Small Business: TARP Failing

Small business customers are a key customer segment for many service and application providers, as they often are more willing to make faster decisions about new communication services and software.

To the extent that firm growth is a direct driver of software, hardware and communications activity, and given that up to 85 percent of new jobs are created by small businesses, perhaps somebody should be listening to them.

A survey conducted in February 2009 by online payroll service SurePayroll found that most small business owners feel the government should be taking a different approach to boost the economy during tough times.

Nearly three out of four small business owners disagree with the way the U.S. government has allocated funds in its Troubled Assets Relief Program (TARP), and believe tax cuts would be the ideal solution.

TARP was deemed effective by only three percent of respondents, while 72 percent were clear on their disapproval and 25 percent did not have a strong opinion.

BlackBerry App World Launches: Implications for Service Creation, Business Models Clear

Research In Motion has opened its new online application store, called BlackBerry App World, according to UPI. BlackBerry App World accepts PayPal for payments and starts prices at $2.99. That move might be an effort to screen apps for quality, something some believe is an issue for Apple's AppStore.

Price options also run up to $999, suggesting RIM will push high-end downloads through the store. To access the store, BlackBerry users will need to have a least a Version 4.2 operating system on their phones.

RIM appears to be negotiating back end revenue shares with vendors of applications that generate revenue through advertising or other means. It’s unclear what the share is, but language in developer contracts suggests that a revenue share is part of the model, Alec Saunders, Iotum CEO, notes.

The broad emergence of app stores, distributing or selling a wide variety of entertainment, utility or business apps, mostly Web related or data related rather than voice related, does raise some questions about the voice "service creation environment."

It is becoming possible to assemble apps rather than "create" them, using open and loosely-coupled processes. The problem would seem to be that "assembled" apps more nearly resemble the old "over-the-top" or loosely-coupled model rather than the high-availability, vertically-integrated model that has in the past been typical of voice applications.

There are obvious business model implications. Independent software developers and device manufacturers obviously participate in the revenue stream. It is less clear how access providers participate, and, if so, to what degree.

The longer-term implications are equally momentous. Up to this point the bulk of revenue has been generated by using "big iron" or "big code." And that might continue to be true for quite some time. Value, though, increasingly is realized by assembling new apps using building blocks essentially abstracted from the "big iron" or "big code" platforms.

That isn't to say that incremental "value" is equivalent to "revenue" in a linear way. Still, it is hard to see where the trajectory leads. To some extent, access, transport, computing, storage or basic features are--though not commodities--perhaps viewed as "table stakes." The new applications, though creating relatively small amounts of revenue, increasingly are viewed as the "secret sauce."

For service providers, there's a sort of inversion of value here. Most of the cost and even the value is provided by the basic infrastructure and connectivity. Yet the "sizzle" is coming from the new apps that represent little incremental revenue. The good news is that given enough sizzle, it will be easier to keep users using the "basic" features.

Broadband Stimulus Meeting in Washington March 10

The National Telecommunications & Information Administration is holding a meeting March 10, 2009 in Washington, D.C. on the "broadband stimulus" provisions of the "stimulus" bill. Click "related article" for details.

Separately, Mark Seifert, formerly with the Federal Communications Commission, has been tapped to head up the policy side of the NTIA's allocation of broadband stimulus grant and loan money. Bernadette McGuire-Rivera will be handling administrative duties.

Representatives of the NTIA, the FCC and the Ag Department's Rural Utilities Service are meeting next week to talk about how to hand out $7 billion-plus set aside in the Obama administration's economic stimulus package to provide Internet to un-served and underserved areas.

VMWare Cloud Computing Initiative

VMware has released its new Virtual Data Center Operating System (VDC-OS), software that creates an on-demand computing capability integrating computers, storage devices, and networking equipment.

"Virtualization," the ability to partition storage so more apps can  be run on fewer servers, used to be a topic computing staffs and storage suppliers were interested in. These days, it is beginning to be interesting on a wider scale, to more enterprises, developers, content, software and service providers because of the way whole computing infrastructures now are capable of "virtualization."

The software, due later in 2009, reflects VMware's push into cloud computing, essentially a virtualized data center. By making the leap, VMware joins Microsoft, Google and Amazon.com as providers of cloud computing infrastructure. 

The world's next generation of software may well hinge, in large part, on use of cloud-based computing, especially for high-volume Web-based applications. 

Hal Varian: Data is Cheap, Ubiquitous, So Value Lies in Meaning

More than ten years into the widespread business adoption of the Web, some still fail to grasp the economic implications of cheap, ubiquitous information and communications and modular, open software. But executives are learning fast precisely what the implications are.  

Inside enterprises, ubiquitous information is reshaping and flattening organizational structures. In the broader economy, retailing and distribution processes are transforming. 

The impact is perhaps nowhere more startling than in print media, music and pre-recorded video, where value is so much altered that some distribution channels are being destroyed, others merely reshaped. 

For communications providers the changes are less direct, if no less challenging. Value and revenue now are shifting inexorably towards "data" experiences rather than simple "voice." But data experiences are precisely where loosely-coupled software, hardware and communications change value contributions so much. 

In a broad sense, the global telecom industry is going to have to learn to do what others are being forced to do: assume an environment of cheap, ubiquitous "things" and learn to create value by extracting meaning and usefulness out of those ubiquitous things. 

Global Telecom Dip in 2009 to Reverse in 2010, Climb for 4 Years

Analyst Simon Sherrington says global telecom capex is set to decline by about 0.7 percent in 2009 to around $297 billion, with steeper declines in mature markets such as the United States and Western Europe offset by investments in growth markets such as China and India, and regions such as Africa and the Middle East.

But the contraction should be short-lived. Sherrington forecasts an increase in global spending in 2010 and in the following three years, with the global capex total hitting $350 billion in 2012.

By the Time the Broadband $ is Spent, It Won't be "Stimulus"

For all of the interest companies now are showing in the $7.2 billion broadband access spending that is supposed to happen as part of the "stimulus" package, it is possible the only people who will "get" any incremental money any time soon are lawyers and consultants who claim they can help clients get some of the money.

A large percentage of the money for broadband in the stimulus package won't be spent until 2011 or later, says Jeffrey Eisenach, chairman and managing partner of Empiris, an economic consulting firm. The money, split between the U.S. National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) of the U.S. Department of Agriculture, will go out in the form of grants, and neither agency is currently set up to allocate billions of dollars, he says.

"In 2014, you're not going to need stimulus in this economy," says Robert Atkinson, president of the Information Technology and Innovation Foundation, a tech-focused think tank. "There's a sort of half-life for stimulus spending."