March 2006 Archives

TMCnet's Patrick Barnard wrote a great article today about the status of U.S. telecommunications legislation. Patrick refers to a quote in BusinessWeek in November 2005 by AT&T's CEO Ed Whitacre:

"Why should they be allowed to use my pipes? The Internet can’t be free in that sense, because we and the cable companies have made an investment -- and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes (for) free is nuts!"

This quote struck me because Stanford law professor Lawrence Lessig used this same quote in a presentation I attended last week in New York City, sponsored by the ILO Institute. Lessig is founder of Creative Commons, an organization set up to initiate new approaches to intellectual property. Lessig has also commented on the Net Neutrality question, one of the central issues in the current U.S. legislative battle.

In his presentation, Lessig likened the Internet to a highway in that the infrastructure is designed so that "any kind of vehicle works on it." What the telecommunications giants are proposing to do now, he says, is "set up reserved lanes" on the highway, "like Moscow under communism." The network owner can then "sell the reserved lanes, and the rest of the people using the Internet will be pushed into the slow lanes."

Lessig says allowing the network owner to exert this kind of control works against innovation. The Internet, he says, was originally designed as an end-to-end (e2e) network without central control. An "end-to-end Internet is massively more valuable than an Internet centrally controlled by AT&T." Giving control to the network operator allows that operator to say, "Vonage, you're making it harder for me to sell telephone service. If you have an innovation, bring your permission slip."

AB -- 3/30/06

Recently I learned about Network Foundation Technologies (NFT), a company providing an Internet broadcasting platform based on distributed computing. This is an important story to tell, as many observers think peer-to-peer technology looks like the best answer to the problem of Internet-based video streaming (see my previous blog entry, "P2P Enables Large-File Media Distribution," from March 16, 2006).

NFT's model depends on a distributed network of users who receive a video transmission as their computers and Internet connections are simultaneously being used as repeaters to distribute the stream to yet other users. Mike O'Neal and Marcus Morton are co-founders of NFT. O'Neal is chair of computer sciences at Louisiana Tech and Morton is a former vice president at EMI and the producer of several feature films.

In a recent interview, I asked them how NFT's technology works, how it solves the problem of Internet video distribution, and what this kind of technology will mean for the future of video and advertising. Here are their responses in Q&A format:

How do you see the future of online video? What will things look like in a few years?

(Morton)

Explosive growth!

While we believe that download and play "on demand" type content will remain popular, concerns over content piracy will continue to limit the amount of content that is available in this format, at least legally. 

Additionally, people generally enjoy being programmed to -- the continuing popularity of radio, despite MP3 players and CDs, is clear proof of this fact.  To cut through the clutter, we go to trusted sources and depend on them to do the work of finding and presenting the content we enjoy.  Heck, that's what a DJ in a club is paid to do -- program the mood of the club. 

People also want to feel "connected" to other people and to what is happening "right now."  There is value in being able to watch an event "as it happens," and this feature is essential for some types of broadcasts, such as sports, breaking news, weather, etc.

For these reasons, we believe that the Internet is about to experience a veritable explosion in the amount of 24-7 television-style broadcasting that takes place on the Web.  Online events, such as AOL's Live 8, CBS's March Madness, and Yahoo's broadcasting of recent NASA events, prove there is pent up demand for this type of broadcasting. 

Why is video streaming such a challenge right now? What are the limiting factors? (You could speak to the CBS example if you like.)

(O'Neal)
 
The traditional approach to streaming, where each viewer is watching a separate copy of the stream with all streams being generated by the broadcaster, simply does not effectively scale to television size audiences.  Right now, online broadcasting costs scale linearly with the number of viewers (i.e., the more viewers you have, the more you have to spend on bandwidth and servers). 

(Morton)

Yes, that's right.  It all boils down to cost.

Can you imagine a network like CBS promoting a television broadcast and then limiting how many people can tune in to watch?  Of course not!   The more viewers a network gets, the more money they can make off of advertiser revenue, and since larger audiences do not cause their broadcast costs to go up, their profits increase. 

But in the online world, things are different.  Rationing access to the broadcast is exactly what CBS has been forced to do with March Madness.  Peak audience levels have been limited to just over 1/4 million viewers, and those viewers are "rotated," so after a fixed amount of time, a viewer will be bumped and forced to get back in line to gain access to the broadcast again.  According to a CBS press release, at one point there were 150,000 people waiting in line to watch the broadcast.  Think about the advertising dollars that were waiting at CBS’ doorstep and simply couldn’t come in the door.

Why is distributed computing the answer? Why is the NFT model working, while the CBS model isn't?

(O'Neal)

NFT can turn the entire online broadcasting proposition on its head, leading to a situation that is much closer to television and cable, where broadcast costs are relatively fixed, regardless of the number of viewers. 

(Morton)

I don’t think anybody can deny the enormous demand for online video content.  CBS’ broadcasting of March Madness was a significant milestone for our industry, as it vividly demonstrated the demand for online access to TV-style broadcasts.  The real question is: where do we go from here?   CBS was forced to limit access to their broadcast because the underlying technology they were using simply doesn’t scale to the level of millions of simultaneous viewers.  NFT’s technology can open the flood gates for content providers.  NFT technology solves CBS’ core problem – allowing virtually unlimited audience sizes while reducing costs.  If CBS utilizes our technology next year, no one will be talking about how many tens or hundreds of thousands of people were waiting in line to access the broadcast.  Instead, the focus will be on how broadcasters and advertisers are utilizing NFT technology to maximize exposure.

Please explain NFT's platform and how it works.

(O'Neal)

NFT is a distributed online broadcast technology.  What this means is that the computers of the individuals who are watching a broadcast help deliver that broadcast to other members of the audience.  NFT’s client software is light weight, and the application is VERY respectful of the end-user's bandwidth.  NFT only uses “idle” upstream bandwidth on the viewer's computer that would otherwise go unused. The moment an end-user needs that bandwidth the NFT application immediately “steps aside.” 

Thus, from the end-user's point of view, the fact that in addition to displaying a video feed, NFT-TV players also pass a copy of the feed on to at most, two other viewers seamlessly and invisible (except for a little icon we provide on the player to make sure end-users know the status of their player).

By transferring the cost of delivering a broadcast onto the computers and Internet connections of those individuals interested in watching that broadcast, advertiser-supported delivery of 24-7 television style content becomes practical.  To the end-user, the service appears "free" because they have already paid for the bandwidth (whether they use it or not) in their monthly cable/DSL bill. 

Additionally, by properly segmenting the distributed network and directing a viewer's computer to connect to other computers within the same ISP, NFT could minimize expensive inter-network traffic and thereby actually REDUCE the costs of the Internet Service Providers.  NFT truly provides a win-win-win situation for broadcasters, consumers and ISPs.

What does NFT provide, and where is your company heading?

(Morton)

We see NFT empowering a revolution in online broadcasting.  Our company is focused on two primary markets -- professional broadcasters (via our NFTPro product) and individual home broadcasters (via our PeopleCast product).  For professional broadcasters, we will dramatically reduce their costs, allowing them to substantially increase the amount and quality of live streaming that takes place online.  NFT will also give home broadcasters the ability to reach large online audiences for the very first time with nothing more than a PC, web cam, microphone and broadband Internet connection. 
What got you into this business?

(O'Neal)

Back in late 2000 or early 2001, I was discussing the emerging Webcam phenomenon with a friend over lunch, and the question of whether it would be technologically possible to enable a home broadcaster to reach a large audience with just a computer, microphone, Webcam and broadband Internet connection came up. 

It was immediately apparent that the only way to accomplish such a task was through some kind of distributed network -- where the broadcaster would not be required to directly feed the signal to all of the viewers.  Of course, the problem that leapt to mind was, how do you maintain such a network, as viewers, and hence repeaters, continually join and depart the network.

Being a natural "egg head," I found that I just couldn't let this problem go.  Three months later, I'd worked out the core algorithms for constructing a stable distributed broadcast network that overcame the major problem faced by such networks:  maintaining stream quality given the turn over inherent in such distributed networks. 

What made our approach so extraordinary is that our algorithms view the natural turnover in the network not as a problem to be overcome, but as the engine for driving the most reliable rebroadcast nodes into the most critical regions of the network -- greatly increasing network stability, essentially "for free."  

In fact, the algorithms are so darn nifty that that is what we decided to call the company – NFT, which we pronounce, "nifty."

(Morton)

What did it for me was that I saw that Mike's approach could lead to a way for content producers to reach large audiences in new ways -- bypassing the existing "gate keepers."

As an independent producer, this appealed to me.  My first major motion picture, "Three Strikes," was produced independently.  Though the picture was an overwhelming financial success (grossing in excess of four times its development and distribution costs), getting that picture into nationwide release was a major hassle.

Many newly formed broadcast channels face the same problem I did -- they have content and know the audience is out there, but the barriers to entry on cable and satellite broadcast systems are simply too high.  NFT provides a way for these companies to directly reach consumers in a cost effective manner.

I'm also intrigued by the concept that NFT can empower a whole new wave of end-consumer generated content.  There is a lot of talent out there.  Most everyone has a message.  Blogging has allowed people to express themselves in written words, podcasting with the spoken word, vlogs with short video clips, and now NFT will bring most anyone with the desire to do so the ability to launch their own Internet TV channel.

What does the NFT model offer for advertisers? How will advertising work in the future that you envision?

(Morton)

An innovative feature of the NFT-TV player is an unobtrusive, "one click" buy opportunity. 

People are tired of flashing banner ads that distract them from the content they are interested in viewing.  Thus, the approach we adopted with our NFT-TV player is to include an informational scroll at the bottom of player, immediately below the video window.  This scroll generally contains program title and related information.  Clicking on this scrollable area launches a Web browser and points it toward a page specific to the onscreen content.  Such a page could contain further information about the program, be a strict buy opportunity, or something in the middle like an Amazon.com page that contains interesting information about the program, such as reviews, together with a mechanism to buy a copy of the video.

We envision that in many applications, the content being broadcast will, in a sense, be an ad for itself.

Thus if you are watching, “Gone with the Wind,” the scroll at the bottom of the screen would link you to a page where you could buy a copy of the movie.  Similarly, for advertiser-supported broadcast content, while an ad is playing, the informational scroll would allow you to "one click" over to a Web page to purchase the item.

We believe that the ability to give the consumer an immediate buy opportunity will be a very powerful tool in converting ad impressions into sales for certain types of products.

Overall, the NFT player offers content providers a much broader advertising inventory than ever before at a reasonable price.   As we all know, metrics drives the advertising world.  Our player is capable of monitoring total viewership data tracking and click throughs. When developing NFT’s technology, we had the advertiser in mind because, at a lower productions cost than conventional streaming technology, any advertiser can flourish when correctly targeting relevant content.

If you could sit down with a top ad agency executive, what would you tell that person to start doing right now to get ready for the future media space?

(Marcus)

Every advertising and media buying firm is looking for new and creative ways to get their clients’ brands in front of possible buyers.  They are also looking for ways to validate and quantify their buys and budgets. NFT opens the possibilities of new ad inventory over the Internet in the form of narrow interest “streaming channels,” where audience response is trackable and data reports that can be viewed “live.”  For example, say there is a BobTV in Denver, Colo.  Bob launches his streaming channel using NFT technology and immediately attracts an average daily audience of 100 distinct viewers.  Commercials can be inserted into Bob’s broadcast a very reasonable cost…a fraction of what a network broadcast spot costs. Now, imagine hundreds and thousands of BobTV’s…Without sounding too dramatic, our technology can make it possible for very small broadcasters to profit from advertising while allowing advertisers to reach very specific audiences at low cost. 

What's the most exciting thing about the business you're in?

(Morton)

The fact that we are on the cusp of another revolution in the way people will use the Internet to communicate – personal Internet television channels – and our company has a powerful technological solution that can help bring about this revolution.

Anything else you would like to add?

(Morton)

Just that NFT is in the market for qualified investors, so if you are one and you'd like to learn more, feel free to drop us an email at [email protected].

(End of interview)

AB -- 3/30/06

In reporting its financial results today, Taiwanese telco Chunghwa Telecom took a swipe at VoIP, including the following in its financial summary:

"International long distance revenue decreased 4.1% due to stiff competition and the impact from VoIP."

As far as I know, Chunghwa has not launched a war against VoIP, but this statement does make me wonder whether they might be starting to build a case in favor of restricting Internet telephony in some way. This statement did get singled out in the technology news media and generated some buzz.

However, you can put the statement about VoIP in context by looking at the whole paragraph:

"On a segmental basis, total Internet and data service revenue for 2005 increased 7.2% year-over-year (YoY). Of this, Internet service revenue increased 8.6% due to strong broadband subscriber growth while data revenue increased 3.0%. Mobile revenue increased 3.9% as a result of solid subscriber growth and higher value-added services revenue. Fixed-line revenue for 2005 decreased 8.0%. Local service revenue decreased 9.3% due to mobile and ADSL substitution. Domestic long distance revenue decreased 8.3%. This drop was mainly due to mobile substitution and a decrease in transit revenue as alternative operators built and used their own circuits instead of our own. International long distance revenue decreased 4.1% due to stiff competition and the impact from VoIP."

VoIP stands out because it comes at the end of the paragraph, but really the overall picture here shows that Chunghwa's decrease in long distance revenue is part of a complex of interrelated trends involving users' switching over to Internet and mobile services generally.

I was also interested to note what Chughwa has been doing in the IPTV market:

"IPTV service was first offered in the Taipei metropolitan area in March 2004, and by the end of 2005, Chunhgwa accumulated around 100 thousand subscribers. The company expanded the service island-wide in August, and it now covers 75% of the island's population. Currently, there are 33 broadcasting channels and approximately 1,600 on-demand programs. Chunghwa also launched home banking and karaoke as a part of IPTV value-added services in August 2005."

AB -- 3/30/06

Susan Campbell's article from today explains what's behind the conflict between AT&T and cable providers Comcast and Time Warner Cable -- see "AT&T Fires Off FCC Letter Accusing Cable Operators of Thwarting Public Debate."

AT&T has been running issue ads trying to gain support for legislation that would make it easier for telcos to bypass local franchise requirements and roll out video services in communities nationwide. Comcast and Time Warner Cable have refused to run the ads, so AT&T is accusing them of trying to stifle public debate.

It's hard for me to feel strongly that there's a good guy in this conflict. Seems to me that both the telcos and the cablecos have a long record of getting away with providing minimal service and pulling any strings possible to stifle competition. ("We don't care. We don't have to. We're your phone company.")

That said, all in all it probably is better if consumers have more than one choice for local video service. In fact, recent research indicates that increased competition in Texas is resulting in lower rates for consumers. (See my previous entry, "Survey Reports Results of Texas TV Competition.")

Even better would be a scenario under which consumers could have even more choices beyond the high-cost poky "broadband" choices available from the entrenched incumbents in the current market.

AB -- 3/28/06

Opticomm has released news about an installation of its Optiva video transmission products at the "Grande Stazione" train station in Rome.

The project involves placement of 150 plasma screens throughout the station for digital display of media, information and messaging. The use of fiber optics allows for high-resolution video display with audio and data throughout the facility.

The disappointing thing about this story is that I can't find any pictures that show the video displays in use. However, here is an image showing Opticomm's Optiva video/audio/data hardware:

AB -- 3/28/06

An ABI Research report reiterates what most home network users already know anyway: "ABI Research Says Consumer WiFi Needs User-Friendly Security." ABI's press release from yesterday says:

"Despite the frequency with which users report finding many unprotected WiFi networks nearby when they log on, or of finding that other people are piggybacking on their own networks, most WiFi security schemes are so difficult to set up that many users give up and accept their network's public exposure as an unfortunate fact of life."

Although Linksys certainly deserves some of the blame for this situation (oh, I guess D-Link and Belkin and a couple others too), in my mind the problem rests with Microsoft more than anyone. Even if Linksys succeeds in developing a usable, secure WiFi router, you can count on Windows XP and its inscrutable networking system to sabotage any improvements.

AB -- 3/23/06

Jenzabar announced enhancements this week to the CRM portion of its Total Campus Management (TCM) suite targeted at the high-education market. The enhancements particularly have to do with giving faculty and students better functionality for advisement, course selection, degree and course requirements, financial aid, grades and similar processes having to do with the logistics of higher ed.

When Jenzabar uses the acronym "CRM" they mean it to refer to Constituent Relationship Management, rather than "Customer," as commonly used in the business world. Having worked in the education field, I understand that the use of the word "customer" can go contrary to sensibilities and organizational models. And in a college or university, the crucial relationships go far beyond that with the customer, that is, the student. You need to consider parents, faculty and staff, alumni, donors, community, referring schools and institutions, regulators, accreditation agencies and others, so "constituent" is an entirely appropriate term.

Even when you just consider just the primary customer, the student, I have thought for a long time that CRM has many exciting applications in higher education. Think about how long the customer relationship might be between an institution and a student. Consider this possible progression of the relationship:

1. Age 16 -- A high school student learns about the college from a high-school counselor and receives a brochure. Touch-point: marketing.

2. Age 17 -- Time to apply. The applicant fills out an online admissions form or fills out a hard copy and sends it in. Touch-point: admissions.

3. Age 17 -- Campus visit to learn about the school and experience the atmosphere. Touch-point: admissions, student services, faculty, others.

4. Age 18 -- Acceptance and orientation. Touch-points: student services, registrar, financial aid, academics.

5. Ages 18-22 -- Student years. Touch-points: Faculty, student services, registrar, financial aid, housing, food service, finance and accounting, others.

6. Age 22 and beyond -- Even after graduation, the student is likely to maintain a relationship with the school based on loyalty, relationships with faculty, and benefits offered to alumni. Touch-points: alumni services, faculty, institutional advancement.

7. Death: Estate planning can result in a bequest to a beloved institution that has maintained a strong relationship with a former student over the years. Touch-points: alumni services, institutional advancement.

Jenzabar's offerings extend far beyond its CRM modules, encompassing administrative and financial modules, ERP, data marts and a learning management system. Everything is delivered through a web-based portal call Jenzabar's Internet Campus Solution (JICS). This kind of unified, integrated suite is a strong selling point, obviating the need to 'manage multiple connections to various constituencies' through "deployment of dissimilar and disconnected portals," says Jenzabar. JICS is built on the Microsoft .NET platform.

Good clear screen shots are hard to come by on the Jenzabar web site, a common fault in the world of CRM marketing (and in software marketing generally for that matter). However, I did find a good example in this screen shot of a faculty access page:

Jenzabar is headquartered in Cambridge, Mass. Its solutions are operating in 700 campuses globally.

AB -- 3/23/06

Just before I saw Laura Stotler's story on the RTX PORTALphone today, I was wondering when some provider is going to come up with a VoIP experience compelling enough to make me cross the line and switch over from POTS at home. The possibility of cheaper phone service has somehow never been enough to tip me over. I know that IP communications can offer so much more.

Pretty soon somebody is going to come up with a consumer IP communications offering that's going to grab people as soon as they see it. All over America (and maybe the world) you're going to hear people shout, "I get it! I'm buying!"

Whether the PORTALphone (called the LAN Cordless DUALphone in Europe) is really that magic offering I'm not sure, but this is heading in the right direction. This is a VoIP phone that integrates calling with multimodal communications and push-technology Web content in an exciting way. Laura's article gives enough information about the product, but I was able to get ahold of some visuals that give a good idea how the phone works and what the user experience is like. The photo to the right shows you some detail. Below you can see what the base station is like.

PORTALphone is meant to be marketed through service providers. This diagram gives an idea how it's set up:

PORTALphone's content offering comes from Casabi ("We don't make the home phone, we make it smarter."), which provides a customizable set of web-based content and services. Here are some images that show some of the services that are possible:

AB -- 3/21/06

Recently I had a chance to interview Joellyn Sargent, marketing vice president for Alerts and Notifications Solutions at Premiere Global Services. Premiere Global provides business communications and data solutions, including conferencing, document management and marketing automation, as well as the alerts and notifications service line.

I got in touch with Joellyn because I heard she was speaking on the topic of "The Fight Against Fraud" at the National Collections and Credit Risk conference last week. I thought it would be interesting to get her to speak to some top-of-mind issues around the mitigation of data vulnerabilities. In addition, I was curious to find out how Premiere Global's alerts and notifications services tie in with companies' efforts to fight fraud.

Q: How has the information technology boom contributed to an increase in credit fraud?
     
A. The information technology boom created advances in business processes never seen before, but at the same time the wealth of information available to anyone with Internet access provided opportunity for negative uses.  For instance, greater access to online credit information, as well as better technology to hack into systems and steal information has greatly increased credit fraud. A simple customer list with email addresses even provides thieves with enough information to “phish” for personal information.  These “spoofed” emails ask for financial data and personal background, sufficient to supply the means necessary to steal identities.  And fraud victims feel comfortable in giving out their information because these emails hyperlink them to similar sites operated by legitimate companies.

More importantly, geography is not an issue with the Internet. According to a 2005 Dove Consulting study, “Fraudsters in foreign countries can send fake e-mails, collect card (and debit PIN) information, produce counterfeit cards and then use these cards to make unauthorized purchases or ATM cash withdrawals in their home countries.”

But the Internet is not the only outlet for credit fraud.  Criminals are using all means available to them.  Even cell phone cameras are used by fraudsters to photograph credit cards at the point of sale, and then use those card numbers for phone and/or Internet purchases.

Finally, an explosion of websites in an attempt to remain as secure as possible for their customers has contributed to a proliferation of password requirements.  This has made people lazy in selecting difficult and varied passwords for each site.  Therefore stealing one password is usually all a culprit needs to access other sites visited by a victim, creating another viable method for fraud.

Q: What are the biggest vulnerabilities, from the point of view of a company in the business of granting credit or collections?

A. Probably dealing with customers who are victims of fraud or identity theft, determining if a debt is real or the result of fraud, as well as dealing with increasingly sophisticated technologies used to perpetrate fraud. Companies need to be aggressive about combating fraud, but they need to balance increased security with customer-friendly methods so that customers feel protected. If fraud prevention technologies and policies are not implemented appropriately, customers can be frustrated – or worse yet, feel they are being treated like criminals themselves. Finding the balance between security and customer satisfaction is a real challenge.

Q: What are the best strategies for safeguarding and authenticating data?
     
A. Employee screening and monitoring their access to and use of data.  A 2000 CSI/FBI Computer Crime and Security Survey states that “insiders pose as significant a threat as outsiders. It is common to think of security in terms of protecting network perimeters from hostile outsiders attempting to gain access. But inappropriate insider behavior can be a bigger threat, both more common and often causing greater financial losses than outsider attacks.”

Data security policies and good standard procedures that are mandated throughout the organization are instrumental in putting safeguards in place for a company to protect itself against employee theft. 

Q: What is it that brings Premiere Global Services into this discussion? (How do your services touch on these issues?)
     
A. Communicating with customers – proactively to stop potential fraud and reactively to let them know what the company is doing about it.

A great example is a personal one for me – my checking account number was stolen, and if I had not discovered it myself through my online banking tool, it could have gone on for more than a month before my paper statement came. If my credit union had detected unusual patterns in my account (in this case, the check numbers were in a different sequence) they could have alerted me to come in to verify some transactions. I’ve also had my credit card company do this, but they did it with a live person, which is time consuming and expensive. We provide our customers with an automated process, which authenticates recipients and provides updates – such as “the money has been returned to your account!”

Q: Anything else you think we need to know about this topic?
     
A. The way a company deals with fraud can make or break a customer relationship. Having solid communications and crisis plans in place are essential to demonstrating a company’s commitment to integrity, transparency and quick resolution to fraud. 

Financial Institutions are required by laws in 23 states to inform customers on the violation of their privacy rights in the event a breach occurs.  Whether or not these notifications are required by law, being proactive in issuing fraud alerts gives customers the sense of being protected and cared for, which goes miles towards creating loyalty. Not only customers but employees, business partners, suppliers and regulators should be notified as well of breaches to an organization’s security.

Premiere Global Services sends these proactive communications via an alerts and notifications system, providing all parties with the necessary information through a variety of delivery options such as SMS, voice, fax or email.  The rapid response system results in maintaining positive relations with our customers.

The Alerts and Notifications process includes:

• Augmenting existing incident response process with customized notification processes utilizing company templates in line with regulations.
• Ongoing maintenance and assessment of templates, process improvement, and handling of Personally Identifiable Information.
• If an event occurs, process actual notifications based on usage and chosen communication method.

AB -- 3/21/06

I was intrigued to see a press release today from PeerFactor, a French IT company, announcing a new system they are calling PeerFactor HD (for High speed Downloading), designed to give Web content providers a way to deliver large files quickly and at low cost. The system will use peer-to-peer (P2P) technology to decentralize file storage and delivery by employing the personal computers of hundreds of users across the Internet. Users will agree to allow their computers to function as file-distribution nodes in exchange for free games and music.

I found that news item intriguing in view of Robert X. Cringely's recent column, "Why P2P Is the Future of Media Distribution Even If ISPs Have Yet to Figure That Out." Cringely's article runs through some math showing (long story short) that, just to stream one iTunes-sized episode of "Desperate Housewives" to all 10 million households that normally watch the show on regular TV, all of "the OC-48 and OC-192 links used by Global Crossing, Sprint, MCI and others just might be enough," as long as you were to spread the downloads out over three days. And given the bandwidth necessary, Moore's Law is no help.

Cringely proposes PeerFactor-type P2P networks as the solution, and points to some companies operating in this space, including Network Foundation Technologies (NFT), Grid Networks and Peer Impact.

The following quotes from these company web sites give some more insight into the delivery models made possible by P2P content distribution:

"The GridNetworks PowerGrid Platform enables content owners to securely stream DVD-quality video across the Internet to broadband connected users. With this revolutionary platform, every computer and set top device becomes part of a content delivery grid, vastly improving delivery speeds, reliability and cost efficiency. The result is an 'instant on,' television-like experience, much like users have come to expect from traditional video-on-demand systems at a much lower cost and greatly improved quality."
-- Grid Networks

"The NFT Core implements a distributed broadcast network in which a viewer's computer can act not only as a receiver of a video stream, but also as a repeater - passing a copy of the stream on to one or two other viewers. In this way, NFT utilizes the uplink capacity of end-user DSL and Cable modems that would otherwise be unused. Stream integrity is assured by the NFT Core via its ability to automatically position the most capable repeater nodes in the most critical regions of the network and to reposition nodes that become unreliable to the edge of the network."
-- Network Foundation Technologies

"Wurld Media has a licensing and distribution arrangement with NBC Universal which will initially make Universal movies and NBC Universal television content available for rent to Peer Impact customers on demand. This agreement marks the first ever license of major studio content to a peer-to-peer service. Wurld also has digital distribution contracts with leading content providers, including the 'Big Four' music labels—Sony BMG Music Entertainment, Universal Music Group, Warner Music Group, and EMI—making it the first authorized peer-to-peer oriented network approved by these major content owners to distribute content. Furthermore, a relationship with Trymedia enables access to over 1,000 games and Wurld Media is in advanced negotiations for content agreements to include additional games, movies, videos, and audiobooks on the Peer Impact network."
-- Wurld Media (Owns Peer Impact)

AB -- 3/16/06

Here's an interesting report from ABI Research: "Metro Wi-Fi Network Coverage to Top 126,000 Square Miles by 2010, Says ABI Research."

ABI says municipal wifi only covered 1,500 square miles in 2005, so this sounds like a fast growth rate. 126,000 square miles, the report says, is a little larger than Poland or New Mexico! ABI estimates these deployments will result in sales of more than a million wireless mesh routers at more than $1.2 billion.

ABI identifies four trends behind this growth:

1. Local governments are backing deployments for government operations and public safety.
2. ISPs see mesh networking as a possible way to compete with incumbent providers in the broadband market.
3. Wireless mesh networking is emerging as a way to serve smaller and more isolated markets.
4. The technology also might work for cable companies in competing in broadband markets.

ABI Analyst Sam Lucerno doesn't think incumbents will pursue wireless mesh extensively "because it does not provide adequate bandwidth for bundled video, voice, and broadband data. Also, they have already invested significant funds and effort in deploying their current networks."

AB -- 3/16/06

Yesterday, March 15, 2006, the National Association of Securities Dealers (NASD) announced that it has fined Merrill Lynch (ML) $5 million in connection with the brokerage firm's Financial Advisory Center (FAC), a call center operation housed in Hopewell, N.J., and Jacksonville, Fla.

The fine centered around practices within the call center operation in 2001-2004 that gave incentives for representatives to convince customers to switch mutual funds and invest in ML's proprietary products, even if those switches were to the customer's detriment. ML was charged with "supervisory failures" that allowed sales contests with non-cash awards such as tickets to rock concerts and sports events.

The FAC was originally set up as a channel to provide investment services for customers with lower assets (accounts of $100,000 or less) or with lower transaction volumes, so advisors in ML's full-service branch offices could focus on more lucrative clients. ML transferred over a million clients to FAC between March 2001 and August 2002. NASD says FAC was managing $20 billion in 1.3 million accounts at its peak in 2002.

NASD has released an Investor Alert, "Customer Advisory Centers: Not Your Typical Securities Firm Call Center," containing warnings and tips for dealing with sales-oriented investment call centers.

The $5 million fine appears to be a harsh penalty, but to put it in perspective, the FAC's gross revenue was about $210 million just for 2002. The greater damage here might be to Merrill Lynch's reputation and its credibility as a provider of investment services.

And I would even go a step further and say that the damage might easily be extended to the financial services industry in general. Consumers and small investors aren't stupid, at least fewer of them are these days, and they are sick of seeing hard-earned savings go down the drain when a big company goes belly-up because of executive dishonesty or when the bottom drops out of the stock market. And they're not likely to be happy to find that their money ended up in a costly or low-performing fund when something better was easily available.

These days consumers are much more likely to be on guard when communicating with anyone calling himself an investment or financial advisor, consultant or counselor, because often such representatives have a hidden sales agenda and an incentive to push the customer toward certain products. Savvy investors are able to pick up on the nuances. And the less savvy become more savvy after getting burned the first time. All this contributes to an atmosphere of suspicion and cynicism.

A scandal like this over abusive sales practices adds to the atmosphere of distrust in the consumer market for financial services and can contribute to pressures on government for stronger regulation. NASD, which describes itself as a "private-sector provider of financial regulatory services," is an example of the value of industry self-regulation. This kind of self-regulation is essential and probably needs to be even stronger to forestall greater consumer backlash and more restrictive legislation and government enforcement.

AB -- 3/16/06

Here's some pretty good quick analysis from The Business (London) about Google's GDrive project, which was accidentally revealed last week in presentation notes published on the web with a Powerpoint presentation: "Google to be the world's hard drive."

The Business says Google's plan to provide universally-available remote storage for users' data harmonizes with Scott McNealy's "thin-client" vision and conflicts with Microsoft's PC-centric model of computing.

AB -- 3/14/06

An article we received from Healthday today says neuroscientists and bioengineers at MIT have used nanotechnology to partially restore sight in experimental hamsters by restoring neural pathways in their brains. (See "Nanotechnology May Repair Damaged Brains.")

Today's article says the experimenters injected the rodents with peptides, or protein fragments, to grow "an extremely tiny biodegradable scaffold that provides brain cells with a place to re-grow -- like a vine on a trellis -- in the damaged area of the brain." Scientists involved with the project hope this method can eventually be used in humans.

AB -- 3/14/06

A little while ago we were following a webcast of a hearing titled "Wall Street's Perspective on Telecommunications," from the U.S. Senate Committee on Commerce, Science and Transportation.

Commerce Committee Chairman Ted Stevens spoke with a group of Wall Street analysts. TMCnet's Patrick Barnard will shortly be writing a summary of the proceedings, and we hope for analysis by Rich Tehrani later.

An archive video of the hearing (about 45 minutes long) should be available soon at this page.

I will let Pat and Rich relate specifics later, but the witnesses spoke to concerns around Net neutrality, regulation and the concept of a '2-tiered Internet.'

Witnesses included:

Aryeh B. Bourkoff, UBS Investment Research

Kevin M. Moore, Wachovia Securities

Craig E. Moffett, U.S. Cable and Satellite

Luke T. Szymczak, JP Morgan Asset Management

AB -- 3/14/06