Exploring the impact of broadband and technology on our lives, our businesses, and our communities.
What a surprise: Higher prices dampens sales
In a shocking discovery, music publishers have found that the law of supply and demand works. Apple loosened up pricing rules for music on the iTunes Store last year. Record companies immediately raised prices. Buyers immediately bought less music. The record companies are shocked, shocked that buyers don't want to pay more. What could have gone wrong? Higher prices signal less supply, and in turn, demand tends to drop. Record companies might want to send a few of their high paid execs back to high school to retake an economics class.
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Portland City WiFi Being Dismantled
The City of Portland, Oregon's municipal WiFi experiment is coming to an end. It was a public/private partnership between the City and a firm called MetroFi, which reportedly spent between $2 million and $3 million to build the network. But it never worked well, and residents reported it did not work well indoors. MetroFi went into bankruptcy in 2008, and the hundreds of antennas that were mounted on City property are now being removed.
It is yet another reminder that fiber always beats wireless. Wireless is expensive and has limited capacity, and in as Philadelphia found out in a similar project a few years back, wireless vendors always oversell the technical capacity of their products. In cities with lots of tall buildings filled with steel reinforcing bars, wireless signals don't travel very far.
Wireless has a role to play for mobile access and in rural areas where it will take a while to get fiber to every premise, but eventually, we will all have a fiber connection. As Portland has found out, wireless has a hard time competing with a wired connection.
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Agency model = Revenue share
Apple, as the company has in the past, has begun to upset, er, apple carts. With the announcement of the iPad, Apple also announced a book section in the iTunes Store, with a business model that is exactly the same as the hugely successful music model they use. For both books and music, Apple will collect 30% of the sales price of the item, and the publisher/seller collects 70%. The seller of the item sets the actual price. This is called the "agency model."
Whose apple cart is upset? Well, it is Amazon, who has insisted on setting prices for publishers that sell books for the Amazon Kindle. This has irritated publishers, who think that popular and fast selling items ought to be priced differently, and conversely, slow moving items should be able to be reduced in price. It is a simple, time tested model that helps keep supply and demand in balance.
Amazon got away with it for a while because they had the only popular ebook reader. But now that Apple has announced the iPad, publishers are likely to abandon the inflexible Amazon. Look for the Kindle to appear in supermarkets in a few months, mixed in with those remainder books for $4.99.
What does this have to do with community and municipal broadband? Well-designed open access, open services networks let providers set prices, and simply take a revenue share that helps pay for network operational costs. This approach encourages innovation and competition among providers. Insisting on fixed prices (the Amazon model) drives service and content providers away.
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Knowledge Democracy:
New Hampshire towns demand right to control their economic future
A coalition of New Hampshire towns and other interested parties are encouraging state legislators to give New Hampshire towns and cities the right to bond for telecommunications infrastructure. Unsurprisingly, the incumbent providers are not excited about the notion, even though largely rural New Hampshire has tens of thousands of residents still on dial-up and one of the providers is having severe financial difficulties. The towns see it as an issue of economic survival. Who wants to live in a rural community, no matter how great the quality of life, if there is no broadband or only "little" broadband?
The towns have correctly distinguished between "little" broadband (DSL, cable, wireless) and "big" broadband. They want big broadband, because that represents the future of economic development and the ability of these towns to retain existing businesses and to attract new ones. Here is an exquisite irony: a fiber cable manufacturer in rural New Hampshire can't get the bandwidth they need to do what they want to do to manage the plant properly.
In exchange for bonding authority, the towns have wisely agreed to only build open access community broadband networks, in which all services for businesses and residents would be sold by private sector providers. So in rural parts of the state where the incumbents are saying it is too expensive to build a private network, the towns are saying, "Okay, we get it. We will build a shared network and let you, Mr. Incumbent, use it to reach customers you can't afford to build to on your own."
Why would the incumbents be opposed to that? It opens them up to competition.
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Is the iPad designed for kids?
The iPad continues to generate enormous discussion on the Intertubes; while I have seen a lot of commentary about how it might be used in higher ed, I have seen very little about how it might be used by kids. The most obvious higher ed connection is as a replacement for textbooks, which are murderously expensive. A college student with an iPad can carry around an entire library of textbooks and should be able to save a lot of money at the same time. Textbook costs ought to decline over time, not to the $15 dollar level, but perhaps by 50% from $60 to $30 (and many technical textbooks are pushing $100 or more).
But the iPad strikes me as the perfect computer for middle school and high school. Smaller, lighter, no moving parts, much less to go wrong, and with plenty of horsepower to handle routine school assignments, which are mostly typing essays and papers. And you could do a lot of interesting basic math with a program like Apple's Numbers spreadsheet application. Apple is selling its three productivity programs for $9.99 each (word processsing, spreadsheet, presentations), about a third of the price of the cost of them for a laptop. With the dock and keyboard and wireless printing to a shared printer, kids have everything they need for school at much less than you might spend for a bare bones Apple laptop. I know there are very inexpensive Windows laptops available, but they still come with all the drawbacks of a laptop--heavy, moving parts, more susceptible to viruses, expensive software, etc.
Like the iPod, the iPad is going to change the way we do a lot of things. And like the iPod, it will create a lot of new business opportunities.
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The third way: Why open access networks work
I receive a lot of inquiries asking for help understanding open access. The broadband stimulus funding has raised awareness of this business model, and I have written a short paper explaining how it works and why. The PDF is attached to this article, or you can visit the Design Nine Web site to download it.
| Attachment | Size |
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 Cohill_FTTH_ThirdWay_Broadband.pdf | 261.05 KB |
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How Apple's tablet could change things
A short, good analysis of six industries that Apple's tablet computer could change. Apple is expected to roll out the device next week.
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First round stimulus rejection letters in the mail
Some applicants for first round broadband stimulus funds report they have received their rejection letters today (1/25/2010). It does not appear that the letters provide any information about why an application was rejected, other than to note that it did not score high enough.
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USDA/RUS releases additional broadband stimulus awards
USDA/RUS has announced an additional $313 million on stimulus funds, going mostly to rural telephone company projects.
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Intelligent Community Smart 7 awards announced
The Intelligent Community Forum announced their Smart Seven communities for 2010 yesterday.
One of Design Nine's projects, nDanville, was one of the ICF's Smart 21 communities this year, and got a mention for its success in attracting new jobs by building community fiber.
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