Customer-Owned Networks

Lawrence Lessing argues that “when customers own the network, everyone wins.”

Why should government be in the business of providing high-speed networks? Isn’t that what free markets are for? Haven’t we all learned that the market is more efficient at supplying goods and services? Do we really need to rediscover the failings of Karl Marx at 100 megabits per second?

The answer, as Cornell economist Alan McAdams argues, has nothing to do with Karl Marx and everything to do with basic economics. AFNs are natural monopolies. That doesn’t mean that there can be only one, but rather that if there is one, then it is far cheaper to simply add customers to the one than to build another. The electricity grid in a local neighborhood is a good example of a natural monopoly. Sure, we could run four wires to every home, but do we really need four electricity companies serving every home?

Most economists would leap from the premise of a natural monopoly to the conclusion that such a monopoly must be regulated. But regulation is not the end that McAdams seeks. Ownership is. If a traditional network provider owned an advanced fiber network (AFN) in a particular area, that network provider, acting rationally, would charge customers a monopoly price, or restrict service to get its monopoly benefit. But if the customer owned the network, then the customer could get the same access at a much lower price and be free of use restrictions. McAdams is pushing – and Burlington and other cities are actually deploying – customer-owned AFNs.

Monetising RSS

David Galbraith has an interesting idea:

Despite the promise of metadata enriched syndicated content, RSS is usually no more than a way to syndicate a link and a headline.

No large publisher will syndicate their full content in RSS because they would lose traffic and therefore, money.

Without full content no aggregator can add much value by categorizing and filtering infomation, so no purely RSS based aggregator can make much money.

Despite all of the interest around web based syndication, people like Lexis Nexis will still make all the money unless this problem is solved.

The solution that gives publishers traffic and allows aggregators to add value is to syndicate full content in such a way that it can be searched or categorized, but people still have to go to read the article on the publisher’s site. All that is needed to do this is to remove ‘stop words’ such as ‘the’, ‘and’, ‘of’ and place the tokenized remainder of the full text in the description tag.

Persuading publishers to do this would surely be the best way of focusing community efforts to guarantee the success of web based syndication, rather than concentrating on standards minutiae.

Steve Gillmor writes about how RSS and BitTorrent could be combined together.

Would be interesting to leverage some of this for our “information marketplace” idea.

Serial Entrepreneurs

NYTimes has an article which has some echoes my career:

Serial entrepreneurs thrive on the high-pressure excitement of starting a business from scratch, but invariably, whether they stick with the business for one year or 10, they depart, only to start another.

It is all about building toward the thrill of opening night; staying till the 200th performance is beside the point. “Serial entrepreneurs get a visceral charge out of taking an idea to market and making it happen,” said Tarby Bryant, who runs the Gathering of Angels.

What distinguishes serial entrepreneurs? “They are more attached to starting something up than to the actual concept,” said Geoff Yang, a partner with Redpoint Ventures, a venture capital firm in Menlo Park, Calif. And unlike mainstream entrepreneurs, they resist the idea of sticking around with a reduced role in the company they founded.

“As soon as the risk is over, they want to go back and do it again,” said Dick Strayer, a Los Gatos, Calif., psychologist and a partner with Joyner Strayer.

Probably the most common reason for leaving is boredom. After the start-up phase ends and a company becomes more stable, the job of the founder naturally changes to be less hands-on and more supervisory.

It is the thrill, the excitement of starting and creating something new, bringing about a revolution, making a difference. Success and failure are both learning experiences. The key is to innovate, create a future which does not exist.

Commoditisation in Consumer Electronics

WSJ writes how companies are “using inexpensive, standardized parts from South Korea and the US..to challenge the heavyweights.”

From China to Eastern Europe to Central America, companies with limited technical skills, resources and experience are reshaping the consumer-electronics business. Instead of spending millions of dollars to design chips and software to power their gadgets, they’re simply buying those components from other manufacturers and then heavily undercutting the industry leaders’ prices.

This sea change resembles the upheaval in the computer industry 20 years ago — and is driven by the same technological force. As more consumer gadgets are based on digital chips and software, standard designs are emerging, just as the personal computer took shape around Intel Corp. microchips and Microsoft Corp. software. Now, new players are using those designs to shake up the older order and push down prices. While it took three years for DVD players to go from $1,000 to under $300, the same drop took just two years for DVD recorders.

The result: Today’s consumer-electronics industry leaders, chiefly Japan-based multinationals such as Sony and Matsushita Electric Industrial Co., are threatened the way computer leader International Business Machines Corp. was threatened by the rise of the PC clone.

With so many competitors making components for such a diverse array of gadgets, it’s unlikely that a few companies will come to control the consumer-electronics market the way Intel and Microsoft dominate PCs. But established manufacturers can no longer assume, as they used to, that it will be years before rivals can match their products.

No surprise then that the various computer companies are headed into the consumer electronics space – working with standardised components is what they’ve been doing for a long time.

India and Software

A number of articles in the Wall Street Journal and New York Times on the Indian software industry.

WSJ writes about NRIs returning back to India to jobs in India. “Over the past decade, hundreds of thousands of Indian engineers moved to the U.S. for jobs, adventure and Silicon Valley wealth. Now, the U.S. job market is lousy and the government is tightening the rules on immigrants…In India, engineers find ample jobs, thanks largely to Western companies trying to cut costs. Salaries are much lower, but so is the cost of living.”

Another article in WSJ looks at how Indian tech companies are luring employees of Western firms in their efforts to win bigger contracts. “These high-profile hires are a big part of the Indian companies’ strategies for winning the biggest contracts, valued over $100 million each, that largely still elude them. They are also part of their push to provide more complex and expensive services, such as computer-strategy consulting, to match their brand-name American and European rivals. The North American and West European markets for computer services are valued at about $422 billion this year, according to research firm Gartner Inc., making them a juicy target.”

A NYTimes story looks at the Indian operations of various US companies doing top-end patentable work. “In clusters of modern low- and high-rise office buildings set amid acres of lush greenery here, thousands of engineers are hard at work, writing software for the latest telephones, designing next-generation microprocessors and developing wireless broadband technology. The work of these engineers is generating significant amounts of intellectual property for American companies like Cisco Systems, General Electric, I.B.M., Intel, Motorola and Texas Instruments – whose various Indian units have filed more than 1,000 patent applications with the United States Patent and Trademark Office. Some applications, with patents already granted, date to the early 1990’s. But most applications from India have been filed in the last two years and still await decisions by the patent examiners in Washington.”

Google Visualiser from Groxis

one of the next frontiers is going to be information visualisation – tools to help us see and explore the information better. News.com reports on Groxis:

It will offer customers of its desktop search application the ability to download a free plug-in to search Google’s more than 3 billion documents.

The tool is designed to let Groxis customers organize Google search results into graphical maps, categorizing relevant data in relation to keyword queries–something Google itself does not do.

For example, a user who searched on the term “Wi-Fi” would see spheres of categories on the subject, with labeled topics such as “news,” “802.11” and “hot spots.” The user could then delve deeper into Web pages on the topic of specific interest by clicking on a sphere.

This could be one of the first steps in bringing information visualisation technologies to the mainstream mass market.

TECH TALK: My Mental Model: to Bridge Divides.

I see innovations as mechanisms to build digital bridges. This is not the same as saying that I want to bridge the digital divide. The digital divide is an effect, not the cause. Information Technology is a means to an end, even though we mistake it as the end in itself. Consider for example the activity in rural India which seems to focus on making available information kiosks connected to the Internet, with the mistaken belief that just by putting these computers there we will be able to solve all the problems that are there.

There are many divides across enterprises and people. More important than the digital divide are the income divides, the social divides, the education divides, the opportunity divides. The two divides that are perhaps more important than any other are the Credit Constraint Divide and the Information Divide. What technology can do is to bridges these divides by reducing transaction costs.

A point once made by Atanu to me was that if there was one problem which lay at the root of the problems in rural India it was that of the credit constraint. If only people had access to credit, then they could create more opportunities for themselves. For example, the lack of an education hampers people all their lives. If, however, they could be given loans with long-payback periods and low interest rates, then they could educate them in specific vocations and use their increased income to repay the loans over time. The lack of credit is one of the root causes of the development trap that rural India finds itself in.

Just as urban India is discovering the magic that access to credit can do (one can buy homes, cars, appliances and pay for it via monthly installments), so also rural India needs access to credit to bridge the opportunity divide that exists. A few innovations applied correctly in the system can have a dramatic amplifying effect across the chain. What the disruptive innovations need to do is to create options and opportunities so that people can start dreaming of a better future. This is happening in the new India that is emerging in the cities. It also needs to extend to the rural areas if India needs to maintain and increase its growth rates.

In the case of SMEs, while credit is a challenge, the information divide is a killer. I have seen this first-hand. The search costs of finding customers for ones products are just too high. This is where electronic marketplaces need to play a role in helping SMEs connect to other SMEs, so they can find new customers for their products. Perhaps, one way to consider getting around the credit problem among SMEs for the adoption of new technology is to consider the equivalent of SME Credits, a barter system which helps SMEs buy within the network. This way, there is a greater velocity for solutions which can make SMEs more productive.

These are some of the challenges that the innovations needs to address. The endgame is growth and development, and the middlegame is more than just creating hardware or software or a few services. Whole solutions that can focus on a key critical issues and elevate the entire value chain with appropriate bootstrap measures will create the next markets and entrepreneurial successes.

Tomorrow: The Road Ahead

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