First, most Hollywood motion pictures aren’t very good. As moviegoers we generally only learn about the good and successful ones. But the catalogues licensed to Netflix, Hulu, YouTube, and other websites reveal just how big the inventory of bad films really is. It’s the principal reason Netflix subscriber growth is weakening a second time.

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Second, Hollywood films cost way too much. There’s a century of legacy expenses within the industry, ranging from unions to opulent lifestyles. Consider the venerable hit Forrest Gump based on a novel by Winston Groom. The author agreed to take a share of net profits as compensation. Despite box office receipts of almost $700 million, Groom was told the film failed to earn a profit.

Third, technology is lowering production costs. As video cameras moved toward electronic media, the cost of models capable of matching the performance of major studio equipment dropped to prices within the means of serious hobbyists. The threshold was actually crossed at least thirteen years ago when freshly minted college students produced The Blair Witch Project in 1999. Five years ago, Paranormal Activity provided a reminder of how eager and independent youths could make a movie hit for under $20,000.

Fourth, distribution and promotion costs are heading south. The principal reason that The Blair Witch Project and Paranormal Activity have been rare examples of successful micro-budgeted motion pictures is that Hollywood historically controlled distribution and promotion. But that century-old characteristic is changing. Companies like YouTube, Amazon, and Netflix have direct distribution channels to consumer. Moreover, those channels are increasingly familiar and routinely trusted by consumers.

Fifth, major new competitors are getting into Hollywood’s turf. YouTube, Amazon, and Netflix are presently developing their own video entertainment content. Equally important is that the newcomers are likely going to be able to produce and distribute their movies and scripted video entertainment programs at much lower cost than Hollywood.

For example, making such programs is such a glamorous job that YouTube pays everyone on the set $15 an hour. That’s a tiny fraction of Hollywood union levels, and less than pocket change for conventional movie stars. Similarly, Amazon is turning to its own customer base with a $55,000 contest reward for the winner of an original comedy or children’s programming series.

Sixth, the dazzling audience experience characteristic of the big screen exhibition theaters is increasingly replicated by home theaters. Flat screen monitors are getting bigger and less costly as are sophisticated home sound systems. The only significant advantage held by exhibition theaters is the traditional delayed release of popular movies to the home market. Newcomers like Amazon, Netflix, and YouTube are much more likely to release new programming immediately for home consumption owing to their ability to directly promote and popularize the shows with their own customers. Amazon, alone, probably has over a hundred million customers.

In conclusion, the Content-is-King strategic monopoly that has so effectively served the video entertainment ecosystem for a century will soon be about as useful as a football bat. Much like the decline of the Record Label industry, its obsolescence won’t be obvious for a few years, but it’s as certain as fleas on a yard dog.

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First, some background.

During the Great Depression Congress passed the bedrock 1934 Communications Act. Among other actions it (1) created the FCC and (2) established an objective of affordable and (nearly) universal local telephone service. For decades the second objective was accomplished by over-charging for long-distance phone calls which were chiefly carried by AT&T Long-Lines. Essentially, long-distance service was regarded as business expense or personal luxury thereby justifying artificially high rates which could be partially applied to “access fees” charged by originating-and-terminating local telephone companies. The great majority of such fees were paid to Bell System affiliates, but over 1,500 independents also participated.

After the Bell System beak-up and rise of cellular telephony, long-distance interconnection fees were no longer adequate. Consequently, the ’34 Act was rewritten in 1996 resulting in the creation of a Universal Service Fund (USF). All telecommunications service providers – including cellular carriers — contribute to the Fund. Nearly all of them “pass along” the cost to subscribers by itemizing the fee on monthly bills. Presently such fees total about $8 billion annually.

As Senator Everett Dirksen put it decades ago, “A billion here, a billion there, pretty soon you’re talking real money.”

Unfortunately, the subsidies have sometimes been massively abused.  For example a 2005 report from the National Taxpayers Union cites a Texas-based independent phone company with 6,000 subscribers receiving almost $200 monthly in subsidy funds per subscriber while spending one-fourth of its total costs on corporate overhead. Who knows how many family members and girlfriends were on the payroll? But it’s not just the independents. Verizon and AT&T presently spend a lot of USF money as well.

In response to the increasing significance of the Internet, the FCC proposes to divert $4.5 billion from the USF to a new Connect America Fund (CAF) in order to subsidize the cost of providing broadband Internet service to (mostly) rural areas. Illogically, the fund will only be available to “telecommunications service providers” and not “Internet service providers”.

Presently about seven million people in rural areas don’t have any broadband Internet service. Obviously, the telephone and CATV companies concluded it is too expensive to reach them. In contrast, fixed-station Wireless ISPs already serve about two million subscribers, largely in rural areas that the telcos and CATV operators regarded as uneconomic.

Fixed-station Wireless ISPs not only pioneered the market without any subsidy, but also typically did so without exclusive frequency allocations. They generally employ license-exempt bands and utilize electronic techniques to manage signal interference. It’s inequitable to allocate a $4.5 billion hand-out to telephone companies to compete against an unsubsidized industry currently generating less that $2 billion annually.

Instead, the FCC should adopt two changes.

First, if Connect America Funds are going to be used to provide broadband Internet access to rural areas, Wireless ISP should be included. (In point of fact, the FCC is considering whether it should permit Wireless ISPs to be classified as “telecommunications service providers” if they provide IP telephony and thereby qualify for CAF funds.)

Second, and ultimately more importantly, the FCC should adopt an important  policy shift that will encourage methods of increasing capacity of the electromagnetic spectrum. In short, the century-old reliance upon exclusive bandwidth allocations should be augmented by the expansion of (1) license-exempt bands and (2) White Space authorization. Such a move will place more reliance upon cognitive electronics — and a competitive electronics industry — to increase traffic capacity through product innovation. Simultaneously it would place less reliance upon the unilateral decisions of operators who may act more leisurely owing to their monopolization of  designated frequency bands. Although the TV Band White Space initiative is a start, it is a only tiny one.

Finally, Wireless ISPs must rise to the regulatory challenge. Somebody within the industry should assume leadership and carry the message to the FCC and Congress. There’s been too much reliance upon the WISPA trade association to carry the flag. But there are no statues in America to committees – only individuals.

For Confederates the quickest connection between eastern and western theaters was a railroad from Richmond to Chattanooga. Consequently, the Mountain City’s strategic significance was far greater than its modest population. Union forces would not gain undisputed control of the town until November, 1863.

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But one general authorized a plan that could have led to Federal occupation more than a year-and-a-half earlier in April, 1862. If successful, the scheme would have avoided such battles as Stones River, Chickamauga, Lookout Mountain, and Missionary Ridge. Today, only the seed of the scheme is popularly remembered as The Great Locomotive Chase.

Although all Union raiders were captured, eight broke-out of prison, and six were exchanged. A year later, the survivors were the first to receive a new military medal authorized by Congress;   one that has since become the most respected of all — The Congressional Medal of Honor

Internet Interaction

The ability to interact over the Internet stimulates my book buying in two ways.

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First, I can buy books with a mere mouse-click which is more convenient than driving to a store where the desired title may not even be in-stock. But there’s more to it than that.

Almost unconsciously I’ve become increasingly skilled at using Amazon’s tools for browsing. For example, Amazon routinely provides suggestions of alternate titles, similar to the one being considered for purchase. Another is the ability search for key words (e.g. topics) within many books remotely over the Net. It’s a more powerful way to learn how much of a topic-of-interest might be covered in a given book than examining the index of a physical book.

Second, I’ve become an active commenter on blogs and online newspapers covering topics of interest. Consequently, I occasionally get into debates. In order to support my viewpoint – or sometimes to learn another – I’ll search Amazon for pertinent titles. Some I will merely inspect with the “Look Inside” feature, but others I will buy.

Perhaps the best example is the interest I’ve taken in the Disunion series of The New York Times. Disunion is an approximate four-year series commemorating the Sesquicentennial of the Civil War. Presumably it will end around June of 2015. There are about four-to-five articles weekly corresponding to events of 150 years-ago on the same month and date. Typically the articles are authored by academics, or popular writers of American history.

A few months after it started,  I was reading Disunion habitually. By last Christmas I was sufficiently motivated to submit an article of my own. It was published in January. That success led me to submit later drafts. Researching each topic prompted me to purchase additional books. When they were available, I would often buy e-books because they could be acquired almost instantly. Quick information access is important when I was  immersed in writing an article draft.

But it was also important that Amazon and Google have a number of public domain e-books available at no charge. For example, presently I am researching the life of Henry Morton Stanley. Google has Stanley’s autobiography for free. But upon reading it, I could sense exaggeration, which led me to discover an authoritative biography at Amazon. To write a good article on Stanley, I need both…and more.

Second-Hand Markets Online

Amazon Marketplace is a service enabling most anyone with an Amazon account to sell merchandise online. Thus, when checking titles of interest I routinely search toward the bottom of the screen to see if less expensive copies are available at Amazon Marketplace. If the merchant has a reliable rating and I can save a few dollars, I’ll often order books from Amazon Marketplace. Books in “good” condition can often be bought at half price. Sometimes even “new” copies have favorable prices. Some of the merchants apparently profit by shipping the books at lower cost than the typical $4.00 shipping allowance.  Not infrequently, I’ve purchased books for a penny and paid the shipping charge of four dollars.

My trust that Amazon quickly settles most disputes enables me to buy with confidence. Only once has a single merchant failed to honor a sale and Amazon quickly credited my account. Although I generally prefer the prompt delivery of an e-book, I will buy from Amazon Marketplace if the price differential is significant – as it often is among newly published books where publishers dictate “agency pricing” for e-books.

Amazon.com Rewards Points

Since my bank only pays negligible interest on Money-Market Accounts, I was it angered the bank retains a $125 annual fee. Consequently, I got a credit card from Amazon providing rewards-points. Amazon makes it easy to convert the rewards-points into purchasing credits at their online store. Whenever rewards-points credits are available it gives me a false sense of buying books for “free”. The feeling prompts me to buy books when I might otherwise fail to act with a debit card knowing that the debit will be deducted from my bank account. Also, for me, using Amazon rewards-points is an Amazon.com-specific learned behavior. I’ve not yet learned how to use the points at other merchants.

iPad.

My iPad is a constant companion. Thus, if I am stuck in a waiting room at a doctor’s office, it’s easy to turn it on and continue reading a book that I “put down” the night before. The iPad makes it possible to carry around a large number of books. Moreover, since the iPad is a multifunction device, it provides more reasons to “take it with me” as opposed to a Kindle.

Conclusion

While this post describes my personal reasons for buying more books, I’m curious to learn how the book-buying habits of Inside Digital Media subscribers might have changed in the past five years. You are invited to share your experiences by emailing me at pleigh1(at)tampabay.rr.com, or commenting at my blog, Inside Digital Media.

1. Last Friday Towerstream (Ticker:TWER) filed a Form 8-K with the Securities & Exchange Commission disclosing it “signed a Wi-Fi agreement with a national wireless carrier (for) utilizing our current and future rooftop assets.” During the past two weeks the stock moved from $2.75 a share to $5.15 this morning (April 3rd).

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Presently the company has an extensive WiFi network in Manhattan designed to help cellular carriers and other potential clients offload wireless Internet traffic. The purpose is to avoid customer frustration with congestion on cellular networks. Towerstream’s Manhattan footprint has about 1,500 access points. Based upon the 8-K language, the company evidently will be building similar networks in other cities, or at least making its antenna locations available to others for a fee.

For those who are annoyed that we did not alert them to the company earlier, well, we did.

2. After revolutionizing the Wireless ISP market with price breakthroughs for base station and customer-premises equipment, Ubiquiti Networks (Ticker:UBNT) could now be doing the same for backhaul. On the first day of the conference the company announced a new product, termed Air Fiber. Like most other Ubiquiti equipment, it utilizes licensed-exempt radio bands, but Air Fiber works with much higher 24 Gigahertz frequencies where the available bandwidth is substantial.

Ubiquiti claims Air Fiber will provide throughput of almost 1.5 gigabits-per-second. If true when the product is first delivered this summer, Air Fiber could enable Wireless ISPs to use a $3,000 radio for point-to-point backhaul connections. This will enable many to bypass much more expensive landline facilities normally provided by telco’s. Internet backbone connections are characteristically the single biggest recurring expense to Wireless ISPs.

For readers annoyed that we did not alert them to Ubiquiti earlier, well we did – before it was publicly traded.

3. TV Band White Space equipment sales are finally happening.  Neul and Carlson Wireless teamed-up and Carlson is expected to ship about one thousand radios this month. Cambridge (U.K.) based Neul has deep technological capabilities and is designing integrated circuits to rapidly bring down the cost for future model Carlson radios. This could enable a significant price reduction in Carlson customer-equipment transceivers in the Autumn.

Especially impressive is that Carlson funded the orders with customer deposits instead of being delayed by the lengthy process of educating bankers when most financiers understand White Space about as well as a cow does algebra.

Readers who ignored Towerstream and Ubiquiti, may want to become familiar with TV Band White Space participants, Spectrum Bridge, Neul, and Carlson Wireless which are privately owned.

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The new competitors shall use (1) licensed and licensed-exempt frequencies in combination with (2) cognitive white space manipulation as a new incremental paradigm for efficient bandwidth allocation. Licensed channels may be purchased from current holders of lightly-used spectrum. One example could be Clearwire. Assuming government approval is denied, the channels Verizon is trying to buy from the Cable TV industry might be a second example. 

Eventually, white space may provide the most added wireless capacity at the least incremental cost. The technique enables cognitive devices to utilize designated licensed frequencies when they are not being used. Thus, white space is both time and location dependent, but on-board electronics enable applicable devices to seize idle capacity on-the-fly, transparently to the user. After one hundred years of nearly exclusive reliance upon inflexible frequency allocations, cognitive electronics shall use idle capacity spontaneously while simultaneously avoiding interference.

Hardware and software trends point inevitably to the emergence of ambient computing over the next decade. Smartphones, tablet computers, and their descendents have the potential to weave themselves into the fabric of everyday life until they become indistinguishable from it. Much like writing – perhaps man’s first information technology — is on everything from street signs to candy wrappers, ambient computing will be almost everywhere. Thus it requires nearly ubiquitous network access for a reasonable – preferably fixed – price.

Cellular carriers are implicitly threatening to strangle ambient computing in the cradle. It began almost two years ago when AT&T Mobility forced metered rates on new iPhone and iPad subscribers. Pressure intensified during the past six months as AT&T and Verizon broke trust with legacy “unlimited” data subscribers by restricting usage whenever such users exceed arbitrary bandwidth thresholds. But the conflicting goals of the two symbiotic industries came sharply into contrast when buyers of the new iPad-4G promptly exceeded consumption caps.

One example is USA Today tech columnist Ed Baig who blew past his monthly data allowance in a single day.  A similar story in The Wall Street Journal reports a user consumed his monthly allotment by streaming two hours of basketball games. Another complained, “All the advantages of the iPad-4G LTE are completely neutralized by AT&T’s three gigabyte limit.”  Consequently, about 90% of tablet sales are units enabled for WiFi-only. Additionally, buyers of cellular-enabled tablets are increasingly “turning off” the cellular access feature.

The iPad-4G’s high resolution screen and fast LTE radios chew through data like a hungry bobcat. But there’s not a shadow of doubt that future units will be even faster and more capable. Today’s potential data rates will look modest by comparison. If forced to pay metered fees comparable to those quoted in the table below, it’s certain that much of the capabilities for future units shall remain latent, or only used in WiFi networks.

Equally threatening to Internet-dependent companies are recent cellular industry suggestions that carriers might minimize subscriber complaints by charging metered rates to destination websites as well as subscribers. Essentially, carriers are floating trial balloons to measure the tolerance among such sites for paying fees whenever cellular subscribers view content from the websites. Video streaming and downloading sites such as YouTube, NetFlix, Amazon.com, and iTunes would be adversely affected.

Two points about the rates quoted above are significant. First, they are high considering the anticipated use of future wireless connected devices. Given that two hours of video streaming exhausted AT&T’s three gigabyte monthly limit, a user who merely watches two hours weekly shall exceed Verizon’s top-end $80 subscription. Second, the similarities of Verizon and AT&T rate cards might imply that a paucity of competition is the explanation.

Presently domestic cellular carries generate about $80 billion in Internet-only revenue annually. By the year 2020 the totals are projected to exceed $300 billion. About two thirds of domestic cellular subscribers are controlled by two carriers, Verizon and AT&T. Without new competitors there’s little reason to expect future changes in incumbent behavior.

Confessedly, the sheer size of the wireless Internet market opportunity is attracting new competitors such as the CATV industry. Specifically, operators such as BrightHouse, Cablevision, and Comcast are installing outdoor WiFi access points. It’s partly a customer retention strategy implemented by offering large area WiFi access zones in service territories as a “free” amenity for top tier customers. Unfortunately, typical of many CATV industry innovations, to date such networks often promise more than they deliver. Based upon their valued reputation for customer satisfaction, Internet-dependent giants like Amazon and Apple are presumably more likely to better execute the deployment of such networks.

Admittedly, a decision by Apple or Google to be involved in such deployments would place them in competition with some of their best customers since cellular carriers typically subsidize the cost of smartphones to subscribers. However, there is normally no such subsidy for iPads, which are becoming an increasingly important component of Apple revenues. And without the subsidy only about ten percent of iPad buyers are subscriber to cellular Internet access. Similarly, many industry observers were surprised when Google bought Motorola because it put the company in competition with all other Android phone makers.

Dorothy Gibson

The night before many Americans file income tax returns this year marks the Centennial of the Titanic disaster. Consider how media frontiers correspond to the end-points of the one hundred year span.

First, the shipwreck underscored the value of incipient wireless communications. Marconi operators on Titanic were among the first to use S.O.S. A New York Times editorial proclaimed, “…every Titanic survivor owed life itself to (Guglielmo Marconi’s)…genius as an inventor.” In three days of trading on the American (Curb) Stock Exchange, shares of American Marconi rose twenty-five percent.

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Since Marconi was half-Italian and half-English, domestic industrialists, overwhelmed with public interest altruism, convinced our Government it was necessary that the technology to be controlled by an American corporation. Consequently, American Marconi was ordered to sell its patents to Radio Corporation of America (RCA) whose owners were General Electric, AT&T, United Fruit, and Westinghouse. Today the descendent components of RCA are held by Comcast and Technicolor.

Second, a nascent motion picture industry responded almost immediately to public hunger for Titanic narrative. Saved from the Titanic was released in May of 1912 staring both a notable and authentic personality. Twenty-three-year-old Dorothy Gibson was among the era’s highest paid movie stars and was also a Titanic survivor. She sketched-out the movie plot herself.

Dressed in the same clothes worn the night of the wreck, Dorothy played a young woman returning from a European vacation to marry her lover, a Navy Ensign. The young man learns of the shipwreck from a buddy who is a wireless operator. He is compelled to call upon the girl’s parents to inform them of the disaster.

Later in a post-disaster scene when Dorothy’s character is telling her family and dinner guests of the events, she is overcome and faints. Her mom calls upon the Ensign to resign from a seafaring career if he wishes to marry the girl. After some dramatics, the Ensign declines by proclaiming it would be dishonorable to abandon his Naval duties. Admiring the officer’s patriotism, the young lady’s dad says, “My daughter, there’s your husband”, as the final scene closes.

As befit her movie star image, Dorothy is portrayed as a heroine. But her actual conduct was lacking. When she realized the danger was serious, Dorothy became hysterical and entered the first of twenty lifeboats. Once upon the water she began to shiver and accepted an overcoat from a thereafter-coatless gentleman.

After the ship foundered a lifeboat crewmember wanted to return to rescue people thrashing in the water. Everyone aboard, including Dorothy, shouted him down. After the victims’ cries faded away, Dorothy announced that the loss of life was minimal since most of the passengers escaped in the lifeboats. She was silenced when a crewmember interrupted to say, “If the boats were filled, not more than a third could have escaped.”

Although married, Dorothy traveled to Europe without her mate and was greeted with a $1,000 engagement ring by her extramarital lover upon arriving in New York. She would not divorce her pharmacist-husband for another four years. Meanwhile she continued to accept the largess of her benefactor-lover who was a rising movie industry mogul. By the early 1920s she was living in Europe where she remained until her death by heart attack 1946.

Third, presently opportunistic freeloaders are attempting to exploit the burgeoning popularity of e-books by issuing out-of-copyright accounts of the shipwreck. Mostly they’re merely (1) copying public domain accounts written by survivors, (2) putting a pretty picture on the cover, (3) “inventorying” with popular e-book merchants such as Amazon Kindle, and (4) selling at unjustifiable prices.

One example is Colonel Archibald Gracie’s Titanic: A Survivor’s Story which is priced at $9.83 at Amazon Kindle. His forebears donated their mansion to New York City where it has served as the mayor’s official residence for years. Unlike most survivors Colonel Gracie had to swim to an overturned lifeboat for safety. He suffered such severe hypothermia that he never recovered and lived less than a year following the wreck.

Another example is Lawrence Beesley’s The Loss of the S.S. Titanic also available at Amazon Kindle and priced at $2.99. Beesley was a thirty-five-year-old science teacher at a British college. His book was published two months after the ship foundered.

Most egregious is a third example of an attempt to sell an “unknown binding” copy of a book that combines Gracie’s account with that of seventeen-year-old Jack Thayer’s The Sinking of the S.S. Titanic. Evidently, an “unknown binding” description implies a print-on-demand version. The seller is offering the book at Amazon.com for $999.99. Like Gracie, Thayer suffered on the overturned lifeboat, but unlike Gracie his youthful constitution enabled him recover. He lived until 1945 when he killed himself after learning his son was killed in World War II.

In addition to the versions cited, there are other e-book copies of the same out-of-copyright books available at reasonable prices.

In sum, while the possibilities of profit at new evolutionary media stages are apparently unlimited, so also are the probabilities of fraud.

In addition to clicking on the hyperlinks above, readers  may also locate the article by searching for “The President and His General” at the New York Times website.

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Amazon’s Kindle Direct Publishing can provide unknown authors a similar experience.  Metaphorically, they’re permitted to run the same race as Laura Hillenbrand or Theodore Dreiser. Like ordinary marathon runners they get token recognition when their self-published e-book “goes live” at the Kindle Store. Given a conscientious effort, there’s noting trivial about a Kindle title. It has their name on it. Dreams of selling 100,000 copies are like the fantasies of winning the New York City Marathon. But when the project is taken seriously, even authors who don’t sell any copies are like the runners bringing up the rear of a marathon. It still has meaning to them personally.

According to the National Endowment of the Arts, there are about 120 million domestic adult readers. Presently, GigaOm estimates about twenty-five million read at least some e-books. Furthermore, they estimate the figure will rise to about fifty million by the end of 2012 and to eighty million by the end of 2013. Simultaneously Amazon’s self-published authors earn royalty rates ranging from 35% - 70% of the retail sales price. In contrast, under the agency model dictated by conventional publishers, authors normally earn royalties of less than 20% of the retail price for e-books, and even lower percentages for hardcover and paperback books.

Such circumstances imply the possibilities for author e-book profits are comparatively unlimited; as are the probabilities of fraud. An example of the latter are “authors” who choose titles by identifying popularly rising Google search terms and merely copy Web-content into blank pages to create their e-books. Such writers are similar to the rare misfits who sneak into an official marathon race a few miles from the finish line.

Presently, I can only share personal experiences as a participant in Kindle publishing. Furthermore, my “races” are more like 5k’s than marathons. Readers looking for advice from the front of the pack in marathon-like Kindle efforts might consider Joe Konrath or Barry Eisler.

My first Kindle e-book, The Future of Television, was published about a year-and-a-half ago in October, 2010. It was a lower-priced derivative of a market research report I wrote over three years ago entitled Third Generation Television. One of the reasons for publishing at that time was to acquire experience thereby enabling me to create a video podcast demonstrating how others could self-publish at Kindle.

The Future of Television remains my best seller, presumably for three reasons. One is that the title unambiguously fits the topic. The meanings of other titles, such as Allergies to Innovation, are not readily apparent. Second, the topic holds broad interest. Third, the future of TV is pertinent to the subject matter of my eight year old blog, Inside Digital Media.

More recently, I’ve experimented with miniature e-books termed Kindle Singles. They’re a type of long-form journalism targeted at the sweet-spot between magazine articles and hard cover books. Normally priced at $0.99 they’re ideally suited for articles I write that don’t conform to scope of my Digital Media blog. Examples include, “Natural Selection at Pea Ridge”, and “Brooklyn in Charleston.”  Finally, last week I completed my “author page” at Amazon.com. It provides a short bio along with a three minute video. Blog posts at Inside Digital Media are also automatically updated at my author page.

Marshal McLuhan’s “content follows form” principle, suggests Kindle Singles could evolve into an important new form factor. Just as magazines, such as The Saturday Evening Post, serialized enduring novels, Kindle Singles offer journalism and literature otherwise ill-suited for conventional distribution.

In sum, for mere participants, Kindle Publishing requires considerable work with little glory. But it can entice a latent desire for intellectual fulfillment much like marathon running addresses a hunger for physical accomplishment, even among those trailing at the end. Kindle Publishing may similarly attract tens-of-thousands of amateur participants. Ideally, competitive sales shall grant the humility to make us teachable, even as finishing-the-job provides the satisfaction to try again.

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But there are two reasons why smartphones are also likely to become the prime tool for retail monetary transactions. First, they’ll be more economical for the consumer by automatically tracking and applying (when desired) (1) discount coupons, (2) rewards points, and (3) special offers derived from our purchasing habits and ephemeral geo-location based on the phone’s location-awareness. Second, they’ll enable faster “check-out” thereby benefiting both the retailer and consumer.

Today’s post focuses on a limited wallet application for the iPhone available only from Apple.  But if it continues to evolve, it has far bigger implications, as shall be explained. Later posts will discuss a variety of digital wallet initiatives for Android devices.

At the start of the 2011 Christmas selling season, Apple added a new feature to its Apple Store App. Termed Easy Pay the element enables customers physically inside an Apple Store to quickly buy accessories, and walk out the door without even talking to a “sales associate” or putting the merchandise into a bag.

Here’s how it works.

First, download the free Apple Store App to an iPhone-4 or iPhone-4s.

Second, visit an Apple retail store and choose an accessory to buy.

Third, scan the bar code on the accessory packaging with the EasyPay feature of the Apple Store App as demonstrated in this two-minute video. The App will ask for the last four digits of the credit card you use with iTunes. It identifies you because your phone is registered with iTunes and it knows you are in the store via the iPhone’s embedded geo-location capability.

Fourth, it verifies your purchase with a “Thank You” screen thereafter leaving you free to simply walk out the door — even with un-bagged merchandise. Since the App is unable to provide a paper receipt, the process seems to invite shoplifting. However Apple is apparently more concerned with speedy “check-out”, although it does limit EasyPay to comparatively inexpensive items.

However, several points about the process suggest a theoretical way to integrate anti-shoplifting features.

Here’s how.

The App associates (1) your identity, (2) location, and (3) time of day, with the transaction. If you walk out the door holding merchandise without having paid for it, you’ll be unable to show a “Thank You” screen to a guard.

But instead of relying upon a guard, packaging for the purchased item could include an anti-shoplifting tag that sends a signal when you walk out the door. Apple would be able to associate the signal with an EasyPay purchase for the applicable item. It could do so by comparing (1) time-of-purchase and (2) item purchased, with EasyPay records at the location. Failure to find a match would imply a shoplifting incident. Without such a match the anti-shoplifting tag signal could trigger an audible alert thereby notifying sales associates of a suspected shoplifting incident.

Whether or not the theoretical shoplifting protection scheme noted above is practical remains to be seen. Fast processing will be required and the tag must be made to work within the Apple Store exit dimensions which are considerably larger than applicable to most anti-shoplifting tag systems. However, if it is feasible, bar code conventions already widely used will enable smartphones to function as digital wallets – there would be no need for a special terminal as required with Google wallet.

Nonetheless, presently Apple apparently concludes the added convenience of EasyPay increases per-Store profits by boosting sales in an amount that is greater than whatever might be lost via shoplifting.

As politicians demonstrate, however, ordinary people are just as likely to steal as those with special interests — they just normally lack the means.

Either term implies Internet Service Providers (ISPs) can justify charging subscribers additional fees for incremental bandwidth, just as electric utilities routinely charge users based upon the number kilowatt-hours consumed. But there’s a key difference the ISPs don’t bother to explain.

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Specifically, electric utilities must not only deliver power, they must also generate it. In contrast, ISPs such as CATV and telephone companies generally must only deliver bandwidth.

Electric utilities deliver power to our homes thorough a network of conductors, seldom needing replacement. Typically there’s a large cost to build the network and small annual expense to maintain it by repairing breaks, aging, weather, and other damage. The average home uses 15,000 Kilowatt-Hours (kwh) annually. The incremental cost to deliver it over the network of conductors is negligible. The big cost is generating those 15,000 kwhs.

Generating household electric current typically requires a generator repeatedly rotate a magnetic field through a coil of wires, or vice-versa. Just how much work is required becomes evident in some science museums where visitors may ride a stationary bike whose pedals turn an alternator coil to illuminate a light bulb. The average person tires-out within minutes.

That’s why electric utilities build large generator stations, powered by steam engines. The steam engines use a variety of fuels including gas, oil, coal, or nuclear. The essential point is that there exists a direct cost associated with generating each additional Kilowatt-Hour.

In contrast, ISPs don’t generate bandwidth. They merely deliver it. By analogy the ISP is like a closed pipe network, delivering water around the system at varying speeds determined by subscriber requests. Generally, the limiting factor is not the size of the pipe, but the capacity of the pumps. Certainly, such is the case for ISPs with fiber or coax.

Assuming the pumps have a capacity of 100 gallons-per-minute the operating cost variance is negligible whether at 10 gallons or 100 gallons-per-minute. When the system starts to demand more than 100-gallons-per-minute, the network operator must buy new pumps, which requires incremental investment.  However, the ISPs don’t tell us that the cost of the pumps is dropping by fifty percent every two years. Put another way, in two years a new 200 gallon-per-minute pump can replace a 100-gallon-per-minute pump at the original price. In five years, the operator could buy a 600-gallon-per-minute pump for the same price.

In short, while higher usage requires more capital investment to deliver bandwidth, it is a false analogy to assert the operator needs more revenue to create bandwidth. Most importantly, the rapidly declining costs of transceivers implies the ISPs operating profit is more than enough to fund investments in future delivery capacity and retain a healthy profit margins. In point of fact, Time-Warner Cable once revealed that its profit margin on ISP service was around 95%.

Download four minute narration to iPhone, iPod, or iPad here.

First, two points indicate Comcast’s chief purpose is to discourage “cord-cutting” of Pay TV and landline telephony service. One: The $5 monthly fee is waived for about 10% of Comcast’s 23 million subscribers using the highest service tier. Two: Unlike NetFlix, Streamflix will not be offered to Internet users outside the Comcast footprint.

Second, Streamflix underscores the significance of Net-Neutrality. Since Comcast shall only offer Streamflix over its own Internet facilities, the company has the technical ability to provide Streamflix a superior bandwidth Q-o-S (quality-of-service) relative to competitors such as NetFlix, iTunes, and Amazon. Superior Q-o-S could be a significant advantage since inferior Q-o-S might be characterized by repeated buffering delays. Such delays would become an obvious annoyance to consumers who would consequently gravitate toward Streamflix in order to avoid the disruptions.

However, if Net-Neutrality remains a sustaining FCC principle, Comcast would be violating regulatory rules if it were to intentionally provide Streamflix a superior Q-o-S.

Third, it’s unlikely Cable operators would have offered a Streamflix-like service without being forced to respond to competitive innovators like NetFlix, Amazon, and iTunes. Essentially, the Cable industry would have little incentive to change anything without such trendsetters. Thus, if Net-Neutrality is abandoned, CATV companies would likely provide their own streaming services a better Q-o-S, thereby driving innovators out of the market.

Fourth, given continuation of Net-Neutrality, services like Steamflix shall ultimately fail to prevent “cord cutting”.  The strategy is based upon the mistaken belief that quality content is only available from conventional producers.

It ignores the Long-Tail concept. Although mainstream viewers share interest in popular content, Long-Tail Theory implies we each also have more narrowly defined interests shared with audience-groups too small to justify mass market distribution. But the Internet shatters such limitations enabling video content to be made available for vanishingly small audiences. Arguably, cultural programming has already migrated to the Net.

One is an exploration of the methods and other personalities that transformed the company into the enviable success it became over the past dozen years.  A second is an evaluation of how those factors might sustain, or alter, the company’s future.

Download 28 minute audio interview to iPod, iPad, and iPhone.

Presumably at his insistence, three key points drove the company to undisputed leadership following Jobs’s second coming.

First, was the courage to develop innovative products before most consumers even realized they would desire them. For example, before the iPod, most MP3-players were low priced units with limited capacity, or kluges with big storage. But Apple leaders dwell at the frontier of art and technology. Thus, they anticipate what is (1) technically feasible and (2) artistically compelling. The resulting iPod was a compact MP3-player that enabled us to carry our entire CD collection in our pockets.

Evidently, One Infinity Loop is the paragon case for William Gibson’s maxim, “The future has already arrived; it’s just not evenly distributed.” As Jobs put it himself, “We really do have a strong belief that we are building products for ourselves.” If true, there’s little reason for Apple to utilize focus groups and other traditional market research tools – and it doesn’t.

Second, consumers get a special feeling when buying Apple products. As Lashinsky explains, “…good design subliminally telegraphs to consumers that the manufacturer cares about them.” Consumers think, “I can’t wait to get the new iPad versus, Which is a better deal, a Kindle or a Nook?”

As Maya Angelou put it, “People will forget what you did, but never how you made them feel.” Thus, we give Steve Jobs and Apple a pass for back-dating executive stock-options because we feel so good about their products.

Third, Apple frequently said “No” to new products – even good ones – that didn’t fit their focus. CEO Tim Cook once explained the company’s entire product line could fit onto a single table-top. Jobs once studied Buddhism which teaches, “…if you are going to prepare a cup of tea, the making of the cup…should demand all your attention.”

As for the future, a couple of points merit emphasis.

First, based upon existing product successes, the wind is at Apple’s back over the foreseeable future. Additionally, the new product pipeline in place when Jobs died was likely conceived under his careful scrutiny. Thus the Jobs signature should be obvious in whatever new products are introduced over the next few years. In this context, the Jobs legacy will be favorable.

Second, Cook and other senior managers have experience at IBM. While Adam may not share the viewpoint, it seems likely that tomorrow’s Apple will be more assertive in the office marketplace. They may not change the product focus much, but it seems probable they’ll seek to optimize the penetration of Apple products into the office market wherever applicable. Jobs was generally hostile toward corporate IT administrators ever since they rejected Apple computers in favor of IBM clones thirty years ago.

In sum, Inside Apple offers a good perspective on how the company performed its magic during the era following the second coming, as well as how it may operate in the future. Partly owing to the time-off his employer provided, Adam said that writing the book was much like a vacation. Since he had fun, I guess we can look forward to more Lashinsky books – that’s good for readers.

Download six minute audio narration to iPod, iPad, and iPhone.

For exceptionally talented and dedicated online students, the new version of Apple’s iTunes-U implies Superman can soon become a virtual reality.  
Part One of our three-part analysis of Apple’s iTextbook and iTunes-U initiatives observed that the fundamental disadvantage of conventional books is their limitation as isolated information silos. In contrast, e-books are simultaneously both (1) information repositories, and (2) portals into the nearly infinite resources of the Internet. Part Two concluded Apple’s iTextbooks shall emphasize a couple of additional features that conventional books cannot match. Firstly, they encourage authors to mix media, including text, graphics, animation, and video. Secondly, they permit interactivity. Part Three of our commentary (today) examines the potentially deep implications of iTunes-U.

Prior iTunes-U

Four years ago Apple invited colleges to upload audio and video lectures into iTunes as free podcasts. Some comprise an entire series that encompasses actual college courses. Participating universities include Stanford, Yale, MIT, Texas A & M, UCLA, University of Paris, and University of Tokyo, among many others. Auburn University provides a number of lectures including (non-typically) a commencement address by Apple CEO, Tim Cook.  Presently available podcasts total about one-half million and there have been seven hundred million downloads.

While exercising, I’ve listened-to and watched (on a stationary bike) podcasts of entire courses including two from Yale and one from Missouri State. A key advantage is that podcasts can be watched repeatedly thereby promoting learning through repetition. Furthermore, the best and most lucid teachers – such as Professor Walter Lewin of MIT – can reach far larger audiences.

While Lewin’s physics lectures require calculus, a simpler example demonstrates how online video can teach seemingly difficult concepts. Derek Owens teaches math and physics via the Internet for home-schooled high school students, mostly in Atlanta. (Although he does not use iTunes-U, as shall be explained shortly, there is now no reason why he cannot.) Watch as Derek derives an expression for electric field intensity using only high school algebra. (I promise; liberal arts grads can understand this.)

New iTunes-U

Starting this month, iTunes-U is no longer limited to video and audio. Instead, iPad owners essentially audit real classes. Presently there are one hundred from Duke, Stanford, Yale, MIT, Open University, Harrisburg Community Colleges, and other institutions.

iPad owners download the iTunes-U App where a “Catalog” button in the upper left connects to available courses. Users may examine course descriptions and even class ratings provided by earlier students. They join a class merely by touching a “Subscribe” icon. Although iTextbooks are often purchased, other study materials are typically free. Examples include lectures, assignments, syllabus, keynote presentations, and dot-pdf monograph reading homework. Creative instructors might also have developed special teaching apps, which could be either free or purchased.

Aside from the lectures, teachers communicate by posting notes which are available to all subscribers via a “Posts” tab in the App. As students read the iTextbook they may highlight text with a simple finger motion on the iPad screen. The resulting text is not only highlighted within the iTextbook, but also stored on separate pages in a “Notes” tab. This enables highlighted comments to be studied and memorized much as if they were written on paper index cards.

Also beginning this month, iTunes-U is permitting teachers in the K-through-12 sector to upload courses. Previously, only college lectures were allowed. In short, the new iTunes-U is a portal through which Superman can fly into public education. While he may not be able to fix everybody’s problems, he has the potential to save a small fraction of students who are exceptionally bright and dedicated, but would otherwise have no access to a quality education. It’s a good start.

Download eight minute audio narration to iPad, iPhone, and iPod.

Apple’s iTextbook emphasizes a couple of additional features that conventional books cannot match. First, it encourages authors to mix media. Second, it permits interactivity.

Mixed Media

iTextbooks are not limited to text and graphics. They can incorporate videos and animations. Moreover, to see more detail and gain added comprehension readers are permitted to enlarge and rotate pictures or diagrams on their iPad screens. Such examples are present even among the handful of iTextbooks currently available. One example is a 2,000 page McGraw Hill book entitled Physics: Principles and Problems. It is the iTextbook version of a venerable high school text retailing for $115 in hardcover, as compared to only $15 as an Apple iTextbook.

If the physics iPad text is a representative sample, the ten iTextbooks available today do little more than permit readers to enlarge photos that were already included in the original hardcovers. Topics such as electromagnetic fields and waves would have benefitted significantly from more creative treatment.

Consider the case of electric flux. Assuming students of the McGraw-Hill text are simultaneously learning vectors, trigonometry, and calculus, an animation such as this would illustrate why the electric flux is dependent upon the angle of the electric field. Although the concept is simple the mathematical expression can be confusing to neophytes:

Even more abstruse concepts such as Gauss’s Law, Maxwell’s Equations, Div, Grad, and Curl would similarly benefit from imaginative animations.

Interactivity

iTextbooks are capable of interacting with readers. For example, iPad’s current physics textbook provides regularly spaced multiple-choice quizzes. Thus, pupils can quickly look to see if their selected responses are correct merely by placing a finger on the “check answer” icon. An incorrect response displays a red “x”, but permits students to try again. They may “clear” responses anytime thereby enabling them to retake quizzes whenever desired.

Historically, physics students learn best by completing assigned problem-sets following of each chapter. That’s not likely to change. But future iTextbooks might also permit stumped pupils to beckon tutorial lectures pertinent to each problem merely by placing a finger on a “tutorial” icon adjacent to each numbered problem.

Unfortunately interactive quizzes in the McGraw-Hill physics iTextbook have too many incorrect answers falsely identified as correct. Apparently they rushed to the market. Nonetheless, the concept of interactivity is powerful.

Publisher Benefits

Although the hardcover version of McGraw-Hill’s physics text sells for $115 as compared to $15 for the iTextbook version, the publisher gets a couple of advantages.

First, since the iTextbook is only available on iPads, students cannot sell used copies thereby competing with new hardcover editions of the same book. Presently used copies of the McGraw-Hill physics text are selling at Amazon.com for as little as $5.

Second, iTextbooks are easier to update. Thus, publishers avoid a need for an additional printing run and the associated inventory risks. Updates can also be more frequent because there’s no minimum economic production run as would be required for hardcover texts.

Publishing Tools

Undeniably, creating mixed media and interactive textbooks puts extra work on authors. It may launch a new kind of authoring collaboration among skilled professionals in various media specialties. Nonetheless, it also provides innovative authors a means to differentiate their work. While the added labor will tend to increase the cost of such textbooks, the offsetting ability to avoid producing, shipping, and inventorying as many physical versions as would otherwise be required, will provide savings.

While iTextbooks authoring is more complex than writing a conventional manuscript, Apple provides tools to at least make it manageable. Owners of Mac computers can download a free application, termed iBooks-Author, to create iTextbooks (or e-books) for sale at Apple’s iBooks Store.

The software enables text in popular word processing programs like Microsoft Word to be dragged-and-dropped into the e-book where it is automatically formatted. Additionally, iBooks-Author includes a number of “widgets” for use in placing multimedia content into the e-book text. Examples include widgets for (1) video, (2) “slide show” decks in Apple’s Keynote, (3) pictures, and (4) diagrams. Authors skilled with JavaScript and HTML can even produce custom widgets to create interactive objects, such as quizzes, or links to Internet content.

Conclusion

Admittedly, the few iTextbooks presently available seem to make limited use of mixed media and interactivity. Similarly, Apple’s authoring tools are fairly limited to authors of ambitious projects who are also unskilled with JavaScript and HTML. Nonetheless, I’d wager $100 against a good Cuban cigar that both authoring tools and the multimedia-interactive content in future iTextbooks will steadily improve, eventually reaching a point where they are the new paradigm.

Part 3 of our analysis will examine how the new iTunes-U initiative will change education and teaching.

Download six minute audio narration here.

At age thirteen Lightoller apprenticed aboard a four-masted “three-skysail yarder.” Being an unfamiliar term, I put my finger on “skysail” to summon iPad’s dictionary which described it as “a light sail above the royal”. The definition was not useful since I was also unfamiliar with the meaning of “royal” sails. Fortunately, iPad’s dictionary also provided links to Google and Wikipedia. The Wikipedia link connected to a full explanation including photographs and diagrams identifying all the sails of a clipper ship.

The ability of iPad’s dictionary to almost effortlessly connect to Wikipedia — or to “Google” unknown words — is a particularly helpful way for individuals reading e-books to learn unfamiliar nouns. For example, compare the Webster definition of a “buntline-hitch” to that of Wikipedia. (Is it any wonder that Internet users protested Congressional copyright bills that threaten viability of the Wikipedia?) Similarly, when Lightoller narrates an earlier shipwreck incident at the remote Île Saint-Paul, the Google Earth application permits readers to explore the island “virtually”.

It’s not the paper form-factor per se threatening obsolescence of conventional books. Instead, it’s the fact that they are isolated information silos. They cannot connect to the “infinite mind” of the Internet. Gradually they’ll become about as useful as a non-networked computer. Much like a handheld calculator, we’ll use them as a special purpose tool. For example, paper books will be convenient in environments that are physically menacing to tablet computers, such as a sandy beach, or an open boat.

Judged against the Kindle-App-on-iPad, e-book reading on Amazon’s monochrome Kindle fails to be a comparably transforming experience. First, the dictionary available on black & white Kindles does not easily connect to the Internet. There are no Google and Wikipedia links within the dictionary, whereas iPad provides such links for each looked-up term. Second, web browsing on a monochrome Kindle is cumbersome. Consequently, much like conventional books, the units are isolated information silos with the limited advantage of being able to hold multiple “books”.

No doubt Kindle Fire was developed partly to address the “information silo” limitation. However, I’ve delayed in buying a Fire on the presumption that initial models will have new product bugs which Amazon will likely correct in the future. Also, the lower $200 price suggests that it will not be as capable as an iPad and therefore provide less demonstrative insight into the full capabilities of e-books.

In time iPad and Fire will compete as “connected” e-book readers. Apple starts with superior hardware and software thereby enabling iPad to function better as a multipurpose unit. Thus, to Amazon’s disadvantage the iPad will likely be more attractive to App developers. However, Amazon will benefit from a lower price and the company’s greater skills at merchandising content.  For example, many public domain Kindle books are free and the company also has a lending library for selected titles. Presently Amazon also leads Apple in the realm of self-publishing and is further down the learning curve in dealing with abuse. One example is filtering spammers who steal content (from the Web or elsewhere) and sell it at the Kindle store.

The revealed benefits of habitual e-book reading merely hint at the implications of Apple’s iTextbook and iTunes-U initiatives. Like Titanic, conventional publishing is already negotiating an alien ice-field, but immutable educators will have epitaphs reading something like “died age 30, buried age 80.” Part-2 of our analysis will address more specifically Apple’s likely impact on the future of textbooks and the teaching profession.

Download 6-minute audio narration to iPod, iPhone, and iPad here.

Presently, “cord-cutting” is the Pay TV industry’s foremost concern. Netflix, Hulu, iTunes, and Amazon.com are pioneering alternate ways to acquire popular programming over the Net as opposed to Cable systems. Equally important is “Long Tail” content on YouTube and other Internet video sites.  “Long Tail” theory implies that while we share interest in popular content, we also have more narrowly defined interests shared with viewer-groups too small to justify mass market distribution. But the Internet shatters such limitations enabling video content to be made available for vanishingly small audiences. Arguably, cultural programming has already migrated to the Net.
While “cord-cutting” threatens Cable operators, it is a clear-and-present-danger to Satellite TV systems. That’s because only a small fraction of Satellite TV subscribers also get Internet service via satellite.

The two dominate domestic Satellite TV operators are DirectTV and Dish Networks. In combination they have about 33 million domestic subscribers with an estimated one-third in rural locations. Most subscribers also want Internet access, but Satellite TV operators subcontract Internet access to third parties which are generally telephone companies. Thus, when Satellite TV subscribers choose to bypass Pay TV by metaphorically “cutting-the-Satellite-cord”, they are most often discontinuing Satellite TV service and upgrading ISP service from telephone carriers. Consequently, Satellite TV operators lose the Pay TV subscriber without benefitting by keeping, and upgrading, the Internet subscriber.

Unfortunately satellite-based Internet service is often unable to compete effectively. Since geosynchronous satellites are 22,000 miles distant, the round trip to a file server on the Internet is 88,000 miles. The lengthy round trip combined with sundry routing & processing results in delays of nearly a full second which is a near-eternity in the Internet world. The inherent lag is intolerable for a number of applications such as Voice-over-IP (Skype), Internet gaming, and Virtual Private Networks.

Fortunately, terrestrial Wireless Internet Service Providers (WISPs) provide an opportunity for DirectTV and Dish Networks to meet the challenge of “cord-cutting.” Since Wireless ISPs normally utilize licensed-exempt spectrum, DirectTV and Dish can build their own WISP networks, or can acquire existing ones.

A Wireless ISP provides broadband Internet service from fixed base stations to antennas typically mounted outdoors on customer premises. Base stations connect to the Internet backbone via fiber, cable, or point-to-point microwave lengths known as “backhaul”. Much like Satellite TV companies, Wireless ISPs originated in sparsely populated rural markets where broadband Internet access from Cable operators and telephone companies was unavailable.  Presently, the WISP industry has about 2 – 3 million subscribers.

There are two reasons why WISPs are good diversification investments for Satellite TV operators. First, they enable Satellite TV companies to offer broadband Internet service under their own control. Given WISP subsidiaries, DirectTV and Dish will no longer be as reliant upon the Cable and telecom “partners” used historically. Second, use of license-exempt spectrum will enable WISP networks to roll-out quickly in response to subscribers who are discontinuing Pay TV service.

Finally, a combination of technological and regulatory advances are enabling WISPs to (1) reach more distant subscribers and (2) gradually encroach into more densely populated geographic markets.

First, FCC approval of television band white spaces increasingly enables Wireless ISPs to reach subscribers who could not be adequately served by conventional unlicensed bands. This applies to both rural and — to a lesser extent — urban markets. Second, WISP transceiver and router hardware prices are quickly declining owing to a shift in recent years toward suppliers who utilize commercial integrated circuits and open software, as opposed to the custom chips and proprietary software employed by the former leading market-share equipment vendors.

In short, DirectTV and Dish Networks may wish to consider (1) building their own Wireless ISP networks, and/or (2) acquiring existing WISPs. Additionally, both Satellite TV operators have the funds required to capitalize on the mostly (to date) latent capabilities of TV Band White Spaces for Internet access.

Today’s 18-minute audio interview is with Jim Burger who is a copyright attorney with Dow, Lohnes in Washington, D. C. He’s specialized in copyright law for thirty years and prior to Dow, Lohnes was on the legal staff at Apple.

Wikipedia turned out the lights yesterday to protest two bills in Congress. Proponents claim the bills need to be enacted in order to protect movies, recorded music, and other “intellectual property” from piracy. Opponents assert enactment of the bills will, (a) censor the Internet, (b) obstruct innovation, and (3) place expensive burdens on innocent third parties.

To download 18-minute audio interview to iPod, iPhone, or iPad, click here.

The House Bill is termed the Stop Online Piracy Act (SOPA). The Senate Bill is called the Protect Intellectual Property Act (PIPA). Most Internet-centric organizations object to the bills, but Wikipedia is the paragon for three reasons. 1. Wikipedia is hosted by a non-profit organization which would likely incur considerable expense even trying to comply with provisions in the bills and risk enormous liability for non-compliance.

2. Compliance would be an almost impossible task for the 1,800 Wikipedia editors who are unpaid volunteers.

3. Wikipedia is the sixth most popular website on the Internet. Millions of people contribute content and tens of millions use it daily.

Wikipedia has at least two legitimate complaints.

First, the bills enable the Justice Department to request that a Judge order all domestically hosted websites to block access to overseas websites that Justice concludes are involved in Internet piracy. If the overseas site is a small business it will not have the money to represent itself at the hearing, thereby making it easy for the Judge to agree with the Justice Department even if targeted websites are legitimate.

Since Wikipedia has millions of people contributing content - including website links - it is almost certain some of the alleged infringers will have links on some Wikipedia articles.  Such links may be disguised, like this:

http://tiny.cc/10k5r

It’s obvious that the above url has no evident relation to the actual domain, but the bills would require Wikipedia to investigate every such arcane link.

Moreover, Wikipedia is required to bear the expense of investigating such links, whereas the motion picture and record label industries offload such costs to the Justice Department – meaning you and me as taxpayers.

Given the enormous Federal budget deficits it’s surprising that so many Congressmen and Senators believe the taxpayer should bear the expense of prosecuting infringement claims for Hollywood, drug companies, and record labels while simultaneously requiring innocent third parties like Wikipedia to pay for the onerous compliance.

A second legitimate complaint is that the bills essentially mandate censorship of the Internet. Once there is a precedent for censorship it seems likely other special interests will seek censorship as well. After such a trend starts there’s no telling where it will end.

“Billy” discusses the earlier trials that KTS did with White Spaces under experimental licenses. He also shares his thoughts regarding how the White Spaces market will evolve in both the United States and abroad.

Download 16-minute audio interview to iPod, iPhone, and iPad here.

One of his conclusions is that municipal Wi-Fi markets will benefit considerably from TV Band White Spaces. He reasons that the FCC envisions White Space technology as encompassing the best of both licensed and unlicensed networks. While they will be able to provide the interference protection of licensed networks they simultaneously offer the innovative free-market access characteristic of licensed-exempt networks. By way of example, he explained that a suburb of a major Florida city tried to offer blanket Wi-Fi service about six years ago. After getting started, they discovered it was too expensive to provide all the required access points. Today, Billy believes that same city could accomplish their goals by providing Wi-Fi access points at locations where citizens tend to congregate.

Examples of such centers-of-congregation might include the city center, community recreation centers, and outdoor parks, among others. Such locations might be thought-of as “hot zones”. The hot zones could be connected via White Spaces transceivers to a central point where the entire network is connected via fiber to multi Gigabit Internet backbones in a manner demonstrated by this half-minute animation.

Future unlicensed wireless Internet access networks will use a variety of standards to provide large zones of coverage. Such standards will include WiMax, WiFi, and White Spaces. As users, we won’t know, or care, which standard is being used. All we’ll care about is how well and how fast we are connected wirelessly to the Internet within a wireless coverage zone.

Download 19 minute audio interview to iPod, iPhone, or iPad here.

Wi-Max discussions can be confusing because there are two standards.
One – 802.16e – is a 4G radio service for mobile devices like cell phones. Historically, the “Dot-e’s” leading proponent in the United States was Clearwire which wanted to offer broadband cellular service to compete with Verizon, AT&T Mobility, Sprint, and T-Mobile However, Clearwire abandoned “Dot-e” last year and is now concentrating on LTE which is the 4G standard most other U.S. cellular carriers will use.

The second Wi-Max standard, termed 802.16d, was developed for the sole purpose of linking the “last mile” to the subscriber. Dot-16d is the chief standard radio technology for providing last mile connectivity although there are some other proprietary alternatives like Motorola’s Canopy and variations of WiFi on steroids, such as White Spaces. “Dot 16-d” base stations can provide Internet service from three to twenty-five miles.

To date, LTE has been primarily focused on providing service to mobile devices. Therefore the terminal unit is constrained by battery life and a small form factor to enable handheld devices. As a result, both ends of the link are not symmetrical. The terminal unit requires a great deal of additional signal processing to overcome the limited power and antenna gain of the small form factor. This processing power is usually leveraged off the terminal device’s main processor whether it’s a cell phone or a tablet.

The base station also has added complexity. It must have additional signal processing to overcome the limitations of the terminal device and it must support the fast handoff requirements expected of a mobile apparatus. The end result of this asymmetrical connection and the requirement for mobility limits the expected range of a terminal device to the base station to a range of one-to-two miles.

Alvarion’s WiMax future will be concentrated on the fixed station market. It acquired Wavion in November to better serve fixed-station customers with a mix of WiMax and WiFi base stations and access points. WiMax will provide the “last mile” Internet connection whereas Wavion WiFi units, which are designed to be mounted outdoors or indoors, will enable subscribers to create large area “hot zones” providing WiFi coverage both indoors and outdoors.