Recently a tree fell near here and the electricity was out most of the night. This caused me to think about the Achilles Heel of the Internet economy, its need for electricity.
The Internet economy requires more than just go-juice. It requires pure, filtered, reliable electricity. My PC includes an Uninterruptible Power Supply (UPS) as a matter of course - if you don't have one you should. It's true that my laptop and cell phone run on batteries, but the batteries need recharging regularly and cell towers are tied to the electric grid. Every server farm and telecomm hotel gulps oodles of juice, and the need will grow - not shrink - over time.
Meanwhile, the spring's rolling brownouts in Silicon Valley are just the first inkling of what's to come. All forms of electrical power generation are controversial, and there are advocates ready to argue against each of them. Coal is dirty, nuclear is dangerous (and fuel can't be discarded), wind cuts the tops off mountains, dams kill the fish, while gas and oil are steadily becoming more expensive (and all hydrocarbons spur global warming). Solar power won't work in the quantities we need.
You can't get away from it. If you install your own generator the problems of the electric company become your problems. How much will fuel cost, and where will you store it? What are you going to do about the noise, the pollution, and the neighbors?
The economic models of the Internet economy are no help. Deregulation works great when supplies are plentiful, but it can make scarcity worse. The oil industry still bases its economic models on $17-20 barrel oil (against a current price of $32/barrel) because they can't be certain today's prices will hold until the new supply comes on stream in a few years. It's even worse in the electric power industry. When you add the objections of environmentalists to the other uncertainties it's just not worth the trouble to build new plants. So generating capacity isn't being built today - it's being mothballed. Nuclear plants are being decommissioned and dams are being blown up.
I don't blame the environmental movement for any of this, by the way. I blame our economic models.
Here's a solution that might work for your server farm. I base it on concepts first developed by (cue the music) the National Football League. Yes, I'm talking seat licenses.
You get start-up capital to build a new plant by having server farms kick in big hunks of cash, in exchange for a guaranteed supply from the new facility. This cash can then be leveraged with money from stockholders, or a fat government subsidy, and suddenly you have the scratch. The guarantee of demand, and cash up-front, brings in the capital to get the stadium (excuse me, the power plant) built. In theory anyone can buy a seat once the stadium's up (if the team's like mine, no one would want to). All the license fee does is get you first in line at the ticket window.
There still remains the second leg to financing the new plant. Once we have the seat licenses, we need that government subsidy. (How do you think George W. Bush became a millionaire anyway?) What voters will demand before kicking in, however, is some guarantee this investment will pay off. They'll need a guarantee the power will be bought, and at a price that will pay off the bondholders.
What they need, in a word, is re-regulation. You hold the price high when supplies are plentiful, and control hikes when costs go up. This was how the grid (not to mention the phone networks) were built. It was a guaranteed return in exchange for guaranteed supply. It runs completely counter to the economic assumptions of our age. But it worked in great-granddad's time, and it can work again.
I'm still making myself available for consulting to a limited number of clients, with an eye toward assuring their long-term success. If you're interested give me a shout at 404-373-7634.
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I write daily for ClickZ, and weekly at Andover.News. I write monthly for NetMarketing, Boardwatch, and Intellectual Capital. I've been in Advertising Age and the Chicago Tribune . Once every other month I'm in CLEC Magazine. Twice each month I'm at OneChannel.Net and I've recently joined the staff at ISPWorld. You can always buy my book . Subscription instructions are at the bottom of each issue.
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Takes on the News
Linking Bricks with Clicks
Radio Shack is not normally where I go for innovation, but the next time your cell phone needs a new battery ask them about CueCat (Offer your phone number in exchange.)
The Cuecat is basically a bar code reader with software that links to your Web browser. Swipe the bar code on an ad and go directly to a designated page online for more information. Digital Convergence of Dallas is selling this as an idea to access news, sports, and other content but it's really aimed at linking advertising and marketing to the Web. (Here's how Radio Shack is using it .)
By having a store behind the delivery of this device you get millions into the marketplace quickly. If the store is smart (or the provider controls their contracts) you have a new interface for everything. Thanks go to Peter Parrish of MerchantBridge for bringing this one to my attention.
The Emulex Mess and the Fire Next Time
A week ago the value of Emulex , a hot fiber networking outfit, was cut in half by a news release that turned out to be a fake . Someone convinced Mike Terpin's Internet Wire to run it . Billions of dollars were lost within minutes, and after word got out of the fraud billions more were made by traders who got in before the stock got back to where the market was valuing it.
What can we do about this? The NASD refused to unwind trades that were made based on the fraud, but when this happens again (and it will) the markets will have to learn how to do just that. Another lesson is that every West Coast company must have an East Coast PR outfit, plus an executive on-call for these kinds of emergencies. (If programmers like my wife can be on 24-hour call, so can you suits.) As markets go to 24-hour trading, the on-call list will also have to run 24 hours.
Throwing one crook in jail doesn't do anything for the victims who traded based on false information. Fool me once shame on you, fool me twice shame on me, fool me thrice and shame on the system.
My Baloney Has a First Name, It's O-R-S-O-N
I had a nice long talk recently with Brightstreet.Com CEO Scott Wills about their Promo Central product. Petsmart has joined the Cox and McClatchy newspapers in supporting Promo Central, which allows you to update and erase your privacy profile from a single link.
Wills said he's depending on Truste and business lobbyists to keep government off his back. FTC Commissioner Orson Swindle, a Republican, has been trying to keep the industry in line against any regulation , despite a few recent defections. (Intel wants a compromise law to provide more certainty.)
Well, privacy is a fight the industry can win until it loses. A President Bush and a GOP Congress can prevent any new laws from being written, for now. But there's always a new election, this one can be lost, and eventually the other side always triumphs. Politicians like Orson Swindle can't protect you forever.
I asked Wills about Europe's tighter laws, and he said BrightStreet doesn't do business there. But why pick a fight and take a risk? Why not follow Europe's directives and let your competitors fail when they can't?
Clued-in is 2600 , the hacker mag that lost the DeCSS suit, for continuing to fight the decision and, thus, getting both the media and Internet industry on its side.
Clueless was CMGI for paying $114 million to get naming rights on the New England Patriots' next stadium . Altavista Field or Engage Park might make some sense, but paying for use of the CMGI name is plain silly. Everyone's going to wind up calling it Cim Gee (or Kimchee) Stadium. Don't you think $114 million is an awful lot of cabbage to spend for a hot pickle?
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