Exploring the impact of broadband and technology on our lives, our businesses, and our communities.
Blockbuster stores to close
The recently announced Blockbuster store closings will cut about 20% of the firm's stores. Blockbuster plans to replace them with kiosks and smaller stores in more densely populated urban areas. Blockbuster also has a Netflix-style subscription service, but will only one-fifth the customer base of Netflix.
Based on my own experience, Blockbuster may have alienated too many customers with their outrageous late fees. They "eliminated" late fees two or three years ago, but replaced them by billing you for the full retail cost of the DVD if it was late. Once you returned it, they credited your account for the DVD, less a "restocking" fee, which, of course, is a late fee by any other name.
In practice, the service being sold (watching a movie) is identical no matter which company you get the movie from. So the movie rental business is based 100% on the quality of service. And so this is why Blockbuster is losing--Netflix does not have the late fee baggage of Blockbuster, and Netflix service is great--so great, you don't even think about it.
Watching movies may not seem to have much to do with economic development, but communities that don't have their eye on this ball will be losers later, in two different ways. High performance community-owned broadband is the only way some communities are going to get to watch movies over the Internet. Cable companies are just barely keeping up with the bandwidth demands now, but as more homes dump driving to the video store in favor of watching movies on demand, legacy cable and DSL networks are going to begin to influence where people WON'T live. That's right--young professionals don't want to live anywhere now where broadband is not available, and within a couple of years, they won't want to live in communities that only offer "little" broadband--that is, the low performance cable and DSL services.
So attracting and keeping the right kind of workforce is a community broadband issue. The second issue is how broadband is changing retail. Video stores have served as anchor tenants in retail shopping districts, as the stores provide a steady and predictable flow of people to a shopping area. As the video stores disappear, what happens to those retail buildings? What happens to the rest of the stores nearby that relied on that traffic?
In our broadband planning work, we continue to see too many communities clinging to a 1960s style of retail planning and economic development. Retail is going away entirely, but the combination of big box stores and the Internet has changed it drastically, and few places can lead with retail as an economic revitalization strategy--perhaps none can. Instead, communities need to think more broadly about how to put empty retail locations to new uses, including office space for entrepreneurs, start ups, and established white collar businesses. And the way to start that process is to begin placing duct and fiber in commercial and retail areas. Call Design Nine if you want help with thinking about your retail and economic development strategies.
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Site upgrade, search working again
Some of you may have noticed that the search function on the site has not worked for some time. After struggling for months to get our hosting service to fix the problem, we have moved the site to a new server hosted by a different company. Not only is the site much faster, search now works. If you notice any problems, please drop me a note.
Have a great Christmas!
Andrew Cohill
Blackberry outage highlights need for network diversity
The recent outage that took down the RIM Blackberry network highlights the need for network diversity. The Internet has, in part, been such a fantastic success because there is no central controlling authority. In fact, there really is no "Internet." It just does not exist. What exists are hundreds of thousands of individual, physically separate networks that use a common set of protocols (rules) to exchange information like email, Web pages, and YouTube videos, among other types of information.
Any one of these networks can down without affecting any other network. Many of these networks can down without affecting the rest of the Internet. But it is even better than that. If major chunks of the Internet (i.e. individual networks) go down, these Internet protocols (rules) allow routing around the damage and most users on all those other networks do not even realize some portion of the Internet is temporarily down.
The Internet just works. To keep it working, we need more independent networks, not fewer, larger networks. We need private sector networks. We need community-owned networks. We need neighborhood networks. More networks, more independent networks equals more reliability, more competition, more choice, more robustness.
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Middle mile projects may be creating new monopolies
As stimulus dollars start to roll, there is much excitement in the industry about an expected boom in "middle mile" projects. Many of these are being promoted as public/private partnerships, but some of the deals being done may result in the creation of substantial new long term monopolies.
Middle mile fiber is necessary, but these projects do not automatically create competition or solve business and economic development last mile connection needs. In fact, many middle mile projects have the potential to further fragment the broadband market space in communities and will have the paradoxical effect of raising prices for businesses and residents while slightly lowering prices for local government and public safety use.
It is all about demand aggregation and unbundling infrastructure from services. The two concepts, executed properly with the right level of local government participation, have the potential to dramatically lower the cost of telecom services: witness the 40% to 70% prices drops for Internet access on The Wired Road, (a Design Nine project) in just one year because local government "middle mile" needs and business/residential needs have been aggregated in a single unified market space.
Middle mile projects that award all the local government connectivity to a single provider that also controls or owns the middle mile fiber dis-aggregates the market space, creates stovepipe networks that are unable to benefit from infrastructure cost sharing, and discourages competition.
The result can be catastrophic to jobs creation and economic development, as it becomes much more difficult for businesses to negotiate favorable prices for telecom services and Internet access. Middle mile, done right, with true sharing of middle mile infrastructure, can be a powerful engine for economic development. But the demand aggregation and infrastructure sharing have to be built into the contracts for these projects.
Google Phone vs. iPhone: Will Apple finally have to compete?
Reports are beginning to dribble out that Google is very close to releasing an "official" Google phone based on Google's Android operating system. Other mobile phone makers have been playing catch up with Apple's iPhone for the past two years, with little success--anyone seen a Palm Pre lately?
But Google has so much money that the firm, like Microsoft in the old days, can just throw money at a project until they get it right. So Android and the Google phone might just finally give Apple a reason to work harder. It will be interesting to see what kind of deal Google comes up with--maybe the phones and mobile service will be free if you can tolerate watching a fifteen second ad every time you want to make a phone call? Or each text message will have a little pop-up ad attached to it the way that little ads pop up on YouTube now? In the future, will everything be free if you will subject yourself to watching piles of ads and giving away every shred of privacy to Google?
How about a Google car? It would be electric, of course, but you get it for free. But every time you start the car to go somewhere, you have to watch a 30 second commercial. And when you listen to the radio, Google inserts a voice ad every ten minutes. And the car comes with a Google GPS tracking device that logs everywhere you go and reports it back to the company. So when you drive to RiteAid to pick up some aspirin, your GoogleCar interrupts and says, "Really, you should go to CVS because aspirin there is on sale today."
Sound far-fetched? In 1994, when I told real estate agents that some day, houses would be bought and sold over the Internet, they said it would never happen.
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Did you know? Making the case for broadband
The "Did you know" video has been around for years, but I just noticed it has been updated recently. It's worth watching again, and really should be required viewing for community leaders who are skeptical that community investments in broadband are important for economic development and jobs growth.
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Does Google want to run everything?
This Forbes article is illuminating, as it neatly describes the Google vision for taking over and dominating every minute of our lives. Google provides a lot of good and even great tools, but the question is, "At what point does Google get so big and so powerful that it sucks all the oxygen out of cyberspace?"
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FCC considers idea of taxing to fund broadband expansion
Via Eldo Telecom, According to Kiplinger, the FCC may be considering expanding the Universal Service Fund (USF) tax to help fund the expansion of broadband into rural and underserved areas. It is an idea that has been kicked around for a while, but if the FCC moves on this idea, community broadband projects like Utopia, nDanville, Palm Coast FiberNET, and The Wired Road should be eligible for those funds--not just incumbent phone companies.
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Will the iPad or iTablet save newspapers and magazines?
With newspapers and magazines going belly up almost weekly, is there any hope for them? The much speculated upon iPad or iTablet from Apple may end up saving the day. Part of the appeal of a newspaper or magazine is the convenience--easy to carry, easy to read, and you can get up close with them. It's hard to get up close to your computer, even a laptop, the same way. The mouse or a trackpad is no substitute for just turning the page. But what if you could subscribe to Sports Illustrated and have it turn up on a light, easy to use tablet device with full color, high resolution images and text that looked just like, well, a magazine page?
One thing that could happen is that we could break out of or away from the Web browser as the catch all container for content. Why or how would this happen? Just look at the iPhone. It comes with a Web browser, but Apple's superb operating system and programming interface makes it easy to create custom applications for specialized content. So when you subscribe to Sports Illustrated, you don't view through the still clunky Web browser, but instead view it using a specially designed application that really unleashes the content and graphic design without the legacy restrictions that have to be dragged along when squeezing content through a Web browser.
As the Internet destroys old business models, it enables the creation of new ones. We may be at the dawn of the golden age of newspapers and magazines, if they can just let go of the paper and barrels of ink they keep in the back room.
Oh, and one more thing....
If you play the YouTube demo of Sports Illustrated, you will notice they plan to include high resolution video, which will really change the way we think about newspapers and magazines--suddenly a magazine looks a lot like a TV channel. Interesting all by itself, but when we all sit down to the breakfast table in the morning with our coffee and iTablets to read/watch the news, guess what we will need?
Bandwidth. Lots of it. More than you are going to be able squeeze over WiFi connections. Fiber to the home is the only technology that will deliver the bandwidth for these next generation news and magazine services. Communities that are building fiber to the home, next generation infrastructure will have a huge edge over communities that rely on incumbent copper-based solutions or wireless only.
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Is journalism dead, near dead, or rising from the ashes?
The Huffington Post has a couple of interesting articles on the direction of journalism today. It is a weird time for news, as the old media and the new media continue to collide. There is much finger pointing going around, with many old media journalists and owners trying to make a fiscally sound transition to new media while simultaneously complaining that new media bloggers and news aggregation sites (like the HuffPost).
If you drop by the HuffPost, it looks just like CNN these days....a long way from the blogger beginnings of the site.
It is not at all clear to me that you can replace news organizations with a bunch of bloggers--news/opinion blogs work because they link to and comment on news articles. Now you can argue that the news articles are often heavily biased one way or the other, but there is still a different quality to even a biased news report compared to a blog post commenting on that report.
Maybe there is no longer much need for big national papers.....you have local news organizations (local radio, TV, news), and outfits like HuffPost aggregate local news into a "view" of national news.
But who then covers "national" and "world" news? Rupert Murdoch of News Corp. wants to charge for it, and the Wall Street Journal is already doing so successfully. And to muddy the waters even more, the FTC says it is considering providing subsidies to news organizations. It is hard to see how that could turn out well--do you really want a government bureaucrat deciding which newspapers and TV stations ought to get free government money at the expense of those stations and outlets that don't? And what if the government doesn't like the point of view your news organization embraces? This is a double-edged sword of exquisite sharpness.
Hat tip to Ed Dreistadt, who is always thinking about these issues.
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