Every year, beginning around this time, trucks shunt around cities and visit every household in North America, and indeed most of the world, depositing these 6-7lb. volumes in stacks as an edifice to a pre-internet era.  Small businesses waste thousands of dollars each in perfecting their ads and emplacing them in a book that, nowadays, most of us will never demean ourselves to open.

There is substantial waste in this business:  whether it’s the energy expended in physically delivering these books to your doorstep every year, or whether it’s the paper (usually recycled — but that still uses energy) that could go to other uses it’s hard to ignore this big yellow hunk of tree when you trip over it while fumbling for your keys — twice a year in some cities as there’s now competition.

Us New Media types like to portray the Yellow Pages business as an anachronism — an embattled dinosaur searching for relevance in an era when we can Google ’til we puke to find the things we need.  Since this is 2009, a Facebook group has emerged, rather unambiguously called “The Yellow Pages Must Be Stopped“, to demand that the industry adopt an “Opt-In” practise.  I personally have not used a Yellow Pages for anything other than as a monitor stand since the last millennium — except when I was once desperate for a Pizza in a Long Island hotel room.

But unfortunately, the Yellow Pages business is not yet the death march that the Web 2.0 kids have hoped it would become.  … This may say a lot more about the new media of web, telephony, and mobile and their capabilities than it does about the old medium of schlepping giant books door-to-door for punters to thumb through.

For one thing, the Yellow Pages is still the number one tool used by consumers to find local business; the industry continues to forecast growth in the bellwether US marketplace from $10.3 billion in 1996 to a projected $18 billion by 2010 — yes, some of their revenue comes from online, but that number is pegged at between 25% and one-third.

Oh.  And people still (gasp!) turn to their Yellow Pages more frequently than anything else for finding products and services that are local to them.  According to research released a couple of months ago from Knowledge Networks, nearly half (48%) of consumers report print Yellow Pages as the resource they turn to most often for information on a business or service, and more than three-quarters (77%) use the print Yellow Pages overall.

As you would expect, age represents the greatest cutoff point.  The print books are for the olds:  54 percent of respondents over 35 years old said they prefer the Yellow Pages, compared to 29 percent of 18- to 34-year-olds.  I would also hazard a guess that the dividing line dissects social class and educational background as well.

So it might be a little bit early to plan the funeral for the dusty old Yellow Pages, though the companies that produce them are clearly being forced to diversify their product offerings and revenues.  They’re also adapting new standards, such as the shift to recycled paper and soy-based inks.

The Kelsey Group, a Research firm which services the Yellow Pages industry, does forecast turbulent waters ahead for the Print business.  This cut comes from their core base of advertisers, small businesses:

Print Yellow Pages is now in a challenging situation … overall, the accumulated data show small and medium-sized businesses’ spending on advertising has dropped, and the distribution of ad spending by bracket appears to have deteriorated. The assessments of the effectiveness and return on investment performance of print Yellow Pages are also weak. There is strong sentiment to reduce print Yellow Pages spending, and advertisers no longer view category position as a sufficient reason to maintain their current spending levels. In broad terms, SMBs that advertise in print Yellow Pages tend to be more consumer-oriented, established businesses. As a relatively expensive medium, Yellow Pages has lower uptake among younger, growing firms. These findings suggest directory publishers have work ahead of them in reestablishing their value proposition to small-business advertisers, particularly as these advertisers seek partners to help them find customers through nontraditional channels like the Internet, voice and mobile.

Google is not yet good at selling or positioning truly local advertising in scale.  In fact, there is not a single substantial advertising network pursuing this opportunity at the moment:  the problem isn’t in building the technologies that match advertising to your locale — the problem is in having a customer acquisition and sales engagement model that cost-effectively pulls in the mom & pop businesses that are the bread and butter for such an advertising network.

What the Yellow Pages is learning is that perception is their greatest enemy.  While surprising numbers of people still use their dead trees to find services and businesses, their advertisers are pulling out.  Other forms of advertising (even local newspapers) are more trackable and accountable than a static ad in the Yellow Pages that changes, at best, once per year and so there exists a greater perception of value in these.  Ironically, even though it’s still reaching customers, people are starting to realize that for most businesses the Yellow Pages isn’t cost-effective.

The real problem is the lack of a viable alternative.  This is actually where the Yellow Pages businesses stand to benefit.  They practically have a first-right-of-refusal in the small business advertising game already.  They have a scaled-out sales force and a revenue model that supports them — and, if it wasn’t already patently clear, a mandate to protect that structure — therefore they can cost-effectively engage with these small-scale advertisers.

What the Yellow Pages industry needs to do is sell more SKUs.  Today they sell advertising in the printed publication, as well as a range of services within their freestanding online directories.  In fact those Online Directories are #3 behind Search and the Printed Directory for how people find local businesses.  But that ain’t enough.  They need to become advertising networks.  They need to engage with the market of local bloggers, like Vancouver’s own Miss604, and give them advertising inventory that is relevant and can be targeted to their local audiences.

In other words the Yellow Pages businesses need to turn themselves inside-out and, instead of attempting to divert everyone into their silos and cathedrals, free their advertising to integrate with the wealth and breadth of the bazaar.  Locally-focused content sites, which today are starving because the best they can hope for is directly-retained advertising revenue or Google Adwords, could use the help — and in return they stand to generate substantially greater advertising exposure at far less cost than the online yellow pages businesses are attracting today.

It’s a simple shift but one which, I suspect, will have difficulty gaining traction within businesses that emerged from the Incumbent Local Exchange Carriers (Ma Bells) and which have inherited much of their managerial culture.

But there is a breakaway business opportunity here.  If they can make the shift then I believe the Yellow Pages can experience their third renaissance — and avoid the death by a thousand cuts that awaits them from environmentalists, web 2.0 kiddies, the expiration of their primary demographic, and online media empires alike.

But that economy is not a reflection of the ecosystems to which it is very closely tied, nor is it tied to the priorities that we, as societies, must maintain. We have always paid more to fuel our vehicles than we have to fuel our bodies, but this quixotic miscarriage of effort was not particularly problematic so long as our food and our fossil fuels came from different places. Rice paddies to not typically compete with oilfields.

I think that most of us intuitively agree with the fact that food sustenance is a much more important priority than transport. And while the two are interdependent, corn subsidies have knocked the whole dependency chain deeply out of alignment. The thesis I attempt to draw your attention to here is that without those subsidies, at least for the time being, the whole notion of “growing energy” in fields would be akin to mania. And without them, at least in the interim, the whole notion of our food supply competing for arable land with our fuel supply would be a non-issue.

Agflation is here. The cost of raw materials such as grains, rice, and especially corn is rising across the board. This means the cost of your daily meals will soon be rising as well, and the culprit is likely you — or at least it’s the twats you voted for. It’s not a good sign for a foundering U.S. economy, either, as “official” inflation reports tend to track just those sorts of items when measuring prosperity and struggle in inflationary markets.

Our planet, thanks to global warming and a mixture of other predicaments such as population growth and rampant warfare, barely has the resources to feed us all through agriculture, much less power our vehicles, industry, and cities. And while economic systems are supposed to be causing our allocation of resources etc. to fall into a natural balance, in this case there is substantial governmental interference which is creating an artificial economy around corn. Furthermore, many experts say that our past century, even when taking the extended drought of the 1930s into account, was unusually ideal for agriculture, and these days we ain’t doing so well. As the chart below illustrates, drought is the rule, rather than the exception to it, on the Great Plains.

There’s a perfect storm here which is diverting resources from your lunch plate to your gas tank. The basis for this imbalance are the subsidies for corn farmers in Canada and the U.S., as I’ve pointed out before. Corn is evil. And we wouldn’t grow as much of it as we do in North America, if it weren’t for the fact that it’s so heavily subsidized. The numbers for the U.S. alone are staggering.

No wonder farmers have been turning over rice and wheat and sugar crops to grow corn. With subsidies, they’re able to sell the corn on the market at prices substantially lower than it costs to produce. Of course, that’s especially fun if you’re a Mexican Farmer trying to grow maize as your family has done for hundreds of years, and there happen to be no subsidies in your own country. This has happened to Canada, mostly because of NAFTA and its proximity to the U.S. But it’s tempting, in the face of stiff competition from subsidized American farmers, for regulators around the world to attempt the same meddlesome subsidies in order to sustain their industries.

The second driver in the emergence of Ethanol also owes itself to interference by politicians and lobbyists: it can be traced back to a key loophole in the supposedly stringent fuel economy requirements placed on automobile manufacturers, called CAFE. As Timothy Carney points out:

“In 1975, following the Arab oil embargo, Congress created CAFE standards to force automakers and car buyers toward more fuel-efficient cars. An automaker’s ‘CAFE’ is the average miles per gallon of its entire fleet (weighted by number of sales per model) for a given year. … Current law requires all automakers to have a CAFE of 27.5 mpg for cars and 22.2 mpg for light trucks.”

Sounds great, right? Only problem is that auto manufacturers need only pay fines in order to escape the strangulation that CAFE restrictions would otherwise place on their big SUVs. The U.S. government has collected about $500 Million from the manufacturers.

The loophole is more recent, and it’s driving ethanol into the mainstream, which doesn’t bode well for those of us who like our corn-on-the-cob, not in our tank. In 1988, the US congress enacted the “Alternative Motor Fuels Act, creating an exemption from CAFE standards for auto manufacturers interested in developing what we now call “Flex-Fuel” vehicles, which run on E-85, a mixture of 85% ethanol (derived from corn) and 15% gasoline. It’s also why most of these Flex Fuel vehicles are big gas guzzlers, like GM’s Silverado and Suburban (listed here). Thanks to the AMFA, those bad boys are now exempt from the dreaded CAFE, saving millions of dollars in annual fines. This is of course regardless of whether you choose to use E-85 at the pump or not. As Carney adds,

“the federal government would multiply ethanol’s mileage by 6.6 and assume all flex-fuel cars would use ethanol half the time. This means a car that gets 20 mpg on gasoline and 15 mpg on ethanol would be treated for CAFE purposes as if it got 60 mpg.”

Typically, true alternative motor fuels such as Hydrogen, Electricity or Flux Capacitor were not invited to the AMFA party. It was strictly focused on E85. And now, with higher CAFE standards in the works, the U.S. Congress is poised to drive even more car models to the road using E85.

The result of this will be an even deeper investment in Ethanol, and further diversion away from the production of actual food on our farms. Surprisingly, even usually intelligent folks like Vinod Khosla and Tom Daschle have jumped on the Ethanol Bandwagon. Khosla has bet big on Ethanol, and the two waged a propaganda war, penning an OpEd piece in the NY Times called “Miles Per Cob” and speaking on radio shows like the one below:

powered by ODEO

The reality is far from the rosy picture they paint of America growing its own gasoline in perpetuity. It takes precious energy to produce Ethanol from crops, and of course since the cost of the raw materials is artificially deflated, there is little to advise the value of E85 once the true costs of the fuel are accounted for. And the emphasis on E85 as any sort of saviour is actually diminishing efforts to develop sustainable alternative fuel strategies, as it substantially displaces their economic benefits.

An unexpected benefit of all of this diversion of corn into the fuels market might be a return by our candymakers and soft drink manufacturers to real sugar, as maize prices skyrocket. The omnipresence of High-Fructose Corn Syrup, as I have asserted, is probably a major contributor to the North American obesity epidemic.

I am reading with increasing dismay about the steady march of Ethanol into the North American psyche as an alternative to buying fuel in the form of light, sweet crude oil from those mean, nasty Arabs. On the surface the idea behind biodiesel and ethanol is appealing and touches all of the perceived pain points of the modern, SUV-driving, suburbanite nuclear family: we can be energy-independent in North America, since the one commodity we have plenty of is space. Canola and Corn, the prime sources for biodiesel and ethanol, are hearty plants that can grow with less effort than potatoes, lettuce, or other food sources, too; theoretically in places where growing those latter crops can be tough. The promise, therefore, of guilt-free living is a simple one with universal appeal: we can have our gas-guzzlers, and eat it, too!

Indeed, this whole Ethanol fuel thing would be all hunky-dory if only it didn’t take dozens of gallons of oil derivatives per acre on a seasonal basis to grow it. The ONLY reason why Ethanol is a “cheaper” source of fuel is because of all of the government subsidies which exist in the US and Canada to nurture the growth of canola and corn instead of real crops that could end up on our dinner table, not to mention subsidies at the pump in the form of tax breaks for the oil companies. Those subsidies of course find their way into the coffers of companies like Monsanto, BASF, and Bayer CropScience, who market genetically-modified crops and integrated pesticides, controls, fertilizers to cash-strapped farmers. But here’s the hitch: we still need to import oil to grow our gasoline in an Ethanol scenario. Without oil-based fertilizers and pesticides, and diesel for tractors and farm equipment, we would have no corn.

Our fields should be used to grow food, not gasoline. Show me a country that doesn’t subsidize corn as a crop, and I’ll show you a country that thinks that Ethanol is a big fat joke.

A Harper’s Article recommended a few years ago that we simply follow the money. As we know, that path usually leads us to politicians.

BUSH is of course a big Ethanol supporter because it suits the short-sighted needs of his constituents: namely, red-state farmers and their enslavers: biotech companies like Monsanto who collectively spend hundreds of millions of dollars per year lobbying in Washington and suing farmers for such inanities as “breach of patent”. For Bush, it’s also a way to show the voting public that the oh-so-progressive Republicans are taking direct action to avoid the perceived impending oil crisis.

North America in particular is addicted to corn, and it’s affecting us around every corner:

• Our obesity epidemic is in large part the result of the overuse of High Fructose Corn Syrup as a replacement for sugar,
  
• The evolution of new species of control-resistant weeds and insect is due to the corruptive influence of Genetically-Modified Corn and Canola,
  
• And now, we’re hooking ourselves up to the Ethanol addiction. Yippee!
  

Soon enough every square inch of arable land will be occupied by canola and corn destined for soft drinks, junk food, and gas tanks. We’ll be paying less at the fuel pump but exponentially more for imported wheat, vegetables, and other food stuffs. And the intricate system of subsidies which allows people to declare that HFCS is cheaper than sugar, and ethanol is cheaper than crude oil, will continue to skew the economic system so that these crops look viable, until someone has the cojones to stand up and declare how ridiculous the whole circle jerk has become.

Politicians frequently meddle in the economics of our food supply with dramatic, though unintended, consequences. That’s how we ended up with corn subsidies in the first place. Of course, no politician wants to confront the reality here, which is that North American farming practises have become so poor that hearty weed-like plants such as Corn and Canola are just about the only remaining crop that can grow in the increasingly depleted soil table of our farmlands, a problem which Europeans confronted centuries ago — by changing (gasp!) their behaviour.

Like Hydrogen, Ethanol is a storage medium for fuel. It’s not a source.

-Ian.

I think that, just to be sure, the US should install warning labels
on all fingers indicating that putting them in proximity to one’s
mouth while holding food could result in dire obesity, particularly in North America. But does
anyone really think that Warning Labels are meaningful anymore, after
decades of useless labels on CDs, Cigarettes, and Ladders?

In the longer term I think that history will illustrate that the real
problem isn’t simply, “sugar” (which is a generic term referencing
dozens of different additives) but instead High Fructose Corn Syrup,
or what I call “engineered sugar”. HFCS was born in the 1970s, in
part to address two things: the high cost of sugar, due to America’s
ongoing embargo of Cuba (which has traditionally ranked highly within
the top five exporters of sugar); and the dramatic overproduction of
corn, due to America’s moronic ongoing subsidy of its growth by
farmers (which has also resulted in the wholly unnecessary emergence
of Ethanol, BioDiesel, and lots of other stupid Corn-Into-Gold
technologies).

High Fructose Corn Syrup is not natural. Its existence is the result
of a mad chemist’s array of processes, fermentations, chain
reactions, and engineering. As such it’s natural to assume that we
organisms might have a really hard time ingesting, processing, and
excreting it safely. Consumed in high enough quantities (which most
of us do today) it has been revealed to effectively turn our bodies
into mush.

What’s circumstantially different between the relatively svelte
peoples of Europe and the statistically obese heifers of North
America is the quality of the sugars we intake. Europeans consume
lots of sucrose (from beet and cane) and us Americans eat mostly
biochemically-engineered sugars. We’re fat. They ain’t.
Confectioners can’t even use the term “chocolate” in the EU unless
their product uses real sugars, which is one reason why Mars bars in
the UK kick ass on North American ones.

So go ahead and label Soda cans all you want, but it’s pure,
unmitigated folly and will have no appreciable effect on the number
of forklift cases faced by paramedics in the future.

You really wanna cope with the obesity problem?

– Educate children (and adults) in schools on how to eat
better in SIMPLE terms
– Stop subsidizing the growth of corn and other crops we
don’t need
– Stop fucking with our food supply unless you’re going to test thoroughly the effects
– Disincentivize the sale and distribution of junk food with extra taxes, etc.
– Close forever the revolving door between the FDA and Monsanto

.. of course we won’t do that, because the Fat Kids can’t afford
expensive Washington/Ottawa lobbyists as can Monsanto, Yum! Foods,
and McDonald’s. Instead, the problem will just continue to amplify
until — like the hormonally-unbalanced, permanently ill beef cattle
of the North American livestock industry — many of the people of our
countries will be managed in a continuous state of illness and sloth,
taxing our social services to the maximum while displacing the truly
sick. All of this at no expense and to the massive profitability of
a dwindling (through consolidation) number of megacorporations
(including, of course, health providers who triage and manage the
lingering deaths of the populace) in the BioTechnology, Food, and
Health Care industries.

High Fructose Corn Syrup is a poison by many names (dextrose, glucose-
fructose, etc.), and is so pervasive in North American foods that
it’s almost impossible to avoid consuming it. My Snapple that
contains the “Best Stuff On Earth!” lists glucose-fructose second in
quantity only to water on the label. Just about the only package on
my desk today that doesn’t contain any HFCS is my bottle of Evian.

Some info:

http://www.westonaprice.org/modernfood/highfructose.html
http://www.washingtonpost.com/ac2/wp-dyn/A8003-2003Mar10
http://www.madsci.org/posts/archives/jun99/927695713.Ch.r.html

A short term answer: go organic.

But what happens to society when only rich people can afford to eat a
healthy diet, free from chemicals and engineered foods?

-Ian.

By Ben Charny Staff Writer, CNET News.com January 27, 2003, 4:00 AM PT

Read more about VoIP

A group of telecommunications giants is quietly pushing a proposal that could create hang-ups for up-and-coming Internet-telephone rivals.

At stake are rules used to divvy up the 5.2 billion unassigned phone numbers set aside for use in North America, one of the biggest potential markets for Internet, or voice over IP (VoIP), telephone services.

VoIP technology allows people to make phones calls that travel over the Internet rather than solely across wires owned by long-distance phone companies. Such calls can be made from telephone systems that tap into the Internet, and from PCs.

The cost of making such calls is significantly less than that of basic long-distance service because the calls bypass the phone companies’ lines. As a result, many large corporations and tech-savvy consumers are using VoIP to make long-distance calls.

Net telephony providers such as Vonage and Net2Phone enjoy an unfettered stream of new numbers passed down from other carriers, which they can hand out to customers as they wish. Now, Verizon Communications, BellSouth and Qwest Communications International want federal regulators to tell the newcomers to heel.

Verizon and the others raised their concerns most recently at a meeting Wednesday of the North American Numbering Council (NANC). The industry group is chartered by the Federal Communications Commission and is charged with developing policies on how to distribute telephone numbers.

If successful, some observers warn, the lobbying push could dampen the market for Internet-telephone service in the United States.

“The results could choke off the industry before it really gets going,” according to a source familiar with the ongoing debate.

The looming fight over phone number allocations comes amid a supply crunch , just as VoIP services are shaping up as a significant new challenge to both local and long-distance carriers.

Once denigrated for spotty reception more similar to that of a CB radio than that of a phone, Internet calling has improved in quality to the point where analysts expect the industry to soar over the next few years. TeleGeography , a phone industry analysis firm, estimates that there were 18 billion minutes of VoIP phone calls in 2002, or about 10 percent of all the calls made.

As VoIP makes up a bigger proportion of the overall phone market, it is poised to join a growing field of competitors that are vying for an increasingly limited phone-number pool.

Your number’s up U.S. government reports estimate that the United States, Canada, Guam, Bermuda and Trinidad will run out of 10-digit numbers by the year 2025, driven by demand for cell phones, faxes and other devices. The coming crunch has led at least one industry organization to draw up a plan for a 12-digit future that could add some 640 billion new numbers to the pool.

In the meantime, the FCC composed two conservation measures, both opposed by the phone carriers. One, “number portability,” would let people keep their phone numbers even if they switch carriers. The second would force carriers to be assigned a smaller amount of telephone numbers at a time.

Against this backdrop, some carriers said they are concerned about what they see as unorthodox number allocation practices among VoIP providers.

At the Jan. 22 NANC meeting, proponents of VoIP phone number regulation said they want agencies including the FCC to examine the Internet-phone industry’s use of “designer numbers,” among other things. Because of the nature of the Web, computer phone providers can offer customers a choice of different area codes, regardless of where they live.

“The idea is not to choke this thing off, but to explore the issues and reach some agreements so we can go forward,” said Randy Sanders, BellSouth’s director of regulatory and external affairs.

NANC members were interested enough in the problems to order a subcommittee to come up with some of the possible technical problems involved with telephone numbers and VoIP.

Others, however, have dismissed the concerns as overblown for an industry that is barely getting its legs in North America.

In a white paper called “Much Ado About Nothing,” AT&T recently argued that Internet phone providers aren’t attracting enough customers now to even pose a possible problem to be addressed.

“The sky is not falling,” AT&T wrote to the NANC in a follow-up to the white paper.

Worldwide, there were around 2.93 million cable telephony subscribers in 2001, more than the 2.5 million most analysts were predicting, according to a study last year by Allied Business Intelligence, an Oyster Bay, N.Y.-based research firm. That number was expected to almost double by the end of 2002, reaching 5.2 million subscribers, the study predicted.

By contrast, only a handful of companies sell computer telephone service in the United States, with fewer than 100,000 people now using broadband connections to make phone calls. The leading computer phone provider is Vonage, which has about 10,000 customers.

NANC and the North America Numbering Plan Administrator (NANPA) distribute phone numbers in blocks to so-called incumbent local exchange carriers (ILECs), which then transfer some of those numbers to competitive local exchange carriers, or CLECs, that ride on their lines.

Vonage representative Brooke Shultz said the company gets its telephone numbers from CLECs, although she declined to name the suppliers or the terms of the transfer deals.

Shultz dismissed the lobbying effort as a competitive tactic.

“This is really the first sort of tactic to get us regulated,” said Shultz. “We’re not misusing numbers.”

Industrywide makeover Regardless of where the industry stands now, there is no doubt of the momentum behind a new way of delivering voice communications at a fraction of the cost of traditional phone networks.

VoIP providers generally require two things–a broadband connection and either an adapter for a landline phone or a microphone and speaker device for computers.

The calls travel mostly over the Web, avoiding the toll roads that are traditional phone lines. As a result, computer phone services can offer plans with unlimited dialing and no long-distance charges. The average monthly price is $40.

VoIP’s efficiencies come through its use of packet-switching technology, which breaks up communications into small bits that are dispersed to find the fastest path across the network and recombined at the end point. Traditional telephony, by contrast, is “circuit-switched,” creating a dedicated channel for the duration of the call.

Analysts have cautioned that traditional phone companies could get squeezed out of VoIP technology. Responding to the threat, big carriers, including Verizon and Qwest, have been inking billion-dollar deals with equipment makers such as Nortel Networks, to add packet-switching capabilities. Sprint began adding packet switching to its network in 2002, after a $1.1 billion deal with Nortel. Qwest has also announced that it will adopt packet-switching technology.

Norm Bogen, a communications infrastructure and services analyst with Cahners In-Stat, expects the sale of media gateways, the equipment needed to install VoIP systems, to increase from $883 million in 2003 to $2.74 billion in 2006.

Even as the big carriers race to get into this area, however, Bogen tipped the advantage to the upstart VoIP providers.

“They are replacing the local phone company,” Bogen said.

December 12, 2002 The Wi-Fi Boom By ADAM BAER

ON a brisk autumn day in Portland, Ore., Paul van Veen was soaking up some sun as he logged on to the Internet – from a spot in bustling Pioneer Courthouse Square. Mr. van Veen was looking for a job, and he was surfing the Web over a free wireless connection.

These days, Pioneer Courthouse Square is but one of some 140 public spots across Portland with free Internet access using a high-speed wireless technology known as Wi-Fi. The network of such Wi-Fi “hot spots” throughout the city was developed by Personal Telco, a grass-roots, nonprofit group devoted to blanketing the city with free access points.

Portland and Personal Telco are just part of a growing national trend. There are community groups promoting public Wi-Fi access in nearly every large American city, from NYCwireless, which “unwired” Bryant Park and Tompkins Square Park in Manhattan, to KC Wireless in the Kansas City area. They have been joined by independent cafes and restaurants, apartment houses and community centers across the country that view free, easy access to the Internet as a draw for customers.

At the same time, subscription services and pay-as-you-go Wi-Fi hot spots are springing up in cafes, bookstores, hotels and airports, put in by companies like T-Mobile and smaller, start-up competitors like Boingo Wireless and Wayport. Last week, Cometa Networks, a new company backed by Intel, AT&T and I.B.M., said it planned to put a network of thousands of wireless access points across a huge swath of the nation by 2004. The result is a growing array of options for Wi-Fi users and the emergence of a mobile wireless culture that spans business travelers, teachers and students, people relaxing in coffee shops and even moviegoers waiting for the show.

All that is needed for laptop users to wander with Wi-Fi (the name is short for “wireless fidelity”) is a piece of hardware called a Wi-Fi card – perhaps a $100 investment – and where the access is not free, a one-time or longer-term service provider. Anecdotal evidence suggests that most users are male, under 40 and comfortable with technology.

The technology is, however, becoming more accessible. People who use paid hot spots like those offered by Wise Zone, Wayport and T-Mobile simply open their browsers to log on. Users of free city networks like NYCwireless are asked to agree to the network’s “acceptable use” policy, and if they do, they are on the Internet for six free hours until they have to sign on again.

Wi-Fi is also changing the way that people – at least some young, technologically adept people – go about their work. In Philadelphia, Yvonne Jones, a 33-year-old freelance copywriter, moved her base of operations to a Starbucks about a month ago and said she quickly became “a thousand times” more productive than she was when working at home. “It’s not your house, and you are there for a specific purpose, so the ‘distractions’ aren’t that distracting,” she said.

Frank Bonomo, who is between apartments and living with his parents on Long Island after losing his job at a dot-com, spends nearly every workday at a Starbucks in Greenwich Village. Mr. Bonomo, 24, is building a freelance practice as a Web producer, managing online advertising and message boards for design firms. He uses an account with T-Mobile to stay in touch with his clients by e-mail and instant messaging. “I commute here from the Island so I can be close to the offices of my three to four regular clients,” he said.

Mr. van Veen, who is looking for work as a wireless systems engineering manager, said he was using the public Wi-Fi hot spot in Portland to research a “hot job lead” because the connection was so much faster than his home connection. “At home, you generally use a standard phone line,” he said. “This downloads at 200 kilobytes a second, which is just lightning quick.”

Actually, under ideal conditions, Wi-Fi offers even greater speeds – 11 megabits per second, exceeding those typically achieved by high-speed home connections through cable modems or digital subscriber lines. Connection speeds slow, however, as a user gets farther from the source of the signal, which has a range of about 300 feet.

Ryan Palmer, a Portland-based consultant who studies human-computer interactions, said public wireless access had allowed him to be more efficient and enjoy himself at the same time. Mr. Palmer, 27, was on a business trip to Austin and wanted to sample the authentic Texas barbecue that he kept hearing about, but he also had some work to finish. He was able to do both at Green Mesquite BBQ, a restaurant with a recently installed free Wi-Fi access point.

“It’s nice to surf the Web and enjoy some good food,” he said, adding that the Internet connection at his hotel was so slow it was “painful.” He said: “I feel empowered. I’m not a stranger in a strange land anymore.”

It took Mr. Palmer 15 minutes of fiddling with the settings on his laptop to get a connection at the restaurant. “I had to play around a little bit,” he said. “I’m still not confident that someone could walk in off the street and do it.”

Not everyone can. Jodi Avant, 41, who is studying for teacher certification at the University of Texas at Austin, uses wireless frequently on campus, where it is widely available. As part of her program, she had to buy an Apple iBook with a wireless card to do schoolwork and communicate with teachers and other students.

She tried and failed to log on to the free Wi-Fi hot spot at a Schlotzsky’s Deli near the campus. “I brought it here, set it up and played around with it for half an hour,” she said. But she did not know what settings she needed and there was no help available in the restaurant.

Ms. Avant, who lives near Schlotzsky’s, visits the restaurant with her children every Saturday. They stay about an hour and use the wireless Internet terminals provided by the restaurant. She checks her e-mail while her 7- and 11-year-old sons play games and her 8-year-old daughter visits sites like www.funjail.com. Ms. Avant said she planned to keep trying to get through to the Schlotzsky’s network on her own computer. “It’s a lot better than my dial-up at home,” she said. “The only downside is I can’t print anything.”

People who use public Wi-Fi networks have another option: they can use the same setup to connect to wireless networks at home, at the office and at school. Running a Wi-Fi network in an office is only slightly more involved. Janine Kurnoff, who runs a Portland company that trains sales and marketing professionals, has maintained her Wi-Fi network for a year and a half. “There’s a little bit of setup involved, but less than an hour of work,” she said. “You don’t have to configure anything. The computer sees your network and picks it up.”

Forest Ridge School of the Sacred Heart, a girls’ school in Bellevue, Wash., was part of Microsoft’s Pioneer School program on incorporating technology into the curriculum in 1996. Now each student’s tuition buys a Wi-Fi-ready laptop.

“There’s a lot of instant messaging going on,” said Diane Burgess, 39, the school’s information technology manager. Ms. Burgess said classes were no longer disrupted by cellphones, parents message their children to arrange pickup times, and students regularly share files for collaborative projects. “Wi-Fi lets them do group work from anywhere on campus,” Ms. Burgess said. “It’s a really freeing experience.”

Beyond the hardware and software difficulties that users like Ms. Avant have encountered at public Wi-Fi spots, there are traffic considerations: connection speeds can slow if the number of users on a network picks up. And some home Wi-Fi users have reported that the systems, which operate on the 2.4-gigahertz frequency, are subject to interference from cordless telephones and microwave ovens. Ms. Burgess said that water, which absorbs the wireless signal’s energy much like food in a microwave oven, can interfere with a home network and that glasses, clothes and other clutter can obstruct the signal. “It actually helps me keep my home cleaner,” she said. “My kids keep their rooms absolutely streamlined now.”

Security is also a concern for open networks. Mark Malewski of NexTech Wireless, a Chicago-based nonprofit group that is trying to organize grass-roots Wi-Fi networks, said there were steps the hot spot operators could take to help. “We have an authentication server that tracks usage,” he said. “Without that, a lot of people could plug in an access point and share it with those who could conduct fraudulent activity.”

Security concerns will become more important as public Wi-Fi networks spread and more people use them. Statistics on use of the technology are elusive, but according to Gartner, a consulting company in Stamford, Conn., the number of Wi-Fi cards sold in North America this year is on track to jump 75 percent over 2001, with another 57 percent gain over this year expected in 2003. William Clark, research director at Gartner, said that the number of frequent Wi-Fi users was expected to grow to 1.9 million next year from 700,000 in 2002, with the number of public hot spots in North America likely to nearly triple by the end of next year from about 3,300 now.

In fact, this growth is responsible for casual Wi-Fi use beyond the high-tech vanguard. Sherry Bough, 56, and her husband, Bob, 59, live at the Austin Lone Star RV Resort, a gated park with a heated pool, a playground and a Wi-Fi network, for six months a year to be near their children. The Boughs used to order a phone line whenever they stayed in one place for more than a month so that they could use their dial-up Internet connection to track their investments, check e-mail and search the Web. Now they use the park’s Wi-Fi network.

“It’s amazing how fast it downloads,” Mrs. Bough said of the network, which was installed earlier this fall and offers fee-based service by the day, week or month. Still, she said, it took her a couple of hours to connect the first time. “It was a little bit confusing,” she said. “To me, that’s where they’re failing right now.” To use the wireless network, the Boughs had to buy a U.S.B. card for their computer and they updated to Windows 98; Mrs. Bough said they also needed to install more memory.

James Westberry, 55, is another part-time resident at Austin Lone Star. He works in Austin, the state capital, when the Legislature is in session, advising lobbyists for small telephone companies like the Eastex Telephone Cooperative, where he works. He goes home to Tyler, Tex., on the weekends.

“I have to have high-speed Internet wherever I’m at,” he said. “Otherwise I’d be at a hotel or have an apartment.” He uses it to download bills, attend committee meetings online and to check e-mail.

Public Wi-Fi has also begun to change the way people play. Jack Swayze, a 27-year-old technical-support worker in Vienna, Va., gathers with laptop-equipped friends at Wise Zone hot spots around Washington to team up for live-action shooting games like Unreal Tournament 2003 and Medal of Honor, which they play against other Web “posses.” “The connection is as reliable and fast as my connection at home,” he said.

At the Alamo Drafthouse North, a movie theater in Austin, wireless access is available in the four screening halls. Tim League, the theater’s 32-year-old owner, installed the Wi-Fi access in concert with Austin Wireless, which set up the system after he agreed to offer it to viewers free.

Mr. League uses the network to offer Internet-based activities to entertain viewers before movies. He is testing interactive trivia programs and audience polling contests and expects to have one running soon. “I’ve always thought it strange that the slides you see before movies still exist,” he said. “That the practice hadn’t changed in 30 years just seemed silly.” He shows animated videos that are downloaded from the Web using a Wi-Fi-equipped computer in his projection room. “Viewers also use the Web to research movie facts or catch up on their work or e-mail, though we ask them to close their laptops when the show begins,” he said.

Entertainment is the main motivation behind Shane Nixon’s experiments with public Wi-Fi. Mr. Nixon, 34, was trying to log on to a Wayport hot spot at the Austin airport last week while he waited for a flight to Bowling Green, Ky., where he lives.

A construction and maintenance coordinator who travels three weeks a month, Mr. Nixon had been using dial-up connections while on the road to chat with his wife by instant messaging and to play card games with her on sites like www .mysticisland.net. He had just installed a wireless network at home so that he, his wife and two sons could go online at once, and he was trying to connect wirelessly on the road for the first time. When he could not log on, he used his cellphone to call Wayport’s technical-support number, but his cellphone battery died. Despite the technical problems he encountered, Mr. Nixon said he would probably stick with Wi-Fi. “I’m gone all the time, so that’s a way to keep in touch and do something together,” he said.

Mr. Nixon noted another virtue of high-speed chatting. “You can talk all night long,” he said, “and you don’t have a large phone bill.”

———–

Whatever the reasons, it is clear that this trend is growing. A government that doesn’t heed these warnings runs the risk of reaching a Tipping Point (hi Lance!) where insurgent ideas lead to insurgent behaviour, on a global scale. That would make 9-11-01 look like an appetizer.

-Ian.

—- http://people-press.org/reports/display.php3?ReportID5

What the World Thinks in 2002 How Global Publics View: Their Lives, Their Countries, The World, America

Released: December 4, 2002

Global Gloom and Growing Anti-Americanism

Despite an initial outpouring of public sympathy for America following the September 11, 2001 terrorist attacks, discontent with the United States has grown around the world over the past two years. Images of the U.S. have been tarnished in all types of nations: among longtime NATO allies, in developing countries, in Eastern Europe and, most dramatically, in Muslim societies.

Since 2000, favorability ratings for the U.S. have fallen in 19 of the 27 countries where trend benchmarks are available. While criticism of America is on the rise, however, a reserve of goodwill toward the United States still remains. The Pew Global Attitudes survey finds that the U.S. and its citizens continue to be rated positively by majorities in 35 of the 42 countries in which the question was asked. True dislike, if not hatred, of America is concentrated in the Muslim nations of the Middle East and in Central Asia, today’s areas of greatest conflict.

Opinions about the U.S., however, are complicated and contradictory. People around the world embrace things American and, at the same time, decry U.S. influence on their societies. Similarly, pluralities in most of the nations surveyed complain about American unilateralism. But the war on terrorism, the centerpiece of current U.S. foreign policy, continues to enjoy global support outside the Muslim world.

While attitudes toward the United States are most negative in the Middle East/Conflict Area, ironically, criticisms of U.S. policies and ideals such as American-style democracy and business practices are also highly prevalent among the publics of traditional allies. In fact, critical assessments of the U.S. in countries such as Canada, Germany and France are much more widespread than in the developing nations of Africa and Asia.

A follow-up six-nation survey finds a wide gap in opinion about a potential war with Iraq. This threatens to further fuel anti-American sentiment and divide the United States from the publics of its traditional allies and new strategic friends. But even on this highly charged issue, opinions are nuanced. Iraq is seen as a threat to regional stability and world peace by overwhelming numbers of people in allied nations, yet American motives for using force against Iraq are still suspect.

Souring attitudes toward America are more than matched by the discontent that people of the planet feel concerning the world at large. As 2002 draws to a close, the world is not a happy place. At a time when trade and technology have linked the world more closely together than ever before, almost all national publics view the fortunes of the world as drifting downward. A smaller world, our surveys indicate, is not a happier one.

The spread of disease is judged the top global problem in more countries than any other international threat, in part because worry about AIDS and other illnesses is so overwhelming in developing nations, especially in Africa. Fear of religious and ethnic violence ranks second, owing to strong worries about global and societal divisions in both the West and in several Muslim countries. Nuclear weapons run a close third in public concern. The publics of China, South Korea and many in the former Soviet Bloc put more emphasis on global environmental threats than do people elsewhere.

Dissatisfaction with the state of one’s country is another common global point of view. In all but a handful of societies, the public is unhappy with national conditions. The economy is the number one national concern volunteered by the more than 38,000 respondents interviewed. Crime and political corruption also emerge as top problems in most of the nations surveyed. Both issues even rival the importance of the spread of disease to the publics of AIDS-ravaged African countries.

These are among the principal findings of the Pew Global Attitudes survey, conducted in 44 nations to assess how the publics of the world view their lives, their nation, the world and the United States. This is the first major report on this survey. The second will detail attitudes toward globalization, modernization, social attitudes and democratization. The International Herald Tribune is our global newspaper partner and conducted in-depth interviews with citizens in five nations, some of which are quoted in this report.

The primary survey was conducted over a four-month period (July-October 2002) among over 38,000 respondents. It was augmented with a separate, six-nation survey in early November, which examined opinion concerning a possible U.S. war with Iraq.

Follow-Up Survey on Iraq

Huge majorities in France, Germany and Russia oppose the use of military force to end the rule of Saddam Hussein. The British public is evenly split on the issue. More than six-in-ten Americans say they would back such an action. But the six-nation poll finds a significant degree of agreement in Europe that Iraq is a threat to the stability of the Middle East and to world peace. More people in all countries polled say the current Iraqi regime poses a danger to peace than say the same about either North Korea or Iran.

Majorities in Great Britain, Germany and France also agree with Americans that the best way to deal with Saddam is to remove him from power rather than to just disarm him. However, the French, Germans and Russians see the conflict between the Israelis and Palestinians as a greater threat to stability in the Middle East than Saddam’s continued rule. The American and British publics both worry more about Iraq than the Israeli-Palestinian conflict.

Turkish respondents differ from Europeans about the danger posed by Iraq. They are divided on whether the regime in Baghdad is a threat to the stability of the region, and just a narrow 44% plurality thinks Saddam Hussein should be removed from power.

Fully 83% of Turks oppose allowing U.S. forces to use bases in their country, a NATO ally, to wage war on Iraq. Further, a 53% majority of Turkish respondents believe the U.S. wants to get rid of Saddam as part of a war against unfriendly Muslim countries, rather than because the Iraqi leader is a threat to peace.

While Europeans view Saddam as a threat, they also are suspicious of U.S. intentions in Iraq. Large percentages in each country polled think that the U.S. desire to control Iraqi oil is the principal reason that Washington is considering a war against Iraq. In Russia 76% subscribe to a war-for-oil view; so too do 75% of the French, 54% of Germans, and 44% of the British. In sharp contrast, just 22% of Americans see U.S. policy toward Iraq driven by oil interests. Two-thirds think the United States is motivated by a concern about the security threat posed by Saddam Hussein.

In addition, respondents in the five nations surveyed (aside from the U.S.) express a high degree of concern that war with Iraq will increase the risk of terrorism in Europe. Two-thirds of those in Turkey say this, as do majorities in Russia, France, Great Britain and Germany. By comparison, 45% of Americans are worried that war will raise the risk of terrorist attacks in the U.S.

Suspicions about U.S. motives in Iraq are consistent with criticisms of America apparent throughout the Global Attitudes survey. The most serious problem facing the U.S. abroad is its very poor public image in the Muslim world, especially in the Middle East/Conflict Area. Favorable ratings are down sharply in two of America’s most important allies in this region, Turkey and Pakistan. The number of people giving the United States a positive rating has dropped by 22 points in Turkey and 13 points in Pakistan in the last three years. And in Egypt, a country for which no comparative data is available, just 6% of the public holds a favorable view of the U.S.

The war on terrorism is opposed by majorities in nearly every predominantly Muslim country surveyed. This includes countries outside the Middle East/Conflict Area, such as Indonesia and Senegal. The principal exception is the overwhelming support for America’s anti-terrorist campaign found in Uzbekistan, where the United States currently has 1,500 troops stationed.

Sizable percentages of Muslims in many countries with significant Muslim populations also believe that suicide bombings can be justified in order to defend Islam from its enemies. While majorities see suicide bombing as justified in only two nations polled, more than a quarter of Muslims in another nine nations subscribe to this view.

U.S. image problems are not confined to Muslim countries. The worldwide polling conducted throughout the summer and fall finds few people, even in friendly nations, expressing a very favorable opinion of America, and sizable minorities in Western Europe and Canada having an unfavorable view. Many people around the world, especially in Europe and the Middle East/Conflict Area, believe the U.S. does not take into account the interests of their country when making international policies. Majorities in most countries also see U.S. policies as contributing to the growing gap between rich and poor nations and believe the United States does not do the right amount to solve global problems.

U.S. global influence is simultaneously embraced and rejected by world publics. America is nearly universally admired for its technological achievements and people in most countries say they enjoy U.S. movies, music and television programs. Yet in general, the spread of U.S. ideas and customs is disliked by majorities in almost every country included in this survey. This sentiment is prevalent in friendly nations such as Canada (54%) and Britain (50%), and even more so in countries where America is broadly disliked, such as Argentina (73%) and Pakistan (81%).

Similarly, despite widespread resentment toward U.S. international policies, majorities in nearly every country believe that the emergence of another superpower would make the world a more dangerous place. This view is shared even in Egypt and Pakistan, where no more than one-in-ten have a favorable view of the U.S. And in Russia, a 53% majority believes the world is a safer place with a single superpower.

The American public is strikingly at odds with publics around the world in its views about the U.S. role in the world and the global impact of American actions. In contrast to people in most other countries, a solid majority of Americans surveyed think the U.S. takes into account the interests of other countries when making international policy. Eight-in-ten Americans believe it is a good thing that U.S. ideas and customs are spreading around the world. The criticism that the U.S. contributes to the gap between rich and poor nations is the only negative sentiment that resonates with a significant percentage of Americans (39%).

Global Discontents

In most countries surveyed, people rate the quality of their own life much higher than the state of their nation; similarly, their rating of national conditions is more positive than their assessment of the state of the world. Even so, the survey finds yawning gaps in perceptions dividing North America and Western Europe from the rest of the world.

Americans and Canadians judge their lives better than do people in the major nations of Western Europe. But that gap is minimal when the publics of the West are contrasted with people in other parts of the world.

Asians, South Koreans excepted, are less satisfied with their lives than are Western publics. Personal contentment is especially low among Chinese and Indian respondents, and relatively few feel they have made personal progress over the past five years. Nevertheless, the Chinese and Indians are extremely optimistic about their futures. In fact, many people in Asia expect their lives to get better. This is the case in the Philippines, Vietnam, South Korea and Indonesia. The Chinese and the Vietnamese, in particular, have great confidence that their children will lead better lives than they have. By contrast, the Japanese are among the gloomiest people in Asia, whether reflecting on the past, present or the future.

[….]

———–

Service Providers suck. They hire guys like me to figure out how to maximize the share-of-wallet while containing the growth and supporting their other, boneheaded, legacy products. Generally speaking, carriers are obstacles to the adoption of technology, rather than instigators of it.

What this article hints at is a mesh of ad-hoc mobile phone users each sharing their network capacity and organically frequency-hopping to avoid network trouble zones. Whereas it has proven impossible for mobile phone network dweebs to engineer reliable wireless services in North America, this could be the answer.

More and more spectrum will be made available to the general public around this world, or we will figure out better ways to use that which is already allocated. In the end, the Return On Investment that carriers expect for their 3G licenses, which already has an event horizon measured in decades, may never happen.

Regulatory bodies will be faced with bolstering floundering wireless carriers, which are clearly obstacles to growth, or enabling an ecosystem of radical technologies to flower into a jungle of new technologies, applications, and networks. The trend of technology and invention clearly favours the latter.

-Ian.

——— http://story.news.yahoo.com/news?tmpl=story&ncidR8&e=4&cidR8&u=/ap/ 20021125/ap_on_hi_te/the_new_spectrum

New Gadgets May Spark Deregulation Mon Nov 25, 7:38 AM ET Add Technology – AP to My Yahoo!

By BRIAN BERGSTEIN, AP Business Writer

NEW YORK (AP) – It almost sounds too “Star Trek” to be possible: A multipurpose cell phone that also serves as an FM radio, walkie-talkie, garage door opener and TV remote control.

And what if every time you made a call with that handset it increased the performance of other phones already in use — instead of competing for airwaves with them?

While such wireless wizardry remains a few years off, those days could be coming faster now, thanks to a rare confluence of technology breakthroughs and a rethinking of airwave regulation by the federal government.

“It is kind of an interesting point in time when it comes to wireless networks,” said Dallas Nash, co-founder of Mississippi-based SIGFX LLC, a player in the impending wireless revolution.

SIGFX figured out how to transmit cell phone calls in a thin part of the airwave spectrum already used by TV stations. By dramatically reducing the cost and increasing the range of wireless phone networks, the invention could bring reliable service to rural areas and developing countries.

Vanu Bose has big dreams, too: to create that new generation of radios — that’s really all that cell phones and garage-door openers are — that can move between various functions with an icon click. The trick is to replace much of the circuitry found in radios with flexible software.

Bose began working at it in a military-sponsored communications project at the Massachusetts Institute of Technology (news – web sites). After graduating in 1998, he started his own company, Vanu Inc., to further develop the technology.

Now Cambridge, Mass.-based Vanu Inc. has created an all-software base station — which relays calls from wireless phones on cellular networks. Vanu also has built a prototype handheld computer that can make calls on different kinds of wireless networks and work as a walkie-talkie, baby monitor, FM radio — “whatever you want,” Bose said.

The big challenge is that the device is limited to 10 to 20 hours of battery life. Bose — son of the stereo engineer who founded Bose Corp. — believes that with more development and improvements in low-power microprocessors, the device could be the size of a cell phone and have a much longer battery life.

At the same time, other researchers are making progress in developing “smart” radio receivers that can, on their own, determine instantaneously when and where a bit of spectrum is going unused and switch their communications accordingly to avoid interference. (A method of doing that is already employed in cellular networks and cordless phones).

In fact, advocates of an “open spectrum” or a “commons” policy believe new generations of radio receivers will routinely handle their own conversations and help relay others at the same time.

“If every radio is both a transmitter and a receiver, as you add more, you add capacity to the network,” said David P. Reed, a former chief scientist at Lotus Development Corp. and a leader of the “open spectrum” movement.

“My gut feeling,” Reed said, “is that in 10 or 20 years this will be as big as the Internet.”

That may seem a wide-eyed prediction, but ideas like this are not just grass-roots dreams.

Intel Corp. backs software-defined radio in hopes it will ignite an explosion of demand for wireless chips. The military’s Defense Advanced Research Projects Agency (DARPA) is working on several ways to “increase spectrum usage by dynamically sensing and adapting in frequency, time and space.”

Researchers at Bell Laboratories, part of Lucent Technologies Inc., recently announced a breakthrough in their BLAST technology, which takes advantage of interference on a network to increase the rates at which data can be sent.

Many technology experts say such breakthroughs should force a revolution in how we treat the airwaves. Since the 1920s, electromagnetic spectrum has been handled like real estate. The government licenses use of slices of spectrum and tightly regulates what can be done in those bands.

Much of the spectrum is tied up — largely by the military — and there’s only so much room for experimental and innovative new technologies in unlicensed bands, such as those occupied by cordless phones and the wireless networking system known as WiFi.

But in what looks like the beginning of a historic policy shift, the Federal Communications Commission (news – web sites) has been listening closely to the technology crowd — and to cellular carriers that spent tens of billions of dollars for spectrum licenses and want more freedom to use or trade them as they see fit.

“We have perhaps the most interesting debate in spectrum governance taking place in America since the 1930s,” said Adam Thierer, director of telecommunications studies at the Cato Institute, a libertarian think tank.

This month, a task force appointed by FCC (news – web sites) Chairman Michael Powell — and headed by the former leader of DARPA’s communications research — offered a framework for a spectrum policy overhaul expected to begin next year.

The group said the government should grant wireless carriers more flexibility with their expensive spectrum licenses so they may lease portions of the airwaves that go unused at certain times, for example.

It also endorsed the “commons” concept in some circumstances, saying new technologies should have more freedom to operate in regulated bands — as long as they don’t interfere with cellular conversations or radio broadcasts — and in unlicensed parts of the spectrum as well.

In essence, the FCC finally would be treating spectrum like real estate in the physical world, where the public has easements and parks alongside private property, and airplanes can fly overhead.

Such monumental changes probably will provoke some fights in Washington.

“Certain ossified licensees will inherently be resistant to change,” said Bryan Tramont, Powell’s senior legal adviser.

Even parties who are clamoring for change are circumspect. Wireless phone carriers, for example, praise the FCC’s efforts to modernize spectrum policy. But some say technologies such as software-defined radio might be too unproven to form the basis of policy changes.

They also worry that low-power transmissions by rival technologies on or near already-licensed frequencies could interfere with wireless phone conversations.

“It’s hard to oppose looking at spectrum policy anew,” said Doug Brandon, AT&T Wireless’ vice president of federal affairs. But, he added, eventually, “someone will say, `My ox just got gored.'”

———–

Its testosterone-fuelled traders were fixtures in Houston’s strip clubs. One division of the company spent $2m a year on flowers alone. And its executives used the firm’s corporate jets as taxis. In the first extract from his remarkable new book on the rise and fall of Enron, Robert Bryce describes the heady mix of greed, sex and arrogance that produced America’s most spectacular financial scandal

Monday November 4, 2002 The Guardian

J R Ewing never talked about pipelines. Jett Rink was interested in drilling for oil, not shipping it through a maze of unseen steel tubes. Real men – particularly fictional ones like Ewing and Rink – find oil and gas. Lesser mortals navigate the maze of engineering, metallurgical and legal wrangles that are needed to get those hydrocarbons delivered to the nearest refinery or storage terminal. Face it, there’s no sex in laying pipe.

Yet pipelines are the conduit for the American Dream. Every year, pipelines carry some 550 billion gallons of crude and petroleum products to refineries, airports, rail yards and other locations. Trillions of cubic feet of natural gas are moved through some 2 million miles of interstate, intrastate and local pipelines. Pipelines are the largely invisible, sometimes dangerous, infrastructure that allows America to consume more energy than any country on earth. By the early 1990s, when Jeff Skilling, a former McKinsey consultant, began his rise to power within Enron, the company and its leaders were, says one veteran gas man, “the kings of the American pipeline business”. Enron owned the greatest collection of tubular steel infrastructure ever assembled in one company. It was transporting or selling 17.5% of all the gas consumed in the United States.

Those pipelines were profitable but they were, and still are, heavily regulated by federal authorities. With all of the federal regulations on pricing, the pipeline business is more akin to the utility business than the energy business. Pipelines carry a product from one spot to another, and the owner of the pipe gets paid a fee for the service. It’s a straightforward, profitable business. As one former Houston Natural Gas executive said of pipelines: “All they do is make money. It’s boring, but it’s dependable.”

Perhaps that’s why Skilling hated them so much. Skilling’s brain was too big for pipelines. He was always thinking big thoughts. And big thoughts have no place in the pipeline business. Pipeline companies demand solid managerial skills from people who show up every day and stick to their business. Skilling was not a manager, he was a deal-maker. Exotic financing schemes and the deals that came with them excited Skilling. Collecting nickels, dimes and quarters from what was essentially a new-fangled toll road that no one could even see, did not. The only thing that mattered to Skilling about Enron’s pipelines was that they kept providing him with cash that he could use elsewhere.

For Skilling, elsewhere meant only one place: the trading business. Skilling may have disliked pipelines, but he was an absolute genius at figuring out how to trade the precious commodity that moved inside them.

As soon as Skilling moved on to the 50th floor, he began a hiring binge that didn’t stop until the company went bankrupt. But give him credit: he attracted the best and the brightest. Harvard, West Point, Rice, University of Chicago – every prestigious school in the country began feeding their best MBAs, engineers and maths wonks to Enron. At the same time, Skilling began raiding Wall Street, stealing traders, investment bankers, information technology whizz kids, programmers and every other skill-set that Enron needed.

The fleet of newly hired hotshots were never short of confidence or the belief that they were working at the best, smartest, fastest-moving company in the world. One longtime Enron employee (who held a PhD from the University of Maryland) said: “There’s no question that Enron people arrogantly thought they were smarter than everybody else. There’s no excuse for that. But they were smarter than everybody else.”

By mid-2000, Skilling had achieved his goal: almost all vestiges of the old Enron, the stodgy, slow-growing pipeline-based entity that transported gas and generated a bit of electricity, were gone. In its place, Enron had become a trading company. And with that change came a rock-’em, sock-’em, fast-paced trading culture in which deals and “deal flow” became the driving forces behind everything Enron did.

Traders ran the place. All of the company’s top executives – particularly those close to Skilling – were either traders or had helped run trading operations. And all of them believed in Skilling’s vision of Enron as a trading company. Chief financial officer Andy Fastow (who was last week charged with 78 counts of fraud and money-laundering) had learned the trading business while in Skilling’s group in the early 90s. Greg Whalley, the president of Enron Wholesale Services, the entity that ran the company’s trading operations, had worked in Europe as one of Enron’s chief power marketers. Mark Frevert, the chairman and CEO of Enron Europe, had overseen the company’s European trading operations. Other top execs, such as Lou Pai, had been involved in trading for years.

Pai, who owned a 14,000ft mountain in Colorado, had two passions in life: money and watching young women take their clothes off – but not necessarily in that order. At Enron, he was able to gorge on both. Stories of Pai’s fascination with strippers were legion. One executive recalled getting an expense report from Pai in 1990, shortly after Pai began working for him. “It was $757 [£484] for one lunch. He and two or three co-workers had gone to Rick’s [a Houston strip club]. I said, ‘I’m not approving this. You are going to have to take care of this yourself.’ You just don’t do that in business.”

But Pai’s attitude to women and sex was far from exceptional at Enron. Several women who worked at Enron said that Skilling and the young traders who dominated the company viewed women as a commodity that could be bought and sold just like gas, electricity, or any of the other products Enron was trading. And since Houston’s strip clubs are among the best in the country, it was only natural that Enron’s boy geniuses visited them regularly.

Sex and extramarital affairs are not, by themselves, a problem for companies. But at Enron, the sexual misconduct happened at such high levels that it became a part of the company’s culture. The sex, said one executive, “set the tone for the rest of the company. And you couldn’t get away from it. It was like a humidifier. It was in the air.”

Enron’s massive new edifice to itself, a 40-storey, 1.2 million sq ft building was going to be a monument to trading. The building, designed by acclaimed architect Cesar Pelli, would have four trading floors – each big enough for 500 “transaction desks” – with state-of-the-art communications systems. Chairman Ken Lay and Skilling would move their offices from the 50th floor of the old building down to the seventh floor of the new one. Instead of overlooking all of Houston, their new offices would be on a balcony overlooking the new trading floors. And they wouldn’t have to take elevators to get to the traders: two snazzy, curved stairways were going to connect their floor with the trading area.

The new tower had been under construction for nearly a year and was costing Enron a fortune. Pelli’s design, which would mimic the glass-sheathed oval tower Enron already occupied, was going to give Enron the most expensive building in downtown Houston. The final bill would be about $300m.

Enron was wasting even more money in Europe. The company’s European trading operations were located in an impressive new building named Enron House, located at 40 Grosvenor Place, in the heart of London, on land owned by the Duke of Westminster. Although the building cost $74m to construct, Enron spent another $30m in bringing it up to the company’s lofty standards. When it moved into Enron House in November 1999, the top executives, including Frevert, could sit in their top-floor offices and look down on rear gardens of Buckingham Palace. The rent for the new digs? A bargain at a mere £8m a year.

And if the Pelli-designed building was going to make a statement, it had to be decorated. It needed art. Expensive, trendy art. And Andy Fastow and his wife Lea – modern-day de Medicis – were just the ones to make sure Enron made the right decisions. Beginning in the summer of 2000 and continuing right through until the autumn of 2001, as Enron began to spiral downward, the Fastows were the driving force behind an amazing art-buying binge. They spent $575,000 on a soft sculpture by Claes Oldenburg. They paid $690,000 for a wooden sculpture by Martin Puryear, a record amount for his work sold at auction. The committee also bought works by the sculptor Donald Judd, the painter-printmaker Vic Muniz, the video artist Nam June Paik, the photographer Julie Moos and the painter Bridget Riley. By August and September 2001, the company had spent about $4m on 20 different pieces.

Extravagantly appointed offices were far from the company’s only indulgence. In 1997, Skilling’s gas and power trading group, Enron Capital and Trade, spent about $2m on flowers, according to an auditor who worked for the division. “Oh yeah, we had secretaries sending their bosses flowers, bosses sending their secretaries flowers. For a while, we were the biggest customer for about five florists all over Houston,” said the auditor. “We found out some secretaries were sending flowers to their friends so that the secretaries could get the pretty vases the flowers came in.”

Flowers, first-class airfares, first-class hotels, limousines, new computers, new Palm Pilots, new desks – Enron employees began to expect the best of everything, all the time.

But cost-control was never a consideration for Skilling and Lay. After all, EnronOnline, the company’s new website, was the toast of cyberspace. In the few months since it had been launched in November 1999, it had quickly become the biggest e-commerce site the internet had ever seen. The trading site had been the brainchild of a trader, of course, named Louise Kitchen, a brash young Brit who had been Enron’s head natural gas trader in Europe. Cocky and impatient, Kitchen was emblematic of Skilling’s new version of Enron. At just 31 years old, she was young, rich (in 2001, her total pay from Enron was $3.47m), and she believed that there was no end to what she – and Enron – might do.

While she and her team were developing the site, Kitchen said: “I didn’t need a pat on the back from Ken Lay or Jeff Skilling. It was obvious that we should have been doing this ages ago.”

Kitchen’s attitude was typical among the traders. They were the über-Enroners, the ultimate masters of the universe. Kitchen, along with another thirtysomething trader, a Canadian named John Lavorato, was rapidly consolidating her power within Enron. And within a few months of EnronOnline’s debut, the pair were heading all of Enron’s North American trading operations. There were hundreds of traders, lined up with banks of computer screens, keyboards, telephones – and adrenaline. In the first five months of 2000 alone, the website did 110,000 transactions with a total value exceeding $45bn. Deals could be done in seconds, rather than minutes or hours.

Electricity, natural gas, coal, oil, refined products, bandwidth, paper, plastics, petrochemicals, and even clean-air credits were for sale on Enron’s website. Within a few weeks of its launch in November 1999, EnronOnline was the biggest e-commerce entity in the world. In all, the company was selling over 800 different products.

EnronOnline was the logical outgrowth of Enron’s gas trading business. What had been done by phone and fax was now being done on the web. The company’s trading business surged, in large part, because of tremendous increases in gas consumption in the United States. Between 1983 and 2000, demand for natural gas in America rose by nearly 30%, to 22.5 trillion cubic ft per year.

Enron transferred what it learned in gas to the electricity business. Once confined to trading among utilities, Enron elbowed its way into electricity trading in the mid-1990s. It was selling gas and power, but all the while it was collecting still more information that provided a constant feedback loop. Enron owned pipelines and power plants, and with EnronOnline, it could instantly tell in which direction the market was going. It could also tell who was buying, who was selling, and where it should be placing its own bets in the marketplace.

In a very short time, Enron had remade itself from pipeline company to the largest energy marketer in the country. But Skilling wasn’t satisfied. He wanted more. So in May 2000, Enron announced that it would buy the London-based MG plc, one of the biggest metals traders in the world, for $446m. Lay said that the deal would allow Enron to claim a major role in the $120bn-per-year metals market. “Our business model, which we have proven in the natural gas and electricity markets, will give us a tremendous advantage in an industry that is undergoing fundamental change.”

There it was again: Enron knew how to trade gas; it knew how to trade electricity; now it would apply those lessons to the metals business.

Surely, Enron would succeed. The company owned pipelines and power plants, valuable assets that gave it visibility in the gas and electricity markets in North America, South America, Europe and Asia. It had a big trading operation in Europe. EnronOnline was becoming the de facto standard for traders all over the world. Commodity traders on Wall Street relied on EnronOnline for pricing on dozens of different products and invariably had one of their computer screens tuned to the website. And Enron had one of the most sophisticated trading platforms ever developed. The company’s traders could assess the risk on any deal almost instantaneously. Any deal they made was instantly processed and accounted for in the company’s massive data centre. Almost any position Enron took in the commodities market was quickly hedged with a countervailing position. Furthermore, it had a battalion of traders who were among the sharpest in the business. They made more money, had bigger egos, and drove faster cars than just about anybody.

Skilling became convinced that Enron simply couldn’t lose. In the lingo of his predecessor, Rich Kinder, Skilling began “smoking his own dope”. Skilling had made Enron into the trading company that everyone was talking about. Enron had become the 900lb gorilla in the marketplace. It didn’t just own the casino. On any given deal, Enron could be the house, the dealer, the oddsmaker and the guy across the table you’re trying to beat in diesel-fuel futures, gas futures, or the California electricity market. With all of those advantages, Enron’s trading business must have been a cash machine. Right?

Wrong.

Like every business Skilling created while he was piloting Enron, the trading business was a loser. Sure, trading was glamorous and sexy, but it generated virtually no cash for Enron. And that was a problem. Instead, Enron’s trading operation had an insatiable appetite for cash. Unlike other online energy marketplaces such as Altra or the consumer-goods auction site, eBay – which matches buyers and sellers for a fee – EnronOnline was the principal in every transaction. That’s a very expensive place to be.

If a seller agreed on Enron’s posted price for, say, natural gas to be delivered on a certain date, that seller could sell it immediately to Enron. The company would then take title to the gas and try to sell it to another party. That may not sound like a big deal, but by mid-2000, Enron was doing several billion dollars’ worth of trades every day. And because it was in the middle of every transaction, Enron would have to hold some of those commodities for days or even weeks before it could get the price that it wanted on its trades. That meant Enron had to have billions of dollars in cash at the ready. The sort of ready cash needed to clear and fund each sale and purchase – often called a company’s “float” – can be enormously expensive. And the bigger the float, the bigger the expense.

Every day that Enron held on to a big position in a commodity, it had to pay interest on the money it borrowed to take that position. For instance, one of Enron’s gas traders might be betting that gas prices would rise and therefore go “long” on gas contracts in the amount of 500 million cubic feet of gas. At $3 per 1,000 cubic feet, the gas could be worth $1.5m. That might not sound like much. But Enron had hundreds of traders, some going long, others going short in gas and dozens of other commodities. Supporting all of those positions required huge amounts of capital. And as the number of transactions handled by Enron-Online grew, so did its appetite for capital. The new operation had to have enough cash to keep a liquid market in 800 different products, each of which was seeing a big surge in volume.

In the first six months of 2000, Enron borrowed more than $3.4bn to finance its operations. The company’s cash flow from operations was a negative $547m. Enron was losing money – real money, cash money – hand over fist by just being in business. Interest expenses were surging.

By the end of June 2000, Enron was paying about $2m per day in interest to banks and other lenders. The $376m in interest charges for the first half of 2000 was more than it paid in all of 1996. Despite EnronOnline’s voracious appetite for capital, Skilling was able to convince a nearly constant parade of reporters that Enron’s trading business was the golden goose. Other companies were going to explode as Enron figured out how to buy and sell every part of an individual company’s traditional business. Enron was going to intermediate everything, commoditise everything. Just as the Ford Motor Company didn’t have to own the steel mill to build cars, Enron was going to speed the breakup of every business in the world into its individual parts.

“We believe that markets are the best way to order or organise an industrial enterprise,” Skilling told the Financial Times in June 2000. “You are going to see the deintegration of the business systems we have all grown up with.”

If Enron was going to help that “deintegration”, its trading business was going to keep growing. And that meant Enron would need more capital, lots more capital. But there was a problem: Enron could not raise capital by adding more debt. More debt on its balance sheet might lower the company’s credit rating, which would further increase the company’s already high interest costs. Skilling needed more cash but no more debt. Some smart “financial engineering” was required.

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-Ian.

—– http://www.pcworld.com/news/article/0,aid,106352,00.asp Are We Living in the Golden Age of Hacking?

Recent months have seen an increase in security holes and in new tools used to exploit them, expert warns.

Gretel Johnston, IDG News Service Friday, October 25, 2002

Over the last eight months major new hacker tools have been released or revealed, ending a lull in activity among hackers that followed the September 11 terrorist attacks and the enactment of legislation that enhanced law enforcement’s ability to prosecute people who break code and wreak havoc on networks by exploiting software vulnerabilities, hacking consultant Ed Skoudis said Thursday.

LibRadiate, Paketto Keiretsu, Setiri, and The Defiler’s Toolkit are just some of the newest tools that have cropped up since March and that are keeping security specialists awake at night, according to Skoudis, who gave a threat update briefing at a SANS Institute conference. SANS is a security education and research organization in Bethesda, Maryland.

Skoudis, the vice president of ethical hacking and incident response at consultancy Predictive Systems, in New York, said the June-through-September period saw massive exposures of security vulnerabilities in OpenSSH, Internet Explorer, and Apache Web server software.

“This summer has been a huge summer for hackers. There were huge issues discovered all summer long, and things really opened up between March and now,” Skoudis said. “The Golden Age of Hacking rolls on.” Insecure Networks

One of the latest developments involves the security of wireless LANs and the ease with which people are able to detect them. For one week in early September, amateur wireless LAN sniffers used freeware called NetStumbler to detect hundreds of insecure business and home wireless LANs in North America and Europe in an exercise called a “war drive.”

Skoudis said attackers have “flocked to this area” and are finding that many wireless LANs are set up without basic security. After they detect the wireless LAN, they can use a tool that’s been available since May called LibRadiate, an API that allows developers easily to capture, create, and transmit arbitrary packets on a wireless LAN using the IEEE 802.11b standard. The tool runs on Linux (kernel 2.4) with wireless cards that have the Intersil Prism 2 chipset, Skoudis said.

LibRadiate makes it possible for hackers, using “fairly simple C code,” to capture TCP/IP packets or inject them into a network. Among the wireless attack tools expected to become available for use with LibRadiate, according to Skoudis, are Wired Equivalent Privacy crackers, which exploit flaws in the WEP protocol, allowing a hacker to determine encryption keys even when WEP is in use; and malformed packet generators, which inject strange and noncompliant packets into a network in an attempt to crash systems that cannot handle unusual packet structures.

“With tools like LibRadiate, the computer underground is starting to develop far more sophisticated attack tools than what we have seen in the past,” Skoudis said. TCP/IP Tricks

Another tool released, two weeks ago, is called Paketto Keiretsu, which Skoudis referred to as a suite of tools for doing TCP/IP tricks. One of its most fundamental capabilities involves rapid port scans, which it does by separating the packet sender from the receiver.

Skoudis also described Setiri, a new Trojan horse back door. The tool bypasses personal firewalls, Network Address Translation devices, proxies, and advanced firewalls by starting up an invisible browser on the victim’s PC.

Then Setiri, running on the victim’s system, uses OLE to communicate with the hidden browser. As long as the victimized PC’s browser can access the Internet, Setiri can reach across the network and get the attacker’s commands. The personal firewall, NAT, proxy, and stateful firewall do not know whether the access is caused by a user surfing the Internet or Setiri getting commands.

Setiri, developed by a small group of South African security consultants and demonstrated in August at Def Con, hasn’t been seen in the wild yet, Skoudis said. Nevertheless, he included it in his presentation because its existence has been acknowledged within the security community and writing the code is something a moderately skilled coder could do.

Skoudis said the system strips out information about the user by going through anonymizer.com, so blocking access to that site is a way of defending against Setiri. Another solution would require changes in IE that limit the actions of an invisible browser, and Skoudis said Microsoft has publicly said it will address the matter. Hacker’s Toolkit

In the new area of “antiforensics,” hackers have had access to a tool called the Defiler’s Toolkit since July. It’s able in a number of ways to foil the Coroner’s Toolkit, a tool that has been used by computer forensic specialists for several years, Skoudis said. For example, it can destroy or hide the traces of a hack that the Coroner’s Toolkit looks for. The Defiler’s Toolkit targets Linux Ext2fs file system, but Skoudis said the concept could be extended to other platforms.

Commenting on the recent distributed denial of service attack on the Internet that happened Monday, Skoudis said major U.S. law enforcement agencies are investigating, but he didn’t know whether they had developed any theories about where the attack originated.

Alan Paller, director of the SANS Institute, said the attack is being characterized by security professionals as a Smurf attack that could have been much worse if all 13 root servers had been affected.

“Had it knocked out all of them, there’s a reasonable expectation that over a certain amount of time … the way that you use the Internet would have ceased to work,” Paller said.

There’s no easy fix for preventing DOS attacks, and the time is fast approaching when ISPs are not going to allow users on the Internet if they pose a threat to the other users by not meeting a minimum standard of security, Paller added.

“DOS attacks are not going to be solved because we get some new hardware in the system,” Paller said. “You are going to have to re-engineer the whole Internet. That’s going to take close to a decade. While we are doing that, we are going to have to start protecting ourselves from [users who] are not going to be careful.”

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