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

Why the airlines are bankrupt, Part 4

I am at the Roanoke Airport, on the way to the Rural Telecommunications Congress Annual Conference in Spokane. I have a Delta flight to Cinncinati, then switch to Northwest for the rest of the trip.

Delta can't give me a boarding pass at the check-in counter. I have to go upstairs to the gate. Huh? If they can assign seats at the gate, why can't they do it at the ticket counter? Apparently the Delta electrons, used in their IT system, are tired on Sunday morning and can't make it from the counter to the gate. This is beyond comprehension. It's all one system--if they can assign seats upstairs, they should certainly be able to do it downstairs. It creates twice as much work for Delta.

I then walk over to the Northwest ticket counter and try to check in for my other two flights. They can only give me seats, but cannot check me in. They have no explanation other than "the system won't do that." Huh? If you can assign a seat, why not just print out the bloody boarding pass? Another utter and complete IT failure.

This is particularly irritating because it means I have to start my trip without being checked in. If my Delta flight arrives late in Cinncinati, I could lose my Northwest seats. Nice treatment of customers by Northwest.

Technology News:

Counting jobs in the community

The U.S. Dept. of Labor has announced they are going to revise the way they count jobs. In the past, the emphasis was on the Payroll Survey. In this survey, employers are called and asked how many employees they have. Payroll jobs have been shrinking, hence a lot of political heat and smoke about whether the economy is improving or not. But Labor has also been doing what's called the Household Survey, in which households are polled about who is working in the household. Job counts based on the Household Survey have been increasing rather dramatically, but the government has not really factored those jobs into the "jobs" number that typically gets published and discussed widely.

If you have a self-employed husband and wife, both fully "employed" in their own businesses, those jobs never show up on the Payroll Survey. They would on the Household Survey.

This is an important issue for communities trying to measure the impact of new and diversified economic development efforts, like investments in getting affordable broadband and small business training and development. If economic developers are being rewarded for increases in payroll jobs, the community is losing out big time--that's not where the growth is.

Not only that, a factory floor payroll job is not necessarily equal to a self-employed job. A prosperous microenterprise owner with a gross business income of $150,000/year and take home "pay" of half that has a much larger impact on the economic health of the community than a $12/hour full time hourly worker, and it's probably much more than just a simple 3x factor. One economic developer I talked to thought that the impact of a single self-employed professional in the community might be worth as much as ten shop floor jobs, because of the indirect effect. Self-employed professionals are spending some of their business income on local businesses--attorneys, accountants, copy services, and other professionals in the community, lifting all of them.

How is your community counting jobs? How are you rewarding your economic developers? Are you rewarding them for the right things?

Technology News:

eRate disaggregates community buying power

The papers have been full of stories this week about the suspension of eRate payments to schools and libraries. The FCC suspended the program because of chronic abuses by some recipients of the payments. That aside, let me point out some structural shortcomings of the effort.

  • Any time some companies have to become the tax collector for the Federal government and others don't, you've created a structural and competitive inequity. Erate does exactly that.
  • Erate really keeps phone bills higher than they would be otherwise, and essentially increases costs for everyone. It would be interesting to do an analysis of what a typical community pays into eRate and actually gets back in eRate payments. What if it turns out most communities pay more in than they get back? Now, one can make an argument that needy communities get more help than they would otherwise. But see my next point.
  • Erate payments disaggregate the ability of the community to pool their broadband demand and negotiate lower prices. Erate takes broadband anchor tenants out of the buying pool, thereby forcing other nonprofits and businesses in the community to pay more than they would otherwise. Again, what we need are some studies that look at how much broadband is being purchased by a community in total and the potential cost savings that could be gained by communitywide broadband aggregation (note: this is an activity that should be part of a technology master plan).
  • The higher cost of broadband due to disaggregation puts businesses in the community at an economic disadvantage, and affects local tax payments and the ability of those companies to grow and expand job opportunities.
  • Erate delays the inevitable, which is what do the eRate institutions do when eRate goes away? Erate will go away because it is a tax on legacy phone service. Legacy phone service is dead, dead, dead. I can have a voice conversation today without using ANY kind of phone company--I don't even need a VoIP service if my calling party has compatible software.

Erate has no future, and schools and libraries are naive in not making plans to move on. A better strategy for schools and libraries would be sit down with all the broadband users in the community and pool their buying power, make some modest community investments in infrastructure, and take control of the economic future of the community, rather than hoping the "free" money continues (and it won't). Erate was a great success--it helped get schools and libraries online. But it is structurally doomed--this has nothing to do with political philosophies or which party you belong to. It just won't work going forward.

Why USAir is bankrupt, part 3

It's hard to feel very sorry for USAir and the company's financial problems. Yesterday, I saw yet another example of IT stupidity. I got to Charlotte and wanted to catch an earlier flight. The Roanoke flight that was leaving was nearly full, so I had to stand and watch the poor gate agent laboriously hand key every boarding pass into the computer. Fifty boarding passes, each one requiring several keystrokes. And virtually every boarding pass had a bar code on it.

Now Delta has very expensive, custom made scanners that must easily cost $20-30K each (note that Delta is also bankrupt). Southwest, which is making money, has cheap, off the shelf barcode scanners (cost about $50) duct-taped to the side of their cheap off the shelf PC computers. So bankrupt USAir manages their seats by hand, bankrupt Delta buys hideously expensive custom terminals, and profitable Southwest makes good use of off the shelf technology. Get the picture?

But wait, there's more, as they say in the knife infomercials. The USAir agent finally established that there was a seat on the plane for me. By this time, the plane was about to leave. He looks at my ticket and informs me that there will be a $25 charge to change the ticket, and that I have to go to the Special Services desk in the main terminal to take care of it. He then apologizes there is not time to do that, and the plane takes off.

Before leaving, I observe the special, custom keyboard he is using has a card reader on it, but USAir's crack IT department apparently never bothered to give the agent software that would allow him to take customer money.

So we have a bankrupt airline that is not equipped to take money from their customers. Hmmm. Anyone see anything wrong with this picture?

Technology News:

Is space important?

I keep hearing a lot of scepticism over my reporting on the emerging Space Economy. This article on the accomplishment of SpaceShipOne and future plans helps illuminate the growing potential.

  • Virgin Galactic, a division of Virgin Airlines, has already contracted with Scaled Composites, the company that built SpaceShipOne, to build five more five-seat versions for commercial use.
  • Initial flights will continue from Mojave, California, a rural community that used to be in the middle of rural nowhere, but is now the first commercial spaceport in the world. However, Virgin Galactic has already indicated spaceports will be added as needed in other parts of the world.
  • An annual X Prize competition has already been announced that will create incentives for additional companies to get into the spaceship business. New Mexico, which used to be in the middle of rural nowhere, has had its eye on space for years, and X Prize competitions will be held at the New Mexico spaceport--that translates directly into increased cash flow into the state.
  • Oklahoma has formed a Space Industry Development Authority and is building a spaceport.

If you are inclined to think there are more pressing problems on earth than getting tourists into space, you are both right and wrong. This is not some pie in the sky program for rich tourists--this is the beginning of the greatest economic boom in human history.

Remember the personal computer and the Internet? Those two little innovations touched off the second biggest economic boom in human history, but what enabled those two developments was the integrated circuit.

Guess where the IC (integrated circuit) came from? The sixties era space program. Anyone involved in economic development who thinks going to the moon was a waste of money needs to go back to the history books--not to study science, but economics. The moon was a bargain, because the money spent by the government to get reliable IC circuitry for the Apollo spacecraft was paid back many times over by the resulting IT boom that started in the late seventies and ended around 2001.

No one predicted that back in 1970, and there's the rub--the future is hard to see. Economic developers who are not willing to take modest, calculated risks are actually putting their communities are greater risk--doing nothing is making a choice. It may look like risk avoidance, but it is not--doing nothing or doing the same old thing is also risky.

Here is the money quote from the article:

"The Ansari X Prize is the beginning, it's not the end," Diamandis said. "Over the course of the last two weeks we have had companies approaching us, we have had wealthy individuals approaching us, about investing in this marketplace. The same thing happened when Lindbergh flew, the same thing happened when Netscape went public, the same thing's going to happen here."

Technology News:

Earthlink adds VoIP services

Earthlink faces the same problem AOL is already struggling with--a shrinking market for dial access to the Internet. Earthlink has been staying in the black by slashing customer support and by providing barebones access, as opposed to AOL's tedious, ad-laden interface.

Earthlink has a lot of customers like me, who need occasional dial access from the road, and don't want the dreck AOL ladles out along with it. But I find I need to dial through Earthlink less and less as hotspots, especially in hotels, become more common. As I've written previously, I and many other travelers now pick hotels based on the availability of broadband, not on the kind of shampoo you find in the bathroom.

AOL has tried to keep its customers by extortion--for example, you can't forward your AOL email to another account, which makes it much more difficult to quit AOL if you have used your AOL email address for a long time. AOL is basically saying to customers, "Leave us and your life will be miserable while all your email goes missing for a while." Most other email account providers let you forward your mail.

But back to Earthlink, which is now providing limited VoIP services if you have an Earthlink broadband account. It's a clever move, because the appeal of free calling (at least to some of your friends and family) will help sell the access part.

We're going to see more bundling of services--the phone companies are trying to win back some broadband customers by bundling local, long distance, and broadband, and the appeal, aside from saving a little money, is that you potentially go to one bill from three. In theory, you should also be able to get better service and customer support (in theory).

Does WiFi work?

In the Telecomm Cities mailing list, Barry Drogin wrote:

The ugly thing here is that in the short term, these [WiFi] deployments will work,
just like shared-media Ethernet networks worked well in the 1980's. But at
some point, user density gets so high that the protocols break down. They
spend more time recovering from errors than they do transmitting good data.
For Ethernet, switches saved the day. But for wireless, that won't work.

I call cheap WiFi the "pizza lady" model. In the grocery store, a little old lady hands out little pieces of pizza, saying, "Try this, it's good!"

WiFi is way of getting dial up users to move at low cost to broadband. What I tell communities is that WiFi will sell fiber. As more and more users crowd on to WiFi, the bandwidth degrades, but by then, people are hooked on broadband, and can't live without the pizza, er, bandwidth.

So they are more willing to support community fiber projects.

WiFi is not THE solution. It is A solution. Fiber is also a solution. There is no one transport mechanism that will satisfy everything we want to do.

Are you a digital immigrant?

CNet has a must read article on the digital divide. The divide the online news site discusses is the one between "digital natives" and "digital immigrants."

Digital natives are those 25 and younger, who have grown up immersed in the Internet, computers, and technology. Digital immigrants are the older group, especially 40 and above, who have had to "cross over" to the new digital world from the old, paper-based world.

As organizations retire more of the immigrants and are replacing them with more natives, the organizations are being changed. The old central command and central authority structures are being undermined and replaced by distributed command and control. Technology and the Internet are the catalysts for often informal lines of communication and collaboration that cut across top-down org charts and limit the ability of managers to "control" the work.

The challenge for communities is to help leaders recognize that this shift is taking place--that the old, authoritarian ways of making decisions in the community don't work anymore--the Internet lets citizens and businesspeople route around the old, top down procedures. If your community is worried that too many young people are leaving, could it be in part because they view community-decisionmaking as out of step with their needs and interests? Conversely, what is the community losing in jobs and opportunities because of outmoded control structures that are not able to lead the community successfully in the fast-paced, highly interlinked Knowledge Economy?

Technology News:

Kitty Hawk and Mojave, California: SpaceShipOne wins the X Prize

Bert Rutan's SpaceShipOne won the $10 million X Prize by sending a ship into suborbital space twice in two weeks. The second of two successful flights took place today, and Mojave, California will likely become a historical milestone alongside Kitty Hawk, North Carolina.

Outsourcing and economic development

An op-ed piece in the NY Times (registration required) provides another data point to show that outsourcing jobs to other countries is not the national crisis the mainstream media has tried to make it.

The author provides data that shows the U.S., as other studies have suggested, is actually showing net gains from outsourcing. That is, outsourcing low pay, low skills jobs creates other business opportunities that more than offset the direct job loss.

As the author notes, this data is not a great comfort to a region that has lost those jobs. Factory floor workers who have had their jobs outsourced need training and help to be able to compete for the higher wage, higher skill jobs that are being created.

For rural communities, it's another indicator that business as usual just won't work. The Old Economy jobs being lost cannot be replaced by more aggressive industrial recruitment, better brochures, or a new logo--all things I've seen promoted as "proof" of a revitalized local economic development program.

What does work? Here are some things that are important in the Knowledge Economy:

  • Recognition and acceptance that most new jobs are likely to be created by businesses already in your community. Action step: Diversify your economic development program into three parts: continue industrial recruitment (30% of resources), but add education, training, and support of existing local businesses (40% of resources), and create an entrepreneurship development program to create new, local businesses (30% of resources).
  • Tightly couple technology council, chamber of commerce, and economic development efforts. In some communities, all three entities are working in stovepipe efforts with little or no cooperation and are often competing with each other for the same community support and resources. Local leaders should withold funds if these groups do not work together on substantive projects.
  • Make your community Web portal, your economic development Web portal, and your local government portals as good as they can be. Companies and entrepreneurs looking for a place to relocate use the Web heavily to make early relocation decisions. Without a strong, well-funded, and well-staffed Web effort, you are crippling your recruitment program.
  • Make sure you have a regional technology master plan. This is a vital tool for recruiting companies and entrepreneurs into the area. Even if you don't have affordable broadband in some places in your region, having a plan to get it there puts you well ahead of communities that are not doing the planning. Master planning also can save tax dollars and lower the cost of doing business in your region--another recruitment tool.

Technology News:

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