Recently in Bad Business Ideas Category

...except that it would have been an antitrust nightmare. So is GOOG-YHOO, for that matter. The search market is pretty much a duopoly already. Until someone else innovates, get used to it.
Posted to Bad Business Ideas
Fake Steve Jobs tells it like it is: Facebook is not worth $15 Billion.

This chart says it all. A new study discovers that the vast majority of Facebook apps are an utter waste of time. But oh yeah -- Facebook is worth $9 billion, or $15 billion. And Slide is worth half a billion because it makes that super important FunWall application. Um, right.

here's the chart, courtesy of C|Net's Caroline McCarthy:

Facebook once had a purpose. It had a really, really clean interface. It was the total opposite of MySpace!

It was a great way to keep in touch with friends, get back in touch with old ones, leave them messages, keep contact information current, find out more about your classmates, etc, and so on and forth. In fact, Facebook by itself would have made a perfect turnkey solution for a corporate intranet's directory system. Heck, it would have been fine had it stayed with colleges and workplaces. That 18-25 highly educated demographic that buys lots of stuff? Target ads to them, right?

Then came the Venture Capitalists, and suddenly Facebook was a platform! And it was going to change the world! Revolutionaries in Colombia were using it, and stuff...right...

The truth is, Facebook has jumped the shark. I still keep my profile current, but do I spent much time there? No. Do I use any of the applications? Absolutely not.

Is it a privacy nightmare with dreadful terms of service written by VC's who want to keep it a walled-garden platform they can sell ads on? Absolutely.

Can I do everything I can do with Facebook with other services, without the hassle or the intrusion or the idiotic problem of people getting their accounts suspended for no apparent reason? Can I do it with more privacy? Yeah. LinkedIn, Drop.io, Flickr, Twitter. 'nuff said.

Absolutely.

Look. I think Mark Zuckerberg is a nice guy. I thought the guys suing him were jerks, and the only positive thing I can say about them is that maybe they'll help the U.S. win an Olympic medal in Rowing (please don't get me started on that topic). In fact, I haven't met a Facebook employee that didn't seem like a nice person.

On the other hand, I suspect the VCs at the top looking for ROI have no idea that they've completely ruined the platform.

Zuckerberg and friends are smart people. If I were them, I'd say "screw you," sell to the VC's, take the money and use your collective talent to start something else, only this time remember your job is to build something that people want, not to take over the world and make other people money.
Posted to Bad Business Ideas | Facebook
For years, people have wondered if Microsoft has built in backdoors for law enforcement. China created their own Linux distribution for government use. There have been instances of police using off the shelf monitoring tools for investigations, installing them in court-sanctioned "black bag jobs."

Now, the good folks at Ars Technica reveal that Microsoft proudly crowing over their latest achievement, a (built-in) back door into Windows and the tools to open it!

 Microsoft revealed its development of a digital forensic analysis toolkit at a security conference yesterday as part of a wider discussion of how technology can be used to fight crime. The Computer Online Forensic Evidence Extractor, or COFEE for short, is a USB thumb drive that contains software capable of executing approximately 150 separate commands. Once plugged in, COFEE can be ordered to decrypt system passwords, display a history of internet activity, and search the system for evidence.


That loud anguished crying sound you heard is a million IT managers' heads exploding. Why? This thing has been available "to law enforcement" since last June.

Here's a question, what company in their right mind that has any requirement for confidentiality would buy software from a software company that sells decryption and password cracking tools for its' own operating system? Isn't that almost advertising how poor your software's built-in security is? Security extends beyond malware protection. It also means that if you build doors and install locks, you should install a good lock. In this case, you're being sold a foam core with a skeleton key.

I would expect a surge in Apple enterprise sales. In their zeal to be helpful and combat computer crime, this may be a shocking case of corporate suicide. They thought people were reluctant to buy Vista now? They'll be shipping XP for a very, very long time, I believe.
Posted to Bad Business Ideas | Microsoft | Security


As Alex reported in the Weekly Mobile News Roundup, NextWave Wireless, Inc. (yes, THAT NextWave) is planning on selling off their 2.5GHz PCS spectrum licenses.


Excuse me while I take the next 10 minutes to roll on the ground laughing hysterically.

OK, I'm back now.

For those of you who don't know, NextWave is the company that won a bunch of 2.5GHz PCS licenses back in the 1990s after the 1996 Telecommunications Act required the FCC to auction off that spectrum for advanced digital wireless services...sort of like what Europe had been using for years. 

So, NextWave won a bunch of licenses, and had to build out their network. Only, the FCC needed them to pay up. But, they couldn't do both. So, the FCC let them make installment payments on the licenses, making the FCC a de facto lender. When they couldn't pay the FCC (because they were trying to build out their network, otherwise they'd lose their licenses,) they filed for bankruptcy to protect their licenses, since the FCC, was, in effect a creditor. 

Meanwhile, the FCC tried to re-auction the NextWave disputed licenses, which created an entire new set of problems for the agency (one which they fixed in the 700MHz auctions that were just completed).

To make a long story short, the Courts agreed with NextWave, but the FCC continued to battle for years and years, with each decision they had to make in any license transfer proceeding dictated by how it fit with their position in the NextWave litigation. Eventually, the FCC kept appealing until the Supreme Court told it that NextWave could keep the licenses, many of which ended up in the hands of what are now AT&T, Verizon and T-Mobile anyway.

So, the circle is complete. The 700MHz auction is completed, with open access and (hopefully) none of the idiotic litigation that followed the last round of auctions, and NextWave is selling off their spectrum, because well, it just isn't that important anymore, and they make lots of Wi-Max hardware now.

For a fantastic take on the NextWave saga and why it was so ridiculous, read former FCC Commissioner (and economist) Harold Furchtgott-Roth's book (I should carry a copy with me everywhere I go) . It's called "A Tough Act to Follow?" and while it doesn't have the Beatles-referencing title of former Chairman Reed Hundt's "You Say You Want Revolution" it is a wonderful history of how the FCC can do something so horribly wrong, even with the best of intentions. Actually, you should read both their books, but Mr. Furchtgott-Roth's has much more about NextWave and is smaller. Plus, out of the two, he's the only one I've met and he's actually a pretty nice guy. Actually, all of the FCC Commissioners I've met are pretty affable people, and that includes three of the five current ones and two former. 

It's a shame that such friendly people get such a bad reputation. 

(Hey! FCC Commissioners! I'll plug YOUR books too! I actually read this stuff!)

wow, I'm boring.
Posted to Bad Business Ideas | Economics | FCC | Wireless
Louis Grey has this fantastic piece up on the sad reality, that bloggers shouldn't expect ad revenue to take in the cash.

Before I get back to normal content, I'll explain why he's right, and why I don't have ads:

t's routinely shocking to me that so many bloggers think they should try and make a profit from their Web site.

Urged on by the success of mega blog networks like TechCrunch and spurred forward by stories from ProBlogger, or corner cases likeDooce.comDaily Kos and others, an inordinate amount of people are hoisting ads on their blogs, from Google AdSense, from AdBrite orFederated Media, in the hope of turning their daily rantings into big dollars that could possibly change their life. It's no surprise that blogging for many has the shiny look of a "get rich quick" scheme, when actuality is far different.

Their hopes are misguided, and for most, a serious reality adjustment is needed.

Anyone notice the lack of ads? I'll probably have one badge replaced with one soon, because someone is doing me a real favour with their service and I want to give them credit. However, I don't expect to make money through this site. At least via ads. If someone thinks my content is good enough that they'll help me keep it running (as a friend has done by providing a service), I will happily accept help. On the other hand, I won't go begging for clicks. And neither should you.
Posted to All | Bad Business Ideas
Aaron over at TechnoSailor beat me to the punch with this gem of litigation (well, via TechCrunch):

In December, I wrote a post stating that Companies using Facebook Beacon as a marketing tool would get sued and demonstrated the privacy policies in effect at a number of the Beacon partners. One of those is Blockbuster, which as noted in the December post, was so over the top with it's privacy policy. It's, in fact, criminal, in my opinion.

Techcrunch is now reporting that Blockbuster is in fact being sued by a Texas woman who under the premise of a 1988 federal law called the Video Privacy Protection Act (18 USC § 2710) which was enacted after Supreme Court nominee Robert Bork was b0rked when video rental history was released during his confirmation hearing. The law prevents video rental companies from disclosing personally identifiable data regarding a member and his/her rental history.



Point of fact, this law has never been tested in court. However, non-lawyer Aaron does a great job of drilling down what's so messed up about this.


Regardless of whether a Facebook user has opted in or out of Beacon advertising within Facebook, express opt-in is required on the Blockbuster side. And at the time, and pertinent to this lawsuit, even with consent it is criminal for video rental companies to share this kind of data, per 18 USC § 2710.


I'll play around on PACER later on and see if I can dig up any more.



Posted to Bad Business Ideas | Facebook
So, Monster Cable is known for making some...interesting claims with regard to how special their cables are (not always so special) and employs lawyers to send fancy letters to unsuspecting companies that make special cables, too.

Generally, they claim that Company X has infringed upon one of their patents by making cables that might in some way look like Monster's but aren't the same, and hopes that the threat of litigation will compel a settlement, and a licensing agreement. This tends to work when the company on the receiving end is easily intimidated.

Not this time.

In this case, they chose to attack Blue Jeans Cable, a manufacturer of high-end (and American made) audio equipment. What they didn't know is that their CEO is an attorney who graduated from UPenn Law School and spent almost two decades in litigation. The response is hilarious enough to have made it to Slashdot. After systematically deconstructing Monster's claim as frivolous and making it quite clear how unenforceable it is, he lets them know they have messed with the wrong guy, he's mad as hell, and he's not going to take it anymore! First off, he starts by completely deconstructing Monster's claims as facially insufficient for well, anything, and notes that the information they've supplied him with is completely inadequate for him to figure out if he's actually infringed:

I will begin by addressing your trademark/trade dress claim.  You have referred to two trademark registrations, and have attached some printouts from the USPTO system but the depiction of the marks on the drawings provided is small and indistinct, making it difficult to determine exactly what the alleged resemblance is, and I need further information from you.

            First, I need legible, scale drawings of the marks, preferably with dimensions shown on the drawing.  To the extent that drawings are inadequate to show the nature of materials, finishes, print legends, colors and the like, I will also need examples of each of Monster Cable's actual uses of these marks in commerce; actual physical examples would be best, but photographic reproductions might do.  As you will understand, these considerations are essential to any claim arising out of trade dress, as you are alleging in essence that there is a resemblance sufficient to cause confusion over the identity or origin of the goods, and no mere line-drawing can suffice.

            Second, I will need copies of the trademark applications and any correspondence between the applicant and the USPTO in support of the applications.

Translatation: Prove it.

            Third, you have not identified the Monster Cable products in question, in actual use and distribution in commerce, whose trade dress you allege has been appropriated.   I have reviewed Monster Cable's online materials and have examined connectors on various Monster Cable assemblies in local retail outlets and am unable to determine which, if any, of these are thought by Monster to represent use of these particular marks.  I am also unable to determine from this review whether Monster Cable actually offers any product for sale to which the Tartan connectors are alleged to be particularly similar.  My own sense of it, in looking at the connectors, has been that there is no similarity between the Tartan connectors and any of the many Monster Cable connectors beyond the general  functional and conventional characteristics which all or nearly all solder-cup, mechanical-assembly, barrel-style RCA-type connectors share.  It may be that there is some line of products to which you have intended to refer but which I have not found in Monster Cable's marketing materials or displays; but if so, you will need to show me specifically what product it is, and you will need to call to my attention the specific aspects of the connector design which you contend constitute unique Monster Cable trade dress, what the associated secondary meaning of those aspects of the trade dress is, and in what manner and by what characteristics you allege that this trade dress has been appropriated.

            Fourth, if the dimensional characteristics of the connector as used in commerce vary from the dimensions of the scale drawing of your mark, I will need a proper scale drawing, with dimensions, of each version of the actual connector as used in commerce, as well as photographs of the connectors showing actual in-use finishes.   If there is more than one such connector design in actual use by Monster Cable as to which appropriation of trade dress is alleged, of course, I will require this information for each and every such design.

            On the basis of what I have seen, both in the USPTO documents you have sent and the actual appearance of Monster Cable connectors which I have observed in use in commerce, it does not appear to me that Monster Cable is in a position to advance a nonfrivolous claim for infringement of these marks.  There simply is not sufficient resemblance between the Tartan connectors and any mark or any example of the marks' actual use that I can find to support such a claim.  But if you have further information for me on that point, you are welcome to submit it.

Translation: You cannot be serious, but go ahead. I dare you.

            You have also supplied me with partial documentation on five design patents which you claim these connectors infringe.  I will begin by observing, first, that the five design patents are so very much unlike one another that it is very hard to imagine that any product could actually infringe more than one of them at a time; anything close enough to one of them to be deemed an infringement would, by that fact alone, be too dissimilar from the other four.  The dissimilarity of the Tartan connector from each of them is readily evident.

            I should add that, for the purpose of this letter, I am assuming that these patents are valid.  This is in no way a concession of the point.  In fact, this is a very significant and likely inaccurate assumption, and you should expect the patentability of these designs to be under attack if you commence an action for infringement.

Translation: I'm keeping a straight face, but if you really want to dance, let's dance.

For his next trick, he proceeds to rip apart Monster's "patents" even more. By this time, the lawyers have to wonder what is going on...


My sense, in looking at these five patents, is that either you are attempting to present some argument that I simply do not understand or you are arguing for untenably broad coverage of these patents which would sweep every functional aspect of the typical solder-assembly RCA connector within the scope of a handful of mere design patents.  You need to clarify this, and frankly, I think you need to indicate to me which, if any, of these patents you actually contend are relevant to the present discussion.  It cannot possibly be that you believe that more than one of these patents is pertinent, and if you insist that they are, we cannot have an intelligent dialogue on this subject.   Once you have identified the patent which you contend is relevant,  I need to see the file history and the references to prior art; I need copies of the applicant's correspondence with the USPTO; and I need a clear and cogent explanation from you as to exactly what aspects of the Tartan connector design are alleged to constitute the infringement, and how.

            Additionally, if you are able to identify any of these patents as applicable, please let me know whether Monster Cable presently sells, or has at any time sold, any products bearing connectors which are in conformity with the patent drawings or which are otherwise contended to be within the coverage of the patents, and identify those products for me.  Please also provide photographs and/or physical examples of these connectors as manufactured and sold.

            Also,  please provide me all of the information referenced above as it relates to your expired patent D323643, a copy of which I am attaching.  I will need to know what products Monster now offers or at any time has offered for sale which were believed to fall within the scope of D323643, and what claims, if any, of infringement of D323643 were made against others by Monster, whether those claims of infringement took the form of correspondence only, litigation, or otherwise.  Please let me know  which, if any, products Monster has ever sold or offered for sale which were marked with the patent number, or other reference, to  D323643.  Please also advise me whether, in your view, the Tartan connector does or does not fall within the scope of D323643, and if it is your view that it does not, please identify each and every difference between the Tartan connector and the connector represented by D323643 upon which your view is based.  (On that note, let me point out to you that the "turbine cut" feature is irrelevant here as your client makes only functional, not design, claims for that feature in its marketing materials for the product.)  I would assume that you would agree with me that if the Tartan connector is less dissimilar from the D323643 patent than from any of the five patents you cite in your letter, then the Tartan connector is within the coverage of the prior art and cannot, as a matter of law, infringe any of your client's current patents.

            I must also point out that unless there is a good deal of background information you have not provided me which makes the case otherwise, Monster Cable cannot possibly square its patent infringement claim(s) with its own patent history.  Two views of the matter might be taken; the first, which is my view, is that none of the design patents, including D323643, encompass the Tartan connector.  If that is so, of course, the claim for infringement fails.  But if one grants the sort of breadth to these patents that you appear to wish to do, a problem arises for Monster.  D323643 is the least dissimilar to the Tartan connector of any of the patents, and stands as an obstacle to any claim of infringement of the others because it establishes prior art; if its scope, like the others, is granted the breadth you argue for, then the Tartan connector falls plainly under the prior art and cannot constitute an infringement of the later, and more dissimilar, patents.  Read the patents narrowly, and Monster loses; read them broadly, and Monster loses.  You are welcome to point out any error in my reasoning; but I have to say that I will be unreservedly surprised if you are successful in doing so.

            Please also let me know whether Monster Cable or any related entity has brought actions to enforce any of the patents and trademarks referenced in your letter or above, and provide me with the jurisdiction, court and docket information pertaining thereto, along with copies of any decisions or judgments resulting therefrom.  If any such litigation proceeded through discovery, I will need all discovery responses, including document production, issued by Monster, as well as copies of any and all depositions taken and the exhibits thereto.

Translation: I Double Dog Dare You!!! Let's go!!!


Oh, and here's my favorite part when he insinuates that Monster operates an illegal tax shelter (probably true):

Further, if any of these patents or trademarks has been licensed to any entity, please provide me with copies of the licensing agreements.  I assume that Monster Cable International, Ltd., in Bermuda, listed on these patents, is an IP holding company and that Monster Cable's principal US entity pays licensing fees to the Bermuda corporation in order to shift income out of the United States and thereby avoid paying United States federal income tax on those portions of its income; my request for these licensing agreements is specifically intended to include any licensing agreements, including those with closely related or sham entities, within or without the Monster Cable "family," and without regard to whether those licensing agreements are sham transactions for tax shelter purposes only or whether they are bona fide arm's-length transactions.


Now, what Monster could not have known was that this guy was a highly trained and experienced litigator in a previous life, and the ending paragraphs of this response are absolutely the most priceless thing I've ever seen in my life and I assume have caused a few changes-of-underwear at Monster. Translation: You've f*cked with the wrong guy, buddy. You wanna play rough? I'll play rough!




I have seen Monster Cable take untenable IP positions in various different scenarios in the past, and am generally familiar with what seems to be Monster Cable's modus operandi in these matters.  I therefore think that it is important that, before closing, I make you aware of a few points.

            After graduating from the University of Pennsylvania Law School in 1985, I spent nineteen years in litigation practice, with a focus upon federal litigation involving large damages and complex issues.  My first seven years were spent primarily on the defense side, where I developed an intense frustration with insurance carriers who would settle meritless claims for nuisance value when the better long-term view would have been to fight against vexatious litigation as a matter of principle.  In plaintiffs' practice, likewise, I was always a strong advocate of standing upon principle and taking cases all the way to judgment, even when substantial offers of settlement were on the table.  I am "uncompromising" in the most literal sense of the word.  If Monster Cable proceeds with litigation against me I will pursue the same merits-driven approach; I do not compromise with bullies and I would rather spend fifty thousand dollars on defense than give you a dollar of unmerited settlement funds.  As for signing a licensing agreement for intellectual property which I have not infringed: that will not happen, under any circumstances, whether it makes economic sense or not.

            I say this because my observation has been that Monster Cable typically operates in a hit-and-run fashion.  Your client threatens litigation, expecting the victim to panic and plead for mercy; and what follows is a quickie negotiation session that ends with payment and a licensing agreement.  Your client then uses this collection of licensing agreements to convince others under similar threat to accede to its demands.  Let me be clear about this: there are only two ways for you to get anything out of me.  You will either need to (1) convince me that I have infringed, or (2) obtain a final judgment to that effect from a court of competent jurisdiction.  It may be that my inability to see the pragmatic value of settling frivolous claims is a deep character flaw, and I am sure a few of the insurance carriers for whom I have done work have seen it that way; but it is how I have done business for the last quarter-century and you are not going to change my mind.  If you sue me, the case will go to judgment, and I will hold the court's attention upon the merits of your claims--or, to speak more precisely, the absence of merit from your claims--from start to finish.  Not only am I unintimidated by litigation; I sometimes rather miss it.

            I will also point out to you that if you do choose to undertake litigation, your "upside" is tremendously limited.  If you somehow managed, despite the formidable obstacles in your way, to obtain a finding of infringement, and if you were successful at recovering a large licensing fee--say, ten cents per connector--as the measure of damages, your recovery to date would not reach four figures.  On the downside, I will advance defenses which, if successful, will substantially undermine your future efforts to use these patents and marks to threaten others with these types of actions; as you are of course aware, it is easier today for your competitors to use collateral estoppel offensively than it ever has been before.  Also, there is little doubt that making baseless claims of trade dress infringement and design patent infringement is an improper business tactic, which can give rise to unfair competition claims, and for a company of Monster's size, potential antitrust violations with treble damages and attorneys' fees.

            I look forward to receiving the information requested and will review it promptly as soon as it is received.

                                                            Sincerely,

                                                            Kurt Denke



I think I have a new hero.
Posted to Bad Business Ideas | Patents
By now everyone is buzzing/blogging/bitching about this article where VirginMedia's CEO claims to be negotiating secret deals to have his content delivered, undermining so-called "net neutrality" principles. Money quote:

In an interview with the Royal Television Society's Television magazine, Berkett said that "this net neutrality thing is a load of b****cks", and revealed that Virgin is already in talks with unnamed content providers about paying to have their content delivered faster than others.


Just a bit of fact-clarifying for everyone:

  1. Virgin Media is in the UK. The UK has a completely different infrastructure for content delivery than the U.S. does.
  2. Because there is much more state-run media in the UK, their regulator "Ofcom" has far more authority to regulate content delivery systems.
  3. Despite Ofcom's previous statements to be "hands-off" I suspect that these types of comments will probably inspire some kind of action.
  4. None of this has anything to do with the U.S. where the largest Cable provider is a known enemy of FCC Chairman Kevin Martin (aka K-Mart) for their refusal to acquiesce to his desire for "a la carte" programmming.


Calm down, everyone. This is bloviating with no concrete effects. Wait and see.
Posted to Bad Business Ideas | Net Neutrality
Remember when Google bought DoubleClick and the FTC reluctantly agreed to it? Well, now come the layoffs, after a bunch of employees signed non-compete agreements.


8. Covenant Regarding Competition. I agree that for a period of one (1) year after my employment with the Company terminates, I shall not (a) engage in any employment, business or activity that is competitive with the Company's businesses; or (b) solicit business from, do business with or render services to, in any capacity, directly or indirectly, any entity that is or was a Company client or customer within the last twelve months of my employment with the Company, for a purpose or in a manner that is in any way competitive with the Company's business. If, during or after my employment with the Company, I seek work elsewhere, I agree to provide a copy of this Agreement to any person or entities seeking to hire me before accepting employment with or engagement by any such person or entity.

9. Solicitation of Employees. I agree that for a period of twelve (12) months immediately following the
termination of my relationship with the Company for any reason, whether with or without cause, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company's employees to leave their employment, or take away such employees, or attempt to solicit, induce, recruit, encourage or take away employees of the Company, either for myself or for any other person or entity.


Now, notwithstanding that non-competes are unenforceable in many states (I'm not sure about CA), if the employer acted in bad faith, I can imagine that if this included enough employees it could turn into a class-action lawsuit. Why?

Well, according to an advisory from the website of mega-firm Akin, Gump, Strauss, Hauer and Feld (trying saying that 3 times fast),non-competes are enforceable in California "only under very limited circumstances." Not only that, but if the clause keeps an employee from staying in the industry, or as the advisory says, "from engaging in his/her lawful profession..." the employer could be subject to liability (read: pay up Google).

Here it is, straight from the law firm's mouth:

As a result of the recent California court decision in D'Sa v. Playhut, this approach by employers has been called into serious question.  Prior California cases have held that inclusion of an unenforceable noncompete provision could be the basis of a violation of California Business and Professions Code Section 16600 (which 

voids any contract provisions that restrain an individual from engaging in his or her lawful profession, trade or business) and could possibly lead to penalties under the Business and Professions Code Section 17200 (which prohibits unfair trade practices). In D'Sa, the California Court of Appeal for the Second Appellate District took these rulings a step further by holding that such a provision may subject an employer to liability.





Despite the "don't be evil" motto, I suspect Google could have a hard time defending themselves in court against this one, as California's court system has a very dim view of Non-Competes.
Posted to Bad Business Ideas | Google
Wired News has picked up on the massive "user revolt" over Flickr's new video features.

The quick version of it: "Pro" users (like me) that pay $25/year to host tons of our photos, some of whom are quite serious photographers...don't care that much about video, and are angry that Yahoo just "threw it out there" without any beta, user feedback, or even...a market for it. Quoth one angry Flickr-er:

The big issue is the way it was implemented," said Jason Bouwmeester, a systems analyst in Canada and one of the group administrators for No Video on Flickr. "There was no public beta.... They just reset everyone's settings."


Quite rightly, Underwired (that's Wired's oh-so-clever Blog name) points out that the new feature takes away from Flickr's purpose - photography.

How does this tie into government (and why the heck would I, you might ask)?

Well, a complaint about lawmakers is that they like to make big sweeping things happen with bills and leave details up to the regulatory agencies (think 1996 Communications Act and the FCC) that bog down the implementation with tons of nitpicking, minutiae and...whatever else makes up the Code of Federal Regulations.

Of course, there's always the tie-in about how the $25 user fees were spent implementing dumb 90 second videos and not...making Flickr better.

"I had hoped my [Pro membership fee] would go to fixing issues with the site, not to starting a video application," said Bouwmeester. "I can't see them reverting [the video service] altogether, but they should have some way for users to ignore it."

I hope people complain as loud when their taxes get raised and their roads don't get fixed. Yahoo should take a lesson from good business and good government, and give the Flickr "taxpayers" a ROI instead of stuff they don't need.
Posted to Bad Business Ideas | Congress | FCC | Taxes
(editor's note: the AP picked up on this hours after we did. We watch the FCC so you don't have to.)



Despite canceling their meeting today, the Commissioners did manage to do what they love most - issuing fines.  While these aren't quite as...sexy...as those levied against various broadcasters for showing glimpses of buttocks or televising Bono, they actually serve a purpose - to punish big box retailers who have been selling TVs that won't receive digital signals, or not properly labeling them as such.

One of the biggest problems we have with our DTV transition is that marketers rolled out HDTV years ago, and to most consumers, DTV and HDTV are the same thing, and they see HDTV as a luxury item. So, there has been a real problem getting people to buy new sets as manufacturers have cut back on making CRTs and increased production of plasma and LCD TV's, again considered luxury items. 

Still, they've been selling regular ol' TV boxes that don't have built in digital tuners to consumers who don't want to pay the extra for the "new flatness" while neglecting to mention that they'll be useless without a converter box in (as of this writing) 313 days. 

Thankfully, the FCC's Enforcement Bureau employs "secret shoppers" who patrol the mean aisles of the big box stores to make sure that evildoers in blue polo shirts get their just desserts...or at least the management does.

To that end, today the Commission has fined seven retailers for a total of $3,928,000. The breakdown goes as follows:

Sears, Roebuck, K-Mart $1,096,000 

Wal-Mart Stores/Sam's West $992,000 

Circuit CityStores $712,000 

Fry's Electronics $384,000 

Target Corporation $296,000 

Best Buy Co. Inc. $280,000 

CompUSA, Inc. $168,000 


Total:     $3,928,000


Of course, this means nothing in the larger context of the looming disaster next February when grandma, having failed to go to notice the poster at the Post Office or the DMV, turns on her favorite set to get...nothing.

I still haven't received my converter box coupon yet, either. On the other hand, I don't complain when the Big Boxes get kicked in the tail, either.

Finally, an FCC action that I can smile about.

Update: that AP report has some reactions from the Big Boxes:

Sears -- fined for 15 of its stores, its Web site and 20 Kmart stores -- said in an e-mail statement that it was "surprised" by the FCC's action and had eliminated analog inventory from its stores last fall and will soon offer converter boxes.

The company said it hasn't decided whether to appeal or pay the fine.

Best Buy, which was fined for 18 stores selling various models of analog-only equipment, said it was "extremely disappointed" by the FCC's action to what it called a "relatively small number of instances."

"Best Buy voluntarily pulled all analog-only tuner products from our stores on Oct. 1, 2007, in a proactive effort to prevent confusion and to help jump start consumer awareness," the company said in an e-mailed statement.

The company said it did not believe it violated the FCC rule "in any willful or repeated manner."

Wal-Mart spokeswoman E.R. Anderson said in a statement that all the products sold by the company comply with FCC regulations. Wal-Mart has "voluntarily invested millions of dollars in new technology, training, new product and consumer education" for the transition, she said.

Posted to Bad Business Ideas | DTV | FCC
NYT reports that Facebook is settling with Cameron and Tyler WInklevoss, the two sons of a Wharton school professor and Olympic rowing hopefuls who claimed to have come up with the idea for Facebook.

I'm not going to rehash all of what I have previously written on how stupid this lawsuit was. However, I believe that Facebook should have fought this in open court.

Just a side note to this, while their father was paying for lawyers to negotiate, Cameron and Tyler raced in USRowing's first National Selection Regatta for this year's Olympic qualification.

While Tyler's boat finished 6th in the final, 25 seconds off the winning pair (which contained Micah Boyd, a Wisconsin alum and former teammate of mine - Go Badgers!) Cameron did not even show up to race his placement final.

Oh, another thing. In my previous article I noted that Howard WInklevoss started a business to import cheap Chinese-made rowing shells for the U.S. market. Well, his sons don't even compete in their dad's company's own boats. I guess when it comes to business, like father, like sons.

Bad business all around. This was extortion, and I have a feeling the VC's behind Facebook would rather settle and go for the IPO than clear Mr. Zuckerberg's name. 

Too bad.
Posted to Bad Business Ideas | Facebook | Idiots

No, I wasn't there, but the FCC sent me a copy to read because they're such fantastic people. I routinely go back and forth on Martin. One minute I'm incensed at his hair-trigger indecency standards, the next minute impressed by how stubbornly he wants a la carte pricing, which might not be a bad idea, no matter what the industry says. Then, I'm totally floored by his insistence on open access for the 700mhz auction, possibly the smartest decision he's made in his tenure (and I suspect having to due with the influence of his old boss, ex-Commissioner Harold Furchtgott-Roth, whose book A Tough Act to Follow? should be required reading for anyone who wants to know about the FCC).

So, whenever I read or hear one of Martin's speeches, I never know how I'll feel afterwards. His CTIA remarks (delivered yesterday) are no different.

Here's an excerpt with an ending that you won't believe:

 

Although initially opposed by the industry, the Commission also worked to create a more open platform on a portion of the 700 MHz spectrum.  The Commission was determined to ensure that the fruits of wireless innovation swiftly pass into the hand of consumers.  A network that is more open to devices and applications can help foster innovation on the edges of the network.  As important, it will give consumers greater freedom to use the wireless devices and applications of their choice when they purchase service. 

 

I believe that putting these choices into the hands of consumers, rather than network operators, will spur the next phase of wireless broadband innovation - innovation that can make us more productive, keep us entertained, and improve our quality of life.

 

Ok, so you've got the big picture. Good. 

When adopting the open platform requirement in the 700 MHz band, we saw it as a rare chance to promote innovation and consumer choice while writing on a clean slate.  We targeted only one block of the spectrum.  And since I have been Chairman, I have opposed applying network neutrality obligations with mandatory unbundling or wholesale requirements to networks that would undermine investment incentives.  This careful balancing of spurring innovation and consumer choice while encouraging infrastructure investment is critical to the wireless industry's continued impressive growth.

 

 

So, what you're saying is if they already own it, they can use however they please, competition be damned. With wireline, you're right. Wholesale was a disaster. Wireless? We don't know yet...but wait, there's more...

 

And what we have observed since the adoption of our 700 MHz rules is quite outstanding.  The requirement for open access in the 700 MHz auction is leading carriers to recognize the benefits of a more open platform. 

 

In fact, in less than a year, many of you have evolved from vocal opponents to vocal proponents, embracing the open platform concept for your entire networks. 

 

Translation: Good job for seeing the writing on the wall before we had to smack you.

 

Verizon Wireless has committed to open its entire network to devices and applications of consumers' own choosing.  More and more wireless providers, including T-Mobile and Sprint through their participation in the Open Handset Alliance, and AT&T, are also embracing more openness in terms of devices and applications.  Indeed, in looking at the program for this conference, I was excited to see a number of educational sessions and panels focusing on the issue of openness.  This interest now appears to be shared across the industry.

 

So, Verizon is trying to catch up to GSM's convenience. They're...competing! But watch...after that eloquent pean to the glories of competition and the free market, Kevin is about to drop an anticompetitive, protectionist bombshell:

 

In light of the industry's embrace of a more open wireless platform, it would be premature to adopt any other requirements across the industry.  Thus, today I will circulate to my fellow commissioners an order dismissing a petition for declaratory ruling filed by Skype that would apply Carterfone requirements to existing wireless networks. 

 

 

Wait a minute! Whoa there! Because you've allowed open access on a network that hasn't been built yet, you're denying open access on the networks that already exist? What this means, is that Skype can't deploy an iPhone or BlackBerry application that lets you access your Skype account from your mobile device. It also means that someone like me, who only has wireless internet access (via a Sprint AirCard) could very well be denied the use of Skype (or Vonage, or any other VOIP service) through the connection that I pay for.

How is that premature? How is Carterfone (meaning that anything I can connect to the POTS network without breaking it is legal to connect) inapplicable to wireless networks? You're telling me that if I have an application that runs on my BlackBerry and uses the device's TCP/IP stack (an open industry standard since the 1970's, by the way) to provide me with a gateway to my VOIP-based phone number, it would be premature to tell my Wireless carrier that they have to let me use it even if it doesn't cause any harm to the network?

Oh, Kevin. You had me flipped. I was ready to start singing your praises to all who would listen...and now this? What are you doing to me? I hoped this was an April Fool's joke, but alas, my hopes were dashed. Even when you say things like this:

In conclusion, let me say that, at the Commission, our job is to provide ample spectrum for a range of wireless services and a regulatory framework that allows you - the entrepreneurs, engineers, and network operators of the world to provide lower prices, better and more innovative services, and more choice to wireless consumers. 

 

How, in the name of Guglielmo Marconi can you talk about the glories of competition and lower prices after you've slammed the door in the face of a service that lowers prices?

Please, Mr. Chairman. Quit playing games with my heart (and my phone). Pick a side.

Posted to Bad Business Ideas | FCC | Regulation | Telecommunications | Wireless

We missed something. Too much about the toy, not enough on the game.

I'm reading Alex's post about Western Union's new "send money by prepaid phone" service and I can't help but think there is an invitation for regulatory disaster here.

I've had to send money with Western Union once in 25 years, to a friend who was stuck in Michigan with maxed out credit cards from a ticket and impound lot, who needed cash to fill up his car and drive back east.

When I called Western Union, they asked me a whole bunch of questions to verify who I was. They had my addresses going back five years (even my college dorms) and I had to think back to remember my old home phone number growing up (301-229-9041) and even some details about my parents.

The beauty of prepaid phones, however, is that they offer some level of anonymity by disconnecting the phone number from an identity. This is useful for say, people who are whistleblowers or sources for journalists, or even for plain old privacy-minded people who are willing to pay a premium to not have a name associated with their phone.

Western Union, which discontinued their signature telegram service last year, now makes their money taking a cut of funds that people send using their network. Those remittances that enterprising immigrants send home (which are, incidentally a huge part of the global economy) make up a massive pool of funds. For instance, Ghana's economy recieved $4.5 Billion in remittances from abroad in 2005, a huge chunk of that country's GDP.

In the U.S. many undocumented/illegal immigrants get paid cash. They send this cash home via Western Union. No tax is paid at any point, except perhaps by WU. On the other hand, this is cumbersome because of the paper trail required. Let's go back to me trying to send $150 tp Michigan. They knew everything about me. I'm sure they collect just as much information on Joe Blow trying to send cash, because they've been an easy target for money laundering and other underhanded enterprises. They cover their butts.

Another thing, if sending money is going to be so easy domestically, isn't the Government going to want a cut, or want to watch the sums moving around from phone to phone? I'd like to see the privacy policy associated with this service. Is reloading my phone with minutes going to be as document-heavy as sending money? Will I have to fill out a form, or will I just be able to buy a "card" with cash, no questions asked? Can you see where this is going?

Now, if I buy a prepaid phone from this service, am I going to have to document myself the same way? What if this becomes more widespread? Could this new "feature" spell the end of the disconnection of number and identity?

If so, the prepaid phone market will be all but dead, except to those who have no other choice. What bothers me about it is that right now, I have a choice, and should continue to have a choice whether or not to be anonymous. I'm afraid that in their zeal to open a new market, Western Union could make it an attractive option for the Government to take that choice from me.

I hope not.

Posted to Bad Business Ideas | Mobile Phones | Privacy

Nokia showed off its N810 WiMax Edition, a mobile computing device with slide-out keyboard and 4.13" screen.  The new WiMax Edition will come equipped with web browsing, powered by Mozilla, and will even support a number of VoIP services, such as Skype.

 

I don't quite know how to react.  Sure, the N810 WiMax Edition can make calls using a VoIP (Voice over Internet Provider) client, but it doesn't seem to have a dedicated phone function in the same way that a BlackBerry or an iPhone does.  Also, if the screen is 4.13" that seems like it would make the N810 a little, well, large to be comfortably used as a phone on a day-to-day basis.  As we, and the washington Post, have commented before, does anyone really have room for another device to carry around with them?

 

Personally, I see WiMax like any other type of wireless data.  I think that the implementation would make a lot more sense if it was treated like EVDO or EDGE - just a faster connection to embed in high-end phones (and eventually not-so-high-end ones) and aircards.  I'm sort of thinking that anyone who would really be enticed by the N810 is probably taking their laptop with them everywhere, and the N810 can't compete with that kind of power.  A WiMax aircard, however, would let the user take their laptop online on the go, without the need for a stand-alone unit fo rmobile browsing.

WiMax has a huge potential to revolutionize the way we look at a wireless internet connection and has the power to allow people to replace their wired internet with it.  I feel like having a device whose comrades have floundered in the States (yes, i'm bringing up the Mylo again) as the flagship ambassador of WiMax is a bad idea.  Why not talk to RIM about bowing a WiMax BB8800 series?  Or preview a BB9000 with WiMax?

 

Currently, Sprint has a soft-launch WiMax network running in Chicago, DC and Baltimore.  They'r eexpecting nationwide rollout this year and are, in cooperation with Clearwire, looking for outside funds from Comcast, Time Warner and Google, to name a few.

 

Full press release at Nokia.

Posted to All | Bad Business Ideas | Broadband | Internet | Technology
Consumerist is reporting that they're degrading HD quality to add more channels:

When you order Hi-Def TV, you expect it to be on the shining Excalibur level, but it looks like Comcast is degrading the quality of some HD channels in order to make room for more channels. To test this theory out, Avsforum member bfdtv recorded the same shows from the same channel at the same time on both Comcast Hi-Def and Fios TV. The left is the FiOs. The right is the Comcast. As you can see, the Comcast signal looks like crap. The forum threadhas more screenshots, a signal analysis, and some source videos. So far the Comcast channels receiving extra compression are: Discovery Channel, SciFi, USA, Food, NatGeo, UHD, A&E, HGTV, Starz, Cinemax, HBO, TLC, Animal Planet, Discovery HD Theater, and History HD.


I wonder what will happen when DirecTV and DishNetwork start dropping all those music channels and use that spectrum to deliver more HD. Hmmmmm...
Posted to Bad Business Ideas