The Industry What Customers Want

Big Companies and Telecommuting

One of the biggest benefits most communities see when the first get good broadband is the ability for people to telecommute or work from home. Communities that get broadband for the first time report that this is one of the most visible changes made in the community and that soon after getting broadband almost every street and road has somebody working from home.

CCG is a great example of telecommuting and our company went virtual fifteen years ago. The main thing that sent us home in those days was that residential broadband was better than what we could get at the office. All of our employees could get 1 – 2 Mbps broadband at home and that was also the only speed available at our offices over a T1. But we found that even in those early days that a T1 was not enough speed to share among multiple employees.

Telecommuting really picked up at about the same time that CCG went virtual. I recall that AT&T was an early promoter of telecommuting as was the federal government. At first these big companies let employees work at home a day or two a week as a trial. But that worked out so well that over time big organizations felt comfortable with people working out of their homes. I’ve seen a number of studies that show that telecommuting employees are more productive than office employees and work longer hours – due in part to not have to commute. Telecommuting has become so pervasive that there was a cover story in Forbes in 2013 announcing that one out of five American workers worked at home.

Another one of the early pioneers in telecommuting was IBM. A few years ago they announced that 40% of their 380,000 employees worked outside of traditional offices. But last week the company announced that they were ending telecommuting. They told employees in many of their major divisions like Watson development, software development and digital marketing and design that they must move back into a handful of regional offices or leave the company.

The company has seen decreasing revenues for twenty straight quarters and there is speculation that this is a way to reduce their work force without having to go through the pain of choosing who will leave. But what is extraordinary about this announcement is how rare it is. It’s only the second major company that has ended telecommuting in recent memory, the last being Yahoo in 2013.

Both IBM and Yahoo were concerned about earnings and that is probably one of the major reasons that drove their decision to end telecommuting. It seems a bit ironic that companies would make this choice when it’s clear that telecommuting saves money for the employer – something IBM crowed about earlier this year.

Here are just a few of the major findings that have been done about the benefits of telecommuting. It’s improves employee morale and job satisfaction. It reduces attrition, reduces sick and unscheduled leave. It saves companies on office space and overhead costs. It reduces discrimination by equalizing people by personality and talent rather than race, age or appearance. It increases productivity by eliminating unneeded meetings and because telecommuters work more hours than office workers.

But there are downsides. It’s hard to train new employees in a telecommuting environment. One of the most common ways to train new people is to have them spend time with somebody more experienced – something that is difficult with telecommuting. Telecommuting makes it harder to brainstorm ideas, something that benefits from live interaction. And possibly the biggest drawback is that telecommuting isn’t for everybody. Some people cannot function well outside of a structured environment.

As good as telecommuting is for companies it’s even better for smaller and rural communities. A lot of people want to live in the communities they grew up in, around friends and family. We’ve seen a brain drain from rural areas for decades as kids graduate from high school or college and are unable to find meaningful work. But telecommuting lets people live where there is broadband. Many communities that have had broadband come to town report that they see an almost instant uptick in housing prices and demand for housing. And part of that increased demand is from those who want to choose a community rather than follow a job.

One of the more interesting projects I’ve worked on with the telecommuting issue was when I helped the city of Lafayette, Louisiana get a fiber network. Lafayette is not a rural area but a thriving mid-size city, and yet one of the major reasons the residents wanted fiber was the chance to keep their kids at home. The area is largely Cajun with a unique culture and the community was unhappy to see their children have to relocate to larger cities to get jobs after graduating from the university there. Broadband alone can’t fix that kind of problem, but Lafayette is reportedly happy with the changes brought from the fiber network. That’s the kind of benefit that’s hard to quantify in dollar terms.

The Industry

Who Owns Internet Ad Space?

Google made a very interesting announcement a few weeks ago that led me to find out more about the ad space on web sites. Google announced that for $2 per month they would block all ads on web sites for a customer as long as they browse through the Chrome browser.

I find this fascinating because it means that Google thinks that they have the ability to block an ad, even when they are not the one to have placed the ad in the first place. Google sells a lot of ads, and so it makes sense that they can block ads that they have placed on a web page. But when they say they can block all ads it also means that they think they have the ability to block ads placed by somebody else.

Just to be clear about what I mean by ads, look at this web page. At the top is a banner ad. At the top right of the story is an ad. And across the bottom of the article are four ads. After loading this web site multiple times I noticed that the ads changed.

It turns out that there are two kinds of ads on a web page. There are fixed ads and remnant ads. Fixed ads are placed there by the web site owner or somebody they partner with to advertise for them. Fixed ads embedded into the web page and can only be accessed by the website owner. The other kind of ads are called remnant ads. These are coded in such a way as to be available to outsiders, and anybody that has access to a website before it reaches a customer can change what is in the remnant ad space.

And as you would expect, these remnant ad spaces get changed all of the time. There are a lot of companies that sell advertising into the remnant ad space including Google (DoubleClick), Yahoo, Amazon, Facebook, AOL, AppNexus, Openx, Adroll, RightMedia and dECN. It was very easy for me to spot remnant ads in the recent election season, because I swear that every web page I looked at here in Florida had a political ad for Rick Scott who was running for reelection as Governor. So somebody was being paid in Florida to put those ads onto Florida computers.

The first question this raised for me is: who owns this ad space? The web page example is from the TechCrunch web site. TechCrunch chose to make the ads open to the public and I assume they gets revenues from at least some of the parties that use that space, which is their motivation to use remnant ad space. Google thinks they have a right to go in and block whatever is on the remnant ad space on that page, so they are sure that it is theirs to grab. I know that some of the larger ISPS like cable companies are also in the advertising business, through partners, and I wouldn’t be surprised if it was Comcast that gave me all of the Rick Scott ads.

I was shown a recent legal opinion by one of the companies that advertises in the remnant space who was gracious enough to share it with me as long as I don’t publish it. The opinion says basically that nobody owns the remnant ad space. The legal opinion says that the act of a web site owner in making this available to the public means just that, and it can be used by anybody who somehow has access to the website before it reaches a customer. That generally is going to mean some company who is part of the chain between a web site and the customer. Obviously the web site owner can hire somebody to place ads in the remnant space. If you reach the web site through a browser then the browser owner can place the ad in there. If you get to a web site through a link on another web site like Yahoo News then they can place ads there. And your ISP also would have access to this ad space.

I really like the Google product that blocks ads. I think there are plenty of customers who would love to avoid all of those ads. Further, blocking ads means a faster Internet experience for a customer. I know there are web sites I go to that have multiple videos automatically running that seems like an extravagant use of my bandwidth. I have a 50 Mbps Internet connection and there are still web sites that load very slowly due to all of the extra videos that have been layered into the ad spaces. I also learned that remnant ads are one of the most common sources today of adware and malware and I will talk about that more in tomorrow’s blog.

Current News Regulation - What is it Good For?

Net Neutraility Comments at the FCC

The FCC’s Net Neutrality docket got over 1 million comments, most from ordinary Americans who are worried about the large ISPs and web companies colluding to restrict or hijack their Internet experience. I read through some of these comments and people are universally worried about companies like Comcast and Google getting together to limit what they can do on the web. The public does not want to see a network provider have the ability to slow down their Internet experience or to dictate which web sites they can use.

Obviously I didn’t read all of the comments in this docket and one has to wonder if anybody at the FCC can or will read it all. That’s a tall task. But I did look at the comments of the larger carriers and web companies to see what they have to say. There were no surprises with the big ISPs on one side of the issue and almost everybody else on the other.

AT&T is in favor of no additional regulation of the Internet, meaning they would be free to prioritize traffic if they wish. This could obviously make them a lot of money. AT&T says if there must be regulation that they would prefer it to be through Section 706 regulation, which is the section of the FCC rules that talks about no blocking of Internet traffic. AT&T is totally against having a Title II classification of the Internet as a common carrier business. And not surprisingly, AT&T is not in favor of regulating data for wireless carriers.

Comcast is also against Title II classification as a common carrier and they prefer no regulation at all. Comcast says that they are already a good web citizen and don’t need to be regulated, but even if they were there would be loopholes that would allow carriers like them to discriminate. This seems like an odd argument to make from a company that wants approval for a giant merger. Comcast says that if there is regulation that it should also apply to public Wi-Fi and mobile broadband.

Verizon had the longest comments I saw. Verizon believes the best solution is the least amount of regulation possible. They think the market will control carriers because customers won’t accept being throttled. Verizon says the real threat to the Internet comes from companies like Google, Netflix and Amazon. And obviously they are very much against Title II regulation.

On the other side of the argument is, well, just about everybody else except a few other cable companies. There were a few filings that represented groups of Internet-based companies. The Information Technology Industry Council represented companies like Apple, Facebook, Google, Intel, Microsoft, Yahoo and many others. They argue that the FCC needs to put in rules to protect consumers, but also to protect both small and large web-based companies. They are not in favor of Title II regulation but instead would like to see something similar to the rules that were vacated by the courts.

The Internet Association represents Amazon, Ebay, Expedia, Facebook, Google, Linked-In, Twitter, Netflix, Yahoo, Yelp and many others. As you might have noticed, Google and Yahoo are in both industry groups. This group also doesn’t support full Title II regulation but thinks that the FCC needs to find ways to stop the ISPs from discriminating and wants the FCC to support application agnostic network management. They want the same rules to apply to wireless carriers.

Netflix is at the core of a current battle over network neutrality. Netflix is about the only big tech company I could find in favor of Title II regulation. They think anything short of full title II reclassification will just be asking for another court battle that the FCC will eventually lose.

One has to wonder if the volume of public comments means anything. It’s clear where the public stands on this issue and people are afraid that the Internet is going to change to their detriment. They already see the ongoing battle between Verizon and Netflix and they don’t want to see a future where their web experience is dependent upon how ISPs and content providers are getting along. When they buy an amount of bandwidth from an ISP they want whatever fits into that bandwidth to work.