Monday, January 31, 2011

Porn leaving hotel rooms, is Hollywood next?

With all the hubbub over usage-based internet billing last week, I almost lost another major story - as it pertains to my book, anyway - in the shuffle. The Marriott hotel chain has announced that, because of declining revenue, it is pulling porn from its in-room pay-per-view offerings.

The media picked up on a couple of interesting angles to this story. Many connected the move with the likelihood that Mitt Romney is once again going to run for U.S. president. Romney recently resigned from the hotel chain's board to prepare for his run. He took heat, especially from Mormons, in the previous election for not pushing Marriott to get rid of the in-room porn, so some are saying both of these moves will remove that particular albatross.

The more interesting angle, I think, is what the Daily Mail calls "the iPad effect" or what I call "BYOP," or bring your own porn. Hotel chains are thinking twice about offering adult content in rooms because people are bringing their own, either pre-loaded on their iPads or smartphones, or they're accessing it online in the room through those devices. In both situations, the hotel is getting cut out of the equation, so ultimately it's a good PR move to get rid of the content.

We've been hearing for the past couple of years how the porn industry has been hurting because of free online content and piracy - you can read all about it in my recent feature - but we're only just now getting a little more illumination on what has been a dirty little secret. Porn piracy doesn't hurt just the porn business - it hurts mainstream businesses too, with hotel chains and cable companies at the top of the list. Anyone who used to make money from the old porn system is seeing that situation evaporate quickly.

Amazingly, you can tie this back to usage-based internet billing. I wouldn't feel too badly for those cable companies, especially Canadian ones, because if they're losing money from a decline in pay-per-view porn, they stand to recoup it from internet usage. Despite what seems to be conventional wisdom, porn is still a major part of the internet and those free sites - the likes of YouPorn and RedTube - are among the highest trafficked out there (both are within the top 150 in Alexa rankings). The more people watch those sites, the more they go over their monthly caps and the more revenue the internet companies get.

That notwithstanding, many people also forget that ISPs have been the biggest beneficiaries of porn's move to the internet. As detailed in Sex, Bombs and Burgers, better access to adult content (as well as file-sharing) has been a major reason for why people upgraded their dial-up internet connections to high-speed. They are a huge part of the dirty little secret.

But to get back to the hotel issue, the iPad effect also extends to mainstream movies. Once again, porn is in the vanguard - if hotels are moving to drop it because people are bringing their own, how long until they drop pay-per-view movies entirely? After all, if you can bring Debbie Does Dallas Part XXIX loaded on your laptop, surely you can also bring Inception, Toy Story 3 or the complete latest season of Dexter. Put another way, why would you watch television on the TV in your room when you can fire up Netflix or Hulu instead? Indeed, one analyst figures pay-per-view revenue overall has shrunk about 39 per cent since 2000.

The hotel chains have been trying to keep this pay-per-view business viable by adding larger flat-screen TVs to rooms and by moving the release windows of movies up. Many of the hotels I've been in recently have had movies on offer that are still in theatres.

They're sort of trying to replicate the whole movie-going experience in the room, albeit on a smaller scale. I'm not so sure that's a good strategy, though, because the price of the lesser experience is roughly the same as the full one. If you're going to pay $15 to see a movie, who wants to watch it on a small screen in their room?

Given that, it seems the overall death of in-room pay-per-view is inevitable.

Friday, January 28, 2011

Netflix: a tale of two countries

Wow, what an interesting week in internet land, especially for Canadians. The buzz all week has been usage-based billing, or metered internet usage. On Tuesday, the regulator handed down on the issue, which will ultimately make it very difficult if not impossible for any ISP to offer unlimited internet usage.

People are pissed. As of this writing (Thursday afternoon), more than 70,000 had signed the Stop The Meter online petition. One fellow, Jean-Francois Mezei - who runs a small computer consultancy in Quebec called Vaxination Informatique - has taken it upon himself to file an appeal with the federal government to have the whole thing struck down. It's a good read; some of it is very technical, but otherwise he covers the innate problems with the whole situation.

At the centre of this storm, believe it or not, is movie and TV show streaming service Netflix. The company announced its latest financial results on Wednesday and, in a refreshing moment of candour (for an executive), CEO Reed Hastings laid out what's going on with the company's recent expansion into Canada, land of the capped internet. He said our restrictive usage caps are a "potentially a significant negative for Netflix," and he criticized the high rates big ISPs are charging when users go over their limits. “Hopefully we can work with the different consumer groups and providers and get a better costing structure... more in the one-penny range or (plans) bundled in with a much higher cap.”

Netflix followed up Hastings' comments yesterday by releasing some illuminating charts. The graphs show how well Netflix performs on different ISP connections, both in the U.S. and Canada. The charts show Netflix performing better in general in Canada than in the U.S., which prompted some people to suggest our networks are better.

Whoa, wait a second there Nelly. That's a mighty big conclusion to be jumping to. There are a couple of things to keep in mind before we can make that leap in logic (not that it's necessarily not true).

The biggest issue is Netflix's performance-versus-usage threshold. There is a very strong logical argument for why U.S. ISPs don't want Netflix to perform well - perhaps more so than their Canadian counterparts. The typical American internet user has hundreds of gigabytes of monthly usage, if not unlimited, to play with. So if ISPs can't discourage internet users from watching Netflix that way, well why not try and make the experience negative in some other way? I'm not saying U.S. ISPs are interfering with or degrading Netflix quality, but it would be foolish of them to go out of their way and devote special resources to making it an optimal experience.

In Canada, it's a very different story. In many ways, ISPs perversely want internet users to have a great experience on Netflix so that they use it more. That gets them up over that monthly usage cap, which results in more revenue. Why not optimize the experience? It makes all sorts of sense. As long as Netflix is still a virtual remainder bin of content devoid of any good new releases or television shows, for the big ISPs it's a case of, "What me worry?"

Let's not forget, also, that we have net neutrality rules in Canada whereas the U.S. is still trying to get them sorted. The Netflix charts are a great thing for Canadian ISPs to point at and say, "Look how well we're provisioning a potential competitor! How dare you suggest we're anti-competitive!?!"

It's really amazing how online video is unfolding, or not unfolding, in Canada. When illegal torrent file-sharing emerged as the big threat to our TV providers a few years ago, they moved en masse to slow it down and cripple it with internet management measures that are still in effect. Now, as the legal options are emerging, they're moving to slow them down and cripple them with different measures: usage limits.

One way or another, they're successfully stemming the tide with the blessing of our regulator and the silent complicity of our government. Is it any wonder Blockbuster Video is doing okay in Canada despite going bust in the United States? Hey Industry Minister Tony Clement: nice "digital economy" you've got going there.

Thursday, January 27, 2011

Stats on technology and dating, sex

Reuters ran an intriguing yet thoroughly unintelligible story the other day about how technology relates to dating and sex. It's tough to figure out what the story is really about because it throws a whole bunch of numbers together with no discernible focus, but the stats themselves are pretty interesting.

The headline figure is that 80% of women and 60% of men believe that texting, Facebook and other social networking tools cause couples to have sex faster. The following sentence, however, says only 38% of women admitted to getting it on faster because of digital intimacy. That would seem to indicate that people believe social networking leads to faster sex, just not with them. Either the stats are wrong, respondents to the survey are woefully wrong, or it's a case of, "uh huh, sure it's not you."

There are a few obvious errors in the story. Apparently, 72% of women say they "scour" a current partner's ex-girlfriend's Facebook pages, which seems wrong. As far as I know, with all the privacy flak Facebook has taken over the last few years, you can't really see too many details on strangers' pages without actually friending them first. That makes it rather hard to "scour," I would think.

The story also notes that 81% of people don't de-friend an ex once they break up with them, which is pretty much a no-brainer. How else are you supposed to keep tabs on them?!?!

(Photo from Marie Claire.)

Wednesday, January 26, 2011

Metered internet a colossal failure

The final word on usage-based internet billing in Canada came down yesterday and it's pretty much as everyone expected: so long unlimited internet, it was good knowing you.

The issue, in brief, if you're not familiar with it: small internet providers lease the networks of big companies such as Bell and Telus to sell their own internet plans. But while the big companies like to set modest usage caps and charge extra for more, the smaller guys have been selling big buckets, if not unlimited. Bell asked our regulator, the CRTC, to allow it to implement those same caps on its smaller wholesale customers and, after much ado, the company got what it wanted. The small guys are therefore going to see their ability to offer unlimited usage buckets severely curtailed.

The CRTC did throw the small ISPs a bone yesterday - it gave them a 15% discount on whatever the big guys want to charge them for usage. By most accounts, that might be enough to keep some of the smaller ISPs in business, but it doesn't give them much room to differentiate their services or make any actual money.

Interestingly, there was an op/ed in The Globe and Mail yesterday from David Beers, editor of The Tyee website. The headline pretty much said it: "A metered internet is a regulatory failure."

I'd go a step further and suggest that by allowing this to happen, the CRTC has actually failed to do its job as enforcer of the Telecommunications Act and it has failed to follow the government's 2006 policy direction.

The policy direction was an unusual set of marching orders that had never been made before because the government and the regulator were supposed to operate within arm's length of one another. It happened because the industry minister at the time, Maxime Bernier, was a hard-core market purist and he wanted to de-fang the CRTC as much as possible.

Bernier, who I got to know through regular on- and off-the-record chats back in the day, believed that any and all competitive problems could be solved by simply having a free and open market. For the most part I agreed with him except - as I keep belaboring - we don't have openness in telecommunications services because we have foreign ownership restrictions that act as a major barrier to market entry. Bernier knew that and wanted to change it, but he was shuffled off into a different job before he could make such a move (and then there was that whole disgrace with the , but that's neither here nor there).

In any event, the government has stuck with Bernier's policy direction for more than four years now and the CRTC has referenced it in pretty much every decision it has made since. Indeed, yesterday's ruling concludes with a statement that usage-based billing
is indeed consistent with that policy direction. I beg to differ.

The double failure is very simple, as it comes from the first points in both the policy direction and the Telecommunications Act. The government's marching orders state the CRTC must "rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives."

In the first instance, by allowing Bell and Co. to dictate the business models of smaller competitors, the regulator is in effect interfering with market forces.

Furthermore, the Act's first objective is "to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions." Its third objective is "to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications."

The Telecom Act is a long and convoluted piece of legalese, but if we break it down to that first all-important objective, the question inevitably arises: Exactly how is cutting down or limiting Canadians' internet usage safeguarding, enriching and strengthening the social and economic fabric of Canada?

We can argue ideologically till we're blue in the face about how to achieve all the other goals of the Telecom Act and the policy direction - i.e. that allowing all comers to access incumbent networks cheaply is the best way, or that shutting the small guys down so the big guys have investment certainty is the best way, etc. - but that just muddies the waters. The first goal is a good one and the most important since it pretty much covers everything else.

In that vein the one point I think everyone, except perhaps the network owners, can agree on is that using the internet more, not less, is the best way to achieve the Act's most important goal: the strengthening of the social and economic fabric of Canada. Ladies and gentlemen of the court, I therefore submit to you the CRTC's first objective and policy direction failure.

What about the Act's third objective? As the wise guys like to say: fuggedaboutit.

According to the Organization for Economic Co-operation and Development, Canada is only one of three member countries (out of 30) where unlimited internet service is practically impossible to find (see table 4G on the OECD's broadband portal - it's worth noting the numbers are from 2009, which means Canada is likely to look even worse now that we've got usage-based billing). Australia and New Zealand are the other two, and don't even get me started on those countries. Having lived in New Zealand and covered this issue there, we should actually consider ourselves lucky here in Canada. As for Australia, it's no surprise the government - at war with Telstra, its own version of Bell Canada - is spending billions on building its own internet access network.

The point is, unlimited or practically unlimited internet is commonplace in almost every other developed nation. Canada doesn't sound too internationally competitive in that light, now does it? That, my friends, is the CRTC's second epic failure.

There are many ways to interpret the Telecom Act and the policy direction, but the above two things are clear as mud: we're being prodded into using the internet less, which is out of whack with what's going on in other countries.

There are tens of thousands of other Canadians who are fed up with this situation and their numbers are only going to grow as 2011 continues. Sooner or later, the government is going to have to sit up and take notice that the market, such as it is, is failing those Canadians badly.

Tuesday, January 25, 2011

Nexus S: the next Jesus phone?

One of my keen areas of interest when it comes to technology, especially when it comes to wireless services, has always been whether it's friendly to consumers or not. By that, I don't mean whether it's easy to use, but whether it puts power into the hands of the individual as opposed to some company. For Canadian wireless users, the ultimate consumer-friendly phone may therefore be the new Samsung Nexus S. I'll explain why in a minute.

As we all know, cellphone service here in North America is considerably more expensive and restrictive than it is in, say, Europe and Asia. With all due respect to our American friends, who also get the royal shaft from their service providers, it's pretty well established that we Canadians have had it worse than just about anybody.

That said, things are also getting better in Canada at a much quicker pace than in the United States. The secret, of course, is that new companies such as Wind and Mobilicity are making things very competitive for the established trio of Bell, Rogers and Telus. But even before the new guys came along, things were getting somewhat better because Rogers was beating the snot out of Bell and Telus thanks to a plain old lucky choice of technology.

Many years ago, Bell and Telus decided to follow the likes of their bigger U.S. brethren Verizon and Sprint in choosing a wireless technology known as CDMA. Rogers, however, gambled on a different standard, GSM, that was emerging in other parts of the world. There are arguments for and against both, but ultimately GSM grew to critical mass and was essentially anointed the winner.

The crown, of course, came in the form of the iPhone in 2007. While there has been much speculation about why Apple ultimately chose to release its hotly anticipated device on AT&T's GSM network over Verizon's CDMA network, the fact that more than 80% of carriers worldwide were using GSM made the decision a no-brainer. By going with GSM, Apple guaranteed at least the potential of mass acceptance of its new venture around the world.

In Canada at the time, Rogers was the only GSM carrier. When the company got the device, it quickly started seeing the benefits: more customer sign-ups and higher monthly revenue from the associated data charges. Bell and Telus users, meanwhile, were stuck with CDMA phones that were not only un-sexy, but they also didn't work in those GSM-using countries. On the inverse, people coming to Canada with their GSM phones obviously ended up roaming on Rogers' network.

Not surprisingly, just over a year ago Bell and Telus did the only thing they could do: they converted to GSM (or technically, its HSPA offshoot). Now, all three companies have the iPhone, as well as all the other cool GSM BlackBerry and Android devices.

Theoretically, this was great news for Canadian consumers. The single-standard situation was actually looking better than the U.S., where the four major carriers use three essentially different standards. (Verizon and Sprint use CDMA, AT&T uses GSM and T-Mobile uses AWS, a different flavour of GSM.) Canadians could now buy a GSM phone such as the iPhone, get it unlocked and go shopping for a service plan, thereby making our providers compete for our business. You know, how the grown-up countries in Europe and Asia do it.

Not so fast. The consumer-friendly move to a unified wireless technology has not made our big three any more consumer friendly. I tried to get a deal with an unlocked iPhone 4 when it was released last summer and came up pretty short. Technology may allow Canadians to move between providers but they certainly don't want us to, which is reflected in the fact that they're reluctant to offer deals without tying customers to long-term contracts.

The new carriers were supposed to help in this regard, but they introduced a new problem. No sooner had CDMA been banished from Canada than a new frequency - Advanced Wireless Spectrum - was introduced by the likes of Wind and Mobilicity. There's no need to get into the technical specifics, but suffice it to say that while AWS is still a flavour of GSM, it's not a widely used one. Very few cellphone carriers in the world use this particular wireless frequency, which means there aren't many phones being built for it. Why are the new Canadian companies using AWS? Well, it's the only spectrum that has so far been made available to them, so it's not like they have a choice.

I wrote about this issue recently for Canadian Business magazine. Basically, T-Mobile is the only big company using AWS, so our new Canadian minnows have basically had to buy whatever phones that company gets. T-Mobile's selection hasn't been bad, but it hasn't been great either - and there is certainly no iPhone option.

Alas. If only there were a phone that could work on regular GSM and AWS frequencies, thereby truly allowing the Canadian consumer to leverage all Canadian wireless companies against each other and force them to compete for their business. Sigh.

Oh wait, there have been a couple so far. First, there's the Nokia N8. The N8 has something called a pentaband chip, which lets it work on five different frequencies, including regular old GSM and the new-fangled AWS. The device is a possible vanguard of truly consumer-friendly devices that will let the user, or the Canadian at least, bounce between all of our wireless providers. The only problem is, while the N8 has a mighty nice camera, it's just not a very good smartphone and it's also locked to Rogers.

Then there's the Motorola Milestone XT720, also known as "the wha?" If you've never heard of this phone, you're not alone. It's Motorola's follow-up to the Milestone, which was the international version of the wildly successful U.S. phone, the Droid. The new Milestone was released in the UK and in Canada through Wind in 2010, but it doesn't seem to have done well, largely because it was barely marketed here, if at all. That's what happens when you don't have a deep-pocketed carrier getting behind a particular handset. It's too bad because the original Milestone was great and by the look of the XT720's specs, it can run on all of our carriers.

That brings us to the Samsung Nexus S. I haven't actually seen the device yet, which only became available in the U.S. and UK in December, but it sounds very much like an amalgamation of the Nexus One and Galaxy S, two very good Android phones. The Nexus S is getting and will soon be coming to Canada - Mobilicity CEO Dave Dobbin recently that all carriers will have it in March.

I'm not sure if the Nexus S has a pentaband chip, but if you look at the , it matches up with the high-speed wireless networks of Bell, Rogers, Telus, Wind and Mobilicity. Samsung's Canadian PR folks won't confirm it, but I did check with a friend who's an expert and we both believe this phone will work to its full capacity on all of them.

Imagine that: a good phone with some cachet attached to it that will work on all Canadian wireless carriers. This is truly a momentous first. (I'm being genuine there, not sarcastic.)

The phone is currently being sold unlocked and contract-free in U.S. Best Buy stores and I have half a mind to go and get one. The thought of being able to leave my cellphone provider any time I want for greener pastures is very appealing. It's downright revolutionary for Canada. I'm actually wondering if we'll be able to buy it contract-free and unlocked when it comes out here. There's something about those consumer-friendly ideas that seems un-Canadian. (Okay, now I'm being sarcastic.)

They said the iPhone was the "
Jesus phone" when it came along because it "saved" consumers from the iron grip of wireless providers. It's well known that Apple fought providers on a number of issues and forced them to lower their previously usurious data rates so that people could actually use the damn thing. Apple also took complete control of the device and, to the company's credit, still doesn't allow carriers to put their own crappy software on it.

The iPhone certainly did all that but the Nexus S could very well be the next saviour phone, at least for Canadians, because it looks to be the first real contender that can force competition across the board. Bell, Rogers and Telus don't want to offer deals to people who own unlocked iPhones because they know they can't go to the cheaper carriers. It looks like that is about to change.

And even if the Nexus S doesn't make a big splash, things are looking up as there is clearly already a trickle of phones that can cross networks in Canada (there may actually be more than the three I'm aware of). Whether the wireless carriers like it or not, we're getting closer and closer to empowered consumers.

UPDATE: My readers write... a couple of folks wrote in (see the ) to clarify some of what I wrote up above. When covering this stuff it's tough to keep it simple enough so that no one is bored to tears, so unfortunately sometimes I do get things confused. The problem is there are tons of wireless standards, frequencies and technologies out there and the carriers don't make things any easier by how they market them. Take "4G" for example - U.S. carriers are marketing their new services as fourth-generation while the same thing here in Canada is considered 3G. The bottom line when it comes to devices such as the Nexus S is, yes, it looks like it will work on just about all Canadian networks... the only question is at what speed. Fortunately, network speeds are generally improving and phones are gaining the ability to work across networks, so the point of the post above still stands: we're inching towards more empowered consumers.

Monday, January 24, 2011

Sex, Bombs and Burgers in the U.S.

It's a very brief post today, updating some book information I mentioned last week. It looks like Lyons Press has given Sex, Bombs and Burgers a release date of Dec. 6, which means the book will be hitting U.S. stores just in time for Christmas.

Not to be outdone, Penguin will also be releasing the paperback version of the book in Canada around the same time. It was originally scheduled to come out this March, but the publisher has decided to hold back in order to take advantage of any exposure the book may get in the U.S. press. I think that's a wise move... we have a good deal of media crossover up here.

One of the other bonuses in having a unified Canadian and U.S. release is that the two books will apparently share the same cover, which will be designed by Lyons Press. I've actually grown quite fond of Penguin's "Yellow Bomb" front so I'll be sad to see it go, but I'm also pretty keen to see what the designers at Lyons come up with.

Speaking of... I'm told the upcoming UK/Australian/NZ version has had its new cover finalized. I'll share it here when I can, but in the meantime I can say it's pretty risque. There are elements of it that I like and parts that I don't, but ultimately I think it will definitely get noticed. Whether that's in a good or bad way is yet to be determined. One thing is for sure: the new cover makes me chuckle.

(Image courtesy National Children's Book and Literary Alliance)

Friday, January 21, 2011

Deflating the myths of McNuggets

The media doesn't often challenge conventional wisdom on certain issues, especially when it comes to food, so when it does happen it's all the more noteworthy. Such is the case with in the Montreal Gazette on McDonald's McNuggets. The story takes a look at what McNuggets are really made of, and I must give the writer - Joe Schwarcz, director of McGill University's office for science and society - kudos for taking down some myths that continue to be perpetuated.

One of the big assumptions laid low in the article is one put forward by Michael Pollan, author of The Omnivore's Dilemma, about how McNuggets are actually 56 per cent corn. He came to his calculation by asserting that because the chickens from which nuggets are made are fed primarily corn, they of course must be corn. But, as the story states, that's a preposterous idea because we really aren't what we eat: "Using this logic, we could all be described as being made of plants, since every bit of our flesh can be traced back to some plant product."

Another issue Schwarcz tackles is the suggestion by Joseph Mercola, a doctor who's pretty popular on the web, that McNuggets contain a chemical called dimethyl polysiloxane, which is also a major ingredient in Silly Putty. The implication by association is, of course, that you wouldn't want to eat Silly Putty.

But, as Schwarcz points out, dimethyl polysiloxane is an approved additive for frying oils. All chemicals become toxic at a certain level and with this particular one, you'd need to eat about 10,000 chicken McNuggets in one sitting to encounter problems. Besides that, the base argument is wrong:"Do we eschew salt because it is used to de-ice streets, or water because it is an essential ingredient of cement?"

It's a great article that you should check out. Schwarcz also has some good points on whether we should eat anything containing chemicals we can't pronounce.

And oh yes, if you're wondering: chicken nuggets are actually made from chicken. And no, they're generally not good for you, mostly because they contain a lot of fat and salt.

Thursday, January 20, 2011

Netflix, Zip and the Canadian broadband problem

I thought I'd write a bit more about usage-based internet billing as there seems to be quite a bit of interest in the subject and because I've heard the NDP - one of our major political parties - is set to condemn the practice today. I'd also like to address on yesterday's post that suggested my link between Canada's lack of innovation and our broadband access situation was "spurious."

I did mention in that there are likely a number of reasons why Canada hasn't produced any internationally successful internet services. Our reliance on natural resources, poor R&D spending and proximity to the U.S. (which makes our top individuals and companies eminently poachable), as well as a whole host of other issues including venture capital supply and taxation, all come into play. Broadband access is obviously not the only factor and I definitely didn't imply that. My point was that it IS an important factor, and it's becoming more so, especially because things are getting worse.

Broadband access certainly didn't inhibit Canadians from innovating during the first few years of the new millennium. Far from it - Canada actually benefited from a robust land grab between cable and phone providers, who scrambled to sign up as many customers as they could. The result was that we had cheap, fast and unlimited internet and consequently led the world in terms of adoption. Some great international websites may indeed have been forming during this time, but the fact that we have none today means some of those other issues obviously factored in. ( is a good example: it was on its way to becoming a great Canadian success story, but then it was gobbled up by News Corp.)

About five or six years ago, things started to change. The phone and cable companies had sewed up all the easy-to-get customers, so they settled into equilibrium. Competition between them died down, prices started to rise and network/speed improvements slowed. The companies are now in a predictable quarterly business cycle where they alternate between acquisition and monetization, both of which are helping to pay off some of that earlier investment. When a given company finds it didn't gain enough customers in a quarter, it introduces an incentive or two to draw in new subscribers. If those acquisition numbers are met, they settle back into extracting as much revenue as they can from those customers until they show signs of bolting for a competitor, then they ease off the throttle. In general though, no one rocks the boat.

Once in a while, something does happen that upsets the status quo - but it never comes from the telecommunications companies themselves. The best example over the past few years is the coming of the iPhone. Since Rogers had the only compatible network, it was beating the pants off Bell and Telus, both in acquiring customers and in monetizing them. The two companies were thus forced to spend hundreds of millions of dollars on a new network that was compatible with the iPhone and a bunch of other hot rivals to the device. They must have cursed Steve Jobs when he first introduced the GSM iPhone, then again last week when Apple unveiled a CDMA device that would have worked just fine on their old networks. Doh.

We recently had another boat-rocking event: the coming of Netflix to Canada. Netflix scares the bejeezus out of our telecom companies because they all make a good chunk of money from renting customers movies over their respective on-demand and pay-per-view services. And sooner or later, Hulu - or some service like it - is going to come along and eat their television lunch. There's a lot of debate going on right now about whether people are "cutting the cord" and canceling their cable in favour of watching TV online, but only a fool believes that isn't the future. (Anecdotally, I know more and more people who are doing it.)

The telecom companies aren't fools and they've been moving for years to prevent or limit the effects of this. First, they throttled services they didn't like (i.e BitTorrent), then they cut the legs out from more competitive smaller wholesale ISPs through government and regulatory lobbying, and now they've got usage-based billing coming in.

To bring this back to how it affects innovation... Let's say you want to create the next great service that beams holograms to people's living rooms via their internet connections. First, you've got all those other issues to deal with: can you get venture capital to fund it, will your business pay excessive taxes, can an American competitor spring up quickly or take you out? For the sake of argument, let's say you manage to overcome all those significant obstacles, then you've got to worry about whether your service is going to run afoul of ISPs' network management practices, which can change at any time, and ultimately whether people will be able to use what is likely to be a heavy bandwidth application.

At that point, who wouldn't just say "screw it" and move their great idea somewhere less restrictive? Like, I dunno... Sweden?

Here's a better real-world example: does anyone think - Canada's own version of Netflix, except without the deep pockets filled by successful U.S. operations - is going to be able to compete with Netflix? Like its U.S. rival, Zip started as a DVD-by-mail subscription service. But while Netflix is rapidly moving toward online streaming in the U.S., where download limits barely exist, Zip is stuck with the mail business and promises that it too will start streaming. Zip had a few years to head off Netflix's streaming entry into Canada but didn't. Venture capital, taxation, etc. may all have contributed, but the finger seems to point squarely back at what yesterday's dissenting commenter called my "favourite whipping boy:" broadband access. It seems that Zip's only two hopes are that it can hold on long enough for Netflix Canada to flop because of download limits or its crappy catalog, or that it gets bought, probably by one of the big ISPs.

The bottom line is: with all the other obstacles Canadian entrepreneurs already face, they shouldn't have to deal with still more when it comes to deploying their ideas on the internet. If anything, we should be making getting on the internet and using it to its full potential easier, not harder.

From that perspective, I don't think it's "spurious" to suggest there is a link between broadband access and innovation in general, or more specifically how able a country is to produce successful internet services. Quite the opposite: I think it's spurious to suggest there isn't a strong link.

Wednesday, January 19, 2011

Sweden: miles ahead of Canada on the internet

I was flipping through the latest issue of Wired the other day and I came across an article on Spotify, a music-streaming service based in Stockholm. I'd heard a little about the service before but, because it's not available in North America, I hadn't paid much attention to it.

The article was illuminating and Spotify indeed sounds like a cool service. It's not here thanks to record labels and their reluctance to give listeners anything for free even though it sounds pretty much like an internet version of commercial radio, except that it allows people to actually buy what they hear.

Ah well, such is not the point of this particular rant. What struck me is that Spotify was started in Sweden, which got me thinking: what is it with those Swedes and their incredibly popular internet services? By my count, at least three internationally successful, game-changing services have been started there: Spotify, Skype and, yes, The Pirate Bay.

The effects of the three are easy to summarize. Spotify is changing the way music is consumed in Europe. Skype has completely revolutionized phone calls (especially long distance), while The Pirate Bay - a torrent tracking website that courts and other authorities seem incapable of shutting down - has forced the entertainment industry to change how it does business because it enables free swapping of music, movies and other stuff.

Then I got to thinking about the many internationally successful, game-changing internet services that have been started in Canada. Hmm. Wait a second. Actually... there aren't any.

Why is this? We're constantly told how smart Canadians are, how we're very big users of computers and how we're very clued in to the internet. So where are our world beaters? Why have no earth-shaking internet services arisen here?

It's a good question and could probably serve as the basis of a Master's thesis as I'm sure there are many answers. But, as usual, I think it's prudent to start with the obvious: internet access and the philosophy government and regulators take toward it.

All of the Scandinavian countries (Sweden, Finland, Norway and Denmark) fare very well in international benchmarks, scoring in the top 10 of the OECD by most measures. Canada, not so much. In terms of average advertised speed, for example, Sweden is 13th out of 30 compared to Canada at 25th. In terms of prices for medium speed connections, Sweden is third while Canada is 20th.

The numbers are from a study by the Berkman Center at Harvard, which is probably the best such report I've seen on such stuff. Here in Canada, of course, some of our big telecom companies screamed bloody murder over the report when it came out, claiming it was full of errors. Of course they did. While no international comparison is going to be completely correct, when enough independent studies (read: not industry funded) point in the same direction, when a good number of experts say the same thing, and when all of that combines to confirm what you already felt to be true, well then there might just be something there.

As that study states, "the level of competition in Swedish broadband markets is strong," a fact that has been achieved by correctly applied unbundled local loop rules, an open door for foreign competitors and government involvement in building infrastructure - issues I remarked on the other day ( generated an incredible amount of traffic, by the way - thank you for reading and commenting!).

As for Canada, we've had none of those things. The report tries hard to shatter the illusions some people may still have: "Canada continues to see itself as a high performer in broadband, as it was early in the decade, but current benchmarks suggest that this is no longer a realistic picture of its comparative performance on several relevant measures."

You would think Canada actually has several advantages over Sweden when it comes to starting new internet businesses. We're just as connected but we're closer to the heart of the internet - the U.S. - which means that our companies surely have better access to venture capital, and perhaps better talent. Our population is four times bigger, which means we should have a higher statistical likelihood of producing more killer internet companies. We also have more universities producing more computer scientists and business graduates. English is also our mother tongue, the main language of the internet.

One possible reason I've heard for why we still haven't produced even a single great internet firm is our over-reliance on natural resources. Canada is teeming with oil, gas, lumber and other "dumb" commodities, so we haven't really had a need to "get smart." That's a good theory, especially when you look at the staggering disparity between how much Canada and Sweden spend on research and development. (Sweden isn't home to the Nobel prize for nothing.)

Another possibility is that Canadian startups are more visible to Americans and are therefore either snapped up by them quickly (Google seems to like buying Canadian companies), or they go out of business when a U.S.-based competitor starts up. Swedish companies, meanwhile, benefit from flying under the radar until they're too big to be denied.

Like I said, there are probably many reasons. If you ask me, though, at the root of it all is a different mentality when it comes to the internet. The common denominator shared by those three Swedish internet services is that they used the true power of the internet - the ability to innovate without permission - to upset the status quo and affect change. This has also happened a lot in the United States, where companies such as Google, eBay, Amazon, Netflix, Craigslist and so on have emerged.

It hasn't happened in Canada because that "innovation without permission" mentality hasn't been allowed to develop. To bring it back to our internet access, it seems like every step of the way we have to ask our internet providers for the right to innovate. The current issue of usage-based billing is a case in point. Limiting how much people can use the internet - rather than encouraging them to use it more, like Sweden does - is a very strong way of continuing and enshrining this permission-based system.

Like I said last week, while I'm not completely opposed to charging heavy internet users more than light users, there should be alternatives available where if an internet provider wants to give its customers unlimited usage, than it should have that option. By forcing all ISPs to play the permission system game, we're not just limiting our internet usage, we're limiting our options.

The real effect of the system we've allowed to developed isn't just cranky internet users, it's a lack of services such as Spotify, Skype and Pirate Bay. That's a far more serious effect than people griping about their bills.

Tuesday, January 18, 2011

I have a dream... of cheese-filled burgers

Yesterday was memorable for our American friends for a couple of reasons. First, it was Martin Luther King day. Second, and perhaps equally as important, Burger King officially rolled out its new stuffed burger. (Okay, clearly the second is a little less important.)

For a limited time only, the chain is selling the Jalapeno and Cheddar BK Stuffed Steakhouse, which is a burger with the cheese and peppers built right into the patty. Mmm... cheese... patty... built right in...

Is it a gimmick? Perhaps, but the folks at Burger Business don't think so. The blog, which likes to predict burger trends, thinks 2011 will be the year of the stuffed burger. Burger King therefore appears to be leading the charge.

As usual, we Canadians will get this late, if at all, so in the meantime we're stuck making our own stuffed burgers. Here are some tips on how to do so. Of course, if you've got a craving any time soon, you'll first have to chisel the ice off your barbecue.

(Thanks to Justin for the tip!)

Monday, January 17, 2011

Down to business

Man oh man, the past few months have been an absolute whirlwind. Since wrapping up at the CBC at the end of October, it's been a non-stop blitz of activity: heading over to the UK for the launch of Sex, Bombs and Burgers, the crazy run-up to Christmas (which is prime writing-about-video-games time) and of course the Consumer Electronics Show. Last week was spent tying up a few loose ends from that whole event, which included talking about CES and some of its more obscure technologies on CBC Radio's Spark, as well as writing my mega-feature on the future of the adult entertainment industry for AskMen.

This week, it's down to business. Sex, Bombs and Burgers is scheduled for release by Lyons Press in the U.S. later this year, which means I've got a few weeks to put together some revisions that I've been wanting to do. It won't be anything major - just a tweak here and there, as well as a few new pages in which I'll answer some of my critics (I promise not to use the term "eat it" anywhere in this new section) and possibly set up the mysterious next book. Cue spooky music.

In that vein, just a heads up that Penguin Canada will be releasing Sex, Bombs and Burgers in paperback in March. I chatted briefly with an editor there about adding revisions and how they were possibly going to tinker with the book's subtitle, but that was a few months ago. I'm not sure where that's at but one thing's for sure: since it's in paperback, the book will be cheaper so now there's no excuse not to buy it!

Similarly, new versions are on the way in Australia, New Zealand and the UK. Last I heard, the new version - which will likely have a new cover - is going to arrive in July. It's looking like the text will be exactly the same as the first version though, as Allen & Unwin (the publisher) doesn't like to mess with the content. More details when I have them.

Otherwise, it's just about time to get cracking on book #2. One of the things I was worried about when I left the CBC was that I would end up spending too much time on freelancing and not enough on the next book, which so far is exactly what has happened. I had that post-job panic of, "Oh lord, I have no income!" and ended up over-assigning myself. Clearly, I'm going to have to learn some self-control if I'm going to achieve my goal of having broken the back of book #2 by the end of this year.

In any event, here are the 10 things I've learned or discovered in the 2.5 months since going independent:
  • Obsolete technologies such as scanners and faxes are still necessary for all those damn writing contracts you have to sign.
  • Playing video games all afternoon is fine if you don't mind writing at 2 a.m.
  • Doing the dishes is now a welcome distraction from the things you really have to do.
  • Showering and wearing clean clothes: both are optional activities.
  • Weekdays and weekends - there's no real difference anymore.
  • Friends aren't as amenable to going for late-night drinks on a Monday or Tuesday as you may be.
  • Going to the movies is much cheaper during the day.
  • I could go for a drive to Pittsburgh, just for the hell of it, whenever I want.
  • You do have to carefully weigh difficult financial decisions, such as whether or not to buy new socks.
  • I am indeed capable of sleeping till noon.

Friday, January 14, 2011

Scenes from the AVN red carpet

I thought about writing up my experience at this past weekend's Adult Video News awards, but I figured there's a long enough story dealing with some of that up on today. The first lesson in journalism school is "show, don't tell," so with that in mind, here's a short video of the evening:

And with that, I think my adult entertainment obligations are done for the time being. Honestly, I really don't want to see another porn star for a really long time...

Thursday, January 13, 2011

Download limits only a symptom of the problem

I thought I'd take a break from blogging about all this adult entertainment stuff that went on last weekend and instead write on a related topic: how Canadian internet users are getting screwed.

I came across a couple of items this week that relate to the issue. The first was an open letter addressed to the media and various government departments opposing the metered usage schemes that have been implemented by big internet providers here in Canada (also known as usage-based billing). The letter, posted on the Open Media internet activist website, goes into detail about how this is bad for Canada in a number of ways. The Reader's Digest version:

1. Smaller and smaller download limits runs contrary to how Canadians are using the internet, which is more and more.

2. With that dichotomy in place, it means we're inevitably going to be paying multiple times for certain services. Netflix, for example - not only do we pay a monthly bill to access the internet so we can get the service, we also pay a monthly subscription fee to Netflix. With smaller download limits, that means we ultimately have to pay a third time if we watch more than a few movies on it.

3. Given those facts, such services are going to avoid doing business in Canada, or they're going to be considerably more expensive here, as a recent report found.

4. There are also involuntary services that chew up our bandwidth, such as software updates for computers. Sure, we can decline these, but then Canada is going to a haven for the viruses, etc., that inevitably get through. Nobody wants that.

5. Notwithstanding all of that, low usage caps will also significantly limit the ability of any such Canadian services developing, such as a competitor to Netflix. In other words, low caps limit innovation and stifle new businesses.

I can't say I disagree with any of those arguments, but I do think the letter writers are barking up the wrong tree. I'm not necessarily opposed to usage-based billing, but I do think that market forces need to exist to keep such schemes honest. If the big internet providers want to keep lowering usage limits, there need to be alternative ISPs that won't - that way the consumer can decide which company and plan is right for them. The problem in Canada, as , is that those market forces don't exist and smaller ISPs have had the bigger companies' business models foisted on them.

That brings us to the second item: a regulatory ruling yesterday on something called unbundled local loops. Warning: this is a topic that can put even the biggest nerds to sleep, so I'll try to keep it brief and simple.

For much of the past decade, Canada and virtually every other developed nation has recognized the need for competition between internet providers. Only when such companies compete with each other do consumers benefit from faster, better and cheaper services. However, governments and regulators have also recognized that it is considerably expensive to build competing networks.

As such, the concept of local loop unbundling was rolled out across most of the developed world. The idea was to take the networks owned by major phone companies and allow other providers to access them to sell their own internet services to customers. So for example: a small company such as Chatham, Ont.-based Teksavvy could connect to Bell Canada's network and get its own subscribers.

Under this scheme, there was of course the recognition that the network owners should get some sort of compensation for other companies using their networks. Those other companies were thus effectively charged rent, generally determined by regulators, to do so.

The intent behind the whole plan was to allow smaller, less well-funded companies to build up a good business, at which point they could afford to build their own infrastructure and eventually ween themselves off the networks of the big phone companies.

The trick, however, has always been in the rent set by the regulator. If that rent was set too low, a smaller internet provider would have no incentive to ween itself off the bigger company's network; why spend money building a network when the one you're using is really cheap? If the rent was set too high, though, the smaller provider wouldn't make much money and therefore couldn't afford to build its own network.

Guess which situation unfolded in Canada? You got it: the rents are too high. According to a Harvard report (PDF on page 168), "Canada has the highest monthly charge for access to an unbundled local loop of any OECD country." I believe the term for that is: booya.

The result: small Canadian internet service providers can barely eke out a living, let alone think about building networks to compete with the likes of Bell and Rogers.

But wait, it gets better. Not only is that a problem, even if a small ISP performed relatively well and was able to position itself as a decent challenger - which some miraculously have, like Teksavvy - it's not like they could even find someone to loan them the money they'd need. We all know a non-Canadian company can't get involved, thanks to our foreign ownership limits, and I believe the Canadian banker's proper response when somone asks them for money to compete against Bell and Rogers is: "Bwahahahahahaha!"

What have the big boys been doing during all of this? Well, they wouldn't be smart if they weren't trying to put their foot into the smaller ISPs' figurative nards. Bell applied to our regulator, the CRTC, to raise those rents further and, from the looks of it, got them. According to some of the smaller ISPs, yesterday's ruling will cause those local loop rates to change, generally not for the better, which is further going to squeeze them and their ability to build their own networks (translation: it's not going to happen).

To go back to the beginning of this post, while it's good that people are complaining to politicians about our incredible shrinking usage limits, the issue is only a symptom of the deeper problem. I've said it many times: lack of competition is the real problem and it needs to be fixed, pronto. That's what people should be complaining about.

There are two potential ways to do this: either the government lifts those foreign ownership restrictions and throws open the battlefield for anyone to enter, or as a consumer watchdog group recently suggested, it orders the CRTC to start taking a heavier and more proactive hand in regulating again. Given the ideological bent of our government, it's obvious the first option is much more preferable. To put it bluntly, Industry Minister needs to crap or get off the pot because things are really starting to stink.

Wednesday, January 12, 2011

Chanel Preston on the future of her biz

Over the past few weeks, I interviewed a whole host of people involved in the adult entertainment business, from producers to directors to actresses, for a big feature I was writing for The story is on the future of porn and I've attempted to touch on every aspect - I'll link to it here as soon as it's up, which I think is supposed to be either today or tomorrow.

The story kept me busy for the past few days so I haven't yet had a chance to blog on my experience at the Adult Video News awards, which was pretty surreal. I actually had to walk the red carpet along in front of a horde of fans, which means that many probably thought I was a porn star. Clearly, I look the part. (Sheeeyeah, right.)

Speaking of porn stars, I did interview a few over the weekend, with plans to posting the videos on my blog. Alas, the audio on my excellent chat with Kayden Kross turned out to be so bad that it's unusable, which is too bad because she's a very smart gal (not to mention really stunning in person).

Fortunately, my equally good conversation with newcomer Chanel Preston turned out well. She's a rookie in the business and was nominated (but didn't win) the best new starlet award, and I found she had some good insights on celebrity in general and the future of adult entertainment. Check it out:

Tuesday, January 11, 2011

Photos from the AVN red carpet

I'm in the process of wading through all my stuff from the Consumer Electronics Show and Adult Entertainment Expo, not to mention tying up a few last assignments from both, so I thought I'd post some photos from the AVN red carpet in the meantime.

I took a ton of photos and posted a bunch to my Flickr account (viewable to everyone here), but I only included those people who I actually recognized. Let's face it: even the most hard-core porn expert would be hard-pressed to identify everyone in the two-hour cavalcade of adult entertainers that went by us on Saturday night.

For a sample, here's the lovely Jenna Haze:

Monday, January 10, 2011

Talking tech at TEDx

I'm in the process of decompressing from the past week in Las Vegas, so it's going to be a very short update today. Full reports on the Consumer Electronics Show, Adult Entertainment Expo and the AVN awards (the Oscars of porn!) coming very shortly.

In the meantime, the organizers of TEDx Ryerson have put up video of the talk - entitled "Technology Good, Media Bad" - I did back in November. Here it is if you want to check it out:

Friday, January 7, 2011

Beauty and the beast

I'm in the thick of the whirlwind that is the Consumer Electronics Show in Las Vegas, hence the short posts of late. Just a quick update today on my dinner the other night with the girls and crew of Digital Playground, purveyors of fine adult entertainment. I actually got to the dinner early this year, so I had my choice of where to sit. Naturally, I jumped at the chance to sit with Stoya (pictured): 

Why did I jump? Because she's a smart cookie, and if you're going to sit with strangers for a couple of hours, you might as well hang out with those who can have a decent conversation.

I interviewed Stoya a while back while working on Sex, Bombs and Burgers, and that interview turned out to be my second in 2009. She actually floored me by remembering more of that conversation - especially the parts about whether the porn business exploits women - than I did. My best recollection was that she mocked me for calling her on a landline (who the hell still has those?).

Over the course of the evening, we discussed a couple of topics such as self-publishing books, the dangers of working in "the biz" and the difficulties of renegotiating contracts. She also impressed our table with her paper airplane-making abilities.

I'm interviewing a number of adult industry folks in the next few days and will share some of that in the next week or two.

Thursday, January 6, 2011

A quick roundup from amid the madness

A quick post today as I'm fully entrenched in the madness of the Consumer Electronics Show. Both the BBC and National Public Radio in the U.S. have posted interviews I did on Sex, Bombs and Burgers. Here's the BBC's Digital Planet panel discussion on where innovation comes from, and NPR's The Takeaway is below (click here if you don't see the embed below). In my defense, that NPR interview took place really, really early in the morning. 

Otherwise, here's a quick hit from CES. I had a sneak peek last week at a thought-controlled iPad game designed by InteraXon, a tiny Toronto startup, and wrote it up for New Scientist. Yes, it is as cool as it sounds.

Wednesday, January 5, 2011

Gourmet Double Down, yum!

I know I swore off writing about the Double Down, but this post doesn't really count because it's not really about the infamous sandwich. At least not KFC's version, any way.

A friend brought to my attention a gourmet version of the bunless sandwich at a restaurant in Montreal. The Foie Gras Double Down at Joe Beef features features the same lack of bun, with high-end ingredients throughout. The price tag: $26. Yowch! Next time in Montreal I'll be sure to give it a try. In the meantime, here's the Globe and Mail story and a photo to boot:

Speaking of KFC, the Globe also reported last month that the chain isn't doing too well here in Canada. Prizm Income Fund, the company that runs the franchise in Canada is apparently looking to sell it. The reasons why are interesting: KFC's ultimate parent, Yum Brands, wants the Canadian restaurants renovated to match its standards, yet Prizm (which also runs new wireless carrier Mobilicity) can't afford it.

Does the plot regarding the Double Down's disappearance from Canada get deeper?

Tuesday, January 4, 2011

Looking forward to the wacky tech

I'm flying out to Las Vegas today for the Consumer Electronics Show, as well as my mandatory side excursion to the Adult Entertainment Expo. As a special treat this year, I'll be attending the Adult Video News Awards on Saturday - the Oscars of porn! - and I'll be sure to report back. Somebody joked this weekend that I should be a presenter. Hmm... I'll have to look into that for next year...

It's going to be a really busy week but also quite a bit of fun. I've seen and experienced some cool stuff at CES in years past, like riding in the Boss, the robot car. I've also seen some pretty comical stuff too. Here's an example of the TV Hat, which is going to be shown off at this year's adult expo:

Monday, January 3, 2011

Starting the new year off with a ban

Happy New Year everybody! I hope everyone had a fun and safe holiday season and that 2011 brings good fortune to all.

I had a nice rest over the holidays, which is good because things are going to ramp up this week again with the Consumer Electronics Show in Las Vegas. I'm flying out tomorrow and will endeavour to post some reports here from the show. I'll definitely have some goodies to share next week.

In the meantime, what better way to kick off a new year than with some bans? We've got a good trio of them here in Sex, Bombs and Burgers land.

First up, China successfully shut down 60,000 porn websites this year, netting about 5,000 people who ran them in the process. Yay for China, right? Well, let's not forget this is also a country that has banned Facebook and one that Google has largely pulled out of. So yeah - those plans that China has for becoming a world innovation leader? Not gonna happen while they ban large portions of the internet.

Next up is the inexorable march to stamp out fast food. A group called the Physicians' Committee for Responsible Medicine has asked the mayor of Detroit to ban the opening of new fast food restaurants because the city has the fourth-highest rate of heart disease in the U.S., and of course all those burgers and fries are apparently responsible. What's awesome is the response from the Michigan Restaurant Association spokesperson: "Restaurants do not lead to obesity, what leads to obesity is maintaining an unhealthy lifestyle." I've heard that before, except it used to go something like, "Guns don't kill people..."

Last up, in a move that should surprise no one, the U.S. military last month banned the use of removable media. Following the (cyber) atom bomb of the Wikileaks fiasco, anyone caught using a DVD, CD or USB drive will be court-martialed. Yikes. Guess all those whistleblowers will just have to break out the retro technology: it's back to the photocopier and miniature cameras for them.
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