Technology Futures

There is the old joke that goes like this:

"There are two kinds of people in the world--those that divide people into two groups, and those that don't."

At the risk of self parody, there are two kinds of people in the world (and I'm broadly overgeneralizing, of course)--those that use eBay and those that don't.

For those that don't, the eBay phenomenon is a bit of mystery. From a certain distance, EBay is cluttered with junk, trivia, excess, and silliness. But it also is a terrific business transaction mechanism, for both formal and informal business.

I just bought a part for my breadmaker. The manufacturer has been out of business for four years, and parts are no longer available through "normal" channels--that is to say, the Manufacturing Economy manufacturer--distributor--dealer supply chain.

But I found the part I needed for $9 (new cost was $15 when it was available) from a guy in Nebraska whose machine had burned up. Instead of throwing it in the landfill, he's selling usable parts from it and making a few extra bucks. It's not only reducing the amount of waste going into landfills (parts of his machine and all of mine), he's profiting from it, and I'm able to keep a perfectly good machine working.

It's amazing when you think about it. A scant ten years ago, the notion of linking a buyer for a very obscure machine part in Virginia with a seller in Nebraska was inconceivable. Today, we take it for granted.

Many small businesses are now using eBay as a strategic part of their business, putting both normal stock and overstocks there for sale. It's a cheap and easy mail order strategy that has virtually no downside.

Does your region's economic development strategy include workshops to help businesspeople learn how to use eBay? I bet not, and business growth opportunities are being missed.

I wrote yesterday about Apple's excellent and free videoconferencing software. Last night, I saw a Microsoft ad touting the advantages of their LiveMeeting product. It's interesting to look at the two very different approaches to the same market space.

Apple has chosen to build value into the basic operating system by providing the software for free. It's functionality is basic, but it works very well, and the next upgrade will suppposedly support videoconferencing with multiple site (the equivalent of a conference call). However, there is no support for document sharing, which would really enhance the value of the service. There are several third party products for the Macintosh would do provide some document sharing and whiteboard functions.

Microsoft's LiveMeeting is a fee-based service that provides some meeting management tools, document sharing, and the ability to include several sites, but there is no videoconferencing. You apparently have to use traditional telephone conference calls to provide the audio portion of the meeting. I say "apparently" because I could not find that information on the site without watching a thirty minute presentation online.

LiveMeeting is a slick product that offers a lot of useful services, but it's really a broadcast medium--which would be quite useful in many situations. The document sharing and whiteboarding won't scale up (on any platform) beyond a few people. Microsoft seems to be aiming for the corporate market, where you might want to make a company presentation to hundreds of people at once in several locations.

Apple is more focused on relationships. In the Knowledge Economy, who you know is more important than what you know, and the ability to maintain and support face to face meetings is going to be increasingly important. From our current book of the month on social networks:

"This is not so much about pushing more information through a group but about developing relationships that can be rapidly sought out when needed."

The other difference between the two models is that Apple, by making their software part of the operating system (and free) is trying to empower their customers to use it freely for whatever purpose they choose, whenever they choose. Microsoft wants to charge you every time you have a meeting. Admittedly, the products are somewhat different, so you can't make too much of my comparison, but I do think the two companies have a very different philosophy toward their customers.

A flurry of articles like this are talking about ADSL2+, a new standard for DSL service over old copper phone lines. ADSL2+ is not only too long as an acronym, it offers too little, and ironically increases the digital divide, in my opinion.

In short, the new service will provide increased bandwidth over copper phone lines, but only if you are about one and a half miles from the telephone switch, as opposed to the three miles of the current DSL offering. ADSL2+ also will go further than the old three mile limitation, but only at low data rates--about four times dial up speeds.

So a few subscribers may get DSL service where they could not before, but only at much slower than "normal" DSL. And a few subscribers may get much faster service, but only if they are very close to the telephone central office. And it's important to remember that the distance rule of thumb is not line of sight, but cable feet; not only that, the ability to deliver DSL is highly dependent on the quality of the copper cable. In many rural areas, DSL just does not work on older cable plant, even inside the distance limits.

It's hard to see how this benefits anyone, even the phone company. It further segments their own customer base and prevents them from offering the same set of services to all customers. For example, some ADSL2+ customers might be able to get a single channel of high quality high defintion TV (HDTV), but others will not. How you market that is a mystery to me--"HDTV--it might work in your area, but maybe not!"

The phone companies are still very fixated on market share, rather than on offering good services in a competitive marketplace. So in their minds, anything that continues to allow them to lock customers up over copper is good, even if it's bad. Does that make sense to you? It doesn't to me either, but that's their strategy until they can figure out a way to justify running fiber to neighborhood.

As I've said repeatedly, the notion of having each provider overbuild their own infrastructure is not only expensive, it will simply create marketplace monopolies that serve neither businesses nor the community at large well. Whoever captures a community market first "wins," in the sense that there is little incentive for another company to come in and build out a new infrastructure.

The only answer is for communities to make investments to help level the playing field. Remember what happened to communities that were too far from an interstate highway? Business collapsed over a period of years. Communities need to make sure they are doing what is needed to stay on the Knowledge Economy highway.

In the Northern Neck of Virginia, broadband is being viewed (appropriately) as a critical economic development issue.

One of the most interesting items in the article is near the end, where an independent ISP that has been reselling DSL via Verizon infrastructure for some time is now in trouble. For a long time, Verizon said there was not enough business in the Northern Neck to justify the investment. So this independent firm sold DSL. Now that the market has been opened by its competitors, Verizon has stepped in and begun selling DSL for less that it charges for wholesale circuits to its competitors.

Verizon has every right to do that, and I don't think communities ought to waste time and effort trying to "get" telcos and cable companies to behave differently. They have to answer to shareholders, not the community.

But the article highlights clearly what communities are facing: a marketplace monopoly (rather than a regulated monopoly) in which the community has only one or two large broadband providers that are able to act in cartel-like behavior, setting prices and services options because of lack of competition. If affordable broadband is an economic development issue (and I think it is), then the community places its economic future in the hands of the big telecom providers unless the community itself makes some investments to level the playing field.

In the last paragraphk, the article quotes the county administrator of Westmoreland County, who worries about investing in the wrong technology. It's a valid concern, but it's not an excuse for doing nothing. And that issue is managed in two ways: communities need to plan for telecommunciations, just like they plan for everything else. Secondly, communities should invest in things that don't become obsolete quickly--telecom duct, fiber, tower sites, antnennas, and colocation facilities. Fear of the unknown (otherwise called ignorance) is putting the economic future of communities at risk. But ignorance is easily correctable--as I've said for nearly a decade--this is an education problem, not a technology problem.