Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Characteristics of Economic Goods and their Social Implications

Posted on | January 20, 2018 | No Comments

In a previous post, I wrote about how media products can be considered “misbehaving economic goods” because most don’t conform to the standard product that is individually owned and consumed in its entirety. Economics is mainly based on the assumption that when a good or service is consumed, it is used up wholly by its one owner. But not all goods and services fit this standard model.

Media products like a cinema showing or a television program have different characteristics. They are not consumed by an individual owner, and it may be difficult to restrict non-paying users/viewer/consumers from enjoying them. Cinemas can project one movie to large groups because it is not diminished by any one viewer although it need walls and security to keep non-payers out. TV and radio began by broadcasting a signal out to a large population. Anyone with a receiver could enjoy the broadcast. Cable distribution and encryption techniques allowed more channels and the ability to to monetize more households. These variations raise a number of questions about the ownership and consumption of different types of products and their economic analysis.

The characteristics of goods and services also raises questions about how society should organize itself to offer these different types of economic products. Media products and services have required a fair amount of government regulation and sometimes government ownership of key resources. Some goods, like fish, are mainly harvested from resources like lakes, rivers, and oceans that prosper if they are protected, and access restricted from overuse or pollution.

In this post, I will outline four categories of economic goods that need to be considered in today’s digital age with its global economy and changing social systems of governance. The major issues are 1) the degree of consumption or “subtractibility” and 2) whether non-paying consumers can be excluded from their consumption. Media products tend to be non-rivalous and non-excludable and are generally considered to be either “club goods” or “public goods.” Consequently, they are a useful point of departure to talk about other types of goods.

Private Goods

The standard category for economic goods is private goods. Private goods are rivalrous and excludable. A person eating an apple consumes that particular fruit, and it is not available for rivals to eat. Yes, an apple can be cut up and shared, but it is ultimately “subtracted” from the economy. Having lived in apple country, I know you can enter an orchard and steal some fruit. Economists like to use the term households, partially because many products, such as a refrigerator or a car, are shared among a small group of people. Other examples of private goods include food items like ice cream, clothing, and durable goods like a television set.

Common Goods

Common goods are rivalrous but non-excludable. This means that they can be subtracted from the economy, but it may be difficult to exclude others from non-payment. Fishing results in catches that are consumed as sashimi or other fish fillets, but the lakes, rivers, and oceans make it difficult to exclude fishing activities. Similarly, groundwater can be drilled and piped to the surface, but it is difficult to keep others from consuming from the same source. Public libraries loan out books making them unavailable to others. Table space and comfortable chairs at libraries can also be taken up, although it is difficult to exclude people from them.

Club Goods

Club goods are non-rivalrous and excludable. In other words, they cannot be consumed with usage, and it is possible to exclude consumers who do not pay. A movie theater can exclude people from attending the movie, but the film is not consumed by the audiences. The audience doesn’t compete for the cinematic experience; it shares the experience. That is why they are often called “collective goods.” These goods are usually made artificially scarce to help produce revenue.

Software is cheaply reproduced and not consumed by a user. However, the history of this product is wrought with the challenges of making it excludable. IBM did not try to monetize software and focused on selling large mainframes and “support” that included the software. But Micro-Soft (Its original spelling) made excludability a major concern and developed several systems used to protect software use from non-licensees. It only recently moved to a more “freemium” model with Windows 10. This strategy takes advantage of network effects and makes sure it gets out to a maximum amount of people.

Public Goods

The other category to consider are those products that are not subtracted from the economy when consumed and whose characteristics make it difficult to exclude nonpaying customers. Broadcast television shows or radio programs transmitted by electromagnetic waves were early examples. Carrying media content to whoever could receive the signals, the television broadcasts were not consumed by any one receiver. It was also difficult to exclude anyone who had the right equipment from enjoying the programs.

The technological exploitation of radio waves presented challenges for monetization and profitability. While some countries like Britain and New Zealand charged a fee on a device for a “licence” to receive content, advertising became an important source of income for broadcasters. It had been pioneered by broadsheets and newspapers as well as billboards and other types of public displays. As radio receivers became popular during the 1920s, it became feasible to advertise on its signals. In 1922, WEAF, a New York-based radio station charged US$50 for a ten-minute “toll broadcast” about the merits of a Jackson Heights apartment complex. These later became known as commercials and were adopted by television as well.

Cable television delivered programming that was also not rivalrous but developed techniques to exclude non-paying viewers. They broadcast content to paying subscribers via radio frequency (RF) signals transmitted through coaxial cables, or light pulses emitted within fiber-optic cables. Set-top boxes are needed de-scramble and decode cable channels allow subscribers to view a single channel. Unfortunately, this has led to monopoly privileges and has resulted in many viewers “cutting the cord” to cable TV.

Generally recognized public goods also include firework displays, flood defenses, sanitation collection infrastructure, sewage treatment plants, national defense, radio frequencies, Global Positioning Satellites (GPS) and crime control.

Anti-Rival Goods

What happens when a product actually becomes more valuable when it is used? It is possible that an economic good not only be not be subtracted but increase in value when it is used, and increases its value when used by more people. A text application has no value by itself, but as more people join the service, it becomes more valuable. This is an established principle called network effects.

Merit Goods.

Merit goods are goods and services that society deems valuable and the market system does not readily supply. Healthcare and education, child care, public libraries, public spaces, school meals are examples. Merit goods can generate positive externalities that circulate as positive effects on society. Knowledge creates positive externalities, it spills over to some who were not involved in its creation or consumption.

These are not necessarily all public goods. While medical knowledge is becoming more readily available, a surgeon can operate on a person’s heart, and her resources are not available to others. Hospital beds are limited and medical drugs and subtracted when used. An emerging issue is medical knowledge produced through data science techniques. The notion of public goods is increasingly being used to guide policy development around clinical data.

Economic Goods and Social Policy

Market theory is based a standard model where products are brought to market and are bought and consumed by an individual buyer, whether an individual or a more corporate environment. But as mentioned in a previous post, some products are misbehaving economic goods. A variety of goods do not fit this economic model and as a result present a number of problems for economic theory, technological innovation, and public policy.

Much political debate about economic issues quickly divides between free-market philosophies that champion enterprise and market solutions on the one hand, and economic management by government on the other. The former may be best for private goods, but other goods and services may require alternative solutions to balance production and social concerns. Much of the US technological development was ushered in during the New Deal which recognized the role of public utilities in offering goods like electricity, telecommunications, and clean water for sanitation and drinking. The move to deregulation that started in the 1970s quickly became more ideological rather than practical. Digital technologies emerged within market philosophies, but practical questions have challenged the pure free enterprise orthodoxy.

Summary

Media products are misbehaving economic goods in that they do not fit the standard model of a market with products that are consumed by an individual consumer. Modern economics is largely based on the idea that goods are primarily private goods. But as we move towards a society based more on information and digital processes, we need to examine the characteristics of the goods and services we value. We need to design systems of production and distribution around their characteristics.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Ensuring Successful Democratic Political Economies

Posted on | January 11, 2018 | No Comments

The recent election of Donald Trump, the US Republican Party candidate, over the Democratic candidate Hillary Clinton, for US president, has called into question the conditions and competences for leading a thriving democratic political economy (DPE). This post examines the roles of the public sector and the private sector in ensuring macroeconomic success. Government and business, while often sharing the common objective of a thriving economy, have differing motivations and strategies for reaching these aims.

One recurrent issue is whether a career politician is a better choice to ensure a prosperous national economic environment or is a candidate with extensive business experience more likely to create the conditions for political and commercial satisfaction and growth? This issue received recent currency with media attention on self-made billionaire Oprah Winfrey after her talk at the 2018 Golden Globes Award. The issue also calls into question the relationship between government and the private sector and what each contributes to economic activity in a democratic environment.

Historically, presidents from the business sphere have performed below average when it comes to U.S. economic activity, although the sample is statistically small. Jimmy Carter turned around his father’s farm but struggled during the stagflation of the 1970s. George H. Bush was a successful oilman but had difficulties managing the economy after taking over from Ronald Reagan. His son, George W. and the first president with an MBA, made a fortune with the Texas Rangers baseball team but left the country with the “Great Recession” of 2008 and massive debts due to war in the Middle East. Herbert Hoover, who was elected 1928, was engineer and silver mining magnate but failed to ward off the Great Depression. More successful was Warren Harding, a newspaper publisher, who presided over “the roaring twenties” and Harry Truman, who, although a failed businessman, saw the country through the end of World War II and the post-war economic boom.

Trump inherited a fortune from his real estate father and developed an international chain of luxury condos and homes targeted at global elites. Although a media celebrity throughout his career, he never held a government position or ran for office. His first year as US president saw the extension of the seven-year economic recovery from the Great Recession, primarily due to advances in asset prices.

But rather than address the capabilities of Trump directly, I will examine some of the structural characteristics that make the success of the economy, a priority for political leadership in democratic political economies. DPEs are republics that have politicians represent the populace in managing governments and their public administrations. This blog post expands on the notion that a division of labor has emerged in DPEs and examines the structural pressures which drive both the public and private sectors towards a common objective – success at the macroeconomic level – despite differing approaches and competences.[1]

Companies drive economic activity by investing in potential profit-making activities. Failure to invest within a national boundary can raise significant difficulties for a government and its internal populace. The globalization of commerce and finance since the 1970s has created new forms of competition for capital by national and even regional governments. This trend has challenged the tax base of these governments as they offer better tax deals to multinational capital. The competition for jobs has also reduced wage rates, further eroding tax revenues.

While capitalists are often quite capable of success at the microeconomic level, they are not in a position to manage the economy as a whole. Towards procuring that success, corporations lobby governments and conduct other activities to influence government actions that will help their companies and industry.

Entrepreneurs and other people in business and professional services tend to be highly focused on their own profitability and while spending only limited resources on community and civic affairs. Private activities are insufficient to maintain parks, libraries, roads and other public goods that enhance the quality of life. As a result, democratic political economies tend to divide the responsibilities for modern economic life. Each shares an interest in robust commercial activities, albeit for differing reasons.

When it comes to ensuring a successful and prosperous political economy, democratic societies have certain structural conditions which guide the emergence of their particular form of capitalism. Neither the public nor private sector in modern democratic societies have sufficient managerial or policy competences to ensure a successful economy. Both rely on a vigorous economy for their success. Each needs economic success to satisfy their respective electoral and fiduciary constituencies. Despite the division and differing reasons, the goal is the same, a vibrant economy that will ensure both profits and political success. The political and commercial spheres both have an interest in macroeconomic success.

Governments look to the fruits of a growing economy to pay for debt interest, defense, and other services, including welfare. Their goal is to maintain a happy populace that will keep them in office. They want a prosperous economy to keep people employed, keep share prices high, and investment flowing into productive activities that will not only keep people feeling economically secure, but provide tax revenues.

The private sector, in general, is unable to ensure overall capitalistic growth on its own. It lacks sufficient organizational and policy consciousness to ensure success at the macroeconomic level. While corporations are often quite capable of success at the microeconomic level, they are not in a position to manage the economy as a whole.

The private sector wants growth and profits as well. Corporations strive to fulfill their fiduciary responsibilities – maintaining high profits for owners and shareholders. Towards procuring that success, they lobby governments and conduct other activities to influence government actions that will help their companies and industry. However, while these attempts may help individual companies or industries, they are insufficient to ensure the success of capitalism as a whole.

An interesting situation emerged with President Obama’s “You didn’t build that” statement during the 2012 presidential election campaign.

    “If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”

The statement quickly received criticism by Governor Romney, a successful businessman, and others as an example of government encroachment in the private sector. The criticism echoed a similar critique against Vice-President Al Gore’s “I took the initiative to create the Internet.” Certainly, the Internet has progressed to be a major medium of global commerce due to entrepreneurial initiatives and accomplishments. However, much of the initial research and development, as well as the policy framework, was created by a wide range of government actions that transformed what was essentially military technology into commercial products and services.

The Republic’s Interest in the Economy

In the first of the major structural mechanisms that Fred Block proposed to explain why government officials pursue policies that are in the general interest of capitalism, he draws on the work of Claus Offe (1976). The officials of the government, according to this view, are to some extent dependent on the level of economic activity that: 1) allows the state to finance itself through taxation or borrowing; and 2) maintains popular support among the voting citizenry. Significant business investment, high levels of employment and minimal amount of government competition for surplus capital make up the most common strategies for ensuring high levels of tax receipts while keeping the voting public relatively contempt.

Governments require a tax base to fund their activities, whether meeting the bureaucracy’s payroll, building infrastructure or funding defense. They tax a combination of capital gains, income, sales of goods and services, etc. Taxes are policy decisions that affect different people, advantage different groups, make possible certain governmental directions. Inheritance taxes for example, are meant to not only collect revenues, but impose a cost on the transfer of wealth and limit familial privilege and class divisions.

Administrations also produce debt instruments that help finance government activities. In the global digital financial economy, debt produced through government securities increasingly fund a significant amount of education, healthcare, military, research and other expenditures.

These instruments also provide an important hedge for the financial sectors. The global trading environment requires constant trading in a large variety of financial instruments. Government debt allows traders to increase trading activities by allowing them to hold government securities in their portfolios and trade them constantly. Common economic doctrine argues that governments compete with the private sector for capital but in reality, the increase in government spending increases the financial sphere by expanding the trading environment and providing instruments for risk reduction. This is a dangerous trend for governments, but financial institutions apply pressure to increase the amount of debt in circulation.

Elected officials also need to keep the voting populace materially happy to stay in office. Economic indicators play a vital role in the public’s perception of the economy. These indexes provide numerical representations of various states of the economy, from consumer confidence, to price levels and the latest unemployment rates. In an age when pensions and retirement accounts are invested in the financial markets, the public also follows such indicators as the Dow-Jones Industrial Average and NASDAQ to gauge their personal wealth. Policies that increase corporate wealth, such as tax cuts, are seen by many voters as more valuable than government expenditures on food stamps or other forms of personal welfare as they increase stock prices.

Significant structural relationships make the business of the economy, the business of government. For one, modern democratic governments have significant fiscal determinants that compel them to establish a major stake in the economy. Relying on taxation and borrowing to propel their activities and programs, they need to ensure a robust commercial sphere in order to obtain the needed financing to run the government, provide for the national defense, monitor the economy, and conduct special programs.

The business class is acutely aware of the influence government has on their interests and work towards shaping that influence, whether it be depressing minimum wage, alleviating environment restrictions, or shaping tax policy. Many critics of democratic political economies
argue that influence gives capital concerns sufficient control over the state. For Block however, it is the first of several reasons, the “icing on the cake.” Other structural factors are at work and need to be considered.

Influence Channels and Cultural Constraints

Two “subsidiary structural mechanisms” are also important when it comes to shaping the actions of public administrators towards economic growth. These are influence channels and cultural hegemony.

The first of the subsidiary structural mechanisms are the influence channels. The private sector can exert significant pressure on the state through its ability influence politicians, especially in a media age requiring significant expenditures on TV and other mediums for advertising. The aims of this influence have generally been oriented towards the procurement of government contracts, favorable legislation, tax cuts, regulatory relief, labor control, and specific spending in certain areas. They are most often lobbying activities, campaign contributions, and other favors. The high costs of elections, particularly media buys for procuring elections, have tied government officials to the influence of economic concerns.

Undoubtedly, issues related to bribery, coercion, and the revolving door into higher paying jobs may be factors that influence policy actions, however, this does not discount larger structural factors at work.

Cultural hegemony was cited as a second subsidiary structural mechanism. Unwritten rules infiltrate democratic political economies, which tend to indicate what is and what is not acceptable state activity. “While these rules change over time, a government that violates the unwritten rules of a particular period would stand to lose a great deal of its popular support. This acts as a powerful constraint in discouraging certain types of state action that might conflict with the interests of capital.”[2]

A contemporary example is the cultural divide over the idea of “liberalism.” This term was recoded during the 1970s and 1980s as an attack on conservative culture, specifically religion and the belief in work and entrepreneurial activity. This attack was also located in the work of the US government. President Ronald Reagan was a strong voice in the articulation and critique of “liberalism” and promised to “get government off our backs.” This divide has been a dominant cultural characteristic of the modern US political debate.

More recently, President Trump withdrew the US from the Paris Climate Accords. While not as popular as Reagan, Trump appealed to a growing backlash against the calls for government action to address the consequences of climate pollution influencing weather effects around the world. Many were convinced that such actions would too expensive and hurt economic progress. Others refused to believe the scientific discourse on the topic. But mostly, strong interests in petrochemical-related industries drive the discussion on climate change through media technologies such as astroturfing to avoid a major “carbon bubble” collapse. For the most part, liberal progressive movements have embraced sustainable technologies and renewable energies such as hybrid cars, solar panels, and vegetarianism.

Summary

Government and corporations, while sharing broad common objectives for a robust political economy, have differing motivations and strategies for reaching these aims. Despite the division and differing reasons, the goal is the same, a robust economy that will ensure both profits and political success. Neither can, by themselves, ensure successful economic growth, but by recognizing this division of labor, and the structural properties that guide each sector, democratic political economies can guide government and corporations towards mutually reinforcing successes.

Notes

[1] Claus Offe and Fred Block have been particularly influential in examining these relationships. When I was in grad school one of my minors was public administration. One the authors that interested me was the sociologist Fred Block. He delineated a set of structural mechanisms that determine the relationship between governments and the private sector in modern economies.
[2] I originally wrote a version of this essay in graduate school. I was reading a lot of public administration as well as neo-Marxist state theory. Fred Block’s work was particularly useful and much of the ideas of a structural division of labor is based on his work, including this quote on p. 14.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Times Square’s Luminescent News Tickers and Public Spaces

Posted on | January 1, 2018 | No Comments

Evan Rudowski argues he was sending tweets long before Twitter emerged in 2007. In 1986, Rudowski got a job scanning the newswires like AP and UPI and entering short 80-character news briefs into what has been called the “Zipper”, a five feet high and 880 feet long electric display providing breaking news and stock prices to the passing crowds. He typed in the messages on an IBM PC and transmitted them from an office in Long Island to the famous ticker display at One Times Square in New York City.

In 1928 the New York Times encircled its signature building with an outdoor incandescent message display. In its November 1928 print edition, it headlined “HUGE TIMES SIGN WILL FLASH NEWS.” It explained, “Letters will move around Times Building telling of events in all parts of the world.”

The zipper’s first message announced the results of the 1928 Herbert Hoover – Al Smith presidential election. The crowd reaction was probably mixed as the loser Al Smith was from New York. On the other hand, he didn’t even carry the state in the electoral college.

Nevertheless, the zipper would reach out to the nation through major announcements such as the bombing of Pearl Harbor, the end of World War II on V-J Day, the assassination of President John F. Kennedy, and the release of 52 hostages that were held in Iran for 444 days.

The surrender by the Japanese drew one of the biggest crowds. On Aug. 14, 1945, the “zipper” flashed: “***OFFICIAL***TRUMAN ANNOUNCES JAPANESE SURRENDER” just after 7 pm that evening and the Times Square crowd exploded in celebration. A picture of a sailor kissing a young nurse he didn’t know by Photojournalist Alfred Eisenstaedt memorialized the event as it symbolized the relief of a dramatic war coming to its end.

V-J Day in Times Square By Photojournalist Alfred Eisenstaedt

Times Square has a storied history as one of the planet’s more recognizable public spaces. The Its zipper reflected our collective response to news events, and it helped establish Times Square as the place to be when major events happen, as we are reminded every New Years Eve.

Each December 31, crowds gather to celebrate the dawning of a new year. Thousands line up, often in freezing cold weather, to see the famous crystal time ball drop. The ball was created by Walter F. Palmer as a way to celebrate the arrival of 1908 and was inspired by the Western Union Telegraph building’s downtown clock tower that dropped an iron ball each day at noon. Now millions participate with the Times Square crowd as television audiences from around the world tune into the final countdown.

Times Square is now flooded with various evolved reader boards (Reuters, ABC, Morgan Stanley, etc.) all based on the original 1928 Times Tower electric ticker. The foot traffic in Times Square is extraordinary, with the daily number of pedestrians exceeding 700,000. It’s a mesmerizing and sometimes dizzying experience as you cross 42nd street on your way up Broadway. Hundreds of different displays provide a kaleidoscope of vivid imagery.

For a history of the stock ticker, see my post on Thomas Edison.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Auctioning Radio Spectrum for Mobile Services and Public Safety

Posted on | December 17, 2017 | No Comments

The breakup of AT&T in the 1980s created new opportunities for new companies to emerge and offer new services, including wireless or mobile telecommunications. Wireless systems lacked the spectrum or infrastructure for broadband and telcos were restricted by their “common carrier” status from carrying content at the time. Government policy needed to address the issue of supplying the public’s radio spectrum to private carriers to enhance the nation’s telecommunications abilities, its e-commerce or “m-commerce” opportunities as well as the ability to protect the public safety and respond to disasters.

Since the 1970s, the Federal Communications Commission (FCC) had segmented the spectrum to provide two analog cellular licenses in about 500 geographically separated areas. One was traditionally given to the Bell system (later to each of the Baby Bells) and another was awarded in each area by lottery. The second license was often subject to various speculation schemes, creating thousands of “cellionaires” and driving up the costs of mobile telephony. Additional costs were added by the high prices the Bell companies charged for interconnecting the wireless portion to the larger public-switched network.

In 1991, President Clinton signed the Emerging Telecommunications Technology Act to release radio spectrum to the private sector. Previously, cellular offered its services with only 50 MHz of spectrum. The Act allocated 200 MHz to be released over a 10-year period for a variety of wireless offerings such as PCS (Personal Communications Services). PCS emerged in recognition of the necessity to expand mobile services beyond car phones on roads and highways to a wider array of antennas that would serve more sophisticated services and extended mobility. A plan in Washington D.C. emerged to privatize parts of electromagnetic spectrum.[1]

The Omnibus Budget Reconciliation Act of 1993 had a rider that allowed the FCC to auction off the public’s radio spectrum. Exercising his privilege as Vice-President, Gore broke the Senate tie and sent it on to the President to be signed. The legislation, which was the first bill to balance the budget in 30 years, gave the FCC the authority to privatize the wireless spectrum. On July 25, 1994, the Federal Communications Commission commenced Auction No. 1,
netting some $617 million in winning bides by selling ten Narrowband Personal Communications Services (N-PCS) licenses used for paging services. The subsequent auction in March 1995 raised $7.7 billion for the US Treasury as companies like Air Touch and AT&T procured valuable licenses to provide wireless services. Consequently, wireless communications prices went down and services expanded.

Technological advances led to a new generation of (2G) digital wireless in 1990. But it was still offered over circuit-switched networks meaning that each conversation still needed its own channel and was slow to connect. TDMA (Time Division Multiple Access) was becoming the standard in the US while GSM (Global System for Mobile Communications) was used in Europe and PDC (Personal Digital Communications) was dominant in Japan and used packet-switching technologies.

Soon, 2.5G standards provided faster data speeds with the use of data packets, known as General Packet Radio Service (GPRS). The new standards provided 56-171 Kbps of service and allowed Short Message Service (SMS) and MMS (Multimedia Messaging Service) services as well as WAP (Wireless Application Protocol) for Internet access. An advanced form of GPRS called EDGE (Enhanced Data Rates for Global Evolution) was used for the first Apple mobile phone and considered the first version using 3G technology. For a history see my previous post on wireless generations.[3]

In 2008, the FCC auctioned licenses to use portions of the 700 MHz Band for commercial purposes. Mobile wireless service providers have since begun using this spectrum to offer mobile broadband services for smartphones, tablets, laptop computers, and other mobile devices. The electromagnetic characteristics of the 700 MHz Band gives it excellent propagation to penetrate buildings and obstructions easily and to cover larger geographic areas with less infrastructure (relative to frequencies in higher bands).

By July 1, 2009, the U.S. Government raised $52.6 billion in revenues by licensing electromagnetic spectrum.

More recently public auctions of spectrum have been used to support the development of First Net, a nation-wide network for public safety and disaster risk reduction. The FCC raised $7 billion in spectrum auction to fund the network at the 700 MHz. Concluded in January 2015, the spectrum auction raised nearly $45 billion.

Notes

[1] From “Administration NII Accomplishments,” http://www.ibiblio.org/nii/NII-Accomplishments.html. October 25, 2000.
[2] Hundt, R. (2000) You Say You Want a Revolution? A Story of Information Age Politics. New Haven: Yale University Press.
[3] Pennings, A. (2015, April 17). Diffusion and the Five Characteristics of Innovation Adoption. Retrieved from http://apennings.com/characteristics-of-digital-media/diffusion-and-the-five-characteristics-of-innovation-adoption/

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

The Landsat Legacy

Posted on | November 3, 2017 | No Comments

“It was the granddaddy of them all, as far as starting the trend of repetitive, calibrated observations of the Earth at a spatial resolution where one can detect man’s interaction with the environment.” Dr. Darrel Williams, Landsat 7 Project Scientist

The Landsat satellite program is the longest-running program for sensing, acquiring, and archiving of satellite-based images of Earth. Since the early 1970s, Landsat satellites have constantly circled the Earth, taking pictures and collecting “spectral information” and storing them for scientific and emergency management services. These images serve a wide variety of uses, from gauging global agricultural production to monitoring the risks of natural disasters by organizations like the UNISDR. Landsat-7 and Landsat-8 are the current workhorses providing remote sensing services.[1]

The Landsat legacy began in the midst of the “space race,” when William Pecora, the director of the U.S. Geological Survey (USGS), proposed the idea of using satellites to gather information about the Earth and its natural resources. It was 1965, and the U.S. was engaged in a highly charged Cold War with the Communist world and space was seen as a strategic arena. Extensive resources had been applied to gathering satellite imagery for espionage, reconnaissance and surveillance purposes. Some of the technology was also being shared with NASA. Pecora stated that the program was conceived… “largely as a direct result of the demonstrated utility of the Mercury and Gemini orbital photography to Earth resource studies.” A remote sensing satellite program to gather facts about the natural resources of our planet was beginning to make sense.

In 1966, the USGS and the Department of the Interior (DOI) began to work with each other to produce an Earth-observing satellite program. They faced a number of obstacles including budget problems due to the increasing costs of the war in Vietnam. But they persevered, and on July 23, 1972, the Earth Resources Technology Satellite (ERTS) was launched. It was soon called Landsat 1, the first of the series of satellites launched to observe and study the Earth’s landmasses. It carried a set of cameras built for remote sensing by the Radio Corporation of America (RCA).

The Return Beam Vidicon (RBV) system consisted of three independent cameras that sensed different spectral wavelengths. They could obtain visible and near-infrared (IR) photographic images of the earth. RBV data was processed to 70 millimeter (mm) black and white film rolls by NASA’s Goddard Space Flight Center and then analyzed and archived by the U.S. Geological Survey (USGS) Earth Resources Observation and Science (EROS) Center.

The second device on Landsat-1 was the Multispectral Scanner (MSS), built by the Hughes Aircraft Company. The first five Landsats provided radiometric images of the Earth through the ability to distinguish very slight differences in energy. The MSS sensor responded to Earth-reflected sunlight in four spectral bands.

This video discusses remote sensing imagery, how it is created, and variations in resolution.

Landsat’s critical role became one of monitoring, analyzing, and managing the earth resources needed for sustainable human environments. Landsat uses a passive approach, measuring light and other energy reflected or emitted from the earth. Much of this light is scattered by the atmosphere, but techniques have been developed to dramatically improve image quality.

After 45 years of operation, Landsat now manages and provides the largest archive of remotely sensed – current and historical – land data in the world. A partnership between NASA and the U.S. Geological Survey (USGS), Landsat’s critical role has been monitoring, analyzing, and managing the earth resources needed for sustainable human environments. It manages and provides the largest archive of remotely sensed – current and historical – land data in the world.

Landsat uses a passive approach, measuring light and other energy reflected or emitted from the Earth. Much of this light is scattered by the atmosphere, but techniques have been developed for the Landsat space vehicles to dramatically improve image quality. The following video discusses the Landsat programs in some depth and how researchers can use their data.

Each day, Landsat-8 adds another 700 high-resolution images to the extraordinary database, giving researchers the capability to assess changes in Earth’s landscape over time. Landsat-9 will have even more sophisticated technologies when it is launched into space in 2020.

Recently, major disasters due to hurricanes in the southern US states and the Caribbean have been monitored by the Landsat satellites. The year 2017 will be noted for major disasters including Hurricane Maria in Puerto Rico, hurricane Irma in the Caribbean, and Hurricane Harvey and associated flooding in Texas.[2]

Notes

[1] Landsat 8 was launched in 2013 and images the entire Earth every 16 days. It is the eighth Landsat to be launched although Landsat 6 crashed into the Indian ocean during liftoff in October 1993.
[2] USGS has released a recent report on all 4 major hurricanes of 2017 that adversely affected the southern US.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Russian Interference, Viral Sharing, and Friends Lying to Friends on Social Media in the 2016 Elections

Posted on | October 5, 2017 | Comments Off on Russian Interference, Viral Sharing, and Friends Lying to Friends on Social Media in the 2016 Elections

As discussed previously, social media is now a central part of modern democracies and their election processes. This was touted in the Obama election in 2008 but became even more evident in the 2016 U.S. election, notably for unexpected 304-232 victory by Donald Trump. The real estate magnate and reality show TV star occupied the White House when the electoral college of January 2017 validated the win, despite 2.8 million more US citizens voting for Hillary Clinton.

In this post, I look at some of the influence by Russia and other foreign entities on the recent election but my main concern is the viral spreading of “fake memes” on social media by compliant voters who fail to read or make critical distinctions about the posts and articles they share with their “friends.” It is likely that Congress and the press, as well as the public, will be parsing this phenomenon over the next couple of months, if not years, as we all strive to understand where democracy is heading in the age of social media.

In early September 2017, Facebook released results of a preliminary investigation looking into possible Russian interference in the 2016 U.S. election. They announced that approximately US$100,000 in ad spending were associated with Russian profiles during the period from June 2015 to May 2017. They later announced to Congress that over 3,000 Facebook ads were believed to be from Russian sources. How powerful were these ads? How were they aided by overzealous Sanders’ supporters? Were shares by Trump supporters significant in influencing independent and GOP voters?

Did Russian operatives and agents carefully target the supporters of Bernie Sanders, Jill Stein, and Donald Trump with emotionally and politically charged ads? And how many of the targeted citizens “shared” Russian produced propaganda over Facebook and other social media to their friends and others on social media? The controversy has positioned Mark Zuckerberg, the guy in the brown tee shirt below, and CEO of the $500 billion social media giant, as possibly the most important person in the world when it comes to the future of global democracy.

Zuckerberg is being proactive as some lawmakers are proposing to regulate social media by requiring all major digital media platforms with 1,000,000 or more users to monitor and keep public records of ad buys of more than $10,000. These digital platforms, as well as broadcast, cable and satellite providers, would also have to make reasonable efforts to ensure that ads and other electioneering communications are not purchased by foreign nationals, either directly or indirectly.

Some major questions to be addressed when it comes to the election interference issue are:

Who was providing the demographic data for targeting specific potential voters on the US side? We know that key swing states, Michigan and Wisconsin were targeted and Trump carried Michigan by 10,700 votes and Wisconsin by 22,748 votes. These were extremely narrow margins. Add Pennsylvania’s 44,000 voter margin, and the election goes to Trump by a mere 78,000 majority.

What keywords were they using to identify susceptible targets? For example, “Jew hater” and the N-word have actually been used to target specific audiences. Do they use specific words, phrases, or images that incite hate or a sense of unfairness? The Black Lives movement has been a particularly important target as Google’s investigation of foreign intervention found.

What foreign entities were involved and how extensive were the social media ad buys? What were they saying and what kind of images are being produced? Who was producing and designing the manufactured and posted “memes”? Memes are designed communications that combine provocative imagery with text that hooks the viewer. These captioned photos are shared easily on social media and are also associated with stories on websites. PropOrNot’s monitoring report identified more than 200 websites as routine peddlers of Russian propaganda during the 2016 election season. They had an audience of over 15 million Americans. PropOrNot estimates that stories planted or promoted on Facebook were viewed more than 213 million times.[1]

Even more significant are the viral metrics that characterize social media. Who was sharing this information and how dynamic was the virality and network effects? In other words, how fast and wide were the messages being spread from individual to individual? This is similar to word of mouth (WOM) in the nonmedia world, and it is highly prized because it shows active and emotional involvement. What can create a “snowball effect” that multiplies your post reach to friends of friends and beyond. With 2 billion active users a month, Facebook is clearly a concern as are other platforms such as Twitter, Instagram, and Snapchat.

social media metrics

An interesting case dealt with a fake news story about paid protesters being bused to an Anti-Trump demonstration in Austin, Texas. That story started on Twitter with hashtags #fakeprotests and #trump2016 and was quickly shared some 16,000 times and also migrated to Facebook where it was shared more than 350,000 times.

So we are entering into an age when social media metrics are not just crucial for modern advertising and e-commerce but essential for political communication as well. We will see an increasing need for skilled digital media analysts that measure social media metrics ranging from simple counting measures of actions like check-ins, click-through rates, likes, impressions, numbers of followers, visits, etc. to other important contextual metrics including conversation volume, engagement, sentiment ratios, conversion rates, end action rates, and brand perception lifts.[3]

Countries interfering in the elections of other countries is not a new phenomenon. But rarely have they been able to enlist so many unwitting collaborators. As we continue to move into the era of cybernetic democracy, a new vigilance is required at many levels. National and local governments need to be wary, social media platforms like Facebook need to review content and sources, and users also need to take responsibility for reading what is being passed around and using ethics-based judgment before spreading rumors and materials that incite hate and social discord.

Notes

[1] PropOrNot’s monitoring report investigates social media stories planted or promoted by the disinformation campaigns.
[2] ThinkProgress recently began a series investigating foreign influence on social media. Founded in 2005, ThinkProgress is funded by the Center for American Progress Action and covers the connections and interactions between politics, policy, culture, and social justice.
[3] I got my start in teaching social media metrics with John Lovett’s (2011) Social Media Metrics Secrets John Wiley and Sons. It is still highly relevant.

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AnthonybwAnthony J. Pennings, Ph.D. is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University. Previously, he taught at Hannam University in South Korea, Marist College in New York, Victoria University in New Zealand, and St. Edwards University in Austin, Texas where he keeps his American home. He spent 6 years as a Fellow at the East-West Center in Honolulu, Hawaii.

Assessing Digital Payment Systems

Posted on | August 29, 2017 | Comments Off on Assessing Digital Payment Systems


In digitally-mediated environments, new forms of currency and payment systems continue to gain public acceptance. Changes in technology, contactless options, and the ease of electronic payments make cash less desirable. While credit cards remain the most popular form of payment with some 70% of the market, other systems are emerging. PayPal, for example, is used for some 15% of online payments.

The major types of payment systems for B2C transactions:
* Payment Cards – Credit, Charge, Debit
* e-Micropayments – less than $5
* Digital Wallets – AliPay, Apple Pay, Samsung Pay
* e-Checking – Representation of a check sent online
* Digital eCash
* Stored Value (Smart Cards, PayPal, Gift Cards, Debit
Cards)
* Net Bank – Digital payments directly from your bank
* Cryptocurrencies – Peer-to-peer blockchain enabled digital coins (Bitcoin, Ethereumm, Dash)

What factors determine the success of a digital payment system? Here is a list of some important criteria to consider when it comes to assessing the viability of a currency/payment system.

* Acceptability – Will merchants accept it?
* Anonymity – Identities and transactions remain private
* Independence – Doesn’t require extra hardware or software
* Interoperability – Works with existing systems
* Security – Reduced risks to payer and payee
* Durability – Not subject to physical damage
* Divisibility – Can be used for large as well as small purchases
* Ease of use – Is it easier to use than a credit card?
* Portability – Easy to carry around
* Uniformity – Bills, coins, and other unites are the same size and shape and value
* Limited supply – Currencies lose value if too abundant [1]

What about payment systems for large transactions between businesses or governments? The major types of payments systems for B2B, B2G or G2G transactions are:

* Electronic Funds TransferACH, SWIFT, CHIPS
* Enterprise Invoice Presentment and Payment (EIPP)
* Wire Transfers – FEDWIRE

The Federal Reserve’s FEDWIRE transfers trillions of US dollars every day and is a major system for facilitating transactions between banks and other financial institutions.

Notes

[1] Types of payment systems and and criteria drawn from “Functions of Money – The Economic Lowdown Podcast Series, Episode 9.” Functions of Money, Economic Lowdown Podcasts | Education Resources | St. Louis Fed. N.p., n.d. Web. 15 July 2017.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Digital Content Flow and Life Cycle: The Value Chain

Posted on | July 14, 2017 | No Comments

In this post, I connect the idea of the digital content life-cycle to the concept of a value chain. E-commerce and other digital media firms can use this process to compare and identify value-creating steps and prioritize them within the organization’s workflow. They also become important in anticipating and analyzing needed human competences and digital skill sets.

The graphic below represents the key steps in the digital media production cycle, starting at one o’clock.

Digital Content Life Cycle_apennings

Long recognized by economists as part of the commodity production process where raw materials are processed into a final product via a series of value-adding activities, the value chain concept was refined by Michael Porter in 1985.

The idea of the value chain is based on the view of organizational outcomes as a series of transformative steps. He focused on the processes of organizations, seeing productive activities as a series of sequential steps. Central to this idea is seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes, and outputs.

Porter distinguished “primary activities” in the value chain from “secondary activities” in the sense that the former were more directly related to a final output. Primary activities include inbound logistics, production/operations, outbound logistics, marketing and sales, and services.[1] Raw materials come into the company through logistical processes and pass through production facilities that are coordinated via operations. These resources are transformed into a final product that is marketed to customers.

Activities such as procurement, human resource management, technological development, and infrastructure are secondary only in the sense that they provide support functions to the primary value chain. Departments such as accounting, finance, general management, government relations, legal, planning, public affairs, and quality assurance are necessary, but not primary. Porter didn’t diminish these activities but rather placed them in relation to output goals.

Both primary and secondary activities can help identify value-creating steps, supporting activities and prioritize them within the organization’s workflow.

An analysis of the flow of digital content production can help companies determine the steps of web content globalization.

In the early days of the Internet, Rayport and Sviokla (1995) presented the idea of a virtual value chain in the Harvard Business Review. They listed five activities involving the “virtual world of information” that help generate competitive advantage. In their article they suggest that gathering, organizing, selecting, synthesizing, and distributing information help companies use content and value-added resources to build new products and services and enhance customer relationships.[2]

They even suggested that newspapers could use the five value-adding steps to construct new products with the digital photography and other information resources they have available. Remember this was a time when the jpeg image was fairly new and companies like Real Networks were competing to become a video standard. No Facebook existed.

A digital chain analysis involves diagramming then analyzing the various value-creating activities in the content production, storage, monetization, distribution, consumption, and evaluation process. Each step can be analyzed and evaluated in terms of its contribution to the final outputs.

Furthermore, it involves an analysis of “informating” process, the stream of data that is produced in the content life cycle process. Digital content passes through a series of value-adding steps that prepare it for global deployment via data distribution channels to HDTV, mobile devices, and websites. Each of these steps is meticulously recorded and made available for analysis.[3]

The digital value chain is presented linearly here, but most data activities that add value operate as cycles. New ideas are conceived, new content is added, questions are constantly being asked, new ways of monetizing content is also extremely important. Also, how are audiences consuming the content? This leads the process back to the initial conception of content with the consideration of audience/consumer analytics and feedback.

Through this analysis, the major value-creating steps of content production and marketing process can be systematically identified and managed. In the graph above, core steps in digital production and linkages between them are identified in the context of advanced digital technologies. These are general representations but provide a framework to analyze the activities and flow of content production. Identifying these processes helps to understand the equipment, logistics, and skill sets involved in modern media production and also processes that lead to waste.

In other posts I will discuss each of the following:

Content Creation and Production
Content Storage and Management
Content E-Commerce
Content Distribution and Delivery
Content Usability and Consumption
Content Analytics and Critique

Notes

[1] Porter, Michael E. Competitive Advantage. 1985, Ch. 1, pp 11-15. The Free Press. New York.
[2] A version of this article appeared in the November–December 1995 issue of the Harvard Business Review.
[3] Singh, Nitish. Localization Strategies for Global E-Business.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

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  • About Me

    Professor and Associate Chair at State University of New York (SUNY) Korea. Recently taught at Hannam University in Daejeon, South Korea. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, media economics, and strategic communications.

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