On Outsourcing, the Economy and the United States

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Audio: On Outsourcing, The Economy and the US

If you’ve missed the economic disaster that’s gripped the world over the last few months, you’re probably capable of forgetting to breathe.  Then again, if you’ve been following the free fall of the US stock market you’ve probably stopped breathing all together.  The economy is on everyone’s mind and a popular blogging subject.  As such, I was a little hesitant to write on it.  However, I’ve yet to see anyone discuss the big picture and very few American news outlets are taking a realistic look at what’s really going on.

The Global Environment

Simply put, you can’t understand the economy until you understand recent world history. The collapse of the USSR in 1990 set off a series of dramatic changes.  With the death of the Soviet Union the US lost its major competitor and the world saw one of its largest and most powerful economies vanish.   This provided a fantastic opportunity for the US to solidify its presence on the global stage.

In 1993 the European Union was formed and began to fill the void that the USSR’s collapse had created.   By 1999 the Euro was introduced and by 2002 most of the member countries had switched to it as their exclusive currency.  As intended, the EU and its currency created a new world economic superpower able to face off with and stand side-by-side with the US dollar. Meanwhile, the widespread adoption of the internet, and decreases in the cost of shipping/phone communication and the like made it economically beneficial to outsource to places like India and China.

Russia’s collapse offered a valuable opportunity for China.  By devaluing their currency China was able to establish and maintain itself as one of the world’s greatest exporters –  fueling an industrial revolution unlike any the world had seen for over 40 years.  With a wealth of natural resources, nearly endless population, and government able to undertake massive/risky projects, China catapulted itself onto the world stage.  By the late ’90s China had truly come into its own as an economic power.

A fourth historical factor essential to an understanding of the current economic crisis is the concept of world currency. In 1945 international currencies were pegged to the US dollar which helped secure US dominance and established the dollar as the world currency.  With the collapse of the gold standard in 1971 most of the world currencies were un-pegged from the dollar. Despite this, most international transactions were still carried out in dollars due to our position as the world’s economic superpower.

The Power of Currency

As the dollar has been the world’s unofficial currency, the United States has been able to operate as the central economic node through which most international business is carried out.  This poured money into the US and helped fuel our economy. The difficult trade off is that it also provided for a strong dollar which slowly made a lot of our industry unprofitable. As a result, our exports began to drop and our imports began to rise.  A brutal and difficult transition.  These decreases were, however, balanced by the thriving tech industry in the US. Our creativity, drive and forward-reaching thought provided the internet and new technologies which we were able to export and sell while re-tooling our economy to the early stages of the next wave: The digital revolution which replaced the industrial revolution.

As our exports continued to diminish, outsourcing thrived and the debate – which had picked up steam in the early 2000s – eventually came to a head around the time of the last presidential election. Outsourcing became a dirty word, unpatriotic and an affront to the American public. The administration decided something needed to be done to bring American manufacturing jobs back to the US and by George they did it. They began a series of actions which resulted in the gradual suppression of the US dollar.  A practice which is similar to what China has done to keep the value of their currency low and exports high.  The idea was to de-value the dollar to increase the price of imported goods while creating incentives to fuel American industry.  Ironically, this has worked.  Companies like Toyota, BMW and others have opened a number of plants in the US over the last year and a half, and industry has poured back into the US. Unfortunately,  not as fast as necessary. There are a few catches.

  1. Our standard of life has been based on living in a post-industrial nation. Our consumption rates, wages, etc. are all vastly different than those of the factory worker who fueled America’s 2nd industrial revolution and exponentially different than those of  the Indian and Chinese workers fueling their country’s current industrial revolutions.
  2. Technology and automation have drastically changed the way manufacturing and assembly jobs are executed, streamlining the process and reducing the demand for manpower.

Unhappily, both of these factors pale in comparison to the real catch. Our role in the global economy.  Unlike China, Japan, India, Mexico or any other foreign nation, the US is not truly an independent currency.  As the de-facto world currency, the US dollar is the central quay to which all of the world’s other currencies are tied.  When we began artificially deflating our currency we began destabilizing the world economy. Instead of offering a quay that the world economies could tie to, we quickly became a lead weight pulling them down.  We can’t have it both ways. We can’t be the world’s economic super power/global currency of choice AND at the same time be de-valuing our dollar to drive up exports.  This process began destabilizing the world economies and has, in my opinion, resulted in a lot of the credit and economic issues we’re currently facing.  It also helps explain why the US is suffering, but stock markets around the world are in equally – if not worse – shape.

The Stock Market & Housing

The common perception and discussion within the US paints the current stock market turmoil and economic trouble as being largely limited to/caused by the US. While it’s obviously hitting us hard and in many ways started with US, it’s not only a US  problem.  Further, the political dialogue has attempted to imply that the difficulties essentially stem from legislation established to put poor people in houses.  Poor people who are now defaulting on their loans and going into foreclosure. While this is, in part, true, it’s a small portion/side effect of the real issue.  It’s not the somewhat limited cross section of lower income Americans who were able to realize the American dream by purchasing a home that created the housing bubble.

In reality it is the fault of middle and upper class Americans who took out home equity loans and ARM loans to purchase 2nd and 3rd properties.   Properties which were purchased as investments in the rush to cash-in on the soaring real estate market. These were properties purchased with the expectation that they could be re-sold for profit in months or at the most a few years – all this to be done before the ARM’s interest rate kicked in and the price skyrocketed. These are the individuals who threw the dice and took a gamble every bit as risky as any stock market investment … and lost.  These are the individuals, many of whom are now faced with paying 2 or 3 mortgages in this bad economy who stand to lose both their speculative investment and their primary home.  Many in the the middle class made the mistake.  They jumped on the bandwagon and now we’re paying the price.

Back to Currency

I talked earlier about how suppressing the dollar doesn’t make sense/work. Consider that since July the Dollar has turned around its downward march and rebounded forcefully. To illustrate this point, consider the gains made by the dollar against the following international currencies:

  • July: 1.04 October: 1.44 – Australian dollars 28%
  • July: .63 October: .73 – Euros 16%
  • July: .50 October: .57 – British Pound 14%
  • July: 1048 October: 1390 – South Korea Won 33%
  • July: 79 October: 110 – Icelandic Krona 39%
  • July: 1.49 October: 1.79 – Fijian Dollar 20%
  • July: 10 October: 12 – Mexican Peso 20%
  • July: 1.59 October: 2.36 – Brazilian Real 48%
  • July: 1.01 October: 1.12 – Canadian Dollar 11%
  • July: 516 October: 611 – Chilean Peso 18%
  • July: 1924 October: 2281 – Colombian Peso 19%
  • July: 149 October: 187 – Hungarian Florin 26%
  • July: 1.31 October: 1.67 – New Zealand Dollar 27%
  • July: 5.07 October: 6.12 – Norwegian Kroner 21%

*Credit goes to Cody Paris for pulling this data/doing the calculations.

So, the question begs – what’s the macro message we should take away from this?  In the modern global economy nothing is quite what it seams. For my part, I’ll be watching the international markets every bit as closely as I watch the markets here in the states.

As always, I value your thoughts and feedback! Please, keep in mind that these thoughts are a summary of my observations and nothing more.  I’m not an economist – only a curious mind trying to make sense of things.

The Technological Revolution – A 2nd Look

The Industrial Revolution is Dead

On April 8th, 2008 I wrote an article entitled “The Technological Revolution – Lessons from 1770″ outlining my belief that we are at a pivotal point in American history. One that will have sweeping social, technological and economic impacts on a par with those that occurred during the American Industrial Revolution. I theorized that some of the social and economic shifts we are currently experiencing are elements of the first wave of a modern technological revolution.

Jonathan Pfeiffer, Author of the blog Multivoiced recently wrote an intellectually stimulating response exploring a number of powerful, intriguing counter points. In place of a private discussion about the points and in the name of further exploration of the concepts discussed in our collective posts, I’ve elected to respond here, in the form of a full post. I encourage you all to review his blog, he has some excellent, thought-provoking posts.

My Thesis: We are well into the early stages of the technological revolution and the window of opportunity is quickly passing during which the U.S. can change the way we operate while working to maintain our spot at the leading edge of the new social/political/financial structure that will eventually transform the global landscape. We are faced with an opportunity to not only maintain but strengthen our status as the world’s super power for another 100 years but only if we adjust.

Jonathan’s Counter-thesis 1: While it is obviously true that a certain kind of economic development is a very good thing, the demand to consolidate the U.S. position at the top of the world is not. What I don’t think Alex understands is that international relations are a non-zero-sum game. The technodevelopmental transformations which Alex finds to be so awe-inspiring should not lead us to an us-versus-them attitude toward our partners around the world.

My Response: While this shouldn’t lead us to an us vs. them attitude toward others around the world, we don’t have to stop our leadership and growth to allow others to catch up and be equals. We must vigorously continue our research and development; we must not be constrained by reactionary policy or an idealistic view of global politics.

To clarify, my world view is largely based on the belief and observation that humans are fundamentally simple animals. Our core social behavior is, in many respects, not unlike a complex version of that found in packs of apes and wild dogs. This social behavior relies on a constantly shifting, evolution-driven, hierarchical structure of Alphas, Betas, Gammas etc. On a more macro level, this system is commonly divided into the small percentage who choose to lead and the majority who choose to follow. Can you imagine what humans could achieve if every member of our species took charge of their individual potentials and chose the enlightened paths of productive intellects? It is a wonderful thought, but sadly, not one that is realistic.

Due to our nature, all social constructs we build defer to a hierarchical system. From personal friendships to governmental power each interaction is subject to these considerations. This phenomenon can be seen in the rise and fall of empires. One popular counter argument to this claim, is that as global communication, the internet, and transportation has improved we have begun to shift into a new global era in which the conventional governmental and social hierarchy have shifted in a fundamental way (eg: the concept of globalism). I disagree. I’m more than willing to acknowledge a shift in the way we receive information, the way we perceive things and how individual dynamics operate.  However, this does not change the basic hierarchical behaviors that drive our system – as has every past system.

In his Counter-Thesis 1 Jonathan makes two specific points. International relations – a zero-sum game? For the sociological reasons outlined previously, I do believe and must counter with stipulations, that it is. While I do believe there is an absolute winner, I do not believe as the concept of a zero-sum game can imply, there must be an absolute loser. Even the individual/organization or nation that might be ranked in last place still benefits, as long as the social structure on a macro level moves forward. If it did not, we would still be pack animals bereft of language. For example, even the Zeta wolf in the pack is safer, stronger and better off as a member of the pack, when compared to how that same wolf would fare operating independently.

The goal of the leader, be it Alpha Wolf or Super Power, is not the zero-sum obliteration of all lesser competition but rather the pursuit, attainment, mastery and maintenance of the pinnacle position and benefits associated therein. I suppose, as Jonathan mentions later in the article, this could be construed as a capitalistic view. I must also argue that despite the attempts of other systems to overcome our hierarchical structure as a species, they suffered many of the same obstacles and corruptions that made it’s implementation neigh impossible. Communism is a primary example.

The second point Jonathan notes, which is integrally connected to the first, has already partially been addressed. It is the nature of a technologically-based us-vs-them mentality. To a degree, I agree with Jonathan. Central to the health and hope of staying competitive in a global economy is our need to integrate, connect, and work together. However, in instances of internet-like technology, each nation is bound by the establishment, maintenance, and most importantly, the control of their own infrastructure. An individual with phone and mail capabilities can respond more quickly and accurately than an individual limited to mail exclusively. America must work to develop and embrace new technologies to maintain a competitive edge. Regressive legislation and the myopic mentality behind it has disastrous potential to limit our advancement and do harm to our global position. This is evidenced in the current pay-per-gigabyte campaign, the leaked treaty information which, as I understand it, would ban, among other things, all P2P technology and other major anti-technology legislation.

My Thesis: Right now America is falling further and further behind every day. Luckily with powerhouses like MIT, Silicon Valley, Microsoft, Google, Dell and a plethora of brilliant individuals and infrastructure we have a slight advantage.

Jonathan’s Counter-thesis 2: We actually do not have an advantage, if “we” means all of us who are stakeholders to the transactions and public decisions that sustain U.S. supercapitalism. Alex seems to be measuring advantage by way of places and institutions that represent an educated and moneyed elite. (This is a common mistake that even Democrats make. See section V of Mike Davis’s 2007 essay, The Democrats After November.)

My Response: If I understand this statement correctly Jonathan is putting forward the classic and difficult to answer question, “But what of the poor?”. As we focus on the future, creating strong platforms for the 20% – or even the 70% – to continue building upon, what happens to that final 10? What is the responsibility to that Zeta piece of the population, individuals without roofs over their heads, struggling from hunger and all the while living in a first-world nation. On the one hand, as a compassionate human being,  I do feel as though it’s a relevant issue. On the other hand, I also feel it’s an issue more macro in nature than something just tied to technology which is the current subject of this discussion.  As a species we have defied nature by striving to protect and aid the weak. We choose to perpetuate the survival of the “unfit” and that is a tribute to humanity even though we still have a long ways to go.

The article you linked to discusses the technological platform as a political tool;  a prop which has been adopted by political mouths as an end-all solution. The same article also notes that these political representatives are relying heavily on/loyal to major players in the tech industry. I’m advocating something larger and more general than that. I’m advocating the necessity of a shift in the way we view technology as a culture and how we treat it in our cultural dialog. Investment in technological infrastructure, encouragement of up and coming technologies, and the associated industry, needs to become complete fact in place of theorized agenda. It’s an issue that transcends political party or agenda, even economic policy. It’s simple necessity. Review the leaked treaty I linked above – the names on that treaty are mostly democrats, democrats who also receive the lion’s share of their donations from lobbyists in the media and music industries. While these industries are technologically based, they have shown a vested interest in blocking the US’s forward movement and our steps towards maintaining a competitive technological presence. Their unwillingness to adapt is strangling the country’s ability to lead. While not directly related a wonderful lead on the subject is Brafman and Beckstrom’s the Starfish and the Spider.

My Thesis: For America to ride the current wave we need to adopt, embrace, and acknowledge the new role of technology and the worldwide web (WWW). Our political policy and legal approach to internet/technological issues cannot cling to our old systems while stifling growth with regressive policies. We must embrace invention and focus on creating a culture that not only understands technology, but is driven by it. Already, every aspect of an average American’s daily life has been effected. We may not acknowledge it, but from entertainment to food distribution, our lives are now driven by modern technology, especially the WWW.

Jonathan’s Counter-thesis 3: As Dale Carrico explained, there is no such thing as technology. This means that we cannot oppose, or as Alex calls us to do, favor, technology in general.

Much of the remainder of the essay, which Alex obviously put some significant thought into, is a list of ostensible historical parallels which reads like something out of a Ray Kurzweil book on the Singularity. We have all the usual suspects, like the proliferation of railroads and canals compared to the up swinging curve of computational power. It’s all nothing more than transit and commercial infrastructure, writes Alex.

My Response: Carrico makes an interesting point. Though to me it focuses on the semantics of words, instead of the nature of the core issues. From an anthropological point of view, every advancement we make is based on improved technology. (Defining technology as the application of science to industry.) Referring back to my initial example citing the Industrial Revolution as an illustration – I imagine we can all agree that the Industrial Revolution was nothing more than another technological revolution at its core. A drastic shift based on new processes and machinery. In that respect there are without question more fitting titles – some might say the Digital Revolution, yet others might prefer the Internet Revolution.

Regardless of the title we choose, I believe Cerrico’s argument makes the assumption, perhaps rightly so, that we are always advancing and that as a result we are all inherently technologically open. What it fails to give credence to, however, is eras of accelerated adoption and significant technological inventions which drastically shift and alter the nature of civilization. The canal, the highway, the mapping of the stars, flight etc. the flip side of which are also eras like the Dark Ages, the fall of the Greek Empire, the collapse of the various eastern civilizations etc. During these times great stores of knowledge and technology were not only rejected but lost. Remember as well that it was most often during these periods that the greatest human suffering occurred. History leaves little doubt in my mind that embracing technology is of greater benefit to humanity than the negative impacts of rejecting it. Subject to those extremes is a spectrum to which we as individuals and as nations have to consider and respond. The nature of those responses chart the direction and speed at which we will advance.

My argument and proposed action is based on the belief that we are at the edge of one of those great periods of advancement, largely made possible by a cultural psyche that has focused and invested in pursuing and embracing new technologies. That the impact of this next evolutionary period will re-define the way we operate and re-establish the nature of the global social structure. Already technologies like the Internet 2 and virtual worlds with millions of residents are springing to life. The ripples of these changes will be felt across the surface of the globe by ALL living creatures. We must be cautious and studious as we move forward working to avoid doing harm, and always remember our humanity, but we must never the less move forward and embrace these technologies or fall back upon ourselves.

Once again, I’d like to thank and credit Jonathan for offering up a number of excellent links and varied view points. Phenomenal food for thought!

*Edit* I just came across this link today in a speech by Presidential hopeful Barack Obama on the subject of technology. It’s a must read.

The Technological Revolution – Lessons from 1770

The Industrial Revolution is over

The Technological Revolution – why everything must change.

Over the past 15 years there has been a lot of dialog over the impact of modern technology, the amazing pace at which it has evolved and general shock at the impact of the Internet and personal computers on our day-to-day lives/the way business is done. In fact, as I completed my research for this article I’ve constantly had to re-evaluate the current situation based on significant developments which have been announced. Yet despite the common appreciation for the significance of current events our government, big business, and the American people have been slow to react.

What we are experiencing now is not just an interesting blip…an increase in productivity. It’s a modern technological revolution which is every bit as significant as the industrial revolution. As was the case with the industrial revolution the adjustment will be equally significant. We are well into the early stages of the technological revolution and the window of opportunity is quickly passing during which the U.S. can change the way we operate while working to maintain our spot at the leading edge of the new social/political/financial structure that will eventually transform the global landscape. We are faced with an opportunity to not only maintain but strengthen our status as the world’s super power for another 100 years…but only if we adjust. Should we fail to take action, history will repeat itself and we will experience the same disastrous ramifications as late adapters during the industrial revolution.

Right now America is falling further and further behind every day. Luckily with powerhouses like MIT, Silicon Valley, Microsoft, Google, Dell and a plethora of brilliant individuals and infrastructure we have a slight advantage. We also still have one of the most diverse, motivated entrepreneurial markets in the world. It is full of creative, inventive, and driven minds but that market is losing steam where it counts. According to statistics recently released by AeA’s Cyberstates 2008 report, “U.S. high-tech venture capital totaled $16.9 billion in 2007, up by six percent”. The fact is large amounts of American capital is being invested in the high-tech industry but the growth rate, while positive, isn’t promising.

For America to ride the current wave we need to adopt, embrace, and acknowledge the new role of technology and the worldwide web (WWW). Our political policy and legal approach to internet/technological issues cannot cling to our old systems while stifling growth with regressive policies. We must embrace invention and focus on creating a culture that not only understands technology, but is driven by it. Already, every aspect of an average American’s daily life has been effected. We may not acknowledge it, but from entertainment to food distribution, our lives are now driven by modern technology, especially the WWW.

Now & Then – Modern Parallels

Parallels between the Industrial Revolution (IR) and what I’ve dubbed the Technological Revolution (TR):

IR: We saw trade explode. This growth was powered by the creation of complex rail and canal networks. Eventually, with the invention of steam power and the automobile we saw additional significant infrastructure growth.

TR: Computer processing speed is growing exponentially. In many ways the computer is representative of IR advances in steam power and electricity. Similarly, our cable/fiber optic/copper/wireless networks have expanded quickly. These networks are the transport infrastructure of the future. They are the roads, canals and rail systems that future commerce and parts of our social dynamic will depend upon.

IR: Massive growth in individual’s production capacity and a shrinking effect as the world became a smaller place.

TR: Similar growth rates and potential in production and productivity. In some instances what previously took hundreds of people to do can now be accomplished by a lone individual in a quarter of the time. The WWW has effectively duplicated the shrink effect the IR had on the world, only now instead of being able to travel to the next town over in an hour instead of a day…you can virtually explore or talk to the other side of the world instantly.

IR: The creation of a middle class. The empowerment of the average individual. An explosion in the options available to the common person when compared to the pre-IR world.

TR: Drastic changes in social power. A populace that switches jobs more often than it switches socks. A business environment where the typical social structures which dictated your professional focus and qualification [e.g. A college degree] have evolved into flexible, general, guides and amount to little more than training opportunities. A population of professionals able to pursue their diverse interests and able to constantly explore new opportunities. The TR has also created amazing opportunities for individuals of all backgrounds and ages [e.g. Facebook, Ebay, Winamp]. Individuals are no longer limited by age, professional experience, or other classic professional barriers.

IR: Major shifts in employment structures and viable business systems. The complete re-evaluation and reformation of certain components of the business sector [e.g. the creation of the automobile industry]. The simultaneous creation of major, alternative business structures previously never before seen.

TR: Drastic shifts in major elements of the business landscape. Major impact resulting from web-based automation all across the spectrum – from WalMart’s automated ordering system to a major shift in math-oriented careers such as accounting and finance where strictly formulaic/mathematical operations can and are now handled by computers. One such example is the automation of the stock market system.

These illustrations are just a brief snapshot. A taste of why I feel that we are truly entering a new global economic period.

Putting Things In Perspective

Even as a relatively tech-savvy individual I find myself regularly surprised by the technological advancements occurring in leading research labs and international markets. Here’s some information that might surprise you.

The Grid: CERN publicly announced the roll out of this data network (think of it as a parallel Internet) recently as part of their Large Hadron Collider project. It was developed in response to their need for a way to exchange the equivalent of 56m CD’s worth of data in a year. The Grid is estimated to be some 10,000 times faster than your current internet connection. This is possible by creating a new network based on state of the art technology instead of a system based around pre-existing networks and operating at the lowest common denominator. By combining modern fiber optics and routers with state of the art servers the increase in web performance is astounding. The Grid currently has 55,000 servers up and running and according to the Times Online expects to have 200,000 within two years. Users of the Grid would be able to download a full length film in mere seconds instead of hours.

Malaysia & Indonesia: Probably not a place that jumps to mind when you think about high tech centers, I recently found an article published by Computerworld Malaysia outlining a Broadband Over PowerLine (BPL) web company which is working on providing Internet access to 60 million Indonesian internet users. To be perfectly honest, I don’t completely understand what they’re doing, but as far as I can gather instead of conventional coaxial or Ethernet lines standard power lines are used. They are using a network of 400,000 mosques in order to serve the projected 60 million users. They claim that their users will be provided unlimited high speed internet connections with a 224mbps connection for approximately $1.60 per user. Compare that with Cox’s standard $50 package for a 7mbps connection with 3 mbps power post. The good news here is that the guys behind this project have inked a deal with US based STM Networks Inc. who will be providing 5 communication satellites.

Japan & Sweden: When I started exploring these concepts I had no idea about the BPL project (Posted March 28th) or CERN’s Grid project (posted April 6th). What I had heard was news of current internet practices and developments in Japan and Sweden. Articles like this one published April 4th by the BBC outlines what’s currently taking place in Japan. The article notes that for $35 you can get a 100 mbps connection. Again keep in mind that here in the U.S. Cox and other similar companies are advertising a 7mbps connection as blazing fast and still charging $40-$60. The article notes that 30% of Japanese subscribers now have access to these plans and that the Japanese government intends to see that expanded to 60%+ in a matter of years.

Meanwhile Sweden which has garnered a lot of media attention as a major hub for P2P networks like ThePirateBay.org and is known for its quality internet network articles like this one outline some of the current experiments being done. This article attracted attention when it mentioned that fiber network operator Karlstad Stadsnät provided a 40gbps connection to a 75 year old woman. The article also outlines plans to expand the service to a 100gbps connection.

FCC Standards & the U.S.: On March 19th Engadget, a major tech blog, noted that the FCC had finally updated it’s policy and official classifications for broadband. The good news is it raised the standard 384%. The bad news is that that raise brought the official broadband threshold to a pathetic 768kbps. Please note that throughout the article this is the first time I’ve so much as mentioned speed in kbps. For those not familiar with the breakdown a kb is a kilobyte. 1,000 kilobytes are in 1 mb or megabyte and in turn 1,000 mb are in one gb or gigabyte. According to the new FCC regulations any connection between 768kbs and 1.5 mbps is now designated basic broadband. It’s also important to note that download speed is often significantly higher than upload speed.

Comcast Corp. & American Broadband: After getting into a major tiff with the general public and the U.S. government over P2P throttling practices, Comcast Corp. changed their stance and has announced plans to offer a 50mbps connection (an upgrade from 16mbps). While a move in the right direction the 50mbps connection also comes with a $150 dollar/mo price tag according to a recent Reuters article. Even better news, however, is their announcement that they eventually plan to offer speeds in the 100 mbps and 160 mbps range. Unfortunately for us that $150 price tag is more than a little different than the $1.60 offering currently going live in Malaysia and Indonesia and still a long ways off of the $35 price tag in places like Japan.

Update – Gizmodo just reported here about new price plans being implemented by Time Warner as well as similar plans already in place in Oregon that are based on a [very minimal] base service with charge by the byte fees if you go over. In addition to having outrageously low minimums these plans are exactly the type of regressive pricing platforms, behavior and thought process I’m talking about.

The EU and P2P: One of the big issues in today’s tech talk is the issue of P2P (Peer-2-Peer) software like BitTorrent and tracker sites like the previously mentioned Pirate Bay. Major lobbying/watchdog groups representing the Movie Industry (MPAA) and the Music Industry (RIAA) have kicked up a lot of press for their lawsuits and ongoing battle with services like Napster and Kazaa. These services enable user-to-user file transfers. There has even been legislation introduced to block the use of P2P software, which has come under heavy fire because P2P networks themselves are not in any way shape or form illegal. In fact, they are used by musicians, software developers, writers, and every day users to distribute software. Even major corporations like the game development group Blizzard behind the online video game World of Warcraft (9 million+ subscribers) use customized P2P networks to distribute their software and updates.

A lot has changed over the last few months. RIAA in particular is getting creamed in court for their unconstitutional behavior, major music labels have dropped/discontinued their controversial DRM (Digital Rights Management) software and the EU announced its 15 million dollar investment/support for a next generation P2P start-up called P2P-Next which will focus on developing a state of the art BitTorrent platform which will allow both downloading and streaming online content. P2P-Next has already picked up the support of several major European players (e.g. the BBC).

Update – The BBC just posted this article about a looming fight between the BBC and ISPs over their iPlayer software which streams legal video. According to the report in its first 3 months over 42 million shows have been downloaded. Unsurprisingly ISPs are crying foul and petitioning the BBC to help offset the costs of expanding their pipelines to meet the increased demand.

Web Hosts – The Other Side Of The Coin

I’ve focused most of my attention and research on the consumer side of things. A lot of focus gets placed on making sure the virtual roads of tomorrow are large enough to keep up with demand but one element that is often overlooked is webhosting. It’s wonderful to have huge pipes, but at a certain level they’re pointless if you lack a pump that can keep those pipes full. In other words, after shelling out your $150 a month for Comcast’s 50 mbps, you pull up your friend’s website and go to download a custom made 50 mb music video he has created. If they’re hosted with a U.S. based webhost there’s a pretty good chance you’re only going to be able to download at a max of 300-500 kbps. The sad reality is that you’re probably realistically looking at a download speed closer to 40-80kbps. Say what you want about Apple and Microsoft, one of the things they have been fantastic about is securing high quality connections. I recently downloaded from Quicktime at 1.8 mbps. THAT is where the web needs to be and that is the level of broadband service we will need to stay competitive.


It’s a problem we are all intimately familiar with. From viruses, to phishing, to identity theft, to hacked websites, security is one of the biggest obstacles to internet progress. Even seemingly harmless issues like spam can reap havoc on user adoption and the utilitarian value of future web development. It’s something that will need to be addressed and that we all need to keep in mind.

The Future

If we want to have any hope of maintaining our position as a world super power it is paramount that we embrace modern technology, foster it with investment, and ensure that it is not hampered by regressive legislation. We are in a time where we need to not only focus on building our infrastructure, but ensuring that American companies, products, and citizens are the best trained, most capable users in the world. As odd a concept as it may seem, the future of tomorrow’s America very well may depend on things like P2P networks, video gaming and the modern media.

The Industrial Revolution is dead. Welcome to the Technological Revolution.