We are already starting to see the beginning of that phenomenon with Voice Over IP, which moves the traditional phone communications over to the Internet. Similarly, television stations are starting to experiment with distribution over the Internet, moving what was once running on a different network to the Internet.

IPzation represents a threat to a number of existing business models because it represents a shift from traditional inefficiencies that were taken advantage of by large providers to the Internet.

Assuming users won’t catch up

Telephone companies were safe in the knowledge that, as long as they had control of the telephone infrastructure, they were assured a near-monopoly over that type of business. They have managed to parlay some of their initial advantage into a position where they are offering a way to access the Internet (via DSL, for example) but are starting to see competition from other entities with access to the home, like cable companies, for example, which have managed to use their access to household’s TV screens to create another way to access the Internet. Because the communication layer is happening over IP, the applications can run on either network without any problem, creating a more competitive market.

However, built into the business model around providing DSL or cable access to the Internet were large subsidies to the telecom providers. For example, a DSL line currently only takes a couple of dollars to provision and maintain. The same economics are true of the cable industry. The reason for that low a cost is that the assumption, based on previously established Internet usage patterns was that users were not going to use the full service they were provided all the time. As such, providing what looked like large pipes to the Internet was predicated on a model that assumed that users would use those pipes in a sporadic manner (fetching email or downloading a web page) which could balance access to the larger pipes and distribute it across users.

As more bandwidth-heavy applications are arriving, the telecom providers are starting to complain that they cannot support users following that model. Basically, what is happening here is that they have sold a good they cannot deliver at a price point they cannot offer. Because they have overpromised, they are now starting to worry that users will actually use what the telecommunications companies claimed to offer.

The inefficiency they had assumed was wiped out by Internet Protocols because such protocol allowed for offering services like the telephone or video over the network, something that telecommunication providers had assumed would not happen. Because telephony and video went through an IPzation process, the telcos need to rethink their business model.

Assuming a geographic hedge

Television companies used the geographic boundaries in terms of distribution of content from a TV station to create affiliate networks of TV stations that each had their own business protected in terms of their local area. As such, one could not find two stations offering the same show at the same time in the same geographic region.

There are a number of assumptions here: assumption about physical space, assumption about time, and assumption about monopolies. The economics of television are now faced with challenges as IPzation takes place because those assumptions are no longer valid. Digital Video Recorders have broken through the notion of time-slots and new devices like the SlingBox are breaking through the notion of space. The TV networks are trying to fight back by starting to offer some of their products over the Internet.

However, in order to fully understand the long term impact of IPzation on the TV business model, one needs to take a step back and start thinking about what business TV stations are in and that business is one that is based on another set of inefficiencies. I am talking here about the advertising business which, when it comes to television, relies on delivering an audience to advertisers and charge a premium for it. John Wanamaker, the father of the department store and the father of modern advertising was known for saying “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” TV advertising models were largely based on that old model. The came Google and advertisers started demanding more information about what it was they were getting from those audiences. As Internet advertising has become more prevalent, the notion of of measurable results has gained mainstream acceptance among advertisers and they are now demanding similar types of metrics from other business and TV station find themselves in the cross-hair.

This is another effect of IPzation. As more and more businesses get transacted over the Internet, the common standards created around IP technology force the companies to rethink their approach. IPzation is ruthless in its dissection of core business practice because it is technology and, ultimately, technology does not care about people because it is not sentient.

This is the third article in a 6 part series. You can read the following parts here:

• Part 1: Intro
• Part 2: Always on
• Part 3: IPzation
• Part 4: Sensors
• Part 5: Participatory Applications
• Part 6: Conclusion

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Future Tense — IPzation. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

As broadband access to the net becomes more prevalent, those applications will increasingly shift to a net-only model. We’re already seeing this switch with applications like webmail or search, which are purely web-based. Similarly, applications like desktop search now integrate with an online component (for example, Google Desktop Search allows you to store documents on their server or services like Plaxo allow you to store data in an online repository and resync it with different devices) and move data back and forth.

As broadband access continues to increase, the important part is not just the speed (although it is an important factor since it allows for richer online experiences) but I would venture that the more critical part of broadband access is the always-on point. Because a broadband connection does not require to dial-in, it is increasingly becoming ubiquitous. Much as people do not think about the systems of filtration and delivery that provide water to their house or the systems of power generation and distribution that allow them to use electricity, the prevalence of broadband will decrease discussions of what is on the net and what is off it. Applications will just be there and a cloud of connectivity will exist around all of us.

To this end, two potential scenarios could play out: the first one would see the communication providers (telephone companies, cable companies, etc…) continue to provide different access points around the globe. However, another potential scenario could develop around the area of a mesh network that would tie all users together in a peer-to-peer network that would be managed by every single user. One could envision each computing device connected to the cloud to allow for some traffic to go through. Because the protocols that dictate internet based communications have been designed to distribute communications across a number of points (what is called, in more technical terms, packetized communication), one could envision a scenario where an increasing amount of communication would happen in areas independent of the systems provided by the communication providers.

The rise of always on, always fast communication can already be seen in some countries like South Korea, where such thing is considered so commonplace that few people bother discussing it. The United States, unfortunately, are starting to fall behind on this and, because large telecommunication providers are trying to protect their monopoly on access to the high speed lines, efforts to increase speed and coverage could be impeded. However, in the long run, something like a mesh network could make an end-run around the telecom companies, which would then put such decisions in the hands of users.

This is the second article in a 6 part series. You can read the following parts here:

• Part 1: Intro
• Part 2: Always on
• Part 3: IPzation
• Part 4: Sensors
• Part 5: Participatory Applications
• Part 6: Conclusion

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Future Tense — Always On. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Voice Over IP

The big surprise here was the acquisition game. When I made the predictions last year, i thought that the acquirers would be larger telcos. However, companies like Ebay and Yahoo! have been playing the acquisition game, looking at telecom space as a feature to add to their product set.

It does, however, show the rise of European players in the US telecom market. Skype was clearly a European player that was seen as a major player in the US market, which explains the acquisition by Ebay.

Asterisk also experienced a banner year with deployments increasing in the small and medium enterprise market. It has not yet broken into the large scale enterprise market so I get only half points for this prediction.

Entertainment Convergence

The convergence I predicted in the post is now in full swing. the introduction of the Xbox 360 as a convergence device and the rise of the video iPod as a way to move television into the arena of small consumer electronics has turbocharged the space.

While MP3 has not yet become the standard for mobile phone, it is starting to emerge. The disastrous release of the Motorola ROCKR has probably slowed progress in that area but I still content that it will happen in the future. Pass on this one.

Meanwhile, the prediction that the movie industry would start suing is starting to come true. They’ve started with a campaign trying to convince people of the evils of illegal downloading. However, the MPAA seems to have learned, to some extent, about the disastrous effect of suing one’s customers and is being careful to not follow in the footsteps of the RIAA.

Also as predicted, legal downloading of television shows is happening. It came from an unexpected source in the form of Apple, which is now taking the formula it applied to music into the rest of the space.

The decision by both XM and Sirius to offer a combined solution that includes both Internet streams and satellite feeds in the same package is following my prediction that radio is about to be upended.

The rise of user-created content is also one of the big stories of 2005 and I believe it will continue through 2006. While no star has broken out of the podcasting and videocasting world, I believe we’re on the cusp of seeing this happen. On the video end, I believe rocketboom will be the first star to break out. Their recent announcement of a partnership with Tivo is just the beginning. On the podcast end, the space is getting more complicated: the entry of the mainstream players into the market could act as a buffer, keeping new players away or at least protecting the status quo.

Business

Large mergers did indeed take the forefront in the 2005 year, however none of the mergers I predicted actually happened. A lot of money went into merger and acquisition budgets and has increased greatly in 2005.

Also impressive is the fact that many of the smaller players were the target of acquisition. It seems the new exit scenario for web 2.0 companies is not to go the IPO route but to find a larger company that will gobble you up.

Apple

This one is way off. Most of my predictions were off base: Apple did introduce a video player, to critical and consumer acclaim, and an iWork product suite, but they did not introduce any photo camera, a recording player, or a way to send images straight to printers. Their partnership with a phone company (Motorola and the ROKR) was fairly disastrous, showing the company still prefers going at it alone than trying to partner up.

Development

Service oriented architectures, trust and security did take to the forefront this year. Meanwhile weblogs and content management systems have not merged yet. However, more and more large companies are starting to take a look at weblog software, with RSS become a major distribution channel. This trend will continue to accelerate into the new year.

Personal

On the personal front, I made a commitment to blog more often. While it looks like this commitment will not come true (I didn’t create more entries), it comes with a substantial disclaimer. This year, I tried to focus on longer, more analytical types of pieces. My decision of doing it that way was largely due to a decision to try to add to the overall discussion instead of rehashing what other people have been saying. The interesting thing is that this approach has actually resulted in more readership. You don’t have to blog a lot to get people to read you; you just have to craft quality blog entries.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2005 Predictions: Keeping the Score. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Traditionally, telephone service was offered on a land line and was divided into local service, long distance, and extra features like caller ID, call forwarding, etc… The model was predicated on the concept of one device (the phone) receiving a package of services.

The mobile phone business started having an impact by untying the phone lines from the wall, making the concept of localization a relatively moot point. Once localization was broken, the differentiation between local and long distance disappeared which left a division only between connectivity and extra features. Since most of the signals going over the air became digital, the cost of delivering extra services dropped to almost nothing, destroying the competitive value of such offerings.

While mobile phone service made headway against traditional land lines, a new set of telephone offerings appeared on the Internet: Voice over IP. With VoIP, telephone just becomes a software issue, unbundling telephone from the concept of a telephone network and dropping the connectivity issue altogether. While mobile phones were tied to a particular phone network, VoIP phones are not tied to any network: they can run anywhere as long as they are running on an Internet infrastructure.

It is due to this realization that AT&T abandoned the consumer market. Since services like Vonage are redefining the concept of telephony by moving the phone away from the lines and away from the device. Vonage service runs on a number of platform including telephones, computers and will soon run on PDAs equipped with a wireless card. This means that companies which were once relying on the bundling of a line, a device, and a set of features can no longer do so. It also means that the concept of overseas long distance will eventually disappear since one could easily run a telephone service on their computer with a local number in a foreign country.

For example, I can envision a time when I will have a phone number in France that will relay my calls to my computer, phone or PDA wherever I am, making it impossible to guess whether I am in the United States, Europe or Asia at any given times. However, I may sound sleepy in the middle of the caller’s daytime because I could be in a time zone where it is the middle of the night.

With this model now in place, the challenge of telephony is no longer a local one but a global one. Telephone companies will have to fight against companies all over the globe in order to retain their customers and since the delivery of those services does not rely on the introduction of expensive networks in order to provision service, it will soon be possible for small companies to provision phone services. One can expect countries like China and India to be the recipients of such outsourcing and your telephone company could well be located in one of those countries in the future.

How does one solve this issue? By providing cheaper products, emphasizing customer service, generally doing right by the customer or getting out of the competitive space. The power base has shifted to the consumers and the only way to fight it is to serve them better than a competitor could.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Modular by Design — Telephony. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The FCC and the cable TV industry recently came head to head when it comes to a la carte pricing . The concept of a la carte pricing is that consumers would be able to buy any TV channel in a model instead of being forced into buying a bundle of shows as part of the standard offering.
The cable industry contends that a la carte pricing is bad because it will wreak havoc with the economic model of the cable business. It’s true that it will do so as large media companies like Viacom and Walt Disney currently force cable operators to broadcast their less popular channels in exchange for the rights to broadcast their top properties, like MTV or ESPN and will no longer be able to do so if a la carte becomes a reality. They will also have a harder time selling an audience package to their advertisers as there will no longer be any guarantee that buying an ad in a package that reaches MTV and Spike will ensure the same kinds of hits.

However, where a la carte works is if a model is established to offer flexible pricing models for those channels. Smaller TV channels could be priced to consumers at a lower monthly rate but a higher premium could be gotten on advertising as they are representing a more targeted audience. This represents a much more difficult financial models for them as it gets closer to a pay for performance approach when it comes to advertising.

Another part of this effort should be to start offering a la carte TV channels over broadband Internet access. The cable packagers are afraid of this because it could represent an intrusion in their model, which packages cable television with broadband Internet access. If a la carte offerings start appearing for anyone with a fast Internet connection, the cable companies will now have increased competition from DSL providers as they would loose their competitive advantage (since no one else can currently offer television and broadband access over the same lines.) This increase in the competitive landscape would eventually result in price wars in terms of package bundle that will benefit consumers. Consumers will eventually be able to either choose your own set of channels or buy some combos of popular ones. For example, a company could offer a deal that would include channels that cater to sports fans and a different deal to people interested in news.

Once again, the only smart approach is not to resist but figure out the best economic approach in this new competitive landscape. Since cable companies have already figured out, to some extend, how to offer bundles (they do offer them on premium TV channels like HBO and Showtime), they are ahead of their phone company competitors. What they will do with that lead is still up in the air.

Tomorrow, we will look at how the telephone companies have their own issues to deal with when it comes to the modular by design approach.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Modular by Design — Cable TV. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

What is a module?

A module is the smallest logical unit of a product. Modules can generally be bundled in larger groups to create a new product. For example, if you look at the music business, a song would be a module and an album would be a group of modules.

A module is small and therefore is always the enemy of big. Because it is small, it moves fast. Because it is small, it sometimes needs to associate with other modules to create something big. Because it is small, it is inexpensive and because it is inexpensive, it resists bundling.

What is the modular by design approach?

The modular by design approach is a concept I would like to introduce which can be quoted as such:

A modular by design issue is one where a problem, industry, group, can be broken down into increasingly modular parts, revolutionizing the business models on which the aggregation of those small parts was based.

Who should worry about the modular by design approach?

In one word, everyone. When push comes to shove, the majority of today’s business models are based on some kind of aggregation. When services and products are packaged together, that’s an aggregated model; when your TV station offers a number of shows, that’s an aggregated model; when a company bundles hardware and software, that’s an aggregated model. Aggregated models can be seen everywhere; they are the enemy of modular design. And because modular designs are small and fast, they act as David did against Goliath, taking him down when people didn’t think that was possible.

In the next few days, I will examine the impact of the modular by design approach on music, digital downloads, broadcast television, cable television, telephony, news-gathering and software, highlighting how this approach has impact that is applicable to all of those. I hope you will join me for this journey and feel free to comment.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Modular by Design — Introduction. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

As political observers know by now, Joe Trippi, the man credited with creating a new political approach by using the Internet, has been replaced at the head of the Dean campaign by Roy Neel.

In: Telecom Insider

The impact of this change goes much beyond a simple change of management. Neel was president and CEO of the USTA, which bills itself as “the voice of the converged telecom industry”.

The USTA and the Internet crowds have often been on opposed end of the political spectrum. Historically, the USTA has been the organization that protects the Baby Bells. For example, the USTA believes that IP telephony should be subjected to the same charges as regular telephone carriers and does not support Wireless Number Portability.

Granted, it is unfair to look at the current record of an organization and use it to paint a negative image of a former president. Maybe the organization changed radically from when he was their president. So let’s look at his record: Neel is against regulations of telephone companies but against sharing lines, which he sees as anti-competitive. Here’s what he had to say:

line sharing create a tremendous disincentive for investment by the local exchange carriers in the deployment of digital subscriber lines and other advanced services

Well, OK… so many he’s pro-consumer and wants to do what’s best to ensure more competition, except…
In March 1997, the FCC was considering a decision on reducing local telephone access charges. Where did the USTA and its president stand? Opposed to it.

Out: Decentralized Internet-based campaigning

Buried in a New York Times story comes the announcement that “Mr. Neel would centralize decision-making in Burlington but would not be dictating to the field offices.” This strikes me as a departure from the previous strategy of pushing power to the edge and creating an open-source presidential campaign.

Does that mean that the distributed nature of the Dean campaign is now breathing its last breath and that the Dean campaign is abandoning the Internet principles that got it so far?

A void in Internet candidacy

With these changes, the Dean campaign seems to signal a shift away from the Internet and towards a more traditional approach. This seems to create a void that could be filled by other candidates but who will step up to the plate? There is an obvious opportunity here for anyone who wants to get an energized base to join them.

At the end of the day, the media went after Dean because he represented something vastly different. His use of the Internet was scary to them because it subverted all the established channels, getting around the traditional media, around the established power-that-be in politics and giving a truly populist campaign back to the people, empowering them through the Internet. Any candidate that steps up to the plate and wants to become the Internet candidate will have to realize that he/she will be attacked for it because it is truly a revolution.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Will the Internet candidate please stand?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Apple

Apple will come out with a new lower-powered, lower-cost version of the iPod. The idea here is that they want to extend their lead in the digital music space and use the iTunes music store as a leverage for selling more iPods. From there, I suspect they will introduce a new low-end iPod which will follow the existing iPod line and offer less hard drive space at a lower price. In conjunction with this announcement, they will introduce a new line of iPods that offer support for both audio and video. From there, we might see a tentative move into the digital video space, with the possibility of their extending the offering on the iTunes music store to include downloadable music videos. Later on in the year, rumors will go uncofirmed as to whether Apple plans to introduce a downloadable movies service.

Apple will also announce the release of a new class of laptops powered by the G5 chip but offering lower speeds than their desktop counterparts, due to issues relating with chip cooling.

Convergence: Music Stores

As more music store follow Apple’s lead, we will see at least one other site (probably Wal-Mart’s) offering downloadable AAC files and follow Apple’s lead. On the other side, Apple will announce that it is solidifying its relationship with AOL and offering the iTunes music store as a component of AOL.

The recognition that the online music business is a low margin one will force many players to reassess their strategy, with consolidation ensuing in that market and solidifying across two standards: Windows Media Player files and AAC files.

Convergence: Voice over IP

2004 will be a big year for Voice over IP with many companies offering Internet telephony products in both the small and medium business arena and the consumer one. As major telephone companies unroll their offering in that arena, thoughts will go to redefining what a telecommunication company is about and new consolidation and splits will see phone companies reorganizing around two business models, either as utility providers, providing the infrastructure (the hardwired lines that go into a house or office), or as service corporations, providing services that run over those lines (the voice telephone will begin to be thought of as a service instead of a utility).

By year end, there will be a lot of discussion as to what those companies are about and calls to reshape the regulatory dialogue on what a telecommunication infrastructure is about. The other discussion on regulation will go towards figuring out how to deal with pricing models on communication services as the new services will destroy the concept of local and long distance.

Wireless: WiFi phones and integration everywhere

A big surprise will be the rise of mobile phones that use Wireless Internet connectivity (Wi-Fi) and voice over IP to allow users to place calls using the Internet infrastructure.

Data services will become more prominent in mobile phones, led by camera-phones, which will increasingly be used for multimedia messaging, and the introduction of some videophone services. As mobile phone companies see more pressure on their voice services, due to the introduction of WiFi phones and continued pressure relating to number portability, they will look to data services as a new source of income.

Business: Revenge of the Internet companies

Internet business will be in the headlines again as Internet companies show they have built successful business models based on profit instead of promise. As a result, investor confidence in Internet stock will return with an increase on stocks of companies that show they can use technology to lower costs and increase productivity.

In parallel, venture capitalists will start investing in new technology companies. Much of the money that has stayed dormant for the last few years will be invested in new companies that focus on services in the infrastructure, security, and interconnectivity arenas.

Of course, the big initial public offering of the year will be Google, which will generate enough excitement in the investment community to have a coattail effect on other Internet stocks.

On the downside of the investment picture, the stocks of Amazon, Ebay, and Yahoo will loose value as investors realize that their price/earning ratio are out of proportion compared to the rest of the market. Amazon will try stemming the losses in their share price by announcing that they are moving to a new strategy: offering a complete set of hosted services for retailers who want to lower their cost, instead of just being an online retailer on its own.

Business: Sun in trouble

Sun microsystems will see itself in a difficult situation as it finds itself squeezed on the lower end by Linux, which will continue to eat Solaris’ marketshares, and on the higher end by Linux, which will increasingly be seen as the way to go when it comes to large scale applications. Companies like IBM and HP will offer utility computing as a “better approach” for large scale applications, running them on mainframes instead of large numbers of blades.

On the educational end, Sun will lose marketshares to Apple, which will be pushing its G5 and OSX platform as a better alternative.

In a dramatic announcement to save the company, Scott McNealy will announce that Sun will abandon Solaris and move completely to Linux by the end of 2005. The company will also look to sell its SPARC processor business, with either HP or IBM picking it up, and announce that it is moving to a new hardware architecture, based on chips produced by another company.

Development: Standards at the forefront

Many large scale businesses will realize the value of building Internet applications on open standards like XML, XHTML, and CSS. As a result, the redesign of many major corporate sites will support those standards and an increasing amount of time will be devoted to making websites more accessible.

RSS will also experience a major growth curve as more and more people become aware of the power offered by such a subscription model. Much discussion will be paid to defining business models for delivery of RSS with media organizations trying to figure out how to distribute advertising in their RSS feeds. Initially, the Internet community will denounce the introduction of ads in RSS feeds but will come to admit it as a necessary evil later on in the year.

Society: Social Networks at the core

While services like Friendster, Tribe, Ryze, and pluggedin received a lot of coverage in the tech sector last year, many investments in the sector will fail as companies just look at social networking as yet another feature to add to their site. The existing players will either merge or be sold to companies like AOL, Yahoo, or Microsoft, which will add social networking as another component in their online product offerings.

Apple will be the surprise player in this new arena, using OSX as the basis for a new social networking platform that will merge their address book application with mail, calendaring and chat services to provide an end to end solution on user’s desktops and offer added services through their .mac platform.

Politics: Internet comes of age

Much of the US presidential campaign will be using the Internet as a political tool to organize supporters and raise funds. The early lead taken by Vermont Senator and democractic presidential candidate Howard Dean will help him win his party’s nomination. Using the same tools during the general election, Dean will try to ignite the general democratic base in a fight against George Bush. The Republican party will enter the election season with a similar set of tools and much of the campaign will be fought online with some potential scandal arising out of one of the candidate’s site being hacked. As a result of the Internet battle, record numbers of voters will show up at the polls in November.

Of course, TNL.net will continue reporting on all this and show how wrong all those predictions were at the end of year.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2004 Predictions. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

For the past few years, Microsoft has been trying to figure out how to remain relevant in an era of increasing openness. The rise of HTML and of HTTP as the underlying protocol for distribution on the Internet have challenged the level of control that Microsoft had on the computing world. The initial control was borne out of a partnership between Intel and Microsoft, which allowed them to establish both companies as the essential players in the desktop computing world (the partnership often being recognized as the Wintel (Windows plus Intel) behemoth.

When the Internet started to rise, the network jeopardized that relationship as open standards offered the ability to move more of the software logic to servers and rely less on the client desktop, with HTML being pretty much the universal interface to those new systems. With the advent of Linux, a cheap alternative to Windows, Intel found itself remaining in a very strong position (as Linux can run on Intel boxes) and Microsoft sees the possibility of being increasingly marginalized. The problem comes from the fact that Microsoft, as holder of the software component is really only working as a middle tier in a relationship that involves processors, network bandwidth, software, and content. Let’s review why this development is significant in the new world.

Ten years ago, the big challenge in computing was processing power. Software was always coming out that needed to gobble up more processing power and more memory. In the last couple of years, though, the equation has shifted radically. Increasingly, users have more processing power on their desktop than they can use. Unless you are a hardcore gamer, the combination of Moore’s Law (which has pushed CPU speed to a point where any gain is of little relevance to most users) and the steady decline of prices for memory has meant that today’s user is finding himself/herself with a computer that is only gated by one factor: speed of access to the Internet. The challenge here is that, for most people, access to the Internet still happens over a regular modem, hence limiting what they can do online. While adoption of broadband access is growing, it still represents a gating factor in what most users can do. As a result, most people are now looking at how they can access the Internet faster, moving the discussion away from the desktop and onto that bit of the network that has traditionally been the realm of telephone companies.

With the rise of cable companies as access providers to the Internet, Microsoft now needs to find partners in two access camps: on the one hand, it needs to partner up with cable companies, and on the other, it needs to partner up with phone companies. For the first time in its life, Microsoft is actually forced to play in an arena where the monopoly players are somewhere else than in its own company.

With the AOL partnership, Microsoft is closing one part of the equation, by getting access to the pipes offered by Road Runner, the high speed access company offered by AOL/Time Warner. Coupled with relationship established with Verizon and Qwest, Microsoft has gained a foothold in the access space. However, this is potentially short-lived, as Microsoft could easily be replaced if any of those companies decided that they wanted to partner themselves with someone else.

So securing access to the pipe is one way to ensure continued relevance but it does not ensure the level of control that the desktop monopoly once allowed. In order to get that level of control, one must find a way to leverage the existing platform (windows) and create a lock-in with it. This is where partnerships on content can become useful.

In order to create a long term strategic control, Microsoft must ensure that it will be difficult to move away from its offering. This is where the Windows media strategy comes in. If Microsoft manages to get control of content created on the Internet, it will be much more difficult to unseat it in the future. With last week’s announcement that AOL would collaborate with Microsoft on digital media, the companies have started to establish something that may give Microsoft much more control in the future. Once content is encoded using the Microsoft Windows Media solution, it will be difficult to move away from it. A partnership on Digital Rights Management also ensures that Microsoft will hold the keys for content encoded using its solution, hence ensuring its tight control of a very lucrative market.

The ace card Microsoft holds in this is its installed base. By moving the dialogue from web servers (a battle it lost long ago) to video and audio servers (a battle that has yet to be fought), Microsoft is positioning itself for the future of the Internet. This early position will ensure that it will be able to offer Windows Servers that power the next generation of Internet content. The key in making its case is that, because it has control of the desktop, Microsoft can offer millions of users with a media player already running on their machines. This is an attractive public, and allows the company to make a strong case for an integrated suite of products and services (“here’s the player, here’s the server.. oh and while you’re using our streaming media server, how about using our rights management system… and you know all that stuff actually runs better on our windows platform…”)

So this is the worst case scenario. But, one can easily say, there are competitors and there’s no guarantee that this will work. Furthermore, the open standards are always creating a limit on the company’s power, right?

Well, that’s not even a guarantee. As we know, Microsoft came from behind in the browser wars. First, there was Netscape, and it was controlling 80% of the market. Then Microsoft launched IE but things didn’t really change much in the beginning. As Microsoft improved its browser (and Netscape, drunk on its own hype, believed it couldn’t be defeated), the percentage of control shifted.

AOL, with its established customer base of 30 million, and its ownership of the Netscape browser (bought as the company was already losing marketshares), was the only company that could have change the balance back. By bundling Mozilla first in Compuserve and then in the mac client for AOL, it indicated to Microsoft that this was something they might be willing to do, if Microsoft didn’t work with them. It quickly became obvious to Microsoft that they could be locked out of the browser market if they didn’t play nice with AOL. So they cut a deal and gave AOL a royalty free license to use the browser for the next seven years. That seemed to pretty much lock everything in place to keep tight control.

But the story doesn’t end here…

Apparently, Microsoft does not intend to build a standalone version of IE anymore. The relevant lines in that discussions are as follows:

Q: when / will there be the next version of IE?A: As part of the OS, IE will continue to evolve, but there will be no future standalone installations. IE6 SP1 is the final standalone installation.

Zeldman points out that IE will be built into future version of MSN for the mac but that otherwise, it will be part of the OS. This is an interesting development.

Let’s extend this concept out to beyond seven years: Microsoft and AOL are at the end of the current agreement. AOL did indeed use the Windows Media suite and is using the OS-embedded IE. Microsoft decides to renegotiate terms. AOL balks. Microsoft says that it will change its browser so that AOL doesn’t work on it. What happens then? What is AOL’s fallback position? On one hand, it’s got 7 years worth of media now encoded in Windows Media format (and would need to reformat all that in order to move off the Microsoft platform, a huge undertaking unto itself), and is locked into the Microsoft OS.

It seems that, unless AOL is keeping Mozilla alive, it is about to sign a deal that could eventually put it in a tough position on the browser end. It also seems that unless it hedges its best and encodes content in windows media and another format, it risks lock-in.

On the web development end, this also has huge repercussions. If we all develop solely to Microsoft, and agree to extensions they might make to HTML once its in the OS, we run the risk of all becoming windows developers, beholden to Microsoft.

This is a really all about a fight for the soul of the Internet. In the 90s, Microsoft announced a strategy of “embrace and extend”, which was often derided as “engulf and devour”. We’re now starting to see the extension happening, and it seems to point back to windows. Do we want to be locked in?

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Microsoft Lock-in?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Beyond giving money, blood and supplies, I’ve been talking to people about what to do to avoid a repeat of those events. While I usually cover technology in this newsletter, I believe that the following is important because it does require technology but also goes beyond that. Here are my thoughts on how we might be able to eradicate terrorism in the long run.

Why did it happen?

Like many, I’ve been left to wonder why terrorism happens. Is it because of our lifestyle? Is it because they consider us “corrupt”? Is it because we are different? Or is international terrorism inherent to globalization?

As it stands, I’ve concluded that the best way to fight terrorism is to force people to question the motives of madmen like Osama Bin Laden. How do you do this? By giving people support. By helping raise them out of poverty. By showing them that we are not barbarians. By showing them that our system can work for them. By showing them that we are tolerant and that our cherished freedoms are something we are willing to share.

A war on poverty

As a result, I am presenting a plan to eradicate terrorism by waging war on global poverty. It is not an easy fight. It is not one that is possible to win overnight. It is not a fight that will result in a better way of life for us. But it is a fight that will lower the chance of another terrorist attack. After all, it is easier to reason with a person who has something to lose than it is to do with a madman.

Compulsory Social Duty

The first step in fighting the war against poverty would be through the establishment of a social duty corp. Similar in nature to the American Peace Corps, this group would be built out of engineers, educators, doctors, lawyers, financiers, construction workers, etc, all jobs that are essential to the building of a capitalist society and of democracies.

This duty would be for a period of two years, preferably right after college. People dropping out of high school would have to join this service immediately. The only dispensation that would exist for this program would be to join the military.

The goal of this army would be to build an economy within underdeveloped countries and transfer that knowledge to local people. The idea here is to start working as a force for change, helping develop an internal economic system and work on the establishment of democracies around the world.

This army of good will would be a global force, and would get in a country at the invitation of the existing people or after agreement of the majority of U.N. members. The work period of those people would be divided into two parts: the first one would be one of education, before getting straight to work. Through that education work, one would be taught some rudiments related to customs, language, and general culture within the country.

During the initial month of a new member’s initiation, that training would represent a 7 days work-week. During the next two months, everyone would work on the front lines to help with feeding the hungry, and polish off some of the lessons learned in class with some real street training.

After that initial quarter, the trainee would be pointed to a work area, based on their skills. Lawyers would work with the local authorities on establishing legal frameworks for the country. Financiers would work on establishing and regulating financial transactions for new local businesses. Teachers would teach schools and recruit from the other groups to establish curriculae in business, political science, law, medicine, etc… Doctors would run hospitals. Electricians, building workers, etc… would work on establishing an infrastructure to allow all this to happen.

Each member would be shadowed by a local person and work on transferring their skills to that person. It would work, in a way, as a sponsor model. During that period, workers would also be hosted in the equivalent of dorms, where half the people would be natives and half would be coming from the outside.

One could decide to continue beyond their tour of duty and in exchange, would receive benefits similar to those in the military.

This force would be supported by the military to ensure their security.

The technology

Of course, this effort should take advantage of advances in technology. Since September 11th, some groups have organized great web sites to manage volunteers in the New York area. A similar effort could be put in place for the effort I’m describing. Using best of breed Internet and intranet technology, we could develop some tools to help manage this effort and reduce redundancies. However, technological efforts in underdeveloped countries are not something that is as easy to do as it is in developed ones.

For starters, there is no infrastructure to speak of: a lot of places have no electricity, no running water, no roads, and no phones. In order to use technology in those efforts, new infrastructure would have to be built. In the initial phase of the effort, these infrastructure would not exist.

As a result, the development of irrigation systems, electrical supplies, and telecommunication supplies would have to be high on the list (but still below some even more basic needs like food and vaccination.)

In a way, the underdeveloped countries that would be the focus of this effort could become the launching pad for a number of new infrastructure, primarily wireless ones to overcome some of the heavier costs of installing a lot of copper or fiber optic cables in areas where such solutions could not survive harsh weather (tropical and desert countries) or where other forces of nature are at hand (mountains, heavy forests).

In terms of electrical supplies, we could look at clean technologies like solar power or wind power, which could help generate electricity in remote areas without having to develop national grids. In terms of telephony, wireless solutions could also help overcome obstacles. Water supplies, however, would probably have to be taken care of using the old fashioned way (big pipes) and we might want to look at the convenience of digging up multiuse canals that would allow to not only distribute water but also pass on information through fiber-optics channels.

The one percent solution

The war on poverty is one that will take money and manpower. In order to raise money, I suggest the possibility of raising a tax of up to one percent on the top median of net worth in developed countries. As a result, a large amount of money would be raised in the developed world to create a global fund to eradicate poverty.

That money would not be sent directly to the country as hard currency but would be dealt out as supplies and as a way to pay for the effort. Only a small part of the money should go to paying for general administration of this program.

Other forms of payment

Currently, in parts of the western world, entires crops are destroyed to sustain global prices on food goods. Instead of destroying those goods, they should be shipped away as part of this global effort to end poverty.

Companies would also be able to distribute inventory of technology needed for this effort in exchange for some tax advantage. Using web technology, a list of needed supplies would be available over the web at all time and be updated in real-time. A new donation would be routed using such system and once the donation has reached its destination, it would disappear from the database.

Using a system similar to the ones used by FedEx and UPS, companies would be able to track their shipment all the way to its destination (all shipping costs would have to be incurred by the company and it would be fully tax deductible). They would also have access to a company account, which would list the goods they had sent, their value, the price of shipping, and other goods they could provide along the same line (for example, if a company sends out a million miles of fiber optic cables and there’s a need for a million more, a request would pop up on their personalized screen.)

Using such a system, companies could decide what they need to donate, when they need to donate it, and see how much benefit they will get out of their donation.

What makes a developed country?

When I talk about developed country, I am talking about countries which have an economy that is sufficient to supply its residents with jobs, food, and shelter. It is an economy that either is rich enough for everyone to get an opportunity, or one that is rich enough to maintain a strong social net.

Eventually, the success of these operations will be measured by how many new developed countries are created.

Why do this?

It seems ridiculous to ask for an effort like this. After all, why should we care? Well, for starters, let’s look at the Manhattan skyline. See anything missing? My point is simple, if we work to help people around the world develop systems that allow them to rebuild their country, restore their dignity, and allow them to become self-sufficient, they will not look to destroy us. For historical precedents, take a look at the Marshall Plan after World War II and see how Germany and Japan are now strong democratic and capitalistic society with no intent to bomb the U.S. They are now players because we all worked together to rebuild them. Let’s do the same for the rest of the world.

The other advantage is that it will foster more understanding among nations. Once you’ve traveled to a foreign country and have been exposed to its culture, you become a more open person. It’s that simple: reaching out to other people is opening your eyes to a new world of possibilities.

What next?

I am forwarding this concept to a number of politicians in the hope that one of them will consider it a possibility and may look into fleshing it out more.

I do realize there are a number of holes to be filled up and I hope you will join the conversation and help me fill them up. Together, we can all make a difference, and maybe, just maybe, the events of September 11th will be seen as the starting point of a new world, one where the world went through hell and came out stronger. It is my hope that together, we will do that.

As a side note, I started thinking about this and discussing it with a number of people after the attack and before we started to bomb Afghanistan. I don’t know if the war will change the dynamics (the original name for this newsletter was a Marshall plan without the war) but I dare hope that we will all come out of this OK.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Rebuilding. You can follow him on twitter here or receive his weekly newsletter by subscribing here.