The Last Bell Company

Bell_logo_1969Cincinnati Bell is the only company in the US still using the Bell name. Founded in 1873 as a telegraph company, even before the invention of the telephone, the company has been serving a small 3-state area around Cincinnati since the founding of telephony. The company operated independently from the old Bell system because AT&T only owned a 32.6% share of the company.

The company abandoned the Bell name for a while in the 90s, changing its corporate name to the Broadwing Corporation, but changed its name back to Cincinnati Bell after a few years. The company has ventured outside its small footprint over the years. It bought IXC communications, a nationwide fiber network, and also spread out at one point as a CLEC to many parts of Ohio. The company’s biggest non-traditional offering was its wireless business which it sold to Verizon last year for $194 million. Like all independent wireless operators it was feeling the pinch of competition from the price wars going on in the wireless industry.

The company has seen the same drop-off of its traditional line of business as all telcos. The company’s traditional voice business of selling telephone lines fell from $520 million per year in 2004 to $203 million in 2014 and now represents only 16% of the company’s revenues. As homes and businesses ditched voice, the successful telcos have had to look elsewhere to replace those revenues.

Cincinnati Bell has undertaken a number of new business lines, and its most successful is its Fioptics business of building fiber to homes and businesses. The company reported at the end of 2014 that it had FTTP service in 91,000 homes and businesses, up from 11,000 in 2009. The company has also put a big emphasis on building fiber to businesses districts and has connected 5,800 commercial buildings in the region, compared to roughly 500 by main rival Time Warner.

In 2014 the company’s fiber business generated $310 million and expects those revenues to grow significantly as they expand the fiber network. The company plans on using the cash from the sale of its wireless business to further expand the fiber business, planning to spend $210 million on fiber expansion in 2015. At the end of 2014 the company had covered about 40% of the region with fiber and expects that to nearly double by the end of 2016.

The company has also done well serving the large corporations in their footprint like Proctor&Gamble and General Electric. The company has a full suite of large company products, such as cloud services, which it has now pushed down to smaller businesses. This business line generated $168 million in 2014 and is growing by double digits.

This effort makes Cncinnati Bell one of the largest fiber builders after Verizon FiOS. And like many fiber companies, they now offers a residential gigabit product priced at $89.99 per month for the first year and then going to $99.99. This is in a market where today Time Warner’s fastest product is 50 mbps download priced at a promotional price of $64.99 and reverting to $107.99 at the end of the promotion. Of course, we’ve seen Time Warner get much faster and become price competitive in other fiber markets like Austin.

For a company to reinvent itself is not easy or without risk. Like many companies that ventured into the CLEC business in the late 90s, Cincinnati Bell’s CLEC business came up a big bust. The company racked up $3 billion in debts and the business badly underperformed, threatening bankruptcy in 2003.

But the company made the right calls and changed directions again towards fiber and now seems to be on a solid path. The company has clearly reinvented itself again to be a fiber ISP. Companies who have been able to make that transition seem to be thriving. Offering the fastest data speeds of fiber in a given market seems to be a winning strategy and is letting companies like Cincinnati Bell benefit from the continuing growth of broadband services.

The company’s history is a good object lesson for others in the industry. The company foresaw the eventual death of voice as a viable business and took chances on launching into other areas. It fared poorly as a CLEC, a little better but not spectacularly as a wireless carrier, and seems to have hit a home run with fiber.

No company in this space can ever stop reinventing itself. The fiber business has thrived in part due to the continually growing demand for broadband, which has now achieved around 75% nationwide penetration of all households. But when that growth tops out, and as cable companies offer faster speeds, even fiber companies will need to stay nimble and creative to protect their revenues. Cincinnati Bell seems like a company that is always willing to take a fresh look at itself, and that’s a good lesson for all carriers.

Our Shifting Viewing Habits

Old TVNielsen did a huge survey earlier this year where they asked 30,000 viewers worldwide questions about how they view video content. The responses show how quickly people are changing their viewing habits in response to the proliferation of new options.

Even as recently as a little more than a decade ago, options to view video other than at the scheduled broadcast time  time were rare. I was an early adapter to TiVo and got my first set in 2000. At that time almost nobody watched TV on a time-delayed basis. But TiVo let me watch things on my own time schedule and I quickly invested in a CD burner that would let me capture content from the relatively small TiVo hard drive to further expand my options to watch on a time delay.

The cable companies responded to TiVo by introducing video on demand, which provided watch-anytime capabilities to a subset of their programming. I am probably somewhat unusual in that I can’t recall as an adult having ever watched a network TV series by watching at the scheduled time. I just have never been able to structure my life in that manner (or even remember what day of the week it is).

But today we have a huge array of options and this survey shows that people are using them. We can, of course, still watch TV live and sit and surf the channels. But the cable company video on demand offerings are much larger than in the past. The large cable companies and networks have also provided on-line delayed viewing for most of their popular content that is available with a cable subscription. There are the huge libraries of content at Netflix, Amazon Prime, and other streaming services. There is some pretty decent content today being produced only for the Web, along with an absolute mountain of content on YouTube. And for those willing to hunt, there are huge piles of older movies, newsreels, and offbeat content all over the web.

Here are a few of the more interesting findings of the Nielsen survey:

  • Only 48% of people now prefer to watch video live. This means that the shift to time-delayed viewing is now the predominant way of viewing video.
  • A gigantic 63% of people say that time-shifted viewing best fits their personal schedules.
  • Only 51% think that the big screen TV is the best device for watching video. This is a pretty amazing shift that says that people not only have gotten used to watching video on computers, tablets, and smartphones, but a lot of them now find those alternatives to be their favorite way to watch video.
  • 37% now finding watching video on their cellphone to be ‘convenient’.
  • Another 37% say that a tablet is as good of an alternative as a television screen or a computer.
  • 58% of people like to catch up on content through binge viewing and watching more than one episode at a time.
  • 21% of people are more likely to watch content that has a social media tie-in.

The survey also shows that the type of content affects which device we use. People still prefer the television when watching live news, documentaries, comedies, and dramas. But less than half of viewers choose the television screen to watch reality TV shows. And almost nobody uses a TV screen to watch short videos under 10 minutes in length.

Probably the most interesting phenomenon is that the choice of multiple screens is killing off the once-powerful social impact of watching television with others. I remember the days when the whole family sat around in the evening watching whatever happened to be on (since we could only get three networks that wasn’t a big choice). But this survey shows that 65% of viewers now watch video alone. I know that my wife and I share almost no common interests among the things we watch, and we routinely watch different things at the same time.

This shift is certainly still not over. I still have many older relatives who only watch traditional TV on the screen as it is broadcast. But just about the opposite is true of young viewers and they have largely abandoned the big TV screen except perhaps as background noise while they are multi-tasking on their phones.

The one place where these shifts ought to soon have a huge impact is TV advertising. With over half of all viewers now watching content on a time-delayed basis the traditional advertising model is quickly dying. Surprisingly, TV advertising spending is only slightly down this year, but it won’t be surprising one coming year to see a huge fall-off in TV advertising spending. It seems a waste to pay to advertise where fewer and fewer of us are viewing.

Barriers to Home IoT

HouseThe early IoT industry has been busy making smart thermostats and monitors of all kinds for homes, but the industry so far has not done as well as some industry analysts predicted. I think there are a number of barriers that have to be overcome for this to become a widespread technology.

Ease of Installation. Ideally you could buy an IoT device, take it out of the box, push a button, and it would work. But there are almost no devices yet like that, and many devices will never work like that. Hooking up a thermostat and many other smart devices means electrical wiring work and most people aren’t comfortable doing this on their own and are not always ready to pay an electrician to do this for an IoT device. Putting in smart door lock means changing out the old one, and anybody who ever changed a door lock knows that it is never as easy as it ought to be.

Ease of Connection. Even after you install most current IoT devices you aren’t done; you next have to connect them to your home network. We are not yet at a time when a device can self-configure, and perhaps we never want it to be that easy since a device that can do that can also be easily hacked to reconfigure. But if you think people are uncomfortable wiring a thermostat, there are just as many people who are uncomfortable messing with the settings on their home WiFi networks.

Fear of Hacking. It doesn’t take very much web research about home IoT devices to run into articles about the lack of security in these devices today. People don’t want an outsider to be able to hack into their surveillance cameras to watch them or to be able to maliciously tinker with the settings on any of their devices. Until the industry gets serious about security this fear factor is very rightfully going to a barrier to entry for a lot of people.

Ease of Using the Information Generated. When I read the literature on a home energy system it goes into great length to describe the great graphs and charts it will generate for me about my energy usage. But I don’t think most people want data – they want solutions. They don’t want to have to interpret data on hourly usage and then decide how to tinker with the settings to get the results they want. People want solutions and they are going to want IoT devices that understands what they want and takes care of the details. If you have to constantly monitor the data out of your IoT devices and then fiddle to achieve your goals, then what you’ve really gained is a new chore – and none of us want that. I think what we are waiting for is the smart house that can take care of all of the IoT devices for us.

Solving One Problem and Creating Another. I took a look at getting smart door locks. But as I thought through how they work I could see they were not for me. They work by interfacing with your cellphone and also have a manual override. But I am the prototypical absent-minded professor-type and I rarely have my phone with me when I leave the house, even when I should. I picture myself locked out of my house and not able to remember the manual code. And who the heck do you call – a locksmith or an IT guy? And oh crap, my phone is locked inside the house.

Value Proposition. In many cases I just don’t see the value proposition that some of the early IoT devices deliver. For instance, do smart locks really make my home any safer from a guy with a crowbar? Do I really need to pay extra for a smart refrigerator or dryer? It might be that the value propositions are there, but the manufacturers need to do a better job of convincing me why any device is indispensable in my life.

Only for Do-it-Yourselfers. All of these issues to me tell me that everybody who is not a do-it-yourselfer is going to want and need help with IoT, either in setting it up, configuring it or deciding how to use it. Today one a certain rather small percentage of the population is willing to tackle all of those tasks, and that is probably the limiting factor for most people.

But there is an upside to any business that can devise a business plan to help people with IoT devices. Cable companies, telcos and ISPs are certainly in an ideal spot to be that vendor for many homes. All that is really needed is that your customers like you and trust you. And trust is the key word. When you want to have a home security system installed you must trust the company and the people doing the work. I remember back when I lived in Maryland that Comcast once sent a tech to my house who was driving a dilapidated 25-year old pickup and dressed poorly. This guy was clearly a contractor and I would not have let this guy install a Comcast burglar alarm in my house. But the Comcast technician in Florida showed up in a Comcast truck and seemed very knowledgeable and professional and is somebody I would be more likely to trust.

There are a large percentage of people who are never going to want to fiddle with IoT devices, no matter how easy this becomes. I can’t ever foresee the day until maybe when we all have smart robots that a smart home is going to be easy enough for the average person. There are too many components of a smart house that are going to be beyond the comfort level of most people. And that sounds like a permanent new service business to me.

How We Deal with Surveillance

SpyVsSpyThe fact that governments spy on us has been in the news a lot in the last two years since Edward Snowden revealed the extent of the US spying. It’s not just the US government; similar revelations have come out even in countries like Canada.

The folks at the Pew Research Center asked Americans how the knowledge that they are being watched has changed their behavior. Not surprisingly, a pretty large majority of people have made no changes. But the survey found that some people have changed their behavior, and here are some of the key findings in this survey:

  • 87% of people said that they had heard about the government surveillance. Only 31% said they had heard a lot about it and 56% said they had heard a little about it.
  • 34% of those who were aware of the surveillance had made at least one change to shield or hide their information from the government.
    • 17% changed their privacy settings on social media
    • 15% have used social media less often
    • 15% have begun avoiding apps that want access to their personal data
    • 14% say they are speaking to friends in person rather than communicating online or using the Internet
    • 13% uninstalled apps
    • 13% have edited themselves so as not to use what they consider to be sensitive terms online
  • Those who have made changes tend to be younger than 50 and also to be in the category of those who heard a lot about the surveillance, or who thought that the surveillance was not in the public’s interest.
  • Many people just cut back on using certain applications or have modified the way they use them. 18% did this with email, 17% with search engines, 15% with social media sites, 15% with cellphones, 13% with mobile apps, 13% with text messages, and 9% with landline phones.
  • 25% of people have started using more complex passwords.
  • Most people either do not know about or have not considered using tools that make it harder to track them. The percentages of people in these categories for various anti-surveillance tools include: 68% for search engines that don’t track you, 59% for email encryption software, 74% for browser plug-ins like DoNotTrackMe or Privacy Badger, 74% for proxy servers, and 70% for anonymity software like Tor.

The survey also asked how people feel about government surveillance and the results were mixed. 40% of Americans found it acceptable to monitor other Americans, 54% to monitor citizens of other countries, 60% to monitor leaders of both the US and of other countries, and 82% for monitoring ‘terrorists’.

Of those who are aware of the surveillance, 61% said that they are not confident that surveillance is serving the public interest. Republicans and those leaning Republican were more likely than Democrats to say they are losing confidence in surveillance.

In an interesting divide of opinion, 49% thought that courts were doing a good job of balancing the needs of intelligence against the rights to privacy while 49% thought they were not.

And finally, when asked how people felt about the government looking at their own personal data, 38% were concerned about emails, 39% were concerned about search engine results, 37% were concerned about cellphone usage, 31% were concerned about social media, and 29% were concerned about mobile apps.

I know I personally have cut way back on my viewing of cat videos. After all, I don’t want the government knowing I am a crazy old cat man (which unfortunately might be the case!).

How Real is Cord Cutting?

Fatty_watching_himself_on_TVAlmost every article you read these days about cable TV mentions cord cutting. Service provider are looking for products to satisfy cord cutters and analysts seem to be obsessed by it. But how real is it? I thought I’d take a look at the latest statistics since I haven’t done that for a while.

Total paying cable customers decreased by 31,000 customers in the first quarter of 2015 compared to a gain last year in the same quarter of 271,000. This is looking at cumulative customers for the whole industry including cable companies, telcos, and satellite. But within that number, the net losses for satellite for the quarter was 74,000 customers with a loss at Dish Networks of 134,000 customers and a gain for Direct TV of 60,000.

And cable companies as a whole are still losing customers to AT&T and Verizon, who together gained 129,000 new customers for the quarter, although as a group these two sectors had a tiny gain for the quarter.

This brings the overall loss for the year ending 1Q15 to 0.05%. While that doesn’t seem large, it’s the biggest (and the first) loss the industry as a whole has ever seen. And within the numbers is a worse story. Cable has now been shrinking for several years when measured against the growth of new households in the country. For the first quarter customers actually dropped 2.3% compared with the net change in total households, and for 2014 this was even worse with a net decline for the year of 2.8%.

As somebody who watched the telephone industry decline with landlines this is feeling very familiar. The industry first became sluggish for a few years, then had some tiny losses, and eventually began to bleed customers. But the loss of landlines was accompanied by the meteoric rise of cellphones, which gave people a good alternative to the home phone.

It’s impossible to sit and predict the same rapid decline of cable. For that to happen people are going to need to feel that the alternatives to cable are attractive enough for them to drop the traditional cable packages. So how are some of the alternatives to cable doing?

In the fourth quarter of last year Netflix streamed 10 billion hours of video, which represents 6% of all TV viewing. That number has been growing by double digits and is expected to continue to grow at that same fast rate. 6% of the market may not seem like a lot, but analysts say that Netflix contributed to 43% of the decline in ratings that TV experienced in 4Q14. So it’s not just that people are watching Netflix, but they are watching it during prime time.

And this is all very largely age-related. In the fourth quarter of 2014, viewing of linear TV (watching live broadcasts) was down 10.6%, a huge decrease over the year before. Millennials are flocking from traditional TV to either delayed viewing, viewing alternate content like Netflix, or viewing shorter content on their cellphones. Only about a quarter of millennials now watch linear TV while 44% of baby boomers do.

Linear viewing, in terms of hours watched, peaked in 2013 but has seen significant decreases since then. Over time this has to result in fewer people willing to pay the big monthly bill for something they don’t watch.

There have been surveys for years that predict an upcoming surge in cord cutting, but for various reasons none of those polls has held to be true. These polls tell that us that people are thinking about dropping cable subscriptions, but something is stopping them from pulling the trigger – there is a noted difference between intentions and actions.

There was another such survey recently released by TiVo. This poll says that about 1.5 million customers plan to ditch traditional cable in the next year. The survey says that another 38.1 million customers are dissatisfied with their pay-TV service. But that survey also reported that 20% of respondents had increased their TV packages within the last year, meaning there is a solid core of people who really love TV.

The TiVo survey might be right. When you consider that there has been no growth in cable for several years now it’s possible that there are already between 1 and 2 million people per year dropping cable, and that those drops are being masked by new households entering the market. But since most new households are younger and are the ones not buying cable that is probably not the case. The whole industry is scratching their head in the same way that I am, because the actual behavior in the market doesn’t match what surveys are telling them.

When Metallica Sued Napster

napster11Anybody who reads this blog knows that I am intrigued by the history of technology and I look back periodically at past events when they seem to be relevant to something happening today. This past week I saw an article that mentioned that April was the fifteenth anniversary of the lawsuit between Metallica and Napster. In retrospect, that was a very important ruling that has had implications in a lot of what we allow or don’t allow on the web today.

So let me look back at a few of the facts of that case and then discuss why this was so important. The first thing that surprised me about this is that this was only fifteen years ago. I remember the case vividly, but in my memory it was older than that and was back at the beginning of the Internet (and in many ways it does).

The case was very straightforward. If you recall, Napster was the first major peer-to-peer file-sharing service. It was very simple in operations and it allowed you to see MP3 files on other Napster users’ computers as long as you agreed to make your own files available. Napster users were then free to download any file they found in the Napster system. You could do simple searches by either song name or artist to navigate the system.

Of course, Napster put the whole music industry into a tizzy because people were using it to download millions of music files free every day. This was illegal for anybody who downloaded songs since they were violating copyrights and getting music without paying the musicians or the record companies.

The industry railed loudly against Napster, but I’m not sure they knew entirely what to do about them. While users of Napster were breaking the law, it was not quite so clear that Napster was doing anything wrong, and the industry feared a court case that might give a legal go-ahead to Napster. The industry was looking at legislative fixes to the problem.

But then along came Metallica. The band got incensed when their song ‘I Disappear’ from the Mission Impossible II soundtrack appeared on Napster before it was even officially released. The band decided to sue Napster to stop the practice and in the process became the spokespeople for the whole industry. The Recording Industry Association of America (RIAA) and Metallica offered settlement alternatives to Napster, such as scrubbing their system of all copyrighted material, but this was impossible at that time (and probably still is). In the process of trying to negotiate a settlement, Napster went bankrupt paying to defend itself.

But this lawsuit sparked an ongoing and major debate about ownership rights of content versus the rights of Internet companies to make content available. While it became clear that blatant file-sharing like what Napster did is illegal, there are plenty of more nuanced fights today in the ongoing battle between artists and internet companies.

The fight moved on from Napster to Apple’s battle against Digital Rights Management (DRM), the practice of tying music recordings to a music player. From there the fight migrated to Congress with attempts to pass the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA) that were pushed by the music and movie industries to give them a leg up over internet companies.

You still see this same fight today when artists like Taylor Swift are fighting with Spotify to be justly paid for their content. You see this same battle between authors and Amazon for not properly rewarding them for their works. There is also a never ending battle between video content providers and sites like YouTube that allow people to easily upload copyrighted material.

It’s likely that the battle is going to be ongoing. Some visionaries foresee a day when micropayments are widely accepted and users can easily buy content directly from artists. But that is never going to be a perfect solution because people love the convenience of services like Spotify or Beats that put the content they like in an easy-to-use format. And as we saw with Napster, millions of people will grab copyrighted content for free if they are allowed to.

Should You Have a Cord Cutter Package?

rabbit earsIf you are in the cable business is it time to consider a ‘cord-cutter’ product? Obviously Cablevision thinks it’s a good idea as they became the first cable TV company to offer a standalone version of HBO Now to its line-up.

Cablevision has also adding two specific cord-cutter products as well. For $34.90 per month they will provide a 5 Mbps download cable modem, a Mohu Leaf 50 digital antenna to watch network television without a cable subscription, and their Freewheel unlimited text and voice WiFi phone service (more on this below).

For a promotional price of $44.90 per month they will provide a 50 Mbps down/25 Mbps up cable modem and the same free digital antenna. There is no description of what the price will rise to at the end of the promotional period. Both products have an option to add HBO Now for $15 per month.

The Cablevision Freewheel WiFi phone is an interesting product also. It provides unlimited voice and text as long as the customer is on WiFi and inside of the Cablevision service footprint. As long as you buy another Cablevision product it’s priced at $9.95 per month and you have to buy a Motorola Moto G phone for $99.95. The phone does not work on traditional cellular, so it’s only going to be attractive to those who are always around WiFi.

Cablevision says these packages are meant to go after cord cutters or cord nevers and are to provide an alternative for those who don’t want to pay for a traditional cable programming package. This begs the question: should other providers consider the same sort of cord cutter packages? A few weeks ago, the FCC officially announced that cord cutting is real (a little late to the game) since I don’t know that I have any clients that are not losing cable customers in a given footprint.

The Cablevision options are somewhat odd, though. While Freewheel WiFi phones will be attractive to those who stay around WiFi all day, it’s a product that doesn’t work in moving vehicles and which doesn’t revert to traditional cellular when you are out of reach of WiFi. For around $15 per month you can buy a better version of this product from several cellular resellers that partner with traditional cellphone service so that the phone will work anywhere in the US. And the more expensive cord cutter package is basically a naked cable modem with a free digital antenna thrown in.

There are two questions to ask if you want to consider a cord cutting product. What do cord cutters really want? Can you put together such a package?

Cablevision seems to think that people want a naked standalone data product, but most of my clients have offered that for years. They have come to the conclusion that they should never turn away anybody willing to pay for their highest margin data product, especially since most small companies are losing money on cable TV anyway. You can often get standalone cable from the larger cable companies if you fight hard enough for it, but they will spend a lot of effort getting you to buy a bundle of some sort instead.

Companies like Sling TV seem to think that cord cutters want smaller packages of programming, and I am sure some of them do. But recent surveys show that customers are extremely loyal to the few networks they most want, and so a smaller package is only going to be attractive to that tiny sliver of your customers who only want exactly what is in the smaller package you offer. I think what people really want is a la carte programming and the ability to buy only what they want and nothing more. But that is not going to be on the table soon, if ever.

If Verizon is able to wade through the lawsuits and offer their smaller packages, I think they are going to get limited response as well, because their proposed pricing for smaller packages is not much cheaper than normal cable packages. And this highlights the second thing cord cutters want – they want to save money. Unfortunately, as many have warned, when you pull channels out of the bigger line-ups and sell them in smaller piles, the programmers are going to charge a lot more for you to carry them. They still want to be paid as if you are taking their larger line-ups.

I would be shocked if Cablevision sells very many of their smaller package – it’s just too quirky in forcing both a WiFi phone and a slow cable modem together. The number of households who are going to think that is the perfect product can’t be very large. But Cablevision might address this over time by offering a wide array of different cord cutter options. But then they will have violated something that cable companies have learned the hard way – which is to keep the options simple.

I’m not sure that there is any real cord cutter package that will be a killer product to keep your cord cutter customers happy. But perhaps there is a suite of different products that will be attractive to different segments of cord cutters and which will each get a little piece of the market.

New Technology – May 2015

TransistorThis blog will look at some of the coolest new technology that has come across my screen lately.

Ultrathin Transistor. Researchers at Cornell have developed a transistor that is only three atoms thick. The transistor is made from an experimental material called transition metal dichalcogenide (TMD).

The findings were published in Nature and noted as a potentially major breakthrough. We are reaching the limit on the smallness of circuits that can be made from silicon and this possibly portends a generation of ultrathin circuits and sensors. The Cornell team has made a circuit on a 4-inch wafer and they believe this can easily be made commercially viable. TMDs are being discussed along with graphene as the potential breakthroughs that will let us march past the Moore’s law limits on circuit sizes.

Acoustruments. Disney research labs have developed a technology they call acoustruments as a way to interface with physical devices using soundwaves. For example, this could let you set an alarm clock at a Disney resort from an app on any cellphone that has a speaker. As you tell the app what to do, it would emit sounds from your cellphone speaker that would then ‘push’ the appropriate buttons on the alarm clock to set the alarm. Disney sees applications allowing people from around the world to have easier interfaces with devices on the Disney property.

This has potential uses far outside this simple example because it could allow a no-power standard interface between people and electronics. This could become a handy way to interface with IoT devices, for example.

Better Electric Conductors. Scientists at Rice University along with the Tejiin Aramid, a firm from the Netherlands, have demonstrated the ability to use carbon nanotubes to carry up to four times as much electricity for the same mass of wires. The team has found techniques that allow them to spin strong durable wire from carbon nanotubes that can perform as well as copper.

This can lead to specialized wiring for those applications where weight is an issue. For example, this could be used to produce higher efficiency long-haul wires from rural solar power stations. Or it could be used in applications like spacecraft, airplanes, and cars where weight is always an issue.

Wireless Energy Transmission. The Japanese Aerospace Exploration Agency (JAXA) has been able to transmit 1.8 kilowatts of power accurately through the air to a receiver 170 feet away. While this is not very far, nor a lot of power, it is the first practical demonstration of the ability to transmit power in much the same way that we transmit wireless data streams.

Japan’s goal with this project is to eventually be able to beam electricity back to earth from space. They envision large solar plants in space that are more efficient and not dependent upon weather. They envision solar farms set up at 22,300 miles from earth where they would be exposed to the sun continuously.

Breakthroughs in Quantum Computing. Researchers at IBM have made a few breakthroughs that could help to make quantum computers commercially viable. For the first time they have been able to measure the two types of quantum errors (bit-flip and phase-flip) simultaneously, allowing them to now work on an error correction algorithm for quantum computers. Until now, they could only measure one of the two variables at a time. The scientists have also developed a square quantum bit circuit that might make it feasible to mass product quantum chips.

These breakthroughs are important because quantum computing is one of the possible paths that could help us smash past the Moore’s Law limits on current technology. A quantum computer with only 50 quantum bits (qubits) can theoretically outperform a slew of our best supercomputers acting together. Such computers would also allow us to solve problems that are unsolvable today.

Better Atomic Clock. Scientists at the National Institute of Standards and Technology (NIST) and the University of Boulder in Colorado have developed an atomic clock that is accurate to within one second in 15 billion years. This is a vast improvement over the current atomic clock technology that uses a vibrating crystal of Cesium 133 and which is accurate to within a second over 100 million years.

The new clock would be sensitive enough to be able to measure the time differences at different altitudes on earth, a phenomenon predicted by Einstein but which has never been demonstrated.

Live Streaming on the Internet

olympic-rings-on-whiteI wrote recently about how Sling TV had problems with the NCAA basketball games, and particularly with the final game between Kentucky and Wisconsin. I watched the Maryland games in the first two rounds of the tournament and reported how awful my experience was.

But Sling TV is not the only one to have trouble with live streaming. I recall last year when HBO Go had a terrible crash with the streamed season premier for Game of Thrones. And the Oscars last year also failed when ABC tried to stream the event.

Live streaming is just that – it’s when a live event is being put over the Internet in real time. This is opposed to the way that Netflix, Amazon Prime, and other online services stream. When you watch one of those services they send a big burst of data at first and they provide enough download to stay a few minutes ahead of your viewing. As you watch, they stream more and try to stay ahead of you. Since you are watching a cached copy of what you have already downloaded the viewing experience is always a good one.

In these three above examples of live streaming problems the companies blamed the issue on unexpected demand. Certainly there might have been millions watching the Oscars and Game of Thrones, but Sling TV had maybe 100,000 viewers of the final four. And I’ve had problems watching less popular sports events on Sling TV where they probably didn’t have more than few thousand viewers.

I really can’t buy the excuse that the live streams failed because any of these companies had too many viewers. That’s a good excuse to hide behind. But in reality they only send out a small number of live streams to the world – it’s not like they initiate a stream for every viewer who is watching. They instead send a stream to the backbone carrier, such as Cogent or Level3 with whom they are interconnected. A company like HBO might also have direct peering with Comcast and a few other large cable companies and telcos. But most programmers that do live streaming are handing off the live stream to an underlying carrier.

Their problems are going to begin if they hand off everything as routine traffic to an underlying carrier. Unless a content provider requests some sort of priority treatment of their streams then it’s going to be treated like everything else on the web. One would imagine that the stream of a major event is going to end up being sent to nearly every one of the thousands of ISPs in the country. And many of them are far down the Internet food chain and get their bandwidth via numerous hops from one of the main ISP POPs.

There are streaming events that have been successful. Consider the Olympics online. There, NBC transmitted not just one event, but many at the same time, and at least at major ISPs the reports on the quality were very positive. It’s almost certain that NBC paid extra and made arrangements to make sure that the Olympic stream had a high priority through the backbone. In case you are wondering if that is against net neutrality, it is not. Net neutrality looks mostly at the customer side of the network while carriers are allowed to pay for arrangements needed to make their service operate as intended through the backbone.

The reason that you don’t hear ISPs commenting on the issue is that some of the streaming problems come from your local ISP. The issue that most affects streaming video is latency, and ISPs are all over the board when it comes to latency. Latency is the average time it takes a signal to get to you, and ISP networks can have hardware, software, and routing practices in place that result in increased latency to the signal. And as mentioned earlier, one of the biggest sources of latency is the number of hops a signal has to take on the web between its source and a given network/end user.

When I lived in the Virgin Islands the latency was horrendous as we were at the end of the Internet food chain in North America. But a lot of rural places and rural ISPs in the country also suffer from poor latency because they buy their internet from somebody who buys from somebody else and they might be half a dozen carriers deep in the delivery chain.

The final source of a bad viewing experience can come from your home. You may have an old or outdated cable modem, or if you are using WiFi to get internet to your viewing device you might have a lousy WiFi router. So even if a good signal makes it to your house, your own gear might be gumming it up. When Sling TV got a universal thumbs down for doing poorly we know that they had big problems at the originating end, and they probably did not elect to pay for a premium routing of the event. But unfortunately for live streaming companies, there are always going to be customers who have a bad experience for reasons out of the programmers’ control. It might be a long time until the whole Internet is ready for high quality live streaming.

The Homework Gap

Generic-office-desktop2A newly released Pew Research Center poll looks at the impact of household income on the percentage of homes with Internet connectivity. The study shows that homes with children and with annual household incomes under $50,000 have significantly lower broadband penetration than higher income homes.

FCC Jessica Rosenworcel issued a statement after the release of the poll and called this phenomenon the ‘homework gap”. There have been discussions since the 1990s about the digital divide; this survey shows that the divide is still there and that it correlates with household income.

This finding comes at a time when computers are routinely integrated into schools. Most classrooms and schools now have computers. Also, though I was unable to tie down any precise statistic, what I’ve read suggests that a majority of teachers assign homework that requires a computer. There is also a new way of teaching becoming vogue. Referred to as the ‘flipped classroom’, this teaching philosophy requires students to watch videos and other online content at home and be prepared to discuss the materials in class (as opposed to the traditional way of showing content in class).

As somebody who has been helping carriers sell into different kinds of neighborhoods for years, the statistics are not surprising to me. The Pew study shows that over 31% of households with children do not have high-speed Internet at home. This low-income group makes up about 40% of all households with school age children. This contrasts to only 8% of homes with kids who make over $50,000 that lack Internet access.

The study looked at a wide range of incomes and is one of the more complete surveys I’ve seen showing broadband penetration rates. For example, it shows that all households under $25,000 per year have a 60% penetration of broadband while households making more than $150,000 per year have a penetration of 97%.

One thing this study didn’t consider was the other digital divide, which is the urban/rural one. According to the FCC statistics, there are at least 14 million homes in the country that don’t have physical access to broadband. And as I’ve written a number of times, I think that number is too low and skewed due to the underlying statistics being self-reported by the large carriers.

The FCC is considering if it should expand its Lifeline program to include broadband coverage for low-income households. Today that fund will chop a few dollars per month off of a phone for low-income families. The Universal Service Fund spends approximately $1.5 B per year for the program.

I understand the sentiment behind this kind of assistance. But I would be surprised if a few dollars per month will make much impact on whether a household can afford to buy broadband. It’s going to take a whole lot more than $1.5 billion per year to solve the obviously large gap for student homes without broadband. And of course, such a program will do no good in those rural places where no broadband exists.

This is not going to be an easy issue to solve. To close this gap we have to find a way to get broadband into many millions more homes. But we also would need to make sure that those homes have working computers that are up to the tasks required by homework. I’ve seen numerous studies over the years that show that low-income households have an equally low penetration of home computers as they do broadband. There are many school systems today that give laptops to kids for the school year and perhaps that would at least solve half of the issue if this was more widespread. But until all kids in a school can use those laptops at home, the kids without internet access are going to fall behind those that have it.