Set-top Competition is the Medicine Cable Needs

The FCC has been trying, after last decades attempts fell flat, to open the set-top box market to competition. Cable companies make a lot of money off of forcing subscribers to rent boxes, which are often underperforming and ill-equipped to serve the modern video consumption habit.

Cable is in a bad position as streaming continues to expand, with advertising and subscriber revenues expected to continue falling. The one thing that could help the market transition smoothly, the advent of the all-comer hardware device, is being actively resisted by the industry that needs it the most.

The proposal was already corrupted in a switch from an API-based model where access comes to the companies to an App-based model where the companies go to the devices. Now it is stalled completely.

The cable company is protecting its box rental revenue and its subscriber revenue at a time when it has enough of both to take a hit and resettle its place in the content delivery field. Instead, as entrenched industries are wont to do, it is fighting against the inevitable. It will see its revenues dwindle anyway, and its corpses (or at least the cable-related appendages; the ISP parts may survive) will then be swallowed by the new generation of media companies.

It is the same sort of short-sighted behavior that threatens our planet when major energy conglomerates don’t buy into the next generation of renewable energy. We may not see the pattern repeated with the auto industry, but that will likely depend on how fast they can merge as fleets of autotaxis become the norm.

What is clear is that the Republican seats on the FCC are actively blocking competition, which is antithetical to the Republican charge that free markets rule. The anti-regulation strain of so-called conservativism is stronger than the free market strain, when the two principles find themselves in opposition.

The lack of easy, integrated media devices will continue to drive consumers away from cable, as most streaming services are available through a single device. Media consumption is largely a social behavior, with people watching content those around them also watch. A generation is growing up without caring about traditional content delivery, and cable is basically ignoring that and fighting against a shift that’s already happening.

The best choice for cable would be to embrace the FCC’s original plan, lobby for the door to be two-way (allowing them to support streaming content on their own hardware offerings), and fight to make the best interface they can at the best price they can. They could even try to strike some subscription deals with streaming services, offering their subscribers the ability to add streaming packages in exchange for a finder’s fee.

Unfortunately, the bigwigs in the cable companies think that this is a very different year, where they can afford to weather the storm. They are betting that the unfathomable will come to pass and their ship will magically right itself. They are foolish for thinking this.

Mobiles versus Wallets

(Calling it a phone anymore is sort of silly. Mobile makes more sense, as a shorthand for mobile device or mobile computer. Better words may come forth, but phone is dead.)

Apple, Inc. is working to bring mobile payments or digital wallets to market. These novel technologies allow you to provide payment information with a mobile computer, rather than through something like a credit card. The market position is that with vendors upgrading their point-of-sale systems to handle more modern chip-and-PIN credit card systems (a response to mass attacks on credit systems of major vendors), they might as well also add digital wallets to the mix.

So far, so good. And maybe this will spell the death of the traditional wallet as mobile payments become the norm. But that is no reason to start thinking of your mobile as your wallet. Wallets are bad enough.

The wallet problem is this: you store important, valuable, or otherwise sensitive documents in your wallet (like currency, or identification). If your wallet is lost or destroyed, you are stuck with rebuilding your lost hoard of necessary items it comprised.

But one of the biggest advantages to digital storage is the ability to have redundant copies of data. If you lose your mobile, it should be a minor inconvenience. You might be sans ID, payment information, etc. for the time it takes to replace the mobile, but you should no longer need to go through the lengthy process of replacing credit cards (i.e., replacing payment data), replacing identification cards (i.e., getting a new driver’s license issued), etc.

Your mobile should be more like a pair of shoes than your wallet. If your shoes are lost or destroyed, it would be an inconvenience. But it wouldn’t be a major life disruption. If the move to digital payment does not come with some simple and fast way to transfer authority to a new device and revoke authority from an old device, and if the digital wallet becomes too much like a real wallet, it will be a disappointing missed opportunity.

That doesn’t mean that everything needs to be cloud-based, or at least not cloud-readable. It mainly means that mobile payments should still require authentication. So, at least a PIN or a biometric check. It might also prove useful to have small amounts available without authentication, with the risk of loss like cash in your wallet if you fail to report a theft before it can be spent.

So how is the mobile payment like a wallet? If pre-authenticated money is in it, it’s got a form of cash. But everything else should be locked down behind authentication. It should not be a major pain to lose it, beyond the cost or aggravation of replacing the device itself.

Even the cash-like money could be triggered only by context. For example, walking into a coffee shop could trigger the availability of what you normally spend, and excess could be revoked if you leave without spending it. Or if you use a transportation app, it could trigger the availability of the payment funds. That could either happen when you hail a cab or enter the subway, or at the time you actually get in the taxi.

And here’s the kicker: if people start buying things with mobiles, why shouldn’t they log in with them? That is, why should they keep creating new logins and passwords for each service, when they don’t have to do that to actually spend money? So at the very least, maybe something good will come from mobile payments beyond just making moving money easier.

Trends and Equilibrium

There are a number of interesting trends going on right now. Some of them have been noticeable for years, others are just growing enough that they will (probably) become statistically likely at some point in the future.

There are a number of common trends which the world is tracking:

  1. Economic trends, including government spending, average wages, employment data, debt
  2. Educational trends, including literacy rates, college graduation rates, high school graduation rates
  3. Ecological/Climatological trends, including species population data, carbon output, ocean acidity, ice concentration, rainfall averages, temperatures
  4. Health trends, including death, birth, fertility, infant mortality, obesity, and cancer rates

There are some other trends, like planetary discovery and the search for the Higgs boson. The former may be a proxy for estimating the discovery of extraterrestrial life and then of discovery of intelligent aliens. The latter signals an approaching greater understanding of the universe, which will bring further advancements over time.

These last trends are of a different sort than the former, because they involve an accumulation of data which doesn’t represent an equilibrium-based system. The educational trends also fit in this category of accumulations. The literacy rate can’t be too high.

But they still represent equilibrium events. At first, the literacy rate was very low, and over time the amount of resources spent teaching people to read has increased. But at some point, it reached a peak. It costs less to teach more people to read today than it used to.

The amount of effort to find the Higgs boson is at (or near on either side of) its peak. As soon as it’s found, there will be efforts to understand the data, possibly to repeat the experiments, but nobody will be searching for its existence.

But the economic, ecological/climatological, and negative health trends represent equilibrium-based systems. The current economic trends can only exist for so long before the whole economic system breaks down (eg, 2008 financial crisis), after which the system finds a new equilibrium.

The same is true for the climate. You can boil a pot of tap water at 100 degrees Celsius, or if you add salt, you can raise that boiling point a bit. The same volume of water can now hold in more heat.

Your own body can only be deprived of sleep for so long before it will force you to sleep in most circumstances. Another equilibrium system.

Breath, blood pressure, hydration, heat regulation, and other bodily functions are all equilibrium-based.

Equilibrium is one of those neat concepts that, once you start looking at it, you see it everywhere.

The Art of the Comeback

This is not a review of the Donald Trump book The Art of the Comeback.  Rather, it is a look at the ways to foster economic growth and prosperity.

There are three broad areas this post focuses on:

  1. Lowering/Removing Barriers to Entry
  2. Creating/Rearranging Markets
  3. Sitting Back and Watching [1] and [2] Kick Ass*

* This is actually part of the path, as you will see, and not merely a filler item to make this post longer.

Barriers to Entry

Let’s suppose you are pretty good at painting, maybe good enough to get some major commercial work, but you live in a city where all of the artists must attend a special art school prior to being licensed.  And the school costs ten times what you might make in a year.  And it’s booked solid for five years.

So much for plan B, because plan B was Blocked by a Barrier to entry.

Barriers to entry are impediments to participation.  They are obstacles to ingress.  Ahem.  They represent lost economic activity, when people that otherwise would have taken the risk find it either unnaturally high or are otherwise prevented (eg, the cost and intricacy-of-work needed for the average person to launch a satellite effectively bars their entry into the space-courier market).

Removing barriers often means simply lowering the built-in costs of hiring.  Those include things like taxes and healthcare.  The problem there comes in the form of imbalance and uncertainty.  If the system doesn’t know how much revenue it has, or if a large portion of the population are not participating in healthcare, you get other irregularities.  It is much like wanting your lawn to be free of snow, and shoveling it onto your roof.  Then the roof collapses, but at least your lawn looks nice.

Those barriers are much more effectively cleared not by simply shrugging them off, but treating them as universal.  That’s no different than is already done with things like drinking water.  Nobody supposes that a large number of businesses will opt-out of hydration.  Even on separated plumbing systems, some of the costs are shared, such as the R&D for the equipment used and the development of hygienic standards.

The alternative actually just shifts the barrier and harms certain business models (eg, endeavors that cannot support paying for workers’ healthcare directly could not be created).

Other barriers are created by poor choices by government, such as contracting for equipment that cannot be reused and which do not offer residual benefits to the citizens.  That is, if our government spends a billion dollars on accounting systems, but businesses and individuals still pay full price for that same software, that’s a barrier that could be reduced significantly.

Google, for example, was able to exist and grow in large part thanks to the existence of free software which they could modify and build on to suit their needs at only the cost of programming (ie, no license fees).  If the government were to procure with an eye on the citizen’s right to use the non-physical public resources, it could lower a lot of technological barriers while also improving the quality of the technology the government uses (via contributions back to the software).

But the single biggest barrier to entry is education.  Historically, lack of education was literally used to bar the masses from participation in religion, but it’s also been used to bar people from voting (poll tests), and it is a prerequisite for effective participation in business and commerce.

Information is the lifeblood of the economy, and all major businesses started with the revelation of a need that could be met in a new way.

Shifting Markets

There used to be horse and buggy.  Then there were streetcars and trains, then cars and planes, and now the Internet and web.  With each shift in technology, there are shifts in the market structures that compose the overall economic system.

Used to be, liquids like beer went to market in wooden kegs.  Then glass bottles.  Today we have aluminum bottles.

Point being that technology can and will drive market shifts and therefore consumption patterns.

Building for cars as the primary means of movement has the consequence that it’s less likely for people to have chance interactions as they travel (ahem, without those interactions proving expensive, if not fatal).  It also makes it less likely they will visit a given establishment.

Consider the term flyover states.  Coasters (folks that live on coasts in the USA) call the rest of the land the “flyover states” because they don’t visit them (except maybe to gamble, ski, or hock their wares).

With trains you get an entirely different category of interaction, as people filter on and off throughout the journey.  With trains you get more buildup along the route.  No one is building a hotel in the middle of the country to accommodate the people that pass over it, ten kilometers up and moving at 500 km/h.

Now, we don’t need people to build a sprawling mass.  Trains help there, too.  If we have a comprehensive system in place, population density will be roughly in inverse proportion to the distance from the train lines.

But, other important technological market shifts remain to be seen.  Real security and monetary abstraction are two big changes that will foster economic growth.  In short, they will make it simpler and safer to engage in transactions online, which has been shown to be a boon to revenue.

There is the famous case of the $300 million button (User Interface Engineering: The $300 Million Button), but that’s something in the control of the website.

Many larger impediments to commerce require industry collaboration with banks, the government, and citizens.

Another market shift is the inevitable (yet ever postponed) US Metrication, which would increase its competitiveness across borders and simplify many supply chains.

Copyright reform, allowing the public domain to flood with thousands of disused creative works from decades and decades ago, would serve both for content creation and for inspiring design and invention.  Literally untapped ideas of generations past.

But, again, education is the biggest market shifter.  The more people know, the better they function as instruments of the larger economic system.  Nobody buys lead paint anymore, because they know better, not merely because it is illegal.

It is essential that people be educated on the issues of the economy, because they will be able to avoid bubbles in favor of real investments.  They will choose economic activities that have compounded results, choosing to purchase better products and services that support long-term growth over short-term fulfillment.

Sit Back

Given low barriers to entry and a system that allows for resources to be readily shifted, the result is a self-maintaining system.  It lowers the costs for all, while maintaining incomes.  It precludes messy government intervention that gives corruption an inroad.  It precludes market bubbles that lead to sluggish corners of the economy that produce drag.

If you ride a bicycle with rust on the chain, low air pressure in the tires, and a wobbly seat, you wont’ go as far as a well-maintained bike would let you.  If the roads constantly jostle you, if they have puddles and speeding cars and blind spots and traffic, you’ll find the journey more difficult.

A smooth road, solid bike, you let the momentum carry you.  You just sit back and cruise for miles at a time.  You get to your destination with much less effort.

Hell, you even have the time to think about something or just enjoy the scenery.  And that gives even more opportunity for further improvement.

You arrive calm and rested, rather than jumpy, irritable.

And that’s the biggest change that’s needed, as we have a society that’s overcomplicated itself and forced itself into a masochistic pattern of herculean tears of effort followed by inadequate recuperation.  But changing that requires the elimination of barriers, it requires shifting the markets.  It’s the most important, but it can’t come without the other changes, just like you can’t grow the flowers until you’ve tilled and weeded the soil.

Ideas: Oil conflict, parking, manufacturing

The case for conflict

From the perspective of a country like Iraq or Iran (OPEC generally) there is actually a very good reason to desire ongoing conflict, be it regional or worldwide.  They make a lot of money from oil, and the largest stingle consumer of oil is the United States Department of Defense.  If you can increase the amount of oil needed by the DOD, you can effectively raise demand worldwide, and thereby make more money.

I’d be very surprised if this hasn’t been raised before, but I hadn’t personally encountered it.

Zoning for parking

One way to begin to reduce sprawl and increase exercise is to simply require new parking lots be built a sizable walk away from any structure and to disallow new structures to be built near the lots.  The tricky problem here is the accommodation of disabled persons that drive themselves, but that shouldn’t be too difficult if such a regulation allowed a few spots to be near the structure and fines for using them were increased.

I swear that it can’t be much of an exaggeration to claim that most suburban businesses and institutional buildings I can think of spend half of their land (plus or minus 10%) on parking.  It gets really bad when you’ve got two such buildings next to one another, with their parking lots separating them.  Simply relegating parking to a distance from anything would mean the actual buildings would be closer together, and it would allow for denser land use that would accommodate public transit in time.

Turn the Midwest into the Modular Construction Capital

One thing that’s ever-clear is that the US economy cannot forever depend on automobiles, and that we should begin to transition to other manufacturing.  The best way to do that is to plan for denser cities by growing a modular building industry.  Properly designed, building modules could be easily moved and reassembled.  If over a generation we replaced demolished buildings with module-based ones, we would soon find ourselves in a much more adaptable environment.  Density changes would be much less expensive, and efficiency improvements would be much easier to assimilate into existing structures.

There are already more cars than licensed drivers, we need to diversify the manufacturing centers in the Midwest, as well as the smattering of automobile factories spread throughout the rest of the nation.  Building small doesn’t get us the right balance of old economy and new, so we need to be building bigger things like trains and modules.