Tech Brew Ride Home - Wed. 01/19 – The 5G Flight Issue Comes To A Head

Episode Date: January 19, 2022

Today is the big day for the showdown between 5G and the airlines. Nobody’s blinked yet, but both sides have sort of blinked. An interesting raise in the NFT space. And I’ve heard of autonomous road cars, but autonomous rail cars? More fallout from the Activision/Microsoft tie-up, and how literally fallout from that undersea volcano may have knocked Tonga off the internet. Sponsors: EditorX.com do.co/trh Links: Airlines Cancel Some Flights Ahead of U.S. 5G Wireless Launch (WSJ) Major airlines cancel, change flights to US over 5G dispute (AP) Coinbase NFT Marketplace Will Enable Purchases With Mastercard (Decrypt) OpenSea confirms acquisition of Dharma, sets sights on fiat onramps (The Block) Michael Jordan, Multicoin Back Solana NFT Firm Metaplex in $46M Round (Decrypt) Former SpaceX engineers bring autonomous, electric rail vehicle startup out of stealth (TechCrunch) Activision Blizzard’s Workplace Problems Spurred $75 Billion Microsoft Deal (WSJ) Microsoft is buying one of the biggest names in games — if Washington lets it (Recode) Tonga’s volcano blast cut it off from the world. Here’s what it will take to get it reconnected. (MIT Technology Review) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeet. right home for Wednesday, January 19th, 2020. I'm Brian McCullough. Today is the big day for the showdown between 5G and the airlines. An interesting raise in the NFT space. And I've heard of autonomous

road cars, but this interesting raise is about autonomous rail cars. More fallout from the Activision Microsoft tie-up and how literal fallout from that undersea volcano may have knocked Tonga off the internet. Here's what you miss today in the world of tech. Well, it's all coming to ahead. AT&T and Verizon say they are temporarily restricting 5G expansion near U.S. airports, but a few airlines say they will still suspend some flights beginning today amid guidance from Boeing, quoting the Wall Street Journal. AT&T and Verizon Communications on Tuesday afternoon accepted the new limits after a month's long standoff between the Souther operators and aviation officials who had promised to limit flights

over concerns about the 5G signals effect on aircraft instruments. President Biden on Tuesday thanked the wireless companies for the pause. Quote, this agreement will avoid potentially devastating disruptions to passenger travel, cargo operations and our economic recovery while allowing more than 90% of wireless tower deployment to occur as scheduled, he said. Nevertheless, airline executives were left wondering whether the federal aviation administrations pending safety precautions would still ground their flights. Aviation safety officials say the wireless carriers agreement will avert

many, but likely not all cancellations and delays. An FAA spokesman didn't detail the extent of those delays. Delta Airlines said Tuesday evening that it is planning for the possibility of flight cancellations in certain weather conditions as soon as Wednesday, even after the agreement by Verizon and AT&T Tuesday. While this is a positive development toward preventing widespread disruptions to flight operations, some flight restrictions may remain, the airline said, end quote. And quoting the Associated Press. Some airlines said they were, warned that the Boeing 777, a plane used by carriers worldwide, was particularly affected by the new high-speed wireless service. The aircraft is the workhorse for Dubai-based Emirates, a key carrier

for East-West travel, and its flight schedule took one of the biggest hits. On Wednesday, Emirates announced it would halt flights to several American cities due to, quote, operational concerns associated with the planned deployment of 5G mobile network services in the U.S. at certain airports. It said it would continue flights to Los Angeles, New York, and Washington. of particular concern, though, appears to be the Boeing 777. Emirates only flies that model and the Airbus A380 Jumbojet. Japan's All-Nipan Airways said that the FAA, quote, has indicated that radio waves from the 5G wireless service may interfere with aircraft altimeters.

Japan Airlines similarly said that it had been informed that 5G signals, quote, may interfere with the radio altimeter installed on the Boeing 777. It said it will stop using the model in the continental U.S. for now, Eight of its flights were affected Wednesday, three passenger trips and five for cargo. Taiwan's EVA Air also said the FAA specifically said 777s may be affected, but it did not spell out how it would adjust its schedule. But Air France said it planned to continue flying its Boeing 777s into American airports. It did not explain why it didn't change its aircraft, as many other carriers have. Air India also announced on Twitter it would cancel flights to Chicago, Newark, New York, and San Francisco because of the 5G,

issue, Korean Air, Hong Kong's Cathay Pacific, and Australian Airlines said they substituted different planes for flights that were scheduled to use 777s. Korean Air spokeswoman Jill Chung said the airline was also avoiding operating some kinds of 747s at affected airports. Germany's Luftanzah also swapped out one kind of 747 for another on some U.S.-bound flights, and British Airways canceled several planned U.S.-bound Boeing 777 flights and changed aircraft on others, end quote. Let's do a quick crypto news, sort of omnibus, a grab bag of three different stories. First up, Coinbase announced it is partnering with MasterCard to let users pay with a credit card

on its upcoming NFT marketplace. They want to solve what they call pain points and classify NFTs as digital goods, quoting DeCript. Coinbase has been working for some time on Coinbase NFT, a peer-to-peer marketplace for non-fungible tokens. In just 48 hours following the announcement of its last, launch, the platform had over 1.4 million signups. As part of its deal with MasterCard, the exchange announced that it will be, quote, able to provide a better customer experience

on Coinbase NFT. In December 2021, Coinbase added support for viewing NFTs to Coinbase wallet, its non-custodial wallet, end quote. Then, news that NFT marketplace OpenC is acquiring crypto-lending API's startup, Dharma Labs. Sources say the deal was valued at between $100 and $130 million dollars, quoting the block. Dharma, an early entrant to DeFi, set out to create more seamless user interfaces for lending and swapping tokens, bridging the crypto and fiat world by enabling users to deposit $1,000 from their debit card to swap tokens listed on Uniswap v3. Dharma's app will be sunset, according to the company.

Still, scooping up Dharma's UX know-how could expedite OpenC's own efforts to simplify and expand the way in which users can purchase digital collectibles and art. OpenC told the block that introducing new and accessible purchasing options, including Fiat options, is top of mind for the firm. Simplified Fiat onramps could be a tailwind for the already fast-growing NFT market, which J.P. Morgan described this week as being the fastest growing universe in the crypto ecosystem. OpenC itself has kicked off 2022 on a strong note, clocking in volumes above $2.35 billion in January. Still competition in the market is mounting with new entrants like Looks Rare coming on the scene recently,

siphoning market share in the process. For its part, OpenC has amassed a significant war chest, having just recently closed a funding round that valued the company at $13 billion, end quote. And one of the things we've talked about is that there's not yet really a leading gold standard or definitive blockchain for NFTs to live on yet, which makes the Metaplex Foundation, developer of an NFT protocol behind more than 5.7 million minted Solana NFTs, an interesting raise. They've raised a $46 million round with Michael Jordan and Alan Iverson among the 90-plus investors, quoting to Crypt. Metaplex is the standard protocol behind Solana NFTs, with more than 5.7 million such NFTs minted to date, according to the foundation.

That's spread across 85,000 projects with 600,000 unique collectors, with Solana NFT trading volume topping $1.2 billion to date, end quote. And let me squeeze in one more interesting raise right here, just because I think it's cool. Parallel Systems builds autonomous battery electric rail vehicles, and it's coming out of stealth, sporting a $49.55 million series A, bringing its total funding to $53.15 million. Yes, I said autonomous electric rail cars, quoting TechCrunch. The startup's rail vehicle architecture aims to solve a few problems, carbon emissions in freight, supply chain constraints of trucking, and limits of railway freight.

In the U.S. Rail Networks account for 28% of all freight movement, but most of that is bulk movement activity, large trains that move primary resources like coal and lumber. A smaller portion of rail freight movement is referred to as intermodal activity, which essentially involves moving steel containers between a range of different modes of transportation like boats and trucks. Parallels patent-pending vehicle architecture involves individually powered rail cars that can load and transport standard shipping containers on a single or double-stacked load. They can join up to form platoons or split off to multiple destinations while en route, which means they don't need to hold large volumes of freight to make the service economical, although the company says they can actually

carry much more weight than trucks, which handle most freight transportation in the U.S. For the unit economics of freight trains to get competitive with trucks, you need really long trains, and you're amortizing the cost of that locomotive and crew over that one really long train, said a spokesperson for the company. When that becomes a problem is when you're figuring out where to park that big train, and the answer is not many places, end quote. Relying on long trains to transport goods means it's harder to do high-volume turnovers that handle all our e-commerce wonders because those trains can't always access urban communities or ports. They require specially built large terminals to accommodate their physical size. Our unit economics don't depend on a very big train, said the company. We can move in smaller platoons, and rather than dwelling all day for the unloading and loading operation,

we're in and out within an hour or two, leaving room for other platoons to come in. It's a more efficient footprint, and it enables things like serving ports and creating inland port shuttle systems, so you can move the containers from a seaport to an inland port, which is often a better place for trucks to go and are closer to warehousing activities, end quote. When it comes to autonomy, Parallel sees the railroad's closed network as the ideal operational design domain for safe and early commercialization of autonomous technology due to limited track access and centralized traffic control. It's important to note, however, that while Parallel's long-term vision seems promising, the company has yet to test on national networks.

It has been testing its prototype vehicle on a small rail in Los Angeles that's insulated from national networks. Rail in the U.S. is privately owned by owner-operators, which makes it difficult for parallel to test its vehicles and the autonomous systems running the vehicles on a large scale. Parallel is targeting private rail companies as its customers hoping to sell or lease its tools for them to operate the service on a day-to-day basis while offering a supporting role in terms of providing and integrating the technology. Until the startup gets a legacy railroad partner on board, it won't be able to see if its tech can handle real-world operations. The company's platoon technology feature self-propelled rail cars that push against each other to distribute the load, which the

company predicts will lead to parallel vehicles using just 25% of the energy compared to a semi-truck, end quote. And let's catch up on the fallout from yesterday's Activision Blizzard, Microsoft, tie-up. Various sources are reporting that Activision Blizzard tried to find other buyers, including meta, while weighing a potential Microsoft takeover after the Wall Street Journal's big expose last November sort of kicked things off. And in recent weeks, CEO Bobby Kotick suggested Activision Blizzard make acquisitions itself, including maybe buying trade publications like Kotaku and PC Gamer. And basically, the timeline for this deal lines up with what we speculated yesterday, quoting the Wall Street Journal. Microsoft, one of the biggest companies in the world with a market

value of $2.3 trillion, held unsuccessful talks to buy social media company TikTok's U.S. operations, photo-sharing platform, Pinterest, and chat startup Discord in recent years. Microsoft's biggest acquisition to date was its roughly $26 billion purchase of LinkedIn announced in 2016. In that deal, Microsoft moved after its target's shares were depressed, in that case because the networking platform's growth had slowed. The tech giant saw another opening in late November when Activision was facing an uprising from employees, investors, and business partners. Activision's share price had fallen nearly 30% since California regulators sued, alleging sexual harassment and gender pay disparity at the company.

The Securities and Exchange Commission was also investigating. Even though the deal carries a 45% premium, it values Activision at around its level before the California lawsuit. The journal reported November 16th that Mr. Katik, the CEO of Activision, had known for years about misconduct allegations including rape and hadn't told the board sending the stock down nearly 20% over several sessions. About 1,900 of the company's 10,000 employees signed a petition calling for Mr. Cotik to resign and some staged a walkout. Business partners, including Sony, said they were re-evaluating their relationship with the company, end quote. Them trying to interest meta, as I guess a stalking horse was interesting, as that last quote also makes clear. It's Microsoft that was always the likelyest suitor, though, since they've been the most acquisition hungry of late, since they can be for now. More on that in a second.

What I didn't anticipate was Sony's shares falling 13% this morning, its biggest drop since October 2008, wiping $20 billion off of Sony's market valuation after the deal was announced yesterday. So clearly the market thinks this is a blockbuster that could transform the industry, assuming it goes through which, Peter Kafka notes today that following several game studio acquisitions, Microsoft's Activision Blizzard deal faces a big regulatory hurdle with Lena Con. anti-trust-focused FTC. Quote, Remember when Disney bought much of Rupert Murdoch's Fox Empire and formerly kicked off a wave of consolidation in Hollywood? This is like that.

But maybe it's bigger. The deals are roughly the same size. Microsoft's deal values Activision at about $69 billion, and Disney paid a little more than $70 billion for Fox's movie studio and other assets. But this deal, if it goes through, is both horizontal and vertical integration, pairing Microsoft's Xbox console business, which already owns huge game franchises like Minecraft and Halo, with one of the world's most valuable gaming companies, which owns giant titles like Call of Duty, World of Warcraft, and Candy Crush. While streaming TV shows and movies occupy a ton of media attention,

video games capture a ton of regular people's attention. Microsoft says there are three billion gamers around the world today and says that number will likely get to $4.5 billion by 2030. This deal is certainly going to draw a lot of attention in Washington, which has been focused on big and small deals made by most of the tech industry, but has largely left Microsoft alone until now. The irony, of course, is that Microsoft spent a long time fighting federal antitrust charges over its web browser dominance two decades ago. The company averted a forced breakup, but lost much of its mojo along the way. This deal has a $3 billion breakup fee, that is, cash Microsoft will have to pay Activision if the merger gets stopped by regulators. which seems like a lot of money to you and me, but is fairly small beans for this kind of transaction. Still, it's supposed to signal the two companies' confidence that it will get done.

When it comes to making its case to Washington regulators, you can expect Microsoft to argue that, one, its Xbox business is much smaller than Sony's PlayStation business, and two, that the future of gaming is about mobile, which means Microsoft isn't just competing with Sony, but with Apple and Google as well. Those are good arguments, but we'll see. Microsoft has also been moving away from its console business. Low margin boxes consumers buy for $300 or more, but 10 not to replace very often, and to its Netflix-style subscription model called GamePass,

where you pay the company $15 a month and can play its games on any kind of device. Microsoft already has 25 million subscribers for that service. I wouldn't expect Microsoft to make most of Activision's big games exclusive for GamePass, just like with movies and TV shows, games are most valuable if they're available to as many people as possible, but you can certainly see Wycahn and her colleagues will want to poke into this one, end quote. And finally today, I'm sure you've heard about that undersea volcano blast near the island of Tonga over the weekend. I guess it's an island nation of several different islands, but from fallout over a merger to literal fallout from a volcano. When you're an island in

the middle of the Pacific Ocean, undersea disruptions can do things to undersea, you know, no, internet cables, communications cables, which are designed to keep you connected to the outside world, and Tonga is currently offline because we think the single undersea cable that connected the country might have been severed, quoting MIT Technology Review. The reason Tonga fell offline isn't yet known for certain, but initial investigations have suggested that the undersea cable connecting its internet to the rest of the world has been destroyed by the blast. Tonga primarily uses a single undersea cable to connect to the internet, says an internet analyst. The Tonga cable system runs 514 miles between Tonga and Fiji bringing internet service to the two island nations. Previously, that connection has been

backed up by a satellite internet connection. I guess they're not able to do that this time because of some technical failure preventing them from being able to switch over, says the analyst. He believes that the wave resulting from the volcano explosion could have taken out the satellite dishes as well. If that's confirmed, it's just about the worst possible news for Tonga's connectivity. It will be days, maybe weeks before the cable is fixed, says the analyst. The outage isn't the first time that Tonga's internet infrastructure has been plagued with problems. In January 2019, the country experienced a near-total internet blackout when an undersea cable was cut. Initial reports indicated that a magnetic storm and lightning may have damaged the connection, but a subsequent

investigation found that a Turkish-flagged ship dropping anchor had severed the line. Fixing the issue cost an estimated $200,000, and while it was being fixed, the island relied on satellite internet connections. Those same satellite connections are likely to be the only savior for Tonga's internet in the near term, but with unknown damage to them, the country could be in for a difficult period. They were probably thinking, well, if the cable goes down, we have the satellites for resilience, says the analyst. If a volcano detonates right next to you and takes out both your cable and your satellite, there's not much you can do, end quote. huge amounts of ash thrown up into the air by the eruption could also be affecting satellite connectivity. Fixing the broken cable won't be easy. Specialized shipping vessels tasked with fixing breakages, which occur every week somewhere in the world, albeit with less force than is likely to have resulted from the eruption,

need to be sent to the site of the problem. One vessel that could help is the CS resilience, currently off Papua New Guinea, nearly 3,000 miles away. It's estimated that any vessel could take days or weeks to remedy the issue, and quote. Thank you to those of you that reached out to Sensel after they were on that first portfolio profile episode. If you were interested in working at Sensel, I wanted to direct you to sensel.com slash careers. I know at the moment, sensel's in the market for electrical engineers and software test engineers. So if that's you, and you're looking for an interesting new gig at a great company, Sensel, that's Sensel, Sensel.com. Sensel.com. Talk to you tomorrow.