For some time, an Australian Company Perceptric Pty. Ltd., has been researching the damage to content provider revenues from illegal file sharing activities.

 

Empirically we can find no conclusive evidence that file sharing damages the income stream for copyright owners, in fact, quite the reverse.

 

We have found definitive statistics that show the distribution of popular music in fact preempts the charts in several countries and therefore P2P should be considered as a distribution and broadcasting medium comparable to online radio stations, cable TV channels and popular entertainment venues.

Essentially, our findings are that P2P is assisting music distribution in an environment where consumers are disengaging daily from traditional broadcast promotional media like radio, in favour of personal digital playback devices.

 

Our research into Internet traffic modeling of P2P content would indicate that there is another aspect to the damage of file sharing causes that has not yet been addressed by the courts or recognised as an issue by our legislators.

 

That is, the damage to the usability of the Internet by non-P2P illegal file sharing (IFS) activities. (Qualified because there are significant quantities of P2P activities that do not infringe any copyrights.)

 

In some countries, nearly 75% of the network traffic consists of P2P (IFS) activity.

This clearly interferes with other user’s enjoyment and benefit that can be obtained from a network that is rather busy serving specific content.

 

The Content Industry has obviously attempted to avert this occurrence by instigating various rigorous forms of DRM. To no avail.

 

A real world example of the magnitude of the problem can be more readily understood by the use of an analogy.

 

The Overturned Chemical Truck.

A truck on a major arterial highway turns a corner sharply and a tank containing highly corrosive HCL is dislodged from the truck. Its corrosive and dangerous acidic content is spilt all over the highway. The hydrochloric acid reacts with the benzoic elements of the bitumen and starts to emit noxious fumes.

 

Lives are at risk and the highway is closed, traffic is diverted involving manpower, with alerts distributed via Television and Radio.

.

The only road around the accident is a disused goat-track that only all terrain vehicles and motorcycles can negotiate.

The only alternative is to drive back 200 kilometers to the alternative route.

 

The fiscal loss to the community is severe and because of the negligence of the tanker driver in ensuring his load was secure, the trucking firm’s insurance company is presented with a bill in the tens of thousands.

 

The Music Industry Gaff

The music industry by it’s failure to correctly secure their load (DRM) have allowed all this content to saturate the network and thereby slow down the rest of us.

 

To add insult to injury, they then ensure that their failure is magnified several thousand times by adding corrupt files to the network – thereby ensuring a further slow-down for the rest of us, due to unavailable resources that are utilized buy illegal file sharers having to download the file a few times to get the right copy.

 

Additionally, the interdiction companies hired by the industry then send empty packets at addresses that have Torrent or ED2K clients active. Whether they are being utilized for illegal file sharing or not.

 

This is referred to as Denial of Service (DoS)

 

In a recent case in the UK, the Appeals court found against an individual that was “spamming” his former employer, apparently maliciously.

 

The judge referred to section 3(1) of the United Kingdom Computer Misuse Act 1990.

 

  The relevant parts of section 3 provide:

"(1) A person is guilty of an offence if—

(a) he does any act which causes an unauthorised modification of the contents of any computer; and

(b) at the time when he does the act he has the requisite intent and the requisite knowledge.

(2) For the purposes of subsection (1)(b) above the requisite intent is an intent to cause a modification of the contents of any computer and by so doing—

(a) to impair the operation of any computer;

(b) to prevent or hinder access to any program or data held in any computer; or

(c) to impair the operation of any such program or the reliability of any such data.

(3) The intent need not be directed at—

(a) any particular computer;

(b) any particular program or data or a program or data of any particular kind; or

(c) any particular modification or a modification of any particular kind.

(4) For the purposes of subsection (1)(b) above the requisite knowledge is knowledge that any modification he intends to cause is unauthorised.

(5) It is immaterial for the purposes of this section whether an unauthorised modification or any intended effect of it of a kind mentioned in subsection (2) above is, or is intended to be, permanent or merely temporary."

  It is also necessary to refer to the interpretation provisions of section 17. Subsections (7) and (8) are relevant. They provide:

"(7) A modification of the contents of any computer takes place if, by the operation of any function of the computer concerned or any other computer—

(a) any program or data held in the computer concerned is altered or erased; or

(b) any program or data is added to its contents;

and any act which contributes towards causing such a modification shall be regarded as causing it.

(8) Such a modification is unauthorised if—

(a) the person whose act causes it is not himself entitled to determine whether the modification should be made; and

(b) he does not have consent to the modification from any person who is so entitled."

 

(Bold highlighting my edit)

 

And from the judgement:

 

  It was submitted before the District Judge on behalf of the prosecution that a computer owner consents only to the receipt of emails from those wanting to make a bona fide communication with him. So here D&G did not consent to receiving emails in the number and in the circumstances which Mr Lennon sent them. It was secondly submitted that the emails Mr Lennon sent were unauthorised from the moment that he clicked on the send button. This was to meet an argument made on behalf of Mr Lennon that, if it was the number which were sent that made their sending unauthorised, the first emails were authorised and thereafter it was not possible to draw a line. Thirdly and alternatively, it was submitted that, as the number of emails built up, a point would have been reached when their sending became unauthorised. Fourthly, it was submitted that as all the emails came from a person other than the purported sender they were unauthorised.

  The District Judge's opinion stated in the case can be summarised as follows:

(1) section 3 was intended to deal with the sending of malicious material such as viruses, worms and Trojan horses which corrupt or change data, but not the sending of emails;

(2) as D&G's servers were configured to receive emails, each modification occurring on the receipt of an email sent by Mr Lennon was unauthorised.

  The issue this court has to consider is whether the addition to the data on D&G's servers arising from the receipt of emails sent by Mr Lennon was unauthorised. Section 17(8) is the relevant provision. Mr Lennon was not the person who was entitled to determine whether the "modification" arising from such receipt should be made. That refers to the person who controls the email address, that is the receiving computer, who will normally be the owner. So section 17(8)(a) is satisfied. The question is then whether Mr Lennon had "consent to the modification from any person who [was] so entitled" - section 17(8)(b).

 

In other words, anyone sending any data to your computer without your permission is guilty of an offence under English law.

 

In Australia, we have the Computer trespass contrary to section 9A of the Summary Offences Act 1966.

 

In the USA, unfortunately the Government appears to condone this activity with previously proposed legislation, which of course received the pushback from the Internet community that it deserved.

 

Either way, the actions of the music interdiction policies are stealing the bandwidth from all users of the internet that utilize certain service ports for any activity, legal or otherwise.

 

As the bandwidth is shared via the ISP’s router, these same interdictions are affecting the entire operations of the ISP and in fact, every user thereto connected.

 

Are You Affected?

Everyone is, if you have a router and it logs all incoming packets, then it may have entries in it that look like this:

 

TCP Packet-Source:212.68.64.111,3691 Destination:121.44.211.10,8088-[DOS]

 

Which, in the above example come from a company in Germany.

Or perhaps like this:

 

Sat, 2009-06-13 14:50:26 - UDP Packet - Source:89.166.37.185,39244

Destination:118.208.132.16,33515 - [DOS]

Sat, 2009-06-13 14:50:26 - UDP Packet - Source:89.166.37.185,33130

Destination:118.208.132.16,33516 - [DOS]

Sat, 2009-06-13 14:50:26 - UDP Packet - Source:89.166.37.185,60518

Destination:118.208.132.16,33517 - [DOS]

Sat, 2009-06-13 14:50:26 - UDP Packet - Source:89.166.37.185,44514

Destination:118.208.132.16,33518 - [DOS]

Sat, 2009-06-13 14:50:26 - UDP Packet - Source:89.166.37.185,59010

Destination:118.208.132.16,33519 - [DOS]

Sat, 2009-06-13 16:11:25 - UDP Packet - Source:89.166.37.185,49829

Destination:118.208.132.16,33502 - [DOS]

Sat, 2009-06-13 16:11:26 - UDP Packet - Source:89.166.37.185,54566

Destination:118.208.132.16,33503 - [DOS]

Sat, 2009-06-13 16:11:26 - UDP Packet - Source:89.166.37.185,33646

Destination:118.208.132.16,33504 - [DOS]

Sat, 2009-06-13 16:11:26 - UDP Packet - Source:89.166.37.185,44101

Destination:118.208.132.16,33505 - [DOS]

Sat, 2009-06-13 16:11:26 - UDP Packet - Source:89.166.37.185,46183

Destination:118.208.132.16,33506 - [DOS]

 

Checking ports to see if your computer responds to a request on a port that some programs use for P2P.

 

Which, originated from an address in Finland.

Click on Gif file to obtain Ripe Results.

 

(That entry comes from the computer of a woman that has never used file sharing software but is connected via DSL.)

 

Each one of those packets is stealing your bandwidth – whether you use P2P or not.

There is at this time no easy methodology to collect the statistics on this global denial of service attack on all internet users by the Content Industry, but if the few statistics that I have collected from less than 10 PC’s are accurate, then approximately 8-20% of an individuals bandwidth is being “stolen” by these denial of service activities.

 

Anecdotally, at $40.00 per month for a 20 GB DSL connection, that could be as much as $8.00 per month per internet subscriber.

 

Multiplied by 1.8 billion internet users, equals $144,000,000,000 per month. Annually, that comes to $1,728,000,000,000 or about twice the GDP of Australia.

 

This activity is a severe impediment to the worlds Internet commerce based economic aspirations and if our Governments approve this activity, they should at least force a hiatus for the duration of the Global Financial Crisis.

 

For one industry to cause so much damage on the presumption of unproven claims about losing a few million dollars (less than a billion per annum) with the consent of Governments is nothing short of digital and financial genocide.

 

If any other person attempted a DoS attack on this scale against USA IP numbers, the US government would immediately declare it an act of Cyberwar.

 

Regardless. This type of stupidity may be legalised in the USA, but there is absolutely no corresponding legislation outside of the United States to permit this kind of deliberate larceny affecting hundreds of millions of non-file sharing internet users.

 

Someone needs to let our politicians know and/or sue the industry for breaking the law in Australia and attempting to destroy the internet for everyone.

 

Caselaw:  Director of Public Prosecutions v Lennon [2006] EWHC 1201 (Admin) (11 May 2006)

I grew up with a fascination for the Pop Charts.

I loved to see whether the records that I liked would go to #1. I used to watch Top Of The Pops on TV in London during the early days of TV when the pictures were still in Black and White when Pirate radio was about rebellion and the record companies loved the Pirates because that was the way that new music got noticed.

When I got into the music business, in Australia, the thing that I wanted to do more than anything, was to get a #1 record. And once I had done that, I wanted more…

Now, 35 years after having my first #1, I imagine that kids are still fascinated by the charts, whether they are consumers of music, or whether they have a band, or whether they work in the business. Getting a #1 is pure adrenaline.

But the weekly chart is about weekly sales. What might be  interesting would be to look at cumulative numbers.

What sort of insights can be derived from looking at the total downloads of a song over long or even short periods of time? What would the chart look like if, for instance, you measured the sales, or the downloads, over a day – or a month – or a year instead of a week. Would that tell you anything different about the popularity of a certain kind of music?

I ask this question, because I am no longer a big fan of the music that dominates the pop charts, even though I still love to listen to music, and I still buy CD’s. And there are a lot of people that I know who seem to buy the same music that I do. But I rarely am aware of it going onto the charts.

Take for instance the albums released by composer/orchestrator, Paul Schwartz. They are productized under the name “Aria” and are all based on contemporary arrangements of classical operatic pieces. They are really excellent. And I am certain that they have a big following, just as the Buddha Bar series of albums has done phenomenally well.

Since I am a baby boomer, and I still buy music, along with a lot of other baby boomers, and since there are more of us than any other demographic, I wonder why the charts aren’t dominated by artists and music that we like. I suspect that there is one significant reason: We tend to make purchases over a longer period of time than teen audiences. So our buying power has length but perhaps not breadth. If you looked at sales over a longer period than a week, you might start to see a whole different picture of what is popular.

The download marketplace may be one place where a more robust picture of popularity can be easily constructed, even though the demography then becomes an issue...

Wouldn’t that be of interest to concert promoters, or to brand managers, or to radio programmers? To look at the historic download profile of an act before confirming a tour… And even better, to be able to isolate the geographic areas where the most downloads of an artist took place before booking the venues for a tour, or before confirming an ad campaign on TV…  To be able to see that an unusual ambient record has a bigger audience that the hot new artist that is all over the airwaves....

Understanding marketplaces is not about the weekly numbers, just as corporate health is not about the quarterly results. It is about being able to look at sustainability of numbers and growth over time.

This is the information that we don't see in the weekly chart.

Consumer incredibelus first appeared in the USA circa 1950's and managed to rapidly propogate it's commonly heard cry of hunger “I want, I need AND I’m stacked with plastic” (credit cards not “plastique”, C4) throughout the rest of the US satellite states.

 

Australia through its Trade Treaties has become one of those satellite states by default. We are used to the concept of satelite states and often joke about New Zealand (our closest geographical trading partner) being our seventh state.

 

There is another homily that is oft joked about; If you loan a gypsy $50.00 bucks, you have a problem, in which case you would do well to pass on the risk of the Gypsy by borrowing  fifty million, then the lender has the problem of both you and the Gypsy.

 

In the US this neat little trick has been achieved since 1987 by the issuance of discounted long bonds.

 

In 2001 I noticed that US long bonds (TIPS) were being offered at a 15% discount.

Anyone with an NPV button on their calculator can very quickly see that a five year bond paying fixed rates at 7% on a 15% discount in a 3.15% PA CPI environment is financial suicide for the issuer.

I wondered why the US had to depreciate the future value of their currency in this manner.

Some would call it whoring. I would call it, selling your mother, wife, mistress and daughters at the local market to enable you to play the pokies on Friday night.

 

Pokies are fun, but who’s going to wash the dishes on Saturday?????

 

The concept of selling ones own currency short for a specific period, to assist in a large export negotiation is not a new meme. The mechanism has been used for hundreds of years (since the UK Wool Board).

 

In 2002 I noticed the discount increased and continued to, yearly, without respite till 2007. Every year the Government issued investment bonds were offered at a higher discount than the previous year.  But it’s OK said the bankers, were secured against this policy flying south with the ducks, we have home mortgage paper to offset the shortfall.

And we had Yen.

 

The Japanese Postal Bank stopped paying interest to their account holders about the same time the US brokers started short selling their own US Dollar.

 

Every financier worth his salt was suddenly borrowing billions of Yen at .005% interest and re-lending at higher margins.

 

Where did the money get lent to? The Home mortgage market which needed a way to offload even more “loan funds”.

 

Let me put it this way, if you had four credit cards and only used one of them to purchase goods with, reserving the other three to make the credit card payments when they fell due, how long would it be do you think before you considered seriously the concept of  personal bankruptcy.

 

Fortunately for the Bankruptcy register, not many people do that. They only use their credit cards to pay for important items like GST and the banks, being oh so accommodating have introduced the home loan draw down option.

 

“That’s OK Mrs. Smith, of course you can have a new kitchen with the Italian marble hand hewn tiles. We’ll just add it to your mortgage. You’ll hardly notice the difference in repayments, - look, see I just worked it out on the calculator, over 40 years it’s only eighteen dollars per month on your current (low fixed rate for the first three years) home repayments”.

 

Mrs. Smith unfortunately didn’t realise that the interest rates increasing by 1% would add $3486 in interest payments alone for her $8640 kitchen.

 

Hah! You say, “consumers arnt that dumb”!

 

Oh no?

 

Well if consumers can work that out – then how come the world couldn’t.

 

How come the world couldn’t work out that the worlds largest capitalist economy was writing an interest cheque on it’s own future that the world would eventually have to make good through holding a pile of paper on a currency that has depreciated to lees than half of it’s 1999 purchasing power parity value.

 

Make no mistake.

 

ACTA, is not about protecting intellectual property. ACTA is about ensuring that the cheque for interest will never have to be cashed.

 

Think Ponzy scheme.

Think Pyramid selling

 

Now think US Government.

 

President Obama inherited a flock of sheep that have no wool; the American people having been fleeced by previous generations of Presidents paying lip service to money hungry industrialists with ever deepening pockets

 

Any economist will tell you that in times of financial strife, the country just needs a good war to pull it out of the doldrums. .

 

But it doesn’t matter, Americans are used to going to war. We’ve had the war against the Nazis, the war against the communists, the war against terrorists. I guess the only war left to wage is the war against the people.

 

Err, by the way, in case there’s any doubt, that’s you and me.

 

Sarbannes Oxley ? Ha! What a joke.

 

I want to know what protects you and I from Politicians continuing to run legal Ponzi schemes with your money. Yes – your taxes today and lack of jobs tomorrow – your money.

 

Think about it.

Talk about it.

Blog about it.

Twitter it.

Digg it.

 

OK OK – for the older readers out there, that actually still remember what a newspaper is, - if it makes you feel better, write a letter to the editor……..

 

Or if you just have a few minutes and cant be bothered with writing long political rants to all your friends, then just go out and vote for the Pirate Party.

Well you might as well, at least their lack of a wide ranging policy manifesto may well mean that they are the only Political Party in the World that doesn’t have a “VE VILL CONTROL ZE VORLD AND ALL ZE MONEY, nya hah haaaaaa” mentality.

Parting Shot.

 

Oh yeah – market tip #2. Any minute and down fast.

My last market tip was the same prediction for the fifth of May. I got it wrong. I’m not a licensed investment advisor, so you should probably ignore me.

People keep comparing the current global recession to the one in the 1930's. And in some respects that is quite reasonable. But there is one absolutely mind-boggling difference.

This time anyone in the world can find out in seconds news that can shape his or her ability to avoid the storm. We do this as a result of the Internet. A lot of what is written in blogs is written as commentary on stories published first in traditional media that also happens to be online. But then a lot of what is written in the newspapers (physical and online) first appears in TV news.

One of the things that is fascinating in the current global financial crisis is the amount of information, that has NOT been published previously, that comments on the economy. Most of it is about the US economy, but that is fair enough too. After all the US has been the global engine of manufacturing for years and then consumption, as the Chinese became the manufacturing giant that it is.

Along the line the Chinese became major holders of US treasury paper. That is they became the lenders to the US, figuring quite reasonably, that the more the US had money to spend, the more it would purchase goods made in China, and that would drive growth. It worked for a long time. Of course now the Chinese are wondering what to do with a bunch of paper that may turn out to be worthless. Chinese economists are apparently saying that this strategy is "risky".


Meanwhile in the West, we have Time Warner joining the clamour started by Rupert Murdoch, to charge for access to online content. They apparently don't get it. The more they move to institute charges, the faster people online will move to share the content freely. You don't need to pay to get anything online. That is the whole google model. The advertiser pays for getting a qualified lead that is superior to the kind of shotgun approach to advertising that old media delivered.

And what does this have to do with China?

China has a different view to copyright than that which exists in the west. The west may have gotten the Chinese to agree to some things that relate to respecting intellectual property. But just as with macro economics, the Chinese do things their own way.

We would do well to understand the rules that they have set for the game, rather than trying to instruct them with a set of rules that favour a corporate structure that dates from the 19th century. As western content companies struggle to deal with the way that information leaks and flows (including movies, trade secrets, music, documents etc) they would do well to consider that the only way that they can actually survive is to become a lot more Chinese in the way that they think...

For as long as the Internet has been with us there has been a view that porn is what drives growth.

Now that concept has actually been with us since the time of the invention of the printing press. Back then of course, there were essentially two business models for content, or three depending on your point of view. There was the the business of printing bibles, which Gutenberg is famous for, and then there is the business of printing porn, which no one talks about, but which made the Marquis de Sade famous. And then there was the business of printing political tracts and leaflets, which of course was the reason that the Statute of Queen Anne was legislated and which brought in the whole concept of copyright. ( By bringing into play the Statute of Queen Anne and the era of copyright, printers could be rewarded for supporting the policies of the king).

In recent times people have talked about how porn drives the growth of the Internet. And for a while there is probably little doubt that it did.

But in recent years porn hasn't been cutting it in the growth stakes.

What has been happening is that the growth of the Internet has been driven by P2P.

Now that presents quite an interesting quandary for legislators all round the world. On the one hand you have the copyright industry driving huge revenues that largely travel to the US. On the other hand you have even bigger revenues from the sale of computer hardware and infrastructure that are also largely flowing towards the US.

If the copyright industry wins and P2P file sharing is impeded or stopped, what happens next? Answer: People stop downloading movies, music and other content. And then they don't need the newest processor in their computer to maximise speeds of file conversion; they don't need the maximum speed connection for their downloads. In fact they don't need a lot of stuff that currently they think they need.

And so they stop spending.

Now the problem with this model is that the US economy is down the toilet anyway. Consumer confidence is shattered and not shaken. And if you add the concept that you really will be sued into oblivion (beyond that which is currently taking place anyway) you create yet another blow to the little confidence that there is currently.

So it becomes obvious, surely. P2P has to remain in place, but the US government will have to go through the motions of pretenting that they are concerned and will try to stop it. It is the same situation as that of grass in California: the 500 pond elephant in the room is the fact that the biggest cash crop in California is grass. The problem is that to legalize it they have to convince a huge amount of uptight conservatives that the stories that they have been spreading for years about drugs are actually untrue.

This then is the quandary that lawmakers and politicians face with regard to P2P: The more they demonize it, the more it will come back and bite them on the bum.

The truth is that the P2P is making the Internet industry and the Computer industry go round. Kill it and the economy goes from critical to stone dead. Not a good look.

We have all heard the following mantra.....

 

Don’t download movies using P2P.

Om Mani Padme Hum.....

Downloading is a crime

Om Mani Padme Hum.....

Stealing movies is a crime

Om Mani Padme Hum.......

Stealing Music is a crime

omph........

 

But is it? Or do P2P activities in Australia represent 5% of the country’s GDP.

 

Lets first see where you, our reader fits into the picture..

 

Are you an Ipod owner?

Do you have an MP3 player?

Do you have a computer?

Are you connected to the Internet?

Do you have a smartphone with x GB storage for movies and music?

Do you have a CD-burner in your computer?

Is your phone connected to the Internet?

 

If you answered yes to more than three of the above, then you have probably at some time or other downloaded copyrighted content that you have not paid for and/or copied that content ontop a device, a CD-ROM, DVD or Ipod illegally, making you by default,

A) A Pirate

B) A Criminal

But we here at Perceptric, being not quite so judgemental of your actions actually think that congratulations are in order.

You are now (by your own admission) officially part of the 57% of Australians that utilize 87% of the internet infrastructure and bandwidth in this country to download music, movies and other items without paying for it.

 

So if 57% of Australians download files, how does that help the economy?

 

Well, let’s look at it another way.

 

Population:	22,000,000
		Per Unit	% pr/yr	Number of	Total $
Infrastructure	A	98,000,000,000	0.21%	98,000,000,000	20,580,000,000
Maintenance	B	209,860,000	1	209,860,000	209,860,000
Wages/Paye	C	5,000,000,000	1	5,000,000,000	5,000,000,000
Computer	D	1,000.00	33%	11000000	3,630,000,000
Laptop	E	1,500.00	66%	4400000	4,356,000,000
Router	F	69.00	33%	3300000	75,141,000
Wifi	G	180.00	33%	3300000	196,020,000
Sat Dish	H	420.00	33%	110000	15,246,000
Modem	I	90.00	20%	11880000	213,840,000
Cellphone	J	550.00	66%	22,000,000	7,986,000,000
Retail Use Plan Home	K	39.95	100%	5,500,000	2,636,700,000
Retail Phone Data Use	L	18.00	24%	9680000	501,811,200
Wholesale Billing	M	12.00	100%	5,500,000	792,000,000
					45,400,618,200
GST	(GST not calculated on "A" and "B")				2,061,261,820
Total Value of P2P	(At 80% of Network and CPE value)				$37,969,504,016

 

In other words, in Australia P2P is worth more than the entire combined revenue base of the member companies of the various industry bodies trying to stop P2P. (i.e.: EMI, Warner, MGM, Sony)

Now multiple those figures by the population of the rest of the world and you have an industry globally that adds up to

$10,355,319,277,091. .

Putting it simply, worldwide, P2P is worth three times the value of the Global Financial Crisis - but in a good way. That means that technology that started because of the ubiquity of content has now outstripped the value of that content, and replaced it with something far more valuable.

The sound of Government cash registers ringing.

Basically, taxable revenue - yes I did say TAXABLE, dollars that your government obtains revenue from - unlike Movies and Music and overseas made TV shows.

 

Notes:

Assumptions.

The cost of the telecommunications infrastructure in Australia is “A”

The cost of maintaining that infrastructure is “B”

That infrastructure generates “C” in wages, PAYE tax and individual taxation.

 

To utilize that infrastructure you require termination CPE (Customer Premises Equipment).

CPE includes, Telephone handsets, Modems (dial-up/ADSL), Nat routers, satellite dishes, WiFi devices. Items “F” through “I”

 

If fifty percent of Australians have a computer – let’s call that “D”

Most computers are cycled every thirty six months. Therefore Annual replacement of “D” is valued at $330.00 on the basis that the purchase price is $1000.00

 

We assume 20% of Australians have a laptop. “E”

 

If 100% percent of Australians have a mobile Phone – let’s call that “J”

If 5.5 million homes of 7.2 million are connected to the internet, that generates a monthly subscriber value of “F” (For this exercise, we assume a monthly total of $39.95 per sub.)  “K”

 

44% of Mobile Phones have data plans and approximately 24% of those phones utilize their internet connection.

The average mobile phone data consumption is therefore worth approx. $18.00 per month. “L”

 

All services are billed between the wholesale carrier and the retail Service Provider. “M”

 

 

Sources: Telstra, ACMA, ABS, Various industry sales results.

 

A section of my Introduction to the

 Responses to

Digital Economy Future Directions

Consultation Paper

By Thomas P. Koltai, on Behalf of Perceptric Pty. Ltd.

 

Submitted 10th of February – Before the Governments National FTTH rollout announcement and before the ACCC ruling against Telstra on last mile local loop. – A section of my introductory remarks.

 

History – A Lesson in what not to repeat

Past governments, with an eye to maximisation of short term advantages to the Australian taxpayer may have thrown away the baby with the bath water, with the assignment of control of the last mile local loop to Telstra.

This has left Australia with no neutral options as to the provision of an easy economic destination for its Broadband initiative.

In respect of the initial comments in the Introduction here-to-before, my key observation is that under the Governments planned NBN the proposed technology does not address the reality that only fibre to the home and useable ISM spectrum will be a long term adequate infrastructure play.

As an alternative, rather than implement a second hybrid Fibre/Coax/DSL solution for the country, I would strongly recommend that the Government prioritize an analysis of unallocated spectrum in the 2.6-3.4 GHz range – suitable for the interconnection of mobile and personal computing devices.

My contention is that since the previous government included the last mile copper in the Telstra sell-off, it left us with a legacy monopolistic approach to the last mile. It is therefore the Government’s responsibility to right this wrong.

 

An article by Mr. Richard Chirgwin posted on his Blog http://chirgwin.blogspot.com/ on Thursday, May 01, 2008 expresses what I consider to be the opinion of the majority of informed ICT professionals in Australia. (With the obvious exception of Telco and Treasury employees.).

 

Digital Dividend or Free Spectrum?

So what's the value of the "digital dividend"?

The question arises because that silly expression is so ineradicable in the political lexicon. A "digital dividend" is out there somewhere, we just have to (as Senator Conroy put it) "put in the hard work" and we'll reap the rewards.

The commercial data that led to America's recent spectrum auctions raising $19 billion aren't on the public record. We don't know how many people Verizon and AT&T consider to be the addressable population of their spectrum. But the price tag provides a hint: the premium paid for the spectrum tells us that the spectrum will be used to deploy broad-based services. The "Internet socialist" ideal, that TV spectrum could deliver broadband to those without fast wired services, won't come true in America.

 

If we assume that the spectrum is destined for broad-based services, then population is a good way to look at the value of spectrum from the outside. The auctions raised $19 billion; America has just over 300 million people; so the per-person value of the spectrum is about $63.

And if that figure is applicable to Australia, the digital dividend would be just over $1.2 billion - or three years' interest on the Communications Fund.

While $1.2 billion is a lot of money, it's not much in terms of the total economy, which is close to $650 billion - and there's no guarantee that investors in Australia would put the same value on new spectrum anyhow.

There was, however, a very interesting nugget in Senator Conroy's speech to the ACMA RadComms conference last week: the Ofcom estimate that radio spectrum contributed £42 billion to the UK economy. It's not actually news (the report was published in 2006), but still interesting.

Instead of focussing on the price tag, though, the employment impact is worth noting: Ofcom claimed that spectrum use contributes to 240,000 jobs in Britain, or 0.7% of the workforce. That

would be about 70,000 jobs in Australia.

The way to maximise jobs growth based on spectrum would be to make spectrum applications

irresistibly attractive.

If you accept that the likely "digitial dividend" is going to be small (and $1.2 billion only sounds big), perhaps the idea that the spectrum should be opened up for free (or close to it) isn't so silly.

Those who entered the fray would be able to focus on infrastructure and services rather than having to design the business plan around recovering money over-spent at auction.

Look again at the US experience. What are Verizon and AT&T going to do with their expensive spectrum? Verizon is talking 4G cellular services, while AT&T is talking about a network that can support 3G iPhones.

Somehow, it's hard to wax lyrical about spectrum bought to support a network-locked toy phone (with no apology to Apple fanboys) in a new cellular network. Whatever is claimed for new mobile networks, they remain focussed on the urban market, because that's where the people are.

The widespread belief that the digital dividend will bring new rural and remote services is a delusion. Unless political thinking changes - and unless somebody pops the wishful expectation

of a huge payoff to general revenue - the digital dividend will end up with the same urban focus as is clearly emerging in the US.

 

I might also mention the amazing lack of initiative by the Unwired Group – recently purchased by

channel 7 - to fulfill the promise for the spectrum that they purchased. 1

 

When the Auction was announced, the then acting ACA Chairman, Dr Bob Horton, said that the

Authority was very pleased to bring the 3.4 GHz spectrum to the market:

 

“This particular part of the spectrum offers opportunities for a diverse range of communications services, from wireless local loop to broadband Internet services, and should lead to increased competition, product and supplier diversity, and therefore benefits for consumers," Dr Horton said.

Spectrum is available in Adelaide, Albury, Bendigo, Brisbane, Cairns, Canberra, Hobart, Launceston, Melbourne, Perth, Rockhampton, Sydney, Toowoomba and Townsville and regional areas of Queensland, New South Wales, Victoria, South and Western Australia and Tasmania.

 

1 http://www.market-dynamics.com.au/Documents/3.4GHz%20Licence%20Report%20-

%20Public.pdf

 

A total of 100 MHz is available in each of 14 major town and city areas and 65 MHz in each of five regional areas. The spectrum will be presented as standard size lots of 3.5 MHz with the exception of two lots of 4.5 MHz in each of the 19 market areas.”

 

I have been an Unwired customer for six years. I am still awaiting the diversity, competition and other benefits promised to customers.

 

Today, nine years after deployment, Unwired is available in Sydney and Melbourne only. As one of the only real alternatives to last mile copper it has languished for nearly a decade recovering a mere fraction of its original capitalisation costs and locking out its use to other possibly more

entrepreneurial start-ups. The 37 million dollars provided by Intel didn’t seem to help in boosting their coverage area either. 2

 

Unwired spokesperson Amanda Wallace said that the company was looking into which cities would get an Unwired roll-out first, but would not be announcing its decision until closer to the launch date in 2006. When the roll-out is complete, Unwired's service will be available to 66% of

the population, Wallace said.

That didn’t quite seem to happen.i

 

Austar was the other major purchaser of 3.4 GHz spectrum. This was presumably based on a strategic business plan that I was commissioned to write for the CEO, Don Hagans, in 1996 . This was based on the premise that wireless could provide the last mile delivery of Broadband via 3.4

GHz together with premium Video on Demand Services.

 

Bob Horton’s later commentsii on Spectrum auctions is as follows:

 

“Acting ACA chairman Bob Horton said the ACA would be accelerating the "market-based" management of the spectrum:

"We will continue to use spectrum auctions in appropriate circumstances where demand exceeds supply," he said. "Several companies using spectrum won at auctions are achieving remarkable results that have only been possible because we adopted a market-based approach."

 

He most obviously was not referring to Unwired or for that matter, to AAPT.

 

AAPT with its 28.8 GHz spectrum, purchased for $66.3 million, has also failed to deliver an equitable widely adopted last mile alternative.

 

Granted, it purchased the spectrum with a view to build a microwave tower link between major and regional cities, however engineers are adamant that alternative utilisation could be made quite easily.

 

Similarly Optus invested a substantial amount ($59.7 million) and has yet to roll out a service.

Optus ready for business with LMDS network 28 Nov 2000

Cable & Wireless Optus announced that it was successful in bidding for spectrum in today's 27 GHz auction held by the Australian Communications Authority.

The spectrum is best suited for broadband wireless access, including the use of Local Multipoint Distribution System (LMDS) technology.

 

Chris Hancock, Managing Director, Data & Business Services, said that Cable & Wireless Optus was very interested in all access technologies that provide an opportunity to expand reach, access new customers, reduce the costs of services and allow the introduction of greater competition to the marketplace.

 

2 http://whirlpool.net.au/article.cfm/1535?show=replies

 

There have not been any announcements about the use of the spectrum since it was purchased.

 

Could he have been referring to the Austar 3.4 GHz which last year was primed for sale for a record 52 Million dollars to Optus subsidiary local loop player, Opel?

The record was the loss - 128 million dollars for spectrum that had not been utilised during the intervening years between purchase and sale.

 

Spectrum Licences expire in 2015, or, considered in a different manner, last 180 months. Austar sat on its spectrum licenses for 96 months, and therefore in effect lost 32 million dollars on the spectrum’s current value (unless one calculates the additional population growth between 2000 and 2008).

(No offense boys and girls - but who do you think bears that loss ? The Government or the Taxpayers through increased subscriber servcie charges.)

Nevertheless I am sure that this is small consolation to Austar’s shareholders.

An interesting observation on the recent sales of spectrum licenses by licensees to other licensees is the move to consolidate control of these strategic assets between several of the large incumbents.

 

There are a great number of commercial developments in other parts of the world that could have already been employed in Australia utilising the above spectrum to deliver a series of cost effective, broadband solutions for all of Australia.

Unfortunately, when competing with a deep-pocket group of monopolists, the price of spectrum is easily bid up to a price where the successful purchaser is unable, without additional capitalraising, to utilise the spectrum in a meaningful manner.

Possibly the Optus/Opel acquisition may have if it were able to survive the funding requirements, heralded a robust 2-30 Mb per second wireless broadband local loop to offer real competition in Australia. As may the Channel 7 acquisition of Unwired.

 

The spectrum game to date has been an additional taxation revenue generator for the Government but with little material benefit returned to the Australian people with the possible exception of higher prices for a longer period to pay for the exorbitant prices of unused spectrum

assets gathering dust in a filing cabinet.

 

On the basis of the above examples, I entreat the Government to err on the side of deliverable bandwidth to those that need it most, driven by an industry (WIFI) that is devoted to getting the maximum out of what little ISM bandwidth it has been able to utilise.

 

Estimates of the 2.4 GHz WIFI market on a global basis exceed 1.3[US] Trillion dollars.

Translated into Australian dollars per capita, that provides a price of $390 per man woman and child. To me that appears to be approximately the price of a home router CPE and a 15 db gain antenna for the following innovative idea:

 

The World of Make Believe.

In a perfect world, a Government that wants to ensure connectivity to and for its population would look at delivery of connectivity on multiple platforms.

Cell phones (the 7th Mass Mediaiii), Wireless Broadband and Fibre to the Home.

In this example – I have selected unsold spectrum in the 2-5.9 GHz range reserved by the government for lease by any carrier prepared to build the infrastructure – and based on equal representation.

The cost for the spectrum used shall not exceed $1 per user per Mb connection speed per month

– to all carriers.

i.e.: a 256 Kb broadband connection would be licensable at 25¢ per month.

 

This would result in an equivalent return to the Government based on user numbers – without the commercial uncertainty inherent in a fifteen year licensing environment. Minimum service levels provided would be 256kb broadband, with additional services such as QOS guaranteed VOIP and

“wireless fixed line services” as a subscriber requested add-on – extending the bandwidth of course at the appropriate pro-rata licensing fee.

Infrastructure would consist of a series of towers following Australia’s main highway system with adequate fibre to the tower network to ensure that every Australian within a 35-65 km range of the tower network can obtain between 256Kb and 30 Mb per second of data services.

Each alternative tower can either be leased to incumbent telecommunications players on a leapfrog basis with the maximum quantity of towers leased by any one carrier being regulated as the total number of towers, divided by the total number of carriers. In this manner, no one carrier can dominate the spectrum, and by extension, Australian consumers.

Each carrier tendering must commit to offering an OC-48 or better interconnect regime at zero settlement at the exchange level.

 

Transit costs to be negotiated between the carriers – spectrum allocation should make allowance for long haul (micro-wave) alternatives (via low cost special purpose apparatus licences) to carrier fibre backhaul to lessen the potential of possible anti-competitive collusion.

 

• Benefits to government in this model include – shared and ubiquitous responsibility for Universal Service Obligation.

• Benefits to Telstra and Optus – USO load redistribution.

• Benefits to consumers – competitive redundant connectivity options.

 

Community Fibre Loops.

As an alternative – but it is my contention that this is additional too and not as an alternative;

Communities can be encouraged to provide their own fibre loops.

i.e.: Home owners can form co-operative last mile telecommunications infrastructure suppliers and similar to school fetes, garage sales, cake bake-offs and other community fund-raising exercises, raise the required capital to implement Fibre To The Home.

Each home owner in the community co-operative can dig their own trench alongside the driveway from the kerb to the end of the drive way.

If everyone in Australia dug their own 450 mm deep, (average) 6 metre long 100 mm wide trench, and placed 1 or 2 (6m length) electrical conduit 15 mm pipes in the trench – preferably terminating next to the house., then nearly $180.00 per home would be saved lowering the estimated 1997 capital cost of FTTH to $220.00 per home for the fibre; street crossings and additional ditch-witching required on nature strips.

That’s an Australia wide saving of $1,098,000,000. Unfortunately, this proposal would only work in the housing suburbs and not metropolitan areas.

It is my contention that most apartment buildings are now constructed with digital frames, many already with planned or existing fibre terminations. Regrettably, a great many of the digital installations are Telstra-only termination.

Upgrading older copper analogue based MDF equipped buildings has not been costed. But it would be interesting if the newer suburbs, in NSW – past Penrith, were automatically supplied with fibre.

 

The economy of the poorer suburbs would surely receive a technological boost and race past the inner city suburbs enabling real teleworking and additional opportunities for the mobility challenged and disabled.

Communities that achieve 51% penetration in their suburb’s (areas) should be connected via federal funding to the closest exchange where they would be connected via a neutral fibre optic switch to the preferred services.

To ensure competitiveness – both in quality of service and a pricing model designed to encourage, not discourage, telecommunication product utilisation, this connection should under no circumstances ever be offered as a bundle connection to only one carrier.

 

The Redefinition of Business.

As we move deeper into digital commerce, interest groups will occasionally attempt to stem the tide, fearful that their business model will become redundant in a digital world.

The most obvious example of industry concern was that raised by the Postal services of various countries who were concerned that the advent of Email would extinguish their profits.

 

CASE IN POINT – The Royal Mail

In the United Kingdom in 1825, the cost of a sending a letter from London to Glasgowiv via carriage mail cost as much as a day's wages (1sh.1½d)v for a working man (9 shillings per week)vi.

Competitors devised a route via coastal shipping to decrease this cost to eight pence, providing a saving to the working man of five pence – but at a risk of piracy and shipwreck.

Was there an outcry of anti-competitive behaviour? Only from the coach and rail operators who saw their profits disappearing as HMPO set-up a dispatch office in the Merchant Marine offices at the docklands.

Amidst fears that email would nullify the mail service, the US Postal Service in 1995, issued a set of tender documents to set-up a modem email gateway service so that people could send mail via their paid network. The postal service was needlessly concerned.

With the Internet, online shopping arrived together with a requirement for parcel delivery and the requirement for tracking parcels (albeit with some glitches in the system).vii

The universal service obligation of rural parcel delivery has ensured that the Bundespost, Royal Mail, US Mail, Australia Post et al, have redesigned their rapidly evolving business models utilising external contractors for parcel delivery.

It may well be that something similar saves Telstra when they finally divorce themselves from reliance on the copper loop and change tack to adopt a wireless model as mooted in the recently released “Interim Report on a Digital Britain”viii. An intent to follow the enhanced wireless

broadband rollout may have been the real reason for Telstra’s “failure” to partake in the governments NBN process.

Empirical data is lacking on the comparative transaction costs of conducting commerce via traditional methods: bricks and mortar store, face-to-face, mail order, telephone, Viatel, Minerva, CompuServe, Minitel and now the Internet. However, Ruth Calaghan of the West Australian

newspaper obtained quotes from industry sources in 1999, including Alinta Gas, ACA Research

and Telequity that indicated that Internet was proving to be the cheapest alternative to conducting

business with customers:

“Every time a traditional sales representative hops out of the car to see a client it costs the business about $300,” he said.” When a customer visits a branch network that is about $25 to $30. The same transaction in a call centre costs about $4 to $8 and if the centre uses the Internet

it is less than 25¢.”ix

I believe that everyone realises the benefits of E-commerce Now we just have to educate the population that there is a need to implement this immediately.

 

Conclusions Today.

 

The Government can not allow control of the new infrastructure to ever fall into the hands of a single commercial entity - or any group of commercial entities that do not fairly represent delivery to 100% of the Australian population and consist of less than twenty Carriage Service Providers.

The Government needs to address the bush/remote requirements through enhanced ISM spectrum allocation capable of servicing the unserviced 20% of the population – who are currently fobbed off with unstable – and often unusable satellite connections.

Government is starting to listen. Senator Kate Lundy Hosted an Open Sphere session in Canberra that demonstrated the willingness of the current Government to actually listen to its constituents.

Thank-you Senator Lundy.

Perhaps there is hope for Australia to regain the "Lost Ecommerce Years" forced on us by a share price hungry previous Government.

References

i Unwired now Unbelievable – User Comments about Unwired service quality

http://forums.whirlpool.net.au/forum-replies-archive.cfm/456802.html

ii Analyst slams ACA spectrum auction - Abby Dinham, ZDNet Australia

19 August 2004 04:13 PM http://www.zdnet.com.au/news/communications/soa/Analyst-slams-

ACA-spectrum-auction/0,130061791,139156749,00.htm

iii The Seventh Mass Media http://smlxtralarge.com/wp-content/uploads/2008/03/smlxl-m7mmcopy.

pdf

iv 1788 London to Glasgow Mail Coach established, taking four days.

1819 Steam ships used for first time to carry mail.

Table 13.8 Postal services: P288

Economic chronologies Extract taken from United Kingdom Input-Output Analyses, 2006 Edition

Consistent with 2006 Blue Book and 2006 Pink Book

http://www.statistics.gov.uk/articles/nojournal/Economic_chronologies_2006.pdf

v [iii] http://www.janeausten.co.uk/magazine/page.ihtml?pid=364&step=4

vi Wages were nine shillings a week for an able bodied man - Rev Herbert Brown who was Rector

of St Lawrence from 1901 and went on to write the excellent histories of St Lawrence and

Bradwell on Sea in the 1920's http://www.essex-countrylife.

co.uk/farmingwagesandconditions.htm

vii http://msdemmie.wordpress.com/2007/08/06/the-royal-mail-doesent-deliver-anymore/

viii http://www.culture.gov.uk/images/publications/digital_britain_interimreportjan09.pdf

ix Callaghan, R. (1999, 8 January). Customer Queries Keep Alinta Gas Humming. The West

Australian, (p. 30).

Modern capitalism was built substantially if not totally using the concepts that were originally set down by Adam Smith in his work, “The Wealth Of Nations”

Smith was actually totally against the idea of the power of a marketplace being concentrated in the hands of a few.

In a true open market place as imagined by Smith there are no cartels.

However in the content industry there has been a continuing concentration of market clout in the hands of only a few for a number of years. In the telecommunications industry there is also massive concentration of clout, with Australia being totally dominated by one player in essence.

The key players in the massively concentrated areas of clout take great care to ensure that they do not meet any of the criteria to cause investigation by regulatory watchdogs even though from time to time their pricing policies as a group have the appearance of predation.

Fortunately necessity is the mother of invention, even in largely controlled marketplaces – mainly as a result of the spread of information technology.

The content industry considers P2P as a massively disruptive technology. It is claimed by them that P2P is at the heart of piracy. They would have us believe that it is an enabling technology that is causing great harm to them and to the creative people they represent.

However I believe it could be argued that P2P is actually not disruptive. Instead it is a technology that provides increased efficiency.

This is entirely keeping with Adam Smith’s philosophies on devising methodologies to ensure that the market determines its own comfort level aided by regulatory assistance. [Smith A – Sheep Farming and Wool Price.]

What is missing in today’s equation is an acceptable regulatory framework that will govern the use of P2P. It does not have to deliver a moral reality, just a fair one considering market forces, costs, and materials - all entirely within the parameters laid out by Adam Smith as being conducive to delivering an efficient marketplace.

In the world of manufacturing that governs physical goods, firstly analogue content and then more recently digital works (but delivered on physical media), there is a simple and well established model for pricing goods. The price of the content is a fixed cost. The price of manufacturing is a variable cost. A notional royalty to reward the content owners is included. A margin is added onto the manufacturing cost and from that a structure is created that rewards all participants in the process.

The development of a fully digital distribution system is quite different. It firstly takes the distribution cost away from the historical distributor and shifts that cost over to the consumer, through the consumers’ payment for bandwidth.

It then changes the quality requirement on the distributor and puts the consumer in charge of determining the level of fidelity he or she would like.

These changes come as a result of a shift in the ownership of the tools that are available to consumers. The ownership of those tools has the potential to vastly improve the efficiency of many aspects of society, but only in the event that there is a fundamental revisiting of the framework for capitalism that was established by Smith.

All parties in the transaction of content should be rewarded. Of that there is no doubt. However the level of the reward that is distributed needs to reflect the fundamental shift in the cost structure that has taken place. In doing so, a truly open market for content will emerge in which appropriate rewards are delivered to all creative producers of copyrighted works. This will mean that there will be a need for regulation. But the regulation will need to be substantially different to what it is currently.

Imagine the work that went into manufacturing a bible before the advent of the printing press. A monk might replicate only several hand-lettered and illuminated books in his lifetime. Clearly such a book would be priceless.

The advent of the Gutenberg press meant that mass production could take place. As scarcity gave way to abundance prices dropped because the effort to produce was reduced. With the advent of P2P we now have true ubiquity at our fingertips. Clearly this should produce a new pricing model that reflects the pure acquisition of the underlying work rather than a pricing model that attempts to extract more margin for less effort, which is the model that the content companies have been trying to maintain.

The fact is that until an optimized regulatory structure is created that reflects changed market conditions and prices the change accordingly, there will be a continuing disruption that will take place. This is because the market is not “free” in the Adam Smith sense of what makes capitalism work.

While there are cartels in operation, (if it quacks like a duck and waddles like a duck, then it isn’t going to turn into a turkey regardless of what it may call itself), there will be continuing pressure to stop regulatory change. We need to understand that as technology improves, regulations need to change too. Copyright law does not need to be overturned. It does need to adapt.

If we are going to live in a capitalist society and espouse Adam Smith’s philosophies to guide us we would do well to actually follow what he said.

If our regulations are driven by a false set of hypothoses there is no doubt that they will cause legislators to reach false conclusions. That, in turn, will absolutely ensure that there will be failure of the business model and that will be rapidly followed by a failure of our society.

Society requires logic and consistency for optimum functionality.

Unreasonable regulations will lead to a dysfunctional society.

P2P needs to be embraced with the preconditions that all digital content flows are to be paid for at a rate that is near zero. That way efficiency is rewarded, downloads are legalized, content creators are rewarded, the public is not demonized. Society wins.

In conclusion, I can think of no words more compelling than Adams Smith’s own words on the duty of Government.

The other day I said that it was an American recession and not an Australian problem.

 

Three things happened yesterday that radically altered my perception. One involved my neighbour, Ron the second involved my uber geek friend from Europe and the third, an Australian edict to stockpile food. .

 

Stockpile Food

For a Government to issue conflicting messages......

Australian Government told Australians to stockpile a couple of weeks worth of food because of the swine flu pandemic – but Don’t Panic – we don’t want a run on the shops.

 

....about a threat that hasn’t yet arrived in Australia is unusual.

 

With previous Pandemics, Sars, Bird Flu, no-one (except an academic report) ever said – stock up, stock up the end is nigh.

But this time round, I have a feeling that the upcoming budget may need some “good news” to take the edge off the unfortunate announcements that have been forced on the government by lowered taxation revenue stream and increasing foreign debt.

 

Therefore – I would opine, that swine flu as dangerous as it may be** – is at this stage a trigger event to increase consumer purchasing in the retail sector. June will be up on the first quarter allowing some much needed book balancing in Canberra.

 

My Neighbour Ron

I was placing potted plants in a garden bed this morning – lining them up for the planned planting frenzy tomorrow and my neighbour walked passed retrieving his wheelie bin. “Hey Ron”, I called out. “Hey Tom”, he replied, “how’s it going”? So we chatted about my planned planting and then I asked him, “so you got the day off, huh?”

 

“Yeah, it’s a bit quiet at work so we’re taking our holidays a bit at a time.”

 

Ron’s not an economist. He’s a diesel mechanic/fitter and turner and he’s worked for the same company for thirty years. It’s an American company. I didn’t have the heart to tell him that the company was probably minimizing its termination liability position in case it received shutdown orders from its USA Head office. Ron’s a nice guy, but he’s 55.

 

I don’t think Ron will find it easy to get a job if the company shuts down.

 

My friend is propositioned by Schoolgirls

The other incident yesterday involved the oldest profession known to man.

 

My uber geek friend AK came to visit me today, and I collected him from the train station*. As I arrived at the station, I could see cops everywhere and I prepared myself for the worst…. The uber geek had hacked NSW Rail to make the trains run on time…..and was about to be carried away.

 

But no, there he was standing on the curb with his hands behind his back looking nonchalantly up at the sky and whistling innocently.

 

“What did you do?” I asked as I pulled up next to him.

 

“Nothing… But it was unreal – I got off the train and there were all these girls offering sex for fifty bucks and then next minute there were plain clothes policeman grabbing people and girls running everywhere.”

 

Apparently, the ubergeek had arrived just in time to watch Sydney’s finest breaking up a train station prostitution ring.

 

“So how do you know it was fifty bucks dude?” I asked.

 

“Because I had two of them offering me services before I got to the stairs, but they were young, just schoolgirls” he replied.

 

So there we have it. Schoolgirl prostitutes, highly qualified people close to being laid off and the Government saying the end is nigh.

 

We do have a problem. I just didn’t realize until today how serious it was.

 

So – to fix this we need more Australian jobs that can only be created by paying more for consumables. Yep – you. Pay more – now – for everything – as long as it’s made in Australia.

 

Try to buy Australian.

 

It’s a simple exercise – start asking shop keepers – was this made in Australia ?

If every single Australian starts to ask every single shop keeper – was this made here, for every single item they buy – very soon the recession that we had to have, coz the USA told us so,  – just ain’t going to happen and schoolgirls can go back to school again, Ron will be able to amass his holidays again and the Government will stop imitating the USA. (Well, one would hope they stop.)

* I am omitting idenitying the station as I do not wish to damage the prosecution evidence of the boys in blue.

** I happen to think that Swineflu will go much the same way as Sars and Bird-flu. It will sell lots of drugs and kill less people than the normal flu.

The Berne Convention (of September 9, 1886) was formed for the purpose of protecting intellectual property.

 

It has been quoted by most American Politicians for the last 10 years as the reason why America needs to get tough with the P2P community.

 

Its interesting, that the United States only became a signatory to the convention (see USA details for accession date) on November 16, 1988,  a mere 90 days after the first news story surfaced about Echelon. (18 August, 1988 - scroll down to the August 18 entry)

 

In other words prior to that date, the United States did not recognise the validity of Intellectual Property outside it’s borders.

 

With its penetrative Deep Packet Inspection policies, implemented initially through Echelon, then via triplet encryption keys in windows, and now Ak..... and some hardware vendors, it could be argued that the United States still doesn’t recognize the value of Intellectual Property except where it pertains to the wealth and well being of its natives, office holders or corporate entities.

 

Many wonder why the European Parliament is concerned about Intellectual Property protection. (ACTA)

 

An article from ZDNet explains part of the nature of the problem.

 

Duncan Campbell's Scientific and Technical Options Assessment (STOA) April 2000 report to the European Union entitled Interception Capabilities 2000 states that those governments implicated in Echelon routinely monitor commercial communications. This report also states that in the US a process was developed "whereby NSA data could be used to support commercial and economic interests."

 

The United States didn’t count on hundreds of thousands of young hackers finding extraordinary methods of obfuscating, encrypting and misleading DPI into not being able to read the commercial data therein.

 

Therefore it had no choice. It had to drag in the RIAA.

 

Our guess is that the conversation went something like this…..

 

Now look here RIAA….

 

Our economy is going to go belly up unless you can convince the world to stop using P2P.

How can we compete against the whole world unless we can read their confidential business plans.

We’ve fixed Microsoft windows – but we just cant get into that open source Linux stuff.

 

You guys created this mess by suing Napster – now fix it.

 

And you cant tell them that its because we cant read their emails to each other – you have to come up with another reason.

 

For countries to continue to kowtow to the United States demands of criminalising intellectual property sharing, they must demand that echelon data be freely shared with all signatories to the Berne convention.

And if the US really is more concerned with illegal file sharing than it is in snooping on the worlds population - then it will off course immediately comply.

In other words - the USA should have to first clean up in its own backyard before it can justify its pontifically "superior than thou" attitude, to foreign Governments.

 

The first thing to remember is that friends don’t spy on friends.

 

Wake up world – smell the coffee – The USA stance on Intellectual Property protection is “Do as I say – not as I do”.

 

Does anyone else see a problem with this? Or am I all alone on this little island.