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Be on the wave or under it™

The News – 07/16/02

In this Issue:

Recommended Reading

I realize this is the only newsletter you’ll ever need, but if you want more in-depth detail, check out:

Stan Hustad’s
The Coaching Connection

Management Signature's
The Express Read

Content is Not King

Professor Andrew Odlyzko, director of the Digital Technology Center at the University of Minnesota, is not a fan of all the hype about content on the Internet or on any other network. In a reply to Nick Stanley’s guest column last SNS, Prof. Odlyzko refers to his keynote talk the 11th IST Mobile & Wireless Telecommunications Summit 2002 in Thessaloniki, Greece, which is available online. (I’ve quoted Prof. Odlyzko before in SNS.) He argues that connectivity is way more important than content, and points to examples such as the success of Short Messaging Service (SMS) and the failure of Wireless Application Protocol (WAP) services in Europe. In his presentation, Prof. Odlyzko quotes from Janet Abbate’s book, Inventing the Internet:

The popularity of email was not foreseen by the ARPANET's planners. [ARPANET designer Larry] Roberts had not included electronic mail in the original blueprint for the network. In fact, in 1967 he had called the ability to send messages between users “not an important motivation for a network of scientific computers” . .  .  Why then was the popularity of email such a surprise? One answer is that it represented a radical shift in the ARPANET's identity and purpose. The rationale for building the network had focused on providing access to computers rather than to people.

Prof. Odlyzko thinks that many telecom analysts who focus on content services as the saviors or the killer apps are forgetting something: Voice is the killer app of telephone networks. Getting more revenue from voice will be much simpler to do for telephone operators than creating new information services. Here are Prof. Odlyzko’s recommendations for growing telecom revenues:

  • There is plenty of room to grow voice usage
  • Think creatively about business models, especially pricing
  • Use higher bandwidth to stimulate greater voice usage.
  • Use higher bandwidth to segment the market and gain revenues by providing different quality levels (be less efficient with compression!).
  • Provide toll-free wireless calling numbers to get revenue from businesses.
  • Use content and other data services as inducements to greater voice usage (i.e., as the dessert, not the main meal)

I think we need to untangle some semantics, though, regarding the claim of kingship for content. If by content you mean things like music, video, news, and entertainment, it’s obvious that no one has yet built a viable content business model on the Internet or on wireless networks. Yet, equally obviously, people do pay for this type of content in other media, both directly (cable/satellite subscriptions) and indirectly (advertising).

This type of content is desirable, and has value. The reluctance of people who think nothing of subscribing to the Wall Street Journal or the local paper to pay for content online has more to do with the competition of free content and user expectations than it does with the desirability of online content. Similarly, the lack of interest of wireless users in this type of content on their cell phones has more to do with the awkward form factor and user interface than with the value of the content itself.

If, however, by content you mean person-to-person digital communications, it’s obvious that content is king. Email was a great driver of Internet growth in the past, as Instant Messaging and Voice over IP (VoIP) are today. That voice has been the great driver of cell networks up to now is obvious. That voice will remain the primary driver of wireless network usage for the foreseeable future is less certain. However, person-to-person connectivity will be a major factor. One of Professor Odlyzko’s tables demonstrates this point eloquently:



Cable TV



Wired Phone



Mobile Phone






SMS (Short Messaging Service), which is all the rage in Europe, costs an astonishing $3,000 a megabyte! Imagine if it were sold that way, instead of by charging 10 cents a message. This table demonstrates the value we put on various types of communications. Yet there’s an important communications type missing: email.

How much do you pay for email? Unless you’re on AOL or a similar email metering system, your email usage is too cheap to meter. Does this mean you don’t value email? On the contrary, email may be the last digital communications service you would give up. So the calculation of price per megabyte may be somewhat misleading.

As I’ve previously argued, what really counts is yacking. People love to yack, on the phone, on the cell, or using their fingers on SMS, Instant Messaging, and email. They love to tell each other stories. The true winners will be those businesses that figure out new ways to facilitate, and charge for, person-to-person communications. My money’s on personal video.

Thessaloniki PowerPoint

Briefly Noted

Also, check out the article I wrote for the Taylor Harkins newsletter entitled, Do you hate your customers? It continues the theme from my earlier article, analyzing the media industry’s response to file sharing.
  • Steganographic Mimic: Steganography doesn’t have anything to do with dinosaurs. Rather it’s the science of concealing messages in outwardly normal pictures or messages. Some overly paranoid government agencies have speculated that terrorists used steganography to conceal messages planning the September 11th attacks. Frankly I don’t think they needed to go quite to that extreme, since coded or encrypted emails would suffice. Now there’s a new steganographic technique that avoids the suspicion that might accompany the sending or receipt of an encrypted file: Disguise the message as spam. The Spam Mimic Web site lets you sample the technique. First, go to this page, which contains a spam message I’ve encoded with a secret phrase. Then decode it at Spam Mimic. The technique makes use of the usually horrible spelling, grammar, and punctuation often found in spam emails.

  • Pretty Good Text to Speech: Most text to speech converters sound robotic and idiotic, often trying to pronounce things that should be spelled out, and vice versa. Loquendo, on the other hand, sounds pretty doggone good. Check out the way their system speaks the paragraph you’re now reading. Not bad, eh?

  • Ends Justifying Means: At least three major record labels are spoofing popular music file sharing services like Morpheus, Kazaa and Grokster with thousands of decoy music files. The files look identical to a particular song, but are filled with minutes of silence or 30-second loops of a song's chorus. The labels are hoping that file sharing users will get so frustrated they’ll stop stealing the music and purchase the CDs instead. Good luck with all of that! One anonymous executive said, “We're not using any of this with any kind of promotion or marketing in mind. We're doing this simply because we believe people are stealing our stuff and we want to stymie the stealing.”

    According to one statistic, more than 18.7 million users downloaded illegal music in May. Spoofing won’t be the only tactic used to stop piracy. Labels are apparently looking at ways to scramble search queries or add file attachments to slow the download of a compressed music file that would typically download quickly. Particularly troublesome is a bill being prepared by Beverly Hills democratic Congressman Howard Berman that would legalize high-tech attacks against file swapping networks. One hopes that this legislation won’t enable the kind of attack envisioned by one record exec, who summarized the mindset of some of his peers as, “Hey, if you don't mind stealing my career and livelihood, I'm sure you don't mind if I destroy your hard drive.” Even Business Week is concerned.

  • Net Traffic Exceeds Voice Traffic: In the US, Internet traffic has reached 100 petabytes per month, which is apparently double the volume of the nation’s long distance voice traffic. But the pace of growth in data is slackening, to a poky 100 percent per year, down from 130 percent in 2000 and 160 percent in 1999. Meanwhile, telecom revenues fell 17 percent and revenues-per-bit fell 45 percent in 2001.

  • Image - Wireless receiver within a tooth - Teeth: The European branch of MIT Media Lab has designed a tooth implant that can silently transmit sound through the jaw and to your ears. The implant is designed to work with an external device such as a mobile telephone, which would transmit a local signal to the tooth receiver. Reception can be switched on and off at will with the aid of the external device. Multiple molars can be implanted for – wait for it – surround sound. Others have restrained themselves from offering this pun, but I’ve no shame: Is this the ultimate Bluetooth device?
    Wired News

  • Failed BizPlan Archive: Alert SNS Reader Roger Hamm sends along a link to a research project that seeks to archive for posterity the business plans of failed dotcoms. The project is a joint effort between WebMergers, which tracked the dotcom revolution, and the Robert H. Smith School of Business at the University of Maryland. “If we do not act now to document the dot-com happenings of the past several years, many of the events and firms that helped define the period will be forgotten,” said David Kirsch, assistant professor of entrepreneurship and head of the research project. “We must create a meaningful digital archive of this historic era of entrepreneurship. The business plans of the 1990s are important cultural products that represent the creative efforts of our age.” Hmmmm. I’ve got a very creative business plan from a former employer that might be interesting . . .

The Wayback Machine – A Year Ago in SNS

The lead article in the July 16, 2001 edition of SNS was How Not to Be an Online Grocer, a consideration of the fate of online grocers following the collapse of WebVan. Today, even cautious and deliberate Simon Delivers is having rough times.

Also in that edition was Wireless Stumble, about the demise of Metrocom’s Ricochet 128Kb wireless service. Today, Aerie Networks, a broadband services company based in Denver, Colorado that bought Ricochet’s network, is still readying it for rollout. Chances are good that Wi-Fi makes Ricochet DOA.

The article, More Disposable Tech, was about a trend toward disposable cell phones. We’re still waiting.

Finally, Thumb Envy, concerned Seiko’s new thumb keyboard for the Palm V. Today, doctors are treating patients suffering from Blackberry Thumb.

Just the Right Stuff™

If you subscribed to CTOMentor’s Just the Right Stuff™ newsletter, over the past few months, you’d have received news nuggets like the following, along with expanded analysis. Your personalized Information Needs Profile would determine which of these items you’d receive. For more information, check out CTOMentor.

  • Military Scours Windows for Back Doors: The US Army and Navy are inspecting Microsoft’s Windows operating systems looking for unauthorized remote-control program. An undisclosed number of copies of the program, RemotelyAnywhere, were discovered on Department of Defense computer systems in March.

  • Movie Pirates Despoil Precious Assets: Surveys say 350,000 films are being downloaded illegally every day, many of them while still playing in theaters. The Motion Picture Association of America filed suit March 5 against file-sharing services, including Morpheus, Grokster and Kazaa. An overwrought MPAA chief Jack Valenti said file-sharing “is file-stealing--it's an outrageous despoilment of precious assets.” Settle down. It’s only the end of the world as you know it.
    LA Times

  • Palm Drives Bluetooth: Palm's drive to make Bluetooth wireless technology ubiquitous shifted into high gear in March with the announcement of a marketing partnership with Sony Ericsson and the release of a Bluetooth add-on card for users of its handheld devices.

  • Faster, Better, Cheaper Wireless LANs: Actiontec brings the price of high-speed wireless networking down to earth with its affordable ($149) 54Mbps wireless PC Card. Unfortunately, Actiontec skimps on security features, and its utility software offers only minimal network statistics.

  • Gartner Predicts Wireless and Mobile in 2002: Business planners have to accept that more than half of all the mobile applications deployed at the start of 2002 will be obsolete by the end of the year, and they have to put up with the lack of sufficiently useful and usable applications.

  • Wireless Gaming Market to Grow to $2.8 Billion Worldwide by 2006: In-Stat/MDR believes wireless gaming offers an excellent opportunity for network providers to create additional revenue through increasing subscribers’ usage levels, reducing churn, and enhancing the overall user experience for their extremely fickle subscriber base. Cahners InStat

Get this Stuff as it happens, not months later. Subscribe to CTOMentor today. Charter subscription discounts still available.

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In the unlikely event that you want more of my opinions, I’ve started a Weblog. It’s the fashionable thing for pundits to do, and I’m doing it too. A Weblog is a datestamped collection of somewhat random thoughts and ideas assembled on a Web page. If you’d like to subject the world to your thoughts, as I do, you can create your own Weblog. You need to have a Web site that allows you FTP access, and the free software from This allows you to right click on a Web page and append your pithy thoughts to your Weblog.

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In Memoriam

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March 14, 1928 - July 5, 2003

In Memoriam

Jane C. Ellsworth

July 20, 1928 - July 20, 2003