Deride it If You Must, But Capitalism Has Lifted 1 Billion Out of Extreme Poverty in 20 Years

Between 1990 and 2010, the number of people living in “extreme poverty” declined by 50 percent in developing countries, from 43 percent to 21 percent, lifting about a billion people out of extreme poverty.

And though the implications will be discomforting for some, free market capitalism is the reason for the progress.

Poverty rates started to collapse towards the end of the 20th century largely because developing-country growth accelerated, from an average annual rate of 4.3 percent in 1960-2000 to six percent in 2000-10.

That is important since 66 percent of poverty reduction within any country comes from growth.

To be sure, greater income equality can contribute about 33 percent. A one percent increase in incomes in the most unequal countries produces a mere 0.6 percent reduction in poverty; in the most equal countries, it yields a 4.3 percent cut in poverty.

Still, since so much of the recent rise has occurred in China, lifting the next billion out of extreme poverty likely will be tougher.

It is easy to attribute most ills of modern life to capitalism. But those attributions are wrong, on one important dimension. If you want to eliminate poverty, free markets work better than anything else we have been able to devise. It rarely works without externalities.

But trying to cure all the externalities will fail if the growth engine itself is constrained. Without growth, we cannot solve any of our key problems. That isn’t to say growth does not create some problems: it does.

Still, without growth, almost nothing else is possible.

Will "Homezones" Compete with or Complement Other ISP Services?

Cable companies are some of the ISPs that might in the future extend Internet access using “homespots” in addition to “hotspots.” The distinction is that ISPs might require, as one of the terms of service, that some portion of at-home bandwidth be reserved for “public” access by other users.

As Fon and Devicescape have done, this would potentially create a “new” network stitched together by amalgamating formerly-private at-home ISP connections.

Homespot Connect, for example, is an Android app that allows smart phone users to connect to Telenet Telenet (Belgium) “homespots.”

Google has for some time been collecting information about U.S. Wi-Fi locations, as part of its Google Maps app. In principle, that could help Google (or users) later if mechanisms to create homespots become more common.

It remains difficult to say with precision whether such “homespot” efforts represent “competition” to mobile or fixed ISP offers.

For some users, who use public Wi-Fi instead of at-home ISP service, there is some amount of competition. But most users tend to use Wi-Fi as a complement to their paid-for ISP services.

In that sense, homespots or public Wi-Fi hotspots offer more coverage, or the ability to offload traffic, and hence mostly are complementary to fixed or mobile ISP service. In principle, that is little different than a mobile operator deploying small cells to provide more capacity in dense urban areas.

But it would be fair to say that in the future, when many subscribers have connections operating at hundreds of megabits per second to a gigabit per second, there should be plenty of bandwidth to enable those at-home connections in “homezone” fashion as well, without affecting the subscriber’s experience.

Still, it will be a matter of business logic, more than anything else, that determines whether a specific homezone network is complementary or competitive to any other ISP operations.

Will Intelligence Gathering Will Slow Cloud Computing?

It sometimes takes an outsider to tell what is happening "inside" a firm or nation. And one Canadian points out one information technology downside to what users reasonably might conclude are threats to information privacy: namely the threat to U.S.-based cloud computing services, compared to services based elsewhere.

In other words, a resident of Canada, needed to source cloud services there, might now conclude that it cannot buy from Amazon or Google or Verizon or other cloud suppliers because of the increased risk of government data acquisition or even transparency about the level of risk. 

Separately, there also are indications the European Union might now be rethinking what U.S. cloud computing risk might mean elsewhere. 

So some would-be customers will have to add intelligence risk to their decisions about sourcing cloud services. Some might conclude that they simply cannot source cloud computing from U.S. suppliers.

And though some blame Verizon or Google for cooperating with U.S. intelligence probes, some might say the bigger culprits are laws that allow overly-broad data gathering, or government agencies that either overreach, illegally use information to punish political opponents. 

After all, a single citizen or business cannot easily refuse to comply with a "lawful" request for records. Nor can citizens prevent people inside agencies from misusing data for other purposes. 

Beyond that, the issue is whether agencies now have become in some way institutionally corrupted, and whether U.S. citizens have allowed that corruption to happen, directly or indirectly.

The issue of "liberty" and other countervailing trends (legitimate needs to provide protection from terrorism) now pose issues the nation has not resolved. And some would say another complicating factor is the growth of the administrative state. That makes effective citizen control much more difficult.

For perhaps the first time, the next generation of computing architecture (cloud and mobile) now is significantly affected by political concerns. And that potentially is going to slow the growth of cloud computing, unless the political problems are addressed. 

More Impoper "Leaking" of Personal Data

A bipartisan group of 24 senators want to know why the Environmental Protection Agency leaked the personal data of more than 80,000 farms and livestock facilities to environmental groups. 

But some might argue there is a partisan angle to at least some of the "leaks." When the government intentionally leaks something that helps its perceived agenda, that's okay. 

When the leaks are not seen as helping, then leaking is a crime. 

Poll Shows Apple Losing "Cool"

A new poll suggests there is some truth to the notion that Apple has lost some of its "cool" lately. Last year, 81 percent of those under 30 years old said they viewed Apple favorably.

This year, that number was down to 71 percent. 

According to a poll, 83 percent of adult respondents have a favorable view of Google. Some 72 percent have a favorable view of Apple and 60 percent have such a view of Facebook. 

The poll results are said to be similar to last year's results, with one possible exception. 

U.S., Internet Surveillance Denial: Because It is Secret, Nothing Can be Divulged

Director of National Intelligence James R. Clapper Jr. described PRISM--the intelligence gathering effort-- as “an internal government computer system used to facilitate the government’s statutorily authorized collection of foreign intelligence information from electronic communication service providers under court supervision.”

Perhaps that tells you something. LIke "trust me." Clapper says a warrant is issued every time  NSA or other intelligence agencies seek information under Section 702 of the Foreign Intelligence Surveillance Act. 

But the secret court orders also are one-time blanket approvals for data acquisition and  surveillance on selected foreign targets for periods of as long as a year.

The problem is that nobody outside can tell how much other information is garnered. Nobody claims all that other data is destroyed. Nobody can assure the public that all gathered data is narrowly targeted. 

The National Security Agency also has requested a criminal investigation into the leak of highly classified information about secret surveillance programs run by the National Security Agency. 

"I can't tell you anything, but you don't have to worry." And if you try to find out, you will be prosecuted. 

Vodafone, China Mobile Abandon Race for Myanmar Telecom Market License

Vodafone and China Mobile, acting together, were among a dozen companies or consortia that made the final list of contenders to bid for a telecom license in Myanmar.

But Vodafone and China Mobile Vodafone and China Mobile have abandoned the effort to obtain one of two new telecommunications licenses Myanmar is making available.

The winners are scheduled to be announced by June 27, 2013. Among the applicants are consortiums led by Singapore Telecommunications, India's Bharti Airtel, MTN Dubai, Jamaica's Digicel Group, and Japan's KDDI and Sumitomo Corp.

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Malaysia's Axiata Group, Norway's Telenor, Millicom International Cellular, Qatar Telecom and Vietnam's Viettel Group also made the shortlist.

The Myanmar government plans to award two new telecom licenses, each with initial terms of 15 years, to the two licenses already awarded.

Only 5.4 million of Myanmar's 60 million-strong population had a mobile subscription at the end of 2012, a mobile penetration of just nine percent.

But the two telecom giants seems to have concluded that the conditions under which the licensees would have to operate make the business case too marginal. Building new networks from scratch, fast, would seem to be an obstacle.

The Myanmar government wants to increase the percentage of the population owning a telephone to between 75 percent and 80 percent by 2015 to 2016. That’s a lot of potential revenue growth in a very short time.

Also, retail prices might have to be quite low.

Myanmar has one of the lowest per-capita gross domestic products in Asia, standing at $855 last year compared with $5,851 for Thailand, according to International Monetary Fund estimates.

Beyond that, some would cite a potentially-significant amount of political risk, given Myanmar’s historically tightly-controlled government, fear of dissent and potential nationalism issues were a foreign-owned company to become too successful.

Whether the Vodafone-China Mobile doubrs are simply a matter of financial return, based on market conditions, or something else, perhaps government requirements that made the business case worse, is not yet clear.

A statement from Vodafone confirmed that the two operators had decided “not to proceed with the process as the opportunity does not meet the strict internal investment criteria to which both Vodafone and China Mobile adhere.”

The bad news is that whatever convinced Vodafone and China Mobile that the business case was marginal, might also be issues for at least some of the other contenders.

After Domestic Spying Revelations, Do You Trust the Government?

Defenders of the “PRISM” spying program claim it has helped authorities avoid at least one terror attack in 2009 aimed at the New York subway system.

But British and American legal documents from 2010 and 2011 contradict that claim. And that gets to the heart of the matter with the numerous examples of government spying that have broken in recent days: trust.

The heart of the issue is not that some amount of intelligence gathering is necessary, or that companies ranging from Verizon to Google to banks and credit card processors have much choice but to comply with lawful orders to hand over data, at times.

The issue is that the apparently far-ranging scope of such intelligence gathering now is so broad, so unfocused, with no assurances that the data on lawful U.S. resident and citizen activities could not be misused.

That is why the Internal Revenue Service targeting targeting of persons and groups for political reasons is so damaging. It destroys confidence in the actual impartial operation of administrative parts of the government.

But that IRS scandal happens at a time when the National Security Agency has probed phone records from the Associated Press, likewise gathered records of reporter James Rosen on apparently false pretenses, and gathered millions of call records from Verizon Wireless, AT&T, Sprint and probably other firms as well, without warrants and in a broad way, necessarily obtaining and storing records on millions of innocent U.S. residents.

NSA also apparently has been collecting data from a number of Internet app providers, including Google, Microsoft, Yahoo, Facebook, PalTalk, AOL, Skype, YouTube and Apple.

So the real issue now is not whether there are some instances where intelligence has to happen. The real issue is that so broad and possibly illegal have been the intrusions that people now are right to mistrust the federal government to behave in a responsible way with programs most would say are sometimes needed to prevent terrorist acts.

The issue isn’t that Internet application providers, phone companies and others have to comply with information requests. The problem is that nobody anymore can be sure the data will be used in a careful or even lawful way.

And the problem now is growing doubt about whether the federal government can be trusted to act lawfully. That is a huge issue.

So Now We Can Guess What New NSA Data Warehouse is For!

If you were wondering why the National Security Administration is building a huge new data center in Utah, now you know. It likely will house millions and millions of records of phone calls, credit card transactions, web searches and emails.

The NSA is building a million square-foot data mining complex in Bluffdale, Utah.

But given the fact the NSA already reportedly intercepts 1.7 billion American electronic records and communications a day, it makes sense that they would need to expand operations beyond its headquarters at Fort Meade, Maryland.

SoftBank Talks to Deutsche Telekom about T-Mobile USA

It would be logical for Dish Network to turn to a deal with T-Mobile USA if its attempt to invest in Sprint were to fail.                                                                                Net Subscriber Additions                                                                                                                                                         


Now it seems a game of musical chairs could start, as SoftBank talks to Deutsche Telekom and a deal to buy T-Mobile USA, in case the SoftBank deal to buy Sprint were to fail.

Either way, it would seem, both Sprint and T-Mobile USA are likely to find themselves poised for potentially new strategies for attacking the U.S. mobile market. 

Whichever asset winds up affiliated with Dish Network will likely, over time, become a relatively specialized "mobile video" service, in terms of market positioning.

That doesn't mean its devices will fail to operate as phones, text messaging platforms or Internet access devices. But the positioning likely will be video entertainment centric. 

Whichever asset winds up affiliated with SoftBank likely will be "mobile Internet centric." Precisly what that might mean is not yet clear, but if SoftBank attacks the way it did in Japan, among the issues is how much average revenue per user the SoftBank-lead firm is willing to lose. 

In the meantime, while the instability continues, no matter what Sprint or T-Mobile USA says about its service, strategy and priorities, those all could change dramatically, and relatively soon. 

Google Denies "Back Door" Access to its Servers

Google CEO Larry Page and Chief Legal Officer David Drummond insist that Google has not "joined any program that would give the U.S. government—or any other government—direct access to our servers."

The U.S. government does not have direct access or a “back door” to the information stored in our data centers, Google says. Page also claims Google "had not heard of a program called PRISM until yesterday."

Google does say it provides user data to governments "only in accordance with the law." Some might say that is likely accurate, but also not completely "true," either. 

Michael Arrington suggests a way Google could be parsing words carefully, but also not completely denying that intelligence agencies can get the access reports claim. For one thing, entities supplying such data are compelled by law to deny they are doing so. 

Nor would NSA or other agencies need access to Google's servers. Backup copies would do. 

Internet Access in Very-Rural Areas is a Problem; High-Speed Access is a Big Problem

Lower-speed Internet access is a problem, but not as big a problem as higher speed service in the United States, a study suggests. 

Any experienced network engineer or architect would agree. At any higher speed, providing service in very-rural areas will be a big challenge.

But as access speeds climb, the gap between urban and suburban areas, and very-rural areas, grows fast.

At the moment, about 66 percent of U.S. residents living in very-rural areas have access to Internet access at speeds of at least 3 Mbps, compared to 99 percent of residents of residents of bigger cities and the suburbs of those cities.

About 53 percent of residents living in very-rural areas can buy access of at least 10 Mbps, compared to 98 percent of residents of bigger cities, and 98 percent of suburban residents living around those cities.

About 14 percent of residents in very-rural areas can buy service at 50 Mbps. About 67 percent of residents of suburban areas surrounding larger cities can buy 50 Mbps service, while 63 percent of residents in central areas of bigger cities can buy 50 Mbps service.

The gap is wider at 100 Mbps, where 38 Mbps of residents of suburban areas can buy such service, while 28 percent of residents in central city cores can buy 100 Mbps service. In very-rural areas, just about three percent of residents can buy 100 Mbps service.

About 23 percent of rural residents are able to buy Internet access at speeds of 50 Mbps or greater, while 63 percent of urban residents can do so, study by the National Telecommunications and Information Administration.

If adoption of 50 Mbps is not at 23 percent in rural areas, and 63 percent in urban areas, it probably means consumers have concluded the existing price-value relationships for slower-speed services are adequate.

One might therefore argue that producing inducements for further upgrades will require some tweaking of the price-value relationship. Since most expect there will be a continuing logic to “higher prices for higher speeds,” absolute price will be the biggest potential game changer, though price per megabit might indirectly be a driver of upgrades.

Likewise, some 38 percent of households in suburbs, 28 percent in the central areas of bigger cities and 31 percent of households in “exurbs” already can buy service at 100 Mbps.

What seems indisputable is that average purchased speeds will continue to increase, as speeds have tended to grow 10 times every five years.

Google Wallet is Failing

Google Wallet, it is probably fair to say, has failed to get traction. The Starbucks app, in contrast, or PayPal's payment platform, continue to stand out as successful mobile payment platforms.

Starbucks has about 10 million users of its mobile payment app. 

In fact, some would say Starbucks dominates mobile payments. 

PayPal expects to process $20 billion worth of transaction value in 2013. 

The fact that some big initiatives, sponsored by big companies, do not get traction is to be expected. We remain at a very-early stage of the evolving mobile payments business. 

In all cases, the solution has to solve a significant problem, in a way that provides more value to users. In the U.S. market, that is a challenge, as few consumers probably would claim the "payment process is broken." 

In the absence of a clearly broken process, any new way of doing things has to create and deliver high amounts of new value, to overcome adoption hurdles. 

Can Anybody Catch Verizon Wireless and AT&T Mobility?

Attackers in the U.S. mobile market have to be optimistic when facing AT&T Mobility and Verizon Wireless, because a rational observer might have a hard time figuring out precisely how any of the smaller providers realistically can overtake the leaders.

AT&T expects postpaid wireless net adds of approximately 500,000 when second quarter 2013 data are reported. AT&T also says  Inc. it has seen “strong” customer additions in the second quarter for U-verse broadband and TV subscribers, year over year.

AT&T also expects second-quarter mobile EBITDA margins to be comparable to the first-quarter. AT&T continues to expect revenue growth of about two percent for the quarter, but profit margins are expected to be down, year over year.

In its first quarter of 2013, Verizon Wireless saw an 8.6 percent year-over-year increase in both service revenues and retail service revenues, with 32.9 percent operating income margin and 50.4 percent segment EBITDA margin on service revenues (non-GAAP), both record highs.

Verizon Wireless added 677,000 retail postpaid net additions, up 35 percent year over year.

Those sorts of figures also point to reasons why it will remain difficult for T-Mobile USA, Sprint or Dish Network to reshape market shares in the U.S. mobile market. The two largest service providers simply continue to take more market share from the smaller providers.

Market share matters. As a rule, market share and profit margin  are related. So as AT&T and Verizon Wireless take more share, their profit margins should grow. In fact, theory would suggest that AT&T and Verizon Wireless, based on their current market shares, should earn profits at twice the rate of the smaller carriers.

T-Mobile USA operating margin was about 25 percent in the fourth quarter of 2012. Verizon Wireless reported first quarter 2013 EBITDA, equivalent to  “operating margin,” of 50 percent on service revenues.

Conversely, it will become harder for Sprint and T-Mobile USA to maintain their own margins if AT&T and Verizon Wireless continue to take more market share.

And new entrants such as Dish Network will start from zero, with no chance of profits for some time.

You might say that is the reason some attackers do not aim to overtake the leaders in an existing market. They want to remake the market, as Skype has done in international long distance. Instead of leading the existing market, the strategy is to essentially destroy the existing market, creating a new market with vastly different revenue and operating cost requirements.

Security Agencies Collecting Credit Card, Internet App and Phone Data from AT&T, Sprint, Verizon, Google, Apple, Microsoft, Yahoo, Facebook, AOL, Skype and YouTube

The U.S. National Security Agency has been collecting millions of customer records from Verizon, AT&T and Sprint, as part of a effort ostensibly for protection from terrorists.

But civil libertarians might now see a dramatic danger that collateral information also is being collected, and could be used in other ways by a growing “administrative state” than now has become a “spying state.” 

Federal agencies also have been collecting emails and Web search data from nine Internet app providers as well. 

Under the Foreign Intelligence Surveillance Act (FISA), the U.S. intelligence community has add access to the servers of nine Internet companies, including Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube and Apple.


Data about credit-card transactions also has been collected, and the current extent of continuing operations is unknown, the Wall Street Journal now reports.

Officials claim the program is “targeted” at terrorism suspects. 

But that isn’t the problem. The problem is that data on all sorts of U.S. citizens and residents also is collected, and apparently is retained. 

That means we have to “trust” agencies not to misuse that information. 

"Everyone should just calm down and understand this isn't anything that is brand new,'' said Senate Majority Leader (D., Nev.)


Maybe it isn't citizens who should "calm down."