Monthly Archives: January 2014

Is Net Neutrality regulation commie nonsense?

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Network Economy

Regulation’s a bad thing, right? Personally, I think there are instances where regulation is an amazingly good thing that drives innovation. We also need to be cautious about who is saying regulation is good or bad. Back in the 90’s we’d hear that regulating in anyway to prevent acid rain would cripple business and kill our economy. This clearly didn’t happen, we have acid free rain for the most part, we have more productive manufacturing than ever. We also hear that regulating CEO pay by median rather than average is significantly more complicated to the point that a place stacked full of MBA’s can’t figure it out. Then there are regulations that pick winners like Solyndra and turns out to be a disaster. These cause higher taxes and are actual drains on the economy (personally I’m on the fence about experimenting with new technologies and having the government support them, but that’s me).

What about the FCC “regulating” net neutrality? I think that it’s important to look at how this all started. First, I’ll start with a bit of a history with the telecoms, then move to how the internet was developed, and move to comparisons between other monopolies.

AT&T has been described as a natural monopoly. This was partially helped by the US government because the government wanted coast to coast telephony and selected AT&T as the standard for that activity. This gave AT&T incredible market strength, but was also extremely fragile as it was continually under threat of being broken up for being a monopoly (which is was). To do everything they could to avoid this, the geniuses at Bell Labs continually designed ways to keep their costs down, improve quality, and make very thing better. They also had some government deals that helped them a lot (military contracts for telecom stuff, like the first satellite). The value of AT&T’s network grew every time a person joined the network.

The fact that one person joined Network A over Network B could further impact the growth of that network. Let’s say Person A is friends with 5 people and is already on Network A, it’s likely, if they are really good friends and A is known for making good decisions, that those five people will join A on Network A. The value increases by more than simply 5, because all five of those people can talk to each other as well as every other person they know on Network A. Now if Person A has more friends, but not as good of friends and they actually are better friends with Person A’s friends they will also likely join Network A. This sort of cascade effect will continue to happen. This is also known as Metcalfe’s law.

When AT&T was force to break up, all of that interoperability remained. Instead of one big monopoly there were regional ones instead. As we’ve seen over time, these same regional operators have slowly re-joined back into 2 Bells versus the non-Bells. AT&T being split is a type of regulation for sure, but it did spur some interesting competition for a time.

How the Internet was designed:

The internet was originally designed to operate in many different application layers. Essentially the bottom of the stack was Internet Protocol which was agnostic to the type of information being sent across it. At the time, the most efficient method was over Ethernet so there was not any requirement to be concerned over the application medium. Over time there would be some concern, but that was really addressed by the protocol.

What would happen is that the applications that required information to be sent on either end would translate the information to be used by the layer below it to send out, such as a web browser to the OS, to the network driver to IP, across the internet to the network driver to the OS to the web server application. Across this entire process the actual data being sent was unknown to any of the nodes in between the application layers. (If you’re interested in this check out Internet Architecture and Innovation).

Of course the companies providing the bandwidth for that did not want to find itself in a similar role as they had after the break up of AT&T where they were forced to become “dumb pipes” for whatever people wanted to send across their network. To prevent this they created capabilities like deep package inspection and other tools to identify what content was being shipped across their lines. This also was the beginning of violating “True” net neutrality.

Why were they dumb pipes? Because they were defined as a common carrier to increase competition across the land line providers and ISPs the telephone companies had no choice. This lead to the explosion of ISPs like AOL, Century Link, and so on. What has happened since? The broadband lines have been ruled that they are not “Common Carriers“. Meaning that the data across the line can be treated however the companies that own the lines want.

Why is this bad in a network economy?

In a network economy, being able to fully control anything and everything can be very bad for the consumer if there is no other option. Now, you could argue that there are options, but in most cases because of other monopoly rules there are few options for allowing a new ISP.

A perfect example where a network monopoly isn’t a big deal is in Smart Phones. The iOS App Store is a natural monopoly in a network. The more people using the iPhone the more valuable it became and more app developers developed apps. It never became a problem that Apple regulates the entire experience BECAUSE there were other networks you could shift to, such as Blackberry, webOS, Windows (whatever mobile version you want to include), and, of course, Android. All of these ecosystems offer very different options for devs. Additionally, within Android there are competing App stores which further benefits the consumer. If there were no other competitors to iOS and it’s App Store the constraints that Apple puts on their product would likely be viewed as very anti-competitive and a type of “foreclosure.”

Market foreclosure is using one monopoly to enable another monopoly. Now, regardless of if you think that this should have happened or not, it did. Microsoft was hit for using it’s Window’s OS to foreclose on the internet browser market and was looking to do the same with their music player. What resulted was that MS was required to offer other browsers when a new Windows OS was launched and helped to reduce the market share of IE.

How does this apply here? Comcast is already trying to do the same with Netflix in the streaming video business. Comcast owns the content (Universal, NBC, etc), the connection (Comcast Cable ISP), the rules (data caps), and if they want to charge to access their network or not. Eliminating the rules of net neutrality tilt the table in the direction of Comcast to a degree that Netflix may never recover. If Netflix, at one point 2/3 of all internet traffic, had to pay for every bit they streamed to allow for an enjoyable streaming experience they would be bankrupt in very short order.

I get that Comcast’s of the world don’t want to be dumb pipes, they own the content and that’s king. However, not every ISP owns content (Verizon/AT&T) so they aren’t at such an advantage to companies like Netflix. However that’s where AT&T’s data plan comes in. Which would essentially level the table compared to Comcast. We, as end users, wouldn’t see any benefit out of this. It’s not that our subscription fees would lower or we’ll magically get faster internet. This is simply rent seeking behavior and bad for the economy overall. Only true new competition can lead to that. Changing these rules have zero impact on that competition.

What it does do though is negatively impact the creation of new businesses that want to stream video or provide a novel product that requires high bandwidth and equal rights to streaming. Removing the protections on net neutrality dramatically increases the cost of streaming that otherwise could go into building that startup’s infrastructure. Think of the problems at Twitch.TV with their growth. My subscription fees pay for the growth of the network that I subscribe to regardless if it’s something like Twitch or Comcast. Anything else will go to shareholders and CEOs.

Could we develop other options like a Mesh network? It’s possible, but for that to work the option would have to be a public/private venture. Most citizens aren’t going to help create that and likely don’t have the technology savvy to do so. To further complicate this issue many ISPs are actually pushing to make it illegal for cities to create their own ISP.

In many cases regulation is bad for business. However, in cases like net neutrality it’s returning the net to it’s roots and enabling much stronger competition based on the merits of the company providing the service, not the arbitrary whim of network owner.

Samsung, the battle for tablets isn’t going to be over specs soon, get ready for Customer Service Wars

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I recently got a Samsung Galaxy Note 10.1 2014, in fact, I got it for Christmas as a present from my awesome wife. I plan on using the tablet as a replacement for my laptop as that’s on it’s last legs and I’m not quite ready to build a PC. I’ll be doing that for my gaming and other stuff, but in the mean time a tablet is going to fit my needs for blogging, watching streaming video, surfing the web, and even a lot of gaming. 

The thing about blogging, is that you really need a keyboard to be able to be efficient at writing. So, I bought a blue tooth keyboard so I can do my writing. Combined, this was a pretty sweet set up. When I was typing it worked pretty much perfectly, however, as I started to use my tablet more for this, I was having blue tooth issues, figured it out about 2 days later. So I talk to support after doing a lot of investigation myself, including reverting to factory settings, and eventually figured out that my blue tooth would drop whenever I switched applications. That’s clearly not acceptable as the tablet is designed for a user to have multiple windows open at the same time and multi-tasking. 

So, I contacted support and they requested that I send my tablet into to get fixed. I sent my tablet in on the 28th and I didn’t hear anything from Samsung until 1/8/2014 when the tablet was repaired. I still haven’t gotten my tablet back. Apparently the label to return the tablet to me was created on 1/11/2014 and still hasn’t shipped out 2 days later. 

Samsung should be concerned the long term impact on their business. I’m probably early as someone that will fully replace a laptop with a tablet, but still rather late to the tablet game as a consumer. Samsung is competing with both Amazon, Google, and Apple for best tablet. Amazon has a fantastic track record with customer service for the products they have full control over. Apple has really good support as well. Google, from my understanding, is also excellent. To this point Samsung has been able to rely on their cell phone providers to provide customer service for their devices, now it’s incumbent upon them to properly manage their customers when they have issues.

What I wanted as a customer in this case was pretty simple, clear expected delivery date to Samsung’s repair facility, clear report on the problem as well as how to deal with the problem if I ever have to do a factory reset, fast turn around time on sending my tablet back to me. At this point I’ve gone much longer without my table than with it.

I’ve had issues with Amazon’s products in the past, my Kindle broke while I was flying and it was well out of warranty. What happened with that, they told me if I paid $50 and sent them my broken Kindle they would replace it. In fact, they actually shipped me a new one and asked me to use that box to return my other one. This worked really well and allowed me to get my Kindle back faster and the customer reps made it very clear what was going on.

How Samsung could have made this better.

  1. Provide Tracking Number for my tablet to Samsung’s repair
  2. Failure analysis with a way of ensuring that I wouldn’t never have this problem again
  3. Shipping my tablet out the very next day from their repair facility to me. It’s been 5 days and the Tablet hasn’t shipped yet.
  4. More information on their service tracking website.

I’ve been extremely disappointed in this service experience. If this problem isn’t resolved, I’m going to be returning the product and likely will not return to the Samsung ecosystem in the future. The great product I bought has been pretty well tainted by their horrible customer service. 

Also, Samsung also asked me to review their service before I got my product back. Talk about tone deafness. Samsung needs to fix this otherwise they will not be able to compete especially with these extremely strong customer service companies in Google, Apple, and Amazon. Great products won’t matter because Laptops will be replaced with tablets and tablets need different levels of manufacturing support than laptops. 

Sponsored data and YOU!

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This could be your lucky day, your cellular provider is going to start offering packages where certain content doesn’t cost you anything in your data cap. This is awesome. You can start streaming more and more video/music/whatever it is that you stream from your favorite services. However, not all of your favorite services will be free of data charge! So make sure that you tell your favorite service that YOU want THEM to sign up and make their content data cap free to you! All those service providers have to do is pay your cellular provider money to stop the data caps! No, seriously, AT&T wants to do this.

Is this a problem? I think it depends on who you are. For a consumer in some cases this is pretty awesome. Let’s say you love to watch video games being streamed on Twitch.tv by your buddies over at KBMOD and Twitch decides to pay money to prevent your data from being charged against your data cap. But you’re also a huge fan of MLG and MLG just decided to start their own Twitch competitor but they can’t afford to pay those same fees. Well, guess you’ll be only watching MLG from your PC or on wifi. Too bad your favorite shows are on while you’re not able to use Wifi though! O well, Twitch is there for you though!

This is a niche market obviously. Not everyone cares about watching someone play streaming video games or even streaming video games to your phone so you can keep playing a game you were playing from home. A lot of people care about TV and movies though. We can look at this as something that’s really analogous to what Comcast was trying to do to Netflix close to two years ago. In April of 2012 Comcast announced that its Xfinity streaming service would not be charged against your Comcast data caps while Netflix streaming service would be. Netflix’s CEO argued that this violated Net Neutrality because it provided preferential treatment to one source of data over another.

What is Net Neutrality? Well, there are two different arguments, which I discuss in a blog here, where one is saying everything must be treated equally, while the other one argues that there are nuances and we can treat data differently because we need to “Groom” our networks. Internet and network purists believe that you shouldn’t even be able to determine what the data is or what the source of that data is if you’re a point along the network, just where it most recently was and where it needs to go next. The only application that can read the data in the package is the application that requested it.

AT&T’s plan, similar to Comcast’s, is in violation of Net Neutrality and the FCC will step in to regulate this type of “service” because it’s, in the end, bad for the consumer. Unfortunately, there are limitations to what the FCC can do and even potentially what AT&T can do.

There has been much more of a push for encryption and it’s likely that these pushes may actually enable more of a return to the true meaning of Net Neutrality. If all of our data is fully encrypted, deep packet inspection tools (which tell if the data you’re getting is video, music, or whatever), won’t work very well as that information will be encrypted. Furthermore, if your application’s data is all encrypted and AT&T won’t be able to tell if your data is your data then there’s no value in paying for “privileged” data status from AT&T.

It’s one of the reasons why I’ll likely support company’s like Wickr, an encrypted Snapchat competitor, which told the FBI to screw itself when they were asked to put a backdoor into their encryption. It’s important that we work to protect our data and support companies that do so in terms of Net Neutrality and encryption.

What companies do you support that encrypt and fight for net neutrality?

Failure of DMCA and TPP is going to be worse

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It should come as no surprise to many of my readers that I’m not really a big fan of DMCA. I believe that this law hinders innovation in the arts and sciences. I you are interested in a very nuanced and well articulated argument against Copyright, I suggest you download Lawrence Lessig‘s book Code 2.0 – it’s a law book, but it’s free and interesting. However, I have written about this topic before if you’re like a bit of a synopsis.

The DMCA is a law that requires companies to help copyright holders manage and protect their copyrighted material. This results in something called a Take Down Notice, where the company that receives the take down notice must remove the offending material. In many cases the copyright holders are requiring companies like Google to create tools to allow them to automatically search for offending material.

Growing number of Take Down requests

Growing number of Take Down requests accessed 1/5/2014

For a growing company like Twitch.TV which streams live video game broadcasts and services several hundred thousand viewers at once, may cripple them in the future. According to a recent George Mason University study, the DMCA take down notice process has been a complete failure. The law was never intended to function in the manner that it has been.

The take down notice was designed as a stop gap measure and compromise between copyright holders and the new technologists on the web. The DMCA was passed in 1998, most of the internet that we know and love didn’t exist then. It was likely that only a few people had even started using Google when the law was passed, YouTube was nothing more than a pipe dream, Napster and sites like it were the major driving force for this law.

Over the past few years we’ve had several attempts to expand on the DMCA and make matters significantly more restrictive on the Internet. For example we had the SOPA/PIPA, CISPA laws that the internet killed with a blackout. The blackout is an example of what Rebecca MacKinnon argued in her book “Consent of the Networked” where law makers need to look at the interconnectedness of the world and how these laws reach beyond our boarders and impact the broader world.

Unfortunately, these types of laws aren’t dead and DMCA isn’t going away despite what GMU recommends. Currently TPP is working it’s way through the “Fast Track Process” (fast track essentially allows the President to enter into trade agreements powers not authorized by the Constitution) and if it is successful there are copyright provisions that are very damaging for both Copyright Law and Patents. The copyright provisions are stronger than DMCA, similar to SOPA, and would force all signers to follow the rule of the trade agreement over their own established laws, including the US. If you are interested in reading TPP here’s the full agreement for download at Wikileaks.

What can we do to prevent TPP from making our copyright lives worse? Well, it appears there’s limited things we can do. Of course you can contact your representatives, however, Darrel Issa was already refused to see the agreement. However, more interest from the general population can only be a good thing. We’re going to have elections this year in the US, so it’s a good idea to get people thinking about this trade agreement now and stop it before it’s ratified.

Startups are going to save us, relax everybody

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In typical Silicon Valley Breathlessness Forbes published an article by Victor W. Hwang arguing the fact the Startup movement isn’t about startups. He argues that it’s actually a movement to free people from the chains of our current economic system. I definitely don’t buy this. Most people start a company for one of two reasons, they find a problem that they have a better solution for than anything provided (or a novel solution) or to make money. Typically it’s a combination of the two. No company in existence is out there not to make money. Companies that aren’t profitable cannot stay in business for long unless you’re lucky and funded by people that thing you will eventually make them a lot of money.

An opinion piece in the NY Times from 1/2/2014 pretty much sums this fact up. You’re replaceable at a startup and likely even more so than any time in the  future of the company. It’s really easy to fire people when you have no money, especially if you are open and honest about how you go about letting people go.

Furthermore, if the startup movement was in fact about bettering the plight of people we wouldn’t be seeing the social stratification that we’re seeing in cities like San Francisco, ground zero for the startup movement. In SF some of the neo-techno-libertarian-elite are upset that they even see the poor people on their streets rather than out of the way like in cities like NYC (he issued an apology not unlike Tiger Wood’s for being a sex addict). Not only are these the people that are involved in the startup movement, but they are funding it. Yes, I know that this is only one person and on the other side you can point to Alexis Ohanian of Reddit fame, which really is doing a lot of social good.

In some ways the startup movement has made it easier for people to be cogs in the wheel. They work long hard hours, large companies like Facebook and Google push and push to get more for less. In many cases this can cause depression and the exact opposite of what the Startup movement is striving for. In fact, the goal of the Lean Startup is to make it extremely easy to ramp up new employees and ensure full coverage if something goes wrong. These companies and products are designed around the idea of building in quality rather than testing or patching it in. Of course, there’s a benefit to the employee in these cases too – they’re free to really explore new problems and create new things without needing to worry about reoccurring problems.

I do believe there are many startup founders are genuinely trying to change our society for the better, but it hasn’t been a frictionless process and will likely only get worse as we move forward. The Sharing Economy, for example, has come under fire from traditional companies, neighbors, politicians, and even members of the sharing economy. While in other cases, such as Zynga, we see companies that are essentially parasites that thrive through creating addicting games and clogging a platform with their notifications (those notifications stopped and Zynga basically died).

It’s important to be skeptical of statements that glorify any portion of our culture. The article that spurred me to write this has a similar tone as many of Thomas Freeman’s, of the NYTimes, articles, fully optimistic, but missing a broader portion of the population and the long term impact. We should be wary of these articles because we’ll end up believing that it’s more complicated to calculate a median value than an average. The startup movement is to help people start companies, some founders are dreamers, some truly try to change how work is done, but they most aren’t truly changing the world in amazing ways. We’ll be fine if reddit, AirBnB, or some other services vanishes. We were when Digg, Google Reader, Palm and any other influential company vanished.