Tuesday, 29 November 2011

Spending Charlie's £100Mn - thoughts on the Chancellor's Autumn Statement

On Tuesday, the UK Government released the Chancellor's Autumn Statement, an important statement of policy at a time when a double dip recession seems increasingly likely (if one believes the doom-laden rantings of the popular press, at least).

In amongst the sensible stuff about public sector pay caps (about time, given the upcoming strike action by middle class, home owning unionists masquerading as "working class" activists) were two statements about the digital economy. Just when you thought the lessons of the risible Digital Britain/ Digital Economy policy failures had been learnt, here comes another misguided governmental attempt to interfere in a functioning commercial market.

The concept is to assign £100Mn for two things:
1) Improving mobile coverage in the UK up to 99% of the population
2) Urban broadband fund to create up to 10 “super-connected cities”

This is a laudable goal, but as usual there’s nothing in the document about how this will be implemented. The super-fast thing is unlikely to be practical in the real world in my view, at least not with £100Mn to spend.

I suspect that the plan will be the usual one - the tax payer will offer grants to BT and Virgin that enable them to make the capital investment in marginal exchanges economically viable. The trouble is that in major cities the investment case is not the problem, it’s just technically very hard. For example, I understand that BT can’t upgrade many London boroughs to Infinity because of the architecture of the London exchange. Likewise, if everyone in the major cities started buying Virgin cable at 100MBit/s, their network would collapse - £100Mn won’t solve that either. Thoughts of fibre are pipe dreams (get it?) – even with universal duct access, it costs about $100,000 per urban mile – raise that to $300,000 if there are no ducts.

In mobile, free urban WiFi is the most likely route to enabling fast mobile broadband access. This is available in lots of cities round the world – Edmonton and Helsinki are two that spring to mind. I suspect the consumer benefit will be quite limited, however, as WiFi contention will render the solution useless in a major UK urban area. Major further question on that is how the operating costs will be covered? If the plan is for cellular, then you again face the problem of what £100Mn buys you. Answer – not a lot!

My fundamental point is that any investment needs to enable a transformational change in the competitiveness of the UK technology industry and/ or create societal benefits. For example, rather than gifting the money to incumbents, why don’t they have X-prize type competitions to fund innovative solutions to maximise the performance of copper networks? Urban wireless, facilitated by high speed WiFi or even
white space networks could also be quite exciting because it enables all of the fancy augmented reality technologies (like Auresma/ Autonomy) and new business models, like scvngr and Foursquare. By making access available for free, you may create an ecosystem of entrepreneurial activity to take advantage. Again, white space networks are one option – wifi might also be good enough, provided the operational realities can be accommodated.

The long term economic benefits of creating a technology industry to exploit that new technology feel much more meaningful than enabling super-high speed file sharing for students. Even then, I remain to be convinced that the examples of high speed networks “creating” technology economies in Korea, Japan and Scandinavia demonstrably show causality between the presence of those networks and the success of their industries. Let’s not forget that the UK already has a thriving Internet economy and are have advanced services and advanced demand for those services. We’re the second country to have OnLive, Lovefilm has been streaming as long as Netflix, etc... I’m therefore not sure what such a tiny amount of money is intended to achieve.

Chances of any scenario in which the money isn’t totally squandered in quangos feel fleetingly small.

Friday, 25 November 2011

What I've been reading this week

New technology

With all the fuss about ARM vs Intel in the PC/ server/ mobile/ any other device market, it’s easy to forget the other alternatives from AMD. Sadly, “Bulldozer” seems to be representative of the speed of their new architecture, not its effect on the competition. Some commentators – like that linked – believe that multithreaded processes in servers will allow AMD to regain ground against Intel. They miss the point – this is a desktop chip and will compete against other desktop chips. Against these, and against server-specific products, it will get annihilated by the competition.


Darknet activities such as this are a core part of the – accidental or deliberate – effort to segment and even weaponise aspects of the Internet.

Breakthrough technology

Given the criticism that some in scientific circles directed at the experimenters for announcing their puzzling results to the wider community, I think this news represents a certain vindication of that decision. Besides the obvious implications of violating the constancy of the speed of light, a really startling thing here is the extreme level of precision that the experimenters can achieve with their apparatus at both ends of the test rig.

This is the cutting edge display technology of 2020 – the challenge now is making it into a product. If that leap can be made, then the societal impact would be immense if used in concert with ever-improving augmented reality capabilities.

Sounds like a fantastic technology, although I’m typically quite sceptical about power generation breakthroughs until they work in the field at an economic price. Solar has been a massive scam from an economic point of view (although there have doubtless been some small environmental benefits), let’s hope these “leaves” both work and are economic.


BBC R&D have produced some impressive innovations over the years, so it’s nice to see that the move to Salford hasn’t yet degraded their creativeness. The Dalek on page 3 is worth looking at, although I disagree that this represents evidence of an Internet of Things. It’s just a toy!http://www.reghardware.com/2011/11/23/reg_hardware_goes_inside_bbc_research_and_development_labs/

Business models

Even with a startling growth of 58% YoY, Apple’s brand is still well below that of Microsoft or even IBM in the (admittedly slightly false science of) brand value.

Digital media

Tablets are the perfect replacement for the second/ third/ xth TV set, something that’s now being formalised by the TV platform operators.

The wrapping together of content, device and connection has long been touted as the future. With e-readers and tablets it’s finally something that also desirable for consumers.

And finally...

A nicely written view on the worst tech mishaps of 2011. I heartily agree. Favourite quote: “At this point, RIM is like the deadbeat dad who shows up two months after your 17th birthday and presents you with a stuffed animal in a gift bag. Too little, too tone-deaf, too late.”

Friday, 18 November 2011

What I've been reading this week

Business model evolution

Apple’s new patent, if implemented in hardware, represents another nail in the coffin of mobile operators slightly pathetic attempts to monopolise the nascent NFC market. NFC in phones is a neat technology, but frankly offers limited additional customer benefit above conventional payment and access technologies. If payment in particular is such a draw, then the industry should ask itself how much consumers are willing to pay for chip and pin. The answer, in case you’re wondering, is “zero”. More sensible to make this a very minor part of the phone architecture.

And just to ram home the point, news of this collaboration between Intel and Mastercard demonstrates how likely it is that the secure functions of NFC terminals will lie off the SIM card.

New technology

Great that the UK has finally got an LTE network, however it’s real impact is likely to be small, particularly in reducing congestion around the Olympic Games sites. So few LTE devices are in service that only a few roamers from Europe and business users crazy enough to do data roaming with dongles will actually benefit. Still, from little acorns...

If the rumours are true and Apple are going to release a TV next year, then I hope it works as well as this. Amazing what can be done with cheap hardware and a bit of ingenuity.

The graphics capability of a modern PC is quite astounding. What’s more incredible is that this level of quality will be the mainstream within 2 years. Imagine that on your 65” Apple TV.

Not really a surprise that Nokia are seeking to complement their smart phone/ music store product set with a tablet offer...

...Nor that Amazon are going to complement their tablet product with a smart phone. My prediction is that neither vendor will sell more than 1Mn units of their new product in 2012.

Digital media

Mobile marketing is set for a big year in 2012 and consolidation will be a feature of that success. My sources in London agencies tell me that they’re seeing triple digit YoY growth in the developed markets as consumers become more used to receiving and interacting with mobile ads.

If capital availability and governmental incentives remain good for digital business, then the continued high engagement UK citizens have with the Internet can be translated into an escape route from our economic woes. Here’s hoping.

Wednesday, 16 November 2011

Impressions of Tokyo

I’ve just returned from a week in Tokyo. Having just recovered from the jet lag, I thought I’d share some experiences and impressions about media and technology landscape.

The first thing to say is that Tokyo is a beautiful city. It’s very clean and for the most part rather peaceful. This is helped by the nature of the traffic. Besides the ubiquitous Toyota Crown taxis, almost every other car was either a hybrid or a tiny Kei car – a glimpse into the future of European cities as fuel prices rise and taxes on gas guzzlers become ever more punitive.

Beautiful or not, this year’s earthquake has had significant effects on life in the city. Since the well publicised issues with their generation capacity began, Japan has suffered with undersupply of electricity and this is manifest in the fact that none of the offices I went to were using their air conditioning. Something I hadn’t really appreciated is that modern office blocks are so well insulated that even the body heat of those inside create stifling conditions quite rapidly if the climate control isn’t active. One of my clients have even changed the dress code from suit and tie to short sleeve shirt with no tie to improve employee efficacy in these conditions.

I think this is another example of Japanese ingenuity in problem solving. Although some things (lavatories in particular) are ludicrously over-engineered, there’s an appreciation of elegance in Japanese design, which is attractive. Probably why the iPhone was by far the most common handset I saw. Many people even had two of them – one for business, one for personal. A few people still used the traditional flip phones – principally for their cameras and mobile TV capability. It seems that women under 30 are obsessed by their morning horoscopes – available on breakfast TV and therefore on the mobile broadcast service.

On the subject of mobile, Tokyo has a curiously large amount of microwave towers and overhead cable. The locals weren’t sure what these were. My theory is that they substitute for fibre in shared ducts or price capped fibre backhaul, which I doubt NTT is forced to provide in Japan’s rather weak regulatory environment. My second favourite theory on this is that they provide resilience against fibre breakage in the event of an earthquake. Less likely since the orientation of the dishes would seem as vulnerable as a buried cable. If anyone knows, then let me know!

All in all it was a useful trip. As ever, there was much interest about western market paradigms at the media and technology companies I visited, not to mention amongst my colleagues in the Tokyo office. With a bit of luck I’ll be back there soon as I’d be very interested in seeing what the other cities are like – Tokyo was less of a culture shock than I expected. Either that or all this travelling is making me immune!

Friday, 11 November 2011

What I've been reading this week

Here's a few stories that I've found interesting this week from across the digital world.

Digital media

Mobile advertising is clearly a market with much growth in it, particularly in developed markets. I wonder, however at what point this will merge with traditional online and which set of business models will win out.

The headline is slightly misleading, as the volumes required to access the best discounts continue to rise, but the analysis is typically cogent and demonstrates the very small size of the content delivery market worldwide, despite all the hype that surrounds online video.

HTML 5 has really blossomed this year and Adobe’s announcement that Flash is to leave the mobile platform (albeit slowly) illustrates that fact. How long can Microsoft persist with Silverlight?

Breakthrough technology

I find it startling how willing people are to connect with total strangers, before we get to the implications for Facebook’s subscriber numbers of fake accounts. If you consider the classic Turing Test, then this script shows how social networks could enable more human-like interaction with machines. How about a Siri/ “Fakebook” mashup?

Both robotics and 3D-printing are due a massive 2012 as advances in both reduce cost and increase utility – I see these technologies as now being at the same developmental stage as computing was in 1980. All we need is the “PC” to arrive and make them mass-market... The spider goes to show how far and fast walking technologies have come in the last decade.

This kind of molecular animation with electric fields is key to truly smart materials and I’m sure will revolutionise material science over the next quarter century. Sadly medical advances based on it will be a decade or more away thanks to the FDA.

Business model evolution

GM blocks Saab transaction over IP fears. I think 2012 will be a year for this kind of story. Chinese state money has been used to strip IP from many bankrupt corporations over the last decade, which is fair enough and common practice in other industries, however when combined with the other activities and aims of the Chinese government is of deep concern to developed world businesses.

“Green-ness” of supply chains is a rather abstract concept at the best of times and Greenpeace fail to show the huge productivity upside (and therefore resource efficiency improvement) enabled by these company’s technologies, but the dynamics show how companies are moving to make their supply chains more sustainable for commercial reasons – lack of resource availability and increasing energy prices chief among them. The mass market, however, seems certain to remain uninterested.

Wednesday, 9 November 2011

Note from Japan - cyber attacks

I'm on a week-long trip to Japan to visit with some clients. Although not a reason for my trip, a subject that's come up several times is the alarming recent spike in cyber attacks on Japanese companies. One senior executive at a global electronics corporation told me that they were responding to at least one serious attempted breach every day; another - more worryingly a significant player in the defensive industry - reported similar issues.

This goes to show that the recent London conference on cyber security was very topical as this is a global issue, at least for those companies that embrace and participate in market capitalism. There is clear danger of reaching for apocalyptic scenarios when discussing this topic, but I for one am concerned about the threat of cyber warfare perpetrated by China, Russia and others to the world's economic and political security.

The regimes mentioned are not in any way wedded to the market economy - they and their puppet companies participate as far as needed to secure sufficient economic and material power to sustain their internal political objectives. If that means that the innovation engine that powers creative destruction is rendered impotent by endless plagarism then all the better. As the technological advantage of the developed world is eroded, so the real power of emerging regimes becomes all the more manifest. Stagnation of global development is excellent for them, even if it is not the primary objective of their strategy.

And the threat is not just economic - it's bad for profit margins if China copies your jet engine design. It's a whole lot worse if that engine ends up in the back of a Chinese fighter plane over the Spratley Islands.

Governmental intervention would be one way of protecting our system, but history suggests that public sector intervention tends to be too late to have a positive effect. For me, the answer lies in industrial co-operation to protect vital communications networks and secure corporate firewalls. RAND would love the game theory inherent in this problem - it doesn't matter where Liyang gets its engine design from, it's the ability to leap technology generations that kills you. Therefore one breach breaks the entire system. We live or die together!

I think this subject is going to be a major focus for us in the coming years - hopefully we can contribute to a meaningful solution.

Thursday, 3 November 2011

Africa Investments - October 2011

Investment in African telecoms picked up in October after a slow September, with $284Mn announced, principally in mobile, with the exception of Liberia and Sierra Leone receiving World Bank funding to connect themselves to the ACE subsea cable system.

Biggest deal this month was the conclusion of France Telecom's protracted takeover of Congo Chine Telecoms. FT paid $125Mn for DRC's 3rd largest carrier and an additional $71Mn for 2MHz of 1800 and 10MHz of 2100 spectrum to boost capacity - necessary given DRC's 72Mn population, much of which remains unconnected. At $92.6 per subscriber, the deal looks like a good one for FT and further strengthens its grip on Francophone Africa.