Competitive Comparison of a Company's Cost Structure

Everyone has by now most likely heard that Bell Canada is removing 2,500 management positions. I think this is inevitable in the face of increasing competition in their core telecom business units. Arguably it should have been done well before now. Competition means that they must, as one of many necessary steps, reign in service prices to hold on to their market share. With revenue down it is a matter of simple arithmetic to see that costs must also come down, and people are a large component of those costs. Whether they are cutting the right positions and reorganize effectively remains to be seen.

I remember back over a decade ago when I was working for Nortel, we were speculating on the impact on the company as it increasingly found itself in competition with a new breed of company, those focused on IP products. At that time, direct competition with Cisco and others like it was still minimal; the products did not yet overlap very much, since VoIP growth was still a few years out and Nortel had not yet bought Bay Networks. Out of interest I did a rough estimate of the revenue per employee for Nortel, Lucent and Cisco. While I don't recall the exact numbers, the revenue per employee figures were something like this:

• Cisco: $300,000
• Nortel: $150,000
• Lucent: $100,000 (they had inherited a bloated organization from AT&T)

At the time I found this very striking. It was hard not to look around at all the thousands of people filling all those buildings and wonder who would have to go. They weren't hard to find, just as I am sure it is true today in Bell Canada; I would not be surprised to learn that a number of those redundant Bell Canada managers are people I know.

The back of the napkin calculation I did all those years ago was one factor among several that convinced me it was time to get out of Nortel. I'm glad I did. When the cuts really got going things got ugly, twice - once before the final run to the optical-driven market top in late 2000, and a second time afterward.

Since then I've been with several startups around Ottawa, and I have not forgotten the lesson of cost structure. In a startup every dollar, and employee, counts. In the early days of a startup you can't do the sort of calculation I did above since revenue is either not there or is small and lumpy, but you can project the cost structure in your business plan to match or exceed your competition so that when the revenue does come the company will be financially sustainable.

If you don't do this you'll have to make some hard, unpleasant decisions when revenue is delayed and salaries are burning the investors' cash. Your competition and your customers can help to keep your feet nailed firmly to the earth.

Do Not Call, Unless You Really Want To

After extensive delays, and only 5 years after US implementation, Canada gets its own Do Not Call registry at the end of September. The CRTC lays out how it'll work, and (if you care to dig into it) you can read up on all the exemptions. The exemptions are more extensive than those in the US.

In case you're wondering, telemarketing did decline in the US over the time the DNC has been in force. It certainly did not stop. There is too much of a market out there, so it is a bit like email spam that way. What happened was that the more ethical (i.e. law abiding) telemarketing operators obey the law, which made room in the market for more unscrupulous operators. Enforcement is poor since there are no new funds for enforcement by the FCC and FTC. I expect enforcement to be even worse in Canada, especially where the cost of tracking down the more slippery (and criminal) operators requires police resources.

So register your numbers (I will), but don't raise your hopes too high. Your phone will keep ringing. Just be happy that, so far, telemarketers are still politely avoiding calling you on your cell phone. That will change, just like it is changing in the US and elsewhere. Remember that the minutes those telemarketers consume on your cell phone will show up on your bill if they contribute to exceeding the minutes on your plan.

News: Timeliness (1 of 2)

In this post about news I want to elaborate on the issue of timeliness I mentioned in my introductory post. I am restricting this series of posts to internet news sources since that is how I primarily consume news. By timeliness I mean how I can place a news item within the flow of time, not how it is distributed to me (push vs. pull); distribution is so well understood I have nothing to add, though I will note I use a mix of push and pull, each depending on whether the distribution source suited to my urgent requirements or merely important, respectively.

One subject where timeliness can be urgent is market and stock news, so I'll use it as my first example; this is particular to me, though you likely have other applications of equal urgency, be it sports or other events. Urgency of market and stock news is a mix of the subjective and objective. For example, if Google announces that they are lowering guidance, that is urgent to those trading in Google stock, and perhaps less so for other market players. This secondary urgency in the latter case varies with whether the stock is used as a broader market indicator. That is, if this example about Google, it will move indices and sentiment indicators for at least the internet sector and perhaps more widely. This is not true of Avanex, to pick a random example.

To broadly categorize urgency I would use the following, in decreasing level of urgency, but not of importance:

• Financial or business news about a stock I hold or trade that impacts its future returns
• News about stocks, bonds, equities, or key indicators that others broadly trade of the basis of key changes
• News about stocks I hold
• Analysis of stocks I hold or trade
• Market analysis from sources that the market broadly listens to and will trade on
• Other market and stock analysis

News in this case can be company press releases, notable changes in stock price or volume, scheduled events like quarterly results, and much more. Analysis is not about market and stock events (though it may be perceived as an event itself), but rather is about current or projected business, sectors and companies, or outside influence upon them. If analysis is any good it's important, but usually not urgent.

Urgent news must be timely, so I should choose a suitable distribution mechanism to ensure it reaches me quickly and is presented prominently. Important but non-urgent news should be within reach, whether distributed by push or pull, and should not displace presentation of urgent news items. Of course non-urgent analysis should not displace either of those.

All urgent and important news should give presented with extra prominence, whether that be by colour, icon, blinking, order in a list, or other means. All news, no matter its urgency or importance, should have a timestamp, and preferably in the link to the article in addition to within the article itself, and presentation should order articles by timestamp wherever it is presented. Timestamps are generally of the following types:

• date
• date and time
• time since published

That concludes my definition of timeliness in the context of a market and stocks application. It isn't cast in stone and it may be incomplete, but it's good enough for this discussion. In my concluding post on news timeliness I'll compare the performance of some of the news services I use.

The Great Dead Car Bounce of 2008

Ever heard the term dead cat bounce? It's commonly used in the world of stocks to characterize the price of a company's shares when it has been severely wounded. The price falls off a cliff and then a short time later, surprisingly, rises, despite the continuing dire, perhaps terminal, prospects for the company. Just like a dead cat falling from a height - one small bounce then down again for good.

SUV resale values have plummeted in 2008 in North America. I haven't looked at the numbers in any depth, though what I've seen is telling. The most gas-guzzling models are selling at 20% or more below Blue Book value. Owners are being badly hurt by the rise in fuel prices. Sales of new fuel-inefficient models is down about 25% between 2004 and 2008, and the number of used SUVs for sale is up about 20% for similar periods in 2007. Demand is down and supply is up, hence lower resale prices. Rather than lower the prices of new SUVs, manufacturers are throwing in extras like guaranteed lower fuel prices for a few months. It isn't helping much, so they're shutting down production.

Now let's suppose a barrel of West Texas crude continues to drop and reaches $100 per barrel by this fall. Will sales of SUVs, new and used, rise once again, and will resale prices return to book value? I would seriously suggest that this phenomenon would be a dead cat bounce. Just as with dead stocks, this may be the best time to sell your gas guzzler. You may never get a better price again. Ever.

Gold: Commodity vs. Miners

Several years ago I started dabbling in commodities as part of my investing. As with my other investments my success has been mixed though positive in the aggregate. I prefer the miners (producers) over the underlying commodity since they have a higher beta - price moves more than that of the commodity, with both higher risks and potential returns.

Lately, perhaps out of angst, I got the idea that gold miners were underperforming the raw commodity. I believed this by regular tape reading, and noticing that when gold went up the miners did not rise in proportion, and when gold went down the miners descended in the expected manner. That is, there was poor upside benefit as gold again approached its record high price.

Was I right? I looked at a few comparison charts and saw that I was only partially correct. The phenomenon was there to be seen in the recent prices, yet it had no longer-term relevance. Ok, I didn't do an exhaustive calculation, I simply eyeballed some comparison charts. Here's an example:As expected the beta of the mining stock (Yamana) on a daily basis is higher than the gold ETF (a reasonable proxy for the commodity, in the short term) 50-day moving average, and the miner has indeed unperformed the commodity on both a daily quote and 50 dma. The disparity is however typical when you look at how they've compared over a longer period, though the spread is near its maximum over the past half year. The 50 dma curves track even more closely.

This is not a golden rule, and so can only be put down to my present misgivings about mining stocks from, perhaps, staring at price quotes more than I ought. It's merely one of the costs of seeking beta. Be careful if you invest on this basis, expecting the divergence to regress to the mean - the quotes for both can drop even while the divergence is reversing.

Note: I used NYSE:AUY rather than TSE:YRI since gold is priced in USD, and there is the factor of CDN:USD exchange rate to be included when investing in miners in Canada. This typically applies to other commodities as well.

Bell Canada Usage Billling for DSL Wholesale

I wrote an earlier article on usage vs. fixed-rate billing for broadband only last week and now it is being rumoured that Bell Canada will make a proposal to the CRTC to implement usage-based billing for wholesale DSL as an alternative to application throttling. It may be a little premature to comment on this one since Bell Canada has yet to make this proposal and may not do so. Still, I think it is possible to scope out the landscape on this topic without going far off base.

First, I will not argue about whether Bell would be right to do this (there's that morality thing again, and business is amoral), though that seems a popular discussion. Let's suppose they do make the proposal and the CRTC is willing to listen to them, and even rule on it. Keep in mind that the CRTC is not obligated to accept the proposal, and if they do they may modify it into something that would not benefit Bell. Any proposal by Bell is therefore risky. I would expect that such a proposal would contain words to the effect of making it somewhat vague and non-binding on themselves, aiming to simply test CRTC's flexibility to bending in their direction. That's my guess.

Whatever Bell does submit, and however it may be constructed, there are key elements that are likely to be uppermost in the CRTC's as they review the proposal:

• Discrimination - Would the proposal affect non-Bell ISPs similarly or differently than Sympatico and other Bell properties.
• Economics - Do the proposed prices (if they go this far at this stage) reflect costs plus a reasonable profit.
• Technology - Does the proposal narrowly address DSL, or even a particular class of DSL service, or can the billing mechanism be applied to other wholesale broadband services.

In an ideal and fair world, Bell would offer DSL wholesale on a non-discriminatory basis. This simply means that the terms offered are measurably identical to the terms offered to their own retail ISP business, Sympatico. Application throttling for both Sympatico and wholesale DSL subscribers is non-discriminatory. As you can see non-discriminatory does not mean that you'll like it. Similarly, if they employ identical usage-based billing for Sympatico and wholesale DSL subscribers, that is also arguably non-discriminatory.

If Bell continues applications throttling for Sympatico, but has usage-base billing instead of application throttling for wholesale DSL then it is not at all clear if it is non-discriminatory. Both are presented as being intended to keep network costs in line with revenue, and may in fact yield identical and stable profits for Bell, yet the impact on users is quite different. They may very well propose this, with the reasonable argument that Sympatico is unregulated so the CRTC should avoid interference in this competitive retail service and that, since they can't control how wholesale DSL is marketed, usage-based billing for those customers is a non-discriminatory method of recovering costs. The wholesale DSL ISPs would then have to decide whether to spread the cost of (aggregate) usage billing from Bell by increasing base prices for all their subscribers, which may be disadvantageous in comparison to Sympatico, or implement usage billing for each of their subscribers. They will most likely fight this since it defeats their existing marketing advantage over Sympatico and increases operating costs.

This brings us to the economics argument. The CRTC would likely ask Bell to submit a detailed cost analysis (engineering economics) for their proposal that supports their claims of reasonable cost recovery. You should expect that the analysis will be held in confidence. One thing I do know is that these cost recovery calculations are very slippery and can be skewed, to some extent, to better fit the desired conclusion. The CRTC will look through it all and make an independent assessment of Bell's economics arguments.

Expect that Bell will try to continue to limit wholesale access to their network, non-discriminatory or otherwise, to as narrow a selection of technology as possible. In this case, DSL over copper in its present form, and possibly even to the present speed limitations of the network-side modems. They will not want to so much as hint that any proposal they make for DSL wholesale should apply to any other existing or future broadband technology, including fibre, wireless (in all its forms) or modem electronics. They will likely succeed at this without even trying since (in my opinion) that would suit the CRTC thinking at present.

Now we wait to see if there is a proposal and what it looks like.

Arguing That Streaming and Published Media Isn't News

In this post I'd like to elaborate on a point in my previous (first) post about news - that I don't consider television and printed publications to be news sources according to the criteria I use to define news. From among my chosen metrics (relevance, importance, and timeliness), these media are deficient with respect to all these metrics but especially timeliness.

Relevance and importance are subjective. As a consumer of news I determine these factors, as do you. When I consume television and published media I must delegate those factors to an editor. That editor caters to a large audience, not to me specifically though perhaps to a self-selected market niche such as precious metals markets. The better the fit between my wants and the editor's objectives, the more that source resembles my sort of news. The mass market, which most of the television and published media target, is unlikely to match my criteria for relevance and importance for more than a fraction of news material.

Consider a typical TV news program or a daily newspaper. Over the previous day, and up to the deadline which is earlier (or much earlier) than publication time, material flows in to the news department from numerous sources, some of which is distributed to all media publishers and some is from the station's or publisher's own journalists. One or more editors sort and select from this flood of information to choose a small subset of material to be published. They typically have a variety of segments which must be filled (local, technology, global politics, business, sports, markets, etc.), and within these segments stories are selected and edited to meet editorial objectives, to fit between advertising, and, perhaps most importantly, to retain and grow their base of subscribers or viewers by, at a minimum, being inoffensive and attractive. Editing is most severe for television and radio news programs (less so for 24-hour news stations).

The typical end product is news that is bland (mustn't offend any segment of the market), repetitive (most people like what they like, and consume that most readily), late (can be over a day late, so if you consider important news to be actionable, you're out of luck), and presented with a pleasing aesthetic (photogenic reporters, lots of colour, action footage, exaggerated effects and messaging). This is entertainment, not news. Entertainment is a wonderful thing, but right now I'm looking for news.

What about specialty news channels? You know the ones: CNN, CNBC, CBC Newsworld and all the rest. Again, I find the focus there to be aesthetics, blandness and, especially, repetitive. The repetition may seem perplexing since there is ample news out there waiting to get on, until you understand there is a cost in acquiring, editing and producing this material, and the revenue available does not justify the additional costs (reduced profits) - you are getting what they can afford to deliver despite the capabilities of the medium. There may also be 'breaking news' on these channels, but do you really want to keep one eye on the tube all day (amazing how many people do this!) waiting for it, and for them to decide to present it? No thanks.

When I do choose streaming media I prefer radio. At least I can keep my eyes where they can be more productively employed (typing blog posts?), which permits better multitasking. Television is entertainment almost without exception, and not even very entertaining entertainment where news is the primary objective.

The occasional times I buy a newspaper it is not for news; I read newspapers to be surprised and seduced by subjects that I would not have otherwise sought out on my own initiative. The Saturday Ottawa Citizen I sometimes buy may take me two weeks to read. Remember that newspapers are not timely news sources so speed reading is unnecessary. Newspaper publishers for the most part understand this and so use some of their space for in-depth and oddball stories. If I read a detailed history of the Afghanistan conflict (as one example), I get just as much out of the article if I read it a week later. The comics are also still funny - they don't go stale, not even the political cartoons. I also get an odd perspective on the news where an item looks forward to a forthcoming event and discusses what the outcome might be and why (G8 summit, an election, or sports event), and, knowing the outcome, compare the two. That can be very educational.

That's enough time to spend on streaming and published media. From here on in I'll focus on the internet, which is where I get what I really consider to be news. Some is good, some is bad, but it's all very interesting and rapidly evolving.

What Is News?

I consume a lot of news during the day. I monitor the markets and my investments, the telecommunications and broader technology business, local goings-on, sports, global news, and more. I can't seem to get enough of it.

There is of course a huge effort on the part of many individuals and companies to sort, prioritize, correlate, distribute and enhance items across all media and sources to meet the specific needs of various individuals. I use them yet I remain unsatisfied with any of them. As a result I use many news aggregaters and related services and bounce along among them throughout the day. All of them have their pluses and minuses. Some are truly dreadful and I avoid them entirely.

I think one problem is that there is no consensus view of just what is news; news can be a very individual thing. I even needed to ask myself that question since without understanding my own wants and needs how could I possibly assess what's on offer. Criticism is unfair without a clear set of objectives as a metric.

Tentatively, my working definition of news is as follows:

• Relevant to one or more interests that I explicitly prioritize. This could something as simple as news about Google, the company, the Opportunity Rover on Mars, or gun-running in south-east Asia.
• Important, either to me (however I might choose to describe that) or to the relevant area of interest.
• Timely, especially if it is important, which would make an item not only timely but also urgent.

I get the bulk of my news via the internet. I do not watch television and I do not subscribe to a newspaper or news periodical. Seriously. Anything that needs to be packaged up and prettied up to be delivered once a day (week, month) or at a specific time of day, is not news. At worst it's merely entertainment, and at best it's relevant and important, but far too late to be timely. I do like to be surprised by items, which would be on topics I might never think to search out yet still appeal to me, but I do not mistake these as being news.

I'm going to keep this post brief to just introduce the topic of news. At irregular intervals for the next while I'll write some posts about news, what does and does not work for me and why, and the positives and shortcomings of some of the news sources I have used.

And as a closing point, is my own blog news? By my own definition, certainly not. It may be interesting and relevant, perhaps even important or entertaining to some people, but it is never timely. That means it can be read at leisure anytime. Your life will not suffer if a post is read weeks after it is written, and I won't feel compelled to feverishly write timely posts.

Billing Broadband: Fixed, Variable, or Both?

A very long time ago, back in the mid-90's, I got into an interesting conversation at a business event with an acquaintance from MCI (remember them?). We were discussing which works better in the long-distance telephony market, variable or flat-rate billing. The standard up until then was billing for time and distance. MCI in particular was experimenting with variations of flat-rate long distance billing to compete against AT&T. This was still some years before VoIP appeared and AT&T was still a company largely focused on long distance telephony.

One of MCI's key competitive advantages was its billing system. With it they could come up with novel and often mind-bendingly complex billing plans. Perhaps the most famous was Friends and Family. At the end of the month each subscriber's calling patterns were analyzed in accordance with the selected plan, generating a bill that charged flat-rate or nothing for certain calls and charged the rest using the prevailing message-rate paradigm. Over time differential charges for distance disappeared, assisted in part by the reduction and elimination of certain state and federal regulated fees to be paid to the parties' local telcos. And over time the average rates declined. The regulatory regime in Canada was similar.

Two Things I Learned

I learned two things from that discussion and afterward. First, there is no one correct way to charge for use of the network - not flat-rate and not message-rate. These are business choices to enhance competitiveness and manage profitability. For example, if your main competitor charges by message, you would offer a flat-rate plan. A lot of your competitor's customers will switch to you. Many people think flat-rate is a good deal (Disney learned that long ago when coming up with one fee for all attractions at their amusement parks) even when their actual use of the phone doesn't justify it. Even when they do realize it, they will still enjoy the feeling of not watching the clock on every call.

Conversely, if a subscriber has flat-rate and sees a competitor offering message-rate, many of them will jump at the opportunity to lower their bills by conceiving the notion they are paying too much for the calls they actually make, or that they can get by with making fewer or shorter calls. These folks will eagerly watch the clock to congratulate themselves on how much money they're saving. They're a bit like some Volkswagen Beetle owners back in the 70s with their passion over fuel economy.

The curious thing is that both types of customer are the same people but at different points in time. They have short memories or, like diets, are sure that this time the new-old plan can finally work for them. The long distance companies knew this and catered to it. Over their large customer bases, no matter which plan(s) they offered, they tuned their promotions and plans to ensure they made about the same revenue either way. The key objective was to entice new customers. That's where MCI excelled, knowing that AT&T's obsolete billing system would not allow them to respond. AT&T understood this of course and gradually improved their systems to better compete.

The second thing I learned is that billing systems and complex plans are expensive. It costs money in software, storage, customer care and marketing to bill down to fine details of every customer's calls. Flat-rate is comparatively cheap.

Now that the underlying costs of telephony are so low, there has been a shift from cyclic changes in billing to a secular shift to flat-rate. It just isn't worth it anymore. Look at the labyrinthine billing plans the cell phone companies offer. They not only annoy their customers, it costs too much for them to manage that complexity. Telephony is going flat-rate and this time it'll probably stick for good. Even heavily-regulated international pricing is going this route.

Broadband Pricing

Now we come to broadband. Up until now, for the most part billing has been flat-rate, though tiered by speed and sometimes by monthly caps. With the probability that P2P throttling will become disallowed or a competitive disadvantage, there is now an initiative by some ISPs to do usage billing. When I learned about this I had a flashback to my old telephony days, which I talked about earlier in this post. Here we go again, I thought, the same old flat-rate versus message-rate billing fight, but now on the battlefield of broadband competition, with a side dish of the ISPs' attempt to favour some internet properties (theirs) over others.

Broadband ISP infrastructure is already capable of measuring upstream and downstream usage per subscriber, and even throttle speed and total usage in real time. Everyone pretty much has the same tools so it is not the uneven playing field that once existed between MCI and AT&T. Surprisingly however this has morphed into an ethical issue rather than one of simple market competition. Here I'm referring to flat-rate and usage billing, not the more incendiary topic of per-application discrimination.

Flat-rate broadband was deceptively simple and cheap to bill, and so has ruled the day up to the present. Now with P2P, YouTube, iTunes and more, flat-rate doesn't look so great to the ISPs. Network costs go up yet revenue for the most part does not. The telcos are further irritated that many ISPs to whom they wholesale DSL (involuntarily, as mandated by regulation), also offer flat-rate but without the application discrimination. This is called competition.

Raising everybody's rates is one alternative. This has been problematic since the bulk of the broadband customer base is served by telcos and cablecos, both of whom are heavily regulated. Now the government and politics gets involved. If it were left as a purely business and competitive matter it might resolve itself. More likely that would not happen in the short term since competition isn't strong enough; the broadband market is currently served in most areas by only a couple of ISPs, making for an oligopoly and a distorted market. Regulators also distort the market, though differently most of the time. For example, by requiring DSL wholesale to non-facilities based ISPs.

My own thought is that usage-based billing for broadband makes sense. It keeps the ISPs out of the nasty business of throttling P2P and other high-usage applications, and thus keeping the politicians and regulators out of their hair.

They will still, I suspect, be regulated out of doing application-based throttling in most jurisdictions in Canada and the US. Sure, it's true they won't like the fact that other providers of entertainment products, including video, will have to be tolerated on an equal footing. It's the price they'll have to pay to get their revenues and costs, and therefore their profits, predictable and sustainable. As for the rest, well, competition should be good for them and for us, their customers.

Opting Out of Opt-out

I have a low tolerance for marketers that try to profit from me by squirreling away opt-out clauses in the fine print, or large print for that matter. I am a passionate believer in opt-in. I was reminded of this again as I read (another) article on NebuAD and its opt-out policy on manipulating browsing by injecting their own ads and, worse, selling your browsing history to other marketers.

Whenever I see an opt-out clause in any form, paper or electronic, I get a sudden disinterest in proceeding.

• Charities: If I see an opt-out clause or a lack of a promise to not share my identity with other charities or companies, I do not donate. There are lots of worthy causes out there that don't do this, and they're the ones that may get my money.
• Contracts: Some businesses require you to enter into a fixed-duration contract when purchasing a product or service. If they do not by default keep my personal information to themselves, I walk.
• Shopping: Any bill of sale that says they can share or sell my identity to their partners is a no-sale. I'll leave my selection on the counter and leave.

This can be particularly difficult to do when, as a consumer, you have limited choice. Focusing on telecom, this can occur on broadband and mobile. I believe it is still important to bite the bullet and make the move to a competitor if that is at all possible. If not, make a stink. Complain to the regulator. You won't get immediate satisfaction, but you'll get no relief, ever, if you and others trapped in this form of marketing hell acquiesce silently.

Imagine a future where every organization you deal with, without even being asked, were to treat your personal information and privacy as precious and assumed necessary to protect their relationship with you. We can get there.

Browser Tactics

I use three different browsers on my various PCs. It works for my needs though it may seem odd. I do it for the following reasons:

1. Privacy
   
2. Security
3. Flexibility
4. Necessity

My main browser is Firefox (mix of 3 and 2). I use it as my workhorse for business, investing, and personal usage. I like it for the reasons that many others like it, so no point in going into further detail. With regard to the above points, it meets most of my needs for the first three.

In FF my ability to manage cookies is good, especially with suitable plug-ins (CS Lite), so that I can control which sites are allowed to use cookies. I block the most annoying of rich-media ads with another superb plug-in, Adblocker, while allowing those that are more benign. Adblocker is also good for blocking those pernicious Javascript loads from ad servers and bandwidth intense (and unwanted) video thumbnails. It also has protected me from malware on compromised but otherwise trusted sites.

Both FF2 and FF3 render a bit slowly on my ancient 2004-era PC, but still acceptable. No problem on the newer machines.

I use Opera 9.5 when I am visiting unknown or potentially untrustworthy sites. For security I keep Java and Javascript disabled, but will enable them on the occasions when it is absolutely necessary. All cookies, cache, and other persistent data are purged at exit. Having a browser set up specifically for privacy and security makes daily life on the internet just a little bit easier; I never need to manipulate FF and play with additional plug-ins to achieve the same result.

The only reason I keep Opera in this secondary role is that I am familiar with FF and I like having access to that great library of plug-ins. I don't do this because I have anything against Opera! It seems to work very well.

Then there's Internet Explorer. I use it almost exclusively for interacting with Microsoft's various properties, focused mostly on software, documentation and the like. At times it seems they make their sites very difficult or impossible to use from other browsers.

While I like IE for its rendering speed and what I perceive as its cleaner integration with the OS, I dislike too much about it for serious use. In comparison to FF and Opera I find it cumbersome, or at least non-intuitively opaque, to manage privacy and security. Therefore I use it for necessity only.

Three browsers, three distinct applications, to make my internet activities run smoothly.

Investing For the Long Haul

Do you invest in an RRSP or directly in equities or, really, any security? Do you invest for the long term by putting money into one or a few investment vehicles, either all at once or a little at a time? Do you ever sell before rolling over into a retirement annuity?

If you answered yes, yes and no, be very, very afraid. Look at the markets today. These sorts of down days are not at all uncommon and are not worrisome when each is looked at on its own. The problem is why the markets are down today. We are starting to see some serious loss of confidence in the entire financial and monetary system. Hopefully it's a false alarm, but don't bet on it - literally.

Pull up quotes on FRE and FNM. Never heard of them? I'm not surprised. These quasi-government agencies hold trillions (yes, trillions) of dollars of (mostly) high-quality mortgage debt, yet their ability to capitalize that debt is sinking like a stone, in part because fewer people than before believe they can. This affects us as well; pull up a quote on any Canadian bank, and gold.

These financial institutions have been considered some of the safest investments on the planet. High quality property assets (debts) supported though not guaranteed by the US government. It's falling apart. It isn't the end of the world as we know it, though it could get very ugly.

So... what is the quality of your own investment choices? Would you say they're better or worse than the above? Maybe you think broadly invested mutual funds are safe? Look at this. So much for the smart money.

Always be prepared to sell, and know what you're holding and why. You can go to cash for a while until the dust settles. In the long run no investment is a sure thing. Companies do go under on a regular basis, even the biggest of them. No investment is safe. Be flexible and move your money around periodically to avoid weak assets and benefit from strong ones. That's what the truly smart money does.

Disclosure: I own stocks in Canadian banks and gold miners.

Bell Canada Justification of DSL Throttling (3 of 3)

In part 2 I analyzed the technical basis for congestion claims by Bell Canada. Putting that aside for the present, let's assume that congestion is real and that it is a burden on Bell Canada. I want to do this to focus the assessment of their business motivation for investing in their network to alleviate that purported congestion. To do this I will look at the matter from a perspective that those inside Bell Canada might very well take.

Bell Canada is a business. That is obvious, yet is often set aside in the pro/anti-throttling conflict; too much of the discussion has been on 'moral' grounds. One side says that throttling is immoral, while the other says that P2P is immoral since it affects service quality for everyone and is often used for unlawful purposes. I am going to put this aside as well since, while questions of morality are interesting, the concrete matters of law, regulation and greed will dominate. Politics is off in the wings for the moment, and may stay off the stage, though it is always possible that the CRTC could be swayed despite its supposed independence since consumers are also voters.

Thus I come to business motivations. Why will Bell spend money to increase data (internet) capacity to support the increasing average per-subscriber traffic loads due at least in part to P2P, whether from their affiliated ISP (Sympatico) or unaffiliated ISPs that utilize regulator-mandated DSL access (wholesale)? What's in it for Bell?

"Greed is good"

Business is amoral; corporations are formed for the primary purpose of generating positive monetary returns to their investors. It is often said that corporations also have the purposes of creating jobs, valuable services and products, and other social benefits, but this is false. Those things are done by corporations only if it makes money for its owners. An unprofitable corporation is a dead corporation since it is unsustainable; only profit keeps a company a going concern. For non-investors who depend on the company's products this may be a bitter pill to swallow. A company keeps its customers, employees and the broader society well-disposed toward them when it is to their financial benefit. Individuals within a corporation are moral actors, but the corporation itself is not. Individuals come and go, whether employees, customers or investors, yet the corporation remains as a profit-generating entity with its own independent existence.

I suspect at this point some readers may be disgusted with what I've written, yet it remains true. Keep in mind that corporations are not unrestrained in their capacity to make money. There are laws and regulations put in place by citizens, by means of government, to constrain them so that society is protected against undesirable behaviour. Within these bounds anything goes, and I like it that way. In case you haven't already guessed, I am a greedy capitalist who likes open markets with only modest government intervention.

Investing Capital and Dealing With Competition

Back to Bell Canada and its business motivations. As everyone knows it is a straight-forward matter for them to buy and install more strings and cans (see part 2) to keep pace with the behaviour of both retail and wholesale customers, which are DSL subscribers in this particular case. Just like you and me, when we put a $1 into a savings account, a T-bill, a mutual fund or an equity, in future we expect to get back more than $1, and so does any business. So when Bell Canada puts $1 into its network it wants to not only get back more than $1 in profits (net of operating and other costs) it wants to get back as much more as it possibly can. Employees who are senior executives don't generally last long by making unprofitable investments for their owners. That's how their performance is measured.

If DSL revenue, both retail and wholesale, is not increased the return on every $1 invested in the network is negative, possibly as high as the original $1. However if they do not invest, and traffic rates increase as they are sure to do, DSL subscribers will be motivated to switch to competitors. This assumes there is competitve choice, which as we know is limited at present. There are the cable companies, including Rogers and Shaw, and wireless. Existing wireless choices are expensive. New operators using Wi-Max technology are still far off for the average consumer. Further, the cable companies are throttling P2P traffic. For this reason Bell Canada has some discretion in choosing to invest in its network, and also customer service.

Since their wholesale DSL rates are partially under the control of the CRTC, they cannot easily increase those prices to get a higher return on that $1 investment. If they raise Sympatico retail prices they lose customers to DSL wholesale (lower per-subscriber profit) or cable (lose the business entirely). Similarly if they throttle only Sympatico subscribers they lose customers to ISPs utilizing DSL wholesale who don't throttle and often have better customer service. They don't however lose throttled customers to cable companies, since they also throttle and tend to have even worse customer service.

Bell can use usage caps and rates, or speed caps and rates, to tier pricing plans so that they are more consistent with network investment. That way they have some assurance of making a profit. Again however, the regulator skews this in favour of those DSL wholesale customers to counteract Bell Canada's near monopoly; it's a matter of public policy, which is changable. Fighting the CRTC, and the public, is a time-consuming process with no assured positive outcome for Bell. So they choose to throttle everyone (having experimenting first on their Sympatico subscribers), and ask for forgiveness rather than for permission. This is a time proven tactic used by businesses, and by individuals; don't ask your spouse if you can have an affair, ask for forgiveness afterward. It works more often than it should.

Value of a Bit

Like electrical power and water, transportation of bits is a commodity business. It is also, quite often, a natural monopoly, and therefore prone to regulation. Commodities are by their nature low-margin (low profit), making the commodity business unappetizing for many investors. Unlike commodities like iron and wheat, bits are easily manipulated (modest investment) to building higher-value products. If your business is bits, there is a strong internal impetus to add value.

Here are some examples of how a company like Bell Canada adds value to bits:
Telephone service (streaming 64,000 bps): phone numbers, global traffic exchange, appliances, vertical features

• Internet (DSL): email, DNS, web hosting
• Mobility (CDMA or GSM): telephone service as above, appliances, presence, SMS, internet access
• Television (satellite or IPTV): programming distribution, VOD, time-shifting

As you may have recently noticed, Bell Mobility and others are being criticized for charging for SMS. One argument is that it's just bits. Sure, but so is every service offered. The question is whether the price works in the market. If not, SMS or any service will either not be used or the customer will, if possible, switch to a competitive offering.

I remember once years ago I did a calculation of how much revenue a typical carrier get per bit for various services. As you might guess, simple data transport was at the bottom of the heap. Basic telephony was higher, though still quiet low. Vertical telephone features like Caller Id, Voice Mail and Call Forwarding add a lot of revenue per bit, as does SMS. In many cases the prices for these services are only limited by regulatory oversight, fear of regulator intervention and the more-usual market willingness to pay.

All of this value-added revenue is under threat. Competitive threats include VoIP, web-based IM, Twitter and much more. The enabler is IP and the internet; it is now far easier to bypass the bit transporter to get at 3rd party services, thus reducing carrier profitability. You may cheer this, yet you still need Bell Canada and its ilk. Remember what I said above - a corporation that is not profitable is a dead corporation. The mighty can indeed fall.

The Worst Job There Is

Bell Canada knows all of this very, very well. They try to navigate the changing competitive landscape while also buying time by impeding competitors and influencing favourable regulatory outcomes. In the long run change will happen regardless, which they, too, understand. Right now they need to keep investors happy by sustaining profits and executing on a credible strategic plan to transform their business. The recent sale of Bell Canada highlighted many of the stresses on their business, and their past failures.

Now imagine you are the executive in charge of wholesale products at Bell Canada. You are responsible for selling products that enable outside businesses, including competitors, to add value to Bell Canada's transport of bits. Every other executive in the company wants you to fail since you are enabling their competitors and therefore damaging their ability to meet their own business objectives. There is some fierce internal competition in these companies. Pity the unfortunate wholesale business head, fought and ostracized by his or her peers.

I have known some of these very executives in my time. No, not at Bell Canada, but in the US. When I say it's a dreadful job, I know first-hand from talking and working with them. Turnover was high since the entire corporate team did what they could to make wholesale fail. The smart or young ones left. Others rode the downward slide until they got a golden parachute or retired.

I see that today Bell Canada announced its new management team. There is a new president of wholesale, John Sweeney. Let's see how long he lasts. He may have a difficult tenure.

Conclusion

Don't expect Bell Canada to voluntarily invest in their network to support P2P or any other bandwidth-intensive services that are not also offered by themselves. It simply is counter to their interests. While the CRTC may tell them to shut down their throttling systems, that will merely be one battle lost. The war will continue. I would be surprised if they have not already planned their next steps no matter the outcome. They will fight becoming a mere transporter of bits to the end. In the interests of their owners this is the right thing for them to do. The interests of the rest of us are secondary at best, and will remain so.

Small Town Revitalization?

Time for a short break from DSL congestion stuff.

This is an interesting article. The premise is that increasing fuel prices are encouraging small town residents to shop, work and play closer to home rather than driving off to do these in a nearby larger centre. Local business and employment is up, and so is the tax base.

That's good, right? Short term, sure. I am just not sure it is sustainable.

The benefit of cheap gas is the ability to reap the pleasures of small town livings (and big city suburbs I suppose) and of the big city. Expensive gas is causing people to make a choice because it just got too expensive to have both.

If people believe the spike in fuel prices is short term, their coping mechanism is to not venture far from the small town or countryside where they live. If high fuel prices are sustained, this could have the opposite and devastating effect on those same small towns.

Will those people who want but can no longer have both, and need to make a long-term commitment to one or other, pick the small town? Won't they quite likely choose instead to move (back) to the big city? This is already a decades-long trend that has not been at all affected by historically cheap gas.

Once they make that decision, the small town loses the people, the taxes, the jobs, the local social scene, and well pretty much everyone a small town needs to thrive. The question is how many people need to choose between small and large towns, and how many of those choose the city. Many of those who want both, and moved to the small towns to get it, are likely already more favourably disposed toward the city. In the long run this would further devastate small towns. Perhaps some will trade in their SUVs for smaller vehicles to gain a little more time, though I don't think that'll help for long.

Small towns, I believe, are threatened, not helped in the long run by high fuel prices.

Bell Canada Justification of DSL Throttling (2 of 3)

As promised in part 1 here is my take on the likelihood that there is congestion within Bell Canada's network. I will start with an elementary discussion about networks, so if that is too basic you'll want to skip lots of this. Once again, here's the link to CRTC's web site where you can find references to the Bell Canada documents which I refer to in this post, and here's the link to the actual documents.

Cans and strings. Just like a child's play phone from days past, any modern communications network works the same way. The cans may be iPhones or a top of the line Optical Ethernet router, and the strings may be copper wire, coaxial cable or free-space photons, it is still much the same. Like any carrier, Bell Canada chooses from an assortment of cans and strings to create networks, and we can analyze on that basis.

On the economics of networks, strings typically cost more than cans. While copper and glass are cheap enough, getting the rights-of-way, burying or stringing, and dealing with environmental degradation and accidents due to their being out in the wild, makes them costly. While some of those cans can have a high price tag the long-run costs can be reasonable, and the carriers can depreciate cans faster than strings, which is good for the balance sheet.

In addition to basic costs, there is the impact of scaling. The greater the revenue base that the can or string supports, it gets effectively cheaper. As an example, consider a hypothetical string that costs $1,000 to buy and bury. If it supports one subscriber (me or you) that's $1,000/subscriber. If it supports 100 subscribers, that's $10/subscriber. And if it supports 10,000 subscribers, that's $0.10/subscriber. I have shown this per subscriber, although the more important calculation is recurring revenue stream per asset dollar. This will come in important later (part 3).

Next, please have a look at this table from the June 19th Bell Canada disclosure (note: I tried to upload it but couldn't figure out how to do it properly with Blogger).

Ignore the percentages for now. Notice however that the reported congestion declines over time, expect at the DSLAM. This would imply they have been investing in their core network at a rate above the growth in subscriber traffic. Consider what I say just above about costs of cans and strings and their subscriber base coverage. This is the easy part of network investment since there are no trenches to dig, usually, so it's not surprising to see them active there.

The DSLAM congestion is fairly steady over time, implying their investment is running at about the same pace as subscriber traffic growth. They don't say but we can safely assume the DSLAM congestion measurement is on the network side of the 'can', not on the subscriber side. Here's the network model diagram from the May 15th Bell Canada disclosure for your reference:

Since Bell Canada says the problem is at the DSLAM and their reported congestion figures support this, and to me it seems superficially credible, I will strictly focus on the DSLAM for the following discussion.

A modern DSLAM does many jobs, much of that having nothing whatever to do with subscriber data traffic. Let's briefly look at what a DSLAM really does and why this new type of network can came to be. This is worthwhile since there appears to be some misunderstanding of what it is (see here for one example of a truly poor description). Let's start at your residence.

A pair of twisted copper wires (string) runs from your DSL modem and analogue phones (cans) out the house, down the street, all the way to a DSLAM (can) typically located in a Bell Canada building. That building is known as a central office. There are lots of all types of cans in that climate-controlled environment, along with one end of many, many strings, and usually some Bell Canada employees keeping it all running smoothly. The DSLAM in particular might also be located elsewhere in the neighbourhood, such as in a secure vault or leased space in a commercial building.

Some historical perspective may be helpful at this point. Remotely located cans, often called remotes, predate DSL by many years. They were used to improve network economics. Imagine running all that copper wire from every home and business back to one of many central offices. That's a lot of wire and trenching or stringing along poles, and it is expensive. By terminating the wire at a can closer to the subscriber, money can be saved. Now only a few strings are needed from the can to the central office, removing all that copper for part of the run. In the early days those cans were simple multiplexors, with analogue baseband voice on one side and digital multiplexed carrier systems (T1 or T3) on the other side. There would be one channel (DS-0 at 64,000 bps) per subscriber, or more with ADPCM. Later, the remotes featured switching capability so that fewer DS-0 channels were needed, by only requiring a DS-0 while the subscriber used the phone.

Then came DSL. Now those remotes became obsolete, yet the economics of networking remained. A new type of remote was needed, one with subscriber-side ports that handled both frequency-multiplexed baseband analogue voice and DSL data. I will spare you the history of standards battles and the countless variants of DSL and DSLAM that came and went. Eventually things settled down and all the vendors' equipment now (mostly) gets along. You may remember a similar battle that raged more recently around Wi-Fi 802.11 and its many variants.

Okay, we're getting closer now; just a little more on the basics that some of you can continue to skip over.

The network side of the DSLAM supports copper and optical carrier systems, though these are primarily optical nowadays. The capacities look like this, based on a 64,000 bps DS-0 channel:

• T1: 1.5 Mbps - 24 channels (or DS-1)
  
• T3: 45 Mbps - 672 channels (28xT1 or DS-3)
• OC-3: 155 Mbps - 2016 channels (3xT3)
• OC-12: 622 Mbps - 8092 channels (12xT3 or 4xOC-3)
• and so on

This bandwidth is split between PCM telephony and DSL data (there can be more than just these, but we'll keep it simple). The bandwidth dedicated to telephony cannot be used for data, and vice versa. They only mix when analogue telephony is replaced by VoIP over a common DSL or similar shared digital string to the home (that isn't how it is done today, and likely not for some years to come). The split between telephony and DSL could be right down the DS-0 level, but is more likely at the DS-1 or DS-3 channelized rates.

The carrier systems in today's Bell Canada network use ATM. Technically this isn't too significant despite being highlighted by Bell as an issue. When an OC-3, for example, utilizes ATM or Optical Ethernet (OE), it's still a 155 Mbps string, though the data and voice streams mix differently. This would alter the utilization of the available capacity, but frankly not by much; ATM and Ethernet have link-layer overheads that limit the payload. Ethernet when used in a point-to-point application like this can achieve 90% utilization of the available capacity (minus that overhead).

When Bell points out that adding an OE string now is a problem for them (see page 10 of their May 15th disclosure), what they mean is that years ago they made a large financial commitment to ATM and they don't want to continue investing in ATM equipment by adding more ATM ports on the DSLAMs and ATM switches due to increasing DSL traffic demand. However they can't easily add in OE ports if their present DSLAMs don't support OE. This makes the expense of adding capacity to alleviate DSLAM-centred congestion a short-term financial burden. This is a real problem, not an invention. Whether you feel sympathy for their plight is purely subjective.

But let's get back to congestion. On the ATM connections from the DSLAMs to the edge ATM switches, they say they take 15 minute snapshots of utilization and congestion. They never define congestion sufficiently to independently assess their subsequent claims, though they imply it's due to buffer overflows during traffic bursts which are well-known to statistically occur with multi-sourced data traffic. For example, if the average data flow is 1 Mbps during a measurement interval, shorter-term fluctuations well above (and below!) this rate occur. Statistically, the probability of these events and their duration both decrease with higher burst rates.

To accommodate these bursts, average link utilization is kept below the maximum link capacity. This can be compensated somewhat with larger buffers, which are themselves an expense. For the subscriber, larger buffers means increased latency during bursts, and higher link utilization means higher rate of lost packets due to buffer overflows. There is no right answer - it's a matter of engineering the network to selected objectives. That is, forecast your load rate and decide how much traffic you are willing to see delayed or dropped. These numbers will always be non-zero.

For a given (average) subscriber traffic load at the time of day total traffic peaks, the lower the bandwidth of the DSLAM ATM or OE link, the lower the average utilization must be kept to achieve a fixed congestion objective. Traffic statistics determine this (if you don't believe me, you'll have to go learn some traffic engineering on your own). Bell Canada says as much (page 3 of their May 15th disclosure). Since I don't know their congestion objectives, I can't say if these number are correct, however they 'smell' right to me.

Okay, enough typing. If you got this far, thanks for sticking with me. I really can't say more about Bell's claims of congestion without them disclosing more detailed data. They won't do this willingly and the CRTC is very unlikely to order it. In my opinion there is a legitimate competitive risk, and I mostly agree with their witholding the data. So all I've accomplished after all this typing is to help readers understand the nature of the issue perhaps a little better than before.

Before I end let me mention a couple more things about DSLAMs that may be of interest. First, DSLAMs are not only deployed outside the central office to save the cost of running lots of wires the full distance from homes to the central office. DSL speeds are a struggle between James Clerk Maxwell's electromagnetic theory and advanced technology. You can't fight the laws of physics. Keeping the copper run as short as possible increases the achievable data rate. DSL utilizes frequencies up into the MHz range whereas analogue voice is only up to a few kHz. Second, Bell Canada uses DSLAMs to, in part, break its dependency on Nortel. When DSL was new Nortel produced DSL-capable equipment (Universal Edge) that plugged into the backplane of their telephony switches. However that would extend vendor lock-in which any customer, including Bell, prefers to avoid. Using DSLAMs with standard interfaces keeps the competitive pressures high, and equipment costs lower. This is smart business on the part of Bell Canada.

And just for the record, I am not now nor have I ever been employed by Bell Canada, nor have I accessed or used non-public information to do my analysis. Use this material at your own risk.

Back later with part 3 of this series where I'll talk a bit about business incentives for Bell to invest (or not) in increasing capacity to support DSL traffic.

Ouch!

My (other) computer, the one on which I keep my blogging material, suffered a hard disk crash. If there are any readers out there, it could take me a day or two to recover from this. I will have to delay immediate follow up to my Bell Canada throttling series.

Bell Canada Justification of DSL Throttling (1 of 3)

As a DSL user of a non-Bell ISP I have a personal interest in this subject. I also have at times in my career being intimately involved in network architectures and network planning, and I have dealt with broadband off-and-on from the time it was merely a gleam in an engineer's eye. Having read a bunch of articles on the recent disclosure of data by Bell the CRTC ordered, I wasn't satisfied by what I read, so I decided to add my voice.

Too much of the purported analysis of the Big Bad Bell Business Behaviour has been superficial. This is partly due to the deliberate (and likely justifiable, I believe) reticence of Bell to release overly-revealing data. I cannot say I've seen all the voluminous body of published articles and subsequent commentary, so it is very possible I have missed some very good analysis. It's just that what I have seen is not the best. Some of it seems skewed by a bias against Bell Canada and in support of the authors' personal interests as DSL consumers or resellers.

Can I do better? Perhaps. Everyone outside of Bell, including myself, is limited by imperfect knowledge of Bell's current network, both in how it is architected and how it is operated. Despite these limits I believe it is possible to get a reasonable handle on the matter.

The first thing, however difficult it may be to do so for those involved, is to be dispassionate about the topic. Yes, those of us who use DSL have an interest, even a deep interest, in the matter, and if we had our wishes fulfilled our broadband service would be cheap, fast, reliable and unencumbered in any way. DSL is simply a business however, and business is amoral; business is always (always!) about money first. This is not a social issue, not politics, and no one is in this business simple to do favours for us. There are diverse interests among the parties, including suppliers, consumers, resellers and regulators, which need to be understood. Simply turning up the volume of the discussion is not likely to be successful. Bell knows this, and so should its critics.

I will deal with this subject by attempting to answer the following the two questions in following articles:

1. Is there congestion in Bell's network?
2. Is Bell motivated to invest in its DSL network for the benefit of wholesale service?

The first question is actually the easier of the two. As for the second, how much I type about it depends on my interest continuing to motivate me to keep typing.

If you're not already deep into this subject, places to start reading some background material follow (and it is only a start):

• CRTC: most recent data disclosures by Bell Canada
• Broadband Reports: article and commentary

Disclosure: I do not hold any position in BCE stock or that of any of its competitors. I subscribe to DSL via a 3rd party ISP that purchases wholesale DSL from Bell Canada. I once subscribed to Rogers High-Speed Internet. I do not use P2P and never have, nor do I plan to do so in the foreseeable future.

Choosing a Mobile Platform

I am not an expert on mobile application development yet I am in a position where I may need to select one in the near future in relation to a business/product venture I am involved with. It's a fascinating dilemma. Beyond the technical comparisons there are numerous business risk considerations. Let's look at the candidates:

• Symbian
• Windows
• iPhone
• Blackberry
• Android
• LiMo/LiPS

For all I know there could be more I don't know about, though these appear to be the main contenders. There are a couple of others I deliberately excluded (e.g. Palm) for my unique purposes.

One thing I look for is market reach, which is determined in part by current penetration levels. In the smartphone space the biggest player is Symbian, with Windows far behind in second place. Then there's Blackberry and iPhone. Android and LiMo are not there, today. Unfortunately (as in the world of investment funds), past performance is not an indication of future returns. In other words, current penetration levels mean little to those looking to the future. For example, Windows may be stagnant, unable to build on its success to date, due to Microsoft's tendency to scare off partners and its reluctance to be truly open and sharing. Symbian is an ancient OS that could very easily fail to be limber enough, technically, to enable effective, speedy and innovative new applications. Apple is a formidable force, though its predilection, like Microsoft, to fence in its partners is problematic, yet their proven ability to at times succeed at world domination makes them very interesting. Google, for all its technological prowess, is stumbling with Android and they seem to only half understand the business side of the mobile space. I worry sometimes that the carrier traction they have achieved to date may only be a tactic on the part of the carriers to scare Apple and the other players to cut better deals with them. Blackberry's strength is mostly business users which may constrain their ultimate success, though they can still win big in that one key segment. LiMo I know nothing about, nor what it means if they tie up with LiPS.

For my purposes this is not a great start, but I have to start somewhere. While it's a largely subjective view of things, it is where we all start. A little more research, including talking to more people with the knowledge of the space, will help to make a selection. From what I know to date, here is how I am analyzing matters for new applications that requires tight telephony integration, targets both consumer and business users, and will allow easy access (via carriers if need be) to the greatest number of potential customers. Certainly there are many contrary opinions out there, which you can sample in the comments to the above-linked TechCrunch article.

Symbian, on the technical side, looks like an integration monster where the objective is seamless operation with the embedded telephony application. This would appear to be exacerbated if you want to do data transfers at the same time. Part of this latter problem, however, is due to CDMA and therefore is not purely a Symbian issue. It is possible that its move to open source will over time encourage OS improvements I am not convinced that those who would undertake that work would not rather focus on a newer OS like Android that does not have legacy problems. Despite its high penetration level I am uncomfortable with Symbian.

Windows, for the reasons I stated earlier, is not an option at this time. I simply don't believe that Microsoft will succeed in broadening the attractiveness of Windows Mobile.

Android looks very interesting. The platform, on an initial inspection, looks clean and extensible. It appears to play well with telephony application integration and concurrent data connectivity. I can see prototyping on it, even without a phone(!), and if things don't work out the code may be reasonably transportable to another platform. If Google stumbles further, which is unfortunately very possible, they could lose this horse race to a resurgent Symbian or Windows.

iPhone applications will look pretty, easier, though like with Windows I am not confident that they will play well with developer partners. There is also the matter of whether the platform will stall as a niche product or extend to a broader appeal. Apple is not at all likely to be willing to consider their OS on appliances other than Apple's own.

Blackberry, for reasons already stated, doesn't appeal to me. I will continue to watch them to see if I need to reconsider. LiMo appears to have little to recommend it as a Linux-based mobile platform in comparison to Android.

My conclusion: choose Android for at least the prototyping stage. If it fails to be a good ultimate choice it should be straight-forward to switch horses before going to market. While it'll be late that is not a problem for my time frame, which is 2009. Their openness is attractive and easy to work with. Even if they do fail I expect they will, by fear or technology influence, cause others to improve their platforms and business practices.

If I'm wrong, that's ok. Business isn't about making good, long-term predictions, but positioning the company to be flexible as the environment changes. That looks to be most possible with this choice.

If you find my analysis here to be amateurish and superficial, you would be somewhat correct. I am not embarrassed by this. We all start in a new space in ignorance and seek to improve. Having objectives in hand at the start helps to navigate even poorly-understood options.

Risk-taking vs. Age

I was reminded of this aspect of human behaviour when this news item about a 95-year old skydiver appeared. Ever notice how typical it is that young people take risks and as we age we tend to reduce our risk-taking activity. There are of course good genetic reasons for risk-taking among the young, especially that of males. There are also good genetic reasons for dying after reproduction of disease, predation and so forth, yet we are no longer constrained by that thanks to civilization and science.

There is an argument to be made that risk-taking should tend to increase as we age. After all, the old have the least to lose since they are closer to death by natural causes. At 20, you risk 60 or more years of life, or a high-quality of life. You also need the time to reproduce and raise your offspring, and you need stability in lifestyle and income to do so successfully. Somewhat more speculatively, imagine if we were to become (near-)immortal due to advances in medical science. As Carl Sagan said using the voice of the character Hadden in his novel Contact, regarding the perppective of a hypothetical immortal race: "Something you think is dead cinch safe, they'll consider an unacceptable risk." The immortal, in other words, are always very young.

At 70, you have perhaps 15 years of life expectancy, more or less. If you had kids, they have long since flown the coop, and you may have a nest egg to get by one for the remainder of your life, or at least a pension, even a poor one, to fall back on. Further, one of the greatest benefits you can now deliver to others is your posterity. That is, die and leave your worldly goods to your children or your favourite causes.

Therefore a youth should avoid risk and a senior citizen should not shy away from embracing it. You don't have to jump from an airplane. You can become an entrepreneur, train for a marathon, risk arrest by protesting for a cause you believe in, or ... just use your imagination.

Personal Energy Hedging

When I came across this article today I had to smile to myself. The idea of hedging against future price swings is of course common in industry, on both the consumption and production side. It is a tool to reduce uncertainty or, as perhaps more commonly understood, to bet that prices will rise in future (or fall, as in the case of a gold miner or natural gas producer). Now it comes to automobile fuel.

However it isn't needed, and I would argue is not a good option, just as I have avoided those natural gas intermediaries that will lock in a price for your home consumption. To do the same and gain more independence and flexibility, my choice is to invest in producer stocks on public markets.

There is of course a disadvantage for the typical consumer that he or she does not invest or does not invest with that degree of personal involvement, leaving the choice of mutual funds to their investment advisor or banking representative.

If you already play the markets as I do, all you need to do is invest in the commodity producers, refiners and distributors, of which there is a large choice of high-quality names. Then when the share prices of your picks go up (and maybe you also receive dividends and trust distributions) you can sing a happy tune as you fill up the SUV or turn up the thermostat another degree next winter.

If you also make the wise decision to reduce your use of fossil fuels, with this strategy you win twice.

Driving Under the Influence, of Cell Phones

Apart from being Canada Day, today marks the start of enforcement of Quebec's law banning driving with a cell phone in hand. These sorts of laws are spreading across more and more jurisdictions here and abroad, and also spreading doubts about the utility and wisdom of these same laws. One bit of commentary I came across recently states it pretty well. Why ban every particular device and driver behaviour rather than simply enforcing existing laws on careless or reckless driving.

This is a good question. I will tell you why I disagree with this perspective, and why I support these anti-cell phone laws (if they're written well).

There is no bright line between acceptable driving behaviour and recklessness or negligence. It's a judgment call. Not only on the part of the police who must lay the charge but also of the court should it get that far. The police, quite reasonably, tend to avoid citing borderline behaviour since it is often difficult to make the charge stick. The driver's behaviour must be truly egregious, or there would have to be an accident or other reportable incident to make the prosecution successful. However I don't think it's wise to only charge drivers that mow down three pedestrians before crashing through the front window of the local Tim Horton. We would prefer to correct these drivers' bad behaviour without waiting for a tragedy to first occur.

Law enforcement is more effective where there are bright lines. Not 16 yet? Sorry, we don't care how mature you are, you simply can't drive. Not 19? Sorry, no alcohol. Driving with a blood-alcohol level of 0.08? Sure, maybe you seem to be staying within the lane markings, but forget it. Using a handheld phone while driving? Sorry, not allowed. These are all bright lines that enable effective law enforcement, despite the obvious truth that, for example, many 15-year olds would be great drivers and many 30-year olds are death on wheels. A cell phone in hand is distracting even if the probability of an accident on any particular use is not at all high. The ensuing death, injury and property damage from the accidents that do occur are sufficiently severe, in my opinion, to justify the law and the cost of its enforcement. It helps the police keep our roads a little bit safer.

I say all this despite my own occasional guilt of phone use behind the wheel. I can live with the restriction.

Biovail - The Third Option

Not too long ago I bought stock in Biovail. I now know that I made a mistake. Pharmaceuticals is not a business I understand well which led me to a poor analysis. Price has been sliding downward, driven in part by the weak revenue pipeline and the recent, and ongoing, proxy battle between management and Eugene Melnyk.

The proxy battle has heavily damaged the stock. I believe this is in part by creating new doubts about prospects for new, successful products and uncertainty about what the company will become and how it will be managed. In my view both current management and Melnyk are coming out of this looking weak. One thing I've learned in business is that execution is key, and a capable management team enables that. A strong team with an iffy idea is better than a weak team with a good idea.

It was a very entertaining few weeks leading up to last week's shareholders meeting, with the guy from Purolator stopping by every couple of days with a new missive from management or Melnyk. Entertaining, yes, but very worrisome. It is very difficult for someone far out in left field to read, understand and assess the technology, market assessment and management competency of the competing strategies. Disgust is what I finally felt. I did vote my shares for management if only because I have less confidence in Melnyk's team. Was I right? Damned if I know.

While I did pick one of the two options presented to me, it is now time to also choose the third option that neither side mentioned. I will sell my shares, undoubtedly at a loss, when the price looks to reach a short-term high. This may happen in July after the parties meet in court next week. They can continue their battle without my skin in the game.

Starting A Blog

Are there a billion blogs yet? Maybe, so why not one more. There must be as many reasons to keep a blog as there are bloggers. My reason is not because I need or want attention, but rather it is a personal database of thoughts as I go through my days as a technologist, businessman, investor, sports participant, citizen, and, well, all the roles a human being plays in this modern age.

We all have thoughts or ideas that are worth recording. This blog is one type of record. As this personal experiment unfolds I'll assess its value and decide whether to continue based on that. It may develop into more than an experiment.

Blog entries will not address my personal life and I will maintain my anonymity. The reason for the anonymity is that I like to compartmentalize the various sides of my life. Anonymity is a tool to preserve this. I will avoid using it to rant or mindlessly attack anyone or anything.

I don't solicit comments though they are certainly welcome, whether positive or negative. I have a strong preference for civilized discourse, even if expressed in strong language. It will be interesting to see if any comments do come my way since I plan no promotion of any sort to draw hits to these pages.