More on cars and colour

In researching my previous post on accurately measuring the risks associated with vehicle crimes based  on colour, I stumbled across another colour related risk measure.

Red cars, supposedly, attract more than their fair share of traffic fines.

Turns out this is incorrect.  Snopes.com has (as usual) an excellent article on red cars, including references to research showing red cars are not more likely to be fined than other vehicles. Unfortunately, the underlying research isn’t available online (as far as I could find).

Uncapped Wordsmiths

There have been major developments in the broadband internet space in South Africa in 2010. Several major ISPs have started offering so-called “uncapped broadband” at surprisingly affordable rates.

The immediate astonishment and disbelief at the low prices was soon replaced by sulking and disbelief at the application of “fair usage policies” that restricts the speed at which certain ports run, and the speed at which the entire service runs after a certain (sometimes specified sometimes not) amount of data has been downloaded for the month.

I blogged a few weeks ago about the fundamental economic problems of shared, uncapped (or “common”) broadband access. This hasn’t changed the conversations happening in the wider world.  Maybe next time.

I thought I’d approach this from a completely different angle. Moneyweb has an article today “Is MTN’s uncapped broadband a con?” In reality, the article is taking a fair swing at most so-called cheap uncapped broadband, claiming that it isn’t really uncapped.

Which is ridiculous.

Of course it’s uncapped. You are never capped. You can download throughout the month and never be capped. The complainers are whinging about the wrong word.

What these services are not is broadband. They are uncapped, but the speed at which they are uncapped is too slow to be called broadband. MTN’s product could better be described as 128kbps uncapped, with a speed boost for the first 3GB (or 10GB depending on package). This is an uncapped account but it is not broadband.

The ASA has already had success in the past in preventing some companies from advertising internet services as broadband if they are not fast enough. This should be the angle taken to prevent misleading advertising.

Interconnecting confusion

Interconnect fees and the reasons for their reduction are possibly the most misunderstood “big” news story over the last twelve months.

The hype and hoopla around this topic is fueled by our feelings as consumers of being charged too much big big monopoly companies. So I should start by saying that I’m not saying that we are paying too much. I’m not saying that because I don’t know enough about the costs of providing cellular services in South Africa. Maybe we are, maybe we’re not. Also, I’m not saying there aren’t monopolistic practices in the market – again I simply don’t know. Given the other stories torn from inside companies by the sharp teeth and salivating jaws of the Competition Commission, it’s understandable that many suspect consumer-unfriendly play by most large South African companies, particularly those in industries with a small number of players.

What I am saying is that most of what you read in the news about interconnect is horribly misguided.

The biggest misconception is that interconnect fees are an expense for cellular providers, and that the removal of this expense would allow them to reduce tariffs to consumers. Well, it is an expense, but it is also a source of revenue. Every time one company pays an interconnect fee, another company is receiving it.

Interconnect does not change the total amount of profit within the cellular industry. It may redistribute it a little, and there may be negative medium term competitive implications arising from interconnect, but lower interconnect won’t automatically increase profits that could allow competitive price lowering for the benefit of consumers.

TechCentral has an interesting article: Bain warns consumers not to expect cellular price cuts.  Of course, it also include some done-to-death flawed statements (whether from Bain or inserted by the zealous staff writer) such as:

Because new players have few customers at first, most calls on their networks will be to networks of other operators. High interconnection fees make it difficult for them to enter the market.

It’s not that this statement is incorrect (it is in fact correct) it’s just that it is horribly misleading because it only presents one side of the story. I’ve reworded it to provide the stunning insight: Continue reading “Interconnecting confusion”

Mumbling in the dark

Are you outraged at the proposed increase in electricity prices from Eskom?

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Creative Commons License photo credit: Näystin

If you are, you’re not alone. 88% of readers polled in a News24 poll were “outraged” at the increase. The problem is that all this outrage is irrelevant at best, and dangerously distracting at worst.

Why price is the wrong thing to worry about

Eskom produces electricity for the country and makes a profit or a loss doing so. This profit or loss goes back into treasury, which, inefficiencies aside, belongs collectively to the citizens of South Africa.

If prices are too low and Eskom makes a loss, this shortfall must be made up through higher taxes or lower government spending. If Eskom is not given additional capital, it will have to stop buying coal and stop investing in new infrastructure.

Those who complain about the inflationary effects of electricity prices are considering the issue too narrowly. Electricity prices may be easier to see than broader macro-economic issues about budget deficits, growth-disincentives from higher taxes and other implications of funding electricity generation from general taxes, but that doesn’t mean it is the right way to look at the problem.

Expensive electricity is better than no electricity. Complaining about higher electricity prices, while understandable, is not useful since the money must come from somewhere.

The real 5 issues we should be discussing

  1. Is Eskom generating electricity efficiently, and at an appropriate cost (compared  to international benchmarks, adjusted for our local fuel costs and other differences)? If Eskom is not producing power as cheaply as they should, let’s focus on fixing the operational and industrial design problems to fundamentally lower the costs of production. More efficiency benefits entire country. Continue reading “Mumbling in the dark”

More medical trouble

After my last post around common misunderstandings of how medical schemes operate,  I saw a Fin24 article on South African medical schemes that are below the required minimum solvency.

What Fin24 readers had to say

Nolulamo Matutu from Fin24 writes:

Acting CEO of the CMA Patrick Matshidze told MPs 18 schemes have fallen below the prescribed solvency ratio of 25%.

Clearly, these 18 schemes cannot pay all the claims we all would like in an ideal world.

However, more interesting to me than the article itself (fairly balanced and factual) were some of the comments written below. Clearly the misconceptions are still strong!

Fed Up had some strong views:

I’d like to see them look at medical aids the other way and see how many of them are making huge profits, some make billions are rands profit which in my opinion is really just ripping people off, medical aids should be non-profit as the less they pay out the more people suffer. Also medical aid is such a bad word, it should be called what it is medical insurance.

I wonder who be the one to break the news that medical aids are non-profit? Continue reading “More medical trouble”

Poor misunderstood taxes

Taxes are bad, right? Death and taxes, mentioned in the same breath so tax must be bad. We have to pay it, never want to pay it, imagine what we could afford if we didn’t have to pay it. Taxes are so bad that we spend millions on paying less tax.

But of course that’s all wrong. Taxes are not bad.

Got your attention?  Good. Note that I didn’t say taxes are good. It’s a little more complicated than that.

Even in the most free, capitalist society taxes are necessary. It’s not that paying tax has some sort of magical benefit, but rather than government expenditure (financed through compulsory taxes) is sometimes the optimal solution for the country.

I like having a police force and judicial system and clean, running water and roads and trains and light-houses and compulsory vaccinations and a thousand more things. These are typical examples of goods and services that can better be provided through the scale of a national government and financed through compulsory taxes rather than relying on free markets to provide the appropriate amount of services.

I benefit from every vaccination provided, since it reduces my risk of infection. Most people (and I’m sure I’m included here too) wouldn’t pay for the vaccination of others just because they received a benefit. Rather let somebody else pay for the vaccination since they will also benefit. Do we really want corporations to run our judicial system? Access to good legal representation is already a function of money, I’m quite glad the judge I get trying my case isn’t a function of how much I can afford! Continue reading “Poor misunderstood taxes”

Comedy and Tragedy

What do the names Oneway, Bull, Kansvatter, Inthemoney, The Bull! and Millionaire in the making have in common? They’re all optimistic, aggressive names used in the Make A Million competition. They’re also, as of right now, all in the bottom ten out of nearly 300 entrants and have all lost everything but a few rand from the R10,000 they started with on their chance to Make A Million speculating with Single Stock Futures. None can even take what’s left of their R10,000 and watch a Movie (except maybe at a Sterkinekor Classic, on Tuesdays, in PE).

These aren’t the unlucky few. As I warned in a previous post on how the Make A Million competition is a bad idea and encourages wild speculation and ill-advised risk-taking, the performances of the best and worst entrants is dramatically different after just two months, with rather more entrants looking at poor returns.

The highest return (so far as of about the time this blog is posted) based on the live leaderboard is a massive, impressive return of 735% in two months. That’s over a 30 million percent return on an annualised basis. That is also where the good news ends.

Some more stats:

  • Highest return 735%
  • Average return -27%
  • Median return -53%
  • Worst return -107% (yes, someone lost all their fund and more thanks to the geared danger of SSFs)
  • Approximate percentage of entrants with negative returns 82%

MaM Performance 15 01 2009

It’s abundantly clear that entrants have been massive losers in just a short space of time.  The average return translates to an annual return of -85%. Of course, the position would have looked much better had the markets boomed during the period, and it’s still possible there could be a huge rally from now until the competition ends. It’s just that I wouldn’t give any of my money to Bull! or Spitfire or Druggies or even Fantastic.

Not in a million years.

How not to do SEO

Search Engine Optimisation (SEO) is an unfortunately necessary part of driving traffic to discover a website. Good content is necessary but not sufficient.

Why SEO is necessary

A large percentage of web traffic is directed by search engines. After all, this is how Google has become the giant company that it is. I tried to track down some hard statistics on this, but they varied widely and didn’t seem all that credible. Nevertheless I think it is clear that this traffic is signficant.

Search engines use algorithms and automated scripts (“spiders”) to understand the importance, quality, relevance and popularity of content on the web. A radiographer takes xrays without being able to see directly the same picture as the xray will produce. A photographer taking black-and-white photographs needs to ignore the colour in the viewfinder and imagine the light and shadows and shapes of the final photograph.

If your website has excellent content, but structures it in a way that is not readily accessible to a search engine’s spiders, then the spider will pass on by without sending humans to visit your site. Two easy examples may help:

  1. Flash content – the content may look great and be ground-breaking and useful, but since most spiders don’t currently “understand” Flash content, it will be ignored.
  2. Login, registration and forms – if large parts of a website are accessible only after filling information in a form or registering and logging in, the spiders won’t get in the door.

There are other considerations that are postulated to be relevant:

  • Duplicate content “dilutes” the scores of any individual page
  • Many links to irrelevant, poorly rated pages can suggest that your site is not providing useful info to the user. This effect is stronger since search engines try to separate “link farms” and rings and other methods to make a collection of websites appear more connected than they are in reality.
  • Poor choice of keywords that searchers may often use, or targeting terms that are widely targeted by a range of other websites.

A typical SEO strategy is quite complex and takes times, effort and money

A typical SEO strategy would cover analysing the target audience of a site, understanding the site content, understanding the site structure, doing keyword analysis, checking out competitors, generating a few good quality inbound links if applicable, possibly generating some linkbait content, installing appropriate tools (e.g. Google Analytics) to monitor traffic and then repeating the cycle once the customer behaviour is better understood. Key metrics are site traffic generated, low bounce rates, long time on the site, repeat customers, higher sales (or more contacts if online sales aren’t part of your service) and higher search rankings.

All of this takes time (both from the SEO but also from the website owner). There are many fly-by-night organisations claiming to do SEO with neither the knowledge or the business ethics to get it right. It is probably because it is a poorly understood, sometimes arcane speciality, that these companies get into business with low starting capital costs.

How not to do SEO in ten easy steps

I received an unsolicited email from Zenteq recently. I’m not providing a link to their website as I have no reason to believe they can deliver anything useful.

  1. Sending unsolicited email (aka SPAM). This is typically a bad idea. Best case scenario you get a few new customers. Worst case scenario you irritate a huge block of potential customers, have your mail server and/or IP blocked as a source of spam, have your ISP close down your website for abuse and so on.
  2. Use bright (as in reflective safety wear) green text and truly ugly formatting. Not a professional image by far.
  3. Offer to “SEO” the website by submitting to 600,000 search engines monthly. This is irrelevant and a giant waste of money.
  4. Charge R350 per month. In the short-term, this is far too little. The work involved at the outset of optimising a website for search engines requires several full days of work. However, in the long-run, this may well be too much. Since there appears to be no reason for the client to stay with Zenteq, we have a familiar problem where the business model doesn’t make sense for a serious operator and thus it’s likely that it isn’t a serious operator. (on trawling their webpage I see there is a R1000 upfront fee as well. Nice not to include this in the email. It still isn’t enough for serious upfront work)
  5. No description of other components of SEO strategy, or examples of prior successful work.
  6. “From” email is marketing@fire-equipment.org, “Reply to” is newheights70@telkomsa.net but the content directs the reader to info@zenteq.co.za. So which is it?
  7. Structure your email so that it gets stopped by the spam filter built into both Thunderbird and Apple’s Mail application.
  8. Include icons on their site claiming valid XHTML code, but then fail the test when the button is clicked.
  9. Analysis of google results shows no links to zenteq.co.za.
  10. And my favourite – a search on google for “seo site:za” which searches for the top websites relating to “seo” within the “za” domain doesn’t have zenteq listed in the top ten pages. A first-page listing is almost an requirement if you expect any number of click-throughs.

So who guards the guards, and who optimises the optimisers?