For the Week of March 24, 2003

Last week I bought a new phone, and found how the Bells are dying, partly at my hand and partly at their own hand.

I wanted a headset for my new job. I'm more comfortable talking hands-free. I might want to take notes on the conversation. In the past I've bought headsets online but rather than wait for a delivery I chose to visit a store while the kids were safely at soccer practice.

There was a surprise waiting for me, a wealth of inexpensive headsets. But they all had straight plugs going into the phone, not the RJ-11 phone plugs I'm accustomed to. They were, the packages said, "designed for cordless or cellular phones." The only wired phone headset in the place cost three times as much as the ones for cordless phones. I found a very cheap corded phone, with a Caller ID display standard, but with the headset I'd be paying $100 to be tethered to a desk.

So I looked at the cordless phones. I found one for $30 that had all the functions of the corded phone, including Caller ID, plus some features my phone company charges extra for, like callback functionality. Add in a $30 headset, and you have a $60 wireless solution against a $100 wired solution. I bought the cordless.

For the last several years, in fact, the Bell companies have been encouraging cordless. Why? Because a cordless base station uses wall power, while old wired phones draw power from the phone line. (You probably haven't noticed.) As people buy phones that use wall power, the Bells save money, because customers aren't drawing power from their network. But consider the cost. If you're using a phone that requires wall power, you lose your phone service when the power goes out. You no longer associate the telephone with the idea of having more reliability than an electric utility (which it does). The Bells, in other words, are giving away a prime selling point.

Something else I discovered just now. Lately I've been having trouble getting faxes. I first thought it was my fax software, then I traced it back to the wall and found there was no service there. (Uh-oh.) So today I went outside, to where the phone service comes into my home, and checked the service with a wired phone from my son's room. (This is something else that won't work with a cordless.) You pull out the RJ-11 plug from the box, plug in a wired phone's RJ-11, and if you get a dial tone the problem is inside the house (your problem). No dial tone means you have no service (their problem). There was no dial tone.

But after walking in I had another thought. Fax is dying, too. A fax is a bitmap file you can attach to e-mail. Over 90% of the faxes I get today are junk mail - I connected the incoming fax line to my PC years ago to save paper and ink. In fact, only one client still faxes things to me, and if they called first I could always plug the remaining phone line to my fax program. So I called BellSouth, and killed the second line. That's a $40/month saving to me, $40/month lost to them.

This is quite a contrast to the scene a decade ago, when I was starting work at CMP's Interactive Age. CMP wanted me to have a dedicated phone line, one they would pay for, so I had my outside box replaced. The old box could handle two lines and the new one would handle as many as six. My mind whirled with thoughts of what I would do with all that power.

Now I'm going to have one line. And I sometimes wonder why I have that. After all, the move toward cordless means millions of us are now taking our landline calls off a radio. Would it not be better to have a radio that works when we leave the house? So the need for any landline goes away (at least for voice).

It's something that stuck in my mind from the AAAA meeting I covered in New Orleans. Mark McLaughlin of FCBi was speaking. The phone line is only there for DSL service, he said. Your phone number should belong to you, not the house - use a cell phone for voice. (I asked the speaker, a one-time Republican campaign operative, why in that case cell number portability is being delayed. To keep people from changing carriers, he admitted, which would lead to all sorts of nasty price competition. (Can't have that in a Republican World, I guess. Yes, it's a cheap shot, but someone has to take it.))

The key point is this. I have one phone line now. I use an alternative DSL provider , so BellSouth only gets $40/month from me, total, not the $90/month you might think. (They get more indirectly by wholesaling their phone line to Earthlink for my DSL.) Maybe in three years BellSouth will try to use the law to force me back, based on the recent FCC decision stating that they can end this wholesaling. But perhaps by that time there will be a reliable Wireless ISP (WISP) in my neighborhood. Maybe Earthlink will be a WISP. BellSouth would then be advised to continue wholesaling to Earthlink, because if they push me, BellSouth will find their take from me, an experienced telecom analyst, a major online presence, and your humble Cluemaster, is a big, fat zero.

Now, multiply my experience by a thousand, a million, by 10 million. Anyone care to buy BellSouth now, or any Bell stock?

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SSP (Shameless Self-Promotion)

The reviews (well, some of them) are in. "Dana, it is GOOD," raves Pete duPont, lawyer, futurist and once a candidate for President. "This is some really powerful 'stuff.' I think you've got a winner," says Drew Kaplan of DAK Catalog fame.

Find out what the excitement is about. Buy The Blankenhorn Effect at Amazon.Com , then go back and say nice things. You can use the ASIN number, 1553953673, and recommend it to readers of other, similar books. You can also save on shipping when you buy the book at Amazon, over the cost of buying it elsewhere.

If you can convince some more published reviewers to read The Blankenhorn Effect and recommend it to their readers, please send me a name and address. In exchange, you'll get the PDF version of my second book, The Blankenhorn Effect: Boom, Bust & Beyond. This is a collection of columns from a-clue.com, organized chronologically and by subject, with additional commentary from yours truly.

I have begun working full-time for MediaPost , but I have also written lately for BtoB Boardroom and Mobile Radio Technology . You can follow the continuing story of The Blankenhorn Effect on my "Moore's Lore" blog . I also contribute to NowEurope and GreaterDemocracy .

You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know . Remember: it's journalism that keeps the Clues coming...

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Shameless Promotion

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Takes on the News

Last Chance for Microsoft

Microsoft is slowly bleeding server market share to Linux. The loss of that market looks inevitable. (The only way to slow it is to "lock-in" users, a process that has now begun .)

While it may be possible to hold the enterprise market by keeping it dependent on Microsoft file formats, what about the home market? That's what Microsoft's new Extended Platform Division is all about.

The EPD will try to bring Microsoft into the world of Always-On. The vision is called "Smart Living." The idea is to embed Microsoft code into all sorts of home automation products, starting with the Xbox. Embrace the whole living room through the Xbox (complete with Microsoft's Digital Rights Management), then use the Xbox as a server to automation chips scattered in and around the home.

It's not about "funky" , and it's not about games. It's about trying to extend Microsoft's reach, as MEMS systems enter the consumer market as "home automation" over the next few years. You'll have chips to control your garden hose, your refrigerator, your alarm clock, etc. etc. If all those systems are dependent on Microsoft why should you go anywhere else?

It's a Clued-in strategy.

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Forrester's New Rap

Forrester Research founder George Colony's new rap is on behalf of "Web services." It's the Next Big Thing, the kind of "technology thunderstorm" that comes around only once in a decade.

Now, there is something real going on, although the name "Web services" is something of a misnomer. Remember that the Web isn't the Internet, just an interface. The Internet is the real breakthrough, a protocol that moves bits anywhere in a standard way. The buzzword simply means using the Web interface to present all the services the Internet can provide, based on standards like XML and Linux.

So Microsoft has its hand in the air, along with BEA Systems, and IBM (for once) is joining its group, with a messaging specification and "road map" for linking stuff under the Web services banner. The problem is this agreement took place outside the W3C umbrella, meaning we have another semi-proprietary hijacking of Internet standards aimed at maintaining high software prices.

Functionality and value always exist in an uneasy alliance. The second must follow the first, over time. Why hijack at all? It's to pay the salaries of the service people. Microsoft and BEA ostensibly grab the money for software, while IBM splashes out the cash directly. (IBM is a giant temp hiring hall.) The former looks like mass production, the latter custom design. But it's systems which can solve problems (and continue to solve them) that really do the business. When something breaks (and it does) you need the patch now, not when some vendor gets around to it. Thanks to "web services," the future of the enterprise market is spelled IBM.

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The Most Important Number in the World

In looking at the possible outcomes of all 21st century war, cyber-and-otherwise one number stands above all else.

That number is the percentage of economic production held by its combatants, in this case the United States. In 1990 it stood at about 21% so allies were needed to win Gulf War I, but it rose throughout the decade, mainly due to high tech manufacturing . By 2000 it stood near 29% so the costs of the present war are bearable.

The question is, what is that number for 2001, for 2002, and what will it be in 2003, 2004 and beyond? Whether our economy grows or not is not nearly so important as how it stands relative to other economies. If America's share remains high no one can stand against us. If it falls we may be forced to our knees, not before Iraq but before China, India, Japan and "Old Europe."

Armies march on the back of economies. The success of the U.S. economy in the 1990s made the current military success possible. But if foreign buyers choose not to buy U.S. goods - whether chips, servers or culture - they may hurt our economy. It doesn't matter whether they do this because they dislike our policy or just get a better deal, the impact is the same. If they choose to sell their investments in this economy, they hurt our war effort. It doesn't much matter whether they do this because they hate us or they're hurting in their own portfolios, the effect is the same.

Power does not grow out of the barrel of a gun, as Mao Tse Tung said. That is a 20th century saying. This is the 21st century. Chairman Dana says, "Power grows from inside the wallet."

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Clued-in, Clueless

Clued-in was the decision on behalf of RSA and Verisign , rejecting "business model" patent claims by Leon Stambler on all of e-commerce. It is long past time for business patents to disappear, but at least now their claims are subsidiary to real breakthroughs.

Clueless is ABC's "24 hour Web news channel" . Most of this paid Webcast will consist of news conferences covered with a single camera. (Yechh!) In fact this is corporate ass-saving, following the failure of the proposed merger with CNN. When it fails the Web will be blamed. Don't be fooled - blame ABC.

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