Monthly Archives: February 2015

Some Thoughts on Sling TV

Old TVSling TV is the first on-line package of programming that is offering a real alternative to the big cable packages. They have put together a package of 15 channels for a base price of $20 per month.

The channels included are ESPN, ESPN2, TNT, TBS, the Food Network, HGTV, the Travel Channel, Disney, the Cartoon Network, ABC Family, CNN, Maker, adult swim, El Rey and Galavision. Additionally, they offer three add-on packages for $5 each: one for sports, one with news and info, and one for kids.

This is being marketed to cord cutters — people who once had cable. A survey from Esperian marketing near the end of last year put cable cutters at 5.5% of households. To put that into perspective, that translates into 8.6 million households. But there is a larger potential market that is not much talked about, which are the cord-nevers who have never had cable TV — a little more than 24 million households.

The first news stories I saw about Sling TV assumed the package is aimed at millennials, since younger households are leaving cable at the fastest pace. But the demographics of the channels in the line-up paint a different picture. Consider the following average ages of those who watch the following Sling channels: CNN (59.1), ESPN (48.6), ESPN2 (53.1), HGTV (56.4), TNT (53.6), Travel Channel (48.2), Food Network (47.6), and TBS (44.4). There are a few channels for kids: Cartoon Network (11.9) and the Disney Channel (11.7). Overall the average age of the viewers of the Sling channels is 48 years old. That’s not exactly a millennial line-up.

There is also a rumor that some of the contracts for programming are putting a subscriber cap on Sling TV at somewhere between 2 million and 5 million total customers. That would be one way for the programmers to stop the online phenomenon from getting too large. They do not want to put at jeopardy the 100 million households that have a cable subscription of some sort.

All of the numbers say that the market is ready for online TV. Just last week it was announced that between the fourth quarter of 2013 to the fourth quarter of 2014, overall live TV viewing dropped 12.7%. That’s the average drop, and varied between a 23% drop for Viacom (MTV, Nickelodeon, Spike, and Comedy Central) and a 7.5% drop for Disney, including ESPN.

A number of analysts say that the viewers that left cable didn’t go away, but instead shifted to streaming services like Netflix and Amazon Prime. This trend will bring about changes to the cable industry. Losing advertising eyeballs at this rate is going to translate to less advertising dollars going to cable channels and networks.

One can see this shift already happening in the advertising world. In 2012 there was $39 B of advertising online and $64 B on TV. By 2014 online advertising had grown to $52 B and TV advertising to $67 B. 2015 is projected at $57 B online and $68 B with TV. One can envision that soon after that TV advertising is going to trend downward along with the lost TV viewers.

I look at Sling TV as the first volley among many to provide more programming online. Both Verizon and AT&T say they will have an online programming package sometime in 2015. There have been rumors of a package from Google and also that Apple is taking another run at this. And some of those who have tried in the past like Sony and Microsoft might give it another shot. Even CBS is now streaming their content online for a fee.

This trend towards online programming is likely to get a major boost from the FCC later this year. The FCC is looking at the barriers that programmers have in place against online programming and it’s clear that the sentiment of Chairman Wheeler is to enable more online TV. The current docket at the FCC asks if we should give online programmers the same rights to get content as cable companies. If they are given that right, then online programming will explode.

I am probably going to buy Sling TV. This might even prompt me to buy a television. My interest in TV networks is really limited. My perfect package would be ESPN, the Big Ten Network, HBO, the Food Network, the Travel Channel, and Comedy Central. Sling TV provides me with half of my wish list, which is not bad for a first volley.

Will Net Neutrality Kill Telecom Investment?

Numismatics_and_Notaphily_iconThe big telcos keep saying that the proposed net neutrality rules will kill their desire to make investments in broadband networks. Is there anything about the proposed rules that would give them reason to say that, or is this just political maneuvering to try to defeat the ruling?

Verizon is still claiming that net neutrality is going to force them to cut their investments in broadband, even though last month their CFO was quoted as saying that it wouldn’t. AT&T made the same claims in December, even though they have backed off a bit.

But for every company that has complained about Title II regulation there are others who have said it is no big deal. In the fiber world Google has said that the rules don’t seem to give them any problems and they like the fact that it would give them easier access to poles. And Sprint has come out supporting the net neutrality rules as a wireless carrier.

I have a hard time thinking that net neutrality rules are going to somehow make broadband unprofitable. I saw just this past week that Time Warner claimed in their annual report that their broadband product has a 97% margin. That surprised me a bit, since it’s the highest margin I have ever seen claimed, but many of my smaller clients have 90% margins on broadband products. Perhaps Time Warner’s higher margin comes from the economy of scale of having millions of customers. I would think that margins that high would make telcos want to expand their networks regardless of regulatory rules.

Today, the big carriers claim to be making major investments in broadband. For instance, the USTelecom web site says that the wireline, wireless, and cable industries together spent $75 billion on broadband in 2013, which was up 10% over 2012. It’s worth noting that $33.1 billion of that number was spent by the wireless carriers, and we can debate all day if wireless data is really broadband and if that should count as broadband investment.

I took a hard look at the proposed net neutrality rules to see if I could figure out which part of it would make Verizon and AT&T cut back on building infrastructure. Here are a few things the new rules won’t do, and I assume that the ISPs view these as positive:

  • The new rules impose no new taxes on the carriers or on their customers. Broadband will not be taxed by the Universal Service Fund. And there won’t be any future taxes unless Congress someday has a change of heart about taxing the Internet (and note that Congress could decide to tax broadband even without Title II).
  • Broadband won’t be subject to any of the rules that are a regulatory burden for big telcos – no tariffs, no rate approval, no unbundling, no administrative burdens or accounting standards.

But there are a few new rules that will enforced with net neutrality and it must be one of these that makes the carriers not want to not build new networks:

  • No blocking of access to legal content on the Internet.
  • No throttling of Internet traffic on the basis of content, applications, services, or devices.
  • No paid-prioritization which would favor some Internet traffic over other content.

These rules basically stop the big companies from devising schemes to bill customers extra to get access to content that they have already paid for in their base rate. The carriers that are against net neutrality must not be happy with a data product with a 90%+ margin and they want to impose rules that will let them charge customers even more.

There is another rule coming out of the order that they also might not like: the FCC will have the ability to intervene in disputes between ISPs and content providers concerning interconnection. This provision means that ISPs cannot extract extra payments from companies like Netflix to deliver their content. I can see why carriers wouldn’t like this, because they want to charge at both ends of the network – to companies like Netflix when content enters their network and to customers when content leaves their network.

The final rule from the order just reiterates one that was passed a few years ago but that has never been fully enforced. It has to do with transparency. Under these rules ISPs are supposed to disclose things to customers like the real data speeds they are delivering. I can see why carriers don’t like this because it will stop them from advertising one speed but delivering something much slower.

But I don’t see anything in those rules that would stop an ISP from investing. That is of course unless an ISP was counting on making a whole lot of money from charging companies like Netflix for bringing content and then charging customers a lot more to get that same content. Any ISP that delivers the speed that a customer purchases regardless of the source of the content is not going to see drastic changes, or even what I would consider as annoying changes from these new rules. So I guess the ISPs who say the new rules will force them to reduce network investments are the ISPs who were planning to screw their customers. That’s what I always figured, but looking at the proposed rules confirms it.

Tracking Us Online

SpyVsSpyAn interesting article from MIT shows how easy it is to identify people using just a few data points. The scientists have demonstrated that only a few data points can identify you well enough to pick out your credit card purchases made from a giant file of credit cards purchases.

What I think that most people are going to find scary about this is that the data points don’t even have to be related. To quote the article, “That means that someone with copies of just three of your recent receipts — or one receipt, one Instagram photo of you having coffee with friends, and one tweet about the phone you just bought — would have a 94 percent chance of extracting your credit card records from those of a million other people.”

What this means is that the ‘metadata’ that a lot of companies sell to each other is not safe, as they would have you believe. Metadata is data that has been scrubbed of identifying information. For instance, it might be credit card transactions without the credit card number and the name of the person doing the purchasing. But it would show the date of the purchase, the amount spent, and some short description of what was bought.

But metadata can mean many other things. It can mean readings from your home Internet of Things devices or your fitness wearable. It can mean records on web sites you visited through a search engine. It can be almost any big pile of raw data that is assembled and compiled from individual transactions. Big web sites tell us not to worry about security because they don’t sell our information. Instead they only sell big metadata files that have removed any personal identifying information.

What the MIT data shows is that it’s relatively easy for data scientists to find any individual’s records within a big pile of metadata. Just two data points were enough in this MIT trial to identify 40 percent of people. Five data points were enough to identify almost everybody.

Of course, in real life we leave all sorts of data points in public that identify us. We allow adware to stay on our computers that tell advertisers sites we have visited in the past. We allow tracking cookies that might tell somebody our name and address. We frequently sign up for public websites and then give them all sorts of personal information in exchange for the right to use the site for free. And we tell sites like Pinterest and Facebook all of our likes and dislikes from restaurants to clothes to politics.

I read somewhere last year that there are other easy ways to identify almost everybody. One thing that makes us easy to identify is the configuration file on our computer that tracks all of the specific versions of software. It turns out that this is as accurate for identifying a given computer as fingerprints are to identify people. Every computer contains small differences in the versions of programs installed that makes that machine unique. When you consider the hundreds or programs and apps that sit on a typical PC, tablet, or smartphone this is not surprising.

I don’t think there are many people left who are naïve enough not to know that people watch what you do online. After all, if you post all of your favorite things on some public website, you have to expect that somebody is going to gather that information somewhere and associate it with you in a database.

But this MIT research shows that big data research firms can take that public data and then match it up to all sorts of things that you didn’t think were public, like scrubbed metafile records of credit card receipts or phone calls. We’ve been told that such metadata records are anonymous, but this research shows how easy it is for a big company to crack the metadata and find your specific records.

We would be naïve to think that somebody isn’t already doing that. There are now a number of firms who will sell you a file of data about anybody if you are willing to pay them for it. A company that will do that has no morals, because they could be selling your information to a jealous partner (or ex-partner), a stalker, or who knows who else? This kind of data is also available to your employer or anybody else willing to pony up a few bucks to take a closer look at you.

It ought to be illegal to sell your personal data to the public, but it’s not. But even if your personal data was not available to the general public, it is routinely passed between large corporations who use it to create a detailed profile of you.

I don’t think there is any way to stop companies from gathering data on us. Data is now generated for everything we do as a routine part of living in a computerized world. If we had strict privacy laws it could be made harder to share such data and to monetize it. But it’s going to take a lot of people to get really angry about this for this to drive a political change. We don’t seem very close to that point yet.

My Take on the Net Neutrality Ruling

Network_neutrality_poster_symbolChairman Wheeler announced the highlights of his proposed order on net neutrality, and since I have been following this closely I guess I should weigh in on what he is proposing. Assuming the FCC vote goes along party lines, this ought to be passed later this month.

My first reaction is one of huge respect for the Chairman. When he first came to office I looked at his background and was highly skeptical about a guy who had worked as the head lobbyist for both the wireless and the cable industries. I assumed it was going to be difficult for him to make the hard calls against those two industries. But with this ruling, and with other rulings such as the expected ruling later this month about allowing municipal broadband, he has proven he is willing to make hard choices.

The Chairman is proposing to implement Title II as the mechanism for regulating the Internet. He is fixing the mistake the FCC made a generation ago when they decided not to use Title II. There is no doubt that one of the big telcos, cable companies, or wireless companies will take this order to court. And that’s too bad, because in this case I think it just delays the inevitable. This is something that the FCC is allowed to do, and I think ultimately any court is going to agree with that.

The carriers hate this ruling because it gives the FCC the ability to tell them no. The FCC can stop ISPs from abusing the public through their broadband policies. It’s a bit ironic since the big companies have mostly been on their best behavior for several years so that they didn’t get this kind of net neutrality ruling. But even so they have done things that harmed the public. Look at the whole fiasco last year when most of the big ISPs were slowing down Netflix on purpose and trying to extract payments from them.

The largest ISPs have proven many times that they are only out for profits. This is somewhat sad because the old Ma Bell, even with many flaws, was mostly a company that did the right thing by the public. There were times when they would dig in their heels and take a stupid position, but the old AT&T also built and operated a telecom network that was the envy of the rest of the world.

But I see zero morality these days out of the likes of AT&T and Comcast. They only care about profits and stock prices and they will try anything and do anything that makes them the most money. And that is why these net neutrality rules are badly needed. I’ve always assumed that they have had a pile of bad ideas ready to foist on the public the second they think that net neutrality is no longer an issue.

So I view these net neutrality rules as a safety net for all of us little people who otherwise have no power against the oligopoly telecom providers. Now the FCC can step in when they get complaints and tell the large ISPs to stop bad behavior.

The FCC published this document of talking points that outlines what will be up for a vote later this month. I am sure that there is going to be a lot more detail to wade through when the order comes out, but this provides a pretty complete picture of how it is going to work.

One thing that I hope doesn’t happen is for politics to raise its ugly head, get involved, and interfere to give the carriers what they want. For instance, there is a bill  circulating in Congress right now that says that it provides for an open Internet without using Title II. That may sound okay, but the bill was written by the big carriers, and it says all the right feel-good stuff about net neutrality but doesn’t give the FCC the authority to crack down on carriers when they misbehave. No bill like that is going to make it into law because the President will veto anything that endangers net neutrality. But you have to worry about the carriers sneaking in watered-down net neutrality rules through some backdoor approach.

This is a bold move by the FCC. I’ve read every proposal imaginable about how to make net neutrality work and this is the only approach that has enough teeth to be able to rein in the ISPs while fitting within the existing law in a way that should survive legal challenge. In fact, when the courts overturned the last net neutrality order they basically suggested Title II as an approach they could approve. A year ago nobody gave this solution a chance. But Chairman Wheeler has done the right thing and preserved the Internet for a while longer.

A Few Shorts for Friday

TGIFI’ve accumulated a few topics that don’t merit a full blog, but which I thought were worth a mention:

NSA a Source of Malware. News came out last week as part of the Edward Snowden documents that the NSA creates malware and also hijacks existing malware for their own uses. I find it a bit scary that the government is creating malware. I have to assume they are creating really good malware, and once released onto the web it can end up anywhere. I am not going to feel any better if I find out that the malware on my computer came from Uncle Sam and not some malicious hacker.

The NSA is also using malware networks to launch their own attacks. The Snowden documents show that they are using operation DEFIANTWARRIOR to place their own malware next to existing malware on computers so that the NSA can launch attacks on sites without it being traced back to them. Attacks look like they came from whoever put out the original malware. This means the next time they attack North Korea they might be doing it from your PC.

US Helps Jamaican Broadband. On January 21 the U.S. Government signed an agreement with Jamaica to help them provide internet access everywhere. The plan is to use white space spectrum which is not in use in the country. This will result in an island-wide wireless Internet network. The U.S. will provide both technical support and some funding.

I have no problem with us doing this. I spent the last ten years living in the Caribbean and the region is largely poor and is falling behind the rest of the world in basic infrastructure and Internet connectivity. It’s going to take initiatives like this all over the world to get everybody connected to the Internet.

My problem is that we aren’t doing the same thing in our own country. The FCC is overseeing a program called CAF II that is going to upgrade a lot of rural U.S. areas to maybe 10 Mbps. By the FCC’s own definition passed last week, this isn’t even considered as broadband. Meanwhile we will help to bring whitespace radio broadband to a third world country that will probably deliver between 20 Mbps and 30 Mbps. The CAF II program is badly flawed in that it gives a priority to the giant telcos to make inadequate upgrades instead of offering that money first to providers who would use it to bring real broadband to rural areas.

FCC Penalties for Advanced Tel. Last week the FCC levied a fine of over $1.5 million on Advance Tel of Simi Valley California. The fine was for failure to make required payments to the Universal Service Fund, the Telecommunications Relay Service, the Local Number Portability administration and other federal regulatory fees. The FCC gave the carrier an opportunity to resolve what it owed, and ultimately levied the fines when no agreement could be reached.

This is a reminder to all of my clients that we are all still regulated. I talk to clients all of the time who look for ways around these regulations and fees, and this is a stark reminder that you should pay your taxes. Most of the fees that Advanced Tel didn’t pay are normally added to customer bills by most companies, and so their customers should have supplied the funds necessary to make the payments. These taxes seem like a hassle, but they are not a competitive disadvantage since every one of your competitors collects them too.

New Wireless 911 Rules. The FCC adopted new rules last week that require more accuracy from the wireless providers in pinpointing the location of a wireless caller to 911. The current data gathering for this process is done by triangulation from neighboring cell sites along with looking at GPS. But these methods work very poorly or not at all for calls originating indoors, particular calls made from large multi-tenant buildings and other large buildings. The FCC has given a deadline to the wireless carriers to propose and implement solutions that will provide greater accuracy and an indoor solution.

Verizon Halts FiOS Again. Verizon announced that it is done expanding FiOS, something it just picked back again a year ago. FiOS has been very successful and the company keeps adding customers where it has fiber. But Verizon has mostly built FiOS in suburbs and a few rich neighborhoods in cities. They have largely ignored the major cities and rural areas, including sizeable towns in rural areas. It will be interesting to see if Google or anybody else tries to step into those large market niches.

It’s also been rumored that Verizon is going to auction off up to $14 B of its assets including more landline customers as a way to raise the money to pay for the spectrum it purchased in the recent auction. At the rate they are ditching copper they will eventually be reduced to only owning the FiOS networks.

Sports and Cord Cutting

Maryland TerrapinsThere are two trends having to do with TV and sports that are headed in opposite directions. There is a continued bidding war where networks are paying records prices to lock down sports content. But we also have the cord cutters who are dropping off the network and reducing the size of the cable TV subscriber base. Somewhere soon those two trends are going to collide in a big way.

The sports programmers keep hammering cable operators with higher costs. Time Warner claims that they have seen a 91% increase in sports programming since 2008. Where is this increase coming from?

  • There are more new sports channels all of the time. There has been an explosion of sports channels over the last decade.
  • The programmers force bundles. For example, I have clients throughout the country who are now being forced to carry the SEC channel, although their customers have very little interest in southern college football.
  • The various leagues are extracting huge payments for rights to their content and this translates into the cost of sports programming growing faster than other programming.

Let’s look at an example of this. I am a Maryland Terrapins fan and they just moved this year to the Big10, largely to get a share of larger television revenues there. The Big10 will reportedly pay out almost $31 million per school this year, mostly due to revenues from the Big Ten Network (and some from bowl games). That network is carried by 60 million homes. They have expended to new TV markets by the additional of Maryland and Rutgers and the projected payments per school are estimated to grow to $44.5 million per school by 2017.

But even in the Midwest, no more than 5% of households, at most, watch the Big Ten Network very much. The two big draws on the network are college football and basketball. Most college football games on the network draw only a few million viewers, with some games getting far fewer than that. And basketball games in general draw maybe half of what football draws. And only the diehard fans watch the network the rest of the year when they show wresting, volleyball, baseball and all of the other Big10 sports.

So the network is pulling in huge dollars due mostly to a three months of college football and most of the rest of the year there are very few eyeballs on the network. Contrast this to ESPN which has a lot of programming that outdraws the Big Ten Network. ESPN has more viewers on a day-to-day basis than a whole season of Big10 football. And so a network like ESPN can make more money from advertising than they do from subscriber fees.

One has to wonder what is going to become of networks like the Big Ten Network as cord cutters cut into programming revenues. We recently saw ESPN agree to be on the Sling TV lineup which is going to be completely online. That will get them new subscribers from sports-loving cord cutters, but it’s also going to attract a new wave of cord cutters. And Sling TV is not the end game, but just the first volley. It seems like there are dozens of companies working to put packages of programming on the web.

The cable industry as a whole stopped growing a few years ago due to cord cutters. Instead of adding a few million new homes per year, the total number of cable households has held steady. But lately it’s finally starting to drop, and when there are real options online a lot more households are going to opt out of the big cable packages.

I’ve seen statistics that say that the average household only watches 17 channels out of the hundreds of programs on the typical cable lineup. When households start finding $20 and $30 dollar packages that give them most of the channels they want, it’s going to become easy for them to jump ship.

ESPN is probably going to make the transition to the web just fine because they are going to be included in most of the web packages. But networks like the Big Ten Network and every other regional sports network are not going to fare so well. It’s just a matter of math.

Let’s say the Big Ten Network wants to make $350 million annually from programming. If there are only 2 million homes willing to pay for the network then they need to charge $14.58 per month. With 3 million customers it’s $9.72, 4 million it’s $7.29 and 5 million is $5.83. Perhaps they can find one of those price points to make it work. But they won’t be operating in a vacuum and there are going to be lots of other sports channels trying to do the same thing and wanting to charge the same high fees. On an a la carte basis it is going to cost a sports fan a lot more than what they pay today for all of the channels, and that is where the rubber hits the road.

I don’t know what is going to happen any more than anybody else. But my gut tells me that the revenue collected by networks like the Big Ten Network are going to drop – slowly at first and eventually precipitously. At some point they will have to get on the web and reach a new stasis, and that probably means making less revenue than today. That’s not such good news for the Terps and the teams of the Big10.

Telemedicine Needs Big Bandwidth

Medical_Software_Logo,_by_Harry_GouvasThe Federal Government is a big believer in telemedicine and there are several branches of the government that have been vigorously pursuing it as a way to better treat patients. Some of these initiatives include:

  • The Department of Veterans Affairs kicked off their telehealth program in 2011 named Special Care Access Network – Extension for Community Healthcare Outcomes (SCAN-ECHO). This program is aimed at providing care to veterans without requiring them to travel to a VA hospital. In some parts of the country VA hospitals are widely scattered and the VA knows that a lot of doctor visits are routine and can be handed adequately through telemedicine links.
  • The Department of Defense started working on a telemedicine program almost two decades ago for use on the battlefield. Their telemedicine links allow specialists to weigh in on battlefield injuries along with field medics, and they had great results in Iraq and Afghanistan. The DoD has named their system ECHO and has recently licensed it to Kaiser Permanente. The hospital chain sees use of the technology to field triage accident victims and to use for their patients who can’t make it to a hospital.
  • The Air Force has been working on a focused telemedicine program for the last four years. Instead of working on remotely treating patients, which is being pioneered by others, they have been focused on four specific areas within teleimaging: teleradiology, telecardiology, tele-endoscopy and telepathology. In a nutshell they are working with field devices that can create the diagnostic images that telemedicine doctors need to better treat field injuries. This would provide more detailed diagnostics for accident victims and remote patients who can’t easily get to a hospital.

Telemedicine is a priority for the Veterans Administration which reports that they are today treating 380,000 vets who live in rural areas. They have nearly 11,000 veteran patients now using the VA’s tele-audiology system, but they would like to greatly expand their telemedicine capabilities.

What all of these programs have come to realize is that the broadband in rural America is not adequate for what they are trying to do. One thing every one of the above efforts needs is big broadband capacity to connect to patients through video links or to transmit gigantic imaging files.

The military is used to having big broadband on the battlefield. We tend to think of satellite data links as small bandwidth and slow connections, but satellites can download significant bandwidth pipes with the right receivers and at the right price. I would assume (but don’t know) that the military has their own data satellites in orbit to provide bandwidth on the battlefield.

So these agencies are adding their voice to the cry for better rural broadband, which is the primary place where intensive telemedicine technologies are most needed. As these agencies are moving battlefield-tested technology into the civilian world they are bumping up against the same rural bandwidth limits that others have been seeing for years.

Just last week the FCC boldly increased the definition or broadband in the country to 25 Mbps download and 4 Mbps upload. According to the FCC’s numbers this means that 55 million Americans, or 17 percent of the population do not have access to broadband.

If you have followed my blog you know that I think the number is even higher than that since the FCC’s estimate is based upon a very flawed National Broadband Map, which is populated by the carriers. But one can be pretty certain that the vast majority of the people who can’t get the FCC’s newly defined broadband live in rural areas.

I have worked for years with rural communities and the lack of broadband has some real life repercussions for the people living there. There are numerous rural communities without hospitals, without doctors and without universities, and the people who live in these remote places have to undertake long drives to do things the rest of us consider as routine like see a doctor or take a class.

Telemedicine has a huge potential for diagnosing and treating rural patients. It is already being used worldwide to bring modern healthcare into remote communities. But I find it sad that many places in our own country can’t have this great technology due to the lack of broadband infrastructure.

The FTC to Monitor the Internet of Things

federal-trade-commission-ftc-logo_jpgLast week the Federal Trade Commission Chairwoman Edith Ramirez announced that the FTC’s latest initiative was to watch the Internet of things for privacy violations. They are already concerned that IoT devices are subject to easy hacking, and also that they are being used to gather data on us.

In a report issued last week the FTC Staff, and approved by 4 to 1 by the Commissioners, the FTC made specific recommendations in the areas of privacy, data collection and customer notification and choice. They also discussed the need for federal legislation to give them more power to police the IoT.

The FTC broadly defined the Internet of Things to include any device, other than computers and smartphones, which transmits information about the owner of the device over an internet connection.

The report makes specific recommendations about security and recommended that manufacturers of IoT devices should:

  • Assess the security risk for every device they make;
  • Minimize the data they collect and retain;
  • Test security before they ship product;
  • Implement measures to keep unauthorized users from accessing a device or data stored on their own networks;
  • Monitor devices throughout the product life cycle and provide patches to cover known risks;
  • Develop a defense to be ready to react to security breaches.

It’s good to see the government espousing these kinds of concerns. You might recall that HP tested ten popular IoT devices last year and found an average of ten security flaws on each device. My fear is that if the industry doesn’t self-police itself (or get prodded by regulators to do so) then someday we are headed for a perfect storm where hackers will do something terrible, like hack and kill hundreds of people with pacemakers. If something really dreadful happens because the industry doesn’t care about security then the world could quickly turn against the IoT. The IoT industry has the potential for huge growth, but one really terrible security breach on devices could badly sour people on the devices.

The report also made recommendations about storing and misusing customer data. The FTC has already been engaged in monitoring company’s use of data. For example, late last year the FTC reached an agreement with SnapChat to stop misrepresenting that data on their network was completely private. SnapChat has changed their advertising and also agreed to hire an independent privacy monitor for the next twenty years.

For now the report recommends that companies limit the data they collect, and absent legislation that is probably as strong of a warning as the FTC can issue. The report is specifically very concerned about customers not knowing what data is being collected about them from an IoT device. They think it is fundamental that customers be informed about the data they are giving up in order to make an informed decision about using any specific device. While any IoT device will have this concern, the sharing of data from things like health monitors is more troubling than the data gathered from a smart refrigerator or smart washing machine.

The report also voice a concern that the IoT device manufacturers would become the target of hackers and that the kind of information that could be stolen, such as detailed health records, are more troubling than stealing things like credit card numbers.

There is some industry concern, echoed by the dissenting Commissioner in adopting the report that the FTC needs to balance the desires to monitor the industry against too much regulation that might stifle innovation and investment in the field. But as a customer I would already vote in favor of what the FTC has started here. The risks to the industry are far greater from allowing companies to be lax with security and play free with customer data. I am going to be a lot more likely to use a device from a company that I think is being truthful with me and careful on both counts.

Can You Really Multitask?

jugglingThis blog is a bit off my normal beat, but I’ve read several articles lately about the effects of technology on our brains. I think the findings of these studies are things that you will find interesting.

I think most people will agree that we are busier today than we have ever been before. Not only do we lead hectic lives, but we have compounded our lives with connections through our smartphones and computers to coworkers, family and friends all throughout the day and night.

I meet people all of the time who say that they are good multitaskers and who say they that they are good at handling the new clutter in our modern personal and  work lives. There are days when I feel I am good at it and days when I definitely am not.

Researchers at MIT say that multitasking is an illusion. Earl Miller, a neuroscientist there says that our brains are not wired to multitask. What you think of as multitasking is really the brain doing only one thing at a time and switching quickly between tasks. He says there is a price to pay for doing this because what we call multitasking leads to the production of the stress hormone cortisol as well as adrenaline. Multitasking creates a dopamine feedback loop which rewards the brain for losing focus and searching for the next stimulation. The bottom line is that multitasking leads to less focus and makes us less efficient.

Miller says that multitasking is a diabolical illusion that makes us feel like we are getting things done, when instead we are just keeping the brain busy. When we multitask we don’t do any of the tasks as well as if we stopped and concentrated on them one at a time. And it’s addictive. Those of us old enough can remember back to a simpler time when we often made choices not to do things. If we were reading a book or watching a TV show we chose not to let ourselves get easily distracted. But since multitasking rewards the brain for getting distracted, we now routinely will break into everything we are doing to read an email, look to see who texted, see who commented on something we said on Facebook or Twitter.

I decided to test myself and I decided to watch a one-hour show on Netflix to see if I could watch it end-to-end without distraction. I was amazed at how poorly I did. Every few minutes I found myself wanting to go do something else. And a few times I almost automatically clicked on a different application on the computer. And I wanted to stop a lot more than I did and it was a real effort to stay focused on the show I was watching. I thought this would be easy, but apparently I am now addicted to multitasking. I wonder how many of you can do better?

One of the reasons we have gotten pulled into multitasking is a new expectation that we are always available. It used to be easy to drop out of sight by simply walking out of range of the telephone. People were not surprised to miss you when they called and leaving voice messages was a big deal. But today the expectation is that we have our smart phone with us and turned on at all times, and through that we can be called, texted, emailed and reached on demand.

Research shows that multitasking kills our concentration and is more detrimental to our short-term memory than smoking marijuana. Cannabinol, a chief ingredient of pot interferes directly with memory brain receptors and directly interferes with our ability to concentrate on several things at one. But research have shown that if you break off concentrating on a task to answer an email that your IQ temporarily drops ten points. And cumulative multitasking degrades your brain’s performance more than smoking pot.

Researchers at Stanford have shown that if you learn something new while multitasking that the information goes to the wrong part of the brain. For instance, if you read work emails while doing something else like watching TV that the information from the emails goes to the striatum, the place where we normally store skills and physical memories and not where we store ideas and data memory. If not interrupted, the same emails would be stored in the hippocampus, which is essentially our brain’s hard drive that is good at retrieving data when we need it.

Multitasking comes at a big cost. Asking the brain to constantly shift tasks burns up a lot of glucose in the brain which we need to stay focused. So multitasking can lead to feeling tired and disoriented after even a short time. I used to believe that deep thinking caused your brain to get tired, but staying on one task actually uses far less energy that constantly shifting from one task to another.

This makes me worry about what we are doing to our children who now multitask at an early age. Perhaps there is some hope since one of the new trends among many teenagers is a rebellion against technology, and that is probably a healthy thing. If the pressure to be always connected is hard on adults, one can only imagine the peer pressure it creates among teens. People of my age use email as our primary method of communication while teens almost exclusively use text. The biggest problem with texting, according to the researchers is that it demands hyper-immediacy and you are expected to return a response as soon as you get a text.

I have started my own little rebellion against multitasking. I am not checking emails more than a few times a day and I rarely check to see if somebody has texted me. After all, I need to save some time for Twitter!