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Commentary on The Capital Markets- Category [Technology]

An interesting case is being heard in the Supreme Court regarding the start-up "Aereo."

For those who are unaware of them they put up thousands of dime-sized antennas that can receive broadcast television stations.  You rent one of the antennas and the electronics necessary to turn the signal it receives into a digital stream that you can watch from anywhere.

Broadcasters and content providers sued them, arguing copyright infringement.

Uh, not so fast Kemosabe which is why this is at the US Supreme Court.

A broadcaster uses public airwaves and in exchange for their license to use a limited and public resource they are required to broadcast using specific standards and methods.  Note that this does not necessarily preclude using encryption; that depends on the specifics of the license.  For example, on HAM Radio bands (I'm a licensed HAM) it is illegal to use any form of code; your transmissions must not only meet certain technical requirements so as to avoid interference with other users on different frequencies but you must also use plain language with the only exception being for commonly-known shorthands (e.g. "CQ", "73", etc.)  On parts of the band where "digital" emissions are permitted you have to use a documented and publicly-known encoding so anyone who cares to can decode and understand your transmission (you can find me, W3KSD, lurking around on PSK31 once in a while; it's an interesting technology.)  But over-the-air encrypted signals are not new; when I was growing up we had a TV station that during the daytime broadcast an open and clear signal but at night it shifted to an encrypted one that required a box to decode and view.  In addition there are a number of other commercial bands for various radio services (think WiFi for just one example) where encryption is perfectly legal.

The problem the broadcasters have is that there is not "copying and redistribution" happening in the traditional sense.  It's legal to use a DVR on an over-the-air signal you receive as well as to use something like a Slingbox to watch the signal somewhere other than at your house; what the broadcasters are effectively trying to argue is that these devices are unlawful!

IMHO they should fail in that argument and thus their complaint against Aereo fails.  If I can do a thing legally then I can by extension pay an agent to assist me in doing the same thing; that's one of the fundamental realities of freedom and commerce whether the broadcasters like it or not.

It will be interesting to see how this case is decided and the logical path taken to that resolution; I'm especially interested in whether the Supremes torture the English language once again in trying to craft a contrived response.

IMHO the decision on this case is simple -- the underlying conduct, that of receiving an unencrypted broadcast in a given market -- is lawful and in fact exactly what was contemplated by both the broadcaster and the terms of their license to use the spectrum they occupy.

The fact that I pay an agent to install an antenna for me (by leasing same) for my singular, exclusive use during a given period of time doesn't change the essence of the underlying and lawful act.

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Nike is allegedly ditching wearable computing.

Yeah, and?

Look folks -- for those who are kinda serious about their exercise you might buy a GPS-integrated watch that tracks things and interfaces with a computer.  

Or you might buy something else like a "fitbit" or similar.

Then there's "Google Glass" and similar.

But here's the problem, in the main: What I need isn't what you need, and the "mass market" stuff is both intrusive and trashy.

Let me explain.

I have a Garmin GPS watch.  It's great for what it is; it handles my running and bicycling, with modes for each, and a heart-rate strap that I wear for training (but not for races.)  I like it.

But -- it's totally inadequate if you do triathlons because it's both questionable in terms of being waterproof and it doesn't have a swim mode that makes sense.  Oops.

Garmin makes a triathlon-suitable model.  It's $500.  What the hell do I need that for since I don't do triathlons?

Then there's the "fitbit" and similar things.  They're fads.  Oh sure, they'll tell you how many steps you took or whatever.  So what?  How does this enhance your life?  Nevermind that for a GPS watch you can use your phone; it has a GPS in it, you know, and there are apps for that.  Oh, and did I mention that your phone also plays music, right, and you don't want to listen to music while you run, do you?  Oh, you do?  Well gee, why would you buy and wear another gadget when you already have a perfectly-suitable one?

See, this is the problem in the end -- it's the "me me me mine mine more more more more more" Madison Avenue crap, but there's no utility behind it that isn't already done at least as well if not better by what you already own.  

IMHO that means this "category" is ultimately a zero.

Now think Google Glass. Come into my office or house with that **** on and you'll be marching right back out the door.  Really?  You are going to come into my house with a little computer that can be (and might be) surreptitiously videotaping everything going on and tagging everyone there?

I think not.

So where can you use this crap?  In public?  Maybe, maybe no.  On a public street, sure.  But how many bars, restaurants, movie theaters and businesses will let you in the door?  Zero is my guess, and certainly if I'm a patron and I see you with that crap on I'm going to ask management whether they want your money or mine, because one of us is leaving.

You guys betting on this nonsense better be living in Colorado because what you're smoking is illegal pretty much everywhere else.

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It's over folks.

Samsung quite-clearly has soft sales on their new GS-5.  How do I know?  Because Verizon is giving away one with a purchase (on contract.)  That is, "buy one, get one."  That's unprecedented for a new flagship device.

Apple has seen soft demand as well against their expectations.

And now there are rumors that Amazon wants "in" that market.  Oh yeah, that'll work out well.  Facebook's venture into phones anyone?

If you have an angle -- something unique -- then you might be able to make it stick.  But in the main handsets are a commodity, and one that is now going to undergo rapid depreciation in price as everyone races toward the bottom of the margin barrel.

This same process happened with personal computers, and indeed it eventually happens with all technology.  You start with an "exclusive" on something "new", but eventually the "panache" fades with the teens, the tweenies and twenty-somethings waving around their latest bling, leaving you with a business that becomes increasingly cut-throat.

T-Mobile is in trouble in this regard too.  Many look at their recent "hidden" $200 offer to upgrade people out of BlackBerry handsets and into Samsung's 5 as yet another attack on BlackBerry.  Nope.  It's yet more evidence of soft demand; why would you otherwise double the previous offer on the newest "hot" device?  Note too that his offer is not open-ended either; it only applies to people on contracted plans who are still "upgrade eligible", which tells me quite a lot about motivation.  Someone fears being stuck with a lot of high-priced "zero day" launch inventory, and that inventory doesn't say "BlackBerry" on its face.

T-Mobile's petulant child Lagere is headed for some fun of the difficult sort.  He may think that there's something magical about the size of his manhood, matched only by the volume of his mouth, but he's wrong.  The simple fact is that he's trying to play margin games in a business where service quality has deteriorated to the point that people will accept cheap but not cheap and crappy.  Oh sure, the "underdog" and "scrappy gamester" motif looks good up front, but under the covers T-Mobile is actually raising prices and cutting feature set as their customer acquisition strategy "at all costs" hasn't done a thing for the red ink they're generating.  That's bad, by the way.

One of the bigger problems with US carriers is the lack of interoperability of hardware and the tying arrangements that result -- and that is bad for customers.  We put up with it in the US pretty much because we have to; it's been the legacy of the business in this nation.  That doesn't mean it makes sense; it simply means that monopoly behavior going back to the "A" and "B" carriers in the AMPS world has been the order of the day for so long that there literally was never a different model here in the US.

Legere is trying to claim he's "different" but that's horsecrap; all he is really doing is trying to buy share in a mature market by raiding other people.  Unfortunately he's up against the same reality as is everyone else -- hardware has transitioned to a commodity business, service expansion is expensive and trying to drive sales through various gimmicks and raids on other players (along with petulant displays of hubris) is all you have left in a market where everyone over the age of 10 already has a cellphone.

Add to this the "must make the quarter" Wall Street focus and you have a recipe for much hilarity in the upcoming months and years.  While AT&T and Verizon have sort of "responded" the key here is "sort of"; neither has mounted a clean response as of yet but you can bet they will, and when they do Lagere is going to look like the mouse that tried to roar but the sound you heard was the squeak of being crushed underfoot.  The market seems to sense this is coming too; after a clean double from the spin-off IPO last year the firm's stock is down over 10% thus far in 2014.

The problem, in the end, is that you need profits in business and I've yet to see a concise plan for how Lagere intends to achieve those aims.

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This is really getting annoying....

This morning the stories are coming fast-n-furious on ATMs running Windows XP -- which most of them do.  My first reaction to this is: So what?

Look folks, I don't have inside information on how these things are networked to the bank systems, but I do know how they should be.  An ATM is just a terminal, really, and it should have a dedicated line connected to exactly one place -- the bank's internal computer network.

That dedicated line should be running with end-to-end encryption.  The other end of that circuit is on an internal network with no outside access.

Unless banks have done something criminally stupid in how they configure these networks it makes utterly no difference what operating system they use since there is no way to get to the protocol or the device's storage except through physical access to the unit itself or after breaking into the bank's internal network!

If you've done either of the latter the last thing the bank is worried about is the ATM's software.  If you break into the physical ATM hardware you simply steal the cassette loaded with money and extract the cash at your leisure.  Your risk of getting caught doing that is exactly the same as your risk of getting caught tampering with the code.

If you break into the bank's internal network then the bank has a lot bigger problems than malware on an ATM; the potential for the bank's entire transaction flow to be intercepted and tampered with exists.

It's very different for a machine connected to the Internet at large that happens to have the ability for random people to access it, or where random outbound connections can be made from it to arbitrary sites and destinations.  Then you have a whole litany of things to worry about, as every bit of software involved in that process has to be "clean" against the possibility of malware attacks, with the most-insidious being buffer overflows and other carefully-crafted means of causing the software to do something unintended, especially any part of it that runs with privileges and thus can overwrite the operating system or otherwise tamper with it.

Any bank that has ATMs configured with unrestricted Internet connectivity in today's world deserves to be shut down instantly with its executives and IT "professionals" taken out back and skinned alive.  The only possible reason to do such a stupid thing is an attempt to save a tiny bit of money on dedicated connectivity of some form, and given the tiny amount of traffic involved in verifying an ATM transaction this sort of mistake is just plain dumb.  Since the device itself is really nothing more than a terminal there is no reason for anything to be present on the machine other than what is required to perform that function and there is also no reason for the media on which it is stored to be writable!

It would not shock me to find that somewhere, someone has done something stupid enough where there are risks involved here, but the risk isn't in using a version of an operating system that no longer has virus and malware patches available.

The risk is that the firms involved employed so-called "professionals" that have rocks in their head.

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