Tuesday, January 27, 2015

Where's The Franchise?

Google announced a massive expansion of fiber to the home. As the Washington Post announces:

After months of speculation, Google confirmed Tuesday that its ultra-fast Internet service will soon be coming to four more cities — Atlanta; Charlotte, N.C.; Nashville, Tenn.; and Raleigh-Durham, N.C. Those regions, along with more than a dozen cities in their immediate vicinity, will be the latest to benefit from high-speed Internet provided by the search giant. Google Fiber already sells Internet service with download speeds of up to 1 gigabit per second — roughly 100 times faster than the national average — for $70 a month in other cities such as Provo, Utah. Google had been considering expanding to as many as nine metropolitan areas. In a blog post Tuesday, Google said it was still in talks with five of those cities — Phoenix, Portland, Salt Lake City, San Antonio and San Jose — and would decide whether to expand into those regions later this year. Construction in the four cities the company named Tuesday will begin in a few months, according to Google.

The questions are:

1. Does Google have to get Franchises and pole attachment agreements in all of these places or is there some "deal" that goes around that and if so why? This is a total of 12 major cities. In my almost 40 years of experience getting a Franchise especially with an incumbent is a long and costly process. Avoiding one is a miracle, namely very few miracles really happen, if any.

2.  At the same time Google is buying in to wireless. As we have argued wireless is much less expensive, requires no franchise, is already enabled by customers and has near equal capacity. So why waste billions on fiber? Do the shareholders care?

3. What is the Google strategy and what are its goals? It appears that they can afford to play many games. But to what end? They can control the distribution channel but then what?

Monday, January 26, 2015

The Insanity of Quality

HHS is mandating payment for quality for Medicare reimbursement. Specifically they state:

In a meeting with nearly two dozen leaders representing consumers, insurers, providers, and business leaders, Health and Human Services Secretary Sylvia M. Burwell today announced measurable goals and a timeline to move the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.

I would remind folks that in Zen and the Art of Motorcycle Maintenance that it was the attempt to define quality that drove the prime character insane. Quality is complex and near impossible to define no less measure.

They continue: 

HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.  HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.  This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.

 Note that the goal is 85% to quality. We have written extensively on this topic and its complexity. The ability to deliver anything like a quality measure is not only problematic but we believe impossible. It is merely a Government plan to cut costs and ration service.

Wednesday, January 21, 2015

Why Are Economists So, Well Just Ignorant...?

I read a piece by a Stanford Economist who is alleging that one should not allow Common Carriage over the Internet Transport companies, such as CATV companies. He alleges:

Under net neutrality, Owen said, Internet service providers are unlikely to offer costly service improvements to anyone if they cannot recover the costs. "At least on the surface, it seems that net neutrality would condemn all users to the same not-terrific and slow-to-improve service," he said. By the end of the 20th century, Owen said, a broad consensus developed among economists that price regulation of industries was unlikely to improve consumer welfare. "Maintaining efficient prices and providing incentives for progressive management of regulated firms rarely works," he wrote.

 Now admittedly he is at Stanford, and down the street a way are all those app companies etc but he is an economist after all, so we cannot expect much regarding technical reality.

You see the Internet was designed and is looked at as an hourglass, thin in the middle, limited capabilities, just allowing say TCP/IP. The smarts were at the edge, then end, with the users. That has worked for a real long while. The problem is that we have allowed the CATV folks to get between the TCP/IP path and the end users. That is against the prime directive, that is what the argument concerning Internet Neutrality is all about. Imagine a world with only MSNBC, and you have Comcast's view of life.

By making the carrier a Common Carrier they do what they are supposed to. Common Carriage does not mean rate regulation, never did, only in the minds of those who fail to understand it. It means openness and level playing fields, etc, those catch phrases so common in DC.

The Internet is meant to be minimalist and not really pay attention to what is being sent across it. Each packet is equal. Each packet gets charged the same. Competition helps, but frankly until the wireless companies get their acts together we are left with 1970 technology from CATV companies. Remember that we change out our mobile devices at least every other year while the average age of a cable modem is 10+ years. They have NO motivation to innovate. So why should they be motivated to do anything other than take actions to further disable their customers. The only answer is Common Carriage, as Elizabeth I set up in 1603!

But also from an economics perspective, why should we tolerate bundling. CATV companies are notorious for that.  We all understand that, we should pay for what we get from them, transport to a meet point. Tell me what it is and don't get in the way! Simple economics, simple antitrust. But not simple for some folks.

Tuesday, January 20, 2015

Trust Fund Kids vs Community College

Fortunately I managed to go through college by means of scholarships, jobs, and no loans. Also I ate a lot of rutabagas and drank a lot of powdered milk. No car, no phone, one pair of shoes, never thought I needed two, and books were still cheap.

Nowadays college is a fortune and kids cannot get scholarships as a result of academic performance, they must conform to some politically correct formula to fit the scholarship route. So no matter how well you did, welcome to paying full freight. And most likely bearing that load for years.

Now at the other extreme is Community College. I actually went there for a year recently. I was denied entry initially because I was over 65, until I informed the EVP of Equal Opportunity that the law applied to us old folks as well. Amazing what sending them a copy of the law will do. Then of course they demanded all my school records, High School, College, Grad School, Post Grad, Professional School, and then I was admitted. If I had a GED it would have been easier but I guess they just did not want some old educate guy there. Then the instructor asked whether I was qualified and his response was I was one of those over achievers. I guess it was not an actionable response.

Lesson learned from Community College was that 90% of the students failed to complete the course. Yet they all paid the tuition, most via Pell Grants. Namely we taxpayers footed the bill. Why did the drop out? Jobs, poor preparation, no support infrastructure, etc. Furthermore at Community College the instructors are marginal at best. Better than those I had at Manhattan College, there I was asked to teach Freshman Calculus and Sophomore Systems Theory. In the first case the instructor was terrified of the students and in the second the instructor admitted he had no idea what the subject was, he was a structural engineer. But at Community College the Instructors may have a modicum of understanding but their approach is akin to a low tier High School. For example Biology gives 100 question multiple choice questions. Pure memorization, no understanding.

Now to the increase in inheritance tax. If I were to generation skip and leave the money to my grandchildren then the tax increases. The proposal is if they work hard and get great grades but because of who they are cannot get a scholarship but I would like to help them, then the Government will take 60% of my funds and give it to the 90% in Community College who never graduate! Smart, it is not!

I continue to wonder what is in the minds of those who come up with this scheme. Destroy those who perform well and create mediocrity. Well it looks that way to me.

Saturday, January 17, 2015

Economists: What Value Are They?

Over the years we have been quite critical of economists. They hold themselves out as practitioners of some scientific discipline yet their recommendations are often in conflict with one another and their ability to forecast is dismal. As some economist has recently noted in the defense of his practice of the art:  

Since the global financial crisis and recession of 2007-2009, criticism of the economics profession has intensified. The failure of all but a few professional economists to forecast the episode – the aftereffects of which still linger – has led many to question whether the economics profession contributes anything significant to society. If they were unable to foresee something so important to people’s wellbeing, what good are they? Indeed, economists failed to forecast most of the major crises in the last century, including the severe 1920-21 slump, the 1980-82 back-to-back recessions, and the worst of them all, the Great Depression after the 1929 stock-market crash. In searching news archives for the year before the start of these recessions, I found virtually no warning from economists of a severe crisis ahead. Instead, newspapers emphasized the views of business executives or politicians, who tended to be very optimistic.

It was not a failure of a few but a failure of a community of them. Does the art of economics lend anything useful to society? The defense of that question is in the following quote:
 
But this criticism is unfair. We do not blame physicians for failing to predict all of our illnesses. Our maladies are largely random, and even if our doctors cannot tell us which ones we will have in the next year, or eliminate all of our suffering when we have them, we are happy for the help that they can provide. Likewise, most economists devote their efforts to issues far removed from establishing a consensus outlook for the stock market or the unemployment rate. And we should be grateful that they do.

This statement is unfair to physicians. Physicians do recognize the problems their patients will face and often cannot do anything. Just look at obesity. It leads to a plethora of disorders but try and get someone to diet. Just like Congress.

In reality Economics should be compared to Civil Engineering. Now observe:

1. Civil Engineers have building codes based upon facts.

2. Civil Engineers have a science they all agree to. Try and get two Economists to agree on anything. They are the nastiest bunch I have ever seen. And each one has at least two opinions on everything and there is no concurrence.

3. Civil Engineers get sued of the bridge they designed falls. Ever hear of an Economist getting sued for anything? Physicians get sued, even lawyers get sued. But Economists, no jury could ever understand them anyhow.

4. Civil Engineers design and build bridges. The bridges work, they do what they were supposed to, unless of course politicians get in the middle. Economists cannot predict anything with the same sense of accuracy. Economists have lots of equations and theories. Civil Engineers have a few thousands of years of experience.

Imagine what would have happened to an Economist in Imperial Rome!

So please, until economists can agree on their "laws" and take responsibility for their failures they are at best witch doctors who somehow make a lot of money.

Friday, January 16, 2015

Cancer Stem Cells Again

There is an interesting update on cancer stem cells in Science. They write:  

THE CANCER STEM CELL model emerged in the mid-1990s, when stem cell biologist John Dick of the University of Toronto reported that his team had isolated rare cells in the blood of people with leukemia that seemed to play a key role in the cancer. Although such patients' blood teems with aberrant white blood cells, only a few of them were capable of growing into a new leukemia when injected into mice. Those cells appeared to be misguided versions of the normal adult blood stem cells that differentiate into mature blood cells. Like normal stem cells, the cancer stem cells carried distinctive surface proteins and were self-renewing: They could divide to produce both a regular cancer cell and a new stem cell.

 Now many researchers have examine the stem cell model and there are reasons for its validity. We have argued for Prostate Cancer and one suspects for hematologic cancers such as MDS. The article focuses on Weinberg at MIT and his new company where the authors state:

Verastem's strategy is to screen approved drugs and other chemicals for their ability to block focal adhesion kinase (FAK), an enzyme that helps tumor cells stick to each other and also helps cancer stem cells survive. In the body, Weinberg believes, blocking FAK kills cancer stem cells directly and also makes it harder for these rare cells within a primary tumor to travel through the bloodstream and seed metastases. 

 It should be interesting to see how this develops. Perhaps our understanding of the stem cell is not mature enough. It has also been argued that the stem cell uses exosomes to cause growth in other cells. There is still a great deal to understand.