Exploring the impact of broadband and technology on our lives, our businesses, and our communities.

Vonage is sinking

Vonage may be the first big casualty of the "Web 2.0" craze. While Voice over IP is technically not a Web 2.0 application, we can use Web 2.0 as shorthand for the same kind of hysteria we saw in 1999 and 2000, when a lot of really bad ideas (from a business perspective) got way too much venture capital funding.

Proving that there is still a sucker born every minute, investors poured nearly half a billion dollars into the VoIP firm's IPO--even though the company has never had a single profitable quarter in its five year life, and in fact has lost nearly half a billion dollars in that time.

The problem for Vonage is that they set the stock price too high (well, the company has lots of problems, but I'm talking about the IPO). The $17 initial price has dropped below $15 in just a few days, and some are predicting it will fall below $10. High flying tech stocks are supposed to shoot upwards in value and make early buyers of the stock big profits.

But wait! There's more!

Vonage offered users of their telephone service an opportunity to buy stock at the initial opening price. That's an attractive offer if the stock value shoots up quickly; you can buy the stock and immediately know you are going to make a profit if you sell right away. But what if the stock price drops? Now you have to buy shares at $17 that the market says are only worth $14.50. What some subscribers are saying is that they are going to renege on their agreement to buy. And Vonage is now suggesting it will force subscribers to honor their purchase commitments.

It can't get much uglier than that.

Stepping back, Vonage has two structural problems. First, the business model for Vonage, in which you can make free calls to other Vonage users and pay to make calls to people not on the Vonage network, is not working--the company is losing money every day.

Second, the big access providers have started playing games with VoIP data traversing their networks so that the quality of the phone calls is much reduced. This is part of the "two tier Internet" issue, where the big providers first "prove" extra fees are needed by monkeying with the way their competitor's data traffic is handled, then claim special fees are needed to make the network work better. Vonage is an early victim of this because they have so many people using their service.

And in fact, heavy VoIP traffic can and does affect networks. But the solution is not to start charging companies like eBay, Vonage, and Google special fees to carry their traffic. The real problem is that the bandwidth model of selling Internet access that we have used for the last decade is badly broken. The two tier Internet "solution" is like putting a band aid on someone having a heart attack.

We need open access digital road systems where bandwidth is free and you pay for services. This allows everyone in the service chain, from customer to service provider, to price or pay for services based on the value of the service, and not on some completely artificial cost of some increment of bandwidth that has no relationship to what people and businesses actually do.

Some communities are already planning open access systems. As they become operational in the U.S., we'll see more and more movement toward them, because they are the only ladder out of the hole we are in. In the meantime, we have to hope our state and Federal legislators don't cave in to the two-tier Internet crowd and really screw things up.

Technology News:

Knowledge Democracy:

25 worst tech products of all time

There is something strangely pleasureable about reading this article. PCWorld has compiled its list of what its editors think are the 25 worst tech products of all time. It's a bit like watching cable TV shows like "World's Worst Drivers." You know you should not take pleasure in other people's misfortune, but somehow, you just can't change the channel.

The other thing about this is list you kind of want to scan it to see if you ended buying or using any of these boat anchor products. My guess is that most people can find at least one item on the list that they purchased, thinking it would make life better and instead made it much worse.

Technology News:

iPod neckwear

In what has to be one of the strangest, but potentially quite practical, iPod accessories, you can buy a tie designed to hold an iPod nano on the backside. If you have never seen a nano close up, they are extremely small and very light, so this would actually work pretty well. And it looks like the tie would match your Nike/iPod sneakers. To trick out an entire ensemble, you might want to finish up with one of the jackets with a solar panel on the back so you can charge your iPod from the sun while you are walking in your Nikes.

Technology News:

Don't confuse franchise fees with right of way rights

South Carolina legislators have passed a bill that creates statewide franchising. What distresses me is that two distinct issues have been mixed up together in this legislation. Franchise fees have been lumped together with right of way. Franchise fees, as originally conceived, no longer make sense when content providers don't have to have a physical presence in the community. But communities do need to have control over their right of way and over those companies that still want to place cable in community right of way. The bill is bad law not so much because franchise fees have been eliminated but because communities have had their rights taken away (the right to manage their own common/public property).

The only solution, in my opinion, is for communities to get busy and build their own, open access broadband networks. Doing so eliminates the overbuilding in community right of way.

Community news and projects:

The blogger police

A school system in Illinois apparently does not have enough to do in the teaching our kids department, and is now going to start reading student blogs to make sure the kids don't write something "inappropriate."

I think this school system has lost its mind. Students that write blogs outside of school have every right to do so, and if anyone should be monitoring what the kids are writing, it is parents, not the school system. The school is trying to get students to sign a pledge agreeing that they can be discplined if the school decides they have written something administrators don't like.

This is patently illegal. I hope parents tell their kids not to sign the pledge, and if the school tries to coerce the students into doing so, the school system should be sued.

Knowledge Democracy:

Is Dell in trouble?

Dell is going to start installing Google software on its new computers. While this is yet another shot across the bow of Microsoft, the more interesting part of this to me is that Dell will get paid to do this. While Dell will doubtless market this as a convenience to customers, I'll bet a lot of them won't appreciate the effort. Corporate buyers of Dell equipment will likely tell the company not to bother.

Dell is doing this not because it thinks Google's spamware, er, software is essential software for customers. RAther, it's doing it because profit margins are razor thin and the company needs the payments from Google to stay out of the red.

Technology News:

Regulating blogs

There are apparently still people in Congress that want to regulate blogs. This brief article says that blogs that spend more than $5000 a year on their operations could be regulated by the Federal Election Commission if they write about politics.

It is hard to understand the purpose of this kind of regulation. Most politically-oriented blogs, even many popular ones, are written as a sideline. Is there really a need to create a new Federal Bureau of Blogs to monitor a Web sites? The only thing this will accomplish is to spend more of our tax dollars on an entirely new set of Federal bureaucrats.

Knowledge Democracy:

Schools overreact to student blogs

This is just one of several stories I have seen recently about K12 students who have their own blogs and get censured by K12 school officials. Student blogs are now common, and school systems have failed to adapt to the new reality. It clearly unnerves some school administrators that students now have a public forum completely independent of the school system. In the old days, students with a bent for writing worked on the school paper, which was monitored by a faculty member.

But today, students have blogs on MySpace, Xanga, and hundreds of other blog services. To be fair, parents have not always kept up with the times either; students are often posting too much personal information on their blogs, making them vulnerable to stalkers, sex offenders, or just other kids with a grudge. But the problem the schools have is actually just a free speech issue. Kids are writing about their dissatisfaction with a teacher or administrator, and schools are overreacting by labeling such writing as "threats" and punishing the student by suspension or expulsion.

Often the writing seems relatively innocuous, as it does in the case I linked to above--a Chicago area student who felt harrassed about having a blog. The school system is now trying to expel him. However puerile the writing may be, school officials have little control over what students do outside of school hours. The tactic most schools seem to be using is to call the writing a "threat" to school safety, but in the absence of something specific, it is not a threat just to express one's dissatisfaction with school officials. These overreactions often end up as free speech lawsuits, costing taxpayers thousands of dollars, with the schools usually on the losing end. School administrators need to take a deep breath and think outside the box a little.

My suggestion: Integrate blogging into English and writing classes. Teach kids what is appropriate, teach them good blogging writing styles, and encourage kids to write using these new tools. How about your school system? Have they used blog tools to help teach writing?

Knowledge Democracy:

Talking sneakers

Once again, Apple has raised the bar with its Nike partnership. A coin-sized transponder that you stick inside specially-designed Nike sneakers sends exercise information to your iPod in realtime. It's a clever gagdet because it makes both Nike sneakers and the iPod more valuable (to some people) than either product individually. iPod watchers were initially in a frenzy because they thought the device used Bluetooth (a wireless protocol) to communicate, suggesting that Bluetooth wireless headphones might soon work with iPods. But Apple's Web site indicates a proprietary protocol is used.

That leads to even more speculation. A tiny wireless transceiver plugs into the bottom of the iPod--can this be used with other devices? Since it is an Apple protocol, any other company that wants to build an iPod enabled device has to license it through Apple. Apple may be onto something really big. I have long maintained that the iPod is a new computing platform, not just a neat music player. We are likely to see more kinds of gadgets that work with the iPod, using the iPod's screen, memory, and computing power to do things that would be too expensive or too difficult to do as a standalone device. Nike could never build this kind of system into a sneaker, but with so many runners carrying iPods, it makes perfect sense.

Apple continues to change the whole IT paradigm.

Technology News:

Voting machines put democracy at risk

Yet another report indicates the most common electronic voting machine is vulnerable to tampering. Get this:

"If Diebold had set out to build a system as insecure as they possibly could, this would be it," says Avi Rubin, a Johns Hopkins University computer-science professor and elections-security expert.

Electronic voting machines were rushed into use after the 2000 national elections as a panacea to the hanging chad problem. Most alarming is that the machines can be easily fixed to alter votes in ways that are not obvious to the local government technicians responsible for managing the machines. The software in the machines can be rigged so that the machines will pass all pre-voting tests properly, but will still alter the results--and no one would know.

This is a classic example of relying on IT vendor problems without conducting any due diligence. What's even worse is that many local governments are now taking a "see no evil" approach to a real issue. The machines need to be returned to Diebold, the money should be refunded, and we need machines that produce an auditable paper trail--trivial to do.

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