Economics: Communication Age

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This is our wiki committed to communication technologies in terms of how they are shaping the way we do business and how that consequently affects the economics of our world. Our mission with this wiki is to allow readers to get a glimpse of what we've learned in researching these subjects and how they pertain to our everyday lives.

"Wal-Marting Across America"

This incident relates to the worlds of communication and economics because the problems that arose came about because of the use of an on-the-rise communication technology, the weblog, or more commonly, the blog. If the blog wasn’t available as a means of message delivery, the entire ordeal probably never would have happened.

The anonymity of blogs and the way they enable users to be able to post messages without providing any real background information was what specifically enabled this to happen. It couldn’t have happened in a newspaper; it’s too cheery. It couldn’t have happened in a magazine; with fact-checking measures used, it would have been discovered much earlier that the two bloggers weren’t just average people. It could, however, have happened in a newsletter or public relations publication, but, as mentioned before, these wouldn’t have been able to provide the sort of audience penetration that the blog could—and did.

What happened

In fall 2006, retail giant Wal-Mart came under fire for its use of one form of communication technology, the blog, to fraudlently promote its own name. The corporation hired a pair of “regular folks” in an effort to restore its image as a company that cares about the everyman and looks to give back to Americans.

These two people, known simply as “Jim” and “Laura,” traveled around the country in fall 2006, visiting Wal-Mart customers and employees and blogging about the way everyone at every store seemed so happy to be there—a far cry from the unhappy employees, rushing customers and long lines that most people have come to associate with Wal-Mart.

It was later found out that Jim, a photographer for the Washington Post, and Laura, a freelance writer, had been paid to write the blog entries and even for their gas and rental fees for the RV they used to travel, by a group called Working Families for Wal-Mart. The blog, titled "Wal-Marting Across America," [1] ended up being more of a public relations mess [2] than a rejuvenation of the corporation's unfavorable image, as was intended.

Public response

Once it was discovered that Jim and Laura weren’t everyday folks, the press seemed to collectively indict Wal-Mart yet again, but this time for being dishonest with its customers. The company is already in the news on a weekly basis for offering poor wages and/or no benefits to its employees, two things that the press has in the past called the company out on.

The blame is not placed on the blog itself in any way, but most articles do indicate that Wal-Mart was essentially hiding behind the Internet as a way to try to promote itself surreptitiously. followed up on the discovery of the blog as a fake—a “flog,” as it’s now being called—and called it “relentlessly upbeat” [3]in an Oct. 8, 2006 article titled “Wal-Mart’s Jim and Laura: The Real Story.” Similar articles were published and posted online regarding Wal-Mart’s already checkered past and its latest effort to repair its tarnished image.

Wal-Mart's defense

Wal-Mart spokesman David Tovar declined comment on the situation: “We won’t comment on the RV tour, since it was a Working Families for Wal-Mart initiative and we didn’t have anything to do with it.” [4]

Richard Edelman, CEO of the Edelman public relations firm that set up the blog, initially declined comment, but later admitted to hosting two other fake blogs, or "flogs," on behalf of Wal-Mart [5] This sort of after-the-fact, hands-off approach indicates that even though Tovar and Edelman feel a sense of responsibility (and guilt), because of the disinhibitive effects of the Internet, they don’t feel as responsible as they would have if the incident had occurred in another medium.

Ethical considerations

This incident raises a few ethical questions that were either completely ignored or not thought of in any manner before it was decided to go through with this. First and foremost, Wal-Mart clearly had no hang-ups about indirectly hiring a pair of “everyday people” to champion their cause. Secondly, the questions of whether Jim and Laura should have considered their own personal careers couldn’t have been posed, either.

The competing interests involved with the posting of this blog are those concerning Wal-Mart’s image and the ethicality of producing something that they knew to be illegitimate. While the line may be grayish in hue, Wal-Mart clearly overstepped its bounds by shadily hiring a third party to do marketing work for it. Jim and Laura also compromised their own interests by knowingly producing something that was not on the level.

Again, the technology itself (the blog) contributes to the ethical dilemmas at hand because it more than likely made it seem to the public relations firm, Jim and Laura, and Wal-Mart, that their collective actions were somehow less real because they were happening only in cyberspace. While this fact doesn’t excuse what was done, it may help to explain it.

HDTV: A shift in entertainment

What Is It?

HDTV stands for high-definition television. It is television that results in Dolby Digital surround sound and high-quality pictures. [6]

Where Did It Begin?

It was introduced to in the 1980's by Japan to the United States' National Association of Broadcasters. There was two groups that opposed HDTV the United States Congress and television broadcasters.

The United Congress was concerned because HDTV was a Japanese product that Americans would purchase. HDTV would make millions for Japan and absolutely nothing for the United States. They feared this because it happened once before with another product, the VCR.

Television broadcasters were concerned that their television programs would not be able to handle the bandwidth of HDTV because it required more than normal television. New television channels were being created for HDTV, leaving old channels to worry that they may be in jeopardy of losing their viewers and their jobs.

These problems were solved thanks to the Federal Communications Commission, FCC. They created a different form of HDTV that was digital so it could be transmitted by existing television channels. It was also created in the United States, so they received the profits instead of Japan. [7]

Issues With HDTV Today

Even though early problems with HDTV were solved, there are still problems with HDTV that exist today. One of the major concerns with HDTV is cost. Both consumers and broadcasters are affected by the costs.

Consumers need to purchase satellite service, cable service, or an antenna in order to receive HDTV. HDTV can cost consumers thousands of dollars.

The digital for of HDTV that was created in the United States ended up not being compatible with all television channels. Broadcasters have to purchase new cameras, control room equipment and editing equipment in order to be compatible with HDTV. They also have to build new towers to to send and receive signals. These demands are costly and few broadcasters can afford them. Leaving the costumer with bad service causing many of them to complain.

Even with all the costs that broadcasters and consumers pay, HDTV still has quite a few faults. This includes interlacing problems, compression, bandwidth limitations, and broadcasting distribution. With all the costs that consumers and broadcasters are paying, there should not be any major problems with HDTV, but there is. [8]

eCommerce risks: the TJ Maxx incident

What happened

On January 18, 2007, several media outlets reported that the TJX Corporation's computer systems were hacked. Customer information and transaction data was accessed from 2003 and the period from mid-May through December 2006. Personal information, including credit card numbers, expiration dates, card verification values and four-digit codes to verify authenticity were recorded, which is enough for thieves to make fake cards. Identity theft can occur on a large scale when personal information is stored on computers.

Risks with computers

If the information was not stored on computers, it would have to be stored on paper and that would make it much more difficult to steal. Computer hackers can obtain the information without physically taking anything and do it at a much greater volume since computers are able to hold so much information. Merchants are supposed to limit the amount of data that is stored on their computers according to the Payment Card Industry Data Security Standard.

Dealing with identity theft

When TJX discovered what had happened in December, they reported it to authorities and major credit card companies. They hired General Dynamics and IBM to investigate and secure their systems. Credit Card companies have notified banks that information may have been stolen and are reissuing credit cards to customers. In December Visa said it would offer $20 million for businesses to comply with the credit card security rules. TJX customers have filed a class action lawsuit against TJX. Personal lawsuits are also being filed.

What was to blame

Outdated systems are being blamed and it is likely that some data was not stored intentionally by TJX. The technology was put into use before there was thought about cyber attacks. Analysts believe the attack was very well orchestrated and may have been carried out by people who previously hacked other computer systems. [9]

Ethical Issues

Identity theft is an ongoing problem in today’s technological environment because so much of peoples’ personal information is stored on computers. The ethical questions raised have to do with responsibilities for peoples’ personal information that is stored in business computers. Will businesses be held responsible to the consumers that may have their identity stolen? Will the business be responsible to the credit card companies that have the expense of reissuing credit cards to all their customers? If businesses are not held responsible then people will have no way to be sure that their identities are not stolen. Businesses need to keep up with security measures to prevent identity theft. Because technology changes at such a rapid rate, it is very expensive to continually keep up with the latest changes. Businesses are going to have to weigh the their profit margins with the price of security. Identity theft is not going to end as long as personal information is stored on computers.

The new kid on the block: Satellite Radio

What it is

Satellite radio, more formally known as Satellite Digital Audio Radio Service (SDARS), is a broadcasting network in which digital high-fidelity (hi-fi) audio entertainment is transmitted from orbiting satellites to receivers on the surface. Signals can be received either directly from a satellite or indirectly by means of earth-based repeaters. Programming can also be received through Internet connections. [[10]]

Who it is For

Music lovers with a wide-ranging taste of music, a diver who spends a lot of time on the road, or a resident of a rural area with no satisfactory radio options. [[11]] Though each service provider appeal to different niche audiences it seems that you can find just about anything that will satisfy your taste.

Problems with Satellite Radio

As on blogger describes Satellites biggest problem is that actually process of acquiring satellite radio. [[12]] Hear he goes into a description of how you have to go through a 22 step process before even getting to listen to your radio. There are often many other problems with satellite radio such as cutting out in a very rural place and cutting out in urban areas with tall building, and long tunnels.

Effects of Satellite Radio on the Economy

For many investors in satellite radio could be looking at hitting bottom at the end of this year. The companies of satellite radio have increased their offering of big brand names, like Howard Stern and Oprah. They did this in hopes to attract more subscribers to pay expenses and make a profit. Howard Sterns radio show had about 12 million daily listeners before he moved to satillite radion. He now has about 1.6 million subscribers and they figure he needs about 3 million just to break even. [[13]] The further we getting into the year and less subscribers subscribe to satellite radio stock prices could easily plummet. Then the major stockholders of these satellite radio including many U.S. carmakers could decided that the satellite radio may represent more of a liability and add to their companies debts. This would also hurt colleges and universities who sell their NCE station licenses usually only costing them more debt and problems than before.

Mp3 files and their effects on the music industry


Since 1999 when Napster first came about mp3 technology has been seen as a major threat to the recording industry. An mp3 is a file (usually audio) that is compressed so that file sharing can be done quickly and easily.[14]

Listening to music is one of the most prominent activities that Americans do today. It is estimated that 45 minutes a day is spent listening to recorded music, and about three hours a day is spent listening to the radio.

How Bad Is It?

Users can make digital copies of their CDs and redistribute them all over the world for free. But in today’s market, are the effects of file sharing and mp3 technology as detrimental as the recording industry might want you to believe? The creation of online music services and unauthorized sharing of copyrighted works have in the past had a negative effect on the music industry. As of 2005 a positive spin has been put on this new technology and example being the rapid increase in sales of digital music services. Music is becoming an area in which the impact of digital distribution, file sharing and new online business models is strong for both the artists and the music industry as well as users, consumers, and content creators.

Other Possible Reasons for Lower Record Sales

The music industry is also being accused of exaggerating losses to piracy. The decrease in album prices have accounted for $50 million of the sale reduction in a single year. This is because large retail outlets are applying pressure on the music industry to lower their prices. Today retail giants are accountable for more than half of all CD sales. On top of that they tend to focus on new releases. Today there are fewer new releases than ever before, thus having a negative effect on the number of record sales.

The Future

New peer-to-peer services are now emerging with business models that are taking advantage of the distributed medium without offending copyright holders. [15] Imesh, a peer-to-peer service based out of Israel plans to launch a new service that will give content owners a means of collecting money. This is the example all companies in the recording industry need to follow. It is now possible for the recording industry to take advantage of file sharing instead of complaining about it. If they learn to work with the new technology they will more than make up for the losses they initially suffered in the early years of Napster. [16]

A new financial trend: cell phone banking

In South Africa, the cell phone is the newest form of banking. There are a large number of people who can not access banking services. So, the cell phone networks teamed up with one of South Africa’s largest banks, and now poor people who never could access banks, ATM machines or credit cards have a way to be a part of the official economy. Before this new banking system, these individuals were underserved and ignored by the traditional banks and were stuck in the cash economy. This form of banking is making its way into other countries as well.

How it works

This form of banking allows consumers to maintain their bank accounts via cell phone. Deposits can be made at any bank or post office by scanning a debit card, taking the person’s cash and then immediately credit the account. Then, the user enters commands on his/her cell phone to check balances or transfer money, by using a PIN number for verification. After every transaction, a text message is sent to the user's cell phone, notifying them of the money being transferred. [[17]]

Will it work?

Cell phone banking is already popular in Vietnam, the Philippines, Soweto, and China. In 2007, cell phone banking is suppose to be used in the United States. A cell phone repairer from South Africa reported that he felt that many people would use the new advancement if the fees were low enough because many people there have cell phones and can not easily access banks. The article says that many people will welcome the new form of banking in South Africa. [[18]]

Ethical considerations

There are several ethical considerations with cell phone banking. These considerations include rates of service, accessiblity and security. This service can be expensive to the poverty-stricken people of South Asia. Not everyone can afford the cost of banking via cell phones. There are fees that they are forced to pay to use the service.

"There are a large number of individuals who are unable to access banking services because conventional banking is expensive, relative to their income. And physically we don't have banking facilities in remote areas," said Herman Singh, director of technology engineering at Standard Bank [[19]].

Also, if a person does not have a cell phone he/she can not participate in banking by phone. Security issues with cellphone banking can include incidents of hacking into other users accounts. E-crime is a potential problem with cell phone banking. Viruses are now targeting cell phones. This technology is so up-and-comming that new users may not be able to understand to the fullest how to operate this system. Cell phone banking uses the same 128-bit encryption as Internet banking. The users personal pin is created by the user which establishes security. There is the same amount of security that regular banking has.


The companies that are providing users with the banking by phone method include:

  • WIZZIT- WIZZIT targets people in South Africa who have difficulty accessing standard banks.[[20]]
  • Cingular Wireless[[21]]
  • Sprint
  • Verizon
  • MTN Group

The banks that are involved include:

  • Bank of America [[22]]
  • Wells Fargo[[23]]
  • First National Bank[[24]]
  • Citibank [[25]]
  • BancorpSouth Inc.
  • Regions Financial Corp.
  • SunTrust Banks Inc.


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