Google’s Potential End Game – Transport and Organize the World’s People, Not Just Information

The Year 2040 – Somewhere in Silicon Valley

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[/dropshadowbox]It’s 8:07 am and my next door neighbor, cheapskate Charlie, has been waiting outside his door for a few minutes for his ride, which is guaranteed to be at his house within a 10 minute window. He looks at his garage and is reminded that he will soon be renting it as storage space to his neighbor, Rich.

As the electric Gee-Auto arrives, Charlie notes that another neighbor, tightwad Tom, is joining him today and on their journey they will pick up parsimonious Paula. Despite sharing a vehicle with two to three people each day, the efficiency of a packet network of autonomous vehicles has reduced his average commute time from 30 minutes to 23 minutes, eliminated the need for auto insurance and given Charlie the opportunity to play his virtual piano on his morning commute, instead of focusing on the car in front of him.

Parsimonious Paula likes the Gee-Mobile service as she no longer has to rely on the discontinued and obsolete county transit. Her monthly subscription to the Gee-Mobile service is comparable to what she used to pay for a monthly transit pass and she doesn’t have to walk half-a-mile in the rain to catch a bus.  It would make bringing groceries home easier, but Gee-Autos have been delivering goods directly to homes for decades.

It’s 8:15 am and across the street, just like every workday, a Gee-Auto meets my spendthrift neighbor, Rich, at his doorstep exactly as he opens his front door. He hops in the Gee-Auto and waiting for him is a morning latte, a freshly toasted bagel, along with morning news, entertainment and education tuned especially for his viewing, listening and olfactory pleasure.

The garage is no longer needed for car storage when one has a vehicle-on-demand service.
The garage is no longer needed for car storage when one has a vehicle-on-demand service.

Rich has a tinge of disappointment that his 15 minute commute (which used to be 30 minutes before the arrival of self-driving, always-connected vehicles) couldn’t be just a little longer, as he really enjoys this daily ritual of breakfast and relaxation in a moving pod. That disappointment is soon forgotten, as he realizes today is the day when a contractor and his team of droids will begin the conversion of his garage into a tricked-out, man-cave.

Along the way, the Gee-Auto’s speed is constantly and automatically adjusted to traffic conditions. The queuing algorithms are working especially well these days and intersections that were formerly regulated by stoplights are now sophisticated roundabouts and it will be a non-stop trip for Rich. There is one stop for the Gee-Auto transporting Charlie and that is to drop off Paula at her banana stand.

Like most days, Rich and Charlie arrive within a few minutes of each other at the Acme Anvil Company (Charlie is the CFO and Rich is in marketing). They wave adieu to Tom, who works about a half-mile away, and go about their day. In the meantime, the Gee-Auto that had transported Rich to work slips into the median, where an embedded wireless charging pod rapidly recharges the hybrid super capacitor-graphene battery system, before receiving its next assignment to pick up groceries for delivery to another Gee-Mobile subscriber.

[Note: The above scenario of an automated people mover seems ridiculous, but it wasn’t too long ago that the idea of talking to one’s phone to get directions would be absolute lunacy. The idea of an on-demand transit system providing door-to-door transport goes back to at least the mid-1970s, as the first major expansion for Silicon Valley’s public transit system was such a service, Dial-a-ride (dial-a-ride used the old school telephone to beckon a mini-bus directly to one’s residence). Dial-a-ride didn’t scale, however, as the staffing and equipment costs were greater than the traditional public transit approach of aggregating people at transit stops.]

Technology to Make the Science Fiction, Fact

Although fictional, the above story isn’t science fiction, as the technology now exists to make the above scenario real. Many companies could potentially implement such a people transport system, including car manufacturers, auto-rental and logistic companies, but it is likely to be outsiders (Amazon, Walmart, Google, etc.) that disrupt this multi-trillion dollar industry.

The focus of this article is Google and how the elements it already has in place could be stitched together to create an end-to-end, subscription (as well as Pay Per Ride) people transport service that generates tens of billions of new revenue, while building upon its existing businesses.

One of the oft-cited barriers to the autonomous car is the question of who is liable in the case of an accident (e.g., the manufacturer, the driver, etc.)? A subscription model doesn’t remove liability factor, but by taking a holistic view of the driving experience and owning the “last mile” transport method, Google could greatly reduce its exposure.

Like its cloud services, Google would have complete control over the design (ensure no single points of failure), the maintenance (no mechanical error by ensuring equipment is always up-to-date) and the software (e.g. secure it from hacking).

Further, removing the constraint of having to accommodate a driver would allow for a rethinking of a vehicle’s design (see the above video). There is no need for a steering wheel, which could change the form factor, while improving the safety of the passenger who occupies the driver seat.

The need for windows goes away and could be replaced with electronic screens, such that one could choose the environment that he wants to see (think advertising space for Google). Without windows, presumably the vehicle’s body could be made stronger (e.g. more cross-members where the windows would have been). Additionally, the seats could be placed backwards as there is no longer a need to face forward.

[dropshadowbox align=”right” effect=”lifted-both” width=”150px” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ]With a 5% market share, the annual revenues could exceed $32B.[/dropshadowbox]Last week’s announcement that they have designed their own prototype car is consistent with other initiatives, like Google Fiber, where they want to control the entire experience. A custom design also reduces vehicle cost by eliminating overhead that an individual consumer normally pays when she buys a car from a dealer (which passes on the sales, marketing, engineering and other overhead costs of the manufacturer, along with the dealer costs, etc.).

Google, along with other entities, have a number of initiatives that set the stage for a subscription-based, autonomous transport system, including:

  • Google has proven it can create an autonomous vehicle that can drive hundreds of thousands of miles without an accident.
  • Google’s Waze application, coupled with their Google Maps already provides a real-time view of traffic allowing drivers to select the best route. Having a vehicle automatically make the decisions as to the best route is the next step (and safer). The more vehicles that are directed in this manner, the better, in terms of route optimization (i.e. traffic reduction); the Gee-Auto and their control become more and more like the Internet, as the underlying signaling improves the throughput of the overall transportation network.
  • Google, as well as Amazon and others, are investing heavily in on-demand delivery of goods. This effort is a great testing ground to understand the best routing of vehicles. As Google is wont to do, they are also building the associated apps and signaling technology via the broadband network to ensure orders are relayed through the delivery chain. If Google can prove this model with a driver, then eliminating the driver via an autonomous car makes the model work that much better.
  • The idea of a subscription service for a car rental isn’t new, as evidenced by the rise of ZipCar in urban areas. The autonomous car would allow this concept to spread into suburban areas, as the cars would automatically appear at the subscriber’s house [Added 12/23/14 – the idea of an on-demand, shared, last-mile car service may become reality in 2015, as Singapore is looking to open up one of its neighborhoods to such an experiment].
  • Relay Rides, Uber and Lyft provide models for the electronic dispatch of vehicles – albeit with human drivers – using a Smartphone or tablet. It isn’t a stretch to envision the elimination of the driver. It is important to note that Google Ventures is already an investor in Relay Rides and Uber [Note, since this article was published, Uber has suggested that the elimination of the driver could be part of their long-term plans – one industry executive even predicted that Uber might purchase a auto manufacturer, so that they could control the experience and have cars that last a million miles].
  • The concept of a relatively low-cost ($24k), electronically controlled electric pod car is close to reality with the soon to be released vehicle from LIT Motors; a small San Francisco start-up that promises to disrupt the auto industry with its Silicon Valley business model.
  • Building a car with screens, instead of windows, provides Google with an opportunity for more “ad-space”. This is ad-space that is not only location-aware, but location-directed (e.g. sensing the rider might be hungry for a certain food item, it would be easy to automatically reroute to one’s favorite restaurant and provide incentives for stopping at said restaurant).
  • A Google Fiber/Wireless backbone, although not necessary, could be tuned to off-load signaling information emanating from the vehicles peer-to-peer communications systems. These two networks (P2P vehicle and the Fiber backbone) could become an integrated central nervous system for the network of vehicles. [Added 6/6/2014] Google’s request for a Statutory Temporary Authority from the FCC for the nationwide testing of millimeter frequencies (77 GHz) looks to be part of an effort to detect objects around a car. [Added 8/25/2014] Further, the conversation on Vehicle to Vehicle communications continues with the NHSTA’s release of it’s Advanced Notice of Proposed Rulemaking.

Tens of Billions of New Revenue – It Moves the Needle

A picture of an electric vehicle from LIT Motors at CES 2014.
A picture of a drive-by-wire, electric vehicle from LIT Motors at CES 2014.

Why would Google ever want to jump into such a seemingly tangential business model of being a Subscription Vehicle on Demand service provider? Simply, a project of this sort could move their revenue needle, produce great margins and augment their advertising business. As importantly, the notion of organizing the world’s atoms is akin to its initial mission of organizing the world’s information.

For simple modeling purposes, let’s assume the IRS reimbursement rate of 55.5 cents per mile (gas, maintenance, amortized car payments, etc.) and that the average person drives 10k miles per year (AAA estimates 59.5 to 97.5 cents per mile for 10k miles/year for a small to large sedan, respectively). That would mean $5,550 a year in transport costs per car or approximately $460 per month.

It isn’t too difficult to imagine a 3 tier subscription offering, similar to what Google is doing with their broadband offering to meet the needs of the various customer profiles:

  • The Parsimonious Paula Offer$125/month – Gee-Auto guaranteed within 10 minutes – have to share with others, advertisements, plus goods delivery within 8 hours  – 500 miles per month (overages apply).
  • The Mainstream Mary Offer$300/month – Gee-Auto guaranteed within 5 minutes, sometimes have to share depending upon demand, limited advertisements, plus goods delivery within 4 hours – 1,000 miles/month limit (overages apply).
  • The Regal Rich Offer$1,000/month – Gee-Auto is ready when the person opens their door, no sharing with others and no advertisements, plus goods delivery within 1 hour – Unlimited distance per month

Further, assume take rates of 10% for the Regal Rich offer, 40% for the Parsimonious Paula offer and 50% for the Mainstream Mary offer, the weighted average would be $300 per month per subscriber (33% less than the assumed conservative average of $460/month in transportation costs).

Assuming a 5% market share of today’s 18+ population, this would mean approximately 9 million subscribers or about $2.7B monthly or > $32B annual business, not counting any uplift to existing businesses (e.g. advertising, broadband, etc.), on-demand business (taxi-replacement business) or fleet/logistic replacement.

Because of the sharing nature of the business, Google’s costs would be lower than the IRS reimbursement rate of 55 cents/mile. Even the most expensive option in the above scenario would be shared (e.g. once a Gee-Auto pod drops off one person, it could pick up another nearby person). Assuming a sharing ratio of 1/3 (one Gee-Auto for every 3 people [8/19/2014 update – When I wrote this, the 1/3 ratio was a gut-feel guess. As it turns out, some MIT scientists using  mathematical algorithms and real-data from  Singapore determined that a 1/3 ratio is about right as summarized here about their white paper]), the costs, based on the IRS figures would be $153/subscriber/month (1/3 of the single driver’s cost of $460) or almost 50% gross margin ($153 costs versus $300 in revenue/subscriber); not a bad business and with $30B+ in revenue, a business that is approximately 50% of Google’s current business.

Granted, there would be significant capital costs to such an endeavor, but, because electronics and software are the significant cost components associated with the above scenario, cost reductions would more closely follow Moore’s Law than the traditional cost for building automobiles. There are also costs associated with upgrading roads, etc. that would need to be factored in as part of a capital build. Still, by building this on a city-by-city basis over time, much like Google Fiber, the capital costs would drop with each deployment. Even at $20k per vehicle, the capital costs to create 3 million vehicles would be $60B; not insignificant, but within the realm of possibility given current costs for low-end electric cars.

There are several upsides, both the aforementioned uplift to their existing businesses, as well as opportunities to reduce expenses relative to traditional transportation systems, as well as find new revenues:

  • Lower Insurance Costs: Google would probably self-insure, given the sheer volume of business, as well as the confidence they would have in their technology and the indemnification clauses their attorneys would include in their subscription agreements. Self insuring would remove the costs of the insurance company middleman. Additionally, given the potential improvements in safety from autonomous vehicles (Google suggests that human error causes 90% of the 1.2 million vehicle deaths each year), the effective cost of insurance would be lower than the costs for insuring human-driven autos.
  • Lower Operational Costs: Being all-electric, the operational costs from maintenance and fuel would be less than traditional hydrocarbon vehicles. Additionally, it wouldn’t be a stretch for Google to create a network of its own power stations (which, as alluded to in the above story, could be in medians and other non-usable areas).
  • Local Subsidies: At $125 per month, the Parsimonious Paula tier is more than 10% cheaper than the existing Silicon Valley public transportation option (a monthly pass on Silicon Valley’s VTA is $140). Given that public transit authorities operate bus systems at a loss, it might be cheaper for a transit authority to pay Google on a variable cost basis and retire the bus systems (particularly in suburban areas). Google probably would run the transit system without subsidies, as the political benefits of saving the local taxpayers money would outweigh the marginal revenue.

Policy Implications at the Local Level  – From First Mover Advantage to Must-Have

A picture of a Google truck at a customer install. Note, the lawn sign promoting the Google Fiber project.
Image courtesy of Google

One of the brilliant insights from the Google Fiber management team is its understanding of the importance of speed; not just speed in broadband access, but speed to market. The longer it takes to deploy Google Fiber, the higher the costs of make-ready and the more opportunity competitors have to thwart its efforts. As such, one of the most important factors in determining where they deploy Google Fiber is the willingness of local cities and agencies to work with them to smooth out the barriers to deployment (e.g. obtaining permits, rights-of-way, etc.).

The Google Fiber project has forged the sort of local relations that would be necessary to implement such a revolutionary approach to transportation. A project of this scale would require working with local government to support infrastructure improvements, such as distributed power charging stations (or some equivalent, such as solar roadways), improvements in traffic light signaling (making it more dynamic, based on real-time traffic demands or [link added 8/17/14] eliminating it as seen in this video) and other road improvements (e.g. roundabouts).

It’s not too difficult to imagine Google pursuing a nationwide competition like it did when it introduced the Google Fiber concept. If Google were to target a community with a population of 100,000 adults and assuming a 5% subscription rate, with a 1/3 ratio of vehicle per subscriber, they would be looking at 1,700 vehicles and assuming a near-term cost of $100k per vehicle, this would be a $170M investment; an amount that is pricey, but would provide a good field test and refine the commercial project, just like Kansas City did for Google Fiber (this is in the realm of possibility, as Google recently announced that they will be building 100 prototype vehicles for testing purposes).

Like the Google Fiber project, which received over 1,000 applications from communities of all sizes, a Gee-Auto contest would grab the attention of forward-looking cities and Google would probably have its choice of cities to pilot such a project. By staying on a city or regional basis, Google might be able to avoid the regulatory reach of some federal and state agencies. As they cross beyond county or state lines, however, the regulatory environment would become more complicated.

Assuming the above tack where Google starts local, policy makers would have many things to ponder over such an application including:

  • How to create an open network, such that vehicles from multiple operators can traverse the same roadway and still communicate in such a way that all operate in a seamless fashion, regardless of the underlying transport technology?
  • Who controls the signaling system and should that entity be a private operator (e.g. Google), a quasi-private entity or a municipal entity?
  • Should the entity that controls the signaling system be able to prioritize traffic, based on subscription tier, (e.g. public safety vehicles would still get first priority), etc.?
  • How to charge operators for the use of the roadways (e.g. pay per mile) and pay for ongoing infrastructure upgrades as well as upgrades that such a transportation system would entail?
  • What are the privacy implications of knowing a person’s movement at such a micro-level?

A shared vehicle society has long-term implications for local planning officials and could change how they plan for parking, design roads and the economic implications of the hollowing out of the traditional automobile trade.

  1. The Gee-Mobile service could potentially reduce the number of parking spots at a given building. Garages in single family residences might no longer be necessary in the autonomous auto world. At night or other times of slack demand, the Gee-Auto would park itself in unoccupied locations, which wouldn’t have to be near a residence. Further, because a Gee-Auto is dynamically assigned, parking lots could be structured to eliminate the space between cars (Last-In, First-Out). Additionally, parking lots and charging stations could be located in what are currently unusable spaces (e.g. in a median).
  2. The roads could be optimized for the autonomous vehicle. For instance, because it would be possible to create a narrower vehicle (LIT Motors, as an example), as well as pack the vehicles closer together, it might be possible to effectively create, say 3 lanes where there are two. These high density lanes could dispense with painted lines, as electronics would keep the autonomous vehicles in place. These virtual lanes would only be for the higher speed, autonomous traffic and not traditional motorists [Added 8/25/2014 – similarly the number of lanes for a given direction could be dynamically assigned, depending upon time of day – e.g. a 4 lane road might use 3 lanes for one direction in the morning and change the direction of those lanes when the traffic pattern changes in the afternoon).
  3. The local economic impact of the reduction of traditional automobiles will be huge. Of course, gasoline taxes to pay for infrastructure go away (an issue with electric cars that need to be addressed, regardless). The bigger impact might be on the restructuring of local economies. From the local auto shop to the gas station to the car dealer to the insurance agent, the traditional automobile has a huge economic impact on a community and the lost revenue would have to be made up with new opportunities from existing and new employers.

One aspect that a local economic agency could tout when trying to get those new jobs is the superior quality of life (e.g. not having to fight traffic, lower cost of transport, freedom for senior citizens and those with physical disabilities to leave their domicile without depending upon others, etc.) Like with gigabit broadband there will be a first-mover advantage for those communities that successfully implement an autonomous vehicle network. Eventually, however, being a “Smart Transport Community” will become a must-have.

The Big Question

Although all the technological elements of the so-called Gee-Mobile service exist today and the pricing is even within striking range, the bigger barriers will probably be business model and regulatory. It looks like there is a path to a business model (particularly as autonomous vehicle costs fall). Google has proven that it can work with local governments with its Google Fiber initiative, which would be helpful in getting past regulatory concerns. The biggest question in the above story is what jobs will cheapskate Charlie, parsimonious Paula, tightwad Tom and regal Rich will be driven to in 2040?

Meanwhile – Back in the Year 2040

It’s 8:30 a.m. and, at the same time Rich and Charlie arrive at their office, I am sitting down to work from home in a virtual environment via my 10 terabit connection. Just as I am about to start, I am pleasantly surprised by the appearance of a Gee-Air, the flying drone that whisked my 113 year old mother from her engagement residence (the term retirement home was retired from the vernacular decades before), located some 60 miles away. She had decided to surprise me with freshly made cinnamon rolls for breakfast. But that’s a story for another time.

Building a Playground – Building a Community

Readers and viewers who follow Viodi on various social outlets may have seen some somewhat odd messages lately about dancing bunnies, wiener dogs meeting Wienermobiles and S.J. Sharkie mixing it up with a bunch of kids. Let me explain the background and the bigger picture behind these seemingly off-topic dispatches.

Together by Necessity

A fun video showing a hidden gem in America's heartland.
Perham, MN – Home of KLN Industries and Arvig

One of the things that inspires me about the people who work for independent communications companies in rural America is how deeply woven they are into the fabric of their communities; the technician may be the mayor, the marketing person may sit on the economic development board and the owner might be a volunteer fire fighter. As locally owned telecommunications’ companies, these businesses are often the major commercial anchors connecting their communities both electronically and physically by their employees’ presence.

In the rural areas served by my telecom friends, the economics don’t support the same level of paid employees that one finds in urban areas, so citizen volunteers are essential to a thriving community. As a result, there appears to be less of divide between the governed and the local government in rural America, as compared to urban America.

And though income levels may vary widely in small town America, they don’t divide like they do in the urban areas. When you are in a town of 2,000 people, there isn’t much choice as to the restaurants you go to, the schools your kids attend or the church where you pray. People of different incomes are forced to live together and help each other out when disaster strikes.  Kids grow up knowing that adults are looking after them, as well as watching them to make sure they are on the straight and narrow (see Search Institute’s 40 Assets).

Together, But Apart

An out of focus picture of San Jose looking East with snow on Mount Hamilton
San Jose in the Winter

Contrast the picture of small town America with life in the city, specifically my hometown of San José, the nation’s 10th most populous city. We have it all; great weather, location, outdoor fun (mountains, beaches), first-class universities and the exciting technology industry. One thing that is lacking is the same level of community I have sensed in my travels to rural locales

We also have a divide. Some would argue that income is what divides our community. I argue that it is a lack of “social connectedness“; a term used by a recent column in the Wall Street Journal.  I am not talking about the electronic social networks that make it easy to connect with anyone, anywhere at any time. No, I am talking about the face-to-face, arm-in-arm connections that one gets by having to work with one’s neighbor, whether they like each other or not, to accomplish something that would otherwise not get done.

We skip over each other as we head off to work, eat or play. Simply, there are few reasons to be restricted to one’s neighborhood and, as a result, we miss serendipitous connections that can only come from  face-to-face encounters. Sure, we have neighborhood web sites.  Although these discussion boards can be good ways of informing, they don’t take the place of face-to-face communication that leads to real collaboration.

Further, we have the luxury of economies of scale, so we can pay people to do what others voluntarily do in rural areas. As citizens, we become reliant on professionals to protect us, maintain our common areas and create a labyrinth of rules to protect us from each other. Despite the apparent advantage of having professional services, crime is increasing, more people go to work outside our city than work here and our communications’ network is nowhere near the gig speeds many of my friends have installed in rural America.

Simply put, the people of San José generally aren’t and don’t need to be as invested in the community like those who live in rural America.

Build a Playground – Build a Community

S.J. Sharkie give his opinions on playground designs.
S.J. Sharkie give his opinion on playground designs at Design Day.

“It starts with a playground,” is the tag line that Kaboom! used to hook me into a project that has become all consuming in a good way. Kaboom! helps communities build playgrounds. Our community’s early Christmas present was the selection by Kaboom! and its partner the Sharks Foundation (yes, the one associated with the future Stanley Cup winner) to build a playground in our West San José neighborhood. This is a neighborhood where one can cross the street and the percentage of children living in households with less than poverty-level income level jumps from approximately 7% to 35%.

What this playground provides is the vehicle to build a community; a community that crosses the street and brings together young and old, rich and poor, neighbor and neighbor. Although it will be open to the public, like a park, it will rely on the people of the community to maintain it and take ownership; we can’t fall back on the city to take care of it, as it is truly the community’s park.

Raising awareness about the community playground with the Wienermobile.
Outreach With the Wienermobile

We are already seeing the beginnings of a stronger community through the events like Design Day, the community car wash and the activity associated with planning this Saturday’s Community Fundraiser.  Still, we have a long way to go in terms of raising awareness and getting to my personal goal of having the 5,000 households in the immediate area each give $2 to raise the community’s fundraising share.

Here are some of the lessons learned so far from this fast-track project:

  • Partnering with a non-profit – in our case the San José Parks Foundation – is invaluable in terms of removing barriers to accepting donations and transacting business.
  • Finding a partner who has the land and a similar mission of wanting to help the community is a necessity. Pueblo De Dios is the perfect partner in so many ways.
  • Fortunately, we have had invaluable support from our Councilmember’s office navigating through the city’s rules and regulations. These rules aren’t made for lay people and trying to figure them out takes away from time that could be spent doing other valuable things.
  • Social networks and email are great for initially getting the word out and starting the excitement, but it is difficult to compete with the cacophony of other posts on these networks.
  • In person outreach is a must.  The serendipitous things that can result from a conversation still can’t be duplicated in electronic media. It is a must to connect to the community in a human-to-human way, whether speaking after a Church service, at a community event or exhibiting with the Wienermobile to raise awareness. That’s not to exclude electronic communications, as they have their place. For instance, we found this bunny video to be a good ice breaker for talking to strangers.

So, if this Saturday, February 8th, finds you in Silicon Valley, which San José is the capital of, please stop by for a chance to win the Party Animals’ dancing and singing bunny at our first annual Community Day for our playground; Pueblo Play.

Party Animals dancing and singing bunny helps promote Community Day.
Click Image to watch Party Animals dancing and singing bunny promote Community Day.

How is the Public Interest Served When Broadcasters Depict Illegal Behavior with No Consequences?

Perceived Great Risk of Marijuana Use among Youths Aged 12 to 17: 2002-2011
Perceived Great Risk of Marijuana Use among Youths Aged 12 to 17: 2002-2011

A recent episode of CBS’ hit series, Two Broke Girls, was thought-provoking; thought-provoking in the sense that it made me ponder, “In 2013, what is the public interest with regards to television broadcasters?”  That is, does it serve the public interest when a prime time (8:30/7:30 pm Monday), entertainment television program depicts behavior which is illegal under federal law without any negative consequences to those characters? In fact, one of the characters suggests a positive impact to the depicted behavior when she says at the end of the episode (20:37), “And another problem solved by weed.”

If CBS were a cable television network, there would be no question regarding its freedom to air the aforementioned episode, since cable television fare is not intended for the public airwaves. CBS-owned stations and CBS affiliates, however, use frequencies that are public and they were given the license (i.e. didn’t pay for the use of the airwaves) in order that they, “Foster the commercial development of the industry and to ensure that broadcasting serves the educational and informational needs of Americans.” Of course, the determination of what is educational and informational versus obscene and indecent is somewhat subjective and has led to court cases throughout the decades.

It is competition with the cable networks for an increasingly fragmented audience that pushes the broadcast networks to air content that is sometimes provocative and gratuitous. It is somewhat ironic that, on one hand the networks are lauded for removing positive references to cigarette smoking, while at least one shows its characters smoking illegal substances.

From a financial standpoint, the broadcast networks look increasingly like cable networks as they augment their advertising revenue with billions of dollars from retransmission fees; fees that are eventually paid for by consumers in the form of higher cable bills. Like cable networks, the broadcast networks are increasingly using the Internet to reach an audience that has tuned out of over-the-air broadcasts. Online is exactly where one can find the aforementioned episode of Two Broke Girls.

Maybe I Have Been Asking the Wrong Question

As I have pondered my original question, I realize that the right question isn’t whether the public interest is served by our current television broadcast licensing regime, but whether there are better ways to serve the public interest with the spectrum that the broadcast networks use. I contend today, as was implicit in this article from five years ago, that opening up broadcast spectrum for broadband use would provide greater value to the public; essentially allowing everyone to be a broadcaster through the power of the Internet.

In the aforementioned article, I lamented that it was too late to change the DTV transition to better serve the needs of the owners of the spectrum.

Perhaps it isn’t too late, as the proposed Consumer Choice in Online Video Act, S. 1680 by Senator Jay Rockefeller (D-W.Va.) would radically change the way “cable television programming” is delivered. By creating a new class of multichannel video programming distributor – a non-facilities based, online video distributor – the current notion of FCC regulations around things such as retransmission consent, local franchising fees and program non-duplication could be in for some big changes.

To his 16 page bill, I would like to suggest an additional clause:

Any broadcaster that receives retransmission consent fees for its programming would relinquish its spectrum or pay fair market value to the U.S. treasury for said use of its spectrum.

In other words, this language would acknowledge that the “broadcast networks” really are cable networks, given that approximately 93% of their viewers are delivered via an MVPD or a broadband portal.  The broadcast networks might lobby against this addition (along with the rest of Rockefeller’s bill), but at least one of them has already threatened to unilaterally take such a measure if the courts back Aereo.

There will be much fighting over the details of Rockefeller’s bill, but at least the conversation has started and perhaps now is the time to seriously look at how more of the spectrum that is currently used for broadcast television could better serve the public interest.

Additional Reference Material:

“Confusing messages being presented by popular culture, media, proponents of “medical” marijuana, and political campaigns to legalize all marijuana use perpetuate the false notion that marijuana is harmless. This significantly diminishes efforts to keep our young people drug free and hampers the struggle of those recovering from addiction.”

The Exit Interview

I envisioned the perfect title for a video interview that wasn’t to be. Since this was his last day in the industry before setting off for warmer climes, a video interview would be a great way to recognize and capture parting thoughts from an affable and humble GM who led the transformation of a telephone cooperative into a broadband provider of multiple services. Of course, his answer to my query of what made him successful would have been, “It is the team.”

His deflection of credit to his team would have been correct, but he was the one who assembled the team and nurtured the culture of the company. He showed the industry how to diversify and create new lines of business. Working with other local leaders and businesses, he helped make his community better and the results spoke for themselves as his company’s customer-base grew by over 300% since the late 1990s; during a time when many companies were in decline.

Click to view Paul Freude discussing the innovative way PBC used the OVS process.

As is characteristic for this modest mid-westerner, Paul Freude didn’t want to be on camera this week to talk about his accomplishments. It was a bit disappointing, as I wanted to thank him on camera for his personal support of Viodi through the years.

Brent Christensen, President/CEO Minnesota Telecom Alliance sums up Freude’s influence in this statement, “It’s hard to even put into words the impact that Paul has had on the industry and, even more importantly, the members of Paul Bunyan Communications. It’s overwhelming when you look at all the accomplishments achieved under Paul’s leadership.”

As I was writing this article, I decided to search ViodiTV for Freude and I found this video that provides pearls of wisdom from an industry leader who will be missed. Fortunately for the members of Paul Bunyan Communications, their company is in good hands with the team Freude built and led by new GM, Gary Johnson. Congratulations Gary and best wishes Paul at the start of your new journey in retirement.

Does Broadband Lead to a Broad Waist?

In late August, the Milken Institute issued a provocative study, Waistlines of the World – The Effect of Information and Communications Technology on Obesity. This report looked at 27 OECD countries between the period of 1988-2009 and the impact of knowledge-based society on obesity rates in those countries. The growth of these rates are a serious concern, as overweight and obesity together are the fifth leading cause of death worldwide, according to the report’s citation of World Health Organization statistics.

The report suggests that,

“For every 10 percentage point increase in the share of ICT spending, obesity rates will significantly rise by 1 percentage point directly and 0.4 percentage point indirectly based on the impact of additional consumption of leisure ‘screen’ time.”

The U.S. has the highest rate of obesity, leaping from 23.3% to 33.8% from 1991 to 2008. In absolute numbers and percentage growth, China’s obesity rate is a huge concern as it more than doubled between 2002 and 2008 from 2.5 to 5.7 percent and the number of overweight people doubled from 1991 to 2006.

The report is loaded with statistics like the aforementioned, but one assumption that is a given in the report, is that, “Urbanization, in general, leads to a more sedentary lifestyle and hence weight gain.”  The implication is that urban areas will see higher obesity rates than will rural areas. While this may be true in developing countries, based on the study, it is not clear whether this is the case in already-urbanized countries, such as the United States.

Information and communication technology (ICT), as defined in the report, is somewhat expansive and includes,

“Information technology (IT), unified communications, telecommunications (telephone lines and wireless signals), broadcast media, all types of audio and video processing and transmission, and network-based control and monitoring functions.”

The report suggests the world’s transition to a knowledge-based society has led to changes in work habits (less manual labor, more dual income families) and lifestyles (increasing urbanization, greater caloric intake, more screen time), which lead to obesity. Backing up their conclusions are complex econometric models, that are way beyond the intellectual firepower of this reporter, but common sense says more screen time leads to a bigger waistline.

More common sense is embodied in their citation of the “last hour” rule, which,

“basically states that when the enjoyment associated with technological advances increases in sedentary leisure, people will devote more time to sedentary entertainment at the margin.”

In other words, most people will kick-off their shoes and sit in front of a screen or screens at the end of the day instead of exercising.

Prescription for Change 

Spring Grove Fitness Center

Their prescription for change involves governmental and employer assistance to help make exercise part of everyday life; like it was prior to screen time. Again, more common sense, but they recommend policies and programs that reduce reliance on vehicle transportation and encourage walking, bike riding  and, of course, exercise programs.

Some 27 existing government and corporate programs from around the world are cited in their list. A concept of interest to telecommunications providers include their suggestion of a tighter coupling between health-care providers and people via things such as keeping track of biometric data. Another example a program that ties patients closer to health-care professionals is one started by a Ohio physician called “Walk with a Doc.”

Employee Fitness Program

Two programs that could be added to their list are from rural broadband operators. Spring Grove Communications, as seen in this 2010 interview, built a gym/library/community center, when it rebuilt its office; benefiting its employees, as well as the community at large. Arrowhead Electric has a simple program that rewards employees for starting and sticking to an exercise program. Both programs represent ways to help people proactively prevent broadband usage (and other screen time) from leading to a broad waistline.

Communications Needed on the Road Less Traveled

Approximate Route of Highway 6 overlayed on FCC Map

The road less traveled is Highway 6, starting in eastern California and traversing the mid-section of Nevada.  Although its neighbor highway to the North, Highway 50, was deemed the “Loneliest Road in America,” the two-lane ribbon of seemingly endless asphalt that is Highway 6 really deserves that moniker.  The condition of the road is great, but what is lacking is the complementary communications nervous system, so common along the Interstate system. The lack of wired or wireless network could mean life or death for the stranded motorist, as this author recently discovered.

Sandia National Laboratories, Tonapah, Nevada
Sandia National Laboratories, Outside Tonapah, Nevada

Highway 6 cuts across the volcanic remnants of the famous Mono Lake and snakes its way to the mining town of Tonopah. Touching the northern edge of Sandia National Laboratory and relatively close to the fabled “Area 51”, it passes through numerous valleys and summits in the Great Basin where it finally merges with Highway 50 in the town of Ely, Nevada.  Through this vast expanse of hundreds of miles, cellular service appears to be available only in the two towns.

Driving along in the family truckster, between Tonapah and Ely, I observed to my 11 and 13-year-old sons (knowing they would find this utterly fascinating), that someone should make a bid on this rural corridor in the upcoming FCC’s Auction 901 (Mobility Fund Phase 1 reverse auction).  I suggested that the bidder could partner with the electric utility and use the many poles to install a fiber backbone connecting femtocells to provide wireless coverage along the highway.

A car or cell tower nowhere to be found
A car or cell tower nowhere to be found

A few minutes later we would find out how useful my proposed communications network would be along this rural road.  A blowout (actually tread separating from the tire) stopped our forward progress, but the good news was that there was no oncoming traffic.  The bad news was there were only two cars in the half hour it took to change the blown tire.  Limping into Ely, Nevada on a spare and another tire that was slashed from our 180 degree spin into a road marker; we were looking for a connection to the Internet so we could find a big box retailer with cost-effective replacement tires.

Unfortunately, besides the lack of a big box retailer, there also wasn’t Internet in this remote mining town.  The cell phone wouldn’t even pick up a “G” network.  After countless attempts to connect at the best hotel in town, the person at the front desk said the ISP had told them that the problems with the Internet connections were due to the fires in Utah. The implication was that there was either no redundant paths to the Internet or all paths had failed.

My proposed fiber backbone to serve wireless along Highway 6 could also potentially serve as another path to the Internet (assuming it could somehow be extended to a meet point with some more populous area) for landline connections as well.  This could be an interesting opportunity for an electric cooperative, such as the Mt. Wheeler Power, or some other entity who has a vested interest in the community of Ely and surrounding environs.

Assuming upfront capital costs would come from the fund, the million dollar question is whether the ongoing operation of the network would be sustainable from the revenue derived from roaming fees, anchor tenants and residential Internet. It will be interesting to see if any entity jumps in with a bid in the FCC Auction 901 for this stretch of rural and lonely road.

The old tire…..

[Postscript:  The nearest big box retailer was over 200 miles away from Ely.  The first tire shop in Eli didn’t have tires to fit our rig.  Fortunately, the other tire shop in Eli had tires, which we gladly purchased and we were merrily along our way on Highway 6– still without mobile phone or data service, but thankful it was only our tires that were damaged.]

Eye Catchers at CES 2012

[Note:  this was originally published on 1/9/2012, updated on 1/25/2012 and 2/4/2012].

Glasses free 3D on an iPad or iPhone for only $30.  

Globalwave introduced sheets that turn screens from iPhone size to 23 inch that allow glasses-free 3D viewing.  Their “free” app can be found at

Photos from CES 2012 of products, services or just something interesting that caught my eye.

3D without Glasses
3D without glasses is getting closer to mainstream, as evidenced by the number of booths touting such advances.
Why look at a picture when you can print a 3D object. Priced around $1,299 and with cartridges around $3 to $4, 3D printing looks like it will move from the machine shop to the backyard workshop.
And another 3D printer - this one for about $3,000. Why limit yourself to plastic, how about printing chocolate or

Mobile DTV and its adoption by consumer electronic manufacturers and consumers was a major emphasis of a series of interrelated booths at CES 2012. It will be interesting to see how these efforts play out, both on a political and commercial level.

Mobile 500 -Alliance of broadcasters focused on creating and sourcing programming for Mobile DTV applications.
Of course, it would be good to be able to protect content, if one is going to charge for it.
Back to the future - Emergency alert via airwaves. Of course, couldn't this same thing be accomplished by via a broadcast SMS message with much less bandwidth?
Using DTV as an alternative to LTE or landline broadband for mobile signage applications
Viasat made waves with their low-cost satellite broadband for the home, but they have an equally compelling product for the jet set - Look for it in JetBlue planes.
Robots were everywhere - many used smartphones or equivalent as their "brains and sensors".
Wheels for feet
Interesting concept to augment short transit (<3 miles), but lots of questions as to the practicality
The booth with the best sign
My favorite booth for some reason
Is It a Wearable Computer or Virtual Reality?
Is It a Wearable Computer or Virtual Reality? SmartGoogles by Sensics - camera, sensors, speakers, earphones - give it connectivity and this Android 4-powered device will augment your
A wireless drone controlled by a wireless phone
Range about the same as WiFi, cost about $300 - A Wireless drone is cool, but an expensive toy from Parrot Wireless
What a cool promo from Nokia - a free bus ride from the airport to the hotel & you get to try the new Nokia Windows 7.5 phones via the T-Mobile Network. Very responsive and great display (worked well in daylight).

2011 Reflections from Roger

Ken & Roger editing - Click to watch the video

The end of 2011 started with scanning as I began scanning old slides and looking at old video footage. The memories made me realized what a wonderful life I’ve had, and the great people I’ve enjoyed it with. Plus, I didn’t have to jump off a bridge to realize it.

The scanning gave me with warm feelings and another realization that I’ve had wonderful opportunities to participate in a history many only viewed. My wife has always been a part of this, and the old photo’s reminded me of that in a warm feeling I’ve enjoyed for days. I am fortunate that we had bought a good 35mm SLR camera back in the days. The quality of the scanned slides has been amazing so especially enjoyable. We’ve documented many events in our lives which include my art works and involvement in leading edge technologies so I’ve got lots of material to “broadband enable”.

Looking back I also realized this month had other significance. I had been lucky to work with leading edge technologies most of my career but 10 years ago something happened the would change how I participate in broadband trends. I was working with the most advanced TV over DSL technology in the world and traveling the country talking about it. Unknowingly I was participating in history being made while some of those communications turned up in a report. That resulted in a meeting that eventually became an unusual yet best business relationship I’ve had in my career.

So here I am, the last day of 2011, reflecting “way back” and to 10 years back. I have a beautify wife that loves me despite my shortcoming, and a business partner with equal acceptance, shared values, extreme willingness to experiment, and persistence to find solutions and succeed despite obstacles that would stop normal human beings. So now I reflected back to what got me here… perhaps the real story?

In the 70’s and 80’s I took lots of photos and viewed those 35mm photographs on paper and projector screens. In the early 90’s I captured analog video into a computer with a Video Spigot card at 8 frames per second and 180×120 resolution. Sixteen years ago I registered my first Internet domain and started putting content on the Internet. Ten years ago I was about to meet Ken Pyle and take things to another dimension with visual content, streaming video on HTML servers (prior to YouTube), generating ad revenue by streaming on-line then watching earlier streamers go down the tubes, managing major sites with a tool called WordPress, going high-definition with video (no more 180×120), producing programs for hotel TV channels, accepting YouTube (because I get ad revenue now), video journalism, producing documentaries and documonials, and having a really great time in 2011.

The end of this year started with intentions to say thank you to everyone that supported us throughout the year and over the past years. For that I do say thank you and happy new year from both Ken and myself. But I want to add a special thank you and happy new year to my wife, to Ken and his wife Jane, and to a couple special guys Charlie and Tom for many good times.

The people around us make life happy and successful through their support. That support comes in many forms from family, from industry relationships, and of course financials that keep the light going (creative and literally). I’ve enjoyed working with all of our supporters, as I know Ken has, and look forward to seeing you all and working with you again in 2012.

Best Wishes, and here’s a video to reminisce by.


Wild Rice and Fall Snow

Click here to learn more about Christmas Point Wild Rice Soup

It was chilly and snowy outside, but there were many hot ideas on how to attract customers at the Minnesota Telecom Alliance’s Video Peer Group at the Grand View Lodge in Nisswa, MN. Viodi produced a mini-version of our local content workshop as a prelude to this event. This was an opportunity for us to learn from Minnesota operators as to the challenges of producing local content, while imparting some painful lessons we have learned about content production. A special guest-speaker, Stephen Henning of Lakes Country TV, gave us an overview of his Minnesota-based television program and the interesting way he financed this look at some of the unique attributes of rural Minnesota.  

As reported before, local weather on the television is a popular local content application. And the weather is a driver of VOD buys, as one operator reported concurrent peak utilization of up to 20%; the peaks in VOD consumption are often directly related to weather conditions (the nastier it is outside, the more people want to hunker down and watch on-demand). Even with this sort of excellent consumption, based on the upfront investment cost, the stand-alone business case for VOD seems extremely difficult for the smaller operator.

The MN operators have always been and continue to be innovative as evidenced by the number of operators that are implementing a dual strategy of video distribution, whereby they are distributing their local content on the web with their own video servers as well as to the TV through traditional mechanisms. This broadband approach offers an alternative way to provide on-demand.

One of the key challenges operators face is leveraging their resources, such that they can create a robust and on-going local content operation within their existing budgets. One operator marketing person called this challenge an, “unfunded mandate.” Still, through things like sponsorship from local businesses and working with their communities, operators are finding ways to create local content.  Several operators mentioned the creation of online and television on-demand product and service tutorials as a source of local content that would help their customer service efforts (see this article for information on what one operator is doing with video tutorial creation) to be one way operators are reduce customers 

To this theme of local, the MTA did the right thing by bringing this conference to a venue within one of their member companies’ service area (CTC). The facility at the Grand View was first class and state-of-the-art (HD projectors, etc.) and the grounds were beautiful and relatively affordable. Even the speaker gifts of wild rice soup from the Christmas Point Wild Rice Company of Brainerd, MN were from a local company and provided a unique way of remembering this special event.

Note: Local content attendees, look for an email with a link to notes from our event.

Using the Old Social Network to Create a New One

The subject line of the email from Alan Toman was simply, “Your Perspective.” The email explained that he was on a mission to speak to at least 100 people over the course of a couple of weeks, so he could directly ascertain the state of the economy, understand how various market segments were doing, where the prospects for growth were, etc. He didn’t want the filter of the media to cloud his perspective on these important topics. Our conversation that followed his email lasted for close to an hour and was quite enjoyable.

A few weeks later, I was pleasantly surprised to find another email from Alan summarizing the conversations he had. He had gathered and synthesized a wealth of information from people who are employed in many industries; from mobile, Internet and advertising to education, energy and finance; from entertainment, non-profit and software to VCs, IT and PR. Over half of the people he spoke to are CEOs, presidents, founders, partners and other senior executives. He also spoke to sales reps, managers, designers, developers and engineers.

His fifteen nine-page document was comprehensive and represented hundreds of hours of work. Although Alan’s background as a marketing innovator, an entrepreneur and executive has given him interesting challenges, he explained that he had never embarked upon a project quite like this one. In the course of his discussions, someone mentioned that what he was assembling was WOOF – Wisdom Of Observant Friends.

In keeping with the common thread of so many of his conversations, he then developed a web site; the WOOF Factor. One cool thing about his web site is that, like tens of millions of other sites, he is using WordPress as his content management platform. The interactive nature of WordPress is allowing him to extend the conversation he started with so many of us this past July. The nice thing about the open source WordPress (even the name has been given to the non-profit, WordPress foundation) is Alan will be able to control the content and won’t be subject to the whims of 3rd-party.

I am sure Alan will continue to keep the site updated with the old social network (e.g. the telephone) and inject that feedback into his posts. Because it is based on WordPress, it is easy to join and/or observe the conversation by simply subscribing.