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Updated: 28 min 21 sec ago

At times, Netflix movies make up a third of traffic

Thu, 2014-05-15 13:51

The Federal Communications Commission voted today to open its latest net neutrality proposal to public comments.

FCC chairman Tom Wheeler has said the commission is "dedicated to protecting and preserving an open internet." Much of the debate around the current proposal has focused on the agreement between Netflix and Comcast, in which Netflix pays extra to guarantee its content is delivered to homes without delay. Netflix accounts for about a third of peak-period broadband traffic. So what does that mean for the net neutrality debate?

"I don't think it matters," says Barbara van Schewick, faculty director of the Center for Internet and Society at the Stanford Law School, "because under a good network neutrality regime, people pay for the bandwidth they use and it doesn't really matter where it comes from."

For example, think about the way we pay for electricity in the summer. A much larger portion of the energy we use is generated by air conditioners. "We don't say the electricity companies should be charging the air conditioning producers for the fact that they create all this demand for electricity," van Schewick says.

Under net neutrality, the same rules would apply to the internet. Broadband providers couldn't charge based on the type of content, or its source. So Netflix or email or Spotify would all be treated the same. Users could only be charged on the amount of bandwidth used.

And Netflix, being a video streaming service, takes up lots of bandwidth. "I think it's important to know that Netflix pays for that," says John Blevins, a law professor at Loyola University in New Orleans. Netflix pays a substantial amount to send out its shows through the internet. "The concern," says Blevins, "is that the internet companies, because they own essentially the driveway to your house, the only way into your house, they want to charge Netflix twice."

That second charge is what's often called paid prioritization, which is currently allowed by the FCC. Over the next 120 days the FCC will take comments from the public on whether that policy should stand.

NCAA academic rules hit smaller, poor colleges

Thu, 2014-05-15 13:11

At Savannah State University, a historically black college in Georgia, the school's Division 1 football team has no chance of making it to the playoffs next year. It's not because of the team record. Rather, it's among 36 teams nationwide barred from playoffs because of National Collegiate Athletic Association academic ratings.

"It kind of limits us to a certain type of recruit because you obviously can't go to postseason play," says Sterling Steward Jr., Savannah State's athletic director.

Like most of the teams on the list, Savannah State is among the Division 1 schools with fewer resources.

"We have a very limited budget, but we are very competitive in everything!" Steward says.

Even so, Savannah State is spending all it can on tutoring, study time, and other resources to improve its athletes' performance and graduation rates. Steward expects the school to be free of restrictions within two years.

The NCAA's so-called Academic Progress Rate started about a decade ago. It measures how many student athletes get good grades and stay in school or graduate. It's also getting tougher, which is why the number jumped from 13 barred from postseason play last year.

Critics of the NCAA are quick to point out, though, that none of the teams penalized this year are top tier schools with big budgets.

"You don't want the richer schools to suffer penalties, because they're the ones generating the money for you," says David Berri, a professor of economics at Southern Utah University.

He says the NCAA has a history of penalizing under-resourced colleges, while giving rich schools a pass, even crystalizing into a joke among NCAA-watchers: "We just found a major school was cheating again. Looks like another smaller school is going to need to pay a penalty," Berri recounts.

Berri thinks the Academic Progress Rate is a way for the NCAA to answer critics who think college sports have become too removed from academics. He notes that students can go pro after one year and not affect a school's score.

"It is done to address the criticism that a lot of these athletes are not being as educated as people would like them to be," he says.

The NCAA doesn't buy it. It says student performance is going up under the program, even at less-resourced institutions.

"The issue here, more than anything else, is making sure that all of our institutions are achieving an academic rate, where they are being successful and graduating students," says Azure Davey, director of academic and membership affairs at the NCAA. "There have been large strides made at our limited-resource institutions on an academic front."

The NCAA has provided more than $4 million to help schools like Savannah State provide tutoring and other services. And, Davey says, the NCAA has programs to give struggling schools more time too boost performance.

But as much as they improve, it's hard to compete with a college that can just throw money at the problem.

For another view of the story, here's a look at the schools that came out on top of the academic rankings.

Meet Thomas Piketty's translator

Thu, 2014-05-15 13:05

What’s at the top of The New York Times’s list of non-fiction bestsellers? A book on income inequality, called “Capital in the Twenty-First Century,” by Thomas Piketty, a French economist.

It is something of a sensation, having sold 300,000 copies, and Piketty has become as much of a celebrity as an economist can be.

What you may not know is that the book is a translation, into English  from the original French, and the translator, a man named Arthur Goldhammer, is a something of a celebrity in his world too.

Goldhammer met Piketty at Harvard University, where the economist was lecturing a few years ago. Later, Piketty asked him to translate “Le Capital au XXIe siècle” into English.

It took Goldhammer five months to translate some 600 pages. “The manuscript came in at about twice as long as expected,” he says.

Goldhammer, who is affiliated with the Center for European Studies at Harvard, works from his home, in Cambridge, Mass., in a “little room, slightly larger than a closet.” It is where he reads and writes, and it is also where he tinkers.

“I do some programming in my spare time, and study physics, and keep up with my past life,” he says, pointing out a Raspberry Pi, a computer that runs the Linux operating system.

Goldhammer has a doctorate in mathematics, from the Massachusetts Institute of Technology. He did his first translation in 1977. After serving in Vietnam, Goldhammer was living in Paris, and he needed money.

“Arthur’s career is extraordinary,” says David Bellos, the author of “Is That a Fish in Your Ear?: Translation and the Meaning of Everything,” and the director of the Program in Translation and Intercultural Communication at Princeton University.  “He’s translated a large number of books and he knows an enormous amount.”

But Bellos says there’s something else that makes Goldhammer exceptional: “I would say there are maybe 20, 30 people in the English-speaking world who live by book translation alone.”

And Goldhammer is one of them.

The French-American Foundation awards a translation prize every year. Goldhammer has won it four times.

“Most translators are underpaid, and sometimes underappreciated,” says Charles Kolb, who runs the foundation. They don’t just go through a text word by word, he notes. They are, as he puts it, “capturing the flavor and the feeling and the context.”

Kolb laments there aren’t more books being translated into the English language – especially from the French. One reason for that, Goldhammer suggests, is there seems to be less money available for translations. There used to be more subsidies from foundations and foreign governments.

“Lately, it’s the author who finds his or her own subsidy,” he says.

Goldhammer won’t say how much he was paid to translate “Capital in the Twenty-First Century”. The money a translator makes is decent, he says, but it is much less than a tenured professor’s salary.

Goldhammer says most translators are paid a fee for every 1,000 words.

“In this case, I probably would have made out if I had taken royalties, but I didn’t,” he confides. Goldhammer and the book’s publisher, Harvard University Press, had expected the translation to sell maybe 20,000 copies. So far it has sold 15 times that. But, Goldhammer says, he has no regrets.

“It’s rare for me to translate a book where I can expect all of my friends at least to have heard about the book, if not to have read it.”

Following the money in America's most expensive war

Thu, 2014-05-15 12:02

Afghanistan has been called the “graveyard of empires.”

It’s a phrase you hear a lot when people talk about our more than a decade of involvement in Afghanistan. And Anand Gopal thinks it’s a bad one.

“There is a sense that whatever happened in Afghanistan was inevitable,” says Gopal, author of the new book "No Good Men Among the Living: America, the Taliban, and the War Through Afghan Eyes". But we had many opportunities to get this right.”

Gopal learned the Afghan language Pashto, and traveled the country by motorcycle to research his book. He says that the U.S. made a mistake in funding Afghan warlords to help fight the Taliban.

“A lot of these militia commanders and warlords are not that much better than the Taliban they replaced... That’s creating support for the insurgency and draining resources. Without us paying them, these guys are not going to continue  fighting.”

The Afghan economy relies almost entirely on the opium trade and foreign aid. But Gopal says all the U.S. money flowing into the country doesn’t guarantee the government’s survival.

“If you take billions upon billions of dollars and put it into a country that has very little capacity to absorb it, you create corruption on an unforeseen scale. If you talk to Afghans today they’ll say that the last 10 years have been more corrupt than anything they’ve seen in the previous 20 or 30 years of fighting.”

Coaching the Coach

Thu, 2014-05-15 12:02

Executives: They get the good offices, the good health plans, the good stock options AND they get to decide whether you keep your job.

But that doesn’t mean life’s easy. "There are actually CEO support groups that have popped up all over the country," says Robert Sutton, Professor of Management Science at the Stanford Engineering School and co-author of "Scaling Up Excellence". Sutton says a lot of CEO’s end up suffering something akin to the Justin Bieber problem: No one around them will tell them if the company’s on the rocks or if all the employees despise them.

"It is exactly the Justin Bieber problem and actually in some ways it's worse," says Sutton. "Everybody around you has every incentive to tell you how wonderful you are and give you no bad news." Sutton says Executives Coaches often come in order to tell CEOs what people actually think of their management style.

Female executives often need help navigating a certain amount of non-acceptance.

"Women are just beginning to step into big roles, so the whole world is watching," says Nancy Koehn, a professor at the Harvard Business School. She says female CEOs often use executive coaches to help them deal with skepticism. "How do women get done what they know they have to get done, when they’re leading people that haven’t necessarily been responsive to a leader or guide who’s female?"

Whatever particular issues they face, CEOs are getting help in greater numbers. Last year, U.S. companies spent more than $1 billion on executive coaching.

The story behind red M&M's

Thu, 2014-05-15 12:00

Remember when red M&Ms weren't a thing?

It was all thanks to a little misunderstanding back in the day, and a little substance called Red Dye No. 2.

"It was a $10 billion dollar industry. It was used in everything from hot dogs to ice cream cones," says Zachary Crockett, writer at Pricenomics.com.

A Russian study found that this same dye caused tumors in lab rats. Cold War politics being what they were at the time, the FDA refused to acknowledge Russian research, and conducted their own study which, as Crockett puts it, ended up being "an absolute nightmare."

"The lead scientist left midway through, the rats were all mixed up in the lab, it was just wholly inconclusive," he said.

Not wanting to get tangled into the whole mess of Red Dye No. 2--which actually wasn't in red M&Ms in the first place--Mars, M&M's parent company, pulled the red M&Ms anyway to prevent customer confusion. Red was out, and orange was in.

Flickr

Nearly a decade later, just in time for Christmas 1985, red was back, thanks in large part to Paul Hethmon, a freshman at the University of Tennessee who started the "Society for the Restoration and the Preservation of the Red M&M."

"He kind of sparked a 'red-olution,' if you will," said Crockett. "All of these people who loved and adored the red M&M back in the '60s and '70s really came out of the woodwork and joined in this cause."

The animated spokescandy--who was once voiced by John Lovitz--has all those people to thank for thrusting him back into the spotlight.

Oil booms have to be good for rural towns, right?

Thu, 2014-05-15 11:03

New Mexico is the nation’s sixth largest oil producer. The industry is creating thousands of jobs in the southeast corner of the state. But all that activity is straining basic services. Housing is limited, classrooms are crowded and roads are more dangerous. Now cities are struggling to catch up.

At Puckett Elementary in Carlsbad, New Mexico a first grade class sang along with their teacher. They gather inside a portable classroom. Schools in Carlsbad are running out of space. Superintendent Gary Perkowski said in the last two years the district has enrolled 200 new students.

"All of a sudden it's going up and going up really quickly and very drastically," Perkowski said.

Carlsbad sits atop the fuel-rich Permian Basin. Dozens of new companies have come here to take advantage of high oil prices. That's attracted a bigger workforce. Crowded classrooms are not the only concern.   

"Last year we lost ten teachers that came to Carlsbad, signed contracts...and could not find housing," Perkowski said.

This town of 27,000 people is growing twice as fast as the rest of the state. Teachers are competing with other newcomers looking for a home.

"We had one guy that was trying to live with his family in a motel at a hundred and something dollars a night and that didn't last long," Perkowski said.

Because of the high demand, major hotel chains in Carlsbad charge rates comparable to New York City.  

At a popular Mexican restaurant Mayor Dale Janway digger into a plate of green enchiladas. He had just come from the oilfields himself where he works as a safety consultant.  

"This is one of the hot spots in the country right now and there are a lot of challenges," he said.

Janway said developers can't build fast enough. New apartments have waiting lists. Workers live in outlying RV parks. But it's not just the oil industry. This region is a major producer of potash, a component in fertilizer. A new mine should start construction this year. The U.S. Department of Energy also runs the country's only permanent nuclear waste facility just outside town.

"Anytime you have growth like we do you have more urgency calls, more fire calls, more police problems," Janway said.

Yet another issue is the traffic. It's especially busy along the 70 miles that separate Carlsbad from the neighboring town of Hobbs. Trucks hauling long cylinder tanks and heavy machinery are non-stop on weekdays mornings.

Ten people have died in traffic accidents this year, a high number in this mostly rural county. Carlsbad native Andrew Perez lost his brother in an accident two years ago.   

"My brother worked for an oilfield company, driving trucks and he worked very hard, long hours, didn't get sleep and ended up crashing his truck," Perez said.

His brother left a job in a corrections facility to become a trucker, Perez said. Before that he was Marine who served in Iraq.

"The day he died was the day that he found out he was going to be a father," Perez said.

An investigation by the Associated Press this year found that in some oil-rich states traffic fatalities have quadrupled in the past decade. In Southeast New Mexico, a coalition has formed a task force to address roadside deaths. A state representative is also pushing legislation that would fund highway improvements in oil-producing counties.

Congratulations, you're pregnant! Now buy stuff

Thu, 2014-05-15 09:05

Perhaps it shouldn't come as a surprise that Shutterfly, an online photo printing service, sent out a mass email with the subject line: "Congratulations, you're pregnant!" -- even to people who were not, in fact, pregnant.

According to a survey by the U.S. Department of Agriculture, Americans will put an average of $241,080 into a child born in 2012 (incidentally, the average calf costs about $363.69). To mix animal metaphors, there's profit to be made off the nesting impulse. The global baby care market was worth $44.7 billion in 2011 and by some estimates, it could be as big as $66.8 billion by 2017.

Shutterstock.com

Shutterfly made the kind of honest mistake that keeps marketing departments up at night. The company's chief marketing officer has since sent an email with language like "Please accept our most sincere apologies... We know this is a sensitive issue."  

But the fact remains: Pregnant people (and their supportive counterparts) spend a lot of money. Why not wish for more of them? 

Companies do all sorts of marketing sommersaults to sell goods to expectant parents, despite the "sensitive" nature of species procreation.

A few strategies:

Pretend like you're selling luxury cars: Meet "The Leather Aston Martin James Bond Baby Stroller": It features "aluminum alloy wheels," is made of "fine leather and air-ride suspension," and costs $3,000. 

Go green, recycle: When a baby outgrows this $999.16 "pure wool felt" hanging tripod crib, the crib lives on organically: "grow something else, flowers or tomatoes.... A transparent hood, durable and lightweight, which turns it into a small winter plants shelter, in the garden or on the terrace."

Woodlyecodesign/Etsy.com

Use the words "all-in-one": Bonus points if you also include the phrase "multi-tasker," or "more than two hands." 

Take, for example, the Combi All In One Mobile Entertainer. It's not only a high chair, it's also a walker, noise-maker, and vintage car.

Toys'R'Us.com

Baby straight jackets: Aww.

Hulabye.com

Parents (or people who have had parents): If babies double as a money-making venture, what do you think it's important for companies to remember? What kinds of sales pitch works best?

PODCAST: The inflation-interest paradox

Thu, 2014-05-15 07:55

Today we're trying to resolve a paradox. Inflation is on the rise in America, yet interest rates are getting lower still. On the one hand, there's word this morning the Consumer Price Index went up three tenths percent in April, the most in 10 months.  Yet, look at benchmark interest rates. To look at this we turn to Diane Swonk, chief economist at Mesirow Financial in Chicago.

And, we been covering an ongoing swarm of protests by fast food workers looking for higher pay in the U.S. Now the protests are going global, involving fast food workers across more than 30 countries, from Argentina to New Zealand. Marketplace's Krissy Clark has some international comparisons.

Meanwhile, in Jersey City and other towns along the New Jersey side of the Hudson River, small-scale entrepreneurs are taking aim at that urban ritual of waiting for the darned bus.  Private operators of mini-buses now ply the streets. Amid questions about safety and traffic, there are new regulations on the way. Marketplace's Dan Weissmann takes us to the "Wild West" of the Hudson.

 

Statuettes and medals

Thu, 2014-05-15 07:20

From the Marketplace Datebook, here's a look at what's coming up Friday, May 16:

In Washington, the Commerce Department reports on construction of new homes for April.

Viewers tune in to "The View" for Barbara Walters' final regular appearance.

Skip the gas pump. Fuel up on Wheaties instead. It's Bike to Work Day.

Gymnast Olga Korbut celebrates her 59th birthday. She wowed crowds with her gold medal winning moves in Munich at the 1972 Olympics.

And the first Academy Awards ceremony was held in 1929. "Wings" took top honors for best picture, the only silent film to do so.

The cost of fast food meals calculated in worker wages

Thu, 2014-05-15 04:50

The push to raise fast food worker pay in the U.S. has just gone global. As day broke on May 15 around the world this morning, fast food restaurants from the Filipino capital of Manila, to mid-town Manhattan have seen flash mobs and protest signs. Workers at McDonalds, Burger Kings, Wendy’s and KFC’s across more than 30 countries are planning actions today.

How does fast-food work in the U.S. compare to other countries? First, you need to understand how important international markets have become for the fast food industry, which has by now just about saturated the U.S. market.

Take, for example, McDonalds. Today more than 70 percent of its sales come from overseas. One of the people who rings up all those burgers and fries is Taylor McLoon, 18, a McDonald’s cashier in Auckland, New Zealand. In New Zealand minimum wage is much higher than in the U.S., and McDonald's workers are unionized.

After three years working at the company, McLoon says she now makes $14.80 an hour in New Zealand Dollars—that’s about $12.80 in U.S. Dollars. When she recently visited Philadelphia, and told some McDonald's workers there how much she earns, they were “shocked, surprised, excited,” she recalls. “A lot of the expressions were ‘Holy—‘ Something-I’m-Not-Gonna-Say.”

But in other parts of the world, the $8 an hour or so wage that many U.S. fast food workers get seems pretty good, according to restaurant analyst Peter Saleh with Telsey Advisory Group. He came up with an interesting calculation to compare wages for KFC workers in China and the U.S.: how many hours did they need to work to afford a typical meal at the restaurant that employs them.

In the U.S., it takes about an hour’s worth of wages, Saleh says. “In China, you probably have to work three or four hours to be able to afford one of those meals.”

Navy sailors get an e-reader called 'NeRD'

Thu, 2014-05-15 02:12

The latest e-reader to hit the market has no internet connection. There are no apps. You can’t download any book you want. There’s definitely no camera. 

Just about all you can do on it is read any of its 300 preloaded books.

This is an e-reader for a very niche market: bored sailors on Navy submarines. 

“It’s a little funny to be rolling out a new tech product that’s a couple generations behind,” jokes Nilya Carrato, program assistant with the Navy General Library Program.

Subs are cramped quarters. Most have a small library on board with 25 paperbacks. So, the Navy wanted a device that could hold far more, take up less space, but not pose a threat to security. That’s why it has no wireless connection or camera.  

The priorities in its development were “Ensuring security, durability, and really access to all of the titles that they want,” says Ralph Lazaro, vice president of digital products at Findaway World, the Ohio company building the device. 

And, like any new tech product, it needed a catchy name. The Navy first tried NR, for Navy Reader. Then, they thought Navy eReader, or “Ner” for short. Eventually, Carrato says, it clicked, and they came up with NeRD, for "Navy eReader Device".

“‘Nerd’ definitely doesn’t have the stigma it used to,” Carrato says.  

For now, the Navy has ordered 385 NeRDs. They cost $3,000 a piece, but most of that pays for the book titles. The Navy says the devices’ costs are minimal.  

The NeRDs have a mix of fiction and nonfiction, from best sellers to Pulizer winners. The Adventures of Cavalier and Clay is on board. 

Submarine sailors are allowed to bring along smartphones and Kindles, but there are restrictions on where devices with cameras can be used on board, and they must have their wireless connections disabled. 

“A submarine is a secure environment,” Carrato says.  

The NeRD is designed to expand the on-board library and give sailors options when they run out of their own books and downloads on long assignments. 

Food prices rise but shoppers won't pay more

Thu, 2014-05-15 02:07

Wholesale food prices are soaring and consumers are still struggling in a challenging economy. That puts grocery stores in rather nasty bind.

“Retailers face that challenge as to whether to pass it on to consumers or suck it up and take lower margins,” says Timothy Richards, professor at Arizona State University’s Carey School of Business.

Profit margins in the grocery business aren’t that high in the first place. They’re generally around 1-2 percent. Even with these razor thin margins, grocers work hard to keep prices consumers pay low. With so many Americans unemployed or underemployed, stores that raise prices risk losing shoppers.

“We’re seeing consumers at an all-time high in thriftiness,” says Rich Nanda, principal at Deloitte Consulting. “They’re really trying to stretch every penny.”

Retailers worry that this may be a permanent shift. In Deloitte’s recent survey of food shoppers, 94 percent agreed with the statement “even if the economy improves, I will remain cautious and keep my spending at its current level.”

Mark Garrison: When stores have to pay more for food, something’s gotta give, says Arizona State University business professor Timothy Richards.

Timothy Richards: Retailers face that challenge as to whether to pass it on to consumers or suck it up and take lower margins.

And profit margins aren’t high anyway, says Boston College marketing professor Kathleen Seiders.

Kathleen Seiders: Around 1%, 2%, sometimes even lower.

Even so, stores must keep the price we consumers pay low, or risk losing shoppers.

Rich Nanda: We’re seeing consumers at an all-time high in thriftiness. They’re really trying to stretch every penny.

Rich Nanda with Deloitte Consulting says grocers could try pushing their cheaper store brands harder. They may have to, as the firm’s latest research on shoppers shows this thrift is not temporary.

Nanda: 9 in 10 told us that they’re not gonna change if and when the economy improves.

In any event, food prices will likely rise further this summer, at which point most retailers will have to pass more of the cost onto us. I'm Mark Garrison, for Marketplace.

In New Jersey, mass transit for the masses

Thu, 2014-05-15 01:45

In Jersey City and other towns along the Hudson, home-grown capitalists have wiped out the urban ritual called waiting for the bus.

Private operators jam commercial streets with mini-buses— and in turn spark new issues. (Think: traffic jams.)  Longtime complaints peaked last summer, when a wayward bus killed a baby girl, and the state created new regulations, which take effect next year.

Meanwhile, to hear Haroun Khan tell it, most drivers regulate themselves. He drives part-time, but today he’s a passenger. Sitting near the front of a jitney heading down Bergenline Avenue, he explains to a fellow-rider how drivers keep out of each other’s way.  

“They try to keep two or three traffic lights before or ahead," he says. "Wait, see what he did? There’s a bus behind him. So he’ll skip that passenger, try to get the space, and he’ll pick the other passengers up. So that way, they can both make money.”

People call the buses jitneys, collectivos, immi-vans. They’ve got maybe 20 seats.  They charge less than New Jersey Transit buses. They stop on any corner when a passenger hails. And they always make change, something New Jersey Transit drivers will not do. 

They’ve been driving through towns like Jersey City, Weehawken, and Bergen for decades. And they’re still growing, 40 percent just in the last four years, according to regulators.

Big operators rent out branded buses to drivers like Pasquale Gomez. At the end of his route, he waits in line for a dispatcher to call his turn.

He pays$100 a shift and buys the gas. Asked how much he makes, he says, “Well, it depends, man. Today, I don’t have a dime for me yet.”

He plays by the rules. Waiting for a dispatcher to call his turn, he says, “Sometimes we’re here maybe 20 minutes. Sometimes an hour.”

Nicholas Sacco, the state Senator who sponsored the new regulations, seems surprised when he hears about Gomez’s situation.

“If they were all that organized, maybe we wouldn’t have needed the bill,” he says. “We had no desire to get rid of the omnibuses. Just to  make them safe.”

The new regulations include higher insurance minimums— $1 million — and a hotline for riders to report anything unsafe.

Many of the jitneys fall under federal regulation— taking passengers back and forth to Manhattan, that’s interstate commerce. Anne Ferro, who runs the Federal Motor Carrier Safety Administration, doesn’t expect tighter regulation to slow business.

“It’s a supply/demand situation,” she says. "Trucks and buses are like water: They will always find a way through.”

Pasquale Gomez would like to see things more tightly regulated, even if it meant fewer buses.

“We are too many,” he says, “going up and down like crazy. That will make us doing things we don’t want to do.”

Meaning: Not all drivers follow the rules.

“They have three blocks to work on, they want five,” he says. So greedy drivers block the way for other buses, slowing up traffic in the process.

And misbehavior begets misbehavior— or at least, aggressive driving. “I see him doing that to me—playing games— and what am I going to do?” he says. “I’m not going to stay behind him.”

What's the best analogy for the Net Neutrality mess?

Thu, 2014-05-15 01:00

Truth: sometimes we journalists get tired of reporting a story. And I'll admit it -- trying to describe Net Neutrality a different way every day this week hasn't been easy. But most people we talk to about the issue of whether Internet service providers should deliver all data to the user with equal speed agree it's significant -- maybe the most significant Internet issue of the decade.

For as long as we've all been online, we've basically been able to access web pages with equal speed -- no matter what web page we're trying to get to and what company is helping us get there. But that could be changing; today's Federal Communications Commission vote on new Open Internet Rules could allow for so-called "fast lane" deals, where a company like Netflix pays a company like Verizon or Comcast to make sure you don't get the spinning pinwheel of sadness. Many people say these deals would stifle innovation (making it hard for the next Netflix-like startup to get off the ground without forking over money it doesn't have yet), and allow service providers to degrade the quality of our connections. Others say that more oversight from the FCC would do the same. It's always super helpful when two sides in a debate use the exact same potentialities to argue their case, isn't it?

But the real question is this: what analogy is best for this big, hot mess? Because a hot mess it is. And part of the mess is that it's so hard to describe and understand. On Wednesday, Sen. Al Franken told me Internet service providers should be considered common carriers -- just like the companies that have covered the country in a web of phone lines. He's even made a video to promote his position: 

 

On today's show, University of Pennsylvania professor Christopher Yoo explains his opposition to that idea by comparing the Internet to the postal service. Sometimes, Yoo says, you should be allowed to pay extra for FedEx or Priority Mail Express, so that your package gets to its destination faster than it would with regular old snail mail. Maybe it's like electricity?

I was arguing with Stacey Vanek Smith a few weeks back about Netflix making a deal with Comcast and trying to use the highway analogy -- but I got fouled up trying to decide who the toll booth operators were. I was talking with Vox managing editor Nilay Patel this week -- he thinks the FCC is about to turn the Internet into airport security.

The idea I keep coming back to is that of the Gordian knot -- an intractible problem that seems like it should have a simple solution. But a simple solution isn't in sight, so that doesn't work. So I put it to you: how would you describe the movement of information on the Internet? And what does that say about your position in the debate? 

Is an internet 'fast lane' inevitable?

Thu, 2014-05-15 01:00

The recently-announced plans by chairman Tom Wheeler and the FCC to create an internet "fast lane" have been met by a great deal of skepticism from those who worry that large companies could pay to speed past the competition. But Christopher Yoo, professor of Law, Communication, and Computer and Information Science at the University of Pennsylvania, argues that offering a pricing system for internet speed makes sense.

Yoo points to the varying services one can pay for when sending a package. If a package can take longer to get somewhere, you pay less. But if the arrival date is imperative, then you should pay more.

"If you force everything into a single class of service, you would force people who would have been willing to take slower service to pay more, and you would deny people really fast service the ability to get it at any price."

Others believe that the internet should be re-classified by the FCC as a common carrier. Yoo argues that in light of recent Supreme Court rulings, it would be difficult for the FCC to claim authority to do so.

To Yoo, its also a moot point. He says that even services defined as common carriers are allowed to create different tiers of service as long as they don't have rules explicitly prohibiting anyone from paying for the better service.

"The 'Common Carrier' regime has always acknolwedged that providers can create different classes of service as long as they charge everyone who wants that class of service the same amount....it wouldn’t prevent internet service providers from creating a fast lane in the first place."

The $24 admission fee to the 9/11 Museum in context

Wed, 2014-05-14 15:00

The 9/11 Memorial Museum opens to the public this week, but the journey to its unveiling has not been without controversy. Questions over the purpose of the museum have been well-reported, but recent concerns have been raised over the relatively high cost of admission.

Those wishing to visit the memorial will have to pay a $24 admission fee.

At a recent press conference, former Mayor Michael Bloomberg said that those upset by the high cost should write to Congress. His point? While the U.S. government has provided $250 million towards the contruction of the 9/11 Memorial, more financial resources are needed to maintain security and its high operating costs.

Federal and state support are issues that factor into the price of admission at other memorials in the U.S. and around the world.

Brandi Simons/Getty Images

The Oklahoma City National Memorial, for example, does not receive any federal funding to contribute to the cost of its annual operation. Though, like the 9/11 Memorial, the museum did receive funding for the initial construction costs. Along with the $10 entrance fee paid by visitors, the self-sustaining museum covers its expenses using "store sales, the OKC Memorial Marathon, [and] earnings from an endowment and private fundraising."

Getty Images

The Anne Frank House in Amsterdam also charges an admission fee -- a practice it began in the early 1970s when the Anne Frank Foundation began having diffuclty shouldering the costs of maintaining the house. Revenue from visitors to the museum now covers 95 percent of the organization's annual budget. While it does receive funding from the EU and the Dutch government, the money is reserved exclusively for projects not involved in running the museum.

Back in the U.S, while legislation was introduced in 2011 to set up a regular subsidy for the 9/11 Memorial, it was basically shelved. It would seem that for now, the price of admission remains.

Electricity as utility. A model for the internet?

Wed, 2014-05-14 14:54

As Federal Communications Commission chair Tom Wheeler moves closer to releasing new rules on net neutrality and internet "fast lanes," many open internet advocates have been calling for the FCC to reclassify internet service providers as "common carriers."

Doing so would effectively turn them into public utilities like power, gas and water services, and thereby subject them to more strict regulation.

But some of those utilities themselves started out as products sold on the open market, just like internet service. So how did they get regulated as public utilities? For the best comparison with the internet's current situation, look at how another "new" technology went from market good to public good: electricity.

In the case of electricity, it starts with Edison.

With a patent for the first practical light bulb in 1879, Thomas Edison needed an actual market of people who could use his invention, meaning a way to get power to his customers. In 1882 his Edison Illuminating Company constructed the first central power plant in the United States, the Pearl Street Station in New York.

The catch with early direct current power plants, however, was that they couldn't generate power at very high voltages. The power couldn't travel that far along the copper wires without weakening the further it went. But as electricity gained popularity and more appliances were created to use it, numerous companies began building power plants to supply electricity to individual neighborhoods, each station selling power to customers within a small radius.

This is where goverment regulation entered the picture, in the form of municipal franchise agreements. Those agreements allowed the companies to dig up streets and build infrastructure. In exchange, they had to meet certain price caps and service standards. These controls, usually administered by city governments, were in fact very weak.

The large investment costs usually prohibited one company from owning all the power stations in a single city at first, but the different firms would often compete over customers in areas where their services overlapped. As companies were able to expand their reach, customers in large cities like New York and Chicago actually experienced a sort of golden age of price wars with many local companies competing against each other.

The competition was short lived, however, as single companies gained monopolies over large cities and increasingly advancing technology made for high barriers of investment in infrastructure needed for a new competitor to enter a market. The market for internet service providers is kind of at the same point right now in terms of barriers to entry, as telecom and cable companies have consolidated to a certain extent, buying up smaller regional ISPs. This has made it pretty much unfeasable for new competitors to get in the the game without considerable resources.

The old municipal franchises that governed electric companies also became prone to corruption from city politicians. In the early 1900s, an entrepreneur named Samuel Insull who had exploited the economies of scale to dominate the Chicago market argued along with other electric utilites that they were "natural monopolies," that resulted from the inherent barriers to competition in large markets.

State governments attempted to regulate these monopolies with legislation, but power barons like Insull were able to outmaneuver the efforts by restructuring their businesses with holding companies that were not covered by the reforms. By the late 1920s, the Federal Trade Commission was investigating the holding companies for market manipulations.

It wasn't until the onset of the Great Depression, and the strong reforms of the New Deal that power over electric utilites was taken away from the holding companies in the form of the Public Utility Holding Company Act and the Federal Power Act of 1935, transferring much of the regulatory power over eletricity over to the federal goverment.

This was significant not because power utility monopolies were split up, but that the "natural monopolies" were in fact legitimated; they could exist, but they had to be under government control. The federal legislation, along with other New Deal legislation, actually provided for the creation of a number of government monopolies over public goods.

As it stands now, internet service providers are sort of stuck in between being a wholly private good or a heavily-regulated public utility. Until recently, the FCC has successfully imposed on ISPs to treat all content the same in terms of speed of access, but they haven't set caps on how much they can charge or set standards for quality of service as are required of utilites like water and power.

The federal government has also subsidized ISPs to the tune of $200 billion to build a fiber broadband infrastructure for schools and low-income regions, which many activists contend they never completed. Following the model of electic utilites, further government investment could hypothetically result in internet infrastructure owned by the government itself.

It's unclear whether the internet will go along the same route to regulation as a utility, but with nearly a third of Americans having no choice for their internet service provider, the circumstances are starting to look very similar.

Where do nudists keep their bitcoin?

Wed, 2014-05-14 14:04

The following public relations email landed in my inbox this morning:   I'll just paste the first line here: "Bitcoin is now accpeted for payment at Bare Oaks Family Naturist Park."   It brings to mind the opening scene in my colleague David Brancaccio's book from a decade or so ago in which he went to report on the economics of a French nudist colony, and finds himself clutching a a fistful of French banknotes... with nowhere to put them.   Think about it.   The book's called "Squandering Aimlessly".  It's on Amazon.  

At the end of tonight's @Marketplace, @kairyssdal references a book by @DavidBrancaccio WITH AN AMAZING COVER. pic.twitter.com/iNJ5PIu3RA

— David Gura (@davidgura) May 14, 2014

Why retailers still bother to print catalogs

Wed, 2014-05-14 13:49

Whether it's yoga pants or fruit dipped in chocolate, Americans spend an average of $850 a year on catalog purchases, according to FGI Research.

In fact, check the mail at the beginning of the workweek, and you'll probably find a catalog in there.  According to research, Monday and Tuesday are the biggest catalog mail days. Every week, Americans get about two to three of them in the mail.

You'd think online retail would've killed catalogs. But no, says Paul Miller, vice-president of the American Catalog Mailers Association: "Catalog companies are still vibrant businesses."

Miller says postage hikes, cyber retail, and the recession all hurt catalogs. But he says catalogs offer something to retailers that the internet can't: customer loyalty.

"There have been studies that have shown that if somebody purchases an item online, they're much less likely to be a loyal customer than if they purchase something as a result of seeing it in a catalog," Miller says.

Companies have gotten smarter about getting their catalogs into the right hands with the help of huge databases containing all sorts of info on millions of households.

"In many of the databases they'll have every purchase you've basically made for years," says John Lenser,  president of CohereOne, a consulting firm that works with catalog companies. "So they will know whether you're buying in different product categories, they'll know how much you've spent."

Database companies track a lot about our lifestyles. If someone moves, furniture catalogs start appearing. They know who buys office supplies in bulk, and who's developing a taste for wine. It's really specific.

The result? Fewer catalogs immediately tossed into the recycle bin.

Places like American Printing Company, a catalog printer in Birmingham, are all about efficiency. Craig McConnell, sales manager there, says there's a ton of potential waste in the printing business.

"So if you're not very efficient, if you don't do a good job and if you don't provide some extra value to your customers, it's very difficult to compete," he says.

The cost of postage and paper have gone up over the years. On the upside, McConnell says, "For every dollar that someone spends for the production of a catalog, they expect to generate at least $4 of additional sales revenues."

For retailers, that might be the best dollar they've ever spent. 

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