Speaking at Hosting Con 2009 …

If you’re going to be in the Washington, DC, area this August 10th to 12th, 2009 — and you’re in the hosting, ISP or SaaS business — you owe it to yourself to check out Hosting Con 2009!

I have the honor of moderating a keynote with two very talented experts involving data protection policies in US and EU, one expert from the US Department of Commerce and the other from the European Commission. I will also be giving a seminar entitled, “How to Structure Your Company Now to Sell Later,” which will provide an overview and discussion on those areas a business owner should focus on now, to maximize value for the business years later to maximize the value for an exit.

It’s a jammed-pack conference, full of outstanding speakers and sessions, involving 4 tracks: Marketing & Sales, Emerging Trends, Technology & Operations, and Business Development.

Why the Xbox 360 is (still) better than the PS3

I’m a 40-something, high-paid professional, who sometimes needs to blow off steam or otherwise look for opportunities to keep in touch with his executive-level friends around the world. Co-op gaming is an important component of my staying sane and in touch.

I play my games on the 1080p, 60″ Pioneer Kuro Elite PRO-151FD. This is a $6,500 plasma unit, and in conjunction with a $9,500 speaker system and similarly priced A/V audio system, it should be clear that price is not a factor in my (or my friends’) gaming decision.

So, this blog article isn’t written for those kiddos who want to argue about graphics, price or some other flame war-worthy debate between these two esteemed game consoles. Rather, I write to those folks who, like me, care more about performance than price. Who may have kids or a significant other, who gets bothered by noise, yet still desires high-fidelity sound. And, I write with the hope that Sony will get a clue and improve their offering to meet the needs of gamers like myself.

I am not loyal to either Sony or Microsoft. I’m loyal to the game, and only for as long as the game keeps me engaged (i.e. new maps, new scenarios and/or new ways of playing that are fun and exciting for me and my friends).

Despite this lack of loyalty to the consoles, I find that Sony is definitely lacking in some key areas, which I believe everyone should consider and I’m disappointed you don’t necessarily hear about in the popular press.

Xbox 360 has much better voice capabilities. PS3’s bluetooth is a non-starter.

Frankly, I cannot understand why more people haven’t made a big stink about this, or why Microsoft hasn’t taken more advantage of the situation.

Here are the issues. The Xbox 360 comes with a “headset” containing a microphone. This headset plugs directly into the wireless controller, and provides a high-quality voice chat for gamers. Basically, Microsoft built voice participation directly into its controllers and the game console itself, providing a quality experience from the get-go. No wires, except for the wire that plugs from the headset to the controller.

Apparently, this has been easy to adopt for third-party headset manufactures, as its easy to find a number of high-quality headsets that have the microphone built-in. This is important for many gamers, who like myself, cannot have ANY game noise at night, for fear of waking the children or seriously annoying the significant other living with us.

For the Xbox 360, I use Turtle Beach Ear Force X3, which allows me to listen to immersive audio, and participate with chat without bother to the other occupants of my home.

Sony has taken a different approach with the PS3, and has enabled bluetooth-based headsets for chat. While this may sound interesting at first blush, it’s really not a great, high-quality solution for gamers who value high-fidelity sound. Here’s why: Most bluetooth headsets (i.e. the ones you use for your phone), fit in your ear and therefore by definition, don’t allow one to use a sound headset. If you use a traditional bluetooth headset, you have to listen to game sound over your speakers. And, because you have a bluetooth headset sitting IN your ear, that ear isn’t getting as much game sound as your other ear. On top of this, most bluetooth headsets are geared for cell-phone quality voice, which is inferior to what most PC and Xbox 360 gamers expect (i.e. voices sound tinny, and are often sound broken up or erratic).

Some PS3 owners have compensated by using USB headsets made for PC’s. These headsets are superior to the bluetooth headsets, but suffer their own problems. First and foremost, they are USB and therefore require a USB cable to connect from the headset to the PS3. In my case, this requires a rather long USB cable and it’s not as elegant as the wireless solutions available for the Xbox 360.

Also, there is a MAJOR issue with USB headsets for the PS3, that isn’t easily discernible with a casual read of the popular press. That issue is: You cannot use USB headsets that require drivers to be installed. This is because installed drivers are PC-based drivers, and therefore cannot be used on the PS3. This severely limits the available USB-based headsets available for the PS3, and it’s often difficult to determine whether a particular USB headset needs drivers installed or not (i.e. sometimes you have to resort to looking at box contents of a particular USB headset).

And beware! Many headset manufacturers say they are PS3 compatible, and they are, but they either lack a microphone or otherwise don’t truly provide high-fidelity sound.

Guess what? You’ve guessed it, didn’t you??!? There are no decent, high-fidelity USB headsets with mic, that don’t require drivers to be installed. Therefore, at least for the PS3, you cannot obtain a USB headset with mic, that will sound great without damaging your relationship with your kids and your significant other.

Fortunately, Tritton just (December 2008) came out with a great USB headset, that will work with the PS3. It is the AX Pro headset. This is the only headset I’ve found, that truly provides high-quality sound, a mic, and works with the PS3 without drivers. The problem? Well, it requires two power supplies (for the headphones and external sound card), and it has two cables running into the PS3 (USB for voice and optical for sound), plus a long third cable going to the headset itself. This does create a bit of a headache for people like me, who run HDMI or optical from the PS3 to their home entertainment systems: If you run optical, you need it for the headphones, so need to figure out how to make the physical switch. If you run HDMI, the PS3 doesn’t send audio simultaneously to both HDMI and optical. You need to switch between the two, depending on whether you want your sound to go to your headphones (i.e. select optical) or your home entertainment system (i.e. select HDMI).

A headache??!? You betcha. It truly stuns me that Sony hasn’t addressed these issues, and delivered a clearer signal or leadership on the issue of high-fidelity headsets, as I believe many people want immersive sound with their gaming, and not upsetting the neighbors, kids or significant other. This is something Microsoft has understood from day-one.

Xbox 360 has immersive audio. PS3 doesn’t.

Speaking of immersive sound, I need to bring up an issue I’ve discovered between the Xbox 360 and the PS3: When playing a co-op Xbox 360 game, the voices of my teammates appear relative to their positions. What I mean by this, is if one of my friends is behind me, his voice comes from the rear surround-sound speakers, and it truly sounds like he’s behind me. This really improves game play, because when someone says “help me,” I don’t really need him or her to tell me where they are. I sort of follow the voice. I have yet to play a game, where this is happening on the PS3. In fact, quite the opposite seems to happen. In a large co-op of Resistance 2, I can’t tell you how many times I hear the following conversation:

“Help me!” And the friend asks, “Where are you?” The response is “over here.” Needless to say, this is not very effective in the heat of battle. These conversations don’t seem to happen on the Xbox 360.

Now to be fair to the PS3, the games I buy on the Xbox 360 aren’t the same games I buy on the PS3 (why waste money?) So, the fair test would be to test the same games on both platforms. The problem though, is Gears of War isn’t on the PS3, and Resistance 2 isn’t on the Xbox 360. In general, though, I stand by this observation.

Xbox 360 has a more responsive and reliable controller. PS3’s controller can be unreliable at times.

On the Xbox 360, I have yet to experience a controller that goes “amok” unless its battery goes low. I have 4 controllers for the PS3, and every time I sit to play a game, I experience the same thing: At random times throughout the game (although, seems directly proportional to when I’m at a critical stage), my character in the game just goes crazy.

Let me explain this precisely: This behavior happens between once and three times, every time I sit down and play a game. Therefore, it happens once to three times, every 3 hours of game play. What happens specifically, is that the controller and the PS3 console seem to loose contact with each other, for about 3 to 10 seconds. Whatever I was doing in the instant they loose contact with each other, my character continues to do for 3 to 10 seconds. If I was running to a hiding spot somewhere ahead of me, I get to watch my character race past the hiding spot I wanted (usually to the side of bad guys), and continue on running until the controller and PS3 resync themselves or whatever, and I regain control of my controller.

Given how little I play, and the associated bragging rights of winning (or the taunts I get from my friends, when it looks like I’ve done something truly foolish in the game), this is a very important issue for me.

It is my understanding that not all PS3 owners experience this problem, but many do. Because I experience this with all my controllers, I suspect it’s a problem with the PS3 itself, but can’t get Sony to do anything about it.

Additionally, the PS3 controllers seem to be cheaply made, and not quite as responsive as the Xbox 360 controllers. Here’s a test: Take your favorite character and run in a straight line over a long distance. Did you get to precisely where you intended, without having to compensate? I find, with the Xbox 360, that when I want my character to walk straight, he walks straight. With the PS3, my character will walk with a slight bias to the right or left. It’s not quite noticeable over short distances, but over long distances, it can become quite annoying.

Usually, I just compensate and continue on. However, this problem leads me to believe the PS3 controllers aren’t quite as well made, and therefore not quite as precise as the Xbox 360 controllers.

Xbox 360 functions as a great media center, and handles streaming well. PS3 and streaming content is frustrating at best.

I have a home network, and a central file server, that contains all my music. The advantage of this, is I can play (or stream) music to different TVs and audio systems throughout the house. When I build a playlist on my laptop, it’s immediately available to my entertainment system with the big stereo. Fun stuff. I also use this home network for pictures of the kids, etc.

With the Xbox 360, I can link to my home network’s fileserver, and access its music, photos, etc. The Xbox 360 has a fairly intuitive picture browser and music player. It also has decent music visualizations, so I can turn on the Xbox 360, and play a playlist over the big stereo and have nice-looking visualizations show up on my plasma. It’s a nice way to impress guests or to handle background music during parties.

The PS3, like the Xbox 360, can also link to my home network’s fileserver for access to music and photos. This is where the similarity ends. The PS3 has a more advanced picture browser, although less advanced music player. What really stands out, is the PS3 has absolutely no streaming capability whatsoever. This makes the PS3 almost unusable for playing music, although the picture browser is tolerable. Let me explain the music issue.

MP3’s are compressed files of music. The more compression the smaller the file size (good thing), but the fidelity decreases significantly (bad thing). Therefore, my MP3’s tend to have the least amount of compression possible. This results in larger file sizes, but great fidelity (notwithstanding the true audio snobs out there who cannot stand any form of compression, let alone digital representation of music). So, for example, an MP3 that some folks (wanting to save space) would have that’s 3MB, the same file for me may be 9MB. Not a tremendously large difference, but a difference nonetheless. Note that many good tracks out there, may be 12MB or more, with normal compression. They are large, simply because they are long tracks.

The Xbox 360 will stream this music when it plays. Therefore, when I select a song to play, the Xbox 360 immediately begins to play the song, even though the song hasn’t fully downloaded from my server to the Xbox 360. The PS3, on the other hand, will download the full song before it begins to play. For a 10MB file, this can take 3 minutes or more.

I’m at a loss to explain why it takes even 3 minutes for the PS3 to play a song I select, as the song should download much faster than that with my home network. I have a 1000 Mbits/s Gigabit Ethernet in the home. It takes mere seconds to download 10MB from my server to any computer in my house.

And, to make matters worse, let’s just accept that it takes 3 minutes to download to the PS3 and we’re willing to wait that long. One would expect, as the song is being played, that the PS3 would also be in the process of downloading the next song in the playlist, so we don’t have to wait another 3 minutes when the next song comes up. Sadly, such an expectation would be wrong. You need to wait another 3 minutes (or more) for the PS3 to get to the next song, once the current song has finished playing.

Xbox 360 updates are almost transparent. PS3 updates are excruciating and frustrating, politely speaking.

As an executive, with kids, time is perhaps my most precious commodity. I get two nights a week, after the kids go to bed, to game. This gives me roughly about 3 hours, twice a week, for a total of 6 hours a week. Any time sitting idle, waiting for an update is frustrating.

Sony takes frustrating to an entirely new level, however. To fully grasp the magnitude of this frustration, it is best to consider the Xbox 360 update process first.

With the Xbox 360, there are two stages of updates: A console update and a game update. When the Xbox 360 boots up (and it is connected to the Internet), it will see if there is an update for the console. If there is, it will ask you if you want to update the console. Most of the time (perhaps 90% or more), the update is optional. You can bypass the update, and continue using the Xbox 360 without issues. When it is mandatory, or you agree to install the update, most of the time (perhaps 99%) the update takes less than 3 minutes. The console reboots and you’re on your way.

The game update for the Xbox 360 is very similar to the console update, except that the game manufacturers appear to dictate whether an update is mandatory or not, and the update is usually more mandatory than not. Most updates usually take less than 3 minutes.

All told, the majority of Xbox 360 updates are optional and take very little time.

Now, consider the PS3 update process. Update notices aren’t given, until you access a game (or resource) that requires an update. So, you start your game, back out of your game, do an update, and get back to your game. All updates (so far, to my experience) have been mandatory updates, so you cannot play the game until you back out of the game and go to “System Update” in the PS3 control panel. This is where frustration really kicks in: The updates apparently are either really large, or Sony has some really slow computers dishing out updates to its millions of PS3 consoles out there. The last update I did, which is typical of updates, took over 40 minutes to download and install.

I will admit, the update process has sped up over the past year or so, because updates used to take hours. And, I have the ultra-fast, more expensive Comcast service that provides 7megs download (and I usually experience much faster service) speeds.

Just last week, I was about to play Resistance 2, Fall of Man, with my friends and had to go through this cumbersome update process. Again, remember I have 3 hours to play. We didn’t know about an update, until my friends and I were about to play. We all got hit with a mandatory update, which took a total of 50 minutes to complete: Almost 1/3rd of our game time gone.

To add insult to injury, the update process had a notice indicating something to the effect of (I’m paraphrasing here), “This update is required to support new photo albums.” Who the #$@#$ cares about new photo albums??!? I was wanting to kick my buddies’ respective butts at R2. And, now 50 minutes is being wasted downloading an update I don’t even need??!?

In summary …

The Sony PS3 is a great game unit, and carries a significant plus with the BlueRay player. However, for serious gamers who care about high-fidelity sound, cables, their time, chatting with their buddies, and/or a media center, the Xbox 360 still comes out ahead — far ahead. These issues aren’t discussed in the popular press, but they are very important for a quality gaming experience.

I’m sure Sony is quite aware of these deficiencies in its platform, and just doesn’t care to improve the experience for its gamers. Perhaps Sony will prove me wrong.

Kudos to Microsoft.

The Inauguration of the 44th President of the United States

I, like many of my fellow Americans (and perhaps, my fellow human beings around the globe), am glued to the news and video streams involving Barack Obama’s inauguration today, on this cold and blistery Tuesday, January 20th, 2009.

I just read a commentary by Donna Brazile, for CNN, entitled “A day to rejoice — and recommit” (located here).

I think she does a marvelous job discussing why this election — and the inauguration of Barack Obama — is so important for so many of us.

For me, she misses an important point, though. For me, Barack Obama is an extremely competent, intelligent and inclusive individual: Precisely the type of individual that is so needed to lead this great country of ours. For me, the color of his skin is absolutely irrelevant. For me, it’s the “content of their character,” that has been so lacking in the White House for so long.

Our country has suffered greatly because of this.

For me, this is an important day, because we have the right individual to lead our nation.

The tears in my eyes aren’t because we have an African-American in the White House, but because we have an extremely competent, intelligent and inclusive leader in the White House.

The tears in my eyes aren’t because we’ve made a huge step forward in civil rights (although I agree, that’s a wonderful icing on an otherwise delicious cake), but because we as Americans see that “competence and character,” not popularity or “moral values,” is the yardstick with which to measure our leaders.

Coaching Program

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• One 90-minute meeting each week, to review business issues, strategy, goals and objectives.
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Debunking the Wayback Machine

The Internet Archive (www.archive.org) was founded in 1996 by Brewster Kahle, a search-engine whiz and dot-com multimillionaire at the time, with a dream: “He wanted to back up the Internet.” It quickly became the largest publicly accessible, privately funded digital archive in the world. At the same time of its founding, Mr. Kahle co-founded Alexa Internet in April 1996, which was sold to Amazon.com in 1999.

At the time of the founding of the Internet Archive, there were approximately 50 million or so unique URL’s. In July of 2007, Google claimed that it found approximately 1 trillion unique URL’s on the web, with every indication that growth will continue to explode. Over the years, the Internet has become a significant driver of commerce, increasingly the subject matter of litigation. The Wayback Machine has provided evidence, for plaintiffs and defendants alike, in litigation ever since; and has become a very important tool for attorneys and litigants.

The problem is, most attorneys (and even highly paid expert witnesses) don’t have enough technical experience to truly appreciate the limitations of the Wayback Machine, and often misuse or misinterpret the results of the Wayback Machine.

I was recently hired as an expert witness by a small Internet company, to help defend against a lawsuit from a major music publisher. The case looked absolutely hopeless, as this major music publisher spent an exorbitant sum on an expert witness, who appeared to have created a water-tight case against my client using information provided by the Wayback Machine.

As I read the report of the plaintiff’s expert witness, it became clear to me that the expert witness had absolutely no understanding of the limitations of the Wayback Machine, and as a result, completely misinterpreted the results. Within a few short weeks, I was able to completely discredit the expert witness, thereby undermining the plaintiff’s case (This case is still ongoing, and has not yet reached final disposition).

I am currently working on a paper, which I am calling “Debunking the Wayback Machine,” which will detail the advantages and disadvantages of using the Wayback Machine in litigation. This paper will discuss the technical issues, as well as provide easy-to-follow steps and guidelines on how to carefully examine and apply the results of the Wayback Machine for testimonial purposes. And, most importantly, how to discredit anyone that blindly relies on the results of the Wayback Machine to prove or disprove their case.

Consider the issues.

These limitations can have profound impacts on what is delivered from the Wayback Machine, and my paper discusses these impacts in depth. For your consideration, consider these two examples I have personally witnessed in the past year:

• In one example, the Wayback Machine has archived a particular website for years. When referencing that website from several years ago, the Wayback Machine contains all the web pages including a form. The form, however, references an actual script that sits on today’s website (i.e. the script, itself, is not backed up on the Wayback Machine). Therefore, when one accesses the form from the Wayback Machine, it gives the false impression that when you hit “submit,” you’re getting the results from several years ago. This is incorrect, because when you hit “submit,” the Wayback Machine sends the query to the existing website, therefor you’re getting today’s information. This is a difficult concept to grasp, and made all the more difficult in litigation, because most expert reports contain mere screen shots, when a careful examination of the underlying links, data and information provided by the Wayback Machine is needed to properly assess the accuracy and relevance of that information to the case at hand.
• In another example, the Wayback Machine had archived some, but not all, images of a particular website. When viewing a backed up website through the Wayback Machine, you see a complete web page but when you carefully examine the links, you find that not all the images represented have been backed up. A few of the images — and in this case, a very important image — continue to be referenced from the existing website. When you have anything coming from outside the Wayback Machine, it is not archived information. Thus, subject to changes and manipulation over time. In this case, the image in question was key to a case: It provided specific information about the company that a plaintiff attempted to use in litigation.

In conclusion, I believe it’s attorney malpractice to let the opposing side use the results from the Wayback Machine in litigation (or to influence settlement or the outcome of a case) without consulting with an expert who can carefully examine and scrub the results provide by the Wayback Machine.

Stay tuned for my paper. If you have any questions or are dealing with a matter that involves evidence provided from the Wayback Machine, please feel free to contact us at your earliest convenience.

2008 Quote of the Year

“I know we loose money for each one we sell, but we’ll make it up on volume…”

You can lead a horse to water, but you cannot make it drink.

Non-Compete Agreements: They Can Work

One of the biggest concerns I hear from many business owners, is the fear of key employees walking away with customers. I’ve talked with employees at many companies, and it’s clear: These people believe any client they work on is “their customer,” they are free to take “their customers” away from their employer, and they don’t believe non-compete agreements are enforceable.

I just cringe for these business owners, who have such individuals in their employ. Sure, they are busy, but make no mistake about it — they are working for themselves and there is zero loyalty — these employees will leave you in an instant if they think the grass is greener elsewhere.

Aside from being completely wrong on all accounts, these employees have little knowledge or respect for the difficulty and sheer effort it takes to open, run and successfully manage a profitable business. It’s the business owner that invests in marketing and signs the advertising contracts. It’s that same owner who doesn’t sleep at night, trying to figure out how to keep the lights on, the clients coming through the door and the paychecks issued. Client loyalty is key to the success — and long-term viability — of any business.

How can you prevent former employees from stealing your clients? The answer is, a well-crafted non-compete and non-solicitation agreement.

The laws vary from state-to-state, jurisdiction-to-jurisdiction. There are ways to write bad (i.e. unenforceable) agreements, and there are ways to write great (i.e. enforceable) agreements. The best way to obtain a great agreement, is to hire a local attorney familiar with such matters — the money you spend writing such an agreement will pay for itself in dividends.

Do you even have agreements in place with your employees? If not, you have no excuse! Start now!

Don’t give courts reasons to invalidate your agreement. Make it fair and reasonable. This means take ownership of what is yours — the client — and don’t unduly restrict your employees from being gainfully employed elsewhere. Avoid:

• Geographic restrictions - even limited ones can pose problems
• Blanket restrictions - everyone has a right to work, so don’t prohibit someone from earning a livelihood
• Unlimited restrictions - always reasonably time-bound the restriction (i.e. 1 year)
• Non-solicitation only - everyone tries to get around this, by creating the circumstances where “I didn’t solicit them, they called me!”
• Punitive damages - courts seldom award punitive damages, especially for employee contracts; so they just help to instill the belief that your non-solicitation agreement is egregious, unfair and unbalanced

Every good non-compete agreement should, at a minimum:

• Define Confidentiality and require employees to honor the confidential information of your business
• Define “Client” and “Client List,” and make it clear they are owned by company and are to remain Confidential and Trade Secret
• Indicate that employees (including “whether as an individual for its own account, or for or with any other person, firm, corporation, partnership, joint venture, association, or other entity whatsoever, which is or intends to be engaged in the same line of business as YOUR COMPANY, or in such other business competitive with YOUR COMPANY,”) may not solicit, interfere with, or entice away any clients (or employees) of your company, for a reasonable period of time (i.e. 1 year)
• Indicate that employees (with language above) after their employment ends at your company, may not service, or perform services for, any Client, for a reasonable period of time (i.e. 1 year)
• Require employees to acknowledge that the restrictions will not create an undue hardship, not prevent them from competing in an independent business, and agree they are subject to a restraining order and/or injunction if they violate the agreement
• Require “reasonable enforcement costs and expenses” to be paid by employee, if they violate the agreement
• Contain the standard clauses of severability, survival, waiver of breach and assignment

Note that if you are presented with employees who are bringing their own clients, and you want to acknowledge the clients they bring, my advice is to create an “attachment” that has the actual names of the clients you want to exclude from the agreement. The employee should specifically indicate who such individuals are.

If you have an employee who doesn’t want to sign such an agreement, then you have some interesting information: They intend to steal clients from you the minute the relationship doesn’t work for them. Do you really want such employees in your organization?

EBay beats Tiffany, but TM law is very much alive and well …

The Wall Street Journal announced today that EBay Wins in Fight Over Tiffany Counterfeits.

eBay finally wins one, and it’s about time. EBay (and other e-commerce companies) won decisively against Tiffany and other trademark holders, which are trying to hold Internet companies liable for the sale of counterfeit goods. The issue involves burden of policing trademarks on the Internet, and Tiffany argued that eBay doesn’t do enough to police its network. The court held that eBay removes content once notified by Tiffany, which is the extent of its legal burden under US Trademark Law. Tiffany wanted eBay to police its network regarding Tiffany trademarks, much as it does prohibiting firearms.

Technically speaking, it wouldn’t be a problem for eBay to police its network as Tiffany desires. The problem is, it creates a slippery slope for eBay in several ways. First, by doing this for Tiffany, it would create a precedent for eBay to do it for all valid trademark holders (or at least those who requested this from eBay). Additionally, it suggest some form of liability to Tiffany, should eBay make mistakes. Finally, such action would cause a disservice to eBay’s customer base, as there are valid holders of Tiffany products. For example, I happen to have a couple of silver cufflinks from Tiffany, and if I want to sell them, I should be able to do so without seeking some form of permission from Tiffany.

It sounds like Tiffany isn’t going to give up. I expect them (and other significant trademark holders) to seek additional rights at the federal level. The problem is, they are overstepping their bounds, and definitely infringing on my rights as a holder of Tiffany goods should I desire to sell them. If we give rights to trademark holders to hold eBay, Craig’s List and the classifieds liable for counterfeits, I will no longer have an opportunity to sell my old Dell laptop, my Logitech mouse, iPhone, Tiffany earrings, my wife’s Louis Vuitton purse, etc, etc, etc.

Don’t think for a minute, that trademark holders are powerless with this decision. It simply reinforces the burden of policing the trademark (i.e. monitoring where your trademark is being used), and once a trademark holder identifies (or thinks they’ve identified, even if they are wrong) improper use of their trademark, an Internet company would be wise to immediately respond to any notice received by taking down the offending material. Otherwise, it becomes an easy case for contributory trademark infringement against your company.

When I was COO & Corporate Counsel for FatCow Web Hosting, I received numerous trademark infringement claims against our customers. The problem for us, is that our 30,000+ customers hosted their websites with us, some websites having many thousands of pages or products, with only one page or product containing the offending material. As a company, we can’t go in and modify a customer’s database to remove the one row (or page) containing the trademark problem. We have to take down the entire website. Therefore, it was our policy to contact the customer first, apologize about the predicament we were in as a hosting company, and explain the options to our customer. Often, those options were:

• Remove the offending material (usually within 72 hours);
• Resolve the matter with the complaining party;
• Obtain a court-order to keep your website up; or
• Have us take down your entire website.

More times than I can remember, I would receive a call by either the customer or their attorney, demanding that we leave the website up and basically trying to plead their case to me as though I’m a trademark judge. Unfortunately, in US Trademark Law, there is no safe harbor for an Internet company or ISP against contributory trademark infringement claims by a valid trademark holder. This means, as an Internet company or ISP, you must take down any material that is alleged to infringe a valid trademark otherwise you risk exposing yourself to a contributory trademark infringement cause of action, which will be difficult to win given the notice you were provided by the original complaint and the fact that you derive revenue from your customer.

In other words, Tiffany didn’t lose anything in this case against eBay. Trademark law is still alive and well for trademark holders.

Comcast may receive financial penalties for managing its TCP/IP traffic

The Sacramento Business Journal had an article today discussing how the FCC Chairman is recommending punishment to Comcast for “violating commission principles meant to protect consumers’ access to the Internet.” In particular, Comcast started regulating BitTorrent Inc. file-sharing traffic in June 2008, and has been accused of creating network changes that have disrupted some users of Vonage VoIP phone service.

I’m both a Comcast and Vonage user, and I’ve never experienced any trouble with Vonage myself, although I’d raise hell with Comcast if they tried to interrupt the ports or connectivity associated with my Vonage use. Vonage is a great service, and I cannot recommend it enough. Internet VoIP is definitely the wave of the future. It’s inexpensive, flexible, highly configurable and most importantly, portable. I can keep my old phone numbers, no matter where I am on the Internet. I can also have phone calls routed just about anywhere.

What this points out, though, is that ISP’s must be ever more careful how they define services for their customers, as well as how they manage their networks. In the past, ISP’s have often had to make hard decisions in impacting one or more users’ access to the Internet, in order to save or protect the overall network. For example, in Comcast’s case, they are trying to manage overall network performance by reducing BitTorrent filesharing traffic.

In today’s ISP market, we market the value of the service by how fast it is, like when an ISP advertises “6 megs.” Consumers don’t appreciate the different between upload versus download speeds, although there are signs this is changing. ISP professionals will tell you that “6 megs” is really not telling the whole story, since it’s a measure of throughput not overall data transfer. If all customers on an ISP’s network fully utilized their full throughput (i.e. all “6 meg” customers transferred a full “6 meg” upload and download all day and night, 24×7), their networks couldn’t handle it. Every ISP’s network assumes customers utilize only a tiny fraction of their overall bandwidth allocation.

The better approach for an ISP, would be to state upload and download speeds, as well as put a monthly or daily cap on data transfer. This would help ISP’s manage their network, when you have heavy users, as well as provide a mechanism to tier access, therefore providing an ability to charging more for the “heavy users.”

Is the small ISP going the way of the Dodo?

I had lunch today with a the owner of a very well-respected ISP here in New Mexico. He is a very likable fellow, very technical and works very hard at keeping his customers happy.

The problem is, his business isn’t growing.

For years, he benefited from high double-digit growth rates in net residential and commercial accounts. This past year, his net growth rate for new accounts is around 5%. He blames it on the economy, acknowledges a deficiency in marketing, and feels that all he needs to do is offer a new backup storage service to get folks enticed to do business with him.

The truth of the matter is far more sinister. His business, like all small ISP’s, is in risk of extinction. The large players, like Qwest and Comcast, are now competing in a deregulated marketplace. They aren’t giving ISP’s the same access to their networks as before. They are bundling services, and throwing in Internet service as a loss-leader.

His people are disenfranchised. They lost that “spark” that keeps them motivated and going that last mile for customers. It’s a downward death spiral, and it will take some serious changes to turn the business around and compete effectively in this new marketplace. He is stymied, and falling back to what he knows best: Introducing new technical features that will have little appeal, especially when ISP-neutral solutions are readily and inexpensively available.

What he needs to do is:

• Refocus on customer service, and delivering a customer support experience that far surpasses what the big-boys can provide.
• Create a corporate proforma, with realistic goals on number of accounts and value-added service purchases.
• Create monthly financial reports that can be disseminated to the company (and public).
• Publish a monthly executive dashboard of business metrics, to help employees better understand how the company is doing and what is needed to grow.
• Provide the same suite of services the big boys provide, that are easier to use, better and more cost effective. At a high-level, broadband capable voice, data and TV. Also, he should include (at a minimum) email, DNS, web hosting, automatic virus protection and spam filtering, and optionally filter out adult content.
• Finally, he needs to offer services the big boys simply cannot. Because his customers are local, he could offer free “computer checkups” and disaster recovery for clients. He should leverage his local access to clients.

Over the course of the next month or so, I’m going to publish articles that offer specific examples and explain how to create the various tools for the small ISP: Proforma, proper financial reports, executive dashboard, exit strategies, broadband network strategies, etc. Stay tuned!