Kiplinger's Tech Alerts - February 17, 2016

In this issue: Google's big plans for home Internet. Coming apps for TV. Growing use of lasers by manufacturers. Our interview with computer scientist and author Eric Siegel. Phones and smart watches with supercharged connectivity. New threats to national security from cutting-edge technology.

Google Revs Up Internet Plans

Google's home Internet service is poised to steal millions of customers from dominant online providers as it enters new areas in the coming years. Google has spent hundreds of millions of dollars expanding its fiber Web service since 2011 in hopes of building a profitable Internet division that also helps sell more ads on Google sites. Many analysts have questioned Google's ambitions in the broadband market, rightly noting that bringing fiber to homes and businesses is expensive and time consuming. But Google has fine-tuned how to pinpoint towns and cities that welcome its efforts by cutting red tape. The low price and quality service win over lots of subscribers, too. Google is selling gigabit speeds (1,000 megabits per second) for $70 per month and has announced plans in 20 metropolitan areas.

The increased competition promises to keep a lid on prices and expand options for consumers and businesses in the many areas where Google is able to set up shop. Rivals such as AT&T, CenturyLink, Comcast and Charter Communications — all likely to see the search giant enter their territory—will feel competitive heat. (Verizon's FIOS network, however, will probably avoid head-to-head competition because it, too, is a fiber service.) By 2021, Google Fiber could reach up to 20 million homes, mostly in smaller cities, according to Bernstein Research. (So far, the company reaches about 500,000 homes and 100,000 businesses.) Big cities, however, aren't out of the question. Google is testing the waters in Los Angeles and Chicago. Competitors hoping to hold on to customers will have to boost their Internet speeds. (Continued below.)

Advertisement:

Safe Ways to Double or Triple Your Cash Yield — Let Kiplinger's Jeff Kosnett show you how to generate as much as 5%, 6%, even 7% a year right now.

This 1-hour webinar is only $29.99. Don't miss out on the practical, proven techniques to boost your spendable investment income!

TV Makes Way for Apps

The TV industry is in for a big shake-up, courtesy of an upcoming federal rule. The Federal Communications Commission will force pay-TV providers to let outside firms make set-top boxes or apps that use TV feeds, allowing third parties to mine viewer data and add online features. Cable, satellite and telecom firms stand to lose much of the $20 billion in yearly fees they make from set-top boxes as subscribers opt for easier-to-use outside products. The looming change brings good news for companies that buy TV advertising: They'll benefit from lower rates and an enhanced ability to tailor their ads to specific audiences.

The new services can renumber channels, add search features, skip ads, combine online content and more, as long as the hardware or apps follow standards that are in the works. The best apps will win over consumers, leaving the door open for third-party services to siphon profits away from television companies. The move will be a huge win for services such as Apple TV, Roku and Amazon Fire TV, which will all integrate live cable TV into their services. New services won't take hold until 2017, at the earliest, but once they do, the new apps and hardware will hit the market quickly. Google already has a prototype set-top box that will likely feature new ad services.

The TV industry is fighting an uphill battle against the rules even as it hedges its bets by investing more in TV apps. Comcast, for instance, is investing heavily in its own app and voice recognition remote. Other companies against the rules include Cisco, Arris, AT&T and Cox. Expect, too, a sped-up demise of big cable bundles, driving folks to cheaper pay-TV packages with fewer channels. That hurts networks such as ESPN that profit from large cable bundles.

Manufacturers Turning to Lasers

Manufacturers are ramping up use of lasers to weld, cut, drill and more, particularly the use of high-powered laser beams for welding lighter products, such as car bodies. Laser beam welding, which employs lasers as a concentrated heat source to join metals, uses less energy and makes stronger welds than traditional methods. But the up-front costs are higher. The technique requires pricier equipment and additional training, so adoption has been relatively slow for many applications that could reap big benefits.

The good news: Laser welding and related technology will cost less in a few years. Uncle Sam is launching a program to speed adoption by publishing key technical data that should “reduce equipment investment and increase basic knowledge of the laser welding process," according to Marla Dowell, coleader of the project at the National Institute of Standards and Technology. Meanwhile, automakers and other pioneers of laser welding are further refining the technology. “It is still a nascent technology, but awareness is growing," says Edward Hansen, global director of product management at ESAB, a company that sells welding equipment. “Many of the early adopters have remained very quiet about their investments since they considered them to be significant competitive advantages." New laser technologies, such as diode lasers, from companies such as TeraDiode, which grew out of MIT, are also coming into greater focus.

Look for faster adoption among firms aiming to make products lighter with thinner designs of high-strength steel and aluminum alloys, says Hansen. Automakers will continue to push more laser welding uses, including in building suspensions, frames, seats and exhausts. Other users include makers of ships, trains, small electronics, semiconductors and medical devices.

Interview: Eric Siegel on Predictive Analytics

Q: Are there any updates or changing trends when it comes to privacy concerns?

Siegel: The new NSA section of the book brings up such a contentious debate. There's been very little headway in the general discourse; it's been divisive and ill informed. People always use the word “creepy." For example, the complaint about the NSA is that it's mass-scale surveillance. But only human eyes can spy. So if the data exists in the computer and is ported to another computer, does that mean somebody has spied? Or is it just a data management shift? Because the data does exist, we know that telecoms have the list of all our phone calls. I actually think that it's a mistake to shut down bulk data collection if there were a way to appropriately manage access to that data.

Q: I've heard the argument that the more data you have, the higher the likelihood of false positives or other mistakes. But you talk about using more data to make better predictions. How should people understand that?

Siegel: That's funny because it's analogous to the mistake people make on the business side. There's this general catchphrase of “drowning in data," and it's going to hurt us. But the fact is, the more data they have, the better. There's no question about that analytically. In the case of the NSA, Congress members say things like, “You're increasing the haystack by collecting all that data." But that's a very narrow view. You need to learn from mass data before you can find a way to intelligently decrease the data. There are true civil liberty concerns and they need to be identified concretely and specifically.

Q: Do you think the “creepy" talk surrounding predictive analytics could prevent promising uses, such as finding health care cures?

Siegel: Health care data is so sensitive, and there are all these restrictions on it. But that hinders the scientific progress we can make from aggregating the data. In general, people get creeped out. They think it's all evil, it's all corporate power and must be shut down. But then in another conversation, they realize how valuable this is for health care, and just in information overload in general. I'm predicting that consumers will start to explicitly clamor for predictive analytics. Talk about drowning in data, this is the antidote to that.

Siegel: The main thing is that Hillary for America was not only heavy on predictive analytics hiring, but more specifically was aiming for persuasion modeling. That's the more advanced form of predictive modeling that Obama used in 2012. It's predicting if someone is persuadable. That is, should we knock on the door, is it going to have an impact? The big question is how the core competency compares on the Republican side because the Democratic side has so much momentum.

Tech Tidbits

Mobile phones and smart watches are getting supercharged connectivity. Qualcomm's latest chips are paving the way to next-gen 5G networks. A new chip for smartphones includes one of the fastest-ever cellular modems, able to hit gigabit speeds. And a chip for wearable devices such as smart watches includes 4G LTE, longer battery life and better motion sensors.

When it comes to America's national security, the development of cutting-edge technology poses a growing threat, according to an assessment provided by James Clapper, director of national intelligence. What sorts of cutting-edge technology development? Think the Internet of Things, artificial intelligence, foreign data science and electronic warfare.

Looking for perspective on key technology stocks? Kathy Kristof, a contributing editor for Kiplinger's Personal Finance magazine, looks at Facebook, Amazon, Netflix and Google (now Alphabet) in “Best FANG Stocks to Buy During the Market Selloff." From the article: