Fascinating article and excellent reasoning. Yes, there are problems, but for those of you interested in big picture thinking, this is worth a read. Cheers, chrisco
From the November 9, 2007, Pulpit
Getting to Know You: Think you have a secret life? Think again.
By Robert X. Cringely
While politicians and the U.S. Census Bureau may disagree on how many illegal aliens are living in the United States, the big credit reporting agencies have a pretty solid handle on the number and it is 17 million. That’s 17 million adults of unproved nationality who have ongoing financial relationships with businesses or — believe it or not — governments. It’s likely that there is some duplication in this total number, that is an illegal alien who is counted twice because he has, for example, a different relationship with his electric utility than he does with his phone company. But since the 17 million figure doesn’t include children, the two are likely to wash out and 17 million is probably pretty darned close to the real number. But it isn’t in any way close to the total number of U.S residents who have financial identities not tied to a Social Security number. That would be 37 million, meaning there are 20 million participants in the U.S. gray economy who aren’t illegal, who are legitimate citizens. This means about 10 percent of U.S. residents are financially invisible, or think they are.
There is a lot to be learned if you think about these numbers. Since all I do when I’m not chasing kids or building Moon rockets IS think about this stuff, this time I’ll do the heavy lifting for all of us. The first thing to be noticed is that these supposedly invisible people have been, well, noticed. The credit reporting agencies have a handle on total numbers and have a lot of information on specific individuals. So members of the gray economy are, for the most part, not invisible at all, just difficult to identify as individuals. But thanks to data mining down at the credit bureau, it is getting harder and harder to hide.
A lot of this sleuthing comes down to a surprising artifact, the Social Security number. One would think that surprising for an economic class of people best known for not having Social Security numbers. Ah, but they do have Social Security numbers, just not their own. You need a Social Security number to sign up for utility services, for example. No Social Security number, no electricity, gas, phone, or satellite TV. So what’s a poor alien to do? They go down to some local hangout and BUY a Social Security number to give to the utility. This has to be a legitimate number or it won’t fly with utility computer systems, but does it have to be the customer’s own number? Good question.
Here’s where we have an interesting business ethics issue. Say you are the electric company and someone tries to set up service using a Social Security number that already exists in your database and is clearly borrowed, bought, stolen, or simply made up. What do you do? Most utilities go ahead and set up the account, because to them what counts is whether the new customer will actually pay that bill and it turns out that people operating on such borrowed numbers are more reliable bill payers than the rest of us. They can’t afford to get in trouble with the electric company because that would draw attention to them. So there is a tacit agreement between the parties that a Social Security number must be provided because that’s the rule, but if it happens to be someone else’s Social Security number, well that’s okay.
The funny thing about this is the impact it has to have on the person who was originally assigned that Social Security number by the U.S. government. Rather than hurt their credit it actually helps because there is so much evidence that they are good at paying their bills.
Of course the credit bureau notices something and that’s why they are so able to estimate numbers in the first place. They know what Social Security numbers are being overused and can probably even trace the genealogy of that number as it makes its way across the country. Here’s an amazing fact: some individual Social Security numbers are in use right now by UP TO 3,000 PEOPLE and it isn’t at all unusual for a borrowed number to be used by 200-1,000 people at the same time. Remember that most of these folks AREN’T illegal aliens.
While illegals tend to keep all their finances under-the-table, many of those 20 million U.S. citizens of the gray economy probably lead double lives with only some of their income hidden.
All of this presents both a challenge and an opportunity for the credit bureau and shows up in the growing inadequacy of the Social Security number as an individual identifier, which it was never intended to be. The challenge is finding some new identifier that makes more sense than a Social Security number and is more likely to cover the entire economically active population. The opportunity is to expand the credit bureau’s business not just by the added number of credit records it can sell from a fully characterized population, but to come up with new products it can sell specifically concerning this previously untapped population. That is without busting them, because turning in illegal aliens and tax cheats frankly isn’t good for business.
Which brings me, as usual lately, to Google.
Stick with me, because this is good.
The Wall Street Journal and a couple other mainstream media outlets are just now picking up the idea I have been pushing for a couple months that Google is likely to bid and bid high in the upcoming auction of 700-MHz wireless spectrum. The search company has done its best to make Wall Street and the mobile operators believe that it doesn’t really intend to bid or will at most bid the auction reserve price just to make sure that someone bids higher and the spectrum is used. Not so. These Google regulatory head feints are more intended to win the 700-MHz spectrum for a lower price. The price wouldn’t matter so much if it could be paid for with Google stock, but the Feds demand cash, so the price does matter somewhat.
So Google announced this week its mobile phone OS, which is very real and they’ll gladly license it to whomever, but it would be incorrect to believe that Google has no plan to use its own mobile OS on its own network. But since that network doesn’t yet exist, since Google needs to get handset makers moving with it, and since announcing the software the way they did this week may lull mobile operators into thinking Google doesn’t still lust for that 700-MHz spectrum, well it all makes sense from a tactical perspective.
But once the spectrum is won and the network is built, say by 2010 or 2011, Google will have a very different relationship with the other mobile operators. That’s because Gphone (its a network service, understand, not a device), like Gmail, will be free.
Think for a moment of the impact a free mobile phone service will have on the mobile phone market. Why would I continue with Verizon or AT&T or Sprint or T-Mobile or Alltel or whomever if I could get the same or better service for free? Yeah, but the way to make the service free is by running ads on it and those ads would be contextually linked somehow to where or who you were calling and isn’t that creepy, especially for business customers?
Yes and no. Like Gmail, Google can sell a higher-end product probably minus the ads. People might find they actually LIKE the ads if Google does its job really well and isn’t too intrusive. The ultimate result, of course, is near-total Google dominance of the mobile ad space and — this is REALLY big — transferring some significant portion of the market caps of all those mobile operators right onto Google’s hips. Thanks to consumer parsimony and telephone number portability, Google over the course of a couple years would become the dominant U.S. mobile operator. And no matter what handset or protocol those customers use, the ads will be there and Google will be raking in the dough.
Which brings us back to the credit bureau. It would be very much in Google’s interest to own one of the big three credit reporting agencies, because your mobile phone number is the most practical supplement for the Social Security number as a financial identifier.
Take all the web usage and YouTube video data Google has been acquiring about us all, glue it to our data down at the credit bureau, tie it to our mobile phone number and our mobile activity, then use the resulting product as both an information service and a database for targeting ads and you have Super Google — the most valuable company on Earth and entirely based on metadata.
The only thing we won’t be able to do is hide.
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