Business & Technology Nexus

Dave Stephens on technology and business trends

Archive for July 2007

What Is The Big Fuss About 700MHz Spectrum

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700Mhz Band Plan from FCC

I’ve been pretty confused by all the back-and-forth reported by traditional media surrounding the upcoming auction for a measley 30Mhz slice of the upper band of the 700Mhz spectrum (shown above). Comments from Google, Verizon, the FCC itself and countless others have provided a lot of color but no clarity. What’s the fuss about?

Currently used for UHF analog channels in the “60’s”, by 2009 this slice called “the Upper 700Mhz band” could be re-purposed to wireless carriers, mobile TV platform providers, or open access internet for anyone – perhaps especially in rural areas.

Yet the more I read the more confused I became. What no one had explained to my satisfaction was the future use and constraints of this piece of the broadcast spectrum. Said dead simply – what is this piece of the spectrum useful for and why is there such a frenzy of political wrangling over it?

Way back in March of this year blogger Om Malik of GigaOM wrote up a great post explaining some of the basic concepts of 700Mhz. See http://gigaom.com/2007/03/14/700mhz-explained/

You can also go directly to the FCC auction description website to read more about current plans, regulations, and requirements – http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=31

What is nice about 700Mhz waves is they go far and can penetrate walls. After all, they’ve worked for analog TV now haven’t they? So any cellular phone service provider might instantly lust after the possibility of fewer towers yet better reception. Of course the longer-range, more accessible signal comes with a price. And that price – at least with today’s technology – appears to be bandwidth. But despite the apparent limitation this spectrum auction appears to have captured the imagination of lobbyists and corporations alike on the possibility of providing a “3rd pipe.”

A public advocacy group called Public Knowledge asserts the following on their website:

“The Federal Communications Commission is poised to set the terms of the most valuable auction of spectrum — the public airwaves over which broadcasters and cell phone companies operate — we will likely ever see. This auction involves a large portion of spectrum that broadcasters are to return as part of the nation’s transition to digital TV. The characteristics and location (in the 700 MHz band) of this spectrum make it ideal for the development of a third, nationwide broadband Internet provider that could compete with the powerful incumbent telephone and cable companies which control 96% of broadband lines in this country. But unless the FCC takes a very different course than it has in past auctions, this valuable resource will most likely end up in the hands of those very companies.”

Think of it this way – do you want to be trapped by a monopoly or near-monopoly environment for access to the public internet? Should 1 or 2 companies control access and set pricing? And if that were to happen (and make no mistake, it is happening) then will restrictions on content and applications come next. The cellular phone providers have kept an iron-grip on customers by crippling blue-tooth, restricting software that can run on mobile devices, etc. As more and more of the net goes mobile, what does that mean?

So, if you see Google as a sort of a nice, rich benefactor of the masses, then their desire to bid on the spectrum only if the FCC puts requirements in place around open access can be seen as protecting our freedom of choice. In my view, it certainly protects Google’s unbelievably massive advertising business as well, so chalk it up to enlightened self-interest.

Here’s an engineering assessment & policy recommendation pdf for more information. And since I’m forking over $58 to Comcast every month for internet access, I guess I’ll close by wishing Google well in their efforts to pursue a wireless open access network.

Written by Dave Stephens

07/25/07 3:24 PM at 3:24 pm

Posted in Opinion

Thinking Through Producer Pricing Floors

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The media, new and old, have reacted quickly and negatively to a recent U.S. Supreme Court ruling striking down a century-old antitrust ruling banning producer pricing floors.

Some of the outcry is captured in the following articles and blog notes:

Slashdot: Ban on Price Floors Abandoned, Internet Prices May Rise
Baltimore Sun: Consumers will be paying the price for price agreements
Montpelier Argus: Consumers may be the losers after court ruling

The opinion, authored by Justice Kennedy, is available at the following link:

http://www.supremecourtus.gov/opinions/06pdf/06-480.pdf

The question the Supreme Court chose to review was whether intrabrand competition  (e.g. finding 100 different prices for the same model Sony Camcorder) always produces pro-competitive effects in marketplaces. Said another way, should it continue to be automatically illegal for a manufacturer to set uniform pricing across its distributors.

Many manufacturers skirt the law today by artificially changing model numbers to pretend items are unique when they are not. For example, mattresses. Go try and find the same model number at different physical retailers of any size – I dare you! :)

I suspect it is true that the decision, one where producer pricing floors were declared “not automatically illegal”, will reduce the number of brand-name goods offered at steep discounts via smaller internet merchants.

But it is also possible that there are pro-competitive effects here too. So I don’t think a knee-jerk reaction is warranted to the ruling. To begin with, pricing floors can still be held to violate the Sherman Antitrust Law when common sense reason is applied. Second, some economists point to an increase in interbrand competition (Sony vs. Canon) when intrabrand competition decreases.

Time will tell as this new ruling will likely have a dramatic and rapid effect on manufacturer business practices and in our most competitive markets.

Written by Dave Stephens

07/20/07 10:26 AM at 10:26 am

Posted in Opinion

Ethanol from Corn – Going Beyond Sound Bites

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Anyone interested in understanding how Brazil managed to introduce Ethanol as a viable alternative to gasoline should read this informative Yale University report. Brazil’s path to energy independence seems often portrayed as an overnight success when in reality it has been a journey underway for well over 30 years (and at a cost of billions of U.S. dollars in subsidies).

I became interested in Brazil’s story because of the huge U.S. government subsidies currently being offered for our nascent ethanol-from-corn program.

Using corn for fuel has opened up a new market for farmers, strained production, and upset long-term pricing trends. A good summary of the 2006 effects were written up by Jeff Wilson for Bloomberg News. Jeff cited a 77% increase in corn prices, to $3.72 a bushel. And the price spike came despite the harvest being the third-largest in U.S. history.

Even before prices began to spike the ethanol-from-corn government investment was widely criticized. A fun and informative assault was made back in 2005 by Robert Bryce for Slate in an article entitled Corn Dog.

Putting politics aside, Bryce cites a report written by 2 scientists, one from Cornell and one from U.C. Berkeley, which concludes that it takes more energy to produce ethanol from corn than the resulting ethanol contains. If this proves a “firm” fact, i.e. one that can’t be changed by introducing greater efficiency or new technology, then it is unlikely the program will ever reduce U.S. dependence on foreign oil – or solve our insatiable appetite for energy.

A web-version of an academic paper entitled “Thermodynamics of the Corn-Ethanol Biofuel Cycle” authored by one of the scientists, Tad W. Patzek of U.C. Berkeley’s Department of Civil and Environmental Engineering, spells out the science behind the assertion that current U.S. policy is flawed.

While well-worth a lengthy read, the report concludes (through analyzing the inputs and outputs of energy generation through biomass) that generating energy from plants is simply unsustainable.

So it will be interesting to watch corn prices over the coming few years. And it will also be interesting to see whether any serious debate over this policy occurs in the 2008 U.S. Presidential Race. If I had to guess today – I’d wager corn prices will continue to climb as ambitious politicians each vie for being labeled the most “pro-ethanol” candidate.

Written by Dave Stephens

07/15/07 8:13 AM at 8:13 am

Posted in Opinion

iPhone Review by an Average Joe

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I’m a huge fan of simplicity. An iPhone, then, which combines 3 devices into one, isn’t something I’d find naturally attractive. Dedicated devices usually suit my tastes better. Case in point is my old Blackberry: No camera, Crippled bluetooth, Crappy phone, *Fantastic instant Email*.

But today I’ve just finished moving my Blackberry address book to my 8Gb iPhone. And I can tell you for certain it was a 1-way trip. The Pearl (one of Blackberry’s latest introductions) is nice but I’m in love with “someone else”.. My poor Blackberry, a dutiful workhorse for the past few years, now sits alone nervously awaiting the recycling mailer due to arrive any day.

What makes the iPhone work well for me is how incredibly simple Apple has made it to use. First and foremost, I absolutely love the iPhone as a phone. It’s a joy to do 3-way calls, a joy to use the recent call list to call someone back, and a joy to check voicemail. And what I mean by joy is that it’s a hell of a lot quicker than I’ve ever experienced. My favorite feature, though it will sound stupid, is the old school dialing keypad – it’s big and so even a lug like me can dial a phone number without a second thought.

The iPod is fantastic as well – but that’s to be expected. The screen is stunning, cover flow is beautiful, etc etc. So my 10Gb 3rd generation iPod is ready for recycling – and when headed to work I can leave my Shuffle at home.

The web browser is fantastic too – the double-tap to zoom in on a column in Google News or other web pages is very handy. I’m usually someplace that has Wifi – my home & my office – so to me it is blazingly fast. Edge sucks in some areas I find myself in and is acceptable in others – it just depends.

I love the camera – you can activate it quickly and it takes pictures fast too – so I’ve found myself capturing little moments that would have otherwise been lost. I don’t think it’s any better than other cell phone cameras of comparable quality – but it’s nice for a guy who has been in an old Blackberry wasteland.

The mail application is just ok. It’s not push of course so it’s a different experience than Blackberry. It also doesn’t merge my Inbox’s (Work and Personal) like I can do in Apple Mail on my Macbook (Apple Mail is also just mediocre – I only use it over Thunderbird due to a massive memory leak I encountered there that pissed me off).

Typing on the iPhone is not as fast as with a dedicated keyboard like my widebody Blackberry had. This is just a tradeoff – I find myself typing “fast enough” – and I think the auto-correction technology is pretty great. But I’d never, ever, ever say it was better than a dedicated qwerty miniature keyboard. It may however be better than the fake dedicated qwerty keyboards where letters are shared between buttons.

I am really curious how many of the iPhones Apple will sell over the next 12 months. But more to the point – I am very happy with the iPhone purchase I made. It’s the first product I’ve waited in line to purchase. And I’ve have to say my Friday night 2 1/2 hour wait at the AT&T store in San Mateo was worth it. I love using the iPhone!

Author’s note: I own Apple stock. Just a little. I wished I owned a whole lot more. :)

Written by Dave Stephens

07/7/07 7:29 PM at 7:29 pm

Posted in Opinion

Exciting News – Bye Bye Procurement Central

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Over the last few months my startup Coupa Software has continued to grow. It’s been great – but it has meant I’ve had far less time to dedicate to the care and feeding of Procurement Central. So apologies to the readers who had come to expect more prodigious posting.

Also, much of the interesting “goings on” – from customer momentum to competitive tactics to pricing and product development – has been decidedly private.

So I’ve had a frozen keyboard – unsure of how or whether to continue. Then this July 4th a good friend of mine suggested I broaden the site to better match my interests (I believe at the time I was showing off my new iPhone).

And 20 minutes later we had come up with the idea for re-positioning my blog as Technology Nexus.

I hope my continued writings will prove useful or (better yet) entertaining to some of you out there. I’m still very proud and feel a part of my former Procurement Central posts – and so they’ve been migrated to the new site.

It should be an exciting ride!

-d

Written by Dave Stephens

07/5/07 10:33 PM at 10:33 pm

Posted in Opinion