by Dana Blankenhorn
Volume V, No. XXV
For the Week of June 25, 2001

This Week's Clue: The Broadband Opportunity

This Week's Clue: The Broadband Opportunity

SSP (Shameless Self Promotion)

SP (Shameless Promotion)

A(OL)rabs and I(gates)raelis

Scavenger Deals Work Only for Scavengers

Berry's Warning

Clued-in, Clueless

When Intel announces a new chip, we yawn. When Microsoft announces a new release of its operating system, we turn the page.

But there is an upgrade we all want that stimulates vast amounts of new purchasing. It's called broadband.

Whether you get broadband through the cable, the telephone, or a satellite dish (some also get it through a fixed wireless system, and it will soon be available through the power grid), many find it's just the first step in the creation of a new lifestyle.

In my own case, I bought new computers and a router last Christmas so the kids could share my connection. My daughter now looks for "Sailor Moon" stories, my son plays "Hearts" online, and both of them use the Internet for school reports. 

It turns out, however, that we've barely scratched the surface of the resource.

At Supercomm I found a host of products, from companies large and small , aimed at helping people get more from an always-on connection. Firewalls and anti-virus programs are essential, while routers and modems are now integrated into a single, expandable box. The industry calls this box a "modular gateway." 

Home networks don't have to use Ethernet cable, of course. They can use phone lines, the electrical system, or they can be wireless. All these systems cost money - hardware, software and services. People who get broadband become great prospects for anyone in the local networking business. 

Home networking isn't the only industry impacted by this. A new report from eMarketer cites a survey done by Broadjump Inc. of Austin, Texas  about the new demand. Half of new broadband users become interested in streaming and Internet telephony. Nearly 40% become interested in video on demand, and nearly a third start wanting automatic back-up services. Even troubled niches like software rental and video conferencing draw interest from a quarter of the new market.

What's funny is that the Bells and cable companies don't seem interested in the opportunity. The Bell contract I signed forbade my building a home network (This stalled my home networking interest for two years because I don't like violating contracts.) Cable operators have been known to cut services to those who they say use the resource "too much" for things like peer-to-peer networking. Even usually enlightened companies like Earthlink see this mainly as an up-sell . I was told at Supercomm that their broadband police will start grabbing an extra $10/month from me now, once they detect a home network. 

If you've been playing "whack-a-mole" with the new pop-up ads on sites like the New York Times, you've been missing yet-another big new niche enabled by mass deployment of broadband. That would be X-10, a fairly primitive home networking standard that is nevertheless "sweeping geekdom," according to a recent Salon article. . With X-10 you can finally get the benefits this 21st century promised - talk to your appliances, share the VCR with any TV, have the air conditioner turned on before you get home. A $6 plug-in adapter will give you remote control of any appliance, and you can "Web-enable" your whole home for under $2,000. 

The point is there is a vast, new set of opportunities here. People get broadband for the speed, and to avoid tying up a phone line with their modem. Then they find there are a host of great new things they can do with always-on connectivity, and they become great prospects for thousands of dollars in upgrades. The technically literate can install this stuff. The rest of us will need help. If you can find a list of broadband prospects, or new broadband customers, you can make yourself a lot of money right now. (You don't need many to keep yourself fed, and you can build a nice business in even a local market.) 

If the home broadband market can be exploited properly and profitably, the present Internet recession can still be turned around quickly and easily. 

SSP (Shameless Self-Promotion)

Napster me, please! If you like a-clue.com, e-mail a copy to a friend. They can subscribe from the home page. Use this medium to increase the circulation of those resources you favor and you'll be doing both of us a good turn.

"Living on the Internet: How to Make Money, Live Right, and Fight For the 21st Century" is tentatively due for release around Labor Day. I'm still writing it, but it looks good. I call it the "first book of the 21st century" because it is designed to feature hyperlinks in all formats - PDF, eBook, and print. (How about if we call it an I-Book for short?) Drop me a note to get on the mailing list for more information on this book.

Boardwatch has launched its newsletter under my byline called ISP Executive. Check it out. You can join the A-Clue.Com discussion at I-Strategy , our shared e-mail digest produced with Adventive.Com. You can also read me at ClickZ , B2B, at Boardwatch, and at Internet Content. More deals are being negotiated as we speak. Remember that it's journalism that keeps the Clues coming...

Shameless Promotion

If you're in New York today and you care about high-tech subjects like storage, clustering and Load Balancing, we've arranged to get you a free pass to the summit on those topics , being run by Creative Expos. (They're the people who ran the Telecom Investor Forum early this month at Supercomm.) If you're at the Javits Center today then just tell Ray Fix' people that Dana of a-clue sent you.

Takes on the News

A(OL)rabs and I(gates)raelis

What's most shocking about the (continuing - don't you believe this ) negotiations between AOL-Time Warner and Microsoft over dividing the online world is how the talks are being covered by the media.

The story is being treated as the ordinary course of business when it is, in fact, an attempt to create an oligopoly covering computer hardware, software, and services - including copyright delivery over the Internet. AOL gave Microsoft a monopoly on browsers and expected in return at least a duopoly in streaming media - with Real Networks surviving alongside Windows Media Player in the mass market. But Microsoft wants the government to enforce its monopoly as a copyright protection measure, and any choice in any major software category would give consumers pressure against it.

Microsoft's ambitions are plainly advertised and if Gates learned anything from his anti-trust battle it was that owning and controlling the government are necessary to real power. The best short-term hope for consumers is a Linux server for the home market - to act as a hub for those services Microsoft doesn't want you to have (a home-based Web server, for instance).

AOL has little objection to all this. In fact it wants Microsoft to succeed, so it can maximize the money it gets from its media properties. AOL's strategy is to force "subscriptions" on people for everything, a degree of permission that will prevent any other services (or media properties) from gaining a foothold.

Both companies want monopolies - Microsoft over software, AOL over services. They will either reach a formal agreement or continue with their informal one. That's the story the media won't tell you (well, most of it ), and that's the reason why media concentration is so dangerous.

Scavenger Deals Work Only for Scavengers

AOL-Time Warner's takeover of Business 2.0 isn't unusual. But hidden in the story are terms that are a model for all publishers who think face is more important than reality.

I recently covered an attempt to extract similar terms from a financially-troubled firm. Such deals carry nominal price tags ($68 million in the Business 2.0 case) but the price is a lie. In the case of Business 2.0 its shareholders get a percentage of revenue over a given amount on both the magazine and Web properties. But AOL-Time Warner gains full control, and that includes the ability to manipulate the business so the percentages become percentages of nothing.

Business 2.0 owner Future Media sacrificed its employees, its business, and its shareholders so it could save face for its executives and hose new suckers. Don't be one of them. I'm not against the buyers in any of these deals . If you have a chance to drive a hard bargain, then good for you. But when the sellers pretend that a take-out is a sale and then ask you to trust them, it's time for your memory to be activated.

Berry's Warning

The DMCA threatens all peer-to-peer technology, not just Napster. That's the warning Hank Berry, CEO of the failing music-swapping service, delivered to American librarians recently and it's a warning that should be taken seriously.

The underlying issue is whether copyright holders have the rights we've grown accustomed to over work they own, or whether they hold the rights Microsoft claims, the absolute right to control all exchanges of their work between third parties.

Berry said that Docster, a document delivery service for libraries built on the peer-to-peer model, will be killed just as Napster was, because copyright owners not only expect to be paid for all copies, they expect to control the transaction.

Berry's warning was that under the present interpretation of DMCA the copyright holders are right. That's a proposition that will only be tested in court if librarians choose to defend themselves (which is uncertain). The mere threat of a lawsuit could destroy all legitimate moves toward peer-to-peer networking.

The confrontation between buyers in the information marketplace and sellers (or those who control sellers through copyright) didn't end with the Napster decision, and it doesn't end with law enforcement's attempt to implement that decision. It continues to define the current Internet recession, and until it is resolved (until buyers of information have an agreement they consider fair) the recession can't end.

Clued-in, Clueless

Clued-in is Eva Rosenberg , who not only creates Web businesses faster than a speeding bullet, but can describe how she does it in detail. (She is best known to us as moderator of I-Helpdesk)

Clueless are fears over Peekabooty , an anti-censorship browser from Cult of the Dead Cow due for release next month. Peekabooty is a weapon, and must be unleashed against China if human liberty is to mean anything. The "collateral damage" of giving pederasts and hackers freedom to look doesn't mean they can automatically touch. Maybe this should be the Internet's Second Amendment: Open minds being necessary to a free people, the right of the people to browse and read shall not be infringed.

A-Clue.Com is a free email publication, registered with the U.S. Copyright Office as number TXu 888-819. We're on the Web at http://www.a-clue.com.