Tag Archives: innovation

Regulators need to accept the new future of work

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Twentieth century government and twenty-first century entrepreneurship do not mix well. That was the top line consensus at a CES panel discussion this afternoon. Moderated by Julie Samuels from Engine, a tech policy advocacy group, it included two company reps – Laurent Crenshaw from Yelp and Marco Zappacosta from Thumbtack – and Arun Sundararajan, a business professor at New York University.

“Taxes are not the issue, small businesses care much more about regulation”, Zappacosta said. As businesses expand, so does the regulatory burden. “This is a big fear that causes businesses not to grow as much as they should”.

The problem is that the assumptions that drove the development of labor laws in the twentieth century no longer apply. The model then was that most people had a career job with a company, that provided a basic social safety net, such as disability, retirement and medical benefits. But now, “that will not necessarily be the best model for organising economic activity”, Sundararajan said.

“Atomisation of work is coming into tension with our regulatory state that assumes a lump of work”, said Zappacosta. “The path we see forward is to refashion our safety net so that it can be managed through individuals”.

There was little optimism that government regulations or regulators will adapt by themselves. But online communities can be self regulating. “Platforms like Yelp and others that basically create a feedback loop between the user and the business owner create a scenario that lets the business itself function ahead of the regulations”, Crenshaw said.

Those online communities can also apply political pressure. “We’re going to see a wide variety of new collectives that are giving consumers a new seat at the table”, said Sundararajan. “They’ll sit at the table in the same way that labor unions did in the past”.

“We’re having these fundamental questions in America about what is the nature of work and what is the social safety net and who is going to provide it”, said Samuels as she wrapped the panel up.

EU’s net neutrality choices favor networks over innovation

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500 gigabits and nothing to watch.

The European Union will implement network neutrality rules that are significantly friendlier to telecoms companies than the ones adopted earlier this year in the U.S. The European parliament rejected amendments –proposed by pretty much the same high tech companies that successfully pushed for the more stringent U.S. rules – that would have closed gaping loopholes.

According to the BBC

Part of the problem with the rules in their current form, argued Joe McNamee at the European Digital Rights campaign group, is that they are ambiguous.

“As the text currently stands there is no indication as to how much abuse of dominance would be permissible under this arrangement,” he told the BBC.

The sort of scenarios that could impact internet use include the creation of “fast lanes” and “slow lanes” or the creation of “zero ratings” in which some services may be accessed without using up any of the internet user’s data quota.

It’s an interesting contrast between the U.S., where Internet content and services companies are the sexy power brokers, and the E.U., where quasi-public telecoms companies are a collegial fit with the bureaucratic political culture. It’s outfits like Google and Facebook that are getting slapped on a regular basis by E.U. regulators – privacy rules and the so-call right to be forgotten, for example – while in the U.S. it’s telecoms companies that are on the defensive.

Looked at another way, it’s the U.S.-based innovators that are creating the demand that higher capacity European networks are better provisioned to fulfill in many cases. It’s not paradox or irony. It’s the natural result of different regulatory choices made from the same set of options. The next time someone touts the fast fiber sprouting in European cities, ask yourself: would you trade innovation for bandwidth?

G.fast means fiber speeds over copper, up to a point

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The point where the infrastructure collapses.

A short range, high speed technology standard for broadband over copper phone lines has been approved by the International Telecommunications Union. The G.fast standard is intended to make fiber-class speeds possible over legacy lines, with a maximum distance of 400 meters between the customer and the nearest fiber node.

Practical distances, though, are much shorter. “Service rate performance targets” – total bandwidth which can be split between up and down loads – are…

500-1000 Mb/s for FTTB deployments at less than 100m, straight loops
500 Mb/s at 100m
200 Mb/s at 200m
150 Mb/s at 250m

Bell Labs has succeeded in pushing a gigabit over 70 meters of pristine plant and 500 Mbps over 100 meters of lousy copper, using its implementation of an earlier version of the G.fast standard.

But it’s not just a transportation protocol. The G.fast standard is intended to fit typical telco provisioning processes, enabling consumer installation with shrink wrapped kit, just like DSL. It makes it easy for telcos to upgrade service levels.

With one big if.

Telcos have to be willing to extend fiber further into neighborhoods and install more nodes. In urban business districts and affluent suburbs – high potential areas, as AT&T puts it – that’s not such a big deal. Either the fiber is already built or the revenue is there for the taking, or both. With the typical AT&T node feeding 600 to 900 meters of copper, doubling fiber distances and quadrupling the number of nodes requires a very sweet business case, if AT&T is to make the investment.

Mass market deployment of G.fast technology is still a few years out. It’ll eventually be a boon to those on the high potential side of the digital divide: places where incumbents have already decided to invest. For people living where telcos let copper rot on the poles, it’s not much help.

Musk takes on another impossible dream

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It’s hard to bet against Elon Musk. He made a fortune as a founder of PayPal, but instead of fading into a life of one-hit wonder obscurity sitting on boards and listening to investment pitches, he doubled down by going weird: electric cars and rocket ships, old ideas with a long trail of broken genius. Each venture had “billionaire vanity project” written all over it. Now, both look likely to revolutionise transportation. We can only hope his Hyperloop daydreaming follows the same path.

Can he revive a 1990s satellite mega-constellation project? Musk has confirmed that he has a 700-satellite low earth swarm under development, a globe circling network of 100 kg birds that could deliver Internet connectivity anywhere on the planet – land, sea or air. Details are scarce, but it sounds a lot like a revival of the Teledesic project, which started out as a proposal to put 800 or 900 birds in orbit, each capable of handling as much as a gigabit of throughput.

The two guys behind it – Craig McCaw and Bill Gates – had as much cred then as Musk does now. But the reality of launching what was originally a $9 billion system was too much even for them. Eventually scaled back to 288 satellites and finally to nothing, Teledesic fell victim to the reality of physics and economics: cutting costs means reducing mass which decreases available power which equals less bandwidth. Scarce capacity is expensive capacity – eventually the billions add up to real money – making it the bandwidth of last resort. It’s hard to make a business model work on that basis.

Gates and McCaw thought so, anyway. Teledesic was shelved along with several other grand satellite plans of that era. But Musk seems ready to make another try. It’s hard to think of anything that’s changed significantly: technology is a lot better but bandwidth demand and expectations are even higher. But if it was easy to think of, someone would have figured it out already. Musk isn’t just someone. So it’s worth paying attention.

How do you say sugar daddy in Irish?

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Finally, an electric utility is taking the plunge on home automation. Electric Ireland announced a deal with Nest, the Google-owned company which makes a networked thermostat that learns your habits and controls your home heating and cooling system accordingly.

New customers who sign up for a 2 year contract with Electric Ireland get a free Nest thermostat, including installation. Existing customers who extend for another 2 years pay €99 (about $123). the device goes for $249 in the U.S. Figuring in the cost of installation and using Irish retail pricing assumptions, though, the value of the device is €374 ($464).

Contrary to fears expressed by some, it’s not the beginning of a long slide into subsidy hell for the home automation sector. The Irish electricity market is competitive and the Nest deal is certainly an excellent marketing tool, but that’s an incentive to go first, not a make or break condition. As I’ve said in the past electric utilities, in competitive markets or not, can use home automation devices to cut costs by managing electricity usage down. It’s an extension of the smart meter concept, not an embrace of the profit killing mobile handset subsidy model.

But it doesn’t need to stop there. The first gizmo might be free, but there are more to buy. Besides its own, branded products, Nest is promoting compatible devices ranging from a security camera to Whirlpool washers and dryers to a Mercedes. And as products are added, the value of the control platform grows. Even if the first freebie can’t be justified on pure subscriber acquisition costs alone, the energy management benefits will eventually make up the difference. After that, it’s a profitable new business for electric companies.

It’s not about the watch, it’s about Apple diving into health care

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When Tim Cook unveiled the Apple Watch on Tuesday, and launched into a rapturous description of the digital crown – the old school winding wheel on the side that’s redesigned into a user interface – the first thing I thought was “they made the damn watch for right-handed people”. Any southpaw old enough to remember having to wind a watch every day – yes, me – remembers having to unstrap it and shift hands first. The crown is on the right side, which is the wrong side if you’re a lefty.

Well, not exactly. The display can be flipped around so you can wear the watch on your right hand with the crown pointing left, albeit sub-optimally positioned lower down. But enough grumpiness.

The big take away for me isn’t the design or functionality. It’s Apple’s determination that smart watches are about health and fitness. The Apple Watch will display text messages and otherwise serve as an iPhone extension, but the killer app is health and fitness, with Apple forming a high caliber development team around it.

Apple didn’t make the first MP3 player or the first smart phone or the first tablet. But it figured out what those devices were good for and how to build supporting platforms and content to make them useful and attractive to consumers. That track record is reason enough to presume that Apple has done the same for smart watches, and could do as well for other wearable categories.

Health, particularly, has been a tough sector for technology companies to penetrate. Microsoft has been trying to run an online medical record platform for years, with little success. Stringent legal requirements and the threat of further regulation has been a stumbling block for nimble startups. Apple has the market strength, development talent and raw resources to succeed, though. It’s not a done deal – an Apple Watch and health platform would be the first post-Jobs attempt at a category breakout – but that’s the way to bet.

If new tech looks like old tech, old rules apply says supreme court

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Today’s turn-of-the-knob logic might have made VCRs contraband 30 years ago.

Functionality, not technology, should guide how pre-Internet laws are applied in cyberspace. That’s the essential logic behind a U.S. supreme court ruling on Wednesday, that said that the same copyright rules that apply to cable TV systems also apply to Aereo, an online system for accessing broadcast television signals.

Aereo argued that since viewers were individually activating a tiny receiver and antenna, and selecting which channel to watch, it was more like a VCR than a cable TV system, which streams multiple channels continuously. A majority of the court disagreed, saying it is “a system that is for all practical purposes a traditional cable system”…

Given Aereo’s overwhelming likeness to the cable companies targeted by [1976 copyright legislation], this sole technological difference between Aereo and traditional cable companies does not make a critical difference here…the signals pursue their ordinary course of travel through the universe until today’s “turn of the knob”—a click on a website—activates machinery that intercepts and reroutes them to Aereo’s subscribers over the Internet. But this difference means nothing to the subscriber. It means nothing to the broadcaster.

The majority opinion, authored by justice Stephen Breyer, went to great pains to say it was a narrow ruling and brushed aside concerns that it would have profound and unintended consequences on new technology and services. In a dissent, justice Antonin Scalia called the underlying logic “crude” and warned that the court was gutting its 30-year old Betamax ruling that said because consumers individually decide how to use them, VCRs were legal products…

It will take years, perhaps decades, to determine which automated systems now in existence are governed by the traditional volitional-conduct test and which get the Aereo treatment. (And automated systems now in contemplation will have to take their chances.) The Court vows that its ruling will not affect cloud-storage providers and cable-television systems…but it cannot deliver on that promise given the imprecision of its result-driven rule.

I think Scalia is right. It might be a narrow ruling, but it establishes a broad standard that gives trolls and others in the predatory bar a blunt instrument to attack new products and businesses. We’ll be living – unhappily – with the consequences for a long time.

You can’t patent just an idea, supreme court rules again

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The Air Force can now defend Earth without fear of trolls.

Doing the job that the patent office should have done in the first place, the U.S. supreme court stepped up to the plate and swatted down a long line of patent trolls. In an unanimous opinion issued today and written by justice Clarence Thomas, the court said that an Australian company, Alice Corporation, can’t take a common, centuries (millennia?) old financial practice – using a middleman to keep both parties honest – and claim a patent on it just because it’s being done on a computer…

There is no dispute that a computer is a tangible system…or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of [it, a patent] applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept. Such a result would make the determination of patent eligibility “depend simply on the draftsman’s art,”… thereby eviscerating the rule that “‘[l]aws of nature, natural phenomena, and abstract ideas are not patentable’ ”.

Alice sued a foreign exchange company, CLS Corporation, because it had the obviously insane idea of doing its work on a computer without asking permission.

That’s the essence of what the worst patent trolls do: take a common idea or process, and use a computer to implement it. Then, they either find an existing patent that sorta talks about something similar or they submit an impressive looking but more or less impenetrable patent application and wait for the federal patent office to rubber stamp it. At that point, it’s a hunting license to prey on companies or, even, consumers who will pay a substantial but affordable sum upfront, fearing the expense of defending a law suit or the risk of losing.

The supreme court keeps kicking these shysters out the door, and we should be glad they do, but the real problem is congress won’t do anything to endanger the cash that the predatory bar showers on it and the patent office doesn’t have the smarts to know when it’s being snowed.

U.S. supreme court sticks to the strict meaning of patent infringement

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There’s good news in the U.S. supreme court’s unanimous decision this week to toss out a patent infringement lawsuit brought by Akamai against a competing content delivery network, Limelight.

The court declined to open a vast new frontier for patent troll claims. Akamai, of course, isn’t a troll – it uses its patented technology to good effect – but it was trying to make the case that a partial (and thus, under law, allowable) duplication of a method it developed was actually an infringement because Limelight told customers how to complete the missing steps themselves. That was no different, Akamai said, than if it had been copied whole in the first place.

Lower courts bought that argument, but fortunately the supreme court disagreed. In the decision, Samuel Alito wrote

A method patent claims a number of steps; under this Court’s case law, the patent is not infringed unless all the steps are carried out…(a “patent covers only the totality of the elements in the claim and … no element, separately viewed, is within the grant”). This principle follows ineluctably from what a patent is: the conferral of rights in a particular claimed set of elements.

Had Akamai’s position been upheld, then the predatory bar could have gone wild and brought lawsuits against any two or more companies or consumers that were doing things that, taken together, looked anything like a patent – dubious or not – held by a troll.

There was no dissent or alternate views offered: the nine justices – left wing to right wing – spoke as one.

Broadcasters descending into madness, says CEA president

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Gary Shapiro, the president of the Consumer Electronics Association, has published a blistering attack on U.S. broadcasters, characterising their rear-guard opposition to new technology as the madness and nonsense of Alice’s Wonderland and urging congress to yank the licenses of television stations that act against the public interest. Not just in what they put on the air, but also their business practices. Shapiro points to a decision by CBS executives to suppress a news story that didn’t fall in line with their business goals…

Last year, CBS leadership reversed a decision by 40 CNET editors who voted the DISH Hopper Sling the best innovation at the 2013 International CES®. CBS and other broadcasters sued DISH over its ad-skipping Hopper, but so far the courts have said this feature is legal. Worse, CBS’s top executives ordered their editors to lie about removing the Hopper from the “Best of” CES list.

Other examples offered by Shapiro include broadcasters’ opposition to Aereo and cable and satellite blackouts resulting from fights over fees paid to retransmit their signals.

To say the least, it’s unlikely that congress will start revoking broadcast licenses. In fact, it’s authorised the FCC to spend billions of dollars to buy back channel space to clear spectrum for wireless broadband service. And Shapiro’s hyperbole has more than a touch of disingenuousness: he (correctly) brands the National Association of Broadcasters as the industry’s “lobbying arm” but neglects to mention that his organisation fills the same role for consumer electronics manufacturers.

Shapiro is dead on, though, in characterising broadcasters as essentially Luddites. The followers of Ned Ludd fought against new technology that was displacing the old technology they relied on to make a living. Television broadcasters had a good run – many fortunes were made in the past 65 years – but their hold on a national audience continues to slip, as does the number of people who watch TV channels over the air.

Broadcasters have every right to try block innovation that doesn’t serve their interests, just as everyone else has a right – a duty – to ignore them when possible and oppose them when not. That includes congress, courts and the FCC.