Monthly Archives: June 2011

What to do about vertical integration? Absolutely nothing

There’s a fun spectacle going on in Ottawa right now called the “Vertical Integration Hearings,” which is basically a pillow fight by the telecom industry in front of the CRTC over who owns what. It’s fun when you consider that the whole exercise is a complete waste of time other than being regulatory theatre at its finest for fans of that sort of thing.

In a nutshell, Canadian telecom is now lorded over by four relative giants: Bell, Rogers, Shaw and Quebecor. Each has telecom concerns, such as internet, wireless, television and phone businesses, as well as broadcast and print holdings. For those keeping score, Bell has CTV and the Globe and Mail, Rogers has CityTV and a host of magazines including Macleans, Shaw has Canwest (Global) and the National Post, while Quebecor has the Sun newspapers and TV and a bunch of French channels. Because these companies own both the content and the methods of distributing it, they are considered to be “vertically integrated” (as opposed to horizontally integrated, which is what you sometimes become with your significant other).

The point of the hearings is to answer the question: What’s to stop these companies from keeping their content from the other guys? If CTV (via TSN) has the rights to NHL programming, for example, what’s to stop Bell from offering hockey only to its own customers? And what if Rogers chose to do the same with MLB baseball or some other sport? In such a scenario, customers would have to get TV subscriptions from both Bell and Rogers if they wanted to get all of that programming. The same concerns also apply to the internet and wireless, where all content is migrating to.

Such a situation would of course be a nightmare, yet there have already been instances of it - in May, Bell announced it would stop carrying Sun TV because Quebecor was apparently charging too much for it. (Not that many would consider living without Sun TV a nightmare, but you get the drift.)

A number of commentators have argued that this is very bad and consumers will ultimately suffer for it, which means the CRTC must put rules into place to prevent it from happening.

I couldn’t disagree more. This is a classic case of the CRTC needing to stay the hell away because it’s related to several other issues the regulator has recently messed up or is currently in danger of messing up.

The answer to the question above, about what’s to keep companies from tying up exclusive content, is simple: competition, which comes in several forms. Firstly, as York University professor David Ellis so eloquently argued recently, the regulator needs to get its “grimy paws off my Netflix.” To summarize, the CRTC is currently considering whether it should regulate so-called over-the-top internet services, including Netflix, YouTube and the like, but it most certainly should not. If the CRTC foolishly decides otherwise and does try to get involved, it will enter its own regulatory form of the Vietnam or Afghanistan war. Its mission will be hopeless and it will be endless.

Over-the-top services need to be left alone and possibly even nurtured as competition to vertical integration. Of course, the CRTC has already nearly screwed that up when it gave its blessing to usage-based internet billing, which would have effectively castrated such services. Amazingly, and somewhat perversely, the market responded by working as it should. Since the regulator fouled up, the public got outraged, the government threatened action and the industry - Shaw and Telus so far - have responded by significantly increasing their internet usage limits. The others will have to follow suit or risk even more consumer anger.

If the vertically integrated companies want to shackle down content with exclusivity, they should be allowed to go ahead and try. If consumers have all the internet data they want to play with, they will quickly find their content through other legitimate over-the-top services and, failing that, they’ll turn to less-legitimate options such as BitTorrent.

This sort of “piracy” is the ultimate competition. File-sharing and other questionably legal methods of acquiring content are constantly improving, both in terms of ease of use and encryption. It’s been proven over and over that when content providers make it more difficult or expensive for consumers to acquire the stuff they want, they not only turn to alternative means, they feel justified in doing so. It’s also been proven that legal and technological responses can’t stop this sort of thing, they only make it improve even more.

So bring on the exclusive vertical integration. Anyone who tries it will soon learn the folly of their ways as consumers turn to other options, as well as the fact that many people who do go that route never come back.


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Camcorders: robots in disguise

A little while back, I wrote a story for Canadian Business about the changing shape of robots. No, it wasn’t about Transformers, it was about what we expect our mechanical friends to look like.

As little as 10 years ago, the popular conception of a robot was still humanoid; that when the robot revolution finally arrived, they would all look like C3P0 or Star Trek’s Commander Data. We’re now in the early stages of that revolution and the reality is considerably different, with robots not only coming in disc shapes but also packaged in familiar forms such as cars and, very soon, houses.

One of the experts I interviewed for the story - Jun–Ho Oh, a professor in the department of mechanical engineering at the Korea Advanced Institute of Science and Technology - said he considers some of the newest cameras on the market to be robots. Such devices can auto-focus and track a subject’s movement autonomously, which qualifies them as such.

It’s hard to understand what he meant without actually seeing it, so I put together a brief video to demonstrate. While I was down at the Electronic Entertainment Expo in Los Angeles a few weeks ago, I got to play around with the new Canon Vixia HF R20 camcorder. I used it to record a number of interviews while mounted on a tripod. The video below is a short clip from my interview with Dennis Durkin, chief operating and finance officer for Microsoft’s interactive entertainment business.

What’s really cool is that the camera, sitting by itself on its tripod, followed Durkin around without any help from me. It’s Jun-Ho’s robot in action. Check it out and watch his movements carefully:

I don’t know about you, but I find that really cool. It’s like having your own cameraman with you.

By the way, Durkin and I were discussing whether Microsoft could apply the success it has found in its Xbox business to other parts of the company. If you’re interested in that topic, check out the blog post I wrote for MSN.

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Posted by on June 22, 2011 in microsoft, robots


Mobile movie tickets still not really here

If you’re a film buff like me, you’re probably always hunting for good apps that help make the movie-going and viewing experience more enjoyable. The first two apps I usually install on any device I come across are therefore Flixster and IMDB.

Flixster is great because it uses a phone’s GPS to locate nearby theatres and then displays showtimes. You can save your favourite theatres, watch trailers and even read reviews. IMDB, meanwhile, is the portable version of the Internet Movie Database website, and it’s integral to solving drunken arguments in bars over trivia, i.e. “The mother from Modern Family was the female lead in Happy Gilmore? No way, you’re an idiot! [Looking it up on IMDB] Oh… wait, you’re right.”

I was thus disappointed the other day when I tried to use Cineplex’s app to buy tickets in advance for a movie.

Here’s the story: I go to the movies once or twice a week, so I know the drill well. If you go on opening weekend, it’s wise to get there early, especially if it’s a big blockbuster-type flick. Usually an hour will do. I rarely stand in the human cashier line, since buying tickets at the automated kiosks is usually much faster (and makes one feel less like cattle). This way, I’m in the theatre at least half an hour before showtime, which is enough to get a decent seat. I often chuckle at the people who show up five minutes before and are forced to leave because the only seats left are in the front row. Clearly they’re rookies who don’t go to the movies very often.

The fact is, if you’re not there at least 30 minutes before you’ll find the movie either sold out or there won’t be any good seats left. I’ve written before about how this could be solved with the assigned seating system that’s common in other parts of the world, but that would run counter to theatres’ chains interest in packing people in early. The earlier people come to the theatre, the more advertising they can be sold.

Now then - what if you could get your ticket ahead of time? If you didn’t have to stand in line, even the shorter one for the automated kiosks, that could shave a good 20 to 30 minutes off how early you need to get to the theatre. That is, of course, the thinking behind buying tickets online and printing them off at home, to be scanned by the ushers at the theatre.

But what about those of us who are deathly opposed to printing anything? Well, that’s where the mobile app should come into play.

Cineplex, Canada’s main movie chain, launched its mobile app back in November, which allows smartphone users to do just that - they can buy tickets from anywhere and don’t necessarily have to be at home to do it.

Hold on, though, there’s a big problem - the app either sends you a ticket, which must then be printed out, or you have to pick it up at one of the automated kiosks. What the app doesn’t do is provide some sort of mobile ticket that can be scanned by ushers right off the phone.

That seems to defeat the purpose. If you have to print at home or stand in line at the theatre, the app seems kind of useless, doesn’t it? Even airlines have figured this out: Air Canada, for example, sends customers an e-ticket that can then be scanned in at the airport gate right from the phone.

I was perplexed, so I spoke to one of Cineplex’s PR folks. He explained that the problem lies in security; there’s currently no way to prevent abuse of such a system. If there was a scannable phone e-ticket, people could simply pass the phone back and forth to each other and sneak their friends into the theatre. I wondered if there were some sort of low-tech solution that could be paired with the e-ticket, such as the customer having to present identification along with it, but that’s apparently not practical for staff to handle at busy times. This is where an airline, where security is often tight, has an advantage over a movie theatre.

Cineplex is working on a solution that is near completion, I’m told. Still, as one person pointed out on Twitter, this current high-tech problem doesn’t seem any different from the age-old low-tech re-entry problem. What’s to stop a group of people from entering the theatre with paper tickets, then one person going outside and passing those tickets to other friends who then get in for free? It seems to be the same thing.

As it stands, the current app only really guarantees that you get a ticket. Whether that ticket translates into a decent seat still often depends on how early you get to the theatre.

Here’s hoping Cineplex figures out its security issue so those of us who love going to the theatre can get truly mobile tickets and thereby save ourselves some time.


Posted by on June 21, 2011 in apple, Google, movies


RIM’s future involves less Canada

What do Research In Motion and the Vancouver Canucks have in common? Both are Canadian organizations that jumped out to a huge lead, only to cough up their advantage to rivals and find humiliation. In both cases, rioting ensued.

In the case of BlackBerry maker RIM, the choking hasn’t resulted in looted stores and burning police cars (yet), but the calls for the heads of the company’s co-CEOs have now turned to howls. For Canada, that may be just the beginning of the upheaval to come.

RIM appears to have four potential paths back to relevancy - and all of them will probably make the company decidedly less Canadian. More likely, these options will become parts of the same chain, which could ultimately result in RIM being only tangentially tied to Canada.

1. New bosses. With institutional shareholders abandoning ship, it’s just a matter of time before co-CEOs Mike Lazaridis and/or Jim Balsillie are shown the door. A new leader will have to figure out exactly what’s wrong the company.

The debate over that is hot and heavy right now, with pundits suggesting everything from the engineering to the marketing of products. On Friday, Business Insider published a scathing letter from a former employee who said the CEOs are woefully out of touch with the market. Lazaridis and Balsillie have gotten too comfy with their success in the business segment and “are culturally blind to the gaping holes in their armour regarding consumer. They honestly think they understand consumer product, business, mentality, marketing - but they really don’t.” Whether or not the author is legit is besides the point because he or she sums up the general analyst consensus: RIM just doesn’t get the consumer market.

An anecdotal example of that are the company’s current TV ads for the PlayBook. One ad touts the tablet’s Flash capability while another spotlights its multitasking chops. The average Joe really doesn’t care about or even know what either of those is, so the ads don’t really give them a reason to buy it.

The new boss will have to have an understanding of how to create devices for every-day people, as well as how to sell them. If no one at RIM currently has that capability, as is clearly the case, then surely the list of people in Canada who do is short to non-existent. The smartphone game is global so if RIM is to attempt to solve its problems with new leadership, it’s going to have to look outside the country for someone with experience running a multinational, consumer-oriented company.

2. New location. A new leader will bring a welcome change in direction. I’ve written before about how RIM can’t currently compete with its better-resourced rivals Apple and Google, so while a new boss will help in the short term, it won’t fix that long-term problem. The company will have to expand operations in other parts of the world, particularly Silicon Valley, if it hopes to attract the same quantity and quality of engineers as its two main rivals. That means some of the great work that has been done so far in Waterloo, Ontario is going to be divvied up and diluted.

This will, of course, have huge implications on Canada, where RIM has been the anchor of the high-tech industry.With the company’s recent layoffs, the tremors are already starting to be felt. More RIM jobs elsewhere will mean even fewer jobs in Canada.

3. New partners. One of the more intriguing options being tossed around is the idea that RIM should adopt Android for its BlackBerry devices. Doing so would tie the company to what is clearly going to be the top smartphone operating system for the near future, as well as it give it access to the critical apps that are needed to sell devices. That’s not a bad idea, but getting in bed with Microsoft might make more sense. While Microsoft’s Windows Phone 7 hasn’t exactly set the world on fire, the Seattle software giant still has a number of things going for it. The company has a track record of convincing developers to work with it, a mammoth business customer base (many of whom use BlackBerry) and an inexhaustible pile of cash with the appetite to be a major smartphone player to go with it.

As two companies that make a lion’s share of their money from dealing with businesses, RIM and Microsoft have always had much in common - much more so than RIM has with Google. At this point, RIM and Microsoft are both on the outside looking in, with Google their common enemy. As the cliche goes, the enemy of your enemy is your friend. Uniting with Microsoft would also solidify RIM’s core business base, rather than fragment it as the Seattle company inevitably comes after it.

4. New owners. RIM supporters and patriotic Canadians alike seem oblivious to or completely opposed to the inevitable, which is that the company will eventually be bought by a much larger foreign concern. The fact is, Google and Apple are giant companies that have their fingers in all kinds of businesses - smartphones are only one small albeit important part of their fortunes. RIM has nothing else to fall back on; if its phones and tablets don’t sell, it’s done. Finland’s Nokia has traveled the same path and, as several analysts have pointed out much to the company’s chagrin, it is now all-but-owned by Microsoft.

That’s not a defeatist attitude, it’s merely reality. Canada has plenty of smart people and great entrepreneurs who have created many innovative technology companies - ATI, Cognos, BioWare, Corel, Nortel, just to name a few. In some cases, as with RIM, those companies have created their own markets, thereby attracting much bigger and better-resourced competitors. Some companies, such as Corel and Nortel, simply couldn’t compete and ended up imploding. Others, such as ATI and BioWare, decided that getting acquired and being part of a bigger whole were the better way to go. History simply does not support the idea that relatively tiny RIM can continue to independently compete against the behemoths that are Google, Apple and Microsoft.

That’s nothing to be ashamed of. Canada is a country of small- and medium-sized businesses that can do well - up to a point. Canadians should be proud that they can sell their ideas and talents to the rest of the world, the same way they’ve been doing with their musicians, comedians and even hockey players for decades. There are those who believe otherwise, but they’re probably the same people who cheered for the Canucks as “Canada’s team,” despite the Boston Bruins having just one fewer Canadian player on the roster.

And just who might buy RIM? Well, even though the company and Microsoft have similar customer bases, BlackBerry might make a better fit with Apple. Unlike Google and Microsoft, RIM and Apple both take an integrated approach to their devices by designing both the hardware and software. They could work better together since they share that philosophy. Apple also has a stated desire to make more inroads to the business market, so since Microsoft appears to have its dance card full with Nokia, the iPhone maker may be the best partner available.


Posted by on June 20, 2011 in apple, Google, microsoft, mobile, RIM


It’s time for some science on sports riots

In watching and reading about the riots in Vancouver the other night following the Canucks’ loss of the Stanley Cup final to the Boston Bruins, many people probably shared my knee-jerk reaction of, “Oh look, there go those stupid hockey fans again.” The following day, there was all kinds of debate over who started the riot - were these people in fact real hockey fans or just idiots looking for any excuse to cause trouble?

I have to admit I’ve never been a hockey fan, or a fan of any sport really. Like many technology journalists, I do however possess a strange affinity for baseball. My suspicion is there’s something about the statistics that somehow attracts us; perhaps we like the sport for its similarity to product specifications? I dunno.

I do know that I like playing baseball, so I sometimes enjoy watching professionals who can perform the sport at a much higher level than myself. But that’s about the extent of my sports fandom.

Living in Canada as I do, I’ve seen plenty of examples of hockey fan stupidity. Indeed, Toronto probably has more dumb hockey fans per capita than any city in the world. The proof comes every year when the die-hards continue to sell out Maple Leafs games despite the team not having a hope in hell of winning the cup. I also remember walking down the street as a kid wearing a hand-me-down Montreal Canadians T-shirt, which was apparently enough to motivate some complete stranger to roll down their car window and yell “faggot!” as they drove by. What a lovely thing to say to a child.

The riot got me thinking about what kinds of people are sports fans - and why are they fans? I’ve always likened sports to religion, so my innate biases kicked in. As numerous demographic studies have shown, religion is more popular with less-educated, lower-income people. If sports is like religion, shouldn’t the same factors apply?

I looked for demographic numbers to back that up but couldn’t find any proper studies on the topic. I found a few sets of seemingly contradictory numbers that showed, for example, that the majority of sports fans were both young and had high incomes. That doesn’t seem possible - unless sports are extremely popular in Silicon Valley. In fact, the only reputable statistics that turned up in my search, from the Pew Research Center, showed that people who follow sports news come from all income and education levels. Without anything better to go on, and considering that I do know several highly educated people with high incomes who are also sports fans, it looks like my initial hypothesis was wrong.

The question remains, though: Why are people sports fans? The reasons, I suspect, are varied. Some people are probably like me - they appreciate seeing a sport played at its pinnacle level, the same way any beginning guitarist can marvel at the likes of Jimi Hendrix or Eddie Van Halen. Others may simply like getting out of the house and experiencing the spectacle of it.

A couple years ago, University of Washington psychology professor David P. Barash tried to take a more clinical view and came to some interesting and provocative conclusions. Sports isn’t like religion, he wrote, it’s the opiate of the masses that has superseded the nationalism that used to pit countries against each other not so long ago. In that way, sports is like war, which is of course an intriguing premise to anyone having written a book on the topic.

The observer of spectator sports cannot help but confront the odd underbelly of this passion: the yearning to be someone else, or at least, a very small part of something else, so long as that something else is Something Else, large and imposing, impressive and thus irresistible. That dark desire for deindividuation was felt for millennia by the herring and the wildebeest, and perfected by human beings centuries ago: interestingly, not by sports franchises but by the world’s military forces…

…It is no great distance from the mesmerizing impact of close-order drill to the stimulating consequence of shared chanting and cheering, the waving of arms (military or civilian) in unison. The Wave, which many fans say originated in my hometown of Seattle, is a good example. Even though they don’t get to swing a bat, throw a pass, or sink a three-pointer, fans have been inventive in providing themselves with ritualized, shared movements that further embellish the allure as well as the illusion of being part of the larger, shared whole, tapping into that primitive satisfaction that moves at almost lightning speed from shared, ritual action to a tempestuous sense of expanded self. One becomes part of a great beckoning, grunting, yet smoothly functioning, and, presumably, security-generating Beast. And for those involved, it apparently feels good to be thus devoured whole and to live in its belly.

In many ways, Barash’s article comes off as psycho-babble but he does raise some salient points. Given the frequent eruption of riots following sporting contests, there does seem to be a solid link to violence regardless of income or education.

Others blame such events on mixing booze with adrenaline, but that sounds too simplistic. National Geographic tried to explain it a few years ago by suggesting that people who get into a crowd think they’re less accountable for their actions because they’re tough to pick out. That rationale seems to be going out the window thanks to social media, where instigators are being identified by good citizens.

In the end, it is worth it to figure out scientifically why people are sports fans and what drives some of them to rioting after playoff games. Otherwise it might be time for cities to start wondering whether they ever want to field contenders in any sport. Without some conclusive science indicating one way or another, the question for cities now remains: Is having a winning team really worth it?


Posted by on June 17, 2011 in sports, war


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