant future, we'll end up losing money on mobile data.

Web executive: Bummer.

Telecom executive: More like mortal threat. Fortunately, we've figured out how to solve the problem. The top five percent of our users produce about 50% of the network's total traffic. So we're just going to cap their accounts and charge more when they go over.

Web executive: Woah! Hold on, those are our most important customers you're talking about. You can't just shut them down.

Telecom executive: The hell we can't. They're leeches using up the network capacity that everyone else needs.

Web executive: Consumers will never let you impose caps. You told them they had unlimited data plans, that's the expectation you set. You can't go back now and tell them that their plans are limited. They won't understand -- and they won't forgive you.

Telecom executive: First of all, the plans were never really unlimited in the first place. There's always been fine print.

Web executive: Which no one read.

Telecom executive: Off the record, you may have a point. On the record, the fact is that you can retrain users. Look, you grew up in California, right?

Web executive: What does that have to do with anything?

Telecom executive: Once upon a time, there weren't any water meters in California. Now most of the major cities have them, and they'll be required everywhere in a couple of years. Something that was once unlimited became limited, and people learned to conserve.

Web executive: The difference is, I can read my water meter. You make a ton of money when people exceed their minutes or message limits, and you don't warn them before they do it. If you play the same game with Internet traffic, it'll scare people away from using the mobile web -- or worse yet you'll invite in the government. Look what happened with roaming charges in Europe.

Telecom executive: Jeez, don't even think about that. Okay, so we'll need to add some sort of traffic meter so people will know how much data they're using when they load a page.

Web executive: Great, that'll discourage people from using Yahoo.

Telecom executive: Huh?

Web executive: Oops, did I say that out loud?

Telecom executive: Then there's the issue of dealing with websites and apps that misuse the network.

Web executive: Not this again.

Telecom executive: I'm not talking about completely blocking anything, just prioritizing the traffic a little. Surely you agree that 911 calls should get top priority on the network, right?

Web executive: Of course.

Telecom executive: And that voice calls should take priority over data?

Web executive: I don't know about that.

Telecom executive: Oh come on, what good is a telecom network if you can't make calls on it?

Web executive: (sighs) Yeah, okay.

Telecom executive: So then what's wrong with us prioritizing, say, e-mail delivery over video?

Web executive: Because when you start arbitrarily throttling traffic, I can't manage the user experience. My website will work great on Vodafone's network but not on yours, or my site will work fine on some days and not on others. How do you think the customers will feel about that?

Telecom executive: Not as angry as they will be if the entire network falls over. Listen, we're already installing the software to prioritize different sorts of data packets. We could be throttling traffic today and you wouldn't even know it.

Web executive: But people will eventually figure it out. They'll compare notes on which networks work best and they'll migrate to the ones that don't mess with their applications. Heck, we'll help them figure it out. And if that's not enough, there's always the regulatory option. The Republicans are out of office. They can't protect you on net neutrality any more.

Telecom executive: You think you're better at lobbying the government than we are? We've been doing it for 100 years, pal. Besides, we have a right to protect our network.

Web executive: You mean to protect your own services from competition!

Telecom executive: Parasite!

Web executive: Monopolist!

Telecom executive: That's it! It's go time!

They both stood. The telecom guy grabbed a beer bottle and broke it against the bar, while the web guy raised a bar stool over his head. Then the bartender pulled out a shotgun and pointed it at both of them.

Bartender: Enough! I'm sick of listening to you two. Telecom guy, you're crazy if you think people will put up with someone telling them what they can and can't do on the Internet. The Chinese government can't make that stick, and unlike them you have competitors.

Web executive: See? I told you!

Bartender: Shut up, web guy! You keep pretending that the wireless network is infinite when you know it isn't. If you really think user experience is important, you need to start taking the capabilities of the network into account when you design your apps.

Web executive: Hey, he started it.

Telecom executive: I did not!

Bartender: I don't care who started it! Telecom guy, you need to expose some APIs that will let a website know how much capacity is available at a particular moment, so they can adjust their products. And web guy, you need to participate in those standards and use them. Plus you both need to agree on ways to communicate to a user how much bandwidth they're using, so they can make their own decisions on which apps they want to use. That plus tiered pricing will solve your whole problem.

Telecom executive: Signaling capacity too. Don't forget signaling.

Bartender: That's exactly the sort of detail you shouldn't confuse users with. Work it out between yourselves and figure out a simple way to communicate it to users. Okay?

Web executive: I guess.

Telecom executive: Yeah, okay.

Bartender. Good. Now sit down and start over by talking about something you can cooperate on.

Telecom executive: All right. Hey, what's that guy doing in the corner? Is that a netbook?

Web executive: He's a blogger!

Bartender: There's no blogging allowed in here!

Telecom executive and web executive: Get him!

I ran. Fortunately, the bar had a back door. Even more fortunately, the web guy and the telecom guy got into an argument over who would go through the door first, and I was able to make my escape.

So I don't know how the conversation ended. But I do know that I wish that bartender was running the FCC.

Kamis, 08 Oktober 2009

STEVE BALLMER SAYS IT’S UTTER HOGWASH!

If looks could kill, the outrageous way my seven year old cellphone looks could have killed anybody a mile around with a ten mile collateral radiation damage. I have been supremely chided by friends, families (neighbours’ included), philosophers and tour guides about the villainously repellent profile my cellphone seems to have inherited after so many years of use, misuse, and abuse. I had been completely insulated from all these ‘change-to-a-modernphone- dear-junkie’ diatribes, till one evening, for the first time, my wife with quite a rancid look on her face accosted me the moment I entered the house, and steamed away, “It’s not anymore about you, but about how outsiders have started perceiving us all due to that schlock of a contraption. Why can’t you buy a new phone? Even the car cleaners have better handsets. Don’t you think buying new technology actually improves productivity?” The thundering sword of a question was pretty haunting in nature: Critically, how valuable do the world’s greatest organisations consider investments in new technology? How well do these investments improve profits, sales etc...?

When the famed Jim Collins wrote a few years back in his best seller, Good To Great, that “none of the Good-To-Great [world class] executives put technology as one of their top 5 drivers,” not many believed that that would be the way it would be in the future. A year back, when I researched the outstanding NYSE CEO Report 2008, it stunningly corroborated Jim’s findings by showing that only 5% of CEOs now thought that new technology would be “the most important internal factor affecting profitability...” 67% of CEOs believed that “the ROIs from technology investments have failed to meet expectations till date!” In fact, the factor considered most important by CEOs for revenue growth was ‘management team’, rather than technology. Now, when I study the most recent NYSE CEO Report 2010, it brilliantly states, “As was the case [previously], operational efficiency and management stand out as the internal factors expected to have more impact on profitability. CEOs have downgraded the importance of new technology and products...” 70% of CEOs now say they would not increase their investments in technology.

A lucid and provocative speaker on business and technology, Nicholas G. Carr, in his most celebrated and controversial HBR article titled, ‘IT Doesn’t Matter’, proves through extensive research how, “As Information Technology’s power and ubiquity have grown, its strategic importance has diminished. Technology’s potential for differentiating one company from the pack – its strategic potential – inexorably diminishes.” While experts and media houses from around the world called the work “A bombshell” (Forbes), “Provocative” (NYT), “Firestorm!” (BusinessWeek), “Accurate description of the technological world...” (CNN Money), “...and of today’s tech landscape” (WSJ), Steve Ballmer, CEO of tech-giant Microsoft, predictably called the article a “hogwash!”

A famed letter from John Seeley Brown (former Chief Scientist, Xerox) and John Hagel III to HBR had this epitaph of a warning, “Businesses have overestimated the strategic value of IT. They have significantly overspent on technology in the quest for business value. IT-driven initiatives rarely produce expected returns...” And for those companies believing in being at the forefront of innovating new technology, I present PwC’s most recent Annual Global CEO Survey 2009, which shows that ‘technological innovation’ does not feature even in the top five factors for CEOs as a “critical driver of long-term success” (The most important factor was “Access to, and retention of, key talent”). Even when it comes to ‘Immediate threats’ that are driving CEOs’ priorities, ‘technological disruptions’ are ranked at a lowly #13; second from last! ‘Terrorism’, ‘Climate Change’, ‘Inadequacy of natural resources’ and other such factors are ranked higher in importance by CEOs. From the IBM Global CEO Study 2006 to the peerless thesis titled Economic and Technical Drivers of Technology (March 2006) by Dr. P. Yin (HBS) and Dr. Timothy F. Bresnahan (Stanford), from the superlative Economist Intelligence Unit 2007 report to McKinsey’s classic 2007 report (The Next Frontiers in IT Strategy), study after study has now proven that investments in technology have not only left a humungous majority of CEOs completely unconvinced about their effectiveness but are also atrociously useless in many cases.

So what do you do when on one side you have all the research in the world screaming away to you to not invest in a new cellphone, and on the other side you have a pressure cooked wife shouting at you to invest thousands in the latest thingamajig?... You buy the cellphone! Period!!!