Hardware and Network issues in e-commerce

Introduction

This review will discuss the issues and outline some future developments related to the three most prominent forms of network technology, broadband, m-commerce and wireless broadband.

What is broadband?

A good definition of broadband is:

“Broadband refers to any communication technology that permits clients to play streaming video and audio files at acceptable speeds – generally anything above 100 Kbps” (Laudon and Traver, 2002).

Typically, broadband is characterised by very high upload and download speeds and most interestingly it is an ‘always-on’ technology as opposed to narrowband where the user has to ‘dial-up’ to the server every time they begin a new session on the internet, whereas with broadband the user simply has to click on the internet icon on their desktop and they are instantly linked to home page of their choice.

Types of broadband

There are many types of broadband access available to the internet user. The most commonly used type of broadband connections made by the general consumer is via cable modem and DSL connections. Cable Modem is usually used by consumers who cannot get DSL connections in their area or who live in a cabled area and is characterised as a shared network service. Internet connection is ‘piggybacked’ on the television signal received by consumers who have cable television. It generally has greater bandwidth capabilities than DSL. MDR – 128 Kbps-10,000 Kbps.

There are no less than six types of DSL connections that can be made, these can range from a puny 40 Kbps (kilobits per second) offered through Rate-Adaptive DSL (RDSL) to an impressive 51 Mbps (Mega bits per second) through using Very High Data Rate DSL (VDSL). There are also other types of broadband access such as T1 and the faster T3 (mainly used by businesses) with speeds of up to 45,000 Kbps. Also there are fiber optic connections such as OC12 and OC48, with OC48 connecting as fast as 2,488,000 Kbps (Plunkett Research, 2004; Shultz, 2001).

Issues with broadband

Due to it’s shared network characteristics, Cable broadband users are subject to unauthorized access to their system in the same way LAN user could gain unauthorized into other systems. Also, in order to get DSL the user has to live within 12,000 to 18,000 feet to get it (Robson, 2000; Shultz, 2001). These are some issues concerned with the two most common broadband connections, however there are a few other issues concerned with broadband.

Security

As more and more ISP’s are beginning to provide broadband access, the competition is heating up. Due to this stiff competition, ISP’s are confronted with stiff price competition, so as price is the basis of competition, other factors such as security are being overlooked (especially in the DSL and Cable segments) by ISP’s, as adding such features will increase costs to the ISP, hence the consumer. As broadband is a relatively new and expensive technology, consumers at the moment are only concerned with actually getting broadband. So they will go for the ISP that provides the broadband service at the most competitive price, “this has let consumers skirt the issue” says Brian Robson (Robson, 2000).

The reason that consumers are largely unaware of the security issues associated with broadband is because it is an ‘always on’ service as opposed to ‘dial-up’, which has previously been used.

Dial-up uses dynamic IP addressing. This basically means that every time the user ‘dial’s up’ the IP address of that user changes and as hackers need to know the IP address of a user to hack into their line, their ‘hacking’ becomes limited. Broadband’s ‘always on’ feature however, uses static IP addressing in that the IP address of the user is always the same, hence the hacker can attack a user at anytime they want to and for as long as they want (Robson, 2000).

This inherent weakness in broadband could be disastrous for businesses. Because of the high speed and always on properties of broadband, a business can use a PC connected to the internet as a node in a Virtual Private Network (VPN) to gain access to the cooperate Local Area Network (LAN). Hackers who gain access to this remote PC can then access the corporate LAN from it and avoid all the security features installed on the corporate LAN designed to keep hackers out (Robson, 2000).

Solutions to security

There are two types of security measures, software only and hardware only.

Such software based security measures are very cost-effective. Network ICE Corp sells a Windows NT software called BlackICE Defender which has firewall and intrusion detection facilities for only $40 (Robson, 2000)

However these ‘software only’ solutions have their drawbacks. Mike Martucci of Watchdog Technologies Inc. says “hackers can tie up a system’s resources while trying to get through these barriers, causing a major drag on the performance of the system”. A user who is not that IT literate would attribute the slowdown to problems with the network, and even if they did realise that their system was being attacked, the only way to stop it for certain would be to turn the connection off, which contradicts the concept of the ‘always on’ feature of broadband (Robson, 2000).

The other approach is the hardware approach. This is where a hardware product sits in between the PC and the network such as a router. An example of such a product would be the R9100 from Netopia, which can support up to 50 PC’s on a LAN and has various in built security features such as a firewall.and VPN support facilities (Shultz, 2001).

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Cost

Another issue associated with broadband is cost. This refers to both set up costs for the consumer and the provider. For the general consumer, before considering to get broadband, they have to consider two main costs. Firstly there’s the cost of purchasing the modem, which can cost from £60 up to £100 (various internet sites).

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Cost

Secondly subscription fees can be quite expensive, they can range from around £15 up to around £70. Another blow to the wallet is the fact that when signed up, apart from a seven day cooling period, the consumer has to stay with the provider for a twelve month period. Consider all this as compared with having a dial-up connection. With dial-up, subscription costs can range from £6.99 (AOL – light user) to £14.99 (BT Openworld) and unlike broadband, instead of imposing a 12 month contract on the user, ISP’s offer a dial-up service on a month to month basis (various internet sites).

For businesses who need a decent high speed connection, a T1 line is the most commonly one used (E1 in Europe). To begin with, the company has to pay for the installation of the T1 line which can cost in the region of £5,000. Then subscription charges can be quite immense, normally ranging from £5,00 to around £1,100 (Cambridge 2001).

For providers broadband is also a very expensive business. According to Sprint, to fit a mile of two way hybrid fiber coaxial cable or fiber optic cable can cost in the region of $25,000 to $3 million. Again with dial-up the advantage is although at a slower connection, anyone with a phone line can connect to the internet (Cambridge, 2001).

Finally security can play a heavy hand on the budget. As mentioned before, there are some major security issues associated with broadband. The larger the business, the more complex security systems they require, this equals higher costs. This will probably involve calling in consultants to evaluate and produce the required security measures. This could run into £100’s if not £1000’s (Robson, 2000)

Traffic

According to Plunkett Research Ltd, the growth in selected online activities performed by consumers in the US grew from 240 million in 2000 to 386 million in 2002. A list of the activities surveyed is included in the appendix. The research also indicated that banking online experienced the greatest growth rate over the two years, 164% followed closely by buying or making a reservation, which experienced a 90% growth (Plunkett Research, 2004).

This indicates that internet traffic is rising steeply and the advent of broadband with features like high bandwidth, high speed and an always on connection will only be a catalyst to this trend and due to this always on feature, internet traffic can last for hours. (Krueger, 2001).

The Future of broadband

The advent of broadband has been heralded as big leap in communications technology. The development of DSL and Cable broadband has brought the possibility of bringing a national fiber network to the general consumer one step closer. Broadband technologies such as ADSL will allow them to foresee any issues that will arise from the implementation of a fiber optic network. Also as the demand for high speed connections will rise, broadband will provide the financial incentive for providers to bring ‘fiber to the door’. However, experts say that it will be at least a decade before a fiber network is widely available to subscribers (Krueger, 2001).

M-Commerce

Although e-commerce is mobile in a sense that a user can perform e-commerce from any PC that has internet access, m-commerce allows the users to perform e-commerce from anywhere, for example, purchasing CD’s while on the toilet.

A good definition of m-commerce can be found in Laudon and Traver’s book;

“M-commerce is the use of wireless digital devices to enable transaction on the web”

Much like Broadband, m-commerce has had big expectations. A consulting firm known as Telecom Trends predicted that revenues gained from m-commerce would rise from $6.8billion in 2003 to an astonishing $554 billion in 2008 and in the UK it is estimated that by 2005 the m-commerce industry will be worth £2.8 billion (Dano, 2003; Shullman, 2003).

Issues with M-Commerce

A survey conducted by Paybox (a service provider) found the reason for this was because the majority (65%) of the respondents had a low interest in m-commerce because of the lack of interest by consumers and 33% said m-commerce’s decline was due to a bad business model (Thomas, 2003). However there are other issues that m-commerce has to contend with.

Open architecture

One of the main issues of m-commerce is maintaining an open architecture. Unlike e-commerce there are a variety of different types of devices, these can range from PDA’s, mobile phones to handheld terminals. In the context of J. Sainsbury’s, an open architecture is important to allow the passing of information between various devices, for example passing a shopping list from a PDA to PC. Although 802.11 is the current wireless standard, new developments are being made such as 802.11b (for faster connection), which could hinder the concept of an open architecture. It is also important for retailers, as an open architecture will allow them to add their applications, whether it be through their own staff or externalising such processes (Shullman, 2003).

Privacy

As new mobile phones are being fitted with location detection facilities, so that the user could be easily found in the event of an emergency. This is seen as an opportunity as an application for the m-commerce industry. For example, when in town centre a user could be alerted to an offer being made by a department store which just happens to be round the corner. This could go two ways, the consumer could find this facility very useful or more seriously, they could perceive it as an invasion of privacy. (Dano, 2003; Shullman 2003).

Interoperability and user statistics

This is particularly problematic for the advertising segment of m-commerce. M-commerce is a good marketing tool. For example, a beer company could distribute promotional coasters with registration codes on them. With these codes, consumers can sign up for trivia games and sweepstakes contests. This would allow the company to promote their brand and collect information such as addresses and phone numbers. “the biggest hurdle is some consistent way to track all this” says Robert Griffin of Media Planning Group. There is no central database of wireless users that would allow the marketers to find out what types of consumer they are reaching. An issue related to interoperability is that of payment. There is no industry-wide mobile payment platform. Currently there is no universal way to pay in m-commerce, so in essence not everything is available to buy in m-commerce, right now the case is that if a consumer is with a certain operator then they can make certain purchases, e.g. only o2 customers can buy from their WAP site. However, Simpay, backed by Vodafone, Orange, T-Mobile and Telefonica Moviles aims to alleviate this. It offers open standards and an interoperable framework for m-payments. “Open standards and interoperability between operators will help m-commerce to achieve real growth, says Jim Wadsworth of Simpay. However Simpay could end up being a number of proposed standards, hence bringing us back to the original issue (Dano 2003; Thomas 2003).

Cost

Contradicting to what had been predicted by Forester Research, there wasn’t an m-commerce boom in 2002. In fact the industry has gone a bit downhill since then. Alex Kwiatkowski of Ovum has attributed this ‘change in mood’ to a general tightening of I.T. budgets and not issues with the technology. “The technology has not changed but budgets have” he then said “companies need a compelling reason to go through with projects – return on investment (ROI) is absolutely critical” (Thomas, 2003).

Security

As mobile devices and the internet develops, providers are offering new services such as online banking. Such new services require the provider to gain the consumer’s trust by providing adequate security measures. However advancements in security systems are beginning to achieve this. The development of a Public Key Infrastructure (PKI) enables the four critical aspects of security- privacy, authentication, integrity and non-repudiation. For added security the PKI is facilitated by the provision of security certificates, registration and validation systems. The combination of these facilities help to ensure tight security for a majority of m-commerce transactions. However, the issue for service providers, is in the implementation of a PKI. In selecting the right one to use the provider must take into account these factors:

Scalability – the design of the system must allow the infrastructure to grow with demand

End-to-end security – e.g. from the bank to the user.

Compatibility – with functions other PKI’s (e.g. wired), mobile devices and open industry standards.

Open architecture – for both forward and backward compatibility (Kinsella, 2002).

Future of M-commerce

Raddicho, a not for profit company is developing a system that will create a cross-industry platform for trusted wireless transactions. Backed by Vodafone, Visa and BT. Raddicho are developing a system known as The Trusted Transaction Roaming System (T2R). According to Stefan Engel-Flechsig of Raddicho, the system will allow the consumer to buy products and services via m-commerce regardless of the network they are on. The system will have three levels of security. For micro payments (up to £5) will require a password for authentication. For macro payments (up to £100) will use PKI. For any payment larger than £100, there would be some sort of encryption technology (Thomas, 2002).

Wireless broadband

This is when broadband access is provided to the consumer via a wireless network. The consumer normally has a satellite receiver on their roof which is connected to a digital modem, which in turn is connected to the users computer. The consumer receives the broadband signal from a signal tower rented or owned by the provider. These towers are designed to service a large number of users which usually approximate in the range of a 35 mile radius. It can also be used by mobile devices (e.g. PDA) through wireless standards such as 802.11b+. (Cambridge, 2000; Lim, 2003).

Wireless broadband is a growing business, Len Laur of Sprint Global Markets Group has predicted that wireless subscribers would grow from 100,000 in 2002 to more than 5 million in 2005. And AT&T reported that their subscribership rose to 768,000 in the third quarter of 2002 (Mannion, 2001).

There are various advantages and disadvantages to this technology.

Advantages

Wireless broadband has advantages over traditional broadband (e.g. DSL) in factors such as cost, manageability and security. These and other advantages of this technology are explained in detail below.

Security

Wireless broadband has the edge over traditional broadband in security. As it is signalled through the air, it could be assumed that a wireless broadband user would be more susceptible to unauthorized attacks. However, due to the Spread Spectrum technology that is being used in wireless broadband, anyone intercepting a signal would simply receive ‘unintelligible blips’. (Cambridge, 2000).

Speed

Wireless broadband can be installed much faster than laying a traditional line. Businesses such as Regent Broadcasting are increasingly turning to wireless as it can be available to them much earlier than a wireline connection. Wireless providers such as Leap Frog have estimated to have installations lead times over their wireline counterparts of over 60 days (Annie Lindstrom, 2003). On top of the fast installation times, wireless connections can be considerably fast as well. The Waverider equipment, installed by North Rock not only takes about two days to install but also the connection is at a blistering 6 Mbps. This, when compared to ISDN’s maximum of 128 Kbps and T1’s 1.54 Mbps connections, wireless seems awfully fast (Cambridge, 2000).

Easier to manage

According to Andy Fuertes of Allied Intelligence Inc., wireless carriers have an easier time managing bandwidth and adding capacity. For wireline providers to add capacity, they would have to split the node, whereas with wireless providers, it would simply be a matter of installing a new base station, which according to Andy Fuertes, is much quicker and cheaper. Wireless providers can also manage capacity much more intelligently, which is the case with North Rock. “we can find out what the problem is and fix it even before the customer notices it” says Tom Coelho of the company (Cambridge, 2000).

Cost

A wireless broadband connection can be much less costly than a wireline connection. Leap Frog offer a 1.54 Mbps connection for less than $700 a month whereas a T1 connection which connects at roughly the same speed can cost at an average of $1000 a month. Installation costs, for a T1 connection could be up to $3,000, but TowerStream another wireless provider offers an installation of $1,500 (Lindstrom, 2003).

Disadvantages

Although very advantageous, wireless broadband has a number of issues concerned with it and may prove to limit the potential of wireless broadband. Such issues are discussed below.

Line of Sight

As mentioned earlier, wireless broadband providers employ signal towers to broadcast the broadband signal. They work on a ‘line of sight’ principle that means that unless the tower can actually see the building that it is supposed to be sending the signal to, there will be no connection or at the very minimum, a very poor connection. Another problem with sending signals through the air is that unlike wireline connections, the connection could be affected by adverse weather. However, experts say that this is only a problem for wireless connections using higher band frequencies such as LMDS (Local Multipoint Distribution System), which is being alleviated by keeping transmitters close together. Lower band frequencies such as the ISM (Industrial Scientific Medical) band can withstand such limitations and can transmit data over very long distances (Cambridge, 2000).

Availability

Although wireless broadband is growing rapidly, it is not available everywhere. Sprint in 2002 opened up their services in Phoenix, America, however, by the end of the year they were predicted to open up in another twenty markets (Cambridge, 2000).

Cost

The communications company AT&T decided to pull out of the wireless industry because according to them it was capitol intensive and there were no potential investors. In 2001 they invested around $350 million into the industry, followed by $450 million in 2002. However, according to David Hale of the company, despite such large investments even with the depth of their team they couldn’t find investors. Another factor adding to the issue was that the cost of supplying the equipment to the consumer ranged from $600 to $1000 (Mannion, 2001).

Future of wireless broadband

The advent of wireless broadband has allowed the benefits of broadband technology to be available to more people. For example, Washington Senator Conrad Burns told state services that in order to sort the broadband availability problem in rural America, they may have to go wireless (Weaver, 2001). Wireless broadband is predicted to be very big very soon. It will allow greater connectivity to users and be able to accommodate an increasingly mobile population. Users with wireless devices such as PDA’s could check e-mails, surf the net at anyplace that has broadband access (Lim, 2003).

Conclusion

The internet is growing, fast. It is estimated that in this year alone there are around 400 million internet users around the world, however, even more astonishingly, it is estimated that by 2010 there will be an immense 3 billion internet users around the world, almost half of the global population (Johnston, 2001). The three network technologies discussed above are the most advanced and the most speculated of all the network technologies. In their own right they encapsulate what the internet will become and where it will go.

Broadband brings to the avid web surfer exactly what they have been longing for, a fast and an always on connection to the internet. Although businesses have had fast connections to the internet for a long time now, this is a relatively new concept for the general consumer. This in itself should promote 100% uptake of it. However issues such as availability, security and cost issues continue to impede the true level of success that broadband can enjoy. But if these issues are dealt with in time, broadband could herald a new age in internet access such as the implementation of a fiber optic network.

M-Commerce has immense potential. In an age where having a mobile phone is seen as more of a cultural accessory than a convenience device, m-commerce is the next logical application to introduce. Again there are a few issues that prevented the explosion of m-commerce that was expected in the late nineties (Dano, 2003). However, as mentioned before, there have already been developments into the two main issues interoperability and security. The applications of m-commerce can be endless ranging from making payments at retail stores to playing video games on them. Although m-commerce has suffered a slow start, in time it will realise it’s true potential (Thomas, 2003).

Finally regarding wireless broadband. This is the next evolutionary step for broadband. It should surpass wireline broadband in uptake. But issues of cost and availability prevent it from taking off. This could be a serious handicap, even though wireless broadband offers significant advantages over wireline broadband. However this is the newest technology of them all and organisations like Sprint are still remaining optimistic about this technology (Mannion, 2001).

Bibliography

Books used:

Laudon, K. C. and Traver C. G. (2002) E-commerce: Business. Technology. Society, Boston, Adison Wesley.

Online publications

Cambridge, S. N. (2000) ‘Tuning into wireless broadband’, eWeek, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Dano, M. (2003) ‘US is still largely left out of m-commerce’, RCR Wireless News, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Johnston, M. (2001) ‘Cisco CEO sees broadband future’, Info World, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Kinsella, R. (2002) ‘Securing E-Business in a wireless environment’, Network Security, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Krueger, K. (2001) ‘Guess who’s bringing fibre to the curb’, LightWave, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

Lim, Y. E. (2003) ‘Potential of wireless broadband’, New Straits Times (Malysia), 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Lindstrom, A. (2003) ‘Fixed wireless comes to rescue’, Wireless Week, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Mannion P. (2001) ‘AT&T, Sprint moves out broadband future in air’, Electronic Engineering Times, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Plunkett Research. (2004) ‘E-Commerce and Internet Statistics‘, Plunkett’s Comapnion to the Almanac of American Employers, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Robson, B. (2000) ‘Security Leaks’, tele.com, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Shullman, R. (2003) ‘Foundation for the future’, Progressive Grocer, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Shultz, S.(2001) ‘Cable routers speed business’, InternetWeek, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

Thomas, D. (2003) ‘M-Commerce: a false start?’, Computer Weekly, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Thomas, D. (2003) ‘Mobile payments to be launched next year’, Computer Weekly, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Thomas, D. (2002) ‘Roaming protocol set to boost m-commerce’, Computer Weekly, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Weaver, H. F (2001) ‘State regulator told that broadband future may be wireless’, RCR Wireless News, 1:1, Winter [online] [cited 3 December 2003] Available from Internet

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Hardware and Network issues in e-commerce