by Dana Blankenhorn
Volume VI, No. IV
For the Week of January 28, 2001

This Week's Clue: We Don't Need No Steenkin' Wires

This Week's Clue: We Don't Need No Steenkin' Wires

SSP (Shameless Self Promotion)

SP (Shameless Promotion)

Where Handhelds Are Going 

Northern Light Goes Out

Service or Content?

Clued-in, Clueless

A niece down in Texas recently moved to a ranch some ways out of town. She wanted phone service, but SBC (her local Bellco) said that not only would she have to pay hundreds of dollars to run a wire from the road to her land, but the phone company would own that line. When others needed it she'd get nothing. 

I pointed out that she and her husband both had their own cell phones. Then I thought, a dish antenna could bring more TV channels than our cable box, plus broadband data service. If someone ran a line of 802.16 connections to town and put up an antenna she could have 11 Mbps Internet service. "Why she can be more connected than we are," I concluded. 

This got me to do some serious thinking. Why do we need wires at all? Phone and cable upgrades cost billions of dollars and take 25 years to pay off. They improve service, but only arithmetically. Wireless services seem to be improving logarithmically, and if the price-performance doesn't go up right alongside Moore's Law the principle is the same - you upgrade by simply changing boxes on either end. Instead of looking for a phone switch, just find a fiber connection -- from there bandwidth is both unlimited and free.

Wi-Fi could be the straw that breaks the wired world's back, but that world won't go away quietly. Subsidies for wires are really what Tauzin-Dingell is all about, and equipment suppliers (represented by TechNet) seem to be key to getting the bill through. The techies are waffling .

Stopping subsidies will be very difficult. Today's wired infrastructure may represent $1 trillion in investment. If the government stands back and lets the market work, if it does nothing and watches Wi-Fi take over, then that investment will have to be written off. 

The question then occurs, can the economy afford the hit? Take a look at some of the companies that would likely go bankrupt - SBC, Bellsouth, Verizon, Qwest, AOL-Time Warner, Comcast, AT&T, Sprint, Worldcom. (You thought Enron was a big political contributor - these boys wrote the book.) Think of the hundreds of thousands of workers employed on today's wires, and the millions more who create and sell equipment for the wired infrastructure. Forget Lucent and Nortel -- could even Cisco survive? 

My response to that is, can the economy afford not to take the write-off? Aren't we already paying too much for an obsolete wired infrastructure? Already, long distance charges are rising . Cable plans cost nearly twice what you pay each month with a dish. My second phone line, which is only used by the fax machine, costs me nearly as much as my cell phone. How many price increases can Americans stomach before they get the message? At this rate China and India will be better places to do business in 10 years from now than New York City - their wireless systems will cost less to use and deliver more service. 

Right now, however, it seems that Washington is determined to prop up the old order in any way it can. The decision to slow cell phone number portability really has nothing to do with cell phones. It means that if you switch from a wired to an unwired phone your number won't follow you, increasing your switching costs and (perhaps) keeping you on the wire a little longer.

The point today is everything has unintended consequences, even Moore's Law. Enron was one consequence - you can't make a market in a free good, and Moore's Law makes fiber bandwidth a free good. We're about to find another. Air is easier to upgrade than metal. Enron was a political earthquake. This looks like an economic tsunami. 

SSP (Shameless Self-Promotion)

It's here! Finally, the Print on Demand version of "Living on the Internet" is available for purchase at BookSurge.Com , for $29.99. And you can get the PDF version for just $7.99 (such a deal). The December update to the book is out now, and it's easy to get on the list via e-mail

This month I opened a new market for my articles with Ray Fix of Wildwood Marketing. The first one appeared here . More exciting deals are on the way. 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 , BtoB , and Boardwatch . I'm also on the mast-head at Bottom Line Personal , a great print newsletter.

Remember that it's journalism that keeps the Clues coming...

Shameless Promotion

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Takes on the News

Where Handhelds Are Going

I've covered handheld and portable computers for 20 years, and no one has ever understood the market like Jeff Hawkins.

Hawkins understands it from the user's perspective. He understands "Dana's Iron Law of Laptops," namely that an ounce on the desk is a pound in my hand. He knows that the key to success is always usability, inside a price people will pay.

This shows in his track record. He created the Palm, then created Handspring after 3Com's purchase of the company. He lead Palm's people to the realization that licensing their software was crucial, and if the Palm OS still leads the market (despite Microsoft's best efforts over a decade) Jeff Hawkins is the reason.

Now Hawkins has a new vision, and again critics don't understand it . He knows that present systems have reached the end of their evolution. Computing arguments emphasize control over software and interfaces - his Springboard connector has lost its momentum because no one else supported it. With enhancement strategies closed off, the Visor is a dying product, so why throw good money after bad?

What's needed is something which emphasizes communication rather than computing. Voice communication comes from cellular networks today, but data communication is a problem. Cellphone networks don't have the bandwidth for data (they're squeezing like mad for voice) and wireless data networks lack ubiquity.

So Hawkins is going back to the lab. My guess is he'll work, not just with Palm and Sony, but with wireless data network providers before returning with a splash, with a product that includes a universal wireless modem and a design that lets a PDA double comfortably as a cellular phone.

Northern Light Goes Out

I've said before that companies evolve from small (customer-focused) to large (process-oriented) to extra-large (numbers-oriented) organizations. Marketing goes through the same process, from an emphasis on acquisition (small) to retention (medium) to branding (large). To survive, companies must execute both on the corporate as well as the marketing level. Very few do, which is one reason so many big, stupid companies (which have crossed these hurdles) don't die faster.

Northern Light succeeded organizationally, but failed in its marketing evolution. Thus, it was broken-up last week by Chicagoan Andrew Flipowski. His Divine Inc.  will sell searches of paid content to large firms. Yahoo will sell the same services at retail.

Northern Light did try branded marketing a few years ago, but lacked the skill to carry it through. Its ads were confusing, its name misleading, and its brand lacked something simple it could have gotten quite cheaply by following the first law of branding. So that you don't make the same mistake, repeat after me: brands aren't about you, they're about them. (For more, click here -- .)

Service or Content?

AOL's 50% price-hike on its "bring your own access" plan sets up an interesting test of a key online question. What matters most, the connection or the content?

AOL will now charge $15/month to users who want to use its software suite and services while retaining their own ISP. It hopes with this move to kill hundreds of small dial-up ISPs who actually provide a quality service, and eliminate choices with its notoriously horrid dial-up offering.

Analysts speculated that AOL could lose as some users choose the Internet, while small ISPs could lose as some users choose AOL's content and software. It's very likely that both these anslyses will be wrong, and many people will just pay the additional charge. That would be a real slap in the face to AOL, but this is the only place where you'll read that truth.

Clued-in, Clueless

Clued-in is Scott Rosenberg for understanding the scandal is not what was done for Enron on the way down, but on the way up. (Too bad no one read it, as the story lies hidden behind Salon's Clueless "premium" firewall, which Scott helped erect.)

Clueless is Bernard Goldberg , who saw the truth and printed its exact opposite. There is a media bias, on behalf of the rich men and companies who own it. Want proof? The rest of the media hasn't picked up on Rosenberg's Clue, while Goldberg is scarfing up money by the basket-full by feeding bigots' persecution complex.

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