Exploring the impact of broadband and technology on our lives, our businesses, and our communities.
Is the global economy over?
An article I saw in the local paper about hair dryers and a blog article from local curmudgeon on the high cost of shipping furniture both suggest the same thing: we may be very near the point (or already at the point) where making everything in China and shipping 7,000 to 10,000 miles is no longer economical.
The note about hair dryers was in response to a question to the paper about the availability of U.S. made ones. The reply indicated a firm had just moved its manufacturing facilities back to the U.S. in part because of high shipping costs. The manufacture of furniture is even more interesting, since the wood for that furniture often comes from U.S. forests. So we ship the raw materials 10,000 miles, then ship the finished product another 10,000 miles.
But the global economy is not going away; it is simply going to shift resources around to find the lowest cost of production. It may be that the U.S. will be able to compete again. Communities with broadband will have a leg up, because manufacturing firms are not going to place factories in places where they can't receive orders 24/7 reliably. Global businesses want redundant telecom providers, redundant cable routes in and out of the community, and redundant electric power feeds (from more than one substation). It's an easy checklist for communities:
- Quality of life
- Class A office space
- Fiber-delivered broadband services
- Redundant telecom cable paths (and/or wireless redundancy)
- Redundant electric power to business and industrial parks
How many of these can your community check off?
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Can covered bonds build telecom for communities?
U.S. Treasury Secretary Paulson has endorsed "covered bonds," which are a new idea in the United States but have been used in Europe for centuries, according to this article. Covered bonds are secured by loans carried on the books of the issuing bank. Keeping the loans on the books forces the bank to pay attention to the performance of those loans, unlike the mortgage mess, where mortgages were packaged, re-packaged, and sold until no one really knew how the mortgages were performing.
Covered bonds can be used as an investment vehicle for issuing mortgages, but in Europe, they have been used heavily by the public sector to finance infrastructure, and are backed by the governments receiving the funds. Why are they different than general obligation bonds? Covered bonds enable local governments to tap a much larger, global marketplace of capital funds, meaning more cash could be available for local infrastructure projects at lower rates because of increased competition among lenders.
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Is California the new Detroit?
Aptera Motors just raised $24 million in funding. The company plans to build a super-efficient car. That makes Aptera at least the second new car company in California, following in the footsteps of Tesla Motors, which makes the super-fast Tesla electric sports car. The increase in gas prices is going to create tremendous new business and economic development opportunities for communities that are out talking to their businesses and studying how to leverage energy assets and broadband.
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AT&T and the iPhone
AT&T, perhaps partly by accident, has probably created success story that is likely to become a business textbook case study classic. Its partnership with Apple has succeeded beyond the company's wildest dreams. Once a kind of also-ran in the cellular industry, customers are switching in droves to AT&T just to get an iPhone. And AT&T has wisely beefed up its network and is making massive investments to ensure its customers have a good signal in more places.
The iPhone is creating a majro change in the portable device and cellphone business, and I think the day of the cellphone is over, meaning that within five years, very few people will have a portable device that is primarily a phone. Going forward, every portable device will have to have a substantial feature set that provides many of the same functions and features of the iPhone.
Apple is probably not greatly worried, as the iPhone's potential is just now barely beginning to be tapped. The iPhone runs a version of the company's flagship OS X operating system, meaning iPhones are full-fledged computers, not just phones with a few extra features like an address book wedged in.
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No one wants to drive anymore
As I predicted months ago when gas prices first started to rise, the suburbs are about to undergo a transformation. USA Today had a front page article about the 'burbs and the changes. In Arizona, they are doing what planners have been recommending for at least thirty years, which is to redesign suburbs as destinations, rather than just a place to sleep.
By "destination," that means adding stores, office buildings, sidewalks, parks, and new downtowns, so that residents don't have to drive thirty miles to and from work.
Small towns and rural communities with traditional downtown Main Streets can also capitalize on this trend converting Main Street buildings into office space--with fiber broadband services. Small towns like Galax, Virginia, better know for some of the country's best barbeque and the Fiddler's Convention, is doing just that as a partner in the Wired Road.
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How cool is Cuil?
The new search engine Cuil (pronounced 'cool') aims to take on Google, like a bunch of other search engines that have tried and failed to dislodge Google. But Cuil is designed and owned by a former Google staffer and her husband who just may pull it off if they have the financial staying power to slug it out over the next couple of years.
Cuil promises better search results by not just counting inbound links but by actually trying to parse whether or not the contents of a Web page are a good fit for the search terms. Cuil also promises a more usable format for results, which wouldn't take much, given that Google has not bothered to give itself a face-lift since the company started. Finally, the Cuil founders promise not to snoop around and store everyone's search results, a refreshing change from Google's policy of developing dossiers on everything you have ever searched for.
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Cloud computing replaces Web 2.0
Cloud computing has replaced Web 2.0 as a popular IT buzzphrase. Nobody ever really knew what Web 2.0 was, but it sounded important, and a lot of small companies got lots of cash to "really important" Web 2.0 applications and services that were going to change the world, make a lot of money, and cure cancer. None of them made much money, and most of them made no money.
Despite the hype, Web 2.0 signaled a shift to much more sophisticated use of the Web, with much better Web-enabled interfaces. The secret sauce for Web 2.0 services and applications was broadband. Cloud computing takes these sophisticated Web apps and high speed data connections to the next level, where both desktop computers and portable devices like the iPhone are connected continuously to data and services hosted somewhere on the 'net (the "cloud").
Apple probably has the clearest vision for this; the company has provided nearly seamless integration of desktop computers and portable devices like laptops and iPhones/iPods with its MobileMe service. For $99 a year, you get "cloud computing," which means your various devices (e.g. desktop, laptop, phone) all stay synchronized more or less automagically--as long as you have some kind of high speed data connection attached to each device.
Cloud computing, despite the hype, is here, and will quickly become a business necessity, meaning communities that cannot provide their own businesses with the right levels of connectivity will suffer economically. And cloud computing, to work properly, has to work from home as well as from business locations, so residential broadband is business broadband. Finally, communities have to have broadband hotspots for business travelers, because those business visitors have the most urgent need for access to the "cloud" of data they use to manage their work.
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Are Internet ads about to collapse?
This analysis of the current state of Internet ads suggests that some of the big ad brokers on the Internet (e.g. Google, among others) may be near an inflection point with respect to ad demand. Lookery, a firm that sells ads on sites like FaceBook and MySpace, just lowered the cost of its ads by 40%, suggesting very soft demand. And Google's AdWord system, according to the article, seems to be propped up financially by Google's practice of setting very high minimum cost per click fees.
I have always maintained that Google is making a lot of money from businesses that are willing to pay modest amounts month after month for a few ads. When times are good, it does not look like a lot of money. But when the cost of other business necessities like fuel and shipping go up, unproductive ads producing few results may be the first to go.
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NATOA calls for local government action, fiber
The National Association of Telecommunications Officers and Advisors (NATOA) has called for a range of policy changes and investments that includes a guaranteed right for local governments to invest in broadband and fiber as the preferred mode of access.
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Why the airlines are broke, Part 7
Fuel prices may be a proximate cause of airline financial problems, but insanely inefficient reservation systems and insulting fee structures are structural problems that less expensive fuel won't fix. I just spent over an hour and a half trying to make a simple change to an existing flight reservation. A full hour was spent on hold, with periodic updates from the reservation agent, who said the change was being "processed." The call was finally disconnected by a recorded message telling me to hang up and try again. Huh? An hour and a half just change a few bits in a computer, and it could not be done!
The cost of the flight doubled, and there was no change in the locations, just a change in the time. So the airline strategy is to treat customers with contempt and bad service--at the same time. It's baffling, and one can only conclude that airline executives never have to deal with their own reservation systems.
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