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Single Cell Phone Standard Gives Europeans Clout
An article in the September 7th issue of Business Week discussed the global struggle to settle on digital cellular telephone standards that will make a cell phone usable throughout the world. Acccording to the magazine, Europe's committee approach has put Europe ahead of America by advancing a single standard, while the U.S. gave competition a free reign.
The European cellular standard is based on a version of Code Division Multiple Access (CDMA) technology developed by an American corporation - Qualcomm Inc. - and the U.S. military. But the European version of CDMA, as presently envisioned, will allow third generation cell phones to transmit at up to 2 megabits per second, but with no "backward compatibility" with existing (second generation) CDMA systems. Should European standards prevail, Qualcomm would lose patent revenue, backward compatibility, and market share of third generation cellular systems. (Estimates of the amount that subscribers will spend on cellular handsets in 2001 are in the range of $55 billion). What's worse for American cell phone manufacturers, the market will be further split into four technical standards because, according to Business Week, today's service providers must assure backward compatibility with their customer's current phones. [Editor's Note: This supposes that subscribers will want to continue to own obsolete cellular phones.] Companies like Motorola, which have proprietary cellular standards, are likely to be hard-hit if a European third generation standard prevails.
As things stand now, it's unsure whether the European cellular industry will back down and incorporate Qualcomm's backward compatibility technology into the European standard. If not, Qualcomm may refuse to license its CDMA patents, and the ensuing dispute may be decided by the World Trade Organization. The article was written by Steven Brull, Neil Gross, and Catherine Yang, and includes information from bureau reports.
Data Quality Problems Cause Iridium Delay
According to The Washington Post, Iridium LLC will delay the launch of its global wireless and data service because of network data quality problems. Rather than begin selling service commercially, Iridium will deliver 2,000 handsets to individual, corporate, and government official customers on a free trial basis until the system is "debugged." The basic DQ problem appears to be that telephone calls and data transfers can't be completed.
Iridium will delay the launch of its global wireless satellite telephone and data service until at least November 1st, as the company works out the technical and marketing kinks. It appears from the Post article that most Iridium problems are caused by the complexity of the Iridium network. Even a minor software glitch appears to be capable of causing a disruption in the network. The article was written by Post staff writer Mike Mills and appears on page C3.
SEC Chairman: Improve Bond Pricing Data Quality
Two reports - in The Wall Street Journal and The New York Times on September 10th concern SEC Chairman Arthur Levitt's announced goal of giving investors more information about the prices and trading of corporate bonds.
At the Commission's request, the National Association of Securities Dealers (NASD) - a Wall Street self-regulatory organization - will set up an electronic network to report and distribute immediate prices of trades in corporate bonds and preferred stocks.
According to Chairman Levitt: "For securities markets, transparency is the extent to which timely data and prices are visible and understandable to all participants, institutional and individual. Investors have the right to know the prices at which bonds are being bought and sold."
Recent volatility in the financial markets, which Mr. Levitt said had affected the prices of bonds as well as stocks "underscores the need for greater price transparency in the market."
Unlike stocks, which are generally traded through a centralized market, like the New York Stock Exchange or Nasdaq, most bonds are traded directly betwen two investors or through an intermediary, usually a securities firm. For most bonds, there is no mechanism for reporting prices to investors who are not involved in a particular transaction. This is true despite the fact that the dollar value of daily bond trading greatly exceeds the dollar volume of the three largest stock exchanges.
According to the Times, Chairman Levitt said the S.E.C. found that high-quality pricing data is available for government bonds and that more information is becoming available about municipal bond pricing. But the corporate bond market is one of the last major markets inn the United States not to have some kind of electronic price disclosure. Once the electronic specifications of the bond price system are put together by the NASD, the S.E.C. will allow public comments. Unlike the Nasdaq stock market, the bond price system would not be an electronic transaction system. Rather, it will report prices only. The article was written by Edward Wyatt and appears on page C8. A front page article by Gregory Zuckerman in The Wall Street Journal provides additional background and details.
Better Data Quality in Future 'Sexual Abuse' Cases
A report in the September 8th issue of The New York Times discussed lessons learned by psychologists, attorneys, and law enforcement officers as the result of mistakes made investigating child abuse charges over the past 15 years.
As the result of recent research, there is an emerging concensus over how children should be interviewed to minimize false reports. Warring camps of psychologists have reached broad agreement that tens of thousands of children suffer "sexual abuse" (as defined and redefined by psychologists) each year. The "vast majority" of child sexual abuse cases are true, according to the Times. And most children over the age of 5 display a great capacity for accuracy. Unfortunately, preschoolers of 3 and 4 tend to be more suggestable than older children.
According to the Times, in the most notorious child sex abuse cases of a decade ago, overzealous and inadequately trained investigators questioned parents and children in a climate of panic, if not hysteria, creating a highly prejudicial and irreparable set of mistakes. The "best" advice for investigators today is not to suggest to children that particular events occurred, not ask clarifying questions about events, not ask leading questions, not suggest that something bad happened, and not shape of criticize a child's response. The key to obtaining good data about sexual abuse is to recognize that children are impressionable, to remain neutral, and to aviod pressure tactics. The article was written by Carey Goldberg and appears on page D1.
Web Stock Tips: Dubious Quality
A special report in The Wall Street Journal on September 8th explores on-line trading and the problems on-line investors experience with Web stock advice. Although the S.E.C requires a Web site or e-mail newsletter to disclose whether it has been paid to promote a stock, lengthy or hidden disclaimers, or no disclosure at all, are common on the Web. And it usually isn't clear that many "analysts" are not only paid to promote stocks, but that their identities are fictitious. Moreover, many "tips" found on Web investment message boards and discussion forums are completely anonymous.
According to John Stark, the S.E.C.'s head of Internet enforcement, investors "should never, ever base an investment decision on what you read on a message board. You don't know what the person's background is, who is posting the message, or what their position is in the stock they're recommending."
Many complaints to the S.E.C. are related to small, often-speculative companies whose shares are quoted on the OTC Bulletin Board, a service run by the National Association of Securities Dealers. Stocks traded on the OTC Bulletin Board aren't subject to many of the disclosure requirements imposed on shares traded on Nasdaq or the other major exchanges. The S.E.C. is supporting reform of the OTC Bulletin Board. (The S.E.C.'s Web site can be found at www.sec.gov). The article was written by Jason Anders, staff reporter for the Journal's interactive division, and appears on page R16 of the supplement.
Computer Benchmark Data: Often Misleading
According to a report in the September 10th issue of The New York Times, computer and peripheral manufacturers are relying more on benchmark results - ostensibly objective measures of performance, such as processsor speed. The manufacturers see benchmarks as a way to separate themselves from competitors and gain a marketing advantage. But many experts say that when benchmark scores are applied to consumer computers, they are useful only in a limited way. At best, they provide consumers with one piece of information that can be used along with price, features, style, and upgradeability, support, and other considerations in making a purchasing decision.
At worst, benchmarks can be so misleading that they would make a used car salesperson blush. Benchmarks are software tools that measure the performance of all or part of a computer system and report the results as a number. The number, by itself, doesn't mean very much. It is only by comparing benchmark scores from similar systems that the data begin to have value.
Some computer benchmarks measure overall system performance, while others isolate the performance of individual components, like microprocessors, disk drives, or microprocessor cards. Computer corporations then compare their benchmark scores with those of their rivals, or they stack them up against earlier generations of the same product in an effot to persuade customers to upgrade.
There are dozens of benchmarks in use today, some narrowly focused - on performance of floating point operations, for instance - and others aimed at real world applications, like opening and using a word processor. In fact, there are so many benchmarks that computer vendors can choose those that show of their own systems to best advantage and ignore, or at least not publicize, the others.
Benchmarks are most accurate when the systems being compared are as comparable as possible. For example, when shopping for a PC, the microprocessor, microprocessor speed, amount of RAM, and version of operating system software (i.e., Windows 95 or Windows 98) being tested should be the same. The PC benchmark software can then determine which PC performs best for a given hardware/software configuration.
In the end, consumers may need to perform reality checks along with the benchmark checks. A system that scores 10% higher on a given benchmark may not mean a system is a better choice than another that costs 20% less. The article was written by Peter H. Lewis, and appears on page E1.
WSJ Article Discusses Mexico's Poor Data Quality
A front page article in the September 10th issue of The Wall Street Journal discusses the secrecy and lack of basic information and data that pervades both the Mexican government and Mexican corporations. According to the Journal, the lack of credible information has frustrated busineses ranging from bankers to travel agents. Bankers claim that the lack of credible credit information has stymied renewed lending since the 1994 peso collapse. Travel agents claim it's almost impossible to get a straight answers from Mexican airlines on the timing of price promotions. And for the past 70 years, the ruling Institutional Revolutionary Party, or PRI, has worked hard to ensure embarrasing information doesn't end up in the wrong hands.
Mexican history is closely guarded when it damages the reputations of the living. But the debate over access to information has become more intense with the growth of a free press, opposition political parties, and a big rise in the number of foreign investors doing business in Mexico who demand transparency. The article was written by Journal staff reporter Jonathan Friedland.