November 2010

In Cybertherapy, Avatars Assist With Healing

For more than a decade, a handful of therapists have been using virtual environments to help people to work through phobias, like a fear of heights or of public spaces. But now advances in artificial intelligence and computer modeling are allowing them to take on a wider array of complex social challenges and to gain insight into how people are affected by interactions with virtual humans -- or by inhabiting avatars of themselves.

Researchers are populating digital worlds with autonomous, virtual humans that can evoke the same tensions as in real-life encounters. People with social anxiety are struck dumb when asked questions by a virtual stranger. Heavy drinkers feel strong urges to order something from a virtual bartender, while gamblers are drawn to sit down and join a group playing on virtual slot machines. And therapists can advise patients at the very moment those sensations are felt. In a series of experiments, researchers have shown that people internalize these virtual experiences and their responses to them -- with effects that carry over into real life. The emerging field, called cybertherapy, now has annual conferences and a growing international following of therapists, researchers and others interested improving behavior through the use of simulations. The Canadian military has invested heavily in virtual-reality research; so has the United States Army, which has been spending about $4 million annually on programs with computer-generated agents, for training officers and treating post-traumatic stress reactions. The trend has already generated a few critics, who see a possible downside along with benefits.

News Corp. Buys Education Technology Firm

News Corp. said it agreed to acquire Wireless Generation Inc., an education technology company, as part of the media conglomerate's nascent efforts to expand into the education market.

News Corp. is paying $360 million in cash for a 90% stake in the company, which makes online tools to evaluate students and personalize instruction. Upon completion of the transaction, Wireless Generation will become a subsidiary of News Corp. and will be managed by founder and Chief Executive Larry Berger, President Josh Reibel and Executive Vice President Laurence Holt, who collectively will retain a 10% interest. The acquisition comes less than two weeks after News Corp. said it was hiring Joel Klein, the former New York City schools chancellor, as executive vice president in the office of the chairman, Rupert Murdoch. Among Wireless Generation's clients is New York City's Department of Education, with which Wireless Generation worked to develop the Achievement Reporting and Innovation System (ARIS), an online tool that gives teachers, administrators and parents access to student data on things like attendance, transfer history and state test scores.

No SIMple Solution for Telecom Firms

Small but deadly. Mobile telephone network operators face a new threat to their business model from handset manufacturers in the form of a new generation of SIM cards, the small chips placed in the back of phones to activate access to mobile networks.

The new SIM technology will be embedded in handsets, enabling manufacturers potentially to bypass operators and sell network access to customers directly, and making it easier for customers to switch networks. There isn't much network operators can do about it. For telecom firms, having a direct customer relationship is important. It provides them with visibility on future revenue and an opportunity to sell high-margin insurance and technical support service add-ons. The suggestion that Apple may include an embedded SIM in coming versions of its iPhone has spread panic through an industry in fear of being relegated to a utility selling network capacity. Apple, after all, already has tens of millions of direct customer relationships. Its suite of iTunes services gives it access to customer-billing information. Its stores sell and support iPhones, taking some of the customer-service burden off mobile operators. The operators have responded by launching a program to produce their own standards for embedded SIMs via their trade body, the GSMA. That makes sense. The operators can use their control of networks to make life hard for new entrants: They can set security standards prohibitively high for switching operators, ramp up prices for network access, or cut subsidies for customers choosing high-end handsets like the iPhone.

Google, Yahoo, other Silicon Valley tech giants add economists to arsenal

In addition to software engineers, computer scientists and Web designers, Silicon Valley giants ranging from Yahoo to Google to eBay are scrambling to hire economists, little-known and increasingly valuable weapons as these companies create new businesses and fine-tune existing ones.

In the wake of the example of UC Berkeley economist Hal Varian, who helped Google perfect the auction process behind its multibillion-dollar search advertising revenue stream, big Internet companies are competing to woo economists away from universities or work with them on specific projects. Yahoo has been among the most aggressive, but eBay, Amazon.com, Facebook and other companies also are recruiting practitioners of what used to be called "the dismal science." Illustrating how crucial companies think those skills are, Microsoft CEO Steve Ballmer personally recruited economist Susan Athey from Harvard. Internet companies see the economists as critical in their efforts to fine-tune advertising networks that serve millions of online ad impressions a day, and to better understand e-commerce platforms with tens of millions of buyers and sellers. Economists can also help determine whether new businesses or approaches will be effective.

Chinese government takes a bite out of Apple

Apple, whose devices overcome many technological obstacles, can't as easily work around Internet restrictions of the Chinese government. Like other western Internet companies, Apple, if it wants to operate in China, has to follow the rules of the Communist government, which does not want its citizens accessing politically sensitive information. For instance, if one searches the App Store in China for the "Dalai Prayer Wheel'' application available in the United States, no results pop up. That's because the Chinese government regards the Dalai Lama as a dangerous "splittist" who wants to separate Tibet from China. Developers in China say Apple has no choice but to abide by the regulations.

Judge Signals TRO Against FilmOn Station Streaming

Judge Naomi Reice Buchwald, of the federal court for the Southern District of New York, said she was granting a temporary restraining order against FilmOn, the online streaming video site, a source in the courtroom said.

Judge Buchwald signaled that she was granting the restraining order, but had not yet issued it. The Big Four nets and their associated studios filed suit last month after FilmOn Sept. 27 launched a $9.95-per-month high-definition service (actually it launched in standard-def, then upgraded) that included what it called "premium free to air television channels" including from CBS, ABC, NBC, Fox, KCAL and KTLA, as well as various international satellite channels. The issue of how online video services are going to be treated when it comes to FCC regulations and copyright laws could be crucial to the future of online video, which many, including the current FCC chairman, argue will be an increasingly important delivery platform.

Verizon proposes wholesale rewrite of US telecom law

Verizon just put out a press release titled "Congress Needs to Update the Nation's Antiquated and Anti-Competitive Telecom Rules."

Verizon public policy VP Tom Tauke straight-up says that the government should completely rewrite the Telecommunications Act, and give a single federal agency "clear jurisdiction" to enforce the law on a case-by-case basis. That's a direct shot at the Federal Communications Commission, which lost the Comcast BitTorrent case when the court ruled it didn't have the power to enforce network neutrality, and then provoked the ire of both industry and Congress alike when it tried to reclassify Internet communications in a way that gave it the power it needed. That's also way beyond the joint Google / Verizon net neutrality proposal from August -- Verizon's gone from suggesting that the FCC make some policy tweaks to demanding that Congress start over with the law that governs the FCC itself, which is something like the difference between a screwdriver and a sledgehammer.

How Amazon.com undersells Best Buy, the Apple store, and almost everybody else

Unless you live in Kansas, Kentucky, New York, North Dakota, or Washington state, you'll pay no sales tax on many purchases from Amazon. This gives Amazon a huge—and largely hidden—price advantage over most other national retailers.

You'll get an especially good deal at Amazon if you're making big purchases and you live in an area with high taxes. In Chicago and Los Angeles, for instance, state and local taxes add up to 9.75 percent, the highest in the nation. Sales tax is 9.5 percent in San Francisco, 9 percent in New Orleans, and it's above 8 percent in Houston, Dallas, Las Vegas, Philadelphia, and Atlanta. The general rule: If you're choosing between Amazon and any other large national retailer, you'll almost always get a better deal at Amazon because of tax savings.

Why doesn't Amazon charge you sales tax? It has to do with the regulations states use to determine which companies must collect taxes. According to Quill Corp. v. North Dakota, a 1992 Supreme Court ruling, companies are only required to collect sales taxes from their customers when they have a presence in the state in which they reside. If you buy something from the Web site of a company that has physical stores nearby, you'll most likely have to pay taxes. When you shop at online-only stores, you pay tax only if the store has substantial operations in your state. Since Amazon's headquarters are in Seattle, you have to pay taxes if you live in Washington State, and because it has warehouses or other facilities in Kentucky, Kansas, and North Dakota, you've got to pay taxes there, too.

Netflix's Slipped Disk Pains Cable

Netflix is raising prices. It must be getting the hang of the subscription-television business.

More significant than Netflix's announcement of a $7.99 streaming-only U.S. offering Monday was its simultaneous decision to raise prices by at least $1 a month for customers who want both DVDs and content streamed over the Web. While there were certain exceptions to the price rise, the typical customer is likely to pay more unless they downgrade to streaming only. Netflix says the majority of its subscribers now use the service more for streaming than for DVDs. That might imply a majority will switch to streaming only, at least $2 a month less than the typical streaming-plus-DVD plans. It is a good bet that won't happen. First, Netflix only launched this after testing the pricing arrangement. And with content costs likely to rise steeply, Netflix can't jeopardize revenue growth. After all, its average monthly revenue per paying subscriber already has dropped to $12.12 in the third quarter from $13.30 a year earlier. And the proportion of promotional subscribers paying nothing has risen to 6.3% from 2.5% over the same period. Chances are, given the limited amount of content available on the streaming service, most subscribers will opt to pay a little extra for the option to get a DVD.

Of course, some people may drop to lower DVD tiers, such as the plan allowing only one disk out at a time. But those downgrades also should reduce Netflix's mailing costs, mitigating any impact.

Time Warner Promises No Waiting for the Cable Guy, for a Price

Time Warner Cable Inc. is set to try a new pitch for customers: No more waiting for the cable guy. There is a price, however. The second-largest U.S. cable operator will set a specific service appointment time for customers who pay $189.95 a month for a new premium package. The plan, dubbed "Signature Home," is being tested in Charlotte, North Carolina, and will roll out nationally within a few weeks, Chief Executive Officer Glenn Britt said.

Time Warner Cable plans to introduce several custom bundles geared at different customer bases within the next two years to lure and retain subscribers. The premium package includes two whole-home digital video recorders and wideband Internet, as well as higher-end service. The company is testing a lower- priced service called "TV Essentials" in New York City for $39.99 aimed at economically strapped consumers.