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The Policy and Commentary Blog of The Heartland Institute
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FCC Targets Cable Set-Top Boxes — Why Now?

February 04, 2016, 11:26 AM

With great fanfare, Federal Communications Commission Chairman Thomas Wheeler is calling for sweeping changes to the way cable television set-top boxes work. In an essay published Jan. 27 by Re/Code, Wheeler began by citing the high prices consumers pay for set-top box rentals and bemoaning the fact that alternatives are not easily available.

Yet for all the talk and tweets about pricing and consumer lock-in, Wheeler did not propose an inquiry into set-top box profit margins, nor whether the supply chain is unduly controlled by the cable companies. Nor did Wheeler propose an investigation into the complaints consumers have made about cable companies’ hassles around CableCards, which under FCC mandate cable companies must provide to customers who buy their own set-top boxes.

In fact, he dropped the pricing issue halfway through and began discussing access to streaming content:

“To receive streaming Internet video, it is necessary to have a smart TV, or to watch it on a tablet or laptop computer that, similarly, do not have access to the channels and content that pay-TV subscribers pay for. The result is multiple devices and controllers, constrained program choice and higher costs.”

This statement seems intentionally misleading. Roku, Apple TV and Amazon Fire sell boxes that connect to TVs and allow a huge amount of streaming content. True, the devices are still independent of the set-top cable box, but there’s no evidence that this lack of integration is a competitive barrier.

A new generation of devices, called media home gateways (MHGs), is poised to provide this integration, as well as to manage other media-based cloud services on behalf of consumers. This is where Wheeler’s proposal should be worrisome. He writes:

“The new rules would create a framework for providing device manufacturers, software developers and others the information they need to introduce innovative new technologies, while at the same time maintaining strong security, copyright and consumer protections.”

This sounds much more like a plan to dictate operating systems, user interfaces and other hardware and software standards for equipment that, until now, has been unregulated. Wheeler gives no explanation as to how his proposal will lead to lower prices or development of a direct-to-consumer sales channel.

[M]y proposal will pave the way for a competitive marketplace for alternate navigation devices, and could even end the need for multiple remote controls, allowing you to use one for all of the video sources you use.

What Wheeler really wants is FCC management of the transition from today’s set-top boxes to the media home gateways (MHGs) just beginning to appear on the market—a foray into regulating the equipment used on customer premises unseen since the 1960s.

For good reason, the words “media home gateway” never appear in Wheeler’s Re/Code article. By avoiding mention of MHGs, he can play his “lack of competition” card, as he did in last Thursday’s press briefing on his proposal.

There’s more than a whiff of misdirection here. Set-top boxes are a maturing market. An October 2015 TechNavio report forecasts the shipment volume of the global set-top box market to decline at a compound annual rate of 1.34 percent over the period 2014 to 2019. By revenue, the market is expected to decline at a compound annual rate of 1.36 percent during the forecast period. When consumers “cut the cable cord,” as some 21 million have, it’s set-top boxes that get unplugged.

At the same time, TechNavio forecasts the global MHG market to grow at a compound annual rate of 7.82 percent over the same period. Elsewhere, SNL Kagan’s Multimedia Research Groupforecasts MHG shipments will exceed 24 million in 2017, up from 7.7 million in 2012. The long list of MHG manufacturers includes ActionTec, Arris, Ceva, Huawei, Humax, Samsung and Technicolor.

MHGs are the “alternative navigation devices” Wheeler coyly refers to in his Re/Code essay. These devices will replace the set-top boxes in use today, but because of their ability to handle Internet streaming, they are likely to be available through more than one channel. That’s why the only way to view Wheeler’s call to “unlock the set-top box” is as a pre-emptive move to extend the FCC’s regulation into the delivery of streaming media.

To be sure, if the FCC mandates integration of streaming options into cable-provided MHGs, streaming companies would gain a stronger foothold into consumers’ homes, which would then allow them to share their apps, gather data on users and, perhaps most lucratively, control the interface on which channels are displayed, as noted by The Verge‘s Ashley Carman.

Yet the streaming companies that would appear to benefit most from this proposal have thus far been quiet. This is [erhaps because Wheeler has made no secret that he believes Apple TV, Amazon Fire and Roku are multichannel video programming distributors (MVPDs), FCC-speak for “local cable companies.”

Is his “unlock the box” plan precisely the opposite? Is it an effort to fold streaming aggregators into the existing cable TV regulatory platform, with all its myriad rules, regulations, legal obligations and—dare we say it—fees and surcharges? You might roll your eyes, but this is the only analysis in which the proposal, which focuses on “device manufacturers, software developers and others,” makes sense.

But does the FCC have the right to require cable companies to share customer data acquired through the infrastructure and software they built and own? It’s yet another iteration of the old unbundled “network elements” model that is consistently shot down by the courts, yet one the FCC can’t seem to get past.

Arcane details aside, the FCC should not be involved in directing evolution paths, operating software or other product features. It creates too much opportunity for lobbying and rent-seeking. History shows that when the government gets involved at the granular level in promoting a specific direction for technology, costs go up and innovation suffers. Capital is diverted into politically favored choices, where it ends up wasted.

The debacles with the Chevy Volt and Solera are just two recent examples of the dangers inherent when bureaucrats try to pick winners, or give a subset of companies in one industry an assist at the expense of others.

[Originally published at R Street]

Categories: On the Blog

Sanders: What Will His Socialist Plan Do to YOUR Medical Care?

February 04, 2016, 10:35 AM

There is one thing that supporters and detractors of Bernie Sanders might agree on: he seems to be honest about his convictions. He is an avowed socialist, instead of pretending to believe in a role for private insurance. Unlike Barack Obama, his answer to the question “Do you get to keep your insurance plan?” is plainly No. There won’t be any more insurance plans. Everyone will be on Medicare.

Other questions are tougher. Do you get to keep your doctor? That depends on what you mean by YOUR doctor. You might be seeing the same person, in the same office. But he won’t be paid by you, and under Medicare “alternative” payment methodologies he won’t be paid for what he does for you. He might in fact be paid for NOT doing things for you, to meet the savings goals of the New Generation Accountable Care Organization (affectionately known as New Gen ACO) in which you will be automatically enrolled.

You shouldn’t judge a politician by his looks, but people often do. Sanders looks like Grandpa—kind and benign. The face of Medicare, however, is Acting CMS Administrator Andy Slavitt. If you were Central Casting, you would probably cast him in a role like the one he has had in real life: a Goldman Sachs banker and CEO for a UnitedHealth Group subsidiary. Such people get their positions through ruthless dedication to the corporate bottom line. What does Sanders think of him?

Medicare is today’s single payer for the elderly and disabled. All the money is funneled through government, though it is first taken from hundreds of millions of taxpayers and disbursed through private contractors called carriers. Would Sanders replace that with a purely governmental entity like the VA, the single payer for veterans? In the VA it is government bureaucrats who delay and deny care instead of corporate bureaucrats.

Veterans can go outside the system if they like, and pay privately. Medicare beneficiaries cannot, unless they see a physician who is opted out or disenrolled or excluded. What does Sanders plan to do about your liberty to use your own property to pay for goods or services to enhance or extend your own life? Doesn’t he, like Hillary Clinton, plan to “take things away from you, for your own good”? And does that include, like in Canada, your right to private care? It sounds as though it does. The additional $28 trillion in federal spending for his plan is supposed to replace insurance premiums and out-of-pocket payment. With the Sanders tax increases, the money available for discretionary spending will be much less, but if you do have any savings, would you be allowed to spend it on medical care? Or would that be unfair to the people waiting in long lines?

And there’s the $28 trillion question for Sanders: where does the money come from? Even if we could squeeze every last dollar out of billionaires and transform all their wealth into medical care for the masses, we don’t have 28,000 billionaires—or 28,000,000 millionaires.

And what will Sanders do about the more-than-$40 trillion in promises Medicare has already made without provision for the revenue to pay for them? What does he imagine will happen when he adds on the demands of the entire rest of the population, and removes any brakes on utilization like copays and deductibles?

Incremental socialism is already bringing the system to the point of collapse. Hawaii is proposing a response to the fact that 30 percent of physicians are already refusing to work under Medicare: forcing physicians to accept Medicare patients or lose their license. Will Sanders try to conscript physicians?

What will he do about the worsening shortages of essential drugs? One hospital reportedly told physicians there would be no morphine until the end of March. Will Sanders nationalize the pharmaceutical industry? Would that help, or make things worse?

Insurance is voluntary. Socialism is force. How much force will Sanders use to take what remains of your doctors’ liberty—and yours? He needs to tell us that, as well what he intends to use to pay for it.

[Originally published at AAPS]

Categories: On the Blog

Government Drags Us Back in Time – Because Cronies and Ideology Tell It To

February 04, 2016, 8:50 AM

Government by ideological fantasy – at the expense of actual facts – is a terrible idea. So too is government of, by and for the donors. Far too often government regulators and bureaucrats ignore Reality – to tilt at ideological windmills. And WAY too often government becomes one giant stenographer for contributors – writing laws and regulations to accommodate their check-cutters’ every whim and wildest dream.

Thus does equal protection before the law – become special treatment for Friends of Government (FOG, if you will). Donors and dumb ideas are favored – at inordinate expense to the rest of us.

To wit: “green” “energy” (wind, solar, hydro, geothermal, ethanol) is neither green nor energy. It’s far worse for the environment than traditional energy sources – that actually produce, you know, affordable energy. Governments here and all around the world have spent hundreds of billions of dollars on this phony energy. It’s been a titanic failure – for decades.

Why has government continued to throw this copious coin out the window – to keep us locked into an uber-failed yesterday? Because their ideological fantasies trump Reality. Why else? Because donors get government money at dollars-on-the-pennies they donated. To wit: President Barack Obama and his Democrats threw $80 billion more at the fake “green energy” industry in the 2009 “Stimulus.” 80% of that money – went to Obama donors.

The more government gets involved – the less the private sector can advance. The more rapidly a sector is advancing – the bigger an impediment government is. Likely no sector is advancing more quickly than the Tech sector. Enter government.

The Obama Administration’s Federal Communications Commission (FCC) has already done egregious damage there. To appease their ridiculous fantasies – and huge donors. About a year ago the Commission’s three unelected Democrat bureaucrats decided to go all the way back in time to1934 landline telephone law – and unilaterally impose it on the Internet. Behold Internet Reclassification – so as to impose the ridiculous Network Neutrality.

The Obama Administration did it – because donors asked for it. Donors like Google. No one did more to get President Obama elected and reelected – than Google. Just about no company swapped staff with the Obama Administration at such prodigious numbers –than did Google.

And after Google greased the skids for Obama – Obama greased the skids for Google. Google spent nearly the entirety of the 2000s trying and failing to get Net Neutrality passed in Congress. Because it is government forcing Internet Service Providers (ISPs) to give uber-bandwidth-hogs like Google – unlimited free bandwidth. We the People didn’t want it – Congress couldn’t pass it. So Obama just issued a fiat – and gave it to them.

But the problem with buying support – is that the “supporters” rarely stay bought. Google is now channeling West Wing President Josiah Bartlet – “What’s next?” And most unfortunately, President Obama’s government stenographers have many, many responses to that request.

Here’s one: FCC Chairman Tom Wheeler has penned a defense of the next backwards-looking power grab – huge new backdoor mandates via television set-top-boxes. Which they have attempted to obfuscate – as a deregulation of set-top-boxes.

Set-top-boxes are the devices we lease from cable companies – to watch their television packages. Which we are doing to a lesser and lesser degree – as the marketplace has already created myriad ways for us to “cut the cord.” Meaning give up cable television – and the set-top-boxes – altogether.

The future (and increasingly the present) of television – isn’t boxes. It’s apps (and alternate hardware like Apple TV and Amazon Firestick). Netflix, Amazon Prime, Roku, Hulu and a host of other companies deliver you (via their apps) unlimited streaming TV and movie content – using only an Internet connection. No cable TV subscription required. And unlike programmed TV, you can watch whenever you want, wherever you want. So more and more people are cutting their cords.

Meanwhile, the government is yet again stuck in the past. The FCC is dubiously invoking a twenty-year-old law (and seriously, how unbelievably different was how we watched TV twenty-years ago?) – to “open” to competitors the collapsing set-top-box market. This is a terrible idea for a number of reasons.

It is just stupid from an evolutionary standpoint. This is like the government issuing mandates to “open” the horse-buggy industry – as Model T Fords are rolling with ever increasing frequency into our driveways and hearts. If you’re “helping” prop up yesterday’s technology – you aren’t helping.

This mandate forces cable companies to spend a LOT of money totally reconfiguring their networks – to accommodate the new boxes. A new configuration for each new box, most likely – because each box will most likely connect uniquely to each network. And cable companies have a LOT of proprietary information and content to protect – so they will have to spend EVEN MORE time and money reconfiguring so as to ensure its protection. For which we will inexorably pay in higher fees – on TV, and the other services cable companies provide (like Internet). All to make room for more devices – of which people want less.

And you will be trading the box lease – for the box purchase. Which requires more coin upfront. And unlike with the lease, when the next upgraded model comes out – you won’t get it for free. You will pay all over again. And given the rapid technological advancement – how often will that purchase have to happen again, and again, and…?

Think how quick is the smart phone tech turnover (which is a MUCH more intensive product). Where you just purchased the “latest” Google Android – only to almost immediately watch Google roll out the next Android. Does Google give you that next version for free? Of course not. Google won’t give you their latest set-top-box either.

Wait – Google wants to get into the going-out-of-business set-top-box business? You bet they do. So the Obama Administration is prepping to issue yet another fiat – to make Google’s wishes come true. Again.

Crony-infested and ideologically-blinded is no way to go through life, Son. It is also absolutely no way to run a government.

[Originally published at Red State]

Categories: On the Blog

Heartland Daily Podcast – Marian Tupy: Human Quality of Life Over the Centuries

February 03, 2016, 3:58 PM

In this episode of The Heartland Daily Podcast, managing editor Jesse Hathaway talks with Marian Tupy, the editor of HumanProgress.org and a senior policy analyst with the Cato Institute’s Center for Global Liberty and Prosperity. HumanProgress, a Cato Institute project, allows people to create, compare, and share statistical indices of how human quality of life has changed over the centuries. 

Despite what some people may say, life on Planet Earth has gotten easier and more enjoyable as history has progressed, and modern technology has changed billions of people’s lives for the better. Tupy says the average person alive today has opportunities available to him or her that emperors and kings would have never even dreamed of enjoying, much less taken for granted. HumanProgress is a tool helping to correcting misconceptions regarding the state of humanity, through the presentation of empirical data collected from third parties, including the World Bank, the OECD, the Eurostat, and the United Nations, focusing on long-term developments. 

The progress of technology and the innovations spurred by free-market competition and capitalism, Tupy says, have created an almost asymptotic increase in human quality of life in every imaginable way, from the eradication of crippling diseases to increased economic wealth, all over the world.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

It’s Too Early to Prove Absolute Safety, But Smokers Shouldn’t Wait to Vape

February 02, 2016, 4:30 PM

Tobacco opponents say that we’ve had too little experience with e-cigarettes to know whether they are safe.  While it is true that we don’t yet know the health consequences of long-term use, that should not discourage smokers from switching.

We know that smoke contains high levels of thousands of agents, many of which are toxic or carcinogenic.  In contrast, e-cigarette vapor contains water, propylene glycol and/or vegetable glycerin, nicotine, flavors and perhaps a few contaminants at minuscule levels.  None of these – with the exception of buttery flavors (here) – are linked to any specific disease.  This difference alone justifies encouraging smokers to switch to e-cigarettes.

In the case of cigarettes, the effects of long-term use were not apparent for 20 years.

As I discuss in my book, For Smokers Only, smoking prevalence increased substantially around World War I (1914-1918).  The first clinical report of an increase in lung cancer and the suggestion of a link to smoking was published in 1939 by Alton Oschner and Michael Debakey in the journal Surgery, Gynecology & Obstetrics (68: 435-451, 1939). “Until recently,” they wrote, “[cancer] of the lung has been considered a relatively infrequent condition.  However, recent studies demonstrate that [lung cancer] is one of the most frequent [cancers] of the body.”  But they acknowledged, “…it is controversial whether the increase in [lung cancer] is apparent or real.”  Oschner and DeBakey described 79 previous cases and presented seven cases that they had seen.

German pathologist Dietrich Eberhard Schairer and colleague Erich Schöniger published perhaps the first epidemiologic case-control study of smoking and lung cancer in their native language in 1943. Now considered a groundbreaking study, it was republished in English by the International Journal of Epidemiology in 2001 (reference here).  They confirmed “the [earlier] report of Müller [1940] that non-smokers rarely get lung cancer whereas heavy smokers get it more frequently than average.”

The smoking-lung cancer link did not appear in mainstream medical literature until 1950, when studies by Ernst Wynder and Evarts Graham (Journal of the American Medical Association,here), and by Richard Doll and Austin Hill in the (British Medical Journal, here) were published.

While the strong link between smoking and lung cancer was not discovered for decades, today’s advanced surveillance techniques may detect a vapor-linked problem sooner.  It should be noted, however, that evaluating the effects of vaping will likely be complicated by the fact that most vapers already have smoking histories.

Smokers shouldn’t wait to vape.

[Originally published at Tobacco Truth]

Categories: On the Blog