Business

Changes to business digitisation brings

BETonSPORTS In US Gambling Probe
The gambling industry is today reeling from the news that the chief executive of one of the UK’s largest betting websites, BetonSports, has been arrested in the States on an US indictment “alleging various criminal acts against multiple defendants.”
David Carruthers, the British CEO of BetonSports, was arrested at Dallas, Fort Worth as he tried to change planes and was held overnight in the airport clink.
The company’s shares were suspended in London today, with Carruthers charged under racketeering laws in connection with a US probe of online gambling.
In addition to the criminal charges, the US has filed a civil case in St. Louis federal court, asking that Betonsports be ordered to stop taking sports bets in the US and to return any money held by US customers in their gaming accounts.
US District Judge Catherine Perry responded by issuing a temporary restraining order granting the request, with a hearing scheduled within 10 days.
Other gambling sites responded by going into freefall, with PartyGaming dropping 7.5 pence (7.3 percent), to 95.5 pence early this morning.
It was the same story with Sportingbet, owners of Paradise Poker, who saw their stock slide 54 pence (19 percent) to 228 pence, while 888 Holdings, the biggest of the online casino companies, crashed 17.5 pence ( 9.1 percent) to 175.5 pence.
Early this morning, BetOnSports PLC issued a statement which included the following:
“The Board have in the meantime been reviewing with their lawyers the impact of the indictment and are considering the serious business impact of the temporary restraining order on its business and that review is continuing. Given the issues and uncertainties involved, until the review is complete and a fuller announcement can be made resolving the uncertainties concerning the future of the Company, the Board has requested the London Stock Exchange to suspend trading in the company’s shares.”
Today’s actions are part of a continuing campaign by US lawmakers to crack down on online gambling, a business which rakes in a mighty $12 billion-a-year.
BetOnSports
18 July, 2006
Barclays Drop BT Media And Broadcast Deal
The planned buy out of the satellite interests of BT Media and Broadcast, the division within UK giant, British Telecom, that operates ‘business to business’ broadcasting industry interests, has fallen at the final fence.
After long and protracted negotiations that we here at Digital Lifestyles have been covering for the last six months, we can reveal here that the deal will not go through. Rumours have been rife for the last week or so after Barclays Private Equity (BPE) failed to get the necessary agreements to cut suppliers costs.
BT like other large telco’s is finding itself with more Satellite capacity than it can usefully manage, remains committed to a sale and is now considering the long term future of some of its’ other major earth stations.
The failure of the negotiations that valued the sale at around £80m, is expected to enable key players from both sides to ‘spend more time with their families’ and staff who had elected to join the new company that Barclays were putting together, face a prolonged period of uncertainty while “reserve bidders” are consulted, including a further interested private equity outfit.
14 July, 2006
Music Industry Grouping Proposes Digital Age Copyright
“A wide music industry grouping representing the independent record industry, composers and songwriters, musicians and performers, music managers, music publishers and their collecting societies hosted a crucial round table meeting yesterday, chaired by the Smith Institute, to debate the creation of a progressive and innovative copyright framework that is fit for purpose in the digital age.”
Which is the official line anyway, whether it has any relevance to the real world is a mute point and potentially completely misunderstood.
After the “industry” round table, a press conference was held, with the following representatives: –
Adam Singer (Chief Executive MCPS PRS Alliance) (below right), Alison Wenham (Chairman, Chief Executive, AIM) Dave Rowntree (Drummer with Blur + Ailerons) Andy Heath (Managing Director 4AD Music, British Music Rights Board) David Ferguson (Chairman, British Academy of Composers & Songwriters) Doug D’Arcy (AIM Board, Managing Director Songlines) Horace Trubridge (Assistant General Secretary Musicians Union) Jazz Summers (Chairman Music Managers Forum, CoFounder Big Life Management)
A value recognition right
This is the whole premise of their argument. Anyone involved in the distribution of content (whether they are aware of it or not) should be considered part of the value chain and therefore subject to licensing constraints.
The Copyright Levy laws were designed for analogue, but digital changes everything, control has passed to other players (ISPs, mobile operators, iPods etc) rather than traditional channels with physical controls. So the intent is to license these distributors. This will of course require working with them, understanding their business models etc.
It’s all about a mechanism for creating a better working relationship with distribution channels.
The groups are already lobbying government to change the law so that these new distribution channels will now be considered actual distributors as the content is adding value to the distributor, therefore the industry should get a cut of the added value.
It’s estimated that £0.5 billion has been lost in license revenues due to illegal sharing. Current copyright law actually forbids copying a CD to iPod (or any other kind of digital copy).
They agree there is more work to do and they’ll publish the report in September including transcripts of discussions held yesterday morning.
These issues don’t just apply to the music industry and they’re gaining traction from other content industries and internationally.
Statistics are everything
One of the major stats used to justify their argument is that 60% of Internet traffic is file sharing, initially it was stated that this was “music sharing”, but this was changed to general sharing. There is a lot of P2P traffic and though a lot of it is probably music sharing, services such as Skype and other legal P2P services will also make up a good percentage.
They then utilise these figures that as so much traffic is P2P, users are signing up for broadband because of file sharing i.e. P2P is adding value and therefore attracting users and they want a cut of the added value.
It’s actually probably the other way around, people sign up for broadband for many reasons. Nowadays, because it’s given away free as a bundle with other services, but also because it’s cheaper than (or near enough the same price as) dial-up. Customers then find P2P is easy and therefore use it.
The margins on broadband are extremely low, Carphone Warehouse (CW) is actually losing money on every customer they sign-up, EVERY month (this will eventually change when they install their own kit in BT’s exchanges). They are buying market share. P2P doesn’t help their situation at all, they’d much rather not have users eating up all CW’s bandwidth which costs them lots of money.
Bulldog have just pulled out of the retail market and have decided to concentrate on the wholesale side and compete with BT Wholesale. Though part of this is that their parent Cable and Wireless (C&W) are trying to consolidate to fewer larger customers (i.e. broadband suppliers who then have lots of customers), part of the problem with having retail customers is you have to constantly upgrade your network to meet their growing bandwidth needs, and this gets very expensive very quickly.
With a wholesale customer base, they only need to provide a certain amount of bandwidth per customer to the retailer, who then has to provide connectivity elsewhere and meet the growing bandwidth requirement pains.
Retailers using BT Wholesale have very small margins, equating to maybe a few pounds per month to provide all the back-end services that customers demand.
Broadband to all
Broadband is becoming a commodity and it’s the value added services that will generate revenue, and what are the value add services? Licensed content, initially likely to be TV (as in IPTV), but other services will follow.
In France broadband is available for 18 Euros per month for 24Mb/s ADSL2+, this includes Internet access, basic TV channels and all you can eat national French dialing. Yes, the companies support P2P, not because they want to, but because customers demand it. The basic service will just about pay for itself, or even make a loss, but then once customers have the broadband in place, they buy premium content and that’s where revenue comes in.
This model is coming to the UK, BT’s broadband hub service is their first foray into an IP connected world, BT Vision (IPTV) is coming.
Stealth Tax
The music industry has gotten very bad press for suing consumers, so now they are trying to make the problem go away by taxing (licensing) the distribution channels and hiding the effect from users themselves.
The distribution channels would rather the traffic wasn’t on their networks in the first place, but are being put in a position (which could be driven through by law) where they have to pay for their users’ (mis)use of the network where margins are incredibly low to start with.
This means the channels will have to put up pricing (which means users notice) or absorb the costs themselves and they make even lower margins.
The music industry needs to rapidly have sensible discussions with the ISPs and other distribution channels to sort out the real economics of distribution or it’s likely a stealth tax will come into force which could kill the distribution industry in doing so, which wouldn’t benefit anybody.
13 July, 2006
ISPs Give Mixed Response On BPI Attempt to Clamp Down
The BPI continued its policy of clamping down on illegal file sharing this week, when it contacted UK ISPs Cable and Wireless and Tiscali with requests to suspend 59 accounts.
BPI Chairman Peter Jamieson said, “We have demonstrated in the courts that unauthorised filesharing is against the law. We have said for months that it is unacceptable for ISPs to turn a blind eye to industrial-scale copyright infringement. We are providing Tiscali and Cable & Wireless with unequivocal evidence of copyright infringement via their services. It is now up to them to put their house in order and pull the plug on these people.”
In a statement, Cable and Wireless said “Cable & Wireless and its ISP, Bulldog, have an acceptable use policy that covers illegal file-sharing. This would normally mean that any accounts used for illegal file-sharing are closed. We will take whatever steps are necessary to put the matter right.”
Tiscali questioned the BPI’s approach – which saw the announcement being delivered to the press at the same time as the ISPs – and its evidence. In a letter to the BPI, Tiscali pointed out that “You have sent us a spreadsheet setting out a list of 17 IP addresses you allege belong to Tiscali customers, whom you allege have infringed the copyright of your members, together with the dates and times and with which sound recording you allege that they have done so. You have also sent us extracts of screenshots of the shared drive of one of those customers. You state that such evidence is “overwhelming”. However, you have provided no actual evidence in respect of 16 of the accounts. Further, you have provided no evidence of downloading taking place nor have you provided evidence that the shared drive was connected by the relevant IP address at the relevant time.”
In a statement on 12th July, the BPI stated “Early responses from both companies suggest that they will suspend accounts which have clearly been used for illegal filesharing” and indicated that it could supply detailed evidence on the other 16 Tiscali addresses. In an interview on More Four News Tiscali spokesman Richard Ayres said Tiscali’s message to the record industry is “Come to us, give us the details and we’ll absolutely work with you.” Which would seem to be in contradiction of Tiscali’s own letter, which also stated that “Tiscali does not intend to require its customers to enter into the undertakings proposed by you and, in any event, our initial view is that they are more restrictive than is reasonable or necessary.”
Whatever the outcome, the action represents a new approach to the copyright battle that is focused on service providers instead of individuals. Some feel that copyright infringement is being used as a way to stifle innovation and free speech.
Copyright activist Cory Doctorow, claimed that “The BPI is basically asking to replace the “notice-and-takedown” regime that allows anyone to censor any Web-page by claiming it infringes copyright with an even harsher regime: notice-and-termination, where the ability to communicate over the Internet can be taken away on the say-so of anyone who claims you’re doing something naughty with copyright…If this regime had been in place when VoIP was invented, there would be no VoIP”.
Coincidentally, the BPI action comes at the same time that the (US based) EFF launched its Frequently Awkward Questions for the Entertainment Industry. The FAQ features a number of pointed questions designed to counter the aggressive behavior of US copyright protection agencies such as the RIAA and MPAA. Among them are points such as “The RIAA has sued over 20,000 music fans for file sharing, who have on average paid a $3,750 settlement. That’s over $75,000,000. Has any money collected from your lawsuits gone to pay actual artists? Where’s all that money going?” and “The RIAA has sued more than 20,000 music fans for file sharing, yet file sharing continues to rapidly increase both online and offline. When will you stop suing music fans?” In the UK, the BPI has issued proceedings against 139 uploaders in the last three years. Of those, 111 settled out of court, paying up to £6,500 in settlement.
The BPI was noticeably absent from the group of industry organizations which gathered in London on the 12th of July to discuss new ways of charging for electronic distribution of copyright material. Their proposal, that “unlicensed intermediaries – rather than consumers” should be “the target of copyright enforcement actions”, was described as “ill-conceived and grasping” by Suw Charman, executive director of the Open Rights Group.
This fragmented and seemingly ad-hoc approach to the copyright issue is doing little to help the overall debate and a groundswell of resistance to both copyright and the way it is enforced has given birth to organizations such as the Pirate Party who demand wide-scale reform of the whole concept.
13 July, 2006
Microsoft Gets Huge €uro Fine
Microsoft have been fined by the European Commission for failing to comply with an anti-competitive ruling.
Their fine is unprecedented at €280.5 million ($375m, £193.8m) and covers a period from 16 December to 20 June at 1.5m Euro/day.
The EC threatens that it will raise the fine to 3m Euro/day if they continue to not comply beyond 31 July.
This tiff between Europe and Microsoft is related to the Media Player and “work group servers,” which Europe want to become more open, enabling other companies to compete against them.
The EC made a previous ruling against Microsoft in March 2004 when they threatened fines up to €497 million ($632m, £330m).
Europe have acted far more harshly that the US Justice Department which has been waiting for papers from Microsoft on a similar issue since 2002.
Competition Commissioner Neelie Kroes was quoted by Reuters as saying, “Microsoft has still not put an end to its illegal conduct. I have no alternative but to levy penalty payments for this continued non-compliance. No company is above the law.”
12 July, 2006
T-Mobile Adds Microsoft Push Email To Web’n’Walk
T-Mobile is the latest UK mobile service provider to offer its mobile customers Windows Push Email.
The Push Email service is compatible with Microsoft Windows 5.0 devices, which include the MDA Pro, MDA Vario, and MDA Compact handsets carried by T-Mobile.
The system – as the name suggests – works by ‘pushing’ email straight to the user’s portable device from their businesses Exchange Server, and then notifying them that there’s a message in their pocket.
Just like the cost to the little boy in the ghastly Melba Montgomery song, there will be ‘no charge’ for the new service for business users already on the web’n’walk professional tariff.
This certainly adds extra value to the T-Mobile package, which currently costs £17 a month, or £8.50 when added to Flext, Relax, or Business 1-Plan contracts.
The Microsoft Push Email service comes stuffed with security measures for businesses, including centrally controlled password protection, local data wipe, and a remote data wipe feature to clear devices of company-sensitive data if they get in the hands of ne’er do wells, rogues and robbers.
For added security and convenience (in case you’re a bit forgetful/half-cut), the wipe feature lets owners decide how many incorrect logon attempts can be tried before the phone shuts up shop.
Working over GPRS, 3G and Wi-Fi, T-Mobile’s push email service also offers integration with Microsoft Outlook, letting swivel-action besuited types synchronise tasks and search for contacts on the move.
T Mobile
11 July, 2006
Spend! Spend! Spend! Brits Head Up Euro Online Shopping League
With credit card-crazy Brits leading at the front, Europeans are spending ever more money online, with the yearly total for 2006 on course to hit €100bn.
According to new figures from Forrester Research, the 100 million Internet shoppers across Europe are shelling out a staggering €1,000 per person, with the buying-bonkers Brits spending more than anyone else, registering an average €1,744 for the year.
Jaap Favier, research director consumer markets at Forrester, commented that online sales are “building up every year in the countries where it started first, such as the UK or Sweden.”
Attributing the growth in e-commerce to the widespread adoption of broadband, Favier predicted that countries like France – who were late to the e-commerce party – are now only about two years behind the UK, and will soon have a higher growth rate in spending.
Favier added, “Consumers take about a year after going online before they will purchase something online. The first thing they purchase is either a book, a CD or a trip. Those people who have been online for a while are extending their buying into other categories such as clothing or electronics.”
So where’s the cash going?
According to Forrester, there’s a veritable tidal wave of cash heading for travel Websites, with over a third of all online spending going on booking flights and happy hols.
Favier predicts the travel boom will see an increase of 133 per cent over the coming five years, bringing the annual spend to €77bn by 2011.
Leisure is another Internet boomtown, as online off-licences and wine clubs rake it in, with Forrester predicting a thumping 283 per cent growth on leisure spending over the coming five years.
It’s a big happy-clappy rosy picture for overall e-commerce sales too, with online sales ready to more than double over the coming five years, reaching a cashtill rattling €263bn by 2011.
11 July, 2006
Spam, Spim And Splog Spins Out Of Control
Steeenkin’ spammers are increasingly turning their evil gaze in the direction of SMS, Web-based instant messaging, bloggers and community sites like MySpace.com, according to MessageLabs.
The mail services company said that spammers are looking to bypass e-mail-based antispam measures by targeting spam on “age, location and other characteristics.”
Mark Sunner, chief technical officer at MessageLabs, warned that social-networking sites offer spammers a “new level of convergence and capability to profile people.”
The company also noted an increase in IM spam (“spim”), with spammers sending just a hyperlink, which can direct users lead to a malicious site, or a phishing site.
“We expect more cross-fertilisation of (malicious software) as Yahoo, MSN and Google become one big blob, from an IM standpoint,” Sunner added.
MessageLabs reported that spam mail soared a hefty 6.9% in June to make up a massive 64.8% of all global emails sent that month.
Geographically, Israel continues to be the world’s number one spam target, with spam making up a colossal 75.9% of the country’s email traffic, up 11.9% since May.
Ireland was hit by the greatest monthly rise, with spam increasing by 14.1% to make up a spam rate of 59.4%, while Spain saw the sharpest fall, with lucky Spaniards only suffering spam at 24.8% of all emails.
Jargon watch
Splog: Blogging spam
Spim: Instant Messaging spam
MessageLabs
10 July, 2006
Virgin First With Mobile TV
Virgin Mobile looks set to launch the UK’s first true mobile broadcast TV service in the autumn, with the beardy one’s empire releasing a rebadged version of BT’s Movio product.
A recent big pilot of BT’s broadcast digital TV to mobile service revealed that punters *hearted* the service with two thirds willing to fork out up to £8 per month to have the service on their network.
BT Movio – formerly known as BT Livetime – broadcasts on the same frequencies as the digital audio broadcasting (DAB) network radio, but does a bit of techie jiggery-pokery to let multiple users access the service simultaneously without a reduction in quality.
Earlier offerings of mobile TV in the UK streamed the signal as Internet protocol (IP) packets, a method which burnt up bandwidth like it was going out of fashion, leaving users with fat bills or having to put up with a capped service.
Movio uses a system known as DAB-IP, which has emerged ahead of the rival technology, DVB-H, because the required radio spectrum is already available.
Although DVB-H should be able to offer more channels than DAB-IP, there are question marks over a timetable for its availability in the UK.
Exclusive
Virgin’s new deal with BT is expected to include a three month period of exclusivity, with Movio content providers announced within the next four weeks.
Hipsters wanting to be the first in town to use the service will have to fork out for a new WM5 phone based on HTC’s Trilogy design.
The curious looking phone has been co-designed by BT and UK company The Technology Partnership and will form part of Virgin’s Lobster range of mobiles.
10 July, 2006
US Democratic Party Adopt Net Neutrality
The US Democratic party has adopted net-neutrality as a party-political issue following the rejection of a second pro-neutrality amendment in a vote late last week.
Previously we reported on the demise of the first pro-neutrality amendment as part of the ongoing review of US telecommunications law.
The Senate Commerce Committee were tied at 11 for and 11 against, with Republican members voting against the amendment and Democrats for it. A majority vote is necessary for a bill to pass. Afterwards, Republican Senator for Alaska, Ted Stevens, gave his reasons for voting against the bill as well as displaying his obviously comprehensive grasp of the technicalities of the Web, “It’s a series of tubes. And if you don’t understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material.”
The Democratic party subsequently took up the issue with the slogan “Republicans: They sold the environment to Exxon, and sold the war to Halliburton. Now they want to sell the Internet to at&t.”
Former presidential candidate Senator John Kerry commented, “This vote was a gift to cable and telephone companies, and a slap in the face of every Internet user and consumer.” Another Democrat, Senator Ron Wyden, placed a ‘hold’ on the bill which temporarily stops further progress but a decision is inevitable and both sides are marshaling forces behind their cause.
Lawrence Lessig greeted news of Democratic support with caution, “Good for the Dems that they got it. Bad that the issue is now within the grips of party politics.” He acknowledged that, give the amount of money involved, political involvement was inevitable.
Many fear that the loss of net-neutrality will signal virtual civil war on the Internet and that commercial interests are having too much effect on the US Legislature. Jeannine Kenney, Senior Policy Analyst, Consumers Union offered a concise summary, “The network neutrality nondiscrimination principle, which protects competition, maximizes consumer choice, and guarantees fair market practices, is one step closer to being abandoned with the Senate Commerce Committee’s vote. This endangers the most important engine for economic growth and democratic communication in modern society. Nondiscrimination made possible the grand successes of the Internet. Its removal can take them away.”
6 July, 2006