June 1, 2006

What do you see when countries negotiate in the bilateral and multi-lateral trade agreements? I see perpetual catching-up in economic divides if we are not careful when dealing with issues that involve patents, copyrights and intellectual property rights.

That said, it’s quite disturbing to hear that Malaysia will pass the Patents Act (Amendment) Bill as the country has decided to accede to the Patent Co-operation Treaty (PCT) by the end of 2006.

As it is, apart from the PCT, Malaysia is also acceding to three additional treaties of the World Intellectual Property Organisation (WIPO), namely the WIPO Copyright Treaty (WCT), the WIPO Performances and Phonograms Treaty (WPPT) and the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure, or in short, the Budapest Treaty.

Patents can be easily related to escalated costs in building quality of life, and there is sufficient evidence to support this argument, with patented medicines as a solid example. Patented anti-retrovirals administered on AIDS patients used to be US$15,000 per patient per year. The generic versions, which are just as safe and effective, are US$150 per patient per year.

In the recent past, we have seen how the United States has been updating its copyrights protection laws vis-à-vis its trading partners. An example is the general extension of the term of protection from 50 years to 75 years. In the specific case of the US-Oman FTA, copyright extension is stretched to 90 years. Perpetuality means absolute monopoly on extended terms.

It is generally accepted that there is a super economic power bloc driving these four treaties. Such dominant drivers may take the forms of industry lobby groups, direct demands by certain developed countries’ governments, and even the WIPO Secretariat. The obvious is that the United States has been insistent on including these four treaties when it is engaged in bilateral free trade agreements with its trader partners. The rationale is that developing countries like Malaysia must assume more legal obligations as globalisation kicks in.

However, people in the technology industry are concerned that Malaysia has rushed into acceding to the four WIPO Treaties when we have not adequately mapped out a National Intellectual Property Policy that embraces and protects the collective interests of the nation in the field of technological innovation.

Let’s not forget that WIPO has entrenched its dominance subsequent to the Uruguay Round in the 1980s. WIPO had led industries in developed countries in lobbying for the inclusion of intellectual property in the negotiation of trade agreements. This precipitated in the adoption of the Trade Related aspects of Intellectual Property rights Agreement (TRIPS). All members of WTO, of which Malaysia is a signatory, have to accept the TRIPS conditions by default.

The immediate outcome is that a lesser powerful economy, like Malaysia, has to bear with more expensive medicines, educational materials and more licensing and royalty payments for the use of technologies. The arithmetic is simple.

According to a World Bank study, this has translated into a hefty cost of some US$60 billion a year for developing countries to implement TRIPS. The beneficiaries to receive patent rents mandated by TRIPS, according to a World Bank report in 2002, are the US, Germany, Japan, France, UK, Switzerland and several others, raking in a total of US$41 billion. In contrast, developing countries that will incur major annual net losses in patent rents include South Korea, China, Mexico, India and Brazil, just to name a few.

It must be stated that the implementation and enforcement of TRIPS standards remain within national jurisdiction. In the case of patents, the basic rule and practice is that applications are made to national patent or IP offices, and these offices will then examine and decide whether a patent can be granted, in accordance with the criteria of novelty, inventive step and industrial applicability of the invention.

A good model of such regional IP offices is the EU. There is a regional patent treaty, with one patent office, taking care of the interests of the patent owners vis-à-vis the patent subjects. This protection is, however, non-existent in ASEAN as a regional group, hence Malaysia has to resort to national patent office to protect its interest, and this is where our fault line lies. We do not have a national IP or patent policy though we have long been a signatory to the Berne Convention that governs copyrights issues in the protection of Literary and Artistic Works.

Since Malaysia is banking on technology as a key economy driver under the 9th Malaysia Plan, let’s focus on the area of digital technologies, especially those related to the Internet and ICT. The relevant treaty is the WIPO Copyright Treaty, or the WCT. It is here that starkly exposes our vulnerability in securing a foothold in technological innovation.

I spoke to several respected software engineers, including those who innovate using Open Source to create generic technologies that may provide the same functions of digital applications and software performed by the patent-protected genres. When patents are enforced, void the WCT, these Open Source people stand the risk of getting arrested for violating the FTA, and should they be arrested in the US, they will be charged under the US legal regime.

How do you like that?

May 16, 2006

How did you file your income tax returns this year, by manual submission or e-Filing? Let me tell you this, I tried e-Filing. I gave up, and returned to paper submission.

Despite the hype, the Inland Revenue Board just isn’t ready with the electronic tax returns processes. My benchmark is the electronic visa application process employed by the US Embassy in Kuala Lumpur, which has a similar methodology. You need Internet connection, filling of electronic forms and final output in PDF. It’s done in a jiffy, as all information submitted electronically will be verified with the government’s backend databases. In contrast, our IRB is half-baked with their processes, with loopholes in between.

I was to eager to register for e-Filing, but was asked to visit an IRB branch office to collect a Personal Identification Number (PIN), a process that required me to physically produce my MyKad for verification. The officer would then key-in my IC number onto their terminal to call up my Income Tax account number. Once they tally, a pre-printed PIN, issued in collaboration with certification authority (CA) Trustgate, was given to me. That is after the officer had written down the serial number of the PIN onto a logbook typified with hand-drawn columns for names, IC number, Income tax number and PIN serial number. I then had to acknowledge receipt by putting down my physical signature in the logbook. I swear that this hybrid of manual record plus computer-aided processes will soon create gawks and gaps in data integrity. However, to be fair, I was later notified that manual PIN collection was replaced with an online process. So an early bird, like me, did deserve a reward. Guinea pig.

Try the e-Filing proper, and problems, errors and doubts surfaced to defeat you.

First, it was “Pendaftaran Sijil Digital Anda Tidak Berjaya”. Then, it was “Pemegang No. K/P pengenalan ini belum cukup umur 18 tahun”. I tried and tried, and somehow got over it. Then came that last stinger when I finally got to the part on deductions for children. The column was there but the field was blocked out and I couldn’t put in my daughter’s particulars. Was IRB trying to deny me my rebates?

It’s déjà vu. Technology is supposed to make life easy, not to complicate and aggravate it. In the case of IRB, how do you justify spending millions on technology upgrades only to find it complicating and useless? How could they bring out the bride when the make-up isn’t ready?

Meanwhile, our contemporaries who have approached IT in business processes have zoomed past us. Let me share some experiences in air travels, the service sector that demands mission-critical IT infrastructure and customer satisfaction benchmarking.

I have, in recent years, changed to Singapore Airlines and, at times, have to transit via Changi Airport. One reason is to reward myself with a better passenger handling experience, and the other is to observe how our competitors are upgrading their business processes to stay globally competent. Basically, my only sacrifice is to endure hours lost through transit and connecting flights.

Singapore Airlines has an innovative use of emails and SMS, two killer applications than our generation can no longer live without. By maintaining an active account with KrisFlyer, you not only earn air-mile rewards with SIA and the StarAlliance consortium, you can now check-in for your outgoing and return flights, and determine your preferred seats -- online – four days ahead of take-off.

You can have an option of having the confirmation delivered to you via email, or SMS to your registered mobilephone, wherever you are in the world. With that done, even an economy class traveller could beat the long queue at busy airports to check-in and obtain your boarding pass at the speed normally reserved for business and first class passengers. That’s because SIA has a special check-in counter for Internet Check-in, worldwide, to issue the boarding pass.

I tested that several times, even holding an e-Ticket that’s no more than a piece of printout. The SIA boarding pass that I collected, which carried my KrisFlyer number, enabled me to enjoy at least 15% rebates at airport lounges, F&B outlets and merchandise outlets in Changi, Manila and selected Australian cities.

The other awe I had was that my airmiles were updated on my KrisFlyer account barely eight hours I have competed a flight. I did no extra steps to make this happen as SIA has auto-captured my flight details at the point of boarding. Because of that, even my retrospective airmile claims could be confirmed within two hours, though I received an email, and later a snail, from its Head of Loyalty Programme who humbly stated that the missing airmiles would take four weeks to reconcile.

When Malaysia makes e-Filing and e-Flying a seamless user experience, we will surely see each other at the top.

May 1, 2006

Before becoming the Minister of Energy, Water and Communication in 2004, Datuk Seri Dr Lim Keng Yaik manned fort as the Minister for Primary Industries. His tenure took him through the rigorous period of massive development during the late 1980’s and the doldrums of the Asian Financial Crisis. It was his mettle in the palm oil industry that has unquestionably helped ascertain Malaysia’s continued foreign exchange income during those stormy years of the late 1990s. Despite the extended economic gloom, palm oil outshined other commodities in export revenue and provided the country much shelter in managing its fiscal shortfall that seriously impacted the neighbouring countries.

However, sitting in his new ministry where water, energy and communications industries are housed in one, his responsibility tripled. Leaving energy and water industries aside, to what extent is he going to leave behind a legacy that equalled his days spent in primary industries?

Currently, he has a plateful of unresolved issues. Fast-track broadband penetration; propelling the development of content to make broadband pervasiveness relevant; mobile-number portability; faster broadband speeds, operators’ lukewarm response to the registration of prepaid cellular service users. All are in a deadlock. How are to further liberalise the telecommunications industry when the telcos continued to resist the country’s public policies?

Are the individual licensees in the teleco industries -- notably TM, Maxis and DiGi – classified under the ‘Little Napoleans’ who disrupt Malaysia’s forward charge that the PM lamented about?

Lately, we heard of Keng Yaik hinting that the government may force the country's three mobile players to step up domestic roaming and improve their services.

This is still a nagging pain in the form of quality of service (QoS) despite the fact that Malaysia has moved into mobile telephony for over 10 years. Under domestic roaming, when a network's cellular coverage is not available, a distressed mobile user is diverted to the network of a rival telco that can provide the coverage. But this hadn’t happened since Keng Yaik brought it up almost two years ago.

And so the minister said he saw resistance from the firms in getting them to voluntarily launch domestic roaming service across the country. He promised that if the government would introduce laws making it mandatory for them to do so.

Besides, we have also heard of Keng Yaik’s rationale for denying DiGi a 3G license and spectrum. He was quoted in the media as saying that the move was intended to break a monopoly of content among the three mobile phone operators.

It warrants highlighting that there are larger issues looming out there when the Minister outcried that telcos have become monopolistic, and that their behaviour of profit maximisation is hindering the development of the nation’s information and communications technology (ICT) industry.

The Minister has admitted Malaysia’s ICT industry, which is worth RM25 billion, is obviously lagging far behind that of South Korea’s which is pegged at RM570 billion.

He blamed the short-sighted players who apparently fail to realise that if the country’s ICT industry can be properly developed, it would contribute significantly to the Gross National Product. That’s common sense but ample food for thought.

LOCAL CONTENT. Coming back to Keng Yaik Lim’s rationale of the government’s latest awarding of 3G licenses, he remarked that the main barrier to 3G adoption in Malaysia is the lack of local content. He mentioned explicitly that when the government awarded the licences the first time, to Maxis and Celcom, the government wanted to spur the growth of content creation for 3G and also that of the mobile virtual network operator (MVNO) industry. Dead end.

What actually happened is that local content developers are getting a very raw deal because, under the Content Provider Platform (CPA) for SMS/WAP-based content, the cellular service providers usually take 60% of the profit for content services, leaving the content creators with only 40%. In contrast, DiGi retains 30% of the proceeds from the profit-sharing model with the balance 70% going to the content providers.

In Japan’s NTT DoCoMo, content developers are rewarded with 85 to 90% of the profit, depending on the popularity of the content genres.

I remember the Minister said: “The time has come in order to develop the industry, we have to regulate and open up the industry and stop the monopoly that causes bottlenecks. It's time for action.”

But how are we to move forward when the local content providers are given just bread-scrump?

April 16, 2006

When big corporations as diverse as Nintendo and Cirque du Soleil are adopting ‘Blue Ocean Strategy’ in their marketing campaigns, you better watch out. Smart CEOs around the world are having a new book for their bedtime reading.

The book is titled: ‘BLUE OCEAN STRATEGY: How to Create Uncontested Market Space and Make the Competition Irrelevant’ co-authored by W. Chan Kim and Renée Mauborgne (Harvard Business School Press, 2005). It deals with new approaches to tackle competition in the market place.

In the book, the authors use the ocean as a metaphor to describe the competitive space in which an organisation chooses to swim. Red oceans refer to the frequently accessed market spaces where the products are well-defined, competitors are known and competition is based on price, product quality and service. In other words, red oceans are an old paradigm that represents all the industries in existence today.

In contrast, the blue oceans denote an environment where products are not yet well-defined, competitors are not structured and the market is relatively unknown. Companies that sail in the blue oceans are those adept at beating the competition by focussing on developing compelling value innovations that create uncontested market space.

Kim and Mauborgne’s book is based on a study of 150 strategic moves that spanned more than a hundred years (1880 – 2000) and thirty industries. Ther authors argue that tomorrow’s leading companies will succeed not by battling competitors, but by making strategic moves which they call “value innovation”. It’s a grand design to create powerful leaps in value for both the firm and its buyers, unleashing new demand, thus rendering rivals obsolete.

Nintendo recently unveiled its new marketing strategies, as exemplified by its Brain Age DS titles. The new marketing strategies have been a huge success in Japan and the products are now being launched in the West. Interestingly, Nintendo’s new strategy is named 'Blue Ocean', signifying the attempt to create a market where there initially was none. It is also a theme that punctuated Nintendo chief Satoru Iwata's speech at the 2005 Tokyo Game Show.

Obviously, Nintendo’s new strategy is opposed to 'Red Ocean', which denotes the currently established but highly competitive games console market. With the changing landscape on web services driven by pervasive broadband connectivity, Nintendo is banking on virtual game console, the Revolution, which allows users to download and play games from any of the company’s previous home consoles. At the backbone, the Wi-Fi component will be used in a different way for each game, just like the DS series.

Meanwhile, Nintendo has also decided to avoid engaging in stiff competition in high-definition resolutions games, which is a cornerstone of the marketing campaign for Microsoft's Xbox 360. This is because current high-def games on a regular TV makes it near impossible to see the graphic details.

The same Blue Ocean strategy is being pursued by travelling circus group, Cirque du Soleil, which is regarded as one of Canada's largest cultural exports to America. Cirque du Soleil, was created in 1984 by a group of street performers. Its productions have been watched by almost 40 million people in 90 cities around the world. In terms of revenue, it took less than 20 years to achieve what took Ringling Brothers and Barnum & Bailey's Circus more than one hundred years to attain. But its position is not unassailable in this modern world of gadgetry where alternative forms of entertainment are abundant. Children cry out for Play Stations rather than a visit to the travelling circus.

Cirque du Soleil realised that it could not win by taking customers from the already shrinking demand for the circus industry, which historically catered to children. Instead, it created uncontested new market space that made the competition irrelevant. Its productions are positioned as ‘unprecedented entertainment experience’ that appeals to a whole new group of customers -- adults and corporate clients prepared to pay a price that is several times more expensive than traditional circuses. Seeing one Cirque du Soleil production in Vegas recently, I am convinced that the company has reinvented the circus in itself.

Meanwhile, LG Electronics has just announced the launch of its ‘Blue Ocean’ management campaign, and it planned to double its sales volume, profit and shareholder benefit by 2010, with 30% of its sales volume and 50% of its profit being derived through ‘Blue Ocean’ products. No details are available, but anticipation is mounting.

Besides corporations from the East, namely LG and Nintendo, American companies, too, have successfully plunged into the blue oceans and navigated soundly. They include Research in Motion (BlackBerry), Southwest Airlines, Apple, and Google. They can’t be too far wrong.

April 1, 2006

There is absolutely no Internet surfer experience without a browser. But why did Microsoft, which professed to dominate in Internet-enabled applications as its core business, take browser so lightly that it had allowed Internet Explorer (IE) to age for the last five years without fundamental upgrades?

Many a Microsoft detractor views the software giant as a business strategist good at knocking off emerging competitors. Some believe Microsoft allows nimble players to R&D new applications, but it will not hesitate to move in to eat their lunch if situations warrant it.

You remember when Microsoft was an industry joke when it launched Internet Explorer 1.0 in August 1995? People thought Netscape was a better product for web browsing. Microsoft worked hard for six years to gain dominance in the browser war, and IE6.0 was finally introduced in October 2001, though still full of bugs. But IE6.0 was epoch-making as it effectively resulted in the premature retirement of Netscape, and Internet visionary Jim Barksdale. The web browser became but a conquered territory.

Have alternative browsers Firefox and Safari threatened IE’s dominance? Yes and No. IE, by far, still remains the browser of choice for more than half of the PC users around the world. But yes, the worldwide web has mutated into the next generation, what Tim O’Reilly, the founder of publishing company O'Reilly Media, termed as Web 2.0.

This is compelling because since 2001, cellular technology has precipitated in the consumers’ unquenched yearn for mobility and mobile devices. Broadband has increased uptake and rich multimedia content distributable over multiple carriers, and Bill Gates called this “form factors”, have become the key driving force that propel new web applications.

O’Reilly, when he coined the term Web 2.0, he forewarned that the next generation Internet is going to be a battle over more database and content, with the user-generated content becoming the core. He quoted auction site eBay.com, image aggregator Flickr.com and online bookmark Deli.cio.us as the examples. This is what O’Reilly called the phenomenon of “increasing collective intelligence”.

In other words, the Next-Gen Internet, IPv6 aside, will see the domains of web development and content residing in the hands of business decision makers, web developers and designers. The end users will provide their lunch. And Microsoft appears to show its strong appetite on the lunch menu.

No less significant is the fact that the web surfing experience has been further enhanced with the adoption of AJAX, which stands for Asynchronous JavaScript And XML, in the last two years. What common Internet users did not realise is that, with AJAX, web pages made to “feel” more responsive by exchanging small amounts of data with the server behind the scenes, so that the entire Web page does not have to be reloaded each time the user makes a change. This is designed to increase the Web page's interactivity, speed, and usability. In short, AJAX is suited to the lifestyle of the Net generation on-the-move.

I was at Las Vegas in Mid March to get an on-site preview of Microsoft’s Next-Gen web strategies revealed at the MIX06 conference. O’Reilly, no doubt a proponent of open standards, again reprised his role as the conversation partner to Bill Gates, who delivered a keynote address on Microsoft’s game plan in the near future.

O'Reilly, noted for his polite but no holds-barred questioning of his guests and hosts like, provided the sparks to Microsoft’s well-rehearsed marketing-speak. His Web 2.0 theory talks about a new wave of applications is emerging that takes advantage of Web-enabled flexibility to offer users innovative functionality unmatched by old-fashioned desktop applications. What have you got this time, he asked the Microsoft chairman point-blank.

Apparently, Microsoft has revisited the neglected Web development market, and has put together a showcase of ready-to-launch web user experience and web developer tools that include IE7, developer tools on Microsoft platform like Atlas (as usual, the Microsoft-flavoured version of AJAX), Microsoft Presentation Foundation, and the long-awaited Windows Vista.

There were traces of Microsoft pragmatism in not succumbing to “reinventing the wheel” syndrome as IE7 has apparently adopted and enhanced Firefox-like tabs, and Safari’s feel-and-look. But look out for Windows Vista, the new OS that will interface well with Bill Gates’ various ‘form factors’, the mobile devices for convergent content.

That will make Web 2.0 visibly exciting.

March 16, 2006

There is a distinct differentiation between multimedia and network service providers in the developing and developed countries. While both blocs continue to have under-served areas within their respective countries, the former keep their sight on rolling out telecommunications infrastructure, and the latter focus on providing solutions to emerging communication needs, which see a rapid change in digital lifestyle.

The business case behind this lifestyle change is the convergence of information and communications technologies. Leading brands in the world, the First World to be exact, have been swift in tapping into this emerging trend, and come out with new gadgetries, applications and lifestyle solutions to excite and humour the digital generation. Some of these big names form strategic alliances to tap into each other’s strengths and dominance in the life of their respective end-users. Novelty, an oft-tried and perishable form of trapping customer loyalty, has been rudely replaced by old paradigms honey-coated with new flavours. Buzzwords: Mobility, Innovation, and Day-to-Day Problem-solving.

For most of us in the productive generation, we are living in a world signified by Blackberry, 3G, blogs and Google search. Our lifestyle has become an undetachable part of the big rat-race. We need information on the tap to make informed decisions in business and in privacy, incessantly. Solving day-to-day problems and myriad challenges, both in the office and at home, is now a lifestyle by itself. So much for digital generation, you may say.

Ever thought of having a blogging tool built into your mobile phone? Recently, Sony Ericsson Mobile Communications announced that it is to integrate into Sony Ericsson mobile phones preloaded with the relevant software that features Blogger.com and Google Search, two assets owned by Google Inc.

The rub-off is that subscribers of Blogger.com will soon be able to update their personal blogs from mobile phones. It is a fact that blogging has experienced exponential growth over the last few years – I know this well as I have been blogging religiously for the past three years – and the digital generation, aka information consumers, are decidedly turning to the Internet as a means of receiving and sharing information and images in personal blogs.

Hence, marriage is made in heaven for bloggers and their mobilephones. Built-in camera just made it even sweeter.
Check out Sony Ericsson’s K610 (the 3G model), alongside K800 (3G/GPRS Dual-band) and K790 (EDGE Tri-Band), which come with integrated 3.2-megapixel digital cameras with autofocus, flash and new imaging technology. With Google search functions built-in, these Sony Ericsson models may herald the day when Google search engine is the standard search engine for all Internet phones in the future. Already, Vodafone and Motorola have also announced that their phones will use Google's search tool. That’s besides earlier innovations that has already made a mobile phone a Walkman.

Riding on the roaring success of iPod + iTunes portfolio, the Apple took personal computing a step closer to digital nirvana recently. After introducing the range of personal computers with Intel processors that are much faster than the previous PowerPC G4 processors, the new frontier is in the arena of competitive compact entertainment solutions. With the new Mac Mini, the user can connect it to a TV, complete with other Apple supremacies -- a remote control that commands Gigabit Ethernet, Wi-Fi, Bluetooth, DVD burner, enhanced Front Row software with Bonjour file sharing and streaming, and some robust display options for better image and graphics output. Hey, since when had a PC become a powerful entertainment hub with a mid-range pricetag?

On the other hand, the grand nanny of personal computing, Microsoft, is not letting up and it recently joined the ‘Me Too’ bandwagon to announce the Origami Project. As specifications are scarce, we could only rely on media releases to learn about the Origami, which means the art of paper-folding in Japanese. Geek pundits called it a handheld "ultramobile" PC that's also a media player (iPod-wannbe?), a PlayStation Portable (PSP), and a Tablet PC rolled into one.

Call that convergent digital lifestyle? Precisely.

You know this better than me, but let me repeat. The digital trending is pointing to a new world of demographics and psychographics that old paradigms in marketing can hardly survive. Consumers’ wants and needs have been distorted with chaotic bursts in changing tastes and personal preferences. My admiration and respect for Sim Wong Hoo remains intact, but why is it that Creative Technologies’ early leading edge in soundcards and media player markets was only to be displaced by iPod’s dominance?

That’s the same question I want to ask strategic planners in the local mobile network who thought 3G is all about video-calls and watching CNN and Bloomberg on the handset. Think out of the box, guys!

March 1, 2006

By now, Malaysia would be seeing more than two licensees given the blocks of 3G spectrum to operate the third generation cellular networks, and the market place should see keen competition in play.

The rollout of 3G services in Malaysia is like a jumbo-jet stuck on the runway, lots of power-hype but you don’t see it take off and fly. More than two years had passed after the licensees and blocks of spectrum were issued before Celcom could roll out its 3G services in May 17, 2005, in conjunction with the World Communications Day. Maxis, the market leader for 2G GSM, followed suit and launched its 3G services a month later. However, take-up rate in the last eight months has been lukewarm with less than 100,000 subscribers.

Why didn’t mobile users warm up fast to 3G? Suffice to say, this is not uniquely a Malaysian problem. Apart from Japan, 3G has seen the same lacklustre in Europe and Asia, particularly the region seen as holding the highest market potentials for 3G.

In my radar screen, I noticed two major blunders that caused this slow market up-take. Firstly, the consultants had sold 3G like snake-oil salesmen do their trade. Secondly, the network operators did not understand 3G and its target audience.

That was not the case. Even today, throughput bandwidth for 3G could barely reach 384kbps outdoor stably. Consumer behaviour also indicated that people don’t find it a pleasant user experience to surf porn, watch soccer goals, play network games and throw dice on that 2.5-inch screens that come with short-lived battery.

There are to date about 100 3G operators in over 40 countries world that offer 3G services prescribed by those snake-oil telecommunications consultants. If you look at their business models, communications campaign plans and real case studies, the operators were equally clever by half. Some had marketed 3G the same way as 2G and GPRS, that’s a combination of more voice and a little data. The gameplan fell flat because 2G and GPRS users found themselves no necessity and incentive to upgrade, if it’s ‘more voice and a little data’ that all they need.

Some operators who have 3G networks but short on content, for examples several notable players in Europe and Hong Kong, and Maxis in Malaysia, had taken the easy way out by launching 3G data card. In other words, it’s an alternative to surfing Internet on WAP and Web channels. Nightmare followed. In countries like Malaysia, where SIM-lock is disallowed, operators discovered that not all WAP and Web sites could render well in graphical user interface (GUI), as there is a diverse array of handsets running on rival operating systems.

Then, there is the fundamental issue of customer profiling that matches with the right content mix.

Most 3G operators have discovered the textbook mantra that there are two sets of target groups for early 3G uptake, namely the early adopters and the innovators. Early adopters are usually the young gadget freaks and those suffering the ‘kiasu’ syndrome and who would change their handsets every three months when there is a new product launch. They make up some 15% of the existing mobile users, who may have the money for the hardware, but not the consumables, the minutes and account credits. The innovators, on the other hand, are the professionals who may be discerning about technology and the related benefits. This is the ideal group with the deep pocket and revenue-generating usage behaviour for the operators. But they are in their small minority.

You see, the window for the mobile operators to convert their captured customers is rather narrow and the acquisition costs, for example the subsidy for the 3G handsets, are relatively high. Then, comes the first nightmare – 3G content and content mix.

A recent survey shows that people don’t use 3G to watch CNN or Bloomberg as they could get the programmes live, and sometimes free, from other media. These 24/7 cable news are only hotly streamed onto the users’ handset during important breaking news which, by the economics of telco revenues, are rare and few apart. In other words, 3G operators need more killer programmes to induce that habitual, daily downloads from among the subscribers. So, where are those killer programmes and programme genres?

I have some clues but I have no business in offering them for free.

February 16, 2006

The egalitarian world of the Internet is inclined for a new challenge when AOL and Yahoo, two of the world’s largest email service providers, recently proposed to charge a fee for the delivery of spam-free emails along the originating and destination route.

According to media reports, AOL and Yahoo will introduce a system that would guarantee speedier delivery to companies that pay between 0.25 and one US cent for each message. While AOL and Yahoo would still accept email from senders who do not pay for preferential treatment, the business bias is that the paid messages would bypass spam filters and other barriers which strip off pictures and other images, enabling the emails to land more quickly in in-boxes.

Are we seeing the prospect of a two-tier Internet from now? Notably, AOL and Yahoo’s proposed new business model came in the wake of intensifying debates on the future of the web as the US Congress prepares to institute the first major update of telecommunications legislation since the birth of the Internet.

The centre of debates is on the principles of Internet Neutrality. It is the principles that had been followed through over the last decade of commercial Internet, under which data has been disseminated without discrimination or preference ever since the birth of the World Wide Web.

Here’s a recap of the development in the US, the Motherland of Internet. In August 2005, the Federal Communication Commission (FCC) decided that telephone companies are no longer required to open up their broadband lines to rival Internet service providers. The FCC decision was made after the US Supreme Court freed cable companies from similar requirements in June. The net result was that DSL and cable modem operators now found themselves competing on a level playing field, with the pure-play Internet operators crying for mercy.

Political clouts came into play. At the insistence of two Democrats on the commission, the FCC adopted a series of principles that favour Internet users, Internet companies and Internet innovators. The principles, which are widely known as ‘Internet Neutrality’, provides the grounding to keep the Internet open in an era when access in the US is dominantly controlled by the cable and telephone duopoly. ‘Internet Neutrality’ is revelled because it should (read my lips!) guarantee the right of users to access all legal content and services on the Web.

This brings us to the key hurdle faced by VoIP operators in access restrictions to certain geographical sites, a prickly issue for the ‘Baby Bells’ in small regions in the US – yes, we have a parallel right here in Malaysia.

Here’s the case. Earlier last year, a small regional telephone company blocked its DSL customers from using Vonage, an Internet telephone service. The FCC intervened swiftly and forced the telephone company to restore Vonage access.
The incident was seen as having restored the FCC's authority to police a content-based discrimination. Besides, it illustrates the importance of upholding the Internet-neutrality principles.

Interestingly too, big names like Apple, Amazon, eBay and Microsoft etc also bandied together to lobby for such Internet Neutrality rules. The implication is far–reaching.

Imagine, without the Internet Neutrality principles being adopted, a broadband service provider could ally with a search engine and, perhaps, a music-download service to forbid its customers from accessing rival services. Competition will be dead, and the vibrant dynamics of open market and innovation will be stifled.

But there is one setback. The ‘Internet Neutrality’ principles do not have the full force of law behind them. To make the principles work, a knowledgeable legislative body and a no-nonsense enforcement agency are critically required so as to consumer interests. This is no easy task. Even in progressive countries like the US, as has been illustrated earlier, if the FCC fails to do its part, the Congress will have to step in to ensure that all Internet users remain free to access all the content and services that are flourishing on the Web.

Internet content providers are already under fire from telecommunications firms, who are seeking to ensure that their profits - as the providers of the pipeline - keep pace with the internet's expansion into entertainment and commerce.

February 1, 2006

What will the Malaysian ICT industry be looking at in pushing the envelope for Open Source this year? We can’t be keeping the evangelical talks after the government has started to incorporate Open Source solutions into its procurement procedure since 2004.

Despite the fact that budget allocation and expenditure for Open Source solutions are relatively miniscule at the moment, it was a good start since the Open Source endorsement policy came into being. Our next job is to show the government the next step. Yes, we need to take that bigger step to realise the benefits of adopting Open Source in terms of innovation and justifiable alternatives in resources planning in the ICT sector, both in the government agencies and the commercial world.

In 2005, I noticed there had been some missteps on the part of the industry’s flag-bearer, the Association of Computer and Multimedia industry Malaysia (PIKOM), with regards to its position on adopting Open Source. For the record, PIKOM during the time when Mr Looi Kian Leong was the chairman was instrumental in the creation of an Open Source Special Interest Group (OSSIG). Some monumental results were produced, one of which was a white paper on adopting Open Source software and solution in the public sector, which was presented to the then Ministry of Communications and Multimedia. The gist of the white paper was also presented at inaugural Public Sector CIO Conference organised by MAMPU in 2002.

However, during the General Public Policy Conference (GPPC) 2005 hosted in Kuala Lumpur by PIKOM, the present PIKOM leadership was reported by the mainstream media that it was reviewing its position on Open Source vis-à-vis the 2002 white paper on Open Source it endorsed via the PIKOM-OSSIG. As a founding member of the OSSIG, I was made aware of the protracted debates that ensued behind the scene within the OSSIG.

It is with this imperative in mind that all is not lost for PIKOM to re-crystallise its strategy to help propel Malaysia to be on par with other First World countries in ICT deployment. Admittedly, we are not here to be copycats and emulate others’ practices for the sake of getting upgraded against the Joneses. However, in technology and sciences, there is this overpowering insistence that we should adopt global best practices in all areas of knowledge domains. It’s precise on this note that PIKOM could play a bigger role as the trade body that represents over 80% of the significant players.

One such trendline is the progress achieved in the promoting of OpenDocument Format (ODF), which has been radically endorsed by the state government of Massachusetts, USA. Recently, the state of Massachusetts had made it official that it will use only non-proprietary document formats in state-affiliated offices effective Jan. 1, 2007. The OPF is one such format.

The OpenDocument Format (ODF) is an acronym for the OASIS Open Document Format for Office Applications. This standard was developed by the OASIS industry consortium, based upon the XML-based file format originally created by OpenOffice.org. In layman’s term, it is an open document file format for saving and exchanging editable office documents such as text documents (including memos, reports, and books), spreadsheets, charts, and presentations.

The obvious political barrier to adopting ODF is that the ODF is intended to provide an open alternative to proprietary document formats, including the popular but undocumented DOC, XLS, and PPT formats used by Microsoft Office, as well as Microsoft Office Open XML format.

Proponents of ODF advocate that organisations and individuals that store their data in an open format such as ODF could avoid being locked in to a single software vendor, leaving them free to switch software if their current vendor goes out of business, raises their prices, changes their software, or changes their licensing terms to something less favourable.

We should keep our eyes open in 2006 to leverage on this significant development.

January 16, 2006

There are several execution flaws to the Government’s directive to register all prepaid phone account clients, irrespective of new or existing ones, starting January 1. This is a follow-through of a 3-month pilot project in Penang and Malacca launched in the last quarter of 2005. At the nationwide level, a 6-month timeline is tied to the exercise, whereby the respective service providers must terminate the phone numbers if the users did not comply with the requirement.

There are three major issues involved. One: There is no legal framework pertaining to the guarantee of security and confidentiality of personal data, and the attorney power of the data custodian is not clearly defined. Two: Registration of user data is relegated to the retail/dealers level and there is no guarantee of quality of custodians of data in transit before the data is transmitted to the mobile operators. Three: Mobile operators are non-committal to a professional workflow while industry regulator, the MCMC, does not provide a clear guideline for operators to adhere.

Let’s take a look at the registration procedure. Recently, media reports said that the government and cellular operators were very satisfied with the cooperation of the public to the registration exercise. But the claim has been challenged, the validity of the statistics and information severely questioned.

According to Bernama, the operators admitted of receiving many enquiries about the matter from the public. They, however, said they were waiting for further instructions from the MCMC. What we heard from MCMC thus far is that this was not supposed to happen as it would frustrate the overall purpose of the registration exercise. How convenient in buck-passing. Didn’t the operators consult the MCMC on the registration procedure before the directive was announced?

Now, let’s look at the larger issue. In 2002, this column has discussed at the length the peril of the authority’s delay in passing the Personal Data Protection Act. Perhaps, it is timely to revisit this issue as we undertake the registration of prepaid cellular users as millions of people’s personal data are passing through the hands of untrained and unrestrained personnel.

Data attached to cellular phone accounts are critical by nature. Each entry will include a person’s name, his address, and his identification card numbers. These sets of personal data are then attached to specific phone numbers where call records can be traced. Frauds have happened before in the automobile hire-purchase industry when such personal data fell into the wrong hands. There is no guarantee that this cannot happen in the cellular industry.

This issue was highlighted in the US recently, albeit at an alarming scale. The sale of personal data and telephone calls record, obtained through sanctioned means or otherwise, has become a big money-spinning industry oblivious to the cellular users.

In early January, the Chicago Police Department issued a warning that dozens of online services – like locatecell.com operated by Tennessee-based Data Find Solutions Inc. -- are selling lists of phone calls made on mobile and land lines, raising security concerns among law enforcement and privacy experts. A Senator has called for legislation to criminalize phone record theft and use.

These online services might be skirting the law to obtain the phone lists. A common method for obtaining mobile phone records is "pretexting", which involves a data broker pretending to be a phone's owner and duping the phone company into providing the information. In some cases, telephone company insiders secretly sell customers' phone-call lists to online brokers, despite strict telephone company rules against such deals.

To test the clandestine service, the FBI paid Locatecell.com US$160 to buy the records for an agent's cell phone and received the list within three hours, the Chicago police bulletin said.

The Chicago Sun-Times did the same and Locatecell.com responded swiftly by emailing back a register of 78 telephone numbers recorded on a reporter’s call list, which included calls to law enforcement sources, story subjects and other Sun-Times reporters and editors.

In July last year, the Electronic Privacy Information Center (EPIC) filed a petition with the US Federal Communications Commission (FCC) seeking an end to the sale of telephone records. It has uncovered Locatecell.com as the company that sold the phone records of a Canadian official to a reporter with “no questions asked”. In other words, with digitisation, critical personal data could travel to foreign hands without your realising it.

So, can we establish that cellular phone numbers and their records are now the most powerful investigative tool? If that’s the case, isn’t it time we tightened the law by instituting the long-awaited Personal Data Protection Act before all hell breaks loose?

January 1, 2006

Bill Gates and his wife Melinda, alongside Irish rocker Bono, have been jointly named "Persons of the Year 2005” by Time magazine for their charitable work and activism aimed at reducing global poverty and improving world health.

Interestingly, the honour, especially for Bill Gates, has nothing to do with personal computer and software that made him a legendary figure in information technology. Instead, the Gates are honoured for their philanthropic contributions via the Bill and Melinda Gates Foundation - the world's largest foundation, valued at US$29 billion, which spends almost the same amount each year as the World Health Organization (WHO).

Time said the Foundation has saved at least 700,000 lives in poor countries by investing in vaccination programmes, has donated computers and Internet access to 11,000 libraries, and has sponsored the biggest scholarship fund in history.

It’s a thought-provoking event as the honour bestowed on Gates is exactly twenty-three years after the PC, the device that created much of his personal fortune, was named Time’s "Person/Machine of the Year" in 1982.

The irony is, Gates would rather dispense his wealth through philanthropic activities than to allow his company to offer affordable copies of Microsoft Windows in the resource-impoverished developing countries targeted by his foundation. What does that tell us?

Paying tribute to the Irish singer, Time said Bono's campaign to make rich countries address the debt of poorer ones has had an equally impressive impact on the world. For the record, in 2005, ''Bono charmed and bullied and morally blackmailed the leaders of the world's richest countries into forgiving US$40 billion in debt owed by the poorest," the magazine said.

That says a lot for technology. The wealth and progressiveness it created for the world should be harnessed for the well-being of humanity. The world shall play the dual role of the benefactors and the ultimate beneficiaries of technological advancement. Gates and Bono have just shown us the ways, and challenged us to replicate them. I hope more corporate entities and individuals will join the fray.

On that note, as we usher in 2006, I suggest we spend some time to reflect on the year past and try to make sense of what lies ahead in the months to come.

First, the bad news. Global digital divide is here to stay. As evident from the various researches and reports presented during the World Summit on the Information Society in Tunis last November, the jarring gap between the info-rich and info-poor is widening into a chasm that can no longer be reconciled. This, not surprisingly, is closely tied to the North-South disparity that didn’t get addressed in the last millennium. Let’s brace ourselves with the surety that this disparity will only develop into new flash points of conflicts in the decades to come. Global unrests, perpetrated by inherent political alienations and economic imbalances, will take the form of complexities we have never experienced before in our civilisation. We really can’t figure out how it will be amicably resolved and this thought is very upsetting.

On the other hand, on the home ground, there have been several positive signs that should spur us on in the areas of market liberalisation and accessibility to affordable services. It is re-affirmed that healthy competition will provide attentive customer service and end-user lower cost. The most significant example is the cellular telephony.

The entry cost for a prepaid mobile account has dropped to RM8.50, compared to over RM200 a couple of years ago. In tandem with the three-corner competition among the incumbents, the floor for intra-network call charges has been lowered to 10 sen per minute, compared to some two years ago. The operators are not giving away their margin as the increased subscriber base provides them larger call traffic, precipitating in higher utilisation of the infrastructure.

Secondly, market focus has since shifted towards value creation, and users are rewarded, via free airtime and bonus credits, based on loyalty. This creates a mentality for customer relationship building and only operators who don’t buck up on CRM will lose out to their competitors. It’s basically a zero sum game as the user growth is tapering off towards a plateau after years of runaway expansion. The curve overcast everybody in a fair game.

It is hope that this phenomenon of fair competition, innovative customer-engaging marketing strategies experienced in the cellular market will be replicated upon in other convergent industries, like broadband and satellite TV services. The regulator just needs to give them a push to make things happen.