Mobility and Net Neutrality

Driving by car is strongly connected with a feeling of personal freedom. While we book flights just for one specific itinerary, and train tickets are usually only valid for a short period in time, we can get into our car whenever we want and drive any route that comes to our mind. Traffic jams, detours, or temporary road blocks apply to every driver the same way. And also speed limits or priority are not depending on how much we pay. This also holds true for toll that might be charged to cross a bridge or a tunnel – every driver is treated the same way.

However can we take this condition for granted that provides a network of roads in a neutral way to every user? Net neutrality is not a matter of fact in every industry, not even in all branches of mobility and logistics. Rail services e.g. charge special rates for express trains. While the tariff structure of rail companies are rather transparent in passenger services, this is not the case for transportation of goods. Depending on the buying power and on the negotiations of the customers‘ procurement, freight will be transported timely or might travel rather slowly to its destination.

In telecommunications, the rate structure is even more notorious for its lack of transparency. Voice and data plans vary by orders of magnitude regarding bandwidth or duration that comes with different plans.

Net neutrality in telecom services became an important issue when ‚over the top services‘ like Youtube or Netflix started to consume significant proportions of bandwidths. It became obvious that in the long run the carriers would be degraded to mere suppliers of infrastructure, just delivering a commodity instead of becoming ‚value added services‘ that could charge their customers extra for their precious entertainment programs.

Until now, users pay for using the service in terms of just transportation of the data packages, no matter whats in the date. Since they are the ones who pay, it should thus follow consequently that the services they want to access must not be charged by the telcos or otherwise the service would be charged twice. In Europa as in many parts of the world it is still mandatory for telcos to act neutrally regarding the services requested by the users.

‚Managed services‘ is what telcos are lobbying for in opposition to net neutrality. The argument goes that companies like Google (with Youtube in particular) or Facebook act like parasites on the infrastructure – skimming the profits without contributing to maintain it. Although there is very little facts provided to prove the allegations, it is not totally implausible. Advocates for net neutrality would respond though, that restricting net neutrality would give telcos a wrong incentive, not to invest in infrastructure to improve the situation, instead to shorten supply to be able to raise the price for services, or even worse, to exclude competition like Skype or Whatsapp and rather continue selling their own products like voice telephony or SMS.

With roads, the situation is fundamentally different. It is comparably easy to add new wires or build additional base transceiver stations to get more throughput for the network. It is much harder to build more roads, in urban environments it is often even impossible to increase the capacity for traffic. The consequence can be seen everyday: Traffic jams, overcrowded parking lots, polluted air. Worst examples are the big metropolitan centers in China and India, but the situation in most big cities in the US is also dire.

Road access without regulations thus leads to a classic example of the ‚tragedy of the commons‘. Each driver will ask herself, why she should be the one to refrain from the benefits of individual traffic and switch to public transport. Some cities have already introduced special tolls, like the congestion fee for entering central London.

Autonomous cars and car sharing services when becoming broadly available would indeed offer another model. Telecommunication carriers license frequencies in the electromagnetic spectrum from the state, for which they have to pay a considerable sum. In return they can offer differentiated rate plans to their customers, and realizing a significant upside for themselves. Cities or whole countries could offer mobility carriers a similar deal: Car sharing platforms would rent capacity from the public, and resell their added value mobility service to finance the infrastructure. Rate plans could be fine tuned and automatically adapt demand. It might in this way just become to expensive to use individual means of transport for a commute that you could as well do in public transport or by bicycle.

That this is no far fetched business model at all is shown by Uber. Uber’s surge pricing anticipates such mobility services reacting elastically to actual demand. A major outcry followed when people became aware that instead of being charged a few dollars like usually, they would suddenly face payments more expensive by orders of magnitude.

Since the times of Henry Ford, individual traffic in the own car has been woven into the culture of most societies. It is thus not easy see opportunities and risks from a more distanced, more objective vantage. It will also not be easy to find the right rules and regulations to make a system of managed services for mobility fair and supportive to the economy.

The worst would be a contemporary version of highwaymen. Second worse however would be to go on and waste space, pollute the air, and jam the vessels of urban life like it can be seen in many cities today. Net neutrality for mobility will therefore become an important issue.

New Product Development in the Age of IoT

If you’re responsible for new product development in your company, you will be familiar with the several steps of that process. Experts mostly separate the new product development process into seven or eight steps, starting with idea generation and finishing with a post launch review. The fact that more and more things become smart; i.e. they either feature some intelligence or they are connected and controlled through the IoT, has significant implications on new product development, particularly on its very first phases.

Traditionally, ideation and screening of first product ideas have focused on research, brainstorming, SWOT analysis, market and consumer trends, and so forth. All these activities imply certain hypotheses and more or less tangible perceptions of products or product components. This works fine, as long as the final product is a one-way product; i.e. once produced and sold it won’t change (other than to age and break, ultimately). However, smart things aren’t on-directional, but bi-directional: they communicate, they change, and therefore their effects on consumers are far more complex and variable than those of their „dumb“ predecessors.

The smarter a thing, or a group of things, is, the more complex the situations they will create for their environment and their users. The much discussed self-driving cars which algorithms must decide whom to run over in case of an inevitable accoident provide a good example of the complexity future products will create.

Now – what are the implications of smarr things and the IoT on new product development? The answer is pretty easy – we just have to look at the discussions regarding the IoT: privacy, responsibility, sustainability, awareness, acceptance, relevance, and ethics. Is my data secure? Who takes responsibility of data provenance? Do I want this thing to be smart? Do I accept a thing’s decision? Do things add value? Do others accept me using my smart thing? Can I defend using my smart thing against my beliefs?

We can sort these crtical questions into three categories:

  • – philosophy (ethical aspects),
  • – sociology (responsibility/acceptance aspects) and
  • – psychology (awareness/relevance aspects).

Philosophy, sociology and psychology are the „new“ fields for benchmarking new product ideas. As distinct from present techniques of finding new product ideas, corporate innovation managers will have to broaden their scopes and companies will have to adapt by hiring and training their innovation departments towards these fields of expertise. Today, only very few companies seem to have inherited this new way of thinking: just look at how Apple creates and markets its products: there is no talk of product features, but of sustainable production chains, of family accounts or enhanced well-being.

Would you have thought that philosophy, sociology and psychology would play a pivotal role in new product development? Could that mean that philosophers sleeping in ceramic jars now can afford posh apartements, or formerly unemployed sociologists can choose their employers, or psychologists leave their universities to actually develop new products? And – will we see a lot mote useful, meaningful, usable and accepted products? I think so.

Know And Speak To Your Customer Through The IoT

Equipped with sensors and microchips, ever more of objects can communicate, with each other and with human beings – the Internet of Things and Humans is born. Even washing powder is set to become smart through attached sensors on its packaging that detects when the product is being used, and that communicates with readers like smartphones when scanned. From today’s 5 billion to 21 billion by 2020, the number of wirelessly connected things will increase. 

Who will profit from the Internet of Things – or IoT – most?
Let’s look at the obvious applications, first: Stock-keeping and supply-chain management processes will have implemented technologies making objects communicating with each other, thus enabling businesses to follow the progress of their products from factories to shops to end-consumers. Espresso beans will tell baristas about the best temperature to keep them in stock. Batteries will inform their owners when reaching the last phase of their power-providing lives.
From our perspective, however, the biggest potential lies in customer relations. Brands are realizing that the best way to sell their products is to build personal relations with customers rather than to spend lavishly on marketing. Until today, many brands come only second behind retailers with regards to communication to their customers. Often, it’s the retailer who knows the customers‘ preferences best, and who is able to retain them through loyalty schemes. Ask yourself: where do you buy your stuff? Online retailers are the ones understanding their customers best, often they have the complete customer journey available.

Speak to your customer
Now it becomes cheaper to add sensors and microchips to products, and to connect them to the internet. The direct result of the IoT is a huge influx of customer or end-user data. Whereas nobody at manufacturers and brands had to – or better: was able to – gather data of actual customer behavior so far, there now arrives Big Data describing everything these companies have ever wanted to know. In theory, this data will help them develop their products and services more rapidly, fix any bugs more quickly and tailor products better to their end-users‘ needs.

In practice, the gigantic flood of data may imply significant structural changes for manufacturers: is the IT infrastructure set to cope with Big Data? Is the IT personnel eqipped with the necessary knowledge amd experience to handle data sampling and dara storage correctly? Are there adequate in-house resources to munge and analyze the data? And, after all, will anybody visualize and instrumentalize the data in a meaningful way? Sure, there already are best practices regarding individual steps of this Big Data process. And for each part of the process, there are tools that can be used a software-as-a-service. But it`s a long way from data sampling to a smoothly managed customer relation through objects.

A new era of competition
Managing and optimizing the company’s own customer relations through the IoT is just one part of the equation: when retailers start a direct communication with their end-users, retailers won’t passively stand on the sidelines. They will fight back trying to defend their position of being „first-to-the-customer‘. And on the operative level, retailers have a big advantage: they have always been the ones with a direct contact to the customer. They know their customers (or at least they should). Everybody who switched from working in a company without direct contact to the customer to an end-user shop has experienced a cultural clash: you won’t imagine the expectations of a typical end-user – i.e. ourselves. Let alone all additional privacy and cyber-security issues.

That said, the IoT offers manufacturers the biggest opportunity since the industrialization. They can understand and learn from their customers. They can even partner with them. But first they have to do their homework and provide all the needed resources in IT infrastructure, processes, and human resources.