Category Archives: economy

British Broadband Tax



In his pre-Budget report, the British Chancellor of the Exchequer has confirmed that there will be a 6 GBP tax on all households with fixed-line phones in order to setup a fund that will be used to ensure that even the uneconomical parts of the UK will get fast fibre connections.

Note for readers – the incumbent UK Government is Labour, who come from a socialist or left-wing background.  The Opposition is the Conservatives (aka Tories), who come from capitalist or right-wing background.  For a good few years, it was hard to tell which policies came from which party but now the economy is down, they’re reverting to type.

While the aims of the Chancellor may be laudable, I think he’s completely wrong to setup a broadband fund.  All it will do is line the telecommunication companies’ pockets and it’s not as if they’re short of a penny.  In each of 2007 and 2008, one of the major British telecoms companies, BT made 2.5bn GBP (before tax) on 20bn GBP.  Ok, things are bit tighter in 2009 so far but they’re still making millions.

If the past 30 years of technological advancement has taught us anything, the pressure on technology to make things smaller, faster or cheaper has come from competitive pressures, not by throwing subsidies or government money at companies.  These companies ought to be trying to figure out how to make the uneconomic parts of the country into economic parts, by delivering more efficiently or delivering differently.

Around 30% of households are believed to be in this uneconomic category but that’s only for fibre connections – the figures (and Government) totally ignore the possibilities of wireless technologies.  Rather than let the best technology win out – and it’s for the market to choose what “best” means – the fund will be used to connect up with fibre whether it’s appropriate or not.

And even if the property is miles from anywhere why not simply charge the customer the true price of bringing fibre to their home.  That’s what happens for electricity – if you choose to build your house two miles from the nearest electricity line, the utility company will bill you the cost to install the cable to your house.  For a non-essential service to be given this kind of subsidy seems bizarre.

And I’m sure an extra side effect will be increasing numbers of people dropping their landlines in favour of mobiles and VoIP.  I’m definitely thinking harder about it – if I didn’t have ADSL broadband I would have done it years ago.


Old Media and the New Frontier



Recently Disney bought an estimated 30 percent stake in Hulu.com, bringing the streaming giant even closer to world domination, and adding to the credibility of its online-based television distribution force.

It is clear that Hulu.com and its partners have invested large sums of money into developing and funding this new media distribution center, yet anytime someone tries to bring this content to the general public and make it easy to use, they seem to go out of their way to hurt their own investment.

Take Boxee for example, they have developed an easy to use interface that collects all of the online media sources into one place for users of a broad range of operating systems. Instead of embracing and thanking them for this improved user interface and social media integration, Hulu’s partners demanded that Hulu take steps to ensure that their content wasn’t available on Boxee’s system.

Their chief concern according to many tech analysts is that the major media companies make more money from standard broadcast commercials than they do from online advertising. This sounds to me like the classic question of “What came first the chicken or the egg?”

It would seem logical to me that the best way to improve the value of your product for advertisers would be to reach as mainy people as possible. In a time of economically hardships such as these I would expect that advertisers, like any other business, would be looking for the most bang for their buck. I would state that online distribution is a much better advertising proposition for today’s market, for one simple reason. if I’m watching something I’ve recorded on my DVR equipped cable box, there is zero chance of me watching an ad. If I’m watching Hulu or one of the other major media online outlets that have built-in mandatory ads, I’m almost guaranteed to watch it unless I need to get up and refill my drink or perform another mundane tasks typically reserved for commercial breaks.

As it stands now, television has went from the world of ad supported shows of the 1960’s to the DVRed shows with no commercial breaks of the 21st Century.

Feel free to comment or rate this with the links below or I can be contacted at jparie@gmail.com.


Are You Dumping Your Extras?



Cell service providers are beginning to notice a somewhat alarming trend among users. As plans graduate out of their contracts, more users are giving up extras like mobile web, texting, and SMS messaging. These “extras” can cost an extra $20-100 a month on most plans, and even more for family-type multiple-user plans like our family has.

As the economy worsens and people look for ways to cut costs, dumping a $40 data plan and a $30 texting plan can really impact a squeezed budget. Most users have alternatives for data, like laptops, netbooks, home computers, etc. The cost of the extras can outweigh their conveniences, in some cases.

Not that we techies don’t like our conveniences and our gadgets, of course. But when the choice is to pay your mortgage or pay for your extras on your cell phone, I think most of us know what the choice should be. In fact, when I hear of anyone buying a smart-phone these days, especially ones with expensive data plans like the iPhone, I have to wonder what they are thinking. I actually have a friend who works for the mortgage business and just bought an iPhone and locked herself into a 2-year contract that is twice as expensive as her cell phone plan had been before. What happens when her mortgage job goes south?

Scary stuff. I know we’ve cut back on things we don’t need that we can live without, including paring down our cell phone plans. And I have to wonder, if enough of us do that, will the cell phone companies, in order to maintain their business, start offering those extras at a lot lower price, as I know they can afford to do?


Economic analysis based on actual data!



We have seen a lot of news reports that talk about large macro economic indicators in dire terms. What’s happening in terms of black friday sales figures, how property prices are falling, and consumer confidence figures for example. While all of these make good news stories, they are lacking in direct information. Most of this is indicator information, and while it could mean that things are bad it can also mean that people think things are bad.

Aaron Patzer has provided a little bit of the missin detail in a guest post on Techcrunch. Aaron is the CEO of a company called Mint. While I am not personally familiar with the company, they do have the details of the spending and financial position of around 900,000 US households. In aggregate form, this data shows us a very good picture of what is going on in the real world bank accounts of a statistically significant subset of America.

It shows that while people are indeed spending less, their bank accounts are lower, and their loans are higher. This shows a picture of what is happening on the street. I reccommend you have a look at the article if you have any interest in this subject. There is some things lacking in the information though. We do not see in the article any detail on the high level demographics of the sample set compared to general US demographics. This stops us knowing how representative this set may be. Also given that Mint appears to be a fairly new company, and the data set compares August to December, it would also help to know whether there was any change in that demographics. I would also like to see a comparison of only users who where customers of Mint at both time periods.

Despite these minor questions on the data, this is one of the best looks into what is actually going on in the economy that I have seen.