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New technology uses human body for broadband networking

March 21, 2005 at 12:00 pm PST

In the “what will they think of next?” category comes this item that I came across while looking at papers yesterday. According to The Guardian of London, “NTT, the Japanese communications company, has developed a technology called RedTacton, which it claims can send data over the surface of the skin at speeds of up to 2Mbps — equivalent to a fast broadband data connection.” You could trasmit your business card with a handshake, share music with a cheek to cheek dance or, presumably one day, surf someone’s personal intranet while tandem surfing. Next thing you know, we’ll be reading about technology that will “beam us up.” Check out the article here.

While props should definitely go to NTT, the article also notes that similar technology, albeit at slower speeds, for using the human body for data transfer was previously created by IBM (back in the last century -- 1996) and is currently being tinkered with at Microsoft.

Kevin Martin Named FCC Chairman and NCAA Tournament

March 16, 2005 at 12:00 pm PST

Today, the White House issued a press release naming Kevin Martin as the next Chairman of the FCC. See White House release here. In the release it mentions that Martin is from North Carolina (as am I) and that he attended UNC-Chapel Hill and Duke (Harvard Law as well, but for the purposes of this blog, that school does not fit.)

I graduated from Wake Forest University, so I thought it would be pertinent to point out that all of these North Carolina ACC schools are now competing in the NCAA Men’s basketball tournament and many have opined that UNC, Duke AND Wake Forest could all get to the Final Four in St. Louis. (NC State and Charlotte are NCAA teams from NC as well, but for the purposes of this blog, those schools do not fit.)

Parenthetically, Cisco’s CEO attended Duke before transferring back to his home state of West Virginia (also in the NCAA’s and a potential second round match-up with Wake Forest) to finish undergrad and then law. (See John Chambers statement on Kevin Martin here.) He also got his MBA from Indiana -- (sorry, but not represented in the NCAA’s this year).

What has this blog got to do with telecom policy, you might ask. Nothing. It is all about the Men’s NCAA tournament. I would hazard a guess that Chairman Martin will be watching the tournament and be pulling for his two NC schools, although my guess is that he is really a Carolina fan -- it is nearly impossible to be a North Carolinian and be a fan of both Carolina AND Duke -- he may be able to straddle that line, but deep-down he would state that his blood in Carolina blue (with respect for Coach K and what the Duke program has accomplished). If he could hang out somewhere on Franklin Street and watch the games, all the better. After all, as the former student body president at UNC, he could be excommunicated from Carolina if rumored to be rooting for Duke.

In conclusion…congratulations to Chairman Martin. I will, of course, be pulling for Wake Forest to FINALLY play some defense in the tournament and hopefully live up to their potential (read: hype). Should Wake meet either Carolina or Duke in the final (hey, a kid can dream), here’s hoping that Wake hits 32 or 32 free throws (again) and JJ Redick doesn’t score 40 points.

P.S. For those of you filling out your NCAA brackets (for entertainment purposes only), remember that Wake is the #1 seed of the #2 seeds. Please, Wake, play some defense.

China and Stock Options and Social Security

March 15, 2005 at 12:00 pm PST

Yesterday, my boss, Laura Ipsen (VP of Worldwide Gov’t Affairs) presented a Cisco overview to a delegation from China. It is a basic history of where Cisco came from, what our innovation strategy is, and where we are going. She then talked a bit about our public policy philosophy which consists of 1) a strong education system; 2) robust communications infrastructure (i.e. “true” broadband); 3) supporting innovation and productivity enhancing systems and tools; and 4) a supportive government -- which more often these days means a government that operates with a healthy dose of forbearance.

After her presentation, she was asked about why stock options were so important to the growth of a company. Without getting into the technical accounting arguments on the merits of whether they are an expense or not, she talked about how they infuse a sense of ownership in the employee population. There have been studies done that show that companies that give stock options to all employees are more productive than those companies that do not. A company of “owners”, she said, is more productive than a company of “renters.” Which made me think of the current debate on social security and the “ownership society.”

I’m not sure why stock options are not a part of this debate. After all, 14 million stock option holders have a stake in their companies (i.e. ownership) and this may be taken away rather than strengthened if stock options are made an expense. Shouldn’t stock options be a part of the “ownership society” and strengthened, not weakened? Just my .02.

Dear Colleague Letter from Reps. Dreier and Eshoo on Stock Options

March 11, 2005 at 12:00 pm PST

California Members of Congress David Dreier (R) and Ann Eshoo (D) today sent a “Dear Colleague” letter to all their fellow members of Congress. A “Dear Colleague” is generally used to bring attention to an issue as well show who cares enough about an issue to send a note to all their fellow members of Congress. Please read full letter below, but especially the press clips that they include at the end of their letter that highlight the fact that many companies are already beginning to scale back their stock options programs to the rank and file workers and only give options to senior executives. As a decidedly non-senior-executive, sure, I don’t like this trend…

Mandatory Stock Options Expensing Hurts Rank-and-File Employees

Dear Colleague

As Congress considers legislation to protect broad-based employee stock option plans, we hope you’ll bear in mind the impact that new mandatory expensing rules proposed by the Financial Accounting Standards Board (FASB) will have on rank-and-file employees. As the news excerpts below make clear, FASB’s proposal has forced many companies to discontinue their broad-based options plans for most employees, and even more are contemplating severely curtailing their programs or eliminating them altogether.

In order to protect this vital employee ownership program, we’ve introduced H.R. 913, the Broad-Based Stock Option Plan Transparency Act. This legislation will protect employee options by preventing the implementation of the FASB rule pending the SEC’s evaluation of enhanced disclosures. If you’d like to cosponsor H.R. 913 or have any questions about the bill, please contact (Dreier Contact name) (Rep. Dreier) at ###-#### or (Eshoo Contact name) (Rep. Eshoo) at ###-####.


David Dreier
Anna G. Eshoo

As many as 40% of publicly held companies are reconsidering broad-based option plans. “Based on his research and industry survey data, [Corey Rosen, the executive director of the National Center for Employee Ownership] estimated that at least 40 percent of publicly traded companies with stock option plans are reconsidering them and as many as a third may discontinue them in the next few years.” [New York Times, 2/19/05

Dell -- “To curb option grants, companies are using a variety of strategies. Many, like Progress, are replacing some or all of their options with fewer shares of restricted stock. Others are simply reducing option grants, without offering a replacement. That’s the case at Dell, which awarded employees 51 million options in 2004, down [60%] from 126 million two years earlier.” [BusinessWeek Online, 2/16/05

Time Warner -- “New financial reporting standards . . . which will require companies to treat stock options as expenses, ‘make it prohibitively expensive’ to continue the practice for all employees.” [New York Times, 2/19/05

Aetna - Aetna Inc., once known for its generous stock options, said it would no longer offer them to rank-and-file employees under the new accounting standards.” [Boston Globe, 1/9/05

Pfizer -- “Pfizer said in the U.S. Securities and Exchange Commission filing that in response to new accounting rules requiring employee stock options to be expensed, it plans in 2005 to reduce the number of options granted, ‘except for most of senior Pfizer management.’” [Reuters, 2/28/05

Whole Foods -- “John Mackey, chairman and chief executive, branded [the new FASB rule] ‘a stupid rule’, but said the company had opted to protect shareholders by limiting the dilution from option expensing to 10 per cent of earnings in any one year.” [Financial Times, 2/10/05

Others -- “In addition to the companies that have dropped options programs, Delphi, Eastman Kodak and AstraZeneca plan to cut back on the options they distribute to regular employees, said Corey Rosen, the executive director of the National Center for Employee Ownership. Last year, Citigroup ended its renewable stock option plan.” [New York Times, 2/19/05, emphasis added]

SEC Chairman Speaks on Stock Options

March 9, 2005 at 12:00 pm PST

Testifying before a Senate Banking Committee hearing today, Securities and Exchange Commission (SEC) Chairman William Donaldson today said the SEC will issue guidance on how to value stock options for expensing this month. No word on if the SEC is going to go the way of the Financial Accounting Standards Board (FASB) who basically punted on the valuation issue by saying that a company could use the Black/Scholes method, the binomial method or by consulting with your teenage nephew, Bucky, who by all accounts is a math whiz.

Senator Bob Bennett (R-UT), who, while a proponent of expensing, has questioned the FASB’s logic on valuation was quoted in a leading DC policy publication as saying, “”What in the world kind of accounting standard is that, when FASB says, ‘You have to expense [stock options] but we don’t particularly care what value you put on them.” Ummm, I’d like to be the first to second that.

Cisco and other companies are continuing to urge the Congress and the SEC to delay the June 15 date for expensing by encouraging an economic impact study. The FASB has claimed that they have nothing to do with economic impact, they only do accounting. The Congress, in my humble opinion, DOES have everything to do with economic impact and should utilize the Hippocratic oath here: First, do no harm. Look at the econoic impact before doing anything.

In a TechNet press conference yesterday, it was mentioned that some high-profile companies, including Pfizer have announced plans to stop or scale back their options plans and will only give options to senior executives. “The prediction was made that people would stop giving options to anybody but the top executives, and that is coming true,” Senator Bennett said, according to CongressDaily’s article by Molly Peterson.

Thoughts on this anyone? Bueller?