Online Flash Mobs — Tip for Rational Business: Lower Prices = More Sales

Phillip Dampier August 22, 2011 Editorial & Site News 3 Comments

This device brought a Texas data center to its knees this morning.

We started getting complaints about site slowdowns and the unavailability of our multimedia content on Stop the Cap! earlier this morning, and the complaints grew as the morning wore on.  Attempts to access certain content here brought error messages or slow load times, when the content loaded at all.

We finally received an explanation early this afternoon that explains it all: the data center providing service for this website (and thousands more) was suffering from a virtual onslaught — an online flash mob of eager buyers trying to pound a certain online retailer for the now-deeply-discounted, and very-discontinued HP WebOS-based TouchPad.  Originally selling for $400 and up, HP on Friday announced they were slashing prices on their entire inventory to as low as $99 for a 9.7″ 16GB tablet they originally hoped would compete with Apple’s iPad.

At $99, it does now, as tens of thousands of customers poured online in search of one, creating a tidal wave of traffic that brought HP’s own website, and those run by several major online retailers, to their knees.  We (and other websites in the same data center) were collateral damage, until merchandise stocks were depleted and the mob moved on (most are now parked on deal sites like Slickdeals, in the tens of thousands, waiting for the next merchant to post the new sales price while avoiding doing their day jobs.)

HP’s phenomenal sales over this past weekend proves one time-honored truth.  If you cut prices in a battered economy, customers will come, even for a tablet running the Rodney Dangerfield of operating systems — WebOS — that gets very little respect (ask Palm how WebOS worked for them).

If only certain telecommunications companies learned the lesson: charging less can, and often does equal more customers.

A Decade After 9/11, Waste, Fraud and Abuse Sidelines National Emergency Telecom Network

As we approach the 10th anniversary of 9/11, emergency responders promised a state-of-the-art emergency communications voice, broadband, and mobile network are still waiting, even though billions in taxpayer dollars have been thrown away in crony insider deals, incompetence, and faulty design work.

Findings from the original 9/11 Commission found radios that couldn’t receive public safety signals, an inability for different fire, police, and ambulance agencies to easily communicate with each other, communications failures when the Twin Towers fell, and nightmarish congestion on civilian cell phone networks often used as a backup when radios are overwhelmed with traffic.

After hundreds of public safety personnel died, the Commission recommended federal funding of a national communications network for emergency responders and other priority traffic.  That recommendation has never been implemented, and piecemeal funding of individual projects in its place on the state level have achieved only mixed success.

Now, legislation languishing to Washington to pay for a national emergency network is getting a renewed push from Democratic senators Jay Rockefeller of West Virginia and Kirsten Gillibrand of New York, and Rep. Peter King, a New York Republican.

The estimated cost of the new network is between $10-12 billion dollars, but before taxpayers foot the bill for a new voice/data emergency network, federal officials should learn from past mistakes that have wasted billions of dollars and have been delayed or worse by waste, fraud, and abusively bad planning.

Examples from just one state — the one worst impacted by the events on 9/11, provide numerous examples of bad decisionmaking and repeated mistakes that could cost taxpayers even more.

The New York Statewide Wireless Network – A Disaster Of Its Own Making

In the summer of 2004, New York State accepted bids to construct what it thought would be a $500 million-$1 billion dollar statewide wireless radio and data system to connect emergency responders together anywhere from Buffalo to Long Island.  The $1 billion dollar winning bid came from Tyco Electronics’ MA/COM division, which claimed it could do the job for one-third of the cost of the next qualified bidder Motorola, which put the price tag closer to $3 billion.

The wide disparity in bids created significant controversy, especially for Motorola which has years of experience in constructing emergency radio systems.

“There’s something wrong with this picture,” John McFadden, Motorola’s vice president of sales for the northern division of its North America Group told Urgent Communications magazine. “There shouldn’t be a massive gap in these prices.”

Indeed, M/A-COM and Motorola — the first vendors to deploy Project 25-compliant systems — often find themselves as bidding competitors, but their proposals typically are in the same price range, Motorola spokeswoman Pat Sturmon told the magazine.

“If we had lost by 10% or 15%, we would have packed our bags and moved on,” she said.

Then-state assemblyman David Koon (D-Fairport), also raised his eyebrows over the veracity of MA/COM’s bid.  He called MA/COM a “kind of unproven company” for its track record of successfully completing projects on time and on budget.  Koon said Pennsylvania’s wireless system, also being built by MA/COM, ran significantly over budget and was running late.

Four years later, MA/COM’s reputation took a hit when Lancaster County canceled their contract with the company for inadequate reception of fire ground communications.  By 2009, Pennsylvania’s statewide network was still suffering reception problems and remained incomplete, costing state taxpayers $500 million, when it was originally expected to cost $179 million.  Despite this, state officials involved in the original approval of MA/COM defended the company’s performance in the state, blaming mountainous terrain for reception issues and changes in the scope of the network.

In 2007, many of Koon’s fears about MA/COM’s eventual performance in New York were proven correct as costs for the billion dollar network more than doubled, and its construction ran considerably behind schedule.  In late 2007, a field test of MA/COM’s network in Erie County was called an abject failure.

Syracuse’s Post-Standard delivered the report card:

Buffalo’s fire commissioner said many radios had no reception in the western half of the city. And many radios that did get signals had poor sound quality. Problems surfaced, too, that pointed out the need for more effective training of the folks operating the network’s equipment.

[…] The Erie-Chautauqua leg of the network was supposed to be up and running by last June. It was on track to meet that target as late as December 2006, according to the state comptroller. Now, the state is hoping to see it working by April 2008.

It was not to be.  Citing 10 pages of the deficiencies that M/A-COM did not fix or remedy, then Gov. David Paterson canceled the contract in January 2009, and effectively sidelined the network.  In fact, state officials were seeking a refund of at least $50 million in wasted taxpayer dollars.

While New York and Pennsylvania were struggling with performance issues in rolling out MA/COM’s networks, MA/COM employees were testifying before the FCC, advocating the federal government adopt the kind of “end-to-end IP network” similar to what the company was building for New York.

But the controversies don’t stop there.  Several contractors hired to develop, administer, or deploy various projects have come under fire for their performance on various projects:

Hiding Projects from Public Scrutiny

Harry Bronson, Monroe County's former Democratic Minority Leader is among many asking questions about Monroe County's public safety communications project.

In December 2010, New York’s comptroller rejected a $118 million contract to update New York City Transit’s communications system, citing the association of the engineering company involved in an alleged $80 million corruption scheme involving city payroll processing.  The government officials who supported the bid were under suspicion of ignoring the consultant fraud and money laundering alleged by federal prosecutors, perhaps to protect their own reputations.  Details of the project under scrutiny were carefully controlled and selectively released by the Office of Payroll Administration, the body in charge of the “problematic project.”  The executive director was suspended.  He later resigned and as of June of this year, New York Mayor Michael R. Bloomberg was demanding a refund of $600 million — all the money one of the project entities has been paid for the project under scrutiny since 2003.

In Monroe County, N.Y. county officials are under increasing state scrutiny over a project to convert the county’s fire radio system to a digital platform.  Questions have been raised about the establishment of a local development corporation — Monroe Security and Safety Systems, Inc. (M3SI) and a contractor — Navitech, which some believe are being used to avoid state oversight requirements.  The Center for Government Research suggested the cozy relationship between the county and the contractors might not be above-board:

[…] Navitech sought bids from only two vendors, Motorola and Harris RF Communications. After Navitech awarded a $30 million contract to Harris, Motorola cried foul, asserting that the bid lacked specific requirements and that the bid was uncompetitive in other ways.

Press and blog reports of the transaction suggest that personal ties among the County Administration and Navitech are involved. Whether allegations of “self-dealing” are true or not, by delegating the big money transaction to Navitech, M3SI appears to have violated the spirit of openness and transparency suggested by open meetings laws and the public bidding process. We accept the proposition that a private firm can operate more efficiently than a public entity. Perhaps complying with all of those laws would have resulted in higher cost. But that seems unlikely. Properly managed, a public bidding process that employs clear specifications and seeks bids from all comers will squeeze excess profit from prospective vendors, securing a better deal for the taxpayer. There is more to learn about how this bidding process was managed. But what we appear to know about the circumstances leaves open the possibility of self-dealing and corruption.

Communications System Upgrades Some Local Fire Officials Think Are Worse Than What They Have Now

Naples, N.Y. Fire Chief Pat Elwell doesn't want Ontario County to spend money on a digital radio upgrade.

In Ontario County, N.Y., some public safety officials understand the need for upgrades, especially a decade after 9/11, but the systems being promoted by some vendors who dazzle local and state officials with glossy presentations and help with federal and state aid don’t get the same glowing assessments by individual fire and police agencies that are forced to use them.  As the hilly Finger Lakes county contemplates a digital upgrade to its public safety networks, Naples Fire Chief Patrick Elwell said the new system could endanger firefighters, not help them.

“There have been numerous failures of the digital trunk communication system, which have contributed to the death of firefighters,” said Elwell.

Although digital systems open up more individual channels for police and fire agencies to communicate, the audio quality often leaves much to be desired.  Almost all sound worse than the average cell phone, with audio artifacts that can give a “watery” quality to voices.  Background noise, common at a fire scene, can actually be amplified by some digital systems, although “hiss and static” common to weak analog signals is eliminated.  Unfortunately, according to Elwell, digital communications systems do occasionally crash, which can disrupt all radio communications county-wide.

The Messenger Post newspaper elaborates:

Elwell provided supervisors with a packet of information included documented cases of radio failure that resulted in the death of firefighters. One took place on April 16, 2007, when a Woodbridge, Va., firefighter died in the line of duty. The Prince William County Department of Fire Rescue concluded that the county’s Motorola Digital Trunked radio system contributed to the tragedy. In another case, firefighters were using their cell phones to communicate when the digital system failed.

Elwell suggested the county reconsider its investment in the digital system and maintain the 400 MHz radio system.

“The financial burden will be less, and the 400 MHz system will assure clear communication on fire ground,” he said.

“Secure” Communications Network Easily Eavesdropped and Subject to Effective Jamming With $30 Children’s Toy

When modified, an effective jammer for critical safety communications.

Among the most ubiquitous modern digital communications networks public safety agencies rely on is based on a standard called Project 25 (P25).  Many manufacturers can build equipment that can support this standard, which makes competition among different vendors possible.  P25 networks are increasingly common in cities around the country for law enforcement and fire communications. But recent revelations suggest P25, touted as secure and effective in public emergencies, isn’t as robust as its backers would have you believe.  In fact, new findings suggest eavesdropping on secure transmissions is easier than many thought, and anyone using a $30 children’s toy can effectively jam even the most sensitive law enforcement communications.

Scanner enthusiasts and the media have legally monitored public safety communications for decades, listening to fire and police calls and causing no harm.  But some agencies don’t appreciate the public audience, and have used digital radio systems to make listening more expensive (digital scanners cost hundreds of dollars) or encrypt even the most routine communications.

The Wall Street Journal reports findings from the University of Pennsylvania that suggest eavesdropping is still routine, even for encrypted, sensitive communications.

University of Pennsylvania researchers overheard conversations that included descriptions of undercover agents and confidential informants, plans for forthcoming arrests and information on the technology used in surveillance operations.

“We monitored sensitive transmissions about operations by agents in every Federal law enforcement agency in the Department of Justice and the Department of Homeland Security,” wrote the researchers, who were led by computer science professor Matt Blaze and plan to reveal their findings Wednesday in a paper at the Usenix Security Symposium in San Francisco.

More disturbing is the fact P25 transmissions can be effectively jammed over a considerable distance with the use of a modified $30 children’s toy — the GirlTech IM-Me:

The GirlTech-based reflexive subframe jammer is able to reliably prevent reception from a nearby Motorola P25 transmitter as received by both a Motorola XTS2500 transceiver and Icom PCR-2500, with the jammer and the transmitter under attack both operating at similar power levels and with similar distance from the receiver. A standard off-the-shelf external RF amplifier would be all that is necessary to extend this experimental apparatus to real-world, long-range use. While we did not perform high power or long-range jamming ourselves (and there are significant regulatory barriers to such experiments), we expect that an attacker would face few technical difficulties scaling a jammer within the signal range of a typical metropolitan area.

Time Warner Cable Dumps “Road Runner” Mascot: Part of a “Brand Refresh”

Gone

After more than a decade of “beep, beep,” Time Warner Cable is retiring Geococcyx californianus, the ground foraging cuckoo better known as the Greater Roadrunner.

It’s all part of a “brand refresh,” Time Warner’s Jeannette Castaneda tells Fortune.  The idea is to “create excitement around the eye-ear symbol.”  For now, the “Road Runner” name will remain — just the mascot disappears.

When Road Runner was first introduced in 1995 in Elmira, N.Y., it was designed to be a localized high-speed online portal, originally called the “Southern Tier On-Line Community.” Portals were all the rage in the 1990s, designed to serve as a unified home page to help users find content more easily.  When the cable modem broadband service finally spread to other markets, it was branded ‘LineRunner.’

But Time Warner’s marketing people decided the company’s best strategy to convince users that paying at least double the price they were paying for dial-up was worth the investment when you considered how fast cable broadband service was, and how it would outperform any dial-up connection.  The cable company spent months negotiating with Warner Bros. to license the use of the roadrunner in the old Wile E. Coyote cartoons.  The company even changed the name of their broadband product to Road Runner to drive home the speed message.

The "eye-ear" branding that replaces it.

Over the years, Time Warner has blanketed customers in postcard mailers, advertising, and billboards showcasing their broadband mascot, but no more.  While Time Warner Cable would not provide exact reasons for the brand change, we suspect there are several factors involved:

  1. The cost to license the roadrunner character from Warner Bros.  In 1998, regional Time Warner representatives shared that the licensing agreement with Warner Bros. was costly and complicated.  Warner Bros. maintains strict control over their licensed characters and how they are used.
  2. In the past, emphasizing speed was essential in convincing consumers to drop their old provider for the cable company’s alternative.  But broadband penetration in most of Time Warner’s markets has already reached a high level and most of those still refusing to take the service are not going to be convinced by speed arguments.  For these holdouts, lack of interest and the cost of the service are the most important factors, and the roadrunner character does not speak to these concerns.
  3. Canis usagecapus

    The telecom industry, notably cable, has spent years trying to retire the phrases “Internet access” and “Internet Service Provider.”  They don’t even like the word “broadband.”  For them – it’s High Speed Internet (HSI) or “High Speed Online.”  They have put the words “high speed” in the very term they use to describe Internet access.

  4. Time Warner Cable believes in their unified bundling of services.  They aggressively pitch all of them together at a discounted price and have de-emphasized the branding that used to be associated with individual package components.  For example, Time Warner didn’t retire the name “LineRunner” when they rebranded their cable modem service Road Runner.  They simply re-used the name for their telephone service.  Time Warner tested LineRunner in the Rochester, N.Y. market before ditching the product for a Voice Over IP service they now like to call “digital phone.”  Today, most of Time Warner Cable’s most visible ancillary branding is done for their triple-play packages.  Remember “All the Best?”

Fortune thinks the retirement of the roadrunner may also have something to do with the company’s desire to implement an Internet Overcharging scheme:

TWC, like other big ISPs, is a leading proponent of imposing bandwidth caps on its Internet users. Imagine the possibilities for illustrating articles about this topic – Wile E Coyote (perhaps wearing a TWC ballcap) tripping up the Road Runner with piano wire, or finally getting his revenge and hurling the obnoxious bird off a cliff.

Canada’s Cellular Cartel: 3 Wireless Companies Control 94 Percent of the Market

Next time you wonder why you are paying substantially higher cell phone bills than your neighbors abroad, take note: just three cell phone companies control 94 percent of the wireless marketplace in Canada, with more than 23.5 million combined subscribers.  The four other significant carriers have a combined subscriber base of around 1.5 million, hardly worth noticing by the largest three:

Rogers Communications

The telecom giant Rogers controls the largest share of the Canadian wireless market with 9,127,000 subscribers as of the end of June.  Nearly 7.5 million of those customers are on two year contracts and pay an average bill of $70.07 per month.  Prepaid customers pay substantially less for their occasional-use phones: $16.14 a month.  Rogers adds more subscribers than it loses, picking up 591,000 new customers during the first quarter, while losing 456,000 current customers, winning a net gain of 135,000.

Data revenue is becoming increasingly important for Rogers, now constituting 35 percent of earnings for the company’s wireless division.

Bell

Coming in at second place is Bell Canada, with 7,283,000 customers.  Over 5.7 million are on contract, 1.6 million are using Bell prepaid phones.  Bell added just under 38,000 new customers last quarter, the smallest net add among the three largest providers.  The average contract customer pays Bell $63.18 a month; prepaid customers pay $16.88.

Telus Mobility

Telus, western Canada’s largest phone company, sells wireless service across the country and has become the third largest wireless provider with 5.8 million contract customers and 1.2 million prepaid clients.  Together, they pay an average of $58.88 a month.  Telus picked up 94,000 net additions last quarter, which is better than Bell but worse than Rogers.

Everyone Else

Among the rest, Saskatchewan’s phone company Sasktel had managed to reach 568,000 subscribers, mostly in the province, as of late March.  MTS Allstream Inc., a wholly-owned subsidiary of Manitoba Telecom came in with 489,722 customers.  Videotron, Quebec’s biggest cable company, had 210,600 clients, mostly in Quebec.

Among the newest entrants, Wind Mobile, subject to considerable controversy for its foreign financial backing, may one day be a much larger player in Canada’s wireless marketplace, but not today.  It had just 271,000 customers as of March 31st.

Even fewer customers rely on some of Canada’s regional providers, which include companies like Thunder Bay Telephone, Lynx Mobility (co-owned by an aboriginal partner with a mission to serve rural Canada), Calgary-based AirTel, which is popular with oil/gas workers for its “push to talk” service, and Ice Wireless, which is the largest GSM carrier in northern Canada, reaching 70% of the population of Nunavut and the Northwest Territories.

Canada’s largest three providers also own or control several “competitors” that mostly sell prepaid service.  Customers thinking they are escaping the big boys often really are not:

  • Fido is owned by Rogers;
  • Virgin Mobile Canada is owned by Bell;
  • Koodo Mobile is owned by Telus

Kansas’ Law Allowing AT&T to Deregulate Itself Means Higher Phone Bills Are Imminent

Phillip Dampier August 17, 2011 AT&T, Consumer News, Data Caps, Public Policy & Gov't, Rural Broadband, Wireless Broadband Comments Off on Kansas’ Law Allowing AT&T to Deregulate Itself Means Higher Phone Bills Are Imminent

Earlier this year, Gov. Sam Brownback (R-Kansas) signed legislation into law that allows AT&T to deregulate itself, and its rates, at will.  Kansas ratepayers are about to pay the price for that law as basic phone rates are expected to increase as much as $84 a year for residents that have few alternatives.

AT&T wants to eliminate price caps on landline service, which currently limit pre-tax prices to $15.70 in rural areas, $16.70 in larger Kansan cities with enhanced local calling areas.  After AT&T won similar deregulation in Oklahoma, Texas, Missouri and Arkansas, AT&T has been regularly raising basic phone rates, which are now $5 to $7 more a month for basic service than before deregulation.

AT&T intends to divert much of the additional revenue away from upkeep of its landline network, which in several states it has won the right to abandon in rural areas, and use the money to enhance its cell phone network instead.

AT&T spokesman Aaron Catlin told The Wichita Eagle AT&T intends to supply communities currently bypassed by AT&T DSL with heavily usage capped, and much more expensive, 3G wireless broadband instead.

AT&T currently sells that service for $60 a month with a 5GB usage limit and an overlimit fee of $50 per gigabyte.

Catlin told the Eagle AT&T was excited with the possibilities, although rural Kansans facing those prices might not be.

“A lot of bad things are going to happen long-term,” Steve Rarrick, an attorney for the Citizens’ Utility Ratepayer Board told the newspaper. “Over time, they (customers) are going to see their phone bills go up. That’s been the experience of other states.”

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