January 23, 2007
The Right to Life, Liberty, the Pursuit of Happiness and Internet Access
Commentary by Bill Bittner, President, BWH Consulting
The theme at NRF this year was all around customer relationship management (CRM) and building a loyal customer base. Much of the activity was centered on the cell phone and its expected place at the center of the future in-store experience. Customers were able to talk with their friends as their image in the latest fashions was displayed on the retailer’s web site. Promotion messages were directed to consumers as they walked the aisle of the store. Payment systems used the phone to complete credit card transactions or carry “cash” balances.
As I watched these demonstrations, I thought about places in the ski country of Vermont where internet access is still over dial-up lines. Then I thought about all the people who do not have a cell phone. I know that seems hard to believe but they do exist. And yet the cell phone is only part of the story. Much of the promotional information was delivered via streaming video. That’s not something you really want to experience over a dial-up line. So all those households that are in remote locations where cable and DSL has yet to reach need some way to get on the network.
The challenge with constantly changing technology is that for some period of time you have double (or triple) the costs because you are supporting both the old and the new. Wouldn’t it just be cheaper, less confusing, and fairer if we just said that everyone has a birthright to network access? Federal and local governments have always maintained access to the highway systems. Since the internet is the “highway of the future,” why do we put it in the hands of private companies? Some cities have already started to put wireless “clouds” in their jurisdictions. Maybe this should become the norm rather than the exception.
There is a sinister side to this for retailers. Think about how much of today’s discretional spending is for “hard goods.” I don’t mean the traditional products you would find in a hardware store; I mean anything that has a “physical presence” and requires distribution. Retailers are usually the last step in the supply chain for physical goods. If everything could be delivered over the internet, retail stores would no longer be necessary. How much of our economy is now based on “virtual goods”? Think about movies (what is the difference between a movie and a video?), music, games, etc. Then think about all the online shopping, which is still only six percent of sales but growing. How would all this change if everyone had broadband access? How much longer would we need to keep doing things both ways?
We
talked about this a couple years ago when Philadelphia first announced their
intentions to provide wireless access. (See RetailWire, 12/9/04 – Facing
a Fork on the Information Super Highway) . Now the “content” is starting
to become available. Have opinions changed? Does it make sense for the government
to somehow ensure everyone has access?
There are a whole lot of different ways this discussion could go, ranging from government taking over the network to dictating the way network service providers distribute access. We already had the debates around “net neutrality” and the effort of a few big internet users to speed the delivery of their content.
I really believe we need to speed up the whole process of getting everyone onboard the internet. I don’t think letting government take over the internet is the answer. What makes the most sense to me is to do like we have done with the gas companies. We have separated the distribution services from the fuel costs so that customers can shop for the “content.” It seems the internet, phone services, and cable should all work the same way. Connection providers need to provide access to all neighborhoods and need to subsidize the rural customers and depressed neighborhoods that otherwise could not afford connections. This gives the content providers a level field on which to present their products.
Should we provide everyone cell phones? I don’t know. We don’t supply everyone a car. We do subsidize mass transit. Maybe the answer is some kind of alternative device that ensures identity and can hold a “cash” amount. If everyone had a card that assured they were who they said they are, that could be their “transit ticket.” People get crazy when you talk about “identity card,” but the number one security challenge is “authentication.” How do you really assure yourself that a person is who they say they are? Everyone talks about biometrics but it is not hard to imagine someone lifting another person’s fingerprints and applying them to their own fingers. Eye scans are another technique but I am sure contact lenses are an issue. So if the person alone is a problem, maybe we can work with a simple ID card that can be used in public devices. The card, combined with biometrics, would provide the authentication needed to allow network access.
Discussion Questions: How beneficial would universal access to high-speed communication networks be to the retailing industry? Should the industry lobby government to bring about universal access? If the government were to launch such a program, how do you think it would be implemented and in what form would it take?
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Universal contact/communication WILL happen, and everyone WILL be identified on a continuous, universal basis. The reason identity theft is so easy today is that people use their own identity “online” only sporadically, not continuously, 365/24/7. When continuous identification is the norm, stealing an identity will mean actual, real-time conflict with the rightful owner, a daunting prospect for the miscreant.
Although some are paranoid about privacy issues, the most paranoid are the criminals. Of course it is a little scary, as the truth about the future usually is. But the experience is likely to be more pleasant in the reality than it may be imagined in prospect.
Yes, Virginia (and Bill), surprising as it may seem, there are people without cell phones. As well as people with them who rarely turn them on or use them because they choose not to be available 365/24/7 as Herb describes it. As Mark says, there are lots of people who do not want to be constantly bombarded with advertising (and pay for the privilege of receiving it). Quite apart from the privacy issues (and yes, Virginia and Herb, I am one of those who are paranoid about identity cards), there is the CHOICE issue about which we speak so often. Some people want to choose what they buy, touch it and feel it, try it on before they buy rather than having it delivered and then face the hassle of returning anything that isn’t quite right. I’ve been gung ho internet for a very long time but I know people who rarely use it and then less for shopping than anything else. Leave them be. Live and let live. Them what wants it will get it. Retailers will benefit, I believe, as numbers continue to grow but it won’t help them to be too pushy and antagonise those who prefer to do their shopping in person.
In the wake of the dot-com crash I wished we could have a program for universal broadband built along the lines of the Depression-era programs that brought phones and electricity to the hinterlands. In that political climate, such a program was impossible, but I still wished.
I still see universal wireless broadband as long overdue. And I kind of like the patchwork of providers we see in populated areas–I would only like municipalities to step in if they have to, as in areas of very low income or very low density.
And I don’t see a down side for any industry–even retail.
I absolutely believe Bill’s statistic that 60% of buyers pre-shop online (in our house, it’s 100%).
With better information, customers help front-line employees complete transactions more efficiently and take some transactions completely out of the high-overhead store environment.
With better production values and interaction driving richer online experiences, the web drives traffic into stores and builds brands.
And maybe some kinds of stores will go away because we can get what they sell online. But we seem to be spending more time than ever in restaurants and gadget stores, and here in St. Louis, the big construction equipment is still building retail centers–we seem to have an endless appetite for commercial real estate.
Have you ever noticed where the U.S. ranks in telecommunications services? Not very high. Places like Denmark, South Korea, Sweden and Norway have much higher speeds with much greater access. These countries achieved this supremacy over the the U.S. through public policies that encouraged local authorities to take advantage of a good deal.
The key to universal access is local management and public policy. Most universities now provide universal wireless and Internet access for their students. Sure, each student must acquire their own cellular devices and laptops which are inexpensively available on Craig’s List. This universality lifts everything up on campus. Communication flows. Professors are more in touch. Lecture materials are available. Students gain access to libraries and find opportunities online. It has transformed education and the learning experience.
The same principles can be applied throughout society. For example, why don’t mall operators equip all of their tenants with high speed, secure communications, just like they do heat and water? That would give each retailer an even chance. And, while in the mall, shoppers could take advantage of Internet access and payment options that they have at home. Sixty percent of consumer now pre-shop online. Isn’t amazing that most stores don’t provide their employees online access? How can they be expected to serve their pre-shopping customers? Would universal access in the mall enhance the workplace, at the very least as learning tool?
Why don’t residential buildings and developments come up with one deal for their tenants and condo owners–one secure, and resilient broadband access in the facility, fairly distributed to all tenants? Surely this would lower costs and increase services. How about senior communities? Hospitals? In every case, the quality of life would be enhanced with universal access under local control.
Not everyone drives on the interstates, but we all pay taxes to support the highway system and we all benefit from it, if not directly, then indirectly (as through lower cost, faster delivery of goods).
A similar logic might apply to universal broadband Internet access. I might be argued that it would improve the overall economy and support communication and information services that serve the greater good. With a national “backbone” established, municipalities could choose to invest in ubiquitous wireless access, the presence of which would make their communities more attractive to businesses and citizens.
Privately-owned public gathering places, such as large stores and malls, have incentives to provide shared local access and public terminals, as an aid to retailers and their multichannel shoppers.
My instincts tell me a mix of public and private action is the best way to propagate broadband access.
Even if everyone were given the possibility of having a cell phone and/or PDA for free, not everyone would want one, would choose to get one, or would choose to use one. Having everyone have access to the same information via the same media would be great for retailers and manufacturers who promote products and services. However, the consumers are in charge today and they do not all want to use the same form of communication (even if it were equally available).
Research of consumers who could purchase from the same company using either the Internet, a phone line, or in-store found that there are customers who prefer to use each method. Trying to manager consumers to get them to use the same technology is a self-defeating position. The consumers will use what they want to use, what they have access to, what is more comfortable for them.
With regard to the question of CRM, the internet is not the answer. It is a short cut being proposed by someone who will make money selling access to businesses. The CRM aspect of broadband is a sales pitch to retail management to help them manage their customers. It will offer no value to a retailer when all retailers adopt it. Unfortunately many companies will buy this pitch because they are too lazy or don’t have the ability to determine what their customers consider as value and deliver it. Once again, American retailing is looking for a silver bullet to solve their problems without actually having to do any work themselves. Does anyone really think that a successful program won’t spread to every competitor in the neighborhood. Heck, I know of coffee houses that advertise free wireless where the coffee house guest is poaching off an adjacent businesses wireless. How about Philly–who is going to have an advantage there? If retail would conserve energy and funds looking for and buying magic bullets, then they might have enough resources to hire competent executives, managers and store personnel. Spend your money on actually providing your customer a unique experience like value and service!
This is an extraordinarily complex issue. First, as anyone who lives in Connecticut knows, cell phones are only part of the equation–you also need towers. As to the Internet, while the idea of universal access is noble, the idea of making sure the government controls that access is a little frightening. The question ultimately is, “Who pays?” There are only three choices: the individual (many of whom can’t afford it now); the government (now there’s a rosy picture!); or business. I don’t know about everybody else but I don’t want to see the Internet turn into some kind of cyber-television peppered with even more ads than it carries now (if that’s possible).
Anyone who wants broadband and can pay for it will soon have it at a reasonable price. They’ll get access via DSL or wireless (WiFi, WiMax) or cable TV or satellite or BPL (broadband over power lines). Just wait another 2 or 3 years. Even people in very rural places in the US. Furthermore, millions of people are either happy with dial-up or just don’t care to have internet access at all. Why should those people pay for services they don’t want? And why not see if the broadband media price, via advertising support, becomes “free”?
Advertising support is now paying the partial or complete cost for information calls (1-800-free411), international calling (www.futurephone.com), search engines, internet access (AOL), and cell phone use (if you agree to receive text messages). For decades, ads have paid for broadcast radio and TV programming. The recent NRF show had many exhibitors pushing in-store ad networks. Why not free broadband, supported by ads?
How about taxing the well-off who already have high speed access and use the money to help the less well off so they can gain free high speed access to educational resources on the net? The customers retailers want access to are already wired. If there are some rural regions that are missing high speed access, we can always leave that up to a more modern version of Sam Walton–remember what he did?
This is made more interesting given the facts and argument in books like Screwed: The Undeclared War Against the Middle Class by Thom Hartmann.
The use of the net, the middle class…these are sure to be raised in the 2008 elections–perhaps raised by the inventor of the internet himself, Al Gore 😉
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Universal contact/communication WILL happen, and everyone WILL be identified on a continuous, universal basis. The reason identity theft is so easy today is that people use their own identity “online” only sporadically, not continuously, 365/24/7. When continuous identification is the norm, stealing an identity will mean actual, real-time conflict with the rightful owner, a daunting prospect for the miscreant.
Although some are paranoid about privacy issues, the most paranoid are the criminals. Of course it is a little scary, as the truth about the future usually is. But the experience is likely to be more pleasant in the reality than it may be imagined in prospect.
Yes, Virginia (and Bill), surprising as it may seem, there are people without cell phones. As well as people with them who rarely turn them on or use them because they choose not to be available 365/24/7 as Herb describes it. As Mark says, there are lots of people who do not want to be constantly bombarded with advertising (and pay for the privilege of receiving it). Quite apart from the privacy issues (and yes, Virginia and Herb, I am one of those who are paranoid about identity cards), there is the CHOICE issue about which we speak so often. Some people want to choose what they buy, touch it and feel it, try it on before they buy rather than having it delivered and then face the hassle of returning anything that isn’t quite right. I’ve been gung ho internet for a very long time but I know people who rarely use it and then less for shopping than anything else. Leave them be. Live and let live. Them what wants it will get it. Retailers will benefit, I believe, as numbers continue to grow but it won’t help them to be too pushy and antagonise those who prefer to do their shopping in person.
In the wake of the dot-com crash I wished we could have a program for universal broadband built along the lines of the Depression-era programs that brought phones and electricity to the hinterlands. In that political climate, such a program was impossible, but I still wished.
I still see universal wireless broadband as long overdue. And I kind of like the patchwork of providers we see in populated areas–I would only like municipalities to step in if they have to, as in areas of very low income or very low density.
And I don’t see a down side for any industry–even retail.
I absolutely believe Bill’s statistic that 60% of buyers pre-shop online (in our house, it’s 100%).
With better information, customers help front-line employees complete transactions more efficiently and take some transactions completely out of the high-overhead store environment.
With better production values and interaction driving richer online experiences, the web drives traffic into stores and builds brands.
And maybe some kinds of stores will go away because we can get what they sell online. But we seem to be spending more time than ever in restaurants and gadget stores, and here in St. Louis, the big construction equipment is still building retail centers–we seem to have an endless appetite for commercial real estate.
Have you ever noticed where the U.S. ranks in telecommunications services? Not very high. Places like Denmark, South Korea, Sweden and Norway have much higher speeds with much greater access. These countries achieved this supremacy over the the U.S. through public policies that encouraged local authorities to take advantage of a good deal.
The key to universal access is local management and public policy. Most universities now provide universal wireless and Internet access for their students. Sure, each student must acquire their own cellular devices and laptops which are inexpensively available on Craig’s List. This universality lifts everything up on campus. Communication flows. Professors are more in touch. Lecture materials are available. Students gain access to libraries and find opportunities online. It has transformed education and the learning experience.
The same principles can be applied throughout society. For example, why don’t mall operators equip all of their tenants with high speed, secure communications, just like they do heat and water? That would give each retailer an even chance. And, while in the mall, shoppers could take advantage of Internet access and payment options that they have at home. Sixty percent of consumer now pre-shop online. Isn’t amazing that most stores don’t provide their employees online access? How can they be expected to serve their pre-shopping customers? Would universal access in the mall enhance the workplace, at the very least as learning tool?
Why don’t residential buildings and developments come up with one deal for their tenants and condo owners–one secure, and resilient broadband access in the facility, fairly distributed to all tenants? Surely this would lower costs and increase services. How about senior communities? Hospitals? In every case, the quality of life would be enhanced with universal access under local control.
Not everyone drives on the interstates, but we all pay taxes to support the highway system and we all benefit from it, if not directly, then indirectly (as through lower cost, faster delivery of goods).
A similar logic might apply to universal broadband Internet access. I might be argued that it would improve the overall economy and support communication and information services that serve the greater good. With a national “backbone” established, municipalities could choose to invest in ubiquitous wireless access, the presence of which would make their communities more attractive to businesses and citizens.
Privately-owned public gathering places, such as large stores and malls, have incentives to provide shared local access and public terminals, as an aid to retailers and their multichannel shoppers.
My instincts tell me a mix of public and private action is the best way to propagate broadband access.
Even if everyone were given the possibility of having a cell phone and/or PDA for free, not everyone would want one, would choose to get one, or would choose to use one. Having everyone have access to the same information via the same media would be great for retailers and manufacturers who promote products and services. However, the consumers are in charge today and they do not all want to use the same form of communication (even if it were equally available).
Research of consumers who could purchase from the same company using either the Internet, a phone line, or in-store found that there are customers who prefer to use each method. Trying to manager consumers to get them to use the same technology is a self-defeating position. The consumers will use what they want to use, what they have access to, what is more comfortable for them.
With regard to the question of CRM, the internet is not the answer. It is a short cut being proposed by someone who will make money selling access to businesses. The CRM aspect of broadband is a sales pitch to retail management to help them manage their customers. It will offer no value to a retailer when all retailers adopt it. Unfortunately many companies will buy this pitch because they are too lazy or don’t have the ability to determine what their customers consider as value and deliver it. Once again, American retailing is looking for a silver bullet to solve their problems without actually having to do any work themselves. Does anyone really think that a successful program won’t spread to every competitor in the neighborhood. Heck, I know of coffee houses that advertise free wireless where the coffee house guest is poaching off an adjacent businesses wireless. How about Philly–who is going to have an advantage there? If retail would conserve energy and funds looking for and buying magic bullets, then they might have enough resources to hire competent executives, managers and store personnel. Spend your money on actually providing your customer a unique experience like value and service!
This is an extraordinarily complex issue. First, as anyone who lives in Connecticut knows, cell phones are only part of the equation–you also need towers. As to the Internet, while the idea of universal access is noble, the idea of making sure the government controls that access is a little frightening. The question ultimately is, “Who pays?” There are only three choices: the individual (many of whom can’t afford it now); the government (now there’s a rosy picture!); or business. I don’t know about everybody else but I don’t want to see the Internet turn into some kind of cyber-television peppered with even more ads than it carries now (if that’s possible).
Anyone who wants broadband and can pay for it will soon have it at a reasonable price. They’ll get access via DSL or wireless (WiFi, WiMax) or cable TV or satellite or BPL (broadband over power lines). Just wait another 2 or 3 years. Even people in very rural places in the US. Furthermore, millions of people are either happy with dial-up or just don’t care to have internet access at all. Why should those people pay for services they don’t want? And why not see if the broadband media price, via advertising support, becomes “free”?
Advertising support is now paying the partial or complete cost for information calls (1-800-free411), international calling (www.futurephone.com), search engines, internet access (AOL), and cell phone use (if you agree to receive text messages). For decades, ads have paid for broadcast radio and TV programming. The recent NRF show had many exhibitors pushing in-store ad networks. Why not free broadband, supported by ads?
How about taxing the well-off who already have high speed access and use the money to help the less well off so they can gain free high speed access to educational resources on the net? The customers retailers want access to are already wired. If there are some rural regions that are missing high speed access, we can always leave that up to a more modern version of Sam Walton–remember what he did?
This is made more interesting given the facts and argument in books like Screwed: The Undeclared War Against the Middle Class by Thom Hartmann.
The use of the net, the middle class…these are sure to be raised in the 2008 elections–perhaps raised by the inventor of the internet himself, Al Gore 😉