Author: David Churbuck

Today’s WSJ reports efforts by the telcos to block municipal plans to offer Wi-Fi to their citizens in Pennsylvania. Verizon lobbied the legislature to block attempts by cities to offer free Wi-Fi.

My thinking on telco stupidity and avarice was formed by Charles Ferguson’s excellent polemic, “The Broadband Problem: Anatomy of a Market Failure and a Policy Dilemma “.

Ferguson, former CEO of Vermeer, the company that developed Frontpage, a WYSIWIG HTML editor acquired by Microsoft, is a research fellow at the Brookings Institute. I highly recommend the book.

While the role of municipal governments in granting utility monopolies to cable companies was hashed out in the 1980s — essentially awarding a town or city to a single provider to cut down on infrastructure disruption — Wi-Fi doesn’t involve ComCast trucks hanging devices off of utility poles, provides broadband to the masses in the spirit of POTS for all, and if anything, will goad the lazy Verizons of the world to get off their dark-fiber asses and start eating their profitable T-1 businesses.

I’m all in favor of broadband at all costs, especially in rural areas where broadband is every bit as much of an economic development incentive as roads without potholes. While I rather see the private marketplace do its economic magic, the cozy relationship between the Telcos and public utility commissions insures we’ll never see true free market capitalism at work.

The conviction of two North Carolina brothers for spamming AOL users with a fraudulent “FedEx Return Processing” work-at-home scheme is welcome news. The sentence, which includes jail time, was decried by the spammer’s attorney as cruel and unusual, but may serve as the head on a pike for other would be e-morons.

The legal process is serving up a few prosecutions but according to Techweb, Can-Spam isn’t doing the job, citing data by MX Logic that compliance in July fell to less than one percent. Unlike the Do Not Call registry — which is turning into a more accurate representation of Americans than the Census — Can-Spam and various state initiatives to put the lid on spam are fighting the Sisyphean reality that most spam has, or will, move offshore.

The Russian lonely-hearts scam described in Tuesday’s New York Times is a classic.

For the past year I’ve subscribed to a spam filtering service called MessageFire which acts as a POP3 go-between. The service is remarkably good at nailing most spam, but is now commercially unavailable to new consumer subscribers following an acquisition that positions the product as a corporate solution. Still, it can’t filter image-spam – which for the most part is HTML-formatted GIFs of people bumping uglies.

The point of all this is that the arm of the law and the arms race of technology are never going to have an impact on spam. What will turn the tide in favor of the consumer is their rejection – as resoundingly ratified by the embrace of the Do Not Call Registry – of intrusive marketing tactics. Marketers who continue to view pop-ups, pop-unders, telemarketing, junk mail, and spam as statistical shotguns are doomed. Publishers who host such crap, who underestimate the intelligence of their audience, are condemned to irrelevance.

The Boston Globe reports
on the third-quarter MoneyTree survey of national venture capital activity that the region had a steep drop in venture financing in the third quarter: down 57% from the second quarter, compared to a national decline of 26%.

Divining the reasons is difficult as the summer quarter is traditionally the slowest for v.c. activity in any region. The question is what is driving the region so much lower than the rest of the country? My sense is that IT investment opportunities – the traditional bedrock of the region – have all but dried up. If the early 90s were driven by networking startups founded by displaced minicomputer engineering talent tossed on the street by the extinction of the dinosaurs at DEC, Wang, Data General, et al – Stratacom, Chipcom, etc. – the early part of this decade hasn’t seen the talent spinoffs expected from the region’s early strengths in search services. Alta Vista and Lycos in particular did not cast off much of a halo effect, and the dot.com froth seemed particularly harsh up in Andover as CMGI flailed through its last stages as an investment holding company before being reborn under George McMillan out of the ashes of an incubator into a focus on supply chain management via SalesLink.

The VCs in the region have traditionally been the more sober members of the species, exemplified by firms such as Charles River Ventures which steered clear of the dot.coms and focused on companies such as Parametric. I sense that with a lot of overhang from uninvested funds, the region’s VCs are following two strategies: one, if you don’t know what to do, don’t do anything; and second, if you can’t spend what you have, don’t raise more.

The transition from an IT/software technology economy to the life sciences is the big regional story. Lifesciences startup salaries are the highest in the nation in New England, and where the talent goes, so goeth the dollars. Indeed, as the MoneyTree survey reports, the largest percentage of the third quarter funding activity went into the life sciences.

I’m writing from Gartner’s ITExpo Symposium in Orlando this week, here to follow the outsourcing/offshoring tracks to gather string for a book I am ghosting for a trio of Gartner analysts and consultants on the subject.

Gartner’s new CEO, Gene Hall, ex-CIO of Automatic Data Processing, McKinsey director, and general wunderkind was unveiled this morning as he introduced the keynote sessions. Hall gave an upbeat presentation to the assembled horde of CIOs and their direct reports, most provocatively telling them the winds of change that are messing up their best laid plans is not coming from the technology but from the consumer side, where insatiable appetites for innovation and device-independent delivery is having the greatest effect on their businesses.

The keynote presentation – by five Gartner analysts – was on software operating architectures – promulgating the view that IT strategy has to get in synch or ahead of business strategy or continue to lag and disappoint. With CIOs under heavy heat from the bottom line of their businesses (and many find themselves at the feet of a yet another c-level exec, the newly born IT CFO) after the spending binges brought on by Y2K terror and e-business conversions five years ago, they have to do something, and fast, to dispel the seminal Harvard Business Review article by Nicholas Carr that IT Doesn’t Matter.

The answer, according to the Gartner panel, is “agility”, to achieve some nimbleness in IT planning and execution by isolating business processes, sourcing them better, and having IT take off its white coat and leave the Big White Room to participate more in business strategy.

I think, given the shifts in IT theory these past few years – from IT as the basis of transformation, to IT as the “lights-on table stakes” for staying in business — that we’re in for a massive change in IT management and spending. Already more than half the $1.3 trillion annual spend is spent outside of the organization, and as more CEOs come back from their CEO confabs telling their leadership councils that “they have to outsource and offshore everything”, the acceleration out to external service providers will increase dramatically.

Give the offshoring issue another month and it will go away after the elections to be replaced by security and intellectual property preservation as the top issues in taking work offshore. Jobs and trade barriers always rise to the top of the shrill meter of political rhetoric during elections, but the substantive concerns going forward are going to be security and risk, not jobs.

More on sourcing theory and trends later.

In general, mood is upbeat, so I’ll presuppose that IT spending is loosening up for many in the crowd.

I’ll skip the Scott McNealy keynote and spend my afternoon grinding away on the book.