Taxi!

Booked the usual taxi to the airport today. We don't own a car right now, as we live in the city centre, and are within short walking distance of 4 car hire companies, bus routes to all parts of the city, and the central train and bus stations. Just don't see the point in buying one to have it rot away in the garage. The retained interest on the car money alone pays for all the buses and car hire for a year!

The taxi company has a scheme whereby they can give your phone a brief ring to let you know the taxi is approaching. OK, it's a nice hack. But really it tells you that there's a presence and notification feature set bursting to escape from legacy telephony, if only we can co-ordinate enough people to have compatible end-points.

Wanted to call my wife when I got to my parents' house. Checked first to see if she's on Skype. No deal, so I call. She's out. The problem is, I'm afraid to call in case I wake up sleeping babies. We only have one landline phone sat in the study where the littlest madam sleeps in the day. But even if I had a second one plugged in and, say, in the kitchen, I can't selectively ring just that one. So no point. Yes I could hack up all sorts of schemes to get around it, but there's no out-of-the-box solution whereby the caller can select the nature of the ring/interruption ("sotto sotto", please).

This time, I don't see a feature that everyone on the planet needs. But I do see the need for a "Voice 2.0" system that is extensible and flexible enough that crazy people like me who choose to lead less-than-conventional lives can have our communications systems fit about us, and not the other way round.

Socialist services

More thoughts on social media. Tonight's unoriginal idea: radio for two. Grab a service like epitonic, which lets you create a personalised radio station based on your genre choices. Simultaneously stream to two people, either of whom can control the "skip" button.

Now you and your loved one can have a virtual snuggle knowing nobody else is listening to the same set as you, and your other half is hearing and enjoying just the same music you are -- even if they're the other side of the globe.

Next week, you can look forward to articles on why IPTV is such an innovative idea, and how IMS is going to unleash a torrent of telco service innovation upon us. Err. Not. Funny, isn't it, how all those 3G TV and music services are creating facsimiles of old broadcast and unicast media when the users have shown a clear preference for doing things in groups of two or more...

Thoughts for the day

It looks kind of kinky, me waddling around town with a big belly. But really it's an excellent way of carrying your kid around. I can thoroughly endorse the Maya wrap slings, although if I were doing it again I'd get one with a shorter tail. Our older daughter has travelled zero feet in a buggy in her whole life. Slings, shoulders and walking make up the rest.

Anyhow, the evening walk with the baby under the coat is good think-time. So here's some thought-entropy from Martin's brain from a night or two ago, courtesy of the voice note feature of my phone.

#1: One of the ideas of me going walkies with the baby in the evening is so she is warm and rocked to sleep in a dark place during peak colic hours. In the meantime, my wife can render her older sister unconscious. (I also get to work off some of the fat and flab that seems to creep in with marriage and parenthood!) But whatever happens, I mustn't bring a screamy infant home when big sister isn't yet asleep. Now, my wife could call me to say she's slipped into the Land of Nod, but that's a bit over the top. She could SMS me, but that's kind of an expensive way to transmit such a puny and useless bit of information.

So I started to think: how to price discriminate SMS better? My idea was the "SMS Ping". You just select someone from your address book, and select "Ping!" from the menu. I think you can guess what happens next -- they get a fixed "I pinged you!" text message. Mechanically still an SMS, but economically a different beast.

So I could agree with my wife that she'll ping me when the older one is asleep. Pings could be configured to not even ring the phone, having a different behavior to vanilla SMS.

The underlying observation is that the success of SMS may in fact be somewhat of a mirage. What people are doing is using SMS to make up for the presence system that the mobile operators forgot to build. Enrich the pricing scheme for SMS and people can afford a wider range of presence messages. And if you're a mobile operator, shouldn't you be thinking that there could be a little pile of gems under the presence stone?

#2: This isn't an original thought, I'm sure. But no harm in reproducing it. When I'm carrying the wee one around in the sling, I can't wander the streets with my wife's iPod any more. I use some rather expensive but truly wonderful earphones that block out all the world. But with a baby attached you need to be able to hear if, say, she pukes her guts out (a not infrequent occurence). You need to hear it so you can be a hero and rescue her from suffocating, choking oblivion. So now I rather wistfully notice all the other people around using their iPods as an (anti-)social dissociative anaesthetic.

The iPod will be tumbled from its pedestal. Some assert it'll be the mobile phone that kills the iPod. I tend to agree in general, although I think the timescale will be longer because the challenge of battery life will take years to sort out. A flat iPod is a minor bother, whereas a flat mobile is a real problem.

No, what'll topple the iPod is when someone really makes music social again. It could be physical proximity based, it could be "logical proximity" (friends or others with similar tastes). Somehow, the joy of sharing music and knowing you made someone else happy by recommending good stuff will eclipse the stand-alone listening experience. The only question is who will crack the functional and business issues in making it happen.

#3. I'll join two disparate dots. The first is Douglas Galbi's paper on presense which you should read, or at least get the summary. The other is my essay on how successful products are those that make your customers happy, and transcend mere function.

Now I see the connection between these two. I think these are saying the same thing from different approaches. We're all junkies for neurochemical stimulation. Some achieve this through productive means, others through destructive. Our entertainments are centred around exciting our monkey brains. Darkened movie theatres with loud noise and bright wide-field pictures; strobed dancefloors and tranced-out music in the nightclub; the soothing hypnotic backdrop of TV; the excitement of the rolllercoaster. What Douglas calls "sensual media" is a codeword for "highly dopamine/seratonin/etc. stimulating" (there's lots to choose from).

We're addicted to attention, praise, distraction, status. Yet the types of committee that come up with systems like MMS are only interested in traditional functional attributes that bridge obvious user desires. What matters is how the product makes the user feel, not what it did. (Indeed, the iPod's success was the perfect blend of function and form -- that form and white earbuds being a social signal about the user's superior aesthetic habits despite the Apple price premium.)

Being useful is potentially a downright disadvantage! I suspect that blockbuster communications products almost certainly cannot emerge from a traditional user needs and product design process. The more a communications tool is used for "useless social chatter" the more certain you can be of its vitality.

UPDATE: With this last one, forget "Location-based services". Think: "Emotion-based services".

UPDATE: Here's a social music application from the research labs.

Digital identity, Web style

Web 1.0: "Please enter your username and password."
Web 2.0: "Please enter your username and password. Note: Javascript must be enabled."

Web 3.0: "Please select your federated identity provider. Please wait whilst you are being redirected. Please enter your username and password. Please wait whilst you are being redirected."

Web 4.0: "Hello, Martin."

Web 5.0: "Hello, Boris." Hey, I'm not Boris!

Web 6.0: "Welcome to IMS:HyprTxt-Global. You have 287 web page credits remaining. Select your destination web page from the drop-down menu of approved secure partners."

OPINION://Land of the setting Sony

Given that the Sony DRM fiasco rolls on, why not spin a few more punditry thoughts?

Firstly, what a screw-up from an economics perspective. The CD should be the premium, DRM-free product. The downloads are the price-discriminated limited-use products with lower bitrates, transfer and play restrictions etc.

What on earth entered their mind by putting DRM on CDs? CDs are supposed to be expensive. They're gift items, rendered in tangible polycarbonate and aluminium foil. They don't compete with downloads, as the markets only partially overlap. Just because it's music doesn't mean it is a solution to the same user need.

Secondly, this problem is getting heaped on Sony's head, but really it's Microsoft's issue. The security model for XP is broken. The view Windows has of the world is as a pre-networked OS. It tries to protect the resources of the computer from multiple programs and users trying to trample over them at the same time. As long as you aren't contending for simultaneous access, what's the problem?

But the threat now comes from outside, and the threat is to the user's privacy and security -- their data -- and not to the PC per se. Yet Windows doesn't track where each file originates from, and ask for the user to intervene when program A unexpectedly starts over-writing system or other program files. Even with an auto-run CD, Windows should pop up with a request that says "This CD is attempting to replace the drivers for your CD/DVD drive. Is this what you really want? Click here to learn more." (Maybe that last link leads to a live page only visible to people who've paid their Windows subscription maintenance tax in future ;) )

Ideally every program would declare in its manifest what permissions from the OS it needs, and Windows would render those in human-readable form. "By installing this iTunes program you give it permission to access files in My Documents\My Music, and to transfer that data over your Internet connection. Do you agree?" Note that the message comes from Windows, not the iTunes installer, in this example. Indeed, Microsoft should standardise the installation process. Time to buy out or crush Wise.

The alternative to up-front declaration of all permissions is intercepting system calls one-by-one and getting user authorisation. This is likely to result in a stream of unwelcome OS pop-ups. (Although I feel a patent coming on whereby the OS manages to quietly let the program roll on until it wants to do real harm and batch up those requests secretly in the background. Or maybe the OS scans the binary for different system call types in advance and asks permission before running the executable.)

I suspect there's a lot of very interesting research to be done in taking several hundred permissions to access system resources like CR ROM drives, printers and shared memory and boil them down into a few simple questions that any user can be reasonably expected to understand. Perhaps it'll be something like "Program X wants to have the same permissions as Program Y you already use, plus the following: ..."? Who knows! Probably a PhD there for the taking for someone in solving the problem, if you can find anyone able to blend the cognitive science and computing skills.

Back to the rant.

Windows keeps backups of changed program and configuration files, but it's all a terrible kludge with no integration into the install and security system. There's no decent "undo", where you can declare that you really didn't find a particular program trustworthy and you would like to get rid of it and all it's done to you.

MacOS isn't much better. OK, autoplay of CDs is disabled by default, which is an improvement. You'll be asked for an administrator password too, which should alert you that something is up. (Only the lowest corporate minions with Windows live without admin rights.) You can easily create "fake" users in Unix to represent a particular application. For example, web servers typically run under the "apache" user. But Unix shows its age, and these are also all unstandardised fixes on top of a broken security model. The granularity is wrong; it's not a list of known users on a computer who are attacking each other, but an unknown and unbounded number of external parties. Time to move beyond the simple user model, folks.

I'm not sure if Windows has an equivalent of Unix "chroot jails" that lock programs within a subset of the filesystem, but that's an example of the direction we need to take. But this has to be generalised to all system resources. By default a program should be able to do nothing unless the user gives consent. The world should look more like a Java sandbox, although Sun have never really got the deployment model sorted out there either.

So until there's a sensible resemblance of real security in general-purpose smart computing devices at the edge, telcos weilding IMS solutions are going to have a "safety" marketing play. Come to our closed network, we've got a security model that works (for a price).

And quite rightly so. Expecting them all to have sysadmin and network engineer skills isn't the answer. The IT folks must sort their lives out and stop building Everything 2.0 on security quicksand. Intelligence at the edge means responsibility at the edge, and at the moment we aren't living up to the needs of the users.

PS - Evil thought. Take a virtual OS product like Wine, strip out everything but the stubs. Now run all your real Windows programs inside the "emulator" that provides the security that Bill G. refuses to sell you. Total compatibility guaranteed, as everything gets passed through to the "real" OS. But nothing runs natively. And then watch the howls as MS sees Windows being 0wn3d by a third party intermediator who can now start pointing the Win32 APIs at other parties who want to supply MP3 playback etc. Yow!

All your profit are belong to us

Spotted on my evening walk around Edinburgh a few days ago:

We'll be offering them big discounts to join us so we can fleece them later with more discounts.

Actually, it's quite clever, because it makes it hard to do price comparisons between operators and does genuinely lock-in subscribers as long as the discount is comparable to the new subscriber offers and you keep offering subsidised handsets. On the other hand, billboard ads are probably an expensive way of spreading the message. New customers are unlikely to be swayed by a 10% discount a year or two out, and you've already got a database with the name and addresses of post-paid customers, to whom you send a bill evenry month.

Here's an example of some nice segmentation and price discrimination going on, as spotted in the Vodafone store on Princes Street:

Now despite all the hoo-hah about the death of traditional marketing and how we're all supposed to be conversational Marketing 2.0 by now, I do find this one rather good, both as an ad and as a business proposition. A clear demographic who are price-sensitive, likely to churn unless given a good reason not to, and will become high-revenue users as soon as they get a real job. Plus they get to self-certify themselves with relatively fraud-resistent student ID. Plus the picture was taken near the start of the academic year, showing some timing sense at Vodafone. Given Sprint's ARPU success with flat-rate data plans, perhaps Vodafone are onto something good here?

Dear Santa

I've been a good boy this year. Well, a bit good. Sometimes. But I hear you'll be making deliveries in just a few short weeks, so I'd like to get my request in early as the elves may need to spend some time down in the lab to get my Xmas gadget ready.

Here's my problem:

We've got an uncountably infinite number of Post-it notes on our study desk, most of which are scribbled items from phone calls. Can you help me escape sticky note hell?

What I want is a little digital tablet that sits on a desk, with a touch-sensitive monochrome screen. Wi-Fi enabled, and probably powered by a long-lasting chunky battery. Kind of like a Windows Tablet PC, but $100 for the whole thing, not just the OS.

At the side is a knob to turn to scroll for "more blank digital paper". And maybe a wee thermal printer at the bottom to print out hard copy of the screen? Nothing fancy.

Perhaps if your elves aren't too busy you could add another knob to select from multiple users? That'd be ever so nice, thanks.

When the phone rings, I can just scribble notes down on the pad using the stylus. It's always on, unlike my PC. Notes are automatically filed against my call log, and are easily retrieved from my Skype client from anywhere in the world I log into the Net. The caller ID and time of call is, of course, attached to the note; a Google search is done to catch the most likely caller name, where possible. If I write a note whilst I'm not on the phone but while actively browsing the web, then that URL is used as an annotation too. Anything else gets queued as a tentative "to do" item.

Everything is searchable, especially since handwriting recognition is used. I can look at the original note image too when the recognition engine can't quite grok my scrawl. Everything integrates with my PIM and personal productivity tools. If I jot down a phone number, it goes in my address book; I receive a reminder to fill in the rest of the contact details when I'm next at my PC. (I can replay that snippet of the call to remind me who the caller was if necessary, and get the number right.)

Who knows, maybe you could even integrate one of these into a Skype phone for me? I've been quite good, really I have.

Best regards to you and your helpers,
Martin from Edinburgh (aged 34½)

PS - We don't have a chimney and the front buzzer isn't working, so can you Skype chat me to be let in? I'll be up until about 1am as it's quiet when the kids are in bed.

The snake that ate itself

Hmmm.

This long tail thing.

Isn't it interesting that so much of this microcontent is captured and hosted by dirty great big commercial Net enterprises? And that almost none of our photo sharing is direct P2P, for example?

It's as if the head is eating the tail. I'll have to go fetch one of my old topology textbooks to see what's supposed to happen next.

Don't worry, be happy

David Isenberg is worried that I've been turned by the telecom borg into a fan of telcothink. I can see why he's concerned, but I'll try to explain why I don't think it's a problem.

Network Neutrality entrenches the current status quo in the US. The conditions in the US are unique to that country; no other has a comparable market structure and regulatory environment.

Here in the UK I subscribe to Zen Internet. They block ports 135-139 on TCP and UDP to exclude Microsoft LAN file-sharing protocols from operating across the WAN.

And I don't care.

Zen caters specifically to people like me who value a high-quality Internet connection and are willing to pay a small premium for unfettered access and quality customer service. If no ISP offers truly "unfiltered" neutral Internet connectivity in the UK, it's because there's no demand for it. Why campaign for something that the public by its actions has expressed no desire to have?

There are better remedies to failed telecom competition laws than Net Neutrality. The most obvious is to simply copy the rules from somewhere else that has cracked the problem. Plenty to choose from higher up the list! I suspect that this will be too hard a pill for my American friends to swallow, so they'll just have to continue with their disease until he symptoms worsen and the bitter medicine tastes less foul.

Personally, I think it's wonderful that SBC's CEO falls asleep at night wondering how he can get Google to pay for his pipes. This is precisely the kind of creative business thinking we need! Yes, they are HIS PIPES -- at least colloquially, as I'm sure the shareholders have an opinion on who actually owns the business. If he can find new ways of funding them, whoopee!

The problem is that he can possibly make such price increases stick because he's established significant market power by ensuring the rules preclude real competition.

More radically, you could try to seed a new "open" Internet via a General Peering Agreement which, much like the GNU General Public License, would agglomerate an ever-bigger pool of openness. That said, it isn't easy to see where you would start now to achieve this. It would have been a slam-dunk 15 years ago when most of the Net was the wiring between universities and a few early entrants like Sun Microsystems.

Another alternative would be a radical approach that would allow customers to "opt out" of Bell hegemony and reclaim ownership of their local loop at regulated rates. A more extreme form of unbundling -- one which could even be done at the exchange level. Imagine receiving a ballot card which would allow all the users of an exchange to select one wholesale provider! Now that would generate some business on K Street.

Freer rules on unlicensed spectrum would help those who dream of a wireless mesh future bypassing access bottlenecks. And so on. In fact, pretty much anything apart from Network Neutrality, please!

Ultimately, if the customers really only wanted TV with a 'buy' button and that's all the market was capable of delivering, then yes I'd be in favour. But as David notes, the "market" doesn't really exist in the US. The problem is that blanket Net Neutrality rules will make things worse, not better. It'll eliminate the bottom end of the ISP market by preventing price discrimination, and these people will be attracted to the more price-discrimination friendly IMS world. Not the outcome we desire.

Call me a Hayekian or Chicagoan, but I really believe that the price mechanism is important, and that it's vital that monopoly rent price signals be allowed to be sent. How else do you ever expect to attract new capital to create competition?

The time to apply Network Neutrality rules is this: an incumbent with monopoly or duopoly power in the connectivity market also offers an application service like email, voice telephony or TV. Only then do you have cause to ensure that the application market remains open. (You'll need some small print to deal with cases where it's an affiliate who stands to gain and pass the money over through the back door; e.g. an SBC-Yahoo! deal which excluded rival portals.) All other forms of price discrimination are legit.

As mentioned before, there's also the issue of truth in labelling when people buy "Internet access" or "broadband". That needs to be dealth with separately too.

If you've got cancer, you've got to take the chemotherapy. The morphine is only there to relieve the pain, not to make you better. Sorry for the unpleasant diagnosis, but that's the way it is.

Dummies Guide to Telecom Strategy

Step 1: Note BBC article on Growth concerns rattle Vodafone:
"Vodafone has been struggling to reverse a drop in Japanese user numbers. Fears over slower growth at Vodafone in the coming year have driven shares in the mobile phone giant sharply lower."

Step 2: Ask which product 90% of the revenue comes from.

Step 3: Ask how they've improved this product to distinguish it from the competition as a result of their tens of billions of network upgrade expenditure.

For the usual fee, I'll run a workshop for them with steps 4, 5 and 6 :)

Isn't it an amazing industry where the one product that hardly ever changes or improves is the one that pays the bills? We can make 8-megapixel camera phone, but we can't seem to get into market one with better audio quality or that can handle voicemails offline.

Healthy telecom

I think this short essay by Ben Hyde is unmissable. Nominally it's about the pricing of health club memberships. But just do your "sed -e 's/health club/telecom/g'" search-and-replace and it magically becomes the snappiest description of the state and future of telecom, ever.

OPINION://Would the real Network Neutrality please stand up?

I'm sure this is something that's been raked over before, but I don't see a common understanding of what 'Net Neutrality' actually is. Despite many of the Internetorati demanding it by law. Whatever.

There appear to be several different camps, which you could paint as "bottom of IP", "middle" and "top".

The bottomistas would see enforced Internet Protocol itself as a premature optimisation and violation of the end-to-end principle. Unhappy that you only get IPv4 or IPv6? Still grumpy that you only have IPv4 and not even IPv6? Really miserable that your VoIP packets are staggering under the poisonous load of IPv6 headers? You're a bottomista.

I suspect there are some fundamentalist bottomistas who would object to your service providers not giving you a choice of Ethernet, ATM or roll-you-own-L2-protocol. We'll pretend to be out and not answer the door when they knock.

The middlemen draw a distinction between "raw IP" (before the ISP gets ahold of it), and "retail IP", which is what you and I get to experience. This kind of suggests that the OSI 7-layer model got it horribly wrong, because there's a fundamental cleave right in the middle of layer 3, where IP sits. Fair comment, but sounds pretty radical to me. Although I've never really got layer 6, so maybe they're onto something.

Then you might be a "top of IP" kind of girl. You can cope with the discrimination creeping higher up the stack to the next layer, where particular TCP and UDP ports and flags are screened off. But you only get queasy if particular commercial service providers or applications are targeted. Blocking off port 25 is OK to you, since it doesn't discriminate against any particular email service provider.

Sadly, these are all hogwash and bunkum.

Net Neutrality is a dead end, because as Searls and Weinberger correctly noted, the Net isn't a thing, it's an interconnected set of agreements. These are bilateral and freely entered into. And since those agreements weren't modelled off a viral template such as the GNU General Public License, they are all unique. There's no contageous clause that insists the Internet becomes a "thing" by virtue of everyone having to agree to freely and neutrally pass packets in an ever growing pool of Neutraldom. So to impose neutrality you're going to have to interpose yourself into a lot of contracts. (Another reason why "Internet Governance" is an oxymoron when referring to anything beyond IP address allocation and routing, which do require some central agreement and co-ordination.)

There's no grand "first principle" from which you can derive network neutrality as an economic argument. No public choice, competition, game theory or otherwise construct that leads us there. Indeed, saying that the public would benefit if there was a transfer of wealth from providers to users isn't good enough. You're playing with matches in the oil refinery when you start messing with property rights. Yes, those networks are mostly funded by risk capital. The local loop copper of a fixed operator may still be hangovers from monopoly days, but generally those assets were brought into the private sector on clear rules, the stockholders took a punt, and some of the better informed ones who saw the long-term potential of DSL etc. got to reap a windfall. Of course in parallel the telcos have done a superlative job of lobbying for rules that keep competition out, but that's a different issue.

But wait a moment, it gets worse.

What if I wanted to allow people in the street to access my WiFi? But I only want to offer web and email, so as to make P2P filesharing tricky. As a good public-spirited citizen I put up a splash page so they know exactly what's going on. Am I allowed to? Or is Net Neutrality only for the mythical mystical "them"?

When in deploying my network do I need to "design-in" neutrality? Concept, build or operation? Should we be outlawing the deployment of PSTN-specific GSM networks because they're "unfair" to non-PSTN voice applications like Skype? Am I allowed to deploy non-technological measures for neutrality, such as contract terms? Am I allowed to read the packets, but not block them, in order to enforce my contract (repeat - freely entered into by both partners)?

What level of jitter and congestion is perceived as "neutral"? What if I deploy technology like Qualcomm's 1xRTT, which separately supports voice and data, with PSTN-only voice, but the data is a bit lousy for VoIP? Is that being unfair, or merely a realistic response to the limitations of technology?

Is neutrality a wholesale or a retail problem? What if the access infrastructure owner offers "neutral" IP connectivity, but no retail provider chooses to pass that on directly to the public without layering on some filtering and price discrimination?

Oh, and what's so special about the Internet? Do other IP-based networks need neutrality principles? Do any networks? Should more network industries be forced to forego "winner takes all" rewards? Google looks awfully dominant at adverts, doesn't it... I wonder if that ad network needs a bit of "neutrality"?

Incidentally, althoug I'm against blanket rules enforcing neutrality, I would reserve it as a tool for post hoc competition and antitrust law enforcement. And I think you can make a stand on Network Neutrality on political and free speech grounds, but that requires a very different policy approach (i.e. not one that confiscates the proceeds of private capital investment).

And if the users value a neutral connection so much, perhaps it's time for them to self-organise a bit, build their own networks, or tender for connectivity together -- rather than rolling over and accepting whatever the local telco can cableco provide by default. But that would burst the illusion that government is here to save us from ourselves and we've no need to take personal responsibility for our connectivity freedom.

The moment you try to define Network Neutrality, you have to choose a layer, a time, a market, the participants. You have to make non-neutral choices in order to define the boundary of your Neutrasphere. There is no 'neutral' space devoid of favouring the interests of particular market players. The contradiction is inherent. There is no way to finesse it away.

Everything's bass-ackwards. Neutrality is a sign of healthy supply competition and sophisticated ways of demand expression. It's an output, not an input. Beware demanding net neutrality as a blanket principle, rather than a scalpel to excise particular local anti-competitive acts. Khrushchev declared the corn harvest was great, too -- but it didn't create the incentives for more corn to be sown and for the system to succeed on future iterations. And net neutrality rules are also likely to have the exact opposite effect of that intended.

Net neutrality messes up freedom of contract, freedom of association, and property rights.

I don't buy it.

Bad Sony, Naughty Sony

I've bought about £3000 of Sony equipment in the last 6 years or so, and undoubtedly have piles of Sony-issued CDs and movies.

I don't foresee myself spending another penny with them until they repent. DRM is clearly incompatible with general-purpose computing devices. It's one thing to build a closed product like the iPod with clear boundaries and expectations, quite another to launch a quasi-criminal broadside against your customers' PCs to install DRM measures.

Hey, how about the Million Blog Challenge: 1,000,000 blogs with their templates re-written so every post starts and ends "*** Don't buy Sony products until they respect their customers: www.sony-screws-your-pc.com ***". Maybe that'll get their attention? Time for a PledgeBank initiative?

Childish lashing out? Not a patch on the damage Sony's done to their customers and people's confidence in their computers, electronics and media.

If one wanted to be vicious and infantile, it would read "*** Samsung make great displays, phones, laptops & the new XBox is cool, so why buy Sony? www.sony-screws-your-pc.com ***".

Meow.

Wanted: office space

I am looking for some office space in or near Edinburgh city centre. If you are located here and willing to sub-let a desk, just drop me a note.

Serviced or non-serviced, doesn't matter. As long as I can provision electricity, Internet access, I'm happy. Desk phones and IT support are for wussies. Must have windows and daylight, else I'll get depressed and want to read blogs all day to cheer myself up. Access to a loo and tap expected. Cheap beats posh. Quiet preferred. Strictly no babies or toddlers ;) I'll go to IKEA and grab a desk and chair myself if need be.

"Wherever I lay my laptop, that's my home".

Conference calls

I'm going to be at two London conferences in the next few weeks.

On Tuesday 22 November I'll be crawling out of bed at 4.30am to catch the first flight down to attend The End Game for Broadband Britain conference as blogger-in-residence. The Access to Broadband Campaign (strictly non-profit, no jokes about telcos please) is auctioning off 10 precious seats on eBay as well as sponsorship of Peter Cochrane's keynote (which is really gunning ahead!).

Then on 30 November and 1 December is NextGen Services and Networks, right next to Heathrow. Ah! The smell of kerosene wafting across the Thames Valley, home sweet home. (For the unfamilar, my father worked at British Airways for 30+ years at Heathrow at their maintenance base, and I was born near the other corner of LHR.) Anyhow, I'm giving one of the keynotes, nominally on "Being There". A mixture of Douglas Galbi's insights into the nature of presence, pointers to some examples of innovative presence, and showing the model I use with clients to explore the "Voice2.0" space. All in 25 minutes. Gee, I'd better get some powerpoint done.

Both look like they'll be cracking events, lots of controversy, plenty to learn. If anyone's interested in meeting up at either one, just drop me a note.

The Intermediators: DialAbroad

This is the first of a trio of little articles on people intermediating telephony in different ways to add value and bypass traditional toll charges.

There are many providers of cheap dialling service in the UK. The windows of local ethnic shops are covered in adverts for them. It isn't an exaggeration to say that London is the dominant hub of intercontinental traffic exchange in this hemisphere. Calls are very, very cheap. I can call people in the US for less than the usual intra-US long distance call rates. National calls are cheap, too. For instance the 18866 access code gives you unlimited UK landline calls for a 3p (about 5¢) flat connection charge. No metered calls, unless you really like paying.

So if you're going to stand out from the crowd, you'd better be good.

What attracted me to DialAbroad was its unique unbundling of the telecom business model, and their blending of wireline and wireless toll re-intermediation.

To obtain credit they use reverse premium SMS, where you text a string to a short code number and are dinged a few pounds by your cellular operator. The cellco takes a cut, and passes on the bulk to the partner. This becomes your credit balance, nominally the same amount as you were charged. You then dial the access number, dial a PIN (if not from your cell phone), and drain down your credit balance. In additional you use minutes at the usual rate (i.e. virtually free on landlines, and cheap inclusive ones on mobile).

This is different from many of the other cheap dialling plans. They either rely on direct regulatory mandate to get access (such as the 18866 example), or directly piggy-back on mid-rate tolled calls like 0870 numbers that offer revenue share. In this latter case, you might be paying 15p/minute to call an 0870 number, 4p/minute goes to the partner, and 2p/minute is used to pay for international call termination, leaving a small profit for the partner.

The advantage of the DialAbroad way is that mobile users are calling a standard number which can be part of heir inclusive minutes, whereas whacky numbers like 0870 aren't inclusive and are often charged at high rates.

I don't normally use any of these services -- I don't make enough non-Skype calls for it ever to be worth my while shopping around! But for your benefit, dead reader, I spent my £3 and made a test call to my US SkypeIn number. It works!

So as an example of the different functions of an operator being separated and re-mixed, I can't find a better case. Payment and access separated and re-modelled. A brilliant arbitrage play, if only subtly different from the bog-standard norm.

So I contacted one of the founders, Chris Smith, for an interview to find out more.

Telepocalypse: What difficulties have you encountered in getting your business set up?

Chris Smith: The main difficulty was largely a technical one; how to integrate an incoming and outgoing facility into one account to try and reduce roaming charges. The amount of research and development was vastly in excess of what we had originally expected.

T: Have the telcos or regulators put up and barriers in your way?

CS: Not yet! We did carry out some preliminary talks with OFCOM [the UK regulator] to check that our position was secure and that the mobile operators could not simply deny access to our service, and were told in no uncertain terms that OFCOM only really deals with BT and competition issues related to BT.

T: Do you think that the telcos will restructure their international call pricing as a result of your service?

CS: Undoubtedly, yes. The industry generally is moving away from voice to data to maintain AMPU in the realisation that voice margins are going to be cut to the bare bones in the wake of competition anyway. The cost of roaming data is certainly going to be the next point of attack for us - currently you could find yourself paying up to £10/mb when travelling abroad.

T: What about your customer base or business has surprised you most?

CS: We were surprised that our customer base is made up mainly of normal people, not the early adopters and technophiles that we expected. It seems that almost everybody is aware of the prohibitive cost of roaming and now they have a comprehensive solution.

T: How do you see the future for businesses like yours 2-3 years out from now?

CS: Telecoms changes very quickly so it is hard to predict. Clearly the mobile operators will respond and price will once again be the key driver - we feel we have a very robust business model and pricing structure and intend to compete with the big 4 for some time to come.

So in conclusion, whilst DialAbroad is hardly going to lead the Voice2.0 charge, it renders the carrier into separate "dumb payment service" and access pipe. And it's an interesting example of the 2rd law of telecom: for every toll booth, there is an equal and opposite bypass. Many thanks to Chris for sparing the time to talk. I wonder if any of the telcos will take the hint and realise that all those CRM systems, billing engines and retail outlets make them look rather like banks? Who said you needed to make money moving bits when you can do it moving money?

UPDATE: Here's a typical convenience store shop front from my cosmopolitan neighbourhood.

Toolbar tips

Excellent service deserves some praise. I needed a new transformer for our low-voltage kitchen light, because the old one was cutting out. Big bad vibes to manufacturer Brilliant whose customer service was worse than useless. Our plumber (another story - leaky shower, insurance claim, big hassle) recommended Edmundson Electrical for getting a part. They were superb -- the guy helped me find the right part, called me back after checking with a colleague, and the price was good too. I'm pleased to have done business with them.

But go take a look at their web site. Now, I've upgraded my Flash player this evening because of a security alert. But when I went to view their site in the old version of Flash using Firefox, it didn't work at all. Usual moral of story, don't use Flash unless it adds value. I had to load it in another browser, and even then because of the Flash I couldn't just cut'n'paste their phone number into Skype to check their opening times (not on the web site - duh!) and whether the part was in stock. (There's a Flash-free version, too -- hope your auto-detection works better than it did for me.)

With the release of the Skype browser toolbars, now is a VERY good time for merchants to go and take a look at their web sites and re-think their customer contact strategy. These toolbars are going to change how people use telephony.

Firstly, get the mechanics right. Will the call go through to the intended number? If you've not expressed it in international format, and it's not clearly a North American number, you may have a problem. Particularly if the domain doesn't give a clue as to the country (e.g. .com), or gives the wrong clue (e.g. localised domain names for countries like Ireland, but a pan-European call centre in the UK.)

Next, make sure it's a number that's callable internationally, if that's your intention; or exclude international calls, as need be. Some numbering ranges are deliberately restricted to international callers, or have strange cost structures (e.g. 0870 numbers in the UK).

It's also a good time to re-think whether you want to have an 800-style number. There's a bigger cost, for sure, but even the folk with the basic version of Skype can call these without subscribing to SkypeOut. How much business can you afford to lose?

You also need to re-think your contact strategy. The number on your web site may start to drive a lot more of your calls. Do you just want to have a single mnemonic 800-type number (e.g. 1-800-AIRWAYS is British Airways), and force people to navigate an IVR? Or break it down into IVR-bypassing numbers? Do all numbers and internal destinations deserve promotion on your web site? Which ones drive revenue and customer satisfaction? Which ones are just cost?

Telcos are used to using their network distribution muscle to control the application services. Now the boot is on the other foot; the money isn't from the phone call, but from the introduction. Companies like Google, Skype and Microsoft out-distribute the telcos easily here. The real fight is on who gets to display and re-intermediate these inbound call channels. By the time the call starts, the economic activity is all over! Soon these new entrants will start to upgrade the experience to "Voice 2.0" standards, with better call quality, multimodality, identity etc. built in ("bright purple minutes", Jeff!). Would you rather place a PSTN call and have to dictate your details, or a Google Talk call which makes the experience simple and privacy-enhanced?

Regardless, the job of being a telco manager at your everyday corporation is about to become a lot more interesting and high profile. No longer do you have a single "phone system" to worry about, but rather a whole suite of possible voice-enhanced and real-time customer interaction channels. I recommend having lunch with your e-commerce team in the next few weeks. You've got work to do.

Very meshy

Will mesh networks necessarily evolve in an 'open' direction? I see this as an assumption, and one which is not necessarily true.

We're seeing a progression in the nature of tele/com over a 50+ year period. Pre-Carterphone and the deregulation process, you owned nothing. You might even have been forced to rent your CPE from a limited telco-controlled selection.

30 years from now, we anticipate a complete reversal. The users, directly or indirectly, come to own the network. That could be via direct ownership, such as mesh or customer-built fiber; indirect, via some co-operative, housing or municipal association; or "reversed" where the other "end" of the end-to-end stupid network is someone like Google who subsidises connectivity. In any case, the telco has no more say over the transport than the company who laid and maintains the road outside your house has over where you drive.

We're just in a messy middle transition phase with some unfortunate path-dependent detours.

The physics suggest a very large future for mesh networks. We can make up for hard Shannon limits by substituting computational effort in the devices. This computational effort is currently limited by our technology and imagination rather than physics, and seems set to remain so for several decades to come.

Now for the hard question: will the co-operative, open model of the IETF/IEEE necessarily triumph in implementation of mesh networks?

Future A: We end up with self-configuring, open, abuse-resistant mesh networks that easily attach themselves at suitable points to open Internet long-distance backhaul. The problem is mainly one of technical co-ordination (e.g. as the Wi-Fi alliance does for 802.11 interoperability).

Future B: We end up with closed mesh networks "owned" by those with the greatest distribution muscle. These need not be telcos; indeed, MotoNet and NokiaConnect are just as likely. The problem becomes one of economic co-ordination. For example, Nokia mesh devices are more attractive because Nokia has negotiated a broader coverage of back-haul provisioning and interconnect agreements; and Nokia's 30% global market share gives it a decisive distribution advantage in attaining a critical mass of devices.

(If you're a long-dated bond holder of a mobile operator's debt, you're excused now if you need to make a quick trip to the barf room, since neither scenario seems to play well for you.)

I find it really hard to discriminate between these futures. Are closed networks like Skype an inevitible short-term solution to integration issues of new technology, with the long-term always the property of open networks?

Sticking with the app layer as an example, will Skype prosper because it's "cost of entry" is zero, unlike the prior closed e-mail operators like Compuserve? What are the real determinants of whether networked systems become 'open' or 'closed'? Do those terms really have meaning?

Open for comments!

OPINION://Poisoning patents in the park

According to Slashdot:

Amazon.com has a new program that wants you to 'Complete simple tasks that people do better than computers. And, get paid for it.' (example: 'Is there a pizza parlour in this photograph?'). For each task you complete you get a small payment, usually ranging from a few cents to a little under a dollar. It's named the Amazon Mechanical Turk after a famous hoax from the 19th century. Kill time and get paid in tiny increments to boot!

As if to prove there's nothing new under the Web, here's my prior art from 2000, when I worked at Oracle. (Note: this was done in my own time, and isn't Oracle intellectual property. But I did pitch it to Oracle as an idea.) What's interesting from a telco perspective is their failure to further develop the payments and small transactions side of their business. They should be in a great position to broker small payments between network users. The mobile operators are starting to make a go of it, with some success using kludges like reverse SMS. The landline operators haven't really tried. (As usual, micropayments got caught up in a "content is king" miscalculation as payment for media, rather than focusing on user-to-user payments.) Perhaps if the billing platforms had been just a bit more open, things would be different?

Interestingly, Paypal has become the "banking parasite" equivalent of the VoIP parasites like Vonage. To operate fully Paypal requires you to back up your identity with existing banking products like a checking/current account and credit card. The banks pick up the expensive sales, marketing, credit control, operations and fraud costs of these products. By making two small random deposits into your account, Paypal gets to suck out some custmer data -- the association of a person and account. They can be assured of its authenticity, all without having to make a business development deal with a bank anywhere. My bank now doesn't allow automated establishment of direct debits (I have to fill in a hand-written form), which helps them to stymie companies like Paypal leaching off their business model. The banking equivalent of port blocking! Funnily enough, telcos have credit-checked customers whose real addresses are known. But that information hasn't been capitalised upon in any horizontal business model extensions.

Anyhow, back to the main story. As a follow-up, I wrote:

The attached typemein.com proposal is really part of a bigger picture. What I've proposed - snippet data entry - grabs one of the lower hanging fruit on a big tree. In the longer run, what I'd like to create is a form of exchange for unskilled and semi-skilled on-line labour.

Hopefully that's an Amazon patent application poisoned with a bit of prior art.

So, from historical interest, here's the lightly edited version of my original paper. Read, and weep about another missed telco opportunity. Warning: Long, laboured, and only marginally on-topic.

Introduction

Who wants to be a thousandaire?

Let’s say you work for a well-established bank, running their cheque processing centre in Stockholm. Your 100 data entry clerks cost a fortune in pay and overtime. But what can you do to reduce costs?

Now imagine you’re a student in Lithuania, just across the Baltic. It’s hard to make ends meet, and you only get paid $1 an hour working as an office cleaner in the evening. If only you could find a better-paid job that allowed you to work at more convenient hours.

This business proposal shows how we can supply the Lithuanian student to work for the Swedish banker, and make a profit from the global differences in prices for unskilled labour.

We first describe a particular application of these ideas in depth. All of the relevant features of the idea are covered by this one example. At the end of the document are suggestions of ways in which the business model could be extended to cover other business applications.

Snippet data entry: an ideal starting point

There is a galaxy of big enterprises involved in processing paper-based documents: not just banks sorting millions of cheques each day, but also insurance companies receiving van-loads of claim forms, and governments issuing tax forms to businesses and individuals. Whole industries are based on processing these documents: data entry, remittance handling, workflow, fraud detection etc. This business proposition focuses initially on the data entry segment. In particular, we will focus on those documents which are time-sensitive (e.g. cheque clearing) or where demand is highly variable or short-lived (e.g. share IPO application forms).

Traditionally these documents were physically moved from office to office to have the data entered. In the last decade this has changed to image-based solutions, where documents are scanned and the images are stored on a central computer system and displayed on PCs for data entry. I propose to publish these images on the World Wide Web to enable lower-cost workers to enter the data, based on a variable piece rate. We will create the world's first marketplace for direct on-line work. This is a totally novel business model. Indeed, it fails to fit into any of the conventional categories of e-commerce. It involves the creation of an entirely new industry.

Until now remote data entry was not technically or economically possible. The telecommunications infrastructure was too slow and expensive; deployment of powerful networked computers was too thin; the need to remotely install complex PC applications too onerous. In the last 1-2 years this has changed; cheap PCs are fast enough to do high-speed data entry via a browser, and Internet access is becoming cheap and widely available—even in less developed economies. Even better, there are target groups like students who can provide a ready-made workforce available with exactly the right ingredients: wired, needing money and with time to spare.
The business will make money by charging a higher rate to those who need data keyed in than is paid to people doing data entry.

Clerical workers in Western countries occupy expensive offices and are paid Western wages. Their salaries are padded with generous benefits such as sick pay, pensions, and paid leave. They are often heavily unionised, and sometimes strike-prone. Some countries have heavy-handed employment regulation; for example in Norway it is (amazingly) not permitted to measure the individual productivity of data entry workers. Moving to an overhead-free environment with a frictionless labour market leaves a vast price gap from which to make money. The differences really are enormous: Sweden’s per capita GNP is approx. US$20000, compared to US$2000 a few hundred miles away in the Baltic states.

The proposed business has significant barriers to entry once established (see below for more details). Combined with the arbitrage of such extreme price differences, the potential for profit is considerable.

Overview

For the purposes of this document we shall refer to the enterprises that have data entered on their behalf as our clients; after all, they provide the revenue. Those who perform the data entry are the subscribers. Our employees are those who work directly for us in sales, marketing, technical functions, etc. We now discuss in more detail exactly what is being proposed.

Who can be a client?

Anyone with a high-volume business of documents to process. We aren’t targeting those who want a few pages of a thesis typed in. Typical clients would include banks, insurance companies, utilities and government agencies.
Some types of client may have very specialised requirements. For example, the postal system will need postcode data entered, and will have a huge peak in volume before Christmas; but all data must occur within 5 seconds of scanning whilst the envelope is still in the machine and awaits sorting. The system may require tailoring to each customer’s requirements as a broader range of clients is addressed.

What data is being entered?

Initially we’re focusing on machine-printed or hand-written data. In particular, we are looking for data suitable for snippet keying. This is where individual fields can be cut out from the overall image. This data is either positioned within predictable boundaries on a document (e.g. your date of birth on a standard application form), or can be located on the document using image processing (e.g. looking for the address on an envelope, or the pound sign on the amount field on a cheque). Long reams of text to enter are not particularly suitable, although one could conceive of breaking these up into line-at-a-time units.

This use of snippet keying is critical to the exercise. Most importantly, by extracting data from its context, it becomes safe to display it publicly. We never display the whole document except to the client’s own staff. It also chops the data into standardised pieces, and avoids people having to type in whole documents, where the temptation is to skip hard ones by logging out and trying again for an easier one.

Where does the data come from?

We will have to integrate with the imaging systems already in place at the client’s processing centre. Sometimes they may specifically install an image-based system to be able to take advantage of our service. The rules for locating the fields can sometimes be complex (e.g. cheque sizes and field positioning vary significantly); in this case we may need extensive integration with the client’s legacy systems to extract these rules.

What does a subscriber do?

When a subscriber logs in, they will be presented with a number of different data entry tasks available, and an indicative price per item entered. They choose the task they want to do. Some people may prefer high-speed numeric keying, others names and addresses. They then key in data; when they want to stop, they can. Certain types of data may have very simple entry rules (“just type in each 2 digit number”); others slightly more involved.

How is the data validated?

Some data (like account numbers) will have a check-digit that verifies no keying errors have been made. Other fields (e.g. a bank sort code) can be checked against a standard list. Some can only be checked in combination (e.g. “cheques with transaction type 10 can only be for business accounts”).

No validation is done at the time the data is typed in; instead, this is done at the back-end, with items that fail to validate being sent out for re-keying. This keeps the data entry application as simple as possible.

Certain types of data are very important that they be entered precisely. Examples include the number of shares applied for, or the amount on a cheque. There may be no way of validating the amount entered directly. In these cases the data will be keyed in twice by different subscribers and the values compared to check they are the same.

Key business features

Advantages of Business Model

There are some important advantages to the business model proposed above:

1. We can distribute work over several time zones. Data may become available to be keyed at times when nobody would otherwise want to key it in.
2. We can cope with big peaks in demand by increasing the supply of labour by offering a higher reward for work.
3. The clients supply most of the computing infrastructure. The capital costs are relatively low; we aren’t building the underlying data processing rules and infrastructure.
4. We don’t need to recruit millions of subscribers, and marketing costs are therefore not in the same league as most Internet-based enterprises. A traditional B2C business increases its revenue roughly in proportion to its subscriber base; in our case, we are primarily interested in clients rather than subscribers.
5. Recurring revenue from clients, so client acquisition costs are kept down compared to total revenue.

Barriers to entry

Particularly critical are the high barriers to entry to any future competitors:

1. There is a network effect. The more subscribers you have, the lower the price you are forced to pay them, and the higher your margins. The more clients you have, the greater the variety of demand profiles you have to address, and the greater the opportunity to smooth out supply and demand between clients and subscribers.
2. Any newcomer will have to offer a better deal to subscribers than you do. As an established company, you should be able to get a higher price from clients (as you can offer faster delivery and are able to cope with greater peaks of demand than a newcomer). Therefore you can enjoy the same margin as the newcomer whilst offering subscribers a better deal. (In effect you are acting as a “union” for subscribers to extract the best deal from clients.) The newcomer will therefore find subscriber recruitment more difficult.
3. Getting people to believe that they can genuinely work on-line and not be ripped off will be a hard task. But once you are established, any newcomer will have to persuade potential subscribers they are going to pay up and be at least as reputable as yourself. A single newcomer advertising on-line work who fails to live up to their promise will seriously damage the chances of any subsequent challengers.
4. Once established, any rival will face a high credibility gap with clients. This type of outsourcing cannot be done by a small company. Only someone with a combination of document image processing skills, Internet-based commerce expertise and a network of subscribers will be able to enter the market. Clients will feel much safer with someone with an established track record, and will have much more confidence in achieving the anticipated cost savings as soon as possible.
5. You will build up a detailed knowledge of pricing history, and supply/demand management. You will also have devised standardised methods of back-end integration. Any new entrant would lack this, so to ensure supply of subscribers would have to offer higher payments. Therefore they would have to overcome significantly lower margins at start-up compared to an established company.

Revenue stream

A unique business model is nice, but it doesn’t pay the bills. Where will the revenue come from?

Unlike too many Internet ventures, this proposal has a clear revenue source from the outset, namely the difference in price between that charged to the client, and that paid to the subscriber. Furthermore, unlike many Internet-based business models, this does not have huge sunk mass marketing and infrastructure costs incurred prior to revenues appearing. We only spend money on integration and subscriber acquisition once we have a contract with a client.

It is possible that at times the service will be run at a loss to ensure sufficient subscribers to cover peak demand, or to encourage new subscribers. Established techniques for forecasting and managing pricing and supply, for example as used in the airline industry, will be used to ensure we make a profit over the longer term.

There are ways of trying to squeeze extra revenue from subscribers by marketing other services or advertising to them. However, we have to remember that these people are unlikely to be the prized cash-rich/time-poor customers normally sought after by B2C enterprises. Therefore unless there is compelling evidence to the contrary, the business model should not be muddied by such additions.

Partners

Potential partners include the following:

• Imaging and document processing companies (e.g. IBM, Unisys, BancTec.). Their existing client base are our potential clients too.
• System integration specialists (e.g. EDS, Cap Gemini). To scale the business, we don’t want to have to grow an army of back-end integration specialists. These partners can supply these ready-made.
• Outsourcing companies (e.g. the above, plus others like Siemens Business Services, CMG). Some of these are already creating “virtual” document processing centres, where several organisations have their processing pooled.
• Clerical labour suppliers (e.g. Manpower), possibly indirectly (e.g. student unions).
• Banks, credit card companies, money-transfer agents, e-money suppliers, retailers. These will be required for paying subscribers.

Some of these could also be potential competitors, so care will be required.

Marketing

Clearly there are two completely separate audiences to market to: the clients and the subscribers. The former will be large (and potentially conservative) organisations that will need to work with experienced sales personnel. Traditional means of advertising in industry journals and general business publications are most appropriate.

Marketing the service to subscribers is a much more interesting challenge; uniquely, you are offering the opportunity to earn significant amounts of money rather than spend it. The marketing strategy is likely to centre on direct means of contact with potential subscribers (e.g. students, existing data entry clerks). This could mean standing outside the gates of college lecture halls handing out marketing material. Generating interest from subscribers is also a text-book candidate for viral marketing techniques.

Given the unique business model, generating headlines in the media should be less of a challenge than for those with more conventional B2C or B2B offerings.

Development Issues

There are a number of different ways that the business could be developed. These include:

• Target client market. What type of client offers the best entry route for initial scaling? Utilities? Banks? Government?
• Target subscriber market. Would we be looking to take on students? Housewives? Office workers who want to earn a bit on the side after-hours?
• Scale of market entry. Too timid an approach and the promised network effect fails to materialise; too ambitious and you could be faced with expensive back-end integration disasters, or an over-stretched technical and business infrastructure. Our network effect is different, too, compared to the standard “Metcalf’s Law” version (which states something like: “the value of having a fax machine is proportional to the number of other people who own fax machines”); understanding the mechanics of this would be important to determining the point beyond which market domination occurs.
• Geography and internationalisation. How international a client base do we want? To what extent do we ship images over borders? Or do we try to keep processing more local?
• Relationship with subscribers. Do we want a formal employer/employee relationship? Do we want to treat them as surrogate employees but not to have such a legal status? Or would we rather not even know their identities? Would we farm out subscriber management to a 3rd party?
• Employment and tax law. Where should the business be based for tax purposes? Would the business have to pay employer taxes if based offshore? Would you have a health and safety duty of care to subscribers?
• Payment pricing model. Do subscribers get paid per field keyed? Per 100 fields? How do we vary the price? Do we set the price, or does the subscriber set the price and only gets work if available at that price? How do rewards for accuracy get incorporated?
• Payment method. How do you transmit small-to-medium sized payments to people across the globe, who may be in locations without a highly developed banking infrastructure?
• Revenue pricing model. How exactly should the contract with a client be arranged? On a simple per-item basis? What about data quality? Coping with uneven and unpredictable loads?
• Distribution channel. The Web is not the only route to publish images. Interactive TV could also provide an ideal medium. Less likely, but still plausible, are wireless Internet devices and PDAs. We could also deploy in existing processing centres, so data entry work is shared amongst several client workforces.
• Systems integration. Do we perform the back-end integration with clients’ image-based systems ourselves? Or do we present a standardised interface to each client, into which it is the client’s responsibility to feed data (and therefore do the integration themselves)?
• Clear allegiance. Like many intermediary businesses, this one will have a split loyalty; does the business serve the subscribers or the clients? If a choice has to be made between annoying a client or subscribers, who takes the hit? There is also a paradoxical relationship with subscribers: we wish to push down the price subscribers are paid, to maximise revenue. Conversely, we will need to keep up those prices to maintain the subscriber base and discourage rivals.

Objections and responses

So, does it all sound too good to be true? Where’s the catch? Well, here are some potential objections—and some corresponding solutions.

Conservatism. It’s all just too far out for staid banks and governments.

When the Royal Bank of Scotland takes over NatWest and promise hundreds of millions of pounds in savings, are they going to turn you away when you can save them a few million a year? In today’s competitive world, this is a luxury few could afford.

Data quality. Surely you could type in any old rubbish and get paid for it?

Not in this game! New subscribers would be fed images that have already been keyed. The accuracy of their work can then be gauged. Those that consistently under-perform will have their subscription terminated. Others will get paid a lower rate to reflect their lower quality. The longer someone subscribes, and the better the quality of their work, the fewer of the images they key in will be double-typed. Quality control will be an integral part of the operation.

Penetration of image technology. You rely on the forms being imaged. Not everyone has this technology.

There is no reason to wait for ubiquity of image-based processing to proceed. Furthermore, the success of the remote data entry business will ensure that those that do not have it will be at a significant cost disadvantage compared to those that do.

Security and data protection. No bank is going to let the world see its customers’ private data. I’d be horrified if anyone saw my health insurance claim.

Well, if you’re rich and famous then you can be sure someone at BUPA’s processing unit will already know all about your embarrassing medical condition. In fact, this is more secure since we only publish snippets of images out of their original context, and that the documents never get seen as a whole by anyone. Out-of-context data ceases to be personal data. For machine-printed fields on documents, it is even possible to deploy “snippet digit” keying, where the field the user sees to be keyed is actually made up of extracted single characters from several documents, all glued together.

Prevalence of paper-based documents. Won’t we all be entering our own data into the Web soon?

Try telling this to my mother. Volumes of paper-based documents are increasing in some areas, decreasing in others (e.g. cheques). Even in declining areas, there is a big business opportunity as clients will want to shed the cost of these legacy documents; they will be under fierce attack by new low-cost online rivals. They will have a strong incentive to use our service.

Can you really guarantee to type everything in via snippet keying?

No. We don’t necessarily need to be able to do this either. Subscribers who come across a field that is un-keyable (for example because the client’s customer wrote outside the permitted box) will have the opportunity to mark the document as un-enterable; it will then be handled by the client’s own staff (who can see the whole document) as an exception item. Some data may indeed be too sensitive, or too hard to image or extract. This proposal is not a panacea.

Integration and IPR. You’re going to have to integrate with the back-end of complex banking systems. The operators of these often don’t own the intellectual property rights or have access to the source code. How are you going to get the images out, and the data back in?

Firstly, some systems will already have an open interface. Secondly, some other systems will have interfaces that are readily adapted; for example if images are stored in flat files and the data is inserted via known database tables or procedures. Otherwise, the client may have to buy the IPR, or we may need to cut the IPR owner in on the deal.

Character recognition technology. Surely you won’t need people to type in documents as it can all be done by machine recognition?

You haven’t tried reading my hand-writing, and you certainly haven’t tried keying in doctor’s scribbles on health insurance claim forms. Whilst automatic read-rates for magnetic-ink codelines on cheques etc. are extremely high, those for machine-printed characters are merely quite good, and handwriting recognition still has a long way to go. We also shouldn’t forget the market for non-western character sets, such as Japanese.

Bulk data-entry outsourcing. There are already operators who take your boxes of forms and key them in, possibly using third-world labour. How is this different? They are already well established in the market.

They have a fixed supply of labour, so can’t respond to changes in demand in the way we can. Taking on a high-volume contract with very variable data volumes would be risky for them. They are also much more likely to suffer outages due to a lack of geographical and network dispersion. Furthermore, some types of data entry will be language-specific. Indians are unlikely to be very productive at keying in Japanese names and addresses.

Regulation of labour supply. This sort of thing could erode the income tax base, and undermine employment law.

We’ll just have to work within whatever constraints the law imposes. Of course, we have complete freedom as to with which tax regime we base the company and the Web servers.

It’s immoral to have such a Dickensian employment policy, and to put so many people out of work. Surely it will be terrible PR for any organisation that became a client?

What is wrong with supplying safe, convenient, and (to them) well-paid work to people in developing economies? This coin has two sides.

Regulation of data export. What if laws prevent you exporting data, even in snippet form? Or even allowing the public to see the data at all?

We can operate even with these restrictions. Subscribers can be geographically restricted (e.g. by having to supply a social security number). They can be made to sign binding non-disclosure agreements. Indeed, if necessary they could be taken on as fully-blown employees.

Supply of labour and guaranteed delivery. How can you be sure that all the data that needs entering will be entered on time, when you have such a tenuous relationship with your subscribers?

We will rely on the price mechanism combined with advanced forecasting techniques. If a sudden surge in demand occurs, subscribers will be alerted (by e-mail, SMS message, or whatever) that an exceptionally high price is on offer. We will have to continually monitor the subscriber base to ensure we have the capacity to take on each new client.

The Internet isn’t reliable enough, and is full of hackers

An outage of even a few hours is potentially recoverable by simply alerting subscribers to the high rates available to key urgent data following the outage. With careful design hacker attacks such as “distributed denial of service” can also be resisted. (One way is to set up your own closed internet service provider for dial-in subscribers.) Remember that the Internet was designed with the express purpose of surviving nuclear attack. Anyway, we don’t need 100% perfection; we just need to beat the number of days lost to industrial action, random national holidays and paralysing transport strikes clients currently suffer.

Back-end integration. Isn’t this going to cost a fortune?

True, it won’t be cheap. We are likely to be talking of hundreds of thousands of pounds, maybe even a few million for a particularly large client. But compared to eliminating the employment costs of 100 people in Scandinavia, that’s good value for money. Furthermore, it is a one-off cost, whereas the saving is ongoing.

Subscribers won’t have Internet access.

The availability of access will be reflected in the price: at first, Western wages may be on offer. This will be highly attractive to anyone elsewhere who has Internet access. It may be possible to justify the cost of donating equipment and Internet access (based on keying a certain value of data). It is also possible a sub-market could evolve where local suppliers of cheap Internet access provide premises and access for on-line work in return for a fee.

Complex data entry. Some data entry is very complex, requiring detailed knowledge of the business and exception rules, and therefore considerable training and supervision. What about that?

We may or may not be able to deal with this scenario. We could possibly key in the raw data for later examination by a human operator. There will be plenty of basic data entry to keep the business well-supplied with clients.

Way Forward

Industries with a strong network effect (e.g. on-line auctions) also give the greatest first-mover advantage. Speed of deployment is therefore of the essence. The immediate next steps are as follows:

• Establish the size of the potential market, and the scale of entry required.
• Establish whether there are any existing intellectual property barriers, and establish our own if applicable.
• Establish the taxation, employment and data protection boundaries that the business needs to work within.
• Prepare a technology demonstration of browser-based snippet keying.

Extension of the business model

This proposal is really part of a bigger picture. What I've proposed - snippet data entry - grabs one of the lower hanging fruit on a big tree. In the longer run, what I'd like to create is a form of exchange for unskilled and semi-skilled on-line labour.

Exchanges: experience to date

As a starting point, consider AutoXchange. This provides a way for absolutely anybody to come and supply Ford with good and services. The main innovations in B2B exchanges such as this are
(i) that suppliers you have no previous relationship with (and maybe even no knowledge of) can bid - thus eliminating many of the supplier acquisition costs; and

(ii) all bids are done in an automated, competitive, real-time auction system, eliminating much of the contract price negotiation costs.

It is not the existence of an exchange per se that enables us to get the lowest possible price - there was nothing stopping us from locating these suppliers and negotiating these prices; rather, it is the ability to address a wider set of potential suppliers more efficiently.

A new type of business

We could replicate these innovations, but in a "C2B" environment. (Unfortunately, "C2B" already has a semi-official meaning associated with it that doesn't fit this model, but it's the best term we've got.) We therefore create LaborXchange.com, where anybody can come and supply labour on-line. It is important to highlight that I'm proposing that the actual work is performed on-line; it is not at all like a conventional employment site where just information about off-line jobs is traded.

This form of on-line work exists in some forms already for high-skilled work - there are already sites where you can go and ask for someone to code up a program spec, and someone in India can bid for it; or get medical or legal advice. What I don't think anyone has hit upon is creating an environment where unskilled and semi-skilled work can be done on-line, by anyone - anywhere in the world - willing to do it for the lowest price.

Applications

Only a select range of low-skill jobs will be suitable for this treatment, of course, but out of the millions of people doing clerical work, data entry and call centre handling, there must be a large selection which could be outsourced over the Internet. Some examples of where the ideas in this proposal could be applied include:

• translation services
• monitoring security camera screens
• proof-reading texts for typos and grammatical errors
• watching airport baggage x-ray systems

Incidentally, in this last case they already use the idea of inserting “known result” items by super-imposing images of guns and explosives on suitcases to keep staff on their feet.

Other examples include the following.

• When you submit your driving licence application, you have to sign inside a box and provide a photograph of yourself; these are both scanned and printed onto your licence photocard. If your signature is missing or outside the box, it is rejected. If your photo is not acceptable - wearing a hat, dark glasses, or is just a picture of your dog - it too is rejected. You already image all the signatures and facial images, so why not publish them and get subscribers to sort the applications into “reject-bad signature”, “reject image”, and “accept”?
• When doing data entry of medical conditions and treatments from doctors’ scrawls on insurance claim forms, some medical knowledge is an advantage; subscribers could even be presented with a précis of the insurance claimant’s medical claims history to help decipher the writing. The accuracy of entry of impairments and treatments can then be improved.
• The model can be stretched even further; with the advent of broadband access in the home, voice-over-IP services would enable easy freelance home teleworking for call-centre operators. This is particularly relevant to questions that have no personal data associated and minimal training needs, such as timetable or telephone directory inquiries.

One possible future for the enterprise is as a portal for all on-line work. The extensibility of the concept depends on the number of business processes than exist which contain labour-intensive sub-tasks which are information dependent.

If this can be made to work, it potentially addresses a vast unexplored market.

The telecom menopause

I'm a bit short of time, so I'll keep my comments brief. But I have to echo James about the just-announced first phase of the Amsterdam municipal fibre network. They are creating an open "layer 1" fiber-optical network, with a diversified ownership model, low cost of deployment, and no public subsidy. This has more significance than meets the eye at first look, since muni network announcements are ten a penny these days.

I'll chop out the tedious logic (and the effort of constructing an argument) and jump straight to the conclusions:

• The natural unit of purchase of connectivity is not necesarily the household. I see it polarising upwards around the municipal subdivision, and downwards around the devices tethered to a given access network. Application-level price discrimination disappears at one extreme, and is embedded in the form factor of the access device at the other. In response to James's musing on the privatized market structure, I would only add that the failure was to make it easy for users to co-ordinate in their purchase decisions. We manage it for garbage collection and roof maintenance, but somehow struggle when it comes to telecom.

• The only escape routes from the paradox of the best network are (i) out-distribute the other guy by having a network that reaches places and offers capacity that the others cannot match. Verizon Wireless is following this in the USA, for example, offering speed and coverage the others can't rival; (ii) move to a new ownership structure that better aligns user and network owner interests. OPLANs are an example, as are vertically integrated muni nets, mesh nets, user-built nets, etc; (iii) Get a politicaly-mandated monopoly/duopoly. This is the Baby Bell approach. Sustainability of this strategy remains in doubt.

• Telcos that divide connectivity from service, by design or through regulation, are in a better position to survive. I think BT will still be around in 30 years, and they'll bless the day that the regulator forced their access division into being, and wish they hadn't voluntarily gone further. But they've got to get leaner and meaner to compete against upstarts without legacy pension promises, union rules and wannabe media company distractions. Dig deep into your engineering, project management and finance talent and you'll live to see another day.

• You can't put the genie back in the bottle. It only takes one Napster to make people see that the music and the disc were separable. It only takes one Amsterdam to succeed to blow away the "it doesn't work" argument. Bit haulage and application service are equally separable and economically viable independently.

If you're ever invited to a funeral for a tired and expired telco, I suggest bringing some tulips to lay on the grave. Just don't grin too much, folk will get suspicious.

Divergence at Tesco

Noticed in Tesco that the mobile phone rack has shrunk in half for the Xmas season, with digicams filling the space instead. Tesco, as one of the world's most astute and profitable retailers, generally gets these things right. Which tells us that for all the hype, "convergence" isn't automatically a given, and when it happens it can be slow. Also doesn't bode well for mobile as as a hot Xmas item -- can you spell "saturated"?

But what's really interesting is this. There are no 3G phones. Zero. Tesco is unable to articulate a value story in 3G for the everyday UK mobile customer. There's no benefit to 3G that the consumate marketers at Tesco are able to spin that justifies any premium price or shelf space!

Doesn't the inability of Tesco to stock and market 3G call into question, just a teeny bit, the strategic nous of those leading the industry to the world of IMS (a.k.a "3G mk 2")? Actually, it reminds me a bit of yesterday's post. Note that the O2 tagline is "Internet at the touch of a button", when it's anything but! As is the telco way, they're conflating a service (Web) with connectivity (Internet). If it really was Internet at the touch of a button (any why bother with the button?) we'd all have a superior voice and messaging experience on O2 devices courtesy of Skype, MSN, Yahoo et al. Now that would be something to crow about.

PS - Note to US readers. Tesco is broadly the equivalent of Target, although the focus is more on food in most stores, and the quality of the food is a bit higher than the often mediocre efforts in the US supermarket sector.