One strategy that telecommunications companies have adopted is bundling, or selling a combination of services at a reduced price. The goal is customer lock-in, a situation in which the buyer is more or less trapped in their purchase. In many cases, lock-in happens when the customer satisfices or compromises to gain value or convenience. Customers might grow dissatisfied over time, but they are unlikely to leave because alternative services are not available, or their perceived switching costs are too high.
A variety of US cable television and telecommunication companies have offered bundling programs. The usual items include television service and broadband Internet.
Companies that offer cable modems usually offer these services through the same “pipe” or connection – the coaxial cable drop found in many homes.
Local exchange carriers (LECs) offer POTS (traditional or “plain old telephone service”), and the final connection to the home is the familiar RJ-11 modular phone jack found in most US homes. Some LECs also offer mobile phone plans in their bundles.
Landline connections may be offered through VoIP or POTS, depending upon the carrier’s technology.
Agonizing over savings
Alina Tugend of the New York Times provided a great example of this decision-making process in her article last week. Customers sometimes obsess over lock-in when their friends brag about how much they saved by switching. Yes, lock-in also works well for insurance companies, too!
In Honolulu, Oceanic Time Warner, Clearwire and Hawaiian Telcom each offer bundles. Oceanic has a standard cable television package that includes cable modem service, long distance calling and VoIP calling plans. Oceanic staff can connect the customer’s RJ-11 telephone jacks to the company’s network, so customers can continue to use their existing landline handsets and equipment.
Clearwire offers broadband Internet service, long distance calling and VoIP telephone numbers through its WiMax network. Customers can hook their landline phone into Clearwire’s modem. The Clearwire service does not require an installation visit, but the coverage areas are somewhat limited. This article at DailyWireless.org has several interesting diagrams of business telephone systems.
Hawaiian Telcom keeps struggling
The HawTel package includes a POTS landline, long distance calling and DSL. HawTel is still working on its IPTV offering, which has been delayed by implementation problems. IPTV would let HawTel offer television service through the same RJ-11 telephone drop used by its landline and DSL offerings.
As a side note, I hated HawTel’s obnoxious “Savers Unite” advertising campaign, and am glad that it has been replaced. Was the tagline a call to action or an insult? It was hard for me to tell. The radio and television ads reinforced a stereotype of the “thrifty local” who clips coupons, hoards travel-size toiletries and wears old clothes to pay the “price of paradise”. Then again, telecom marketing campaigns usually strive for the “common touch”, in an effort to hold the average customer.
Telecom bundles are subject to a host of Federal, state and local regulations. Pricing is often controlled by government agencies and franchise agreements. On 18 August 2007, I discussed HawTel’s naked DSL option, which let consumers order DSL service without a voice landline. HawTel was late to act, as thousands of subscribers adopted mobile phones and dropped their landlines. These customers switched to Oceanic, Clearwire, or other broadband Internet services.
Customer lock-in is difficult to achieve when companies fail to implement their industries’ key success factors well. On 16 November 2006, I discussed HawTel’s billing problems after the company was purchased from Verizon. Mike Ruley never overcame these earlier issues and lost his post as HawTel’s CEO earlier this month, as I mentioned on 5 February 2008.
IS 7010 students who have read the Nokia case in our textbook might chuckle a bit at this news: Nokia has resurrected 2003’s N-GAGE mobile phone/video game console.
The first new model for the US market is the Nokia N81, a WiFi 3G GSM handset that ships with 8 GB of RAM and retails for US$639.
Mistake number one: users must pay a one-time US$10 fee to activate the built-in games on this phone. Hard to believe that Nokia couldn’t provide a free game on a handset that is more expensive than an iPhone.
For my students, here’s a quick summary of some links and materials on copyright and fair use.
The content on this web site is copyrighted and available through an alternative scheme called Creative Commons. I’ve chosen a license that lets anyone share, remix and modify my work, as long as they give me credit for the original work. As this page explains, the CC license allows me to claim “some rights reserved”, which is less restrictive than the “all rights reserved” terms of copyright, but provides me more rights than placing my work into the public domain where no one owns anything. These videos explain the CC system, and there is also a FAQ.
The Creative Commons scheme also works well on the Internet, as the licenses can be attached to electronic documents and files. The Internet works like a copy machine, as Kevin Kelly pointed out in this January 2008 article. I discussed this issue in this 4 February 2008 post.
A couple of times a week, one of my monitoring tools will tell me that an automated script has been scraping my RSS feed and reposting my content on a fake blog. If they give me credit for my work, I leave them alone. After all, I’m not claiming copyright on my this blog.
Fair use lets people post or republish a small portion of someone else’s work, as long as proper attribution or creedit is included. That’s a key reason why I have my students use TurnItIn.com to submit assignments.
From BoingBoing comes the most disturbing information security news I have read in a while.
We’ve long assumed that disk encryption is a robust means of storing confidential data on a computer. Disk encryption products work by encrypting all of the data on a drive, including documents, the operating system, swap files and caches. Disk encryption software can start up before the operating system to let the user enter their password or key. Disk encryption software can also be used on USB storage, as well as partitions on an unencrypted drive.
Disk encryption helps travelers keep their data confidential. My post of 5 Janaury 2008 addresses how cryptography works.
Warm RAM, lost key
Princeton University researchers have developed a simple attack that can retrieve the BitLocker disk encryption key from a Windows Vista computer. The user has to have logged into the computer so that the encryption key is then stored in the computer’s RAM. If the computer is in sleep mode, running a screen saver, or still warm, the encryption key can be extracted from RAM. The extracted data can be saved to a USB storage device, so that another computer can take its time to analyze and fix any errors in the extracted key.
Declan McCullagh has posted his analysis of the report at news.com. he points out that this vulnerability has been used by other researchers to pull data through a FireWire connection to an iPod. It is difficult to harden a computer against this form of attack, but the attack must be carried out in person. It cannot be done across the Internet, at least in the form that the researchers demonstrate. The attacker needs a USB drive preloaded with the attack software. A can of Dust-Off might also be helpful, to chill the RAM.
Watch that drive
The easiest way to harden a computer against this attack is to maintain physical control of the encrypted drive. Don’t leave it alone. Update the encryption software regularly, as the software developers will more than likely develop their own patches to wipe the key from RAM.
This YouTube video produced by the research team is a brief overview of the vulnerability and the attack.
The technology panel will announce their selection for Honolulu’s proposed fixed guideway mass transit system tomorrow, according to this article in the Honolulu Advertiser. The five panel members are evaluating four technologies, including:
trains (steel wheel on steel rail)
buses (rubber tire on concrete)
monorail
magnetic levitation
The decision will also be announced on the Honolulu High Capacity Transit Corridor’s web site. The video simulation of the proposed Aloha Tower station is pretty good. Most of the site’s content is trapped in PDF files, however.
As I posted on 6 February 2008, I support the bus option. This option could create a two-lane elevated road that can also be used by emergency vehicles. The buses for this system might also be deployed on surface roads as demand warrants. The other three technologies are less flexible and more expensive. City councilmembers Donovan Dela Cruz and Ann Kobayashi appeared on the byline for this article in the Honolulu Star-Builletin on 26 August 2007. The article includes a picture of one bus model. Below is a promotional video for the Eindhoven bus system.
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