Let me put a string of assumptions about the Middle East, the USA and China together and see if we draw similar conclusions.
The Iraq and Afghanistan wars are not about democracy, they are about the free flow of oil. While the USA and China are not in agreement about democracy, they both want free flow of oil. Free flow of oil benefits both nations.
The Middle East is a region that is not driven by economics in the same way that the USA and China are driven by economics. In the Middle East, ideology and religion are extremely powerful. There were successive attempts by leaders like Qaddafi, Saddam Hussein, Osama Bin Laden and now Ahmadinejad to be the rulers of the Muslim world, and this is something that neither the USA nor China want, because they both have oil dependent economies. In general, the strategy of the Muslim leader is always the same. It resembles that kid who tried to kill Reagan to impress Jodie Foster (replace Jodie Foster for the average inhabitant of the Middle East). Stand up against the USA and Israel, and get Muslims to admire you. Then become the “natural leader” of the Muslim world. So far this has not worked. Now Ahmadinejad is going at it with nuclear weapons, making it ever more urgent for the USA to align with the Chinese.
Free flow of oil benefits the Chinese Communist government more than the American government. The USA is a solid democracy that can withstand a recession, China is an unstable autocratic nation with a government whose people tolerate it because it gives them prosperity. Cut off the flow of oil and the Communist government becomes very unstable.
Russia is not a natural ally for the USA in the Middle East for the simple reason that Russia is an energy exporter. It is only partly an ally in the sense that Russia, as well as China, are frequent victims of Muslim extremism. But Russia does not want the free flow of oil.
China has 2.2 military personnel and spends $60bn per year on the military. The USA has 1.4 million and spends $600bn. The economic advantage that China has in manufacturing jobs is similar to what China has in military costs. China is a low cost military producer whose labor is especially good in wars of occupation. The USA is a high cost high quality military producer whose advantage is in air and tactical wars which is exactly what the current Iraq, Afghanistan and Pakistan wars are not.
The cost of the Middle East wars over the last 10 years has been estimated at $1 trillion. Coincidentally, USA debt to China grew to close to $1 trillion during these wars. So it is fair to say that it is China who is financing the wars for the free flow of oil. It benefits from them, but does not fight them nor spend on them. China just lends money and expects to be repaid in full. Owing a lot of money to the Chinese is not a great idea for the future national and foreign policy of the USA. For example, the next time the USA says that Chinese should revalue or that they are dumping goods, the Chinese will say shut up and pay your debt. The Chinese will do what the USA did to the UK and France in the Suez Canal dispute (USA told the UK that if they insisted in fighting the Egyptians over the Suez canal it would pull off the financing of the pound and destroy its value. The UK gave up. I learned this reading IOUSA).
Given these assumptions I come to the following theses. I think the USA should have China fight and equity finance the Middle East wars for free flow of oil instead of just debt financing them. If China fights it, it is China that spends the money, not the USA indebted to China. Moreover, China can do the job 90% cheaper than the USA. If the Chinese can send a soldier to Afghanistan for $100K per year, and the objective to send this soldier is to prevent an Al Qaeda takeover of the middle east, why send a US soldier for $1M?
The USA may be afraid of having China become a global military power, but the sooner the USA drops its pretenses that it fights wars to promote democracy (why not fight the most undemocratic Saudi Arabia then?), the sooner it realizes that it fights them to promote free and cheap oil, the sooner the US government will come to the conclusion that it should partner with China. That either it gets China to fight and pay or otherwise it just waits it out. The USA has to stop thinking of itself as the first victim of any global crisis. The Communist Party of China would be the first victim. But they know it, and that’s why they pile up while the USA spends.
The last US president who understood how to make others pay for war and not take the country to bankruptcy was Bush senior who able liberated Kuwait with little investment of US money. He knew how to fight an efficient war (USA is best in the world at short tactical wars) and when to pull out.
Moreover, while many are afraid of China, I think that the Chinese, at least so far, have proven to be much more gun shy than the USA when fighting what they believe is right. China waited to regain Hong Kong without fighting, it will probably regain Taiwan amicably and will continue to deal with the uncomfortable situation of Tibet without a war. This is because the Chinese are patient and smart. This is also why, if the Chinese are willing to fight for free oil, then we should join them because when they are ready, things will be really serious and not fake serious (WMD).
Now don’t take me wrong. I prefer democracy to dictatorship and I still overall prefer the USA to China, in spite of the US voracity for foreign interventions . I especially still prefer a USA led world over a Communist Chinese led world. But if the USA doesn’t realize how China is both getting to own the USA and benefit from free oil while not contributing any sweat or real equity in the war efforts, it will go bust. And if somebody goes bust, I prefer it be the Chinese Communist party. That is why if I had anything to do with US military policy, I would not go on fighting without engaging them.
Lastly, I would like to say the same about North Korea. If anyone should worry about North Korea it’s the Chinese who are next door. They should worry about their nuclear ambitions, the potential for a nuclear war at their borders, and the enormous economic disruption that could come from a conflict in the region. And yet, the USA goes at this problem alone, and so far it has achieved nothing. This is another conflict that the USA should work closely with the Chinese on.
What brought the USSR down was the combination of a corrupt regime that was unable to deliver prosperity to its people and its disproportionate level of military spending. So long as the USA makes it easy for China to focus on prosperity and outsource most of its foreign policy to USA, the Communist will stay in power.
Together with FON, our partner BT, has reached its goal of building a million-strong WiFi hotspot network in the UK. The vast majority (more than 85%) of BT’s WiFi hotspots are BT FON hotspots and a direct result of a vision Ian Livingston, BT’s CEO, and Gavin Patterson, BT’s CEO Retail, and I, FON’s CEO, had just three years ago.
Back then BT only had some Openzone hotspots in commercial areas. In order to quickly build a truly ubiquitous WiFi network in the UK, BT needed a new approach. BT needed FON.
Teaming up with FON, BT added FON WiFi sharing functionality directly into BT Home Hubs. This made it easy for BT subscribers to become members of the FON community. As members, BT broadband customers who elect to safely share a little of their home WiFi with others, get access to the world’s largest WiFi network in return. Instantly, BT customers who opted in to FON received more access to WiFi, and the joint BT FON network took off, growing faster than anyone expected. In the past six months alone, BT’s WiFi network has doubled. We expect it to continue growing even faster in 2010, thanks in large part to FON.
2010 13
Shibuya 109: irrelevant for geeks
Published by MartinVarsavsky.net in General with No Comments
This is a video about fashion in a blog that is not about fashion so if fashion is uninteresting to you avoid it. In this video I follow @ninavarsavsky as she shops in Shibuya 109. Now right next to Shibuya 109 there are many gadget shops….not in this video however.
And here are some pictures of Tokyo taken today.
2010 9
Job Offer: Analyst
Published by MartinVarsavsky.net in General with No Comments
I am looking for an an analyst to work for me. Job consists of helping me evaluate investment projects in the areas of Internet, Telecoms and Alternative Energy. The ideal candidate will be a recent graduate, somebody who blogs and/or writes good reports in English, who has a great understanding of technology, and especially of how to turn new technologies into businesses. The job is based in Madrid and should be seen as a first training job. I have found that I work well with bright people who analyze and communicate well, but who have not received formal training in a large company. The companies that I have invested in already appear on the right side of the blog. The job also includes doing research for me for conferences related to my job as CEO of FON, this blog, other publications, teaching at IE and on different subjects that I may find of potential. Please write to me at martinvars@me.com.
2010 7
When I grow up, I want to be a Swiss cow
Published by MartinVarsavsky.net in General with No Comments
This video, that I shot this morning in the outskirts of Gstaad, shows how well cows live in Switzerland. And it shouldn´t surprise you, since in Switzerland according to the Becker-Posner Blog, 68% of farmer’s income comes in the form of a government subsidy. A billion of people on this planet live on less than a dollar a day. The average European cow gets $2.7 per day, and Swiss cows get way more than that. Here’s another interesting article on subsidies and how unfair their distribution is.
If you understand Spanish here’s a similar article but the video has a special star.
2010 4
UK to forbid Open WiFi – FON can help
Published by MartinVarsavsky.net in Fon with No Comments
As ZDNET reported, the UK government will not make an exception with its proposed Digital Economy Bill for public institutions offering “Open WiFi”. The Digital Economy Bill intends to crackdown on illegal downloads of copyright protected data. The bill suggests that ISPs could shut down a subscriber’s internet connection if the subscriber has repeatedly committed copyright infringement via his internet connection.
These penalties not only apply to individual subscribers, but also to institutions and businesses who leave their WiFi open to guests or members. This means, if a bar-owner leaves his WiFi open, and a customer accesses the internet and downloads content illegally, the bar owner will be held responsible. The ISP could even temporarily suspend the subscription. The same is true for libraries, universities and all kinds of shops. So, de facto, this would mean an end to open and unprotected WiFi in the UK.
That is bad news for anybody who wants to offer WiFi to their guests!
But, the good news is that FON can help!
FON service is unaffected by this bill as we comply with all the requirements of the UK government. FON does not offer open and anonymous WiFi access to the internet, but controls the access. Users who log on to FON need to be registered with FON. We know their identity confirmed by payment details such as credit card or phone number. We comply with all requirements of the UK Telco Regulation and collaborate with authorities if requested to identify copyright infringement cases. Just like other hotspot operators.
So, all a bar, café, shop or institution needs to do is use our Fonera WiFi router instead of an WiFi router with “open WiFi”. With a Fonera router, anyone can offer WiFi safely to their customers and not have to worry about copyright or other infringements. FON manages the access to the network.
The Fonera+ is available for purchase in the UK for just £29.95 at our FON Shop.
2010 28
In the EU we have browser choice, but few know about it
Published by MartinVarsavsky.net in General with No Comments
The EU has been tougher on monopolies than the American antitrust authorities. This has been good for Europe and bad for America. In Europe we have an amazing choice of fixed line internet providers for example. In the USA, there is generally one DSL provider and one Cable provider per territory. As a result, we have more bandwidth for less money. This is surprising because, in general, there is more choice at a better price for a lot of goods and services in the USA, including cars, banking and financial services, gadgets, etc. But the problem with the USA is that sometimes lobbying is more influential than the common good. In Europe, our career public servants seem to be less immune to lobbying (although not always, and banking, for example, seems to be an exception and most countries protect their local banks).
But recently, the EU has given us more choice in Europe. This time is the freedom to choose our browser. But as this survey shows most Europeans, around three quarters of them, are not aware of this choice. It turns out that Spain is the country with the lowest browser choice awareness in Europe.
This week we had a chance to visit Puerto Rico for the first time. We were in Culebra, not great, in Vieques, amazing, in Old San Juan which beats La Habana, and then came the rest of PR, the great and the ugly. The great is the interior of Puerto Rico, as you can see in the pictures below, it is beautiful and authentic. Ugly is the coastline of Puerto Rico. Ugly in the sense that it is all franchised. It is so fast food, gas station, double lane roads and intersections with big traffic lights, that you would not guess you are in Puerto Rico, unless of course, you are from Puerto Rico and know what it looks like. But the interior of the island, not easily accessible, is really nice, lost in time. Places like Maracao, where we had lunch, are so withdrawn from the Burger King odor of rest of the island that you think you are somewhere else. Indeed as we ate a simple but great meal in the general store, we thought that PR could be a great experiment on what fast food does to people. The study would simply consist of studying the average weight of people living in the interior of the island, say Maracao, and contrast it with the average weight of people in Arecibo. And in order for the science to be good, we also have to be open to the possibility that there is actually no difference.
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2010 14
Fonera 2.0n Quality Survey
Published by MartinVarsavsky.net in Fon with No Comments
For a CEO of a start up who launches a new product, what just happened to me is very discouraging. I wrote a post about the new Fonera SIMPL that we will soon launch. I mentioned that it is called SIMPL because, as opposed to the Fonera 2.0N, it is not a buffer to the cloud. I was surprised at the amount of extremely negative comments that I got about the quality of the Fonera 2.0N. I am suprised because the reviews we got in blogs like Techcrunch, Wired, Boing Boing and many others are positive. Whereas, the comments that you can see here are extremely negative.
Now the danger of blogs is that the people who are motivated to comment are in general those who are experiencing problems. So if you listen too much to your blog’s comments, you can get very upset as a CEO. So to find out if the level of dissatisfaction expressed in the post about the SIMPL is realistic, I am running a poll among Fonera 2.0N buyers in both my Spanish and English blogs. And in the meantime, I would like to apologize to those who are experiencing problems and say that we are working very hard on a new firmware release. We also offer discounts to Fonera 2.0G buyers to upgrade to Fonera 2.0N, and I am open to any other ideas that the community has. In the meantime, we are getting large orders for the Fonera SIMPL which is just that, simple, an N router that shares some of your bandwidth so you can roam the world for free and make money when others connect to you.
I end by saying that I use the Fonera 2.0N every day of my life, that I am using one now to write this post. I connect my iPhone, Nexus One, and Blackberry to the Fonera 2.0N. The customer care group is, on purpose, right outside of my office, and I just can’t replicate the bugs that people report. In the past, I used to be the first one to find bugs.
The translation from Spanish is this:
The first choice is, while you would like to see improvements in the Fonera 2.0N it is a product you can use.
The second choice is, as the Fonera 2.0N stands now, with the current firmware, you cannot use it.
2010 13
2010: the Year of WiFi, the Year of FON
Published by MartinVarsavsky.net in Fon with No Comments
FON struggled initially in 2009. But we managed a steady turnaround and ended the year with phenomenal results. In September, we reached breakeven and launched a new WiFi device, the Fonera 2.0n. From Q1 to Q4, we increased our monthly gross revenues by 250%, decreased costs by more than 60% and tripled WiFi access. FON now has over one million FON Spots worldwide.
The outlook for FON in 2010 is even better thanks to the ever-increasing demand for WiFi. FON is well positioned, growing strong in several directions, including sales of passes and routers to individuals, and partnerships with fixed and mobile operators.
The FON community is growing because people want more access to free WiFi while roaming, and a superior WiFi experience at home. Our fixed partner list, including BT, ZON TVCABO and Comstar Russia, is growing because operators now clearly understand the importance WiFi and the benefits to partnering with FON. They reduce churn and customer acquisition costs, sell more broadband and increase ARPU. Our mobile partnerships, including E-Plus Group (a division of KPN), SFR and others yet to be disclosed, are growing because operators can offload data traffic. In sum, mobile and fixed operators who partner with FON make more money, reduce costs and get higher valuations than the competition.
Industry players are calling 2010 “the Year of WiFi”. RBS expects WiFi to play a key role in the world of fixed and mobile Telcos and significantly influence their value. For example, E-Plus, our mobile partner in Germany, was the only mobile company not downgraded by RBS for 2010. RBS and Morgan Stanley recently named BT, our major Telco partner in the UK, “Top Pick” for 2010. RBS specified that BT’s partnership with FON (BT FON) put it “in a strong position” and offered it “a great chance to benefit from WiFi.”
Benefits aside, many operators may soon be forced to embrace WiFi out of pure necessity. WiFi is quickly becoming an alternative to mobile data subscription. Demand is increasing rapidly for WiFi-only devices such as the iPod Touch and for WiFi-enabled devices, including smartphones (especially Apple iPhone, Google Android and RIM Blackberry), laptops, notebooks, eBooks, tablets and even TVs. Within three years, mobile networks may become “infill”, useful only between WiFi spots. Within five years, all phones in the US may be smartphones. RBS notes that WiFi progressions like these may very well occur faster than current market estimates due to the enormous cost savings for the customer (up to 50% on a usage-based mobile phone bill) and the influx of WiFi innovation (“smarter” gadgets, faster WiFi signals, value-added services such as voicemail to email, etc.). Finally, attempts to regulate or constrain WiFi growth or VoIP are not expected to stand up to public pressure.
I am calling 2010 “the Year of FON”. Not just because what’s good for WiFi is good for FON and our partners, but based on FON’s record-breaking sales already this January. We sold over 400,000 Foneras SIMPL to an important mobile operator, our largest order in history. We also have several new partners and products in the pipeline.
I predicted the imminent importance of WiFi when I started FON in 2005. Since then, WiFi usage has skyrocketed and FON has become the biggest WiFi community in the world. With no slowdown in sight, 2010 should be the year for both.
Sources:
RBS: Telecommunications Equity Europe Report, 13 January 2010
Morgan Stanley: Telecommunications Services Industry Review, 4 January 2010
Frost & Sullivan, 2010 Outlook & Forecast: Mobile & Wireless Communications