Ivory Terminal

Until recently, the mobile phone has been a quiet place in the world of telemarketing. As someone that uses mobile phones for all of my lines, I have greatly appreciated the lack of interruption. Considering that my lifetime score to positively responding to an unsolicited telemarketing call is zero, this has been a great relationship for both parties. Thanks to laws, lack of phonebooks, opt-outs, and so on, most of the calls that I receive are wanted, or at least not out of place.

Now that mobile phones are not only commonplace but even replacing landlines for mainstream consumers, the telemarketers must have needed a profit-saving change.

My blissful silence was halted by an e-mail this afternoon from GE’s capital arm announcing that the terms to my service were changing:

“You agree that GE Money Bank and any other owner or servicer of your account may contact you about your account using any contact information or cell phone numbers you provide (whether previously provided or provided in the future).

You expressly agree to the use of any automatic telephone dialing system and/or artificial or prerecorded voice when contacting you, even if you are charged for the call under your phone plan.

The above provision will become part of your account agreement if you consent to the provision by (i) using your account more than 15 days after this notice is delivered to you or (ii) keeping your account open after March 15, 2009. If you do either of these things, we will conclude that you have consented to being contacted on your cell phone in this way. If you do not want to be contacted on your cell phone in this way, you may call us at ***-***-**** at any time.”

I am left with two choices: Close my account ASAP, or agree to be bothered by all kinds of robot nonsense not stopped by conventional preventions because I have explicitly agreed to the contact.

Normally, I would instantly send them packing, but after reading an article on Wired.com about similar changes to American Express terms (discussing the security issue with the change which I did not even consider), I can only assume this change will quickly spread over the whole credit card community. Although this is an exceedingly aggravating change of terms, I am not sure that I am willing to give up credit cards as a whole. I have already called the opt-out number I was given, and opted out my mobile phone. Based on the wording of the message above, I will be interested to see if my account is closed.

I am not looking forward to having similar terms added to all kinds of phone-based (and unrelated) services. Everyone has been asking how Twitter and Facebook and the like are going to make money, and I am afraid that this is part of the answer.

My top reasons why Facebook is about to get paved over by easy-to-start more trendy competitors:

1.   The marginal facebook user knows less and less about computers. Once a social network expands beyond the college kids and the nerds this will always be true.  The people that originally made up the group to not necessarily want their every move broadcast to the linked world.  The feature allowing users to view albums of non-friends that friends are in was the end.

2.   Once social networks go public (shareholder public), they are required to (quickly) monetize a model with a very short halflife, made up of consumers who will revolt if you charge them a cent for the service.  Setting up the next twitter might take a couple of days and a couple of servers.  There are no barriers to entry and few paths to monetization.  This point is often expanded upon on this site when recommending that niche-market companies avoid growth-models that require them to abandon their enthusiast customer-base.

3.   The networking effect is not as pronounced as the economists think it is.  Having an extra 30 million users does not make the service more valuable to the people using social networks as semi-walled gardens, in fact, it makes it less so.  

4.  Facebook is making all of the same mistakes as myspace:

a.  Opening the doors to everyone (including 419 script-kiddies).  Hacked account-holders often do not come back, and requests for Western Union wires* piss off everyone. 

b.  Allowing increased customization (profiles are starting to look like old geocities flash sites and myspace pages [not flattering]). 

c.  Encouraging (paid and annoying) app development in an environment where everyone only wants to hear “free” or “easy”. 

d.  Allowing ever more intrusive ads to generate revenue, which turns off the desirable users.

e.  Datamining as a last resort to generate revenue, at which point the sophisticated users find the next social network where we are not getting annoyed by promoters.

The past few days have brought the world a couple of celebrity mishaps; Michael Phelps getting photographed supposedly engaging in drug use, and Chris Brown (who?) running into a domestic violence issue.

I find the reactions of the sponsors interesting. Both situations are less than ideal for the sponsors, but Phelps appears to have weathered the storm without long-term issue, while Brown is being booted from the world of celebrity endorsements.

I imagine the dataset for celebrity improprieties and subsequent endorsement changes would be relatively small (would there be a separate category for things like kidnapping with a samurai sword?), but I think it would be interesting to see if there was a significant difference between corporate penalties for drug use and violence as a whole.

Outside of the regimented and often odd world of law, the change in sponsorship, interview schedule, and so on might tell us something about our society’s true opinions regarding drug use.

 The digitalization of health care records is snowballing in the media. Many of the problems not related to the budget for this activity center on privacy and data security.

Departing for a moment from the conventional arguments, I want to explore why this privacy is necessary, and if there is anything that could be done to reduce the need for privacy, and the gravity of the breaches that will certainly come.

Our current healthcare system is obviously on the over-the-hill side of an insurance system life-cycle. Given a lengthy time period, any open insurance system will end in failure, as the rising premiums price out more and more potential contributors. For a moment, accept that we have a market failure in the US for health insurance. What do we do? The free market answer is to let the system fail, take down the health insurers and the current health care pricing models with it, and then start over with another free market system. If we were talking about something that was not life saving, everyone would be screaming to let it go and rebuild already, as the population does about the bank and automaker woes. However, due to the incredibly emotional nature of health care, and the dire individual consequences of having a system in flux, prepackaged bankruptcy and reorganization does not seem to be an acceptable course of action.

Assuming that the free market approach will end soon in the health insurance companies going under, this gives us more freedom to explore other options. For health care, the obvious solution continually centers on nationalization. I say that understanding fully that my individual health care would probably get worse, at least for awhile. Many people with premium health insurance options feel the same way, and state that they are compromising by either simply saying no to another option, or accepting the thought of a nationalized healthcare system but insisting that there be supplemental paid insurance (a model that would compromise the baseline healthcare, and get us right back to the problem we are experiencing now). As a population, we treat healthcare in a much different way than cars or banks when we discuss its possible failure, so why are we so averse to treating it differently in “normal” operation?

Now armed with the assumption of health care nationalization, let’s move on to the privacy aspect, and why it is important right now. In our culture, being sick is often embarrassing, and many choose to hide their illnesses from friends, family, coworkers, and as we have seen lately, investors. This behavior is understandable, as there are currently all types of discrimination against the sick. Some of this discrimination comes from the fact that the sick might not be covered by health insurance, and if they are denied their claim, they are more or less out of luck because of the comical healthcare pricing in our current system. At the same time, the illnesses are often discovered at much more advanced stages because we have a medical care system that discourages preventative care.

The argument that our system discourages preventative care can be summed up by the “pre-existing condition”. If one switches providers or loses insurance for a period of time, as is common in the US since we have a system primarily dependent on employer-based health care, they may be ineligible for insured healthcare from a new provider for conditions diagnosed previously. This creates an incentive to remain ignorant of health problems so they will not have to be paid out of pocket in the event of an emergency. By creating a system where the insured have an incentive not to catch possible problems early, and to avoid things like genetic testing, we have defeated our insurance system from within. The current system forces out many of the sick, but does not give discounts to the healthiest users to make up for this. This provides a disincentive for the healthiest users to participate in insurance, and the system collapses from there.

Because of insurance exclusion in our current system, privacy is of the upmost importance, so much so that individuals often prefer to remain ignorant of their own impending health problems for fear of being excluded from insurance. A nationalized health care program would remove this disincentive for knowledge, and would likely make the need for privacy less important, as an acknowledgement of a medical problem would not lead to insurance exclusion. If there was not a possible penalty for learning about genetic conditions or future medical problems, many more individuals would likely prefer to know the medical histories and futures, and would not have the same fear of sharing their findings with the medical system. Obviously, medical records should not be made open to the public, but it seems misguided that this country is attempting to build the Fort Knox of data repositories to help continue such an obviously failed insurance and care system.

 Many news outlets have reported today that the Obama administration is shocked with the condition and age of the networked infrastructure in the White House. Most take it as an opportunity to take shots at the Government’s upgrade schedule, and a couple go as far as to mention the outgoing administration may have purposefully held off upgrades so the new team could pick their components. According to some of the reports, the phones did not even work in most of the offices.

I think this is shenanigans. The Bush/Cheney administration was almost inarguably the most hostile group to ever protect digital communications. There is absolutely no way that they were running on ancient and non-working hardware. I do not think the hardware is old, I think it is missing. Based on things like years of “lost” e-mail, missing backups, etc, I think that the former team’s technology went out on a barge and got sunk a few days ago.

Time and discovery are not likely to treat the administration well, but the “data leaks” (normally known as, “…saved for posterity”) will not come from the fiercely loyal staff.

There is a lot of conversation about the Obama Administration broadband build-out.  I will remain cautiously optimistic, but I have a hard time believing that the juggernauts currently in charge of broadband in the US have any interest at all in build-out of rural communities, and improvement of urban ones.  

Will the administration stand up to the telcos and cable providers who sue to prevent municipal broadband?  Will they be willing to say no to wireless-class fees for providing service in rural areas?  Will they force adoption of next-generation fiber-optic switches?  Will universities get the grant money they need to fairly work with industry in developing future communication technology without having to bastardize the higher-education model further?

The Obama team is clearly committed to Internet neutrality, but that position will almost certainly require some help for the “tube” providers as bandwidth per user continues to rocket upwards.  Will we be willing to subsidize the Verizons and Comcasts of the nation in order to maintain competitive pipes?  I worry that a majority of voters will view spending in this realm as excessive and unneeded, and it will take massive amounts of funding during a prolonged era of economic pain to move the land-rich United States forward in the broadband rankings.  Nothing has been mentioned about a wireless build-out, and I am waiting to hear the always fantastic claims of a censored white-space internet that will likely be a part of the Obama plan (the request to delay the DTV conversion is interestingly timed).  If so, I am going to lose a lot of enthusiasm instantly, since a filtered Internet is in no way “neutral”, regardless of site connection speeds.  

If we want to create a generation of not only connected but knowledgeable users, we need to find ways to get computer programming into our schools and make it interesting.  Computers are becoming a huge part of everyday life, and it is time that we begin to treat them as such in our educational system.

I think that computer languages should count towards foreign-language requirements from elementary school to college.  English is always called the “language of business”, but increasingly computer code is collectively becoming that “language”.  Even if a student masters a spoken foreign-language, they have few opportunities to use it.  If I student learns a programming-language, all they need is a machine to practice as much as they desire, and when they are ready to play outside of their sandbox, there are endless dedicated user communities.  Try and find a basic French language-learning message board that is on par with a Python developer community.  We could easily create a generation of children that can truly communicate with computers, and restore some of the digital glory of the United States.  The administration mentions that they want to make math and science education a priority, and what better way to do that that provide every student with an explanation of how math and science can be used for fun, learning, and even a source of income.  I believe that part of the aversion to math and science in the US comes from the dry teaching methods of the subjects.  School subjects should not be treated as separate pursuits, but should be presented as components that mastered together will allow a student to explore and contribute to their world in interesting and engaging ways.  Explaining how grammar, math, and science all work together to create our digital world could go a long way to motivating the next generation of Internet architects.  It would be a shame to have the entire country wired, and find out that the connectivity available was willingly limited by users to cesspools like myspace.  Currently, our population regards the Internet as a more interactive television, an attitude that needs to be changed decisively.

If we create demand for broadband through education and interest, the build-out will come willingly, even enthusiastically.  In the spirit of the Internet, we simply need to show our young students how everything is linked together.  Creating another generation of passive users would be an inexcusable waste, regardless of their uptime and connection speed.

Apple announced that they are making it possible for users to “upgrade” their libraries to files that are not DRM-protected.  They also announced catalog price changes.  File prices will now range from about $0.70 to $1.30 in the States.  However, all of the songs purchased before today were $0.99, so the $0.30/file upgrade fee makes every song previously purchased $1.30, regardless of its new status in the store.  For a file that is now $0.69, a former purchaser would end up paying $1.29 ($0.99 + $0.30), an 87% premium.  

At first, I thought the pricing change would be ignored because of the small dollar amount, but Apple is making it easy to upgrade all available files at one time for one price.   This means that some heavy iTunes users are going to see upgrade costs of hundreds or even thousands of dollars, a fairly ominous convenience charge for files that were already purchased.  Since the DRM-removal is on a per song basis, the most loyal iTunes users are going to see the heaviest DRM-removal tariffs, which could certainly dampen enthusiasm for the service.

I also believe that the lump pricing will remind many users of how much they are spending on iTunes for the first time, and could lead to purchase-impacting decisions about reducing expenditures.  Imagine getting a $1,500 upgrade bill and realizing that you dropped $5,000 on iTunes.  I have only ever paid iTunes for Apps, and will probably not use the service because of the change as I view other services to be superior for paid music, but if iTunes had been my main music purchasing depot and I received the $0.30/song upgrade offer, I would have been looking at a four-figure charge.  Thankfully all of my music purchases lack DRM.

Finally, there is a concern to me about the removal of encryption on consumer products as a paid service from the company that sold the encrypted content.  Imagine the reaction to the $0.30 per song charge if the songs had ceased to play unless the fee was paid.  

Hopefully the change will make consumers less willing to accept DRM as a protection for files like those sold on iTunes.  It is increasingly clear that these solutions do not provide any true file protections on a global scale, and simply aggravates casual users who are originally more likely to use the DRMed services regularly.  This seems like an obviously failed concept since the people likely to spend more money on files with the standard are more impacted by it.  Regardless of why it happened or why it took so long (or was allowed in the first place), I am glad that a major online music retailed has given up on DRM.

This should be an interesting thread to watch.

*Netflix punished their heaviest users who were the least profitable.  The iTunes upgrade price progressively (at least in sticker-shock form) impacts the heaviest users who are likely most profitable.

InTrade’s sister site, tradesports.com is ceasing operations. It will be interesting to see if InTrade continues to function as normal.
Maybe they can create a market betting on their future. More to come…

~posted on a mobile device

In much of the election coverage I browse, the Intrade Political Futures Market is mentioned if listen long enough or read far enough; usually as in indication of the “wisdom of the crowds”.

On Wednesday, I was released from my draconian investment bank trading clause, and after I spent the morning closing my covered former employer’s accounts and opening my own brokerage accounts, I tried to open a small Intrade account for good measure.  I have been kept away from investments I freely elected, and while on the multi-year personal trading vacation, I started following the Intrade markets since people that I look up to in the political and investment worlds mention them often.

Traditionally, when you open a brokerage account you fund through a wire transfer from a bank account.  When I was presented with a credit card option, I chose it, figuring I would keep my personal banking information out of the picture while dealing with a relative unknown.  After I entered my information and requested to fund through my credit card, I received a message that the bank behind my credit card refused to deal with the company.  Normally, this is a huge red flag, and I immediately paused my registration.  There is no way I am allowing an institution that my credit card company will not work with to have my personal (uninsured from fraud loss) bank account information.  

I decided this event warranted a little Ivory Terminal Investigation (we need some flak-vests and hats with a nice “ITI” logo).  After a quick online search, I decided the questionable legality of Intrading as a US citizen was going to require some advice from my lawyer friends.  There is a little set of words called the Unlawful Internet Gambling and Enforcement Act (UIGEA, 2006) which unleashed a flash-flood on my parade.  After asking way too many questions on a Saturday (one friend even threatened to send me a bill if I did not accept the answer), I decided that Intrade was a little risky.  If my funds were somehow denied after a withdrawal request, I would arguably not be able to use US law to retrieve them.

Still determined to find a way to monetize the political process, and selfishly make my opinion part of the “wisdom” of the crowds, I found the Iowa Electronic Markets (IEM).  This market is American, not-for-profit, and has been around long enough to get no-action letters from the Commodity Futures Trading Commission (CFTC) prior to Clinton’s election to the White House.  Success!

Based on my non-binding decree, the IEM will be the official political futures market for IT members, and weekly balances will be compared for bragging rights at 7pm ET every Tuesday (we need to keep some kind of tradition around here).  There is a $500.00 limit, so we need to agree upon a starting balance. 

Now that the above is settled, I turn my attention to the media coverage of Intrade.  Assuming that most Americans obey the UIGEA, the Intrade predictions market is made up of foreign nationals and those willing to violate an omnibus online gaming law, not exactly a cross-section of American voters.  Learning this, I must question the use of the Intrade market as a media bellwether.  I would argue that the IEM, being open and accessible to participants from the United States, would be a better gauge of the “wisdom” of the voting crowd.  

Shockingly, the IEM (with an assumed larger percentage of American traders) has the generic Democrat winning the race by a larger spread than Mr. Obama commands on the Intrade market.  I would love to have access to the data for the two exchanges, allowing an analysis of the makeup of each market.  Short of this, I am stuck with my assumptions.

In the mean time, my check will be in the mail to Iowa on Monday, and I will go on assuming that the herd is not to be followed.

Although the media is making it almost impossible to pay attention to what is going on with the telecom immunity debates, I have been doing my best to stay on top of the various “compromises” offered.  Finding them all inadequate, I present my own:

Offer no immunity of any kind, but cap all related damages and awarded fees at $1.00.

Why propose such a silly cap?  Because this is a true compromise!  Capping damages will mean that businesses will not go under (allowing us to continue to patronize ISPs and Telcos), and the number of potential lawsuits will be minimized.  Denying immunity will allow a few parties to sue, bringing to light the scope of illegal activity.

This compromise would allow concerned citizens to learn about the details of this surveillance while protecting the business interests that are vital to our modern communications.  Even proposing this would force opponents to reveal their motivations, and allow constituents a much clearer view of the unfolding situation.  Could such a simple middle ground be possible?  What do you think?