by Tyler Cowen
on January 15, 2014 at 12:26 pm
1. One look at the court’s new net neutrality ruling, and another take here. I’d like to see less talk about what this “could” mean and more talk about what it likely will mean.
2. Malaysian fast food restaurants face foreign worker ban.
3. Is the future of on-line education in Africa?
4. Top books of 2013 at the New York Public Library.
5. Is ACA death spiral risk over? And new health care policy think tank.
6. What is the Chinese word for “taper”?
Has anyone actually tried to teach online in Africa? I know people who have, and the infrastructure is not nearly ready. Example: Class is cancelled because of heavy rain. Guess what. It’s the rainy season. Semester cancelled?
#1 Here’s a stab at what’s “likely” to happen. Next time you’re interested in high profile legal rulings, I highly recommend skipping Slate (which often makes readers dumber) and checking in with Volokh.com
“5. Is ACA death spiral risk over?”
“The risk of a “death spiral” is over. The Kaiser Family Foundation estimates that if the market’s age distribution freezes at its current level — an extremely unlikely scenario — “overall costs in individual market plans would be about 2.4% higher than premium revenues.” So, in theory, premiums costs might rise by a few percentage points. That’s a problem, but it’s nothing even in the neighborhood of a death spiral.”
Only in Policy Wonk land is a 2.4% loss considered a good sign. At least the “in theory, premiums costs might rise by a few percentage points.” part is a tacit admission that premiums are going up substantially.
I’m guessing that the “overall costs” is actually just the estimated medical payout. Which means that the insurance companies would still be losing billions even if they raised premiums to cover the actual medical payouts. After all, they still have to pay for taxes, marketing, billing, regulatory costs, payroll, etc. And of course, if the newly insured use more health care than projected (and I’m guessing those projections were low balled, just like every other Obamacare projection seems to have been), then the premiums will have to rise to cover the higher than expected actual medical payouts.
I fail to see how even a charitable interpretation of these numbers indicates a solvent system. It’s pretty clear looking at the numbers that assuming the -2.4% is compared to actual medical reimbursement and that insurers will cover their legally mandated 15% overhead, that we are looking at premiums going up by roughly 100/82.6 = 21%.
There are some assumptions embedded in that and clearly the administration will use all of its political power to minimize the increases, but I still expect to see a roughly 20% increase in Obamacare policies next year.
The earth could spin off its axis due to this law and the nuts will defend it to the last man. At a certain level, you can’t blame them. This expands the managerial class with more busy work and undermines the middle class and small business. No matter the results, the ruling class is going to stick with it. It serves their interests and nothing else really matters.
Can confirm the point on the ‘total costs’ not being an apples to apples comparison.
Wonkblog is getting its numbers from the linked Kaiser study, which is getting its numbers from the there-linked study of health care costs by the Society of Actuaries, which defines its data as follows: “Both the commercial data and the Medicare data are allowed charges” – that is, the amount that gets paid to providers of medical services (including whatever the patient is paying as a deductible or copay). The part paid by insurance isn’t the full cost to the insurance companies of supporting these plans, that’s the numerator of the medical loss ratio. Call it charitably something around 80-85% of the full cost to the insurer (it could be worse – those are ACA mandates rather than historical numbers).
So there are (at least) two offsetting errors at work here: the difference between ‘allowed charges’ and what the insurer is itself paying out, and the difference between their piece of ‘allowed charges’ and full cost to the insurer, including payroll, marketing, taxes, profit, and so forth.
Depending on where the deductibles, copays, and such come in as a fraction of allowed costs, this may even mean that the system is solvent for the insurers… but the numbers, standing alone, definitely don’t indicate that. And for that to work, deductibles would have to be covering 15-20%+ of all allowed charges.
This seems high, but I don’t have good data either way on that ratio.
#1 – Not sure how all the commentary leaps from “paying for faster access” to “blocking content” That maybe too much of a slippery slope. If one ISP starts to block part so the internet, customers will be upset, and pretty soon another ISP will advertise that they do NOT block parts of the internet because they see demand there.
Wireless technology is advancing at a fast enough pace that soon there will be real competition in the broadband market in my opinion.
If I had to choose, I’d side with the ISP’s on this one. Easier to escape bad policies of the big bad ISPs, than the bad policies of the big bad government.
Not sure how all the commentary leaps from “paying for faster access” to “blocking content”
Because the internet providers and the traditional entertainment companies are the same, and already attempted blocking and/or throttling. ISPs have targeted streaming specifically because it was cutting into their revenue of TV.
The market solution doesn’t work when there is a monopoly, in particular, when there is a government sponsored and enforced monopoly. I have only two options for high speed internet and that is one more than most. Some local governments have deals with providers limiting the option to one, or in some cases, none. Some of the deals were struck when high speed was slightly better than dial up.
As far as wireless, I live in one of the best areas for Clear, and used it for almost three years. I switched back to FIOS because we couldn’t keep connected to the university’s servers that were hosting the programs my wife and I needed. (COMSOL was the most frequent problem since it needed constant connection or it stopped calculating and dumped the info). The speed difference was non trivial.
There are no advances in wireless that I’m aware of (and I pay attention to that sort of thing) that even remotely resemble a real world option to wired.
Given that the big bad governement policy was that ISPs couldn’t block part of the internet and the ISP’s bad policy is to prevent progress, I’m siding with the FCC.
By definition, if you have two choices, it is not a monopoly. If it is government enforcing the monoploy, well, shouldn’t we address that? In reality, it is the massive capital costs that prevent, say, multiple cable systems in any communuity (Google the company “Wide Open West” to see a company that chooses to build cable systems in the service areas of existing cable systems, they’re not exactly setting the world on fire).
I don’t think that Clear wireless is a good solution for a streamer, but for someone with basic broadband needs, they’re fine.
The fact is that capital costs of upgraded (much less new) broadband are huge. Look at what AT&T is spending to upgrade their wireless and Uverse services. Somebody needs to pay that. AT&T already has bandwidth caps to make money on the demand side, and they just announced that they’ll work with content providers on the supply side. Seems like a decent business model.
I’m not convinced by your argument. Not to say that the major ISP are innocent here either, but, allowing ISPs to work it out is far more preferable than some government agency. Let’s say the FCC is allowed to implement net-neutrality, then the ISPs have to treat ALL traffic with equal priority. The problem is that existing infrastructure has not kept up with the required data flow, there simply isn’t enough bandwidth to serve everyone, so that means as more people get on, service degrades equally for everyone… by law. (no room for innovation here)
In reality, not everyone needs full bandwidth everywhere, different populations have different internet usage patterns. ISPs can offer pricing structures that give people what they want at different price points, or get it content providers. Some customers only want basic internet access and Netflix and Hulu only, they can get a special internet package that only provides them what they want for for a cheaper rate because the ISP got netflix and hulu to pick up part of the tab for that customer. It’s win win.
In the end, populations of people will be organized into optimized networks allowing better network efficiency for everyone. People on the netflix/hulu network, will have faster speeds to those networks, and be throttled on regular internet(and they don’t mind) allowing the regular internet users (who don’t care about netflix/hulu) more bandwidth there and everyone will be happier.
I think you misunderstand what net neutrality means. It doesn’t prevent different price packages to consumers, it prevents the ISP from limiting specific sites. For instance, if Comcast wants to prevent people from watching hulu because it is a competitor, now they can since net neutrality got bumped.
Works the otherway too as the articles mentioned, the bruhaha is all about ISPs wanting to grant some content providers a higher tier like no-bandwith cap, higher priority. It wasn’t about limiting specific sites it was about giving specific sites better access.
Eh no, net neutrality could be about blocking sites but it is really about managing traffic by assigning different priorities to different streams of (mainly video and telephony) content; a bit lime traffic lights with priority lanes. The Internet already works this way on the core / international networks through CDNs and cache servers that are not managed by ISPs as they are defined by regulators (i.e. may be the same company but a part of it that the regulator doesn’t see as a bottleneck – correctly so)
“The problem is that existing infrastructure has not kept up with the required data flow, there simply isn’t enough bandwidth to serve everyone, so that means as more people get on, service degrades equally for everyone… by law.”
Let me ask you this. Assuming you have broadband, have you noticed any degradation in your connection in the past, say, decade? Is your connection slower? Are you unable to access sites due to inadequate bandwidth?
I certainly haven’t experienced anything of the sort.
decade? netflix and hulu did not exist a decade ago, Hulu started in 2007. Netflix did not start streaming till 2007. Highspeed broadband was in its infancy and the speeds haven’t gotten much faster since then. Cable broadband still crawls in NYC during peak hours, its really bad in some neighborhoods.
So, if you are not using alot of bandwidth on a regular basis, wouldn’t you like to pay less for more limited service which wouldnt impact noticeably you anyway?
or perhaps, your regular internet usage is low, but you love to stream movies and TV from a handful of content providers, instead of having to pay full freight for “equal access high speed service” you could still pay your low rate, AND get your highspeed streaming with no datacaps. Net Neutrality would preclude such an innovative product.
Count me as one who doesn’t want any more “innovative products” from telecoms and ISPs. This is what I want from telecoms and ISPs: Access to the internet so that I can enjoy all the innovative products that non-ISPs are offering.
Also, how confident are you that these “innovative products” won’t come with strings attached?
@AndrewL: this differentiation is not for the final consumer. It is the old trick of selling two times the very same product to different consumers. As a home consumer, If you want higher bandwidth you can already buy a faster and more reliable connection. But, what if the ISP also charges Netflix for the service you already pay? If Netflix refuses to pay, they are sent to the slow lane.
Comcast already declared they are not interested in separating Bit Torrent transfers even if they consume bandwidth. Why? I suspect because it is difficult to send a new invoice to millions of users. It is easier to send a single invoice to Netflix.
Skype already does this kind of separation. Even if you do 0.05 cents per minute calls the quality is awesome compared to free calls. No problems, Skype runs on their servers. Problems arise when the ISP decides without transparency which services are granted greater bandwidth.
You’re making my point for me.
Demand has increased by orders of magnitude what with many more users and the advent of streaming content – Flash in general, Netflix, Pandora, etc.
And yet, I don’t see any changes in performance. I don’t think the networks are anywhere near as strained as these ISPs would have you believe. The fact of the matter is that the NY market has always been shitty because Time Warner sucks as a general operating principle. If they are suddenly able to charge everyone double for service, they’re still not going to invest in better infrastructure.
It dosn’t make sense for TWC to sit on unused infrastructure, if TWC has the capacity, it will use it. It costs money for TWC to own and maintain it, so having sit unused is a waste of money. Networks are constrained, especially for that “last mile” leg from the trunk to the customer.
The current ISP pricing scheme was developed long before the advent of online video streaming. we don’t know exactly how ISP set their pricing, but they probably assumed a certain usage pattern at which they can offer a certain performance that would work for 95% of their customers. As usage patterns change, their freedom to alter their pricing schemes don’t have that much flexibility to change with it. Enter this new service innovation. By offering more price and service flexibility between customers and CDN’s, ISP’s can more optimally route traffic. It could be as simple as some network switch upgrades and co-located servers. The optimization of CDN’s traffic would benefit everyone in the end by increasing network efficiency.
The problem with that is that you usually only have one or two ISPs in any particular market offering high-speed broadband services, and the fixed costs and regulatory barriers involved in building new ones are so high that it’s just not done (aside from community broadband, which the ISPs usually try to kill with political sabotage). If they both go down the road of deliberately speeding up/slowing down sponsored content, you don’t have alternatives.
Wireless providers might one day be that alternative, but they aren’t now and won’t be for years. Data plans with reasonably generous data allowances (i.e. more than 5 GB a month) are still by and far the exception rather than the rule, and they’re very expensive compared to broadband. They’re also experimenting with the same type of sponsored content set-up, what with AT & T’s plan to allow companies to pay up and not have their customers’ data usage count against said customers’ data plans.
#5 Ezra Klein’s formulation of premiums maybe having to rise a few percentage points isn’t very clear and depends a great deal on what “costs” represent. If these plans are run at roughly 80% loss ratios, premiums may need to rise as much as 30% to get there. It’s very hard to stay in business with a loss ratio over 100%. If that includes all the administrative and other overhead costs too, then I guess that’s not as far off.
The age mix argument is also assuming that the younger people who have signed up are broadly representative of all younger people, not those with pre-existing conditions or babies due in March.
“The age mix argument is also assuming that the younger people who have signed up are broadly representative of all younger people, not those with pre-existing conditions or babies due in March. ”
The existing sign ups are almost certainly those with the highest incentive, i.e. the customers with the highest expected costs. However, the assumption that if you hit the 38% enrollment percentage in the next 3 months, the overall average will be about right seems pretty logical. However, the assumption that we’ll see a dramatic increase in enrollments over the next 3 months is tenuous.
“Carl’s Jr Malaysia’s restaurant manager Nor Asini binti Mamat says their recruitment woes lie in the local work ethic. Many Malaysians quit after a few days of work, she says…… they say they are tired or not interested and just resign,”…. her niece and nephew did the same. “Nowadays they want to work easier, earn more money and work in a cosy place,” In contrast, immigrants are willing to work 12-hour shifts and are fast learners.”
You could just as easily be talking about the U.S.
“Nowadays they want to work easier, earn more money and work in a cosy place,”
How horrible of them. Has there ever been any employee in history who has wanted to work longer, for less money, in worse conditions? Even the immigrants she’s talking about (presumably) find her fast food chain to be a better job than their next-best option.
Railroad regulation used to rely heavily on the idea that all shippers had to be treated equivalently. Prior to the late 1970s, shippers and carriers couldn’t enter into contracts because this might foster price or quality discrimination. All that is now ancient history and the shift against “rail neutrality” has been a good thing. Railroads are much stronger financially (nearly a quarter of the track was in bankruptcy in the 1970s), and time-sensitive shippers are generally pleased with the ability to get premium service — for a premium price. The common carrier standard of reasonable service upon reasonable request still prevails, but shippers wanting something special have to negotiate with their carriers until they find a win-win outcome. And shippers remain able to complain to federal regulators when carriers engage in unreasonable practices (blocking or slowing down access to competitors would probably qualify on that count).
Not sure what Internet 3.0 will bring, but I’m cautiously optimistic.
Thanks for the history lesson!
Yep, this sounds like the right template.
The “net neutrality” that I can accept is this: if my ISP takes my money promising me X gigabytes per month at Y megabytes per second, then they ought to deliver at least that much service regardless of which sites I download from. If they want to offer me more if I use favoured web sites, then that is their own business.
4. My priors on the readers of those books tell me that women are more likely to check-out books from the library (or at least this one). Not a surprising finding, but informative.
I suspect that the readers of those books are overwhelmingly female. I wonder if it is because women choose what books to read the same way they decide when to go to the restroom. Maybe it’s because older people read more books than younger people and there are more old women.
I just find it odd. I don’t see more women than men at my local library.
“I just find it odd. I don’t see more women than men at my local library.”
Do you go during office hours on a weekday?
4. I’ve read none of these. I feel no sense of regret.
I have some vague impression we should all be reading 50 shades of grey. It seems like this weeks equiavalent of “The Girl with the Dragon Tatoo” — and that was a cracking good novel, in spite of its ploddingness.
1. I think what will happens is that internet providers will start to charge different rates for different usage tiers. Much like wireless providers have different data plan tiers. Much like AT&T’s flat rate unlimited plans are a thing of the past, cable internet flat fee unlimited plans will also disappear.
They already did/do consistent with the FCC rule. Verizon claimed it would not change anything after winning its case.
But a factor driving the FCC ruling were cases of ISPs blocking certain kinds of Internet traffic or sites.
If Comcast is losing cable customers to OTA plus streaming video from the networks and other providers, this ruling means they will not violate an FCC rule by blocking streaming from Netflix, Amazon, Hulu, youtube. Unless you pay a $25/mo streaming video service fee to replace the profit you generated buying cable plus the HBO package. On top of the $10-20 increase in Internet service because you dropped the base cable service for which that was an add-on.
JC Penney is laying off 2000 workers and closing 33 stores. This is following Macy’s decision to close five stores and terminate 2500 workers. The LFPR and war on normal IQ Americans continues. Anyone who thinks we left the recession behind has not visited Main Street in a while. At least we have tablets and smart phones to occupy us.
“1. One look at the court’s new net neutrality ruling, and another take here. I’d like to see less talk about what this “could” mean and more talk about what it likely will mean. ”
Well, according to Robert McDowell, former FCC commissioner originally opposed to the FCC rule overturned, what the ruling should mean is more lawsuits by individuals, groups, corporations against ISPs, government agency lawsuits and investigations of the ISP by the FTC, consumer protection, DOJ, etc, and opposition to mergers and spectrum awards as a means of forcing concessions to ISPs.
He sees that as the free market solution which gets government out of the way of innovation and investment.
“We used to write programs on paper,” says Ahmed Maawy of Mombasa, Kenya. “Say, write a program that calculates the area of a square. And you write that whole piece of code on paper. That’s the test. It’s so crazy!”
Uhhh….sounds like many introductory programming classes even in developed countries. Usually writing code or pseudo code in pencil is common on many programming exams.
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