This was a slow week for tech news – Probably the most significant development was the decision by the US FCC to regulate Internet services in a limited sense as a utility and to enforce net neutrality.
Ultimately this is a political decision which will pit the well monied carriers and large Internet companies (some of whom gain if there is no net neutrality) against lowly consumers and businesses.
FCC votes for net neutrality, a ban on paid fast lanes, and Title II
This was, no doubt, the big tech story of the week. Certain countries, notably the US and Canada do not regulate Internet services. In a competitive market this might no be necessary, however, in North America, as in most places, there is no competition. As a consequence, carriers use their monopoly/duopoly position to maximize returns, which means higher costs and lower service. It is not coincidence that Internet service providers in Canada and the US are unusually profitable despite offering substandard service along with high prices relative to areas where regulation is in effect. A loss of Net Neutrality further restricts competition by establishing barriers against competition for Internet services since new entrants would lack the funds to pay off the carriers to carry their offering. I believe Internet services should be fully regulated as a utility such as electricity is. Unfortunately, this is not done yet: no doubt well funded lobbyists will make a sincere effort to reverse the move.
“The Federal Communications Commission today voted to enforce net neutrality rules that prevent Internet providers—including cellular carriers—from blocking or throttling traffic or giving priority to Web services in exchange for payment. The most controversial part of the FCC’s decision reclassifies fixed and mobile broadband as a telecommunications service, with providers to be regulated as common carriers under Title II of the Communications Act. This decision brings Internet service under the same type of regulatory regime faced by wireline telephone service and mobile voice, though the FCC is forbearing from stricter utility-style rules that it could also apply under Title II.”
Android Captures Tiny 11% Share of Global Smartphone Profit in Q4 2014
The way to make money in technology is to establish a closed, proprietary, standard. This explains the success of Apple, Microsoft, and Intel. It is not surprising that Apple earns most of the money from the smartphone market as they are the only company with significant market share to have established such a position. It is worthwhile noting that Apple’s position was gained when it was perceived as a technological leader, rather than the follower it currently is. Consumers will eventually get wise to the situation and prices (and thereby profits) will plunge. Needless to say, none of this will motivate vendors to move to Firefox, Microsoft, or some other OS vendor because those will neither be profitable nor have measurable market share.
“Global smartphone operating profit grew 31 percent annually from US$16.2 billion in Q4 2013 to US$21.2 billion in Q4 2014. Android hardware vendors combined took a record-low 11 percent global smartphone profit share, down from 29 percent one year ago. In contrast, Apple iOS captured a record-high 89 percent profit share, up from 71 percent in Q4 2013. Apple iOS continues to tighten its grip on the smartphone industry. Apple’s strategy of premium products and lean logistics is proving hugely profitable. Android’s weak profitability for its hardware partners will worry Google. If major smartphone manufacturers, like Samsung or Huawei, cannot make decent profits from the Android ecosystem, they may be tempted in the future to look at alternative platforms such as Microsoft, Tizen or Firefox.”
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Kill the Wireless Contract! Buy Your Own Phone
I admit to being perplexed that so many consumers preferred to remain indentured to a mobile carrier rather than buying an unlocked phone. Most carriers will offer a discount if you “bring your own device” and you end up with significant bargaining power once you have the option of switching carriers at any time. Do not, however, pay the full shot for a phone from carrier: in Canada, for example, Rogers was charging 20% more for a “locked” Nexus 5 than what you would pay for an unlocked version directly from Google.
“I am an idiot. I signed a two-year contract to get my iPhone 6. Without much thought, I did what most Americans do every two years: I agreed to be locked in by a multibillion-dollar wireless company. With pricey contracts and confusing add-ons, they make it incredibly hard to leave, let alone take our phones with us. I deserve to walk around with “Property of Verizon” stamped on my forehead. We sign on the dotted line because we presume it will save us money on that new shiny phone and our monthly service. But here’s the thing they don’t want us to know: Neither is necessarily true anymore.”
Rogues Falsely Claim Copyright on YouTube Videos to Hijack Ad Dollars
Can there be no more vile crime than asserting copyright over another person’s cat video? Well, not so much crime because it is not clear they are doing anything illegal. After all, Google has no interest as to whether you or the Russian mob owns your cat video, so long as the advertising dollars keep spending. They set up an automated process for “take down” notices which essentially transfer the burden off proof to the original owner rather than the guy making the allegation. Nevertheless, this may be civil fraud and not criminal. I am surprised there hasn’t been a class action suit on the matter.
“Cat videos are all the rage on YouTube, so much so that a Russian company hijacked a recent cute clip of a feline named “Pepper” in order to steal the ad revenue. Kidnapping YouTube videos, which anecdotal evidence suggests has happened thousands of times, is as easy as it gets. A Russian company called Netcom Partners and others are taking advantage of YouTube’s copyright-control filters, known as Content ID. It’s not clear how much money the scammers are stealing from YouTube videomakers. But if you judge by the volume of complaints about the hijacking on Google’s forums, it’s likely Netcom and others are doing pretty well making money for nothing.”
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