The Market Ticker
Commentary on The Capital Markets- Category [Technology]
Logging in or registering will improve your experience here
Main Navigation
Full-Text Search & Archives

Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be sent unmodified to lawmakers via print or electronic means or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.

Considering sending spam? Read this first.

2019-05-16 12:05 by Karl Denninger
in Technology , 159 references
[Comments enabled]  

There's a chuckle factor associated with all of this "breathless reporting" on new attempts to bring "satellite" internet to the world.

Upcoming satellite technology could lower prices for Internet services, a new report predicts.

Low Earth Orbit (LEO) satellites from Elon Musk’s SpaceX Starlink project and Jeff Bezos’ Project Kuiper could save American households more than $30 billion per year by introducing more broadband competition, according to a report from BroadbandNow.

“The arrival of this emergent technology is likely to drive down monthly internet prices for hundreds of millions of Americans,” the report said. In short, the more broadband Internet services available in an area, the lower the price consumers will pay on average.

Weeeelllllll, maybe.

Wayback machine time.

When I ran MCSNet I had a little "skunk" project that was my personal pet and nobody else had access to, nor even knew existed.  I detected quite early on that the technological progression for Internet access was likely to go from dial-up (where we were when we started for ordinary consumers) into the monopolist-owned pathways.   ISDN became available quite early on but was still 64kbps per channel, or 128kbps in your house.  Plus compression it wasn't bad and latency was much better than a modem, but still.... and it was expensive, both for the terminal equipment and for the circuit, which was charged like a phone call (or 2 in the case of 128k bonded.)

The "promised land" was sold by many as DSL, but every analysis that I did said that the companies selling it at the time (Covad, etc) were all going to go bankrupt.  They did, ultimately, and I was very, very happy we never got in bed with them as the hit to customers when it happened was extreme.

The risk was from the cable companies which could (illegally) cost-shift much of their build-out into the cable TV space and just like today with health care and online product sales (e.g. Spamazon) I saw zero evidence that state or federal AGs would go after these guys on a competition basis.  This was an existential threat down the line a decade or so to the industry -- and a threat that I fully expected to materialize.

So I spent a lot of time noodling on ways to beat the monopolists without shooting their CEOs or the State and local governments and "regulators" for their refusal to do their job since shooting people was at the time (and still is) illegal.

One of the concepts I played with was building an embedded-system box that you'd buy and plug into your home.  It would run on unlicensed RF spectrum and, when plugged in, look for other reachable nodes and insert itself into a mesh.  At the time (pre-IpV6, which was ratified as a Draft in 1998 -- there was no generally-usable stack available prior to roughly 2000) we had moderately-severe constraints on IPv4 address allocations, and there were business-level "wars" that broke out from time to time.  There were also moderately-severe and recurring routing table problems, although the most-serious of them was quite-early when the first AGS+ routers simply ran out of addressable RAM space, and being VME/M68k based products couldn't have more RAM added to them (they got forcibly turned into "mid-level" and edge routers, and ultimately were scrapped -- at very significant cost.)

My scheme to address this was to layer an internal, network-private prefix in front and carry it only in the aggregate for the specific metro area; it would not be visible to anyone either end of the jack, but was essentially an extension of address space for the purpose of local area aggregation and traffic management.  The design was intended to deliver auto-configured Internet service out a standard Ethernet jack on the back of the box.

The problem that killed the project was the lack of a reasonable cost-and-availability solution for the processing and RAM required in each of the nodes to handle what was a non-centrally-controlled (that is, self-configuring, self-healing and self-modifying, yet secure against tampering) mesh.  It wasn't an unsolvable problem per-se, but on a reasonable money per box basis it was, considering that the mesh itself was worthless without external connections, which would have to be charged of course at various "touch points."  I still have working code and my notes; I never filed a patent on it or disclosed exactly how it worked to anyone because my calculations were that by the time the horsepower necessary to make it actually work in the consumer world was available the patent protection time would have either run out or been very close to expiration, and thus there was no way to make money at it.  As I expected would happen the cable companies indeed came in, leveraged their existing rights-of-way and monopolist access to same plus their ability to cost-shift and here we are.

These new LEO schemes share similar characteristics, except that of course today cheap wide-scale CPU and RAM power is not all that tough of a problem, and now you have formal IpV6, so at least in theory addressing isn't a problem either.  Unlike my idea of blanketing an urban or suburban area these systems would not care about density of customers on the land side at all.  But what IS a problem in the LEO space is that since the satellites "move" from the perspective of the ground station you need a phased-array antenna with a fairly decent amount of processing power to manage it and you also need the spectrum which by its nature is concentrated at the satellite end instead of being distributed as is the case with a mesh.  And finally the satellite side has constraints too -- much of them power-related, as flying birds up there have fairly severe energy constraints; you can't exactly plug something into the wall, so you're limited by what you can harvest with solar cell arrays.

I'm not necessarily sold on the will be cheaper paradigm, even if Space-X manages to get the cost of lofting the birds down to the degree that Musk thinks he will.  The birds still cost a lot of money in capital expense to build and the bandplanning required for such a system along with the processing and protocol work so as to make the network functional and solve potential interference problems is not trivial.  It's not an unsolvable problem by any means, and the latency of a connection in LEO as opposed to working in geostationary space, never mind the slot limitation issues with geostationary orbits (at 1/2 degree spacing you only have 720 of them, etc) that evaporate with an LEO constellation do help a great deal, but in the end it all comes down to actual deliverable bandwidth .vs. cost.

One of the problems with the existing option -- HughesNet -- is that not only is there a latency issue due to geostationary satellites being used but in addition there are extremely severe uplink speed limits and a "fairness" algorithm that prevents the sort of use that people enjoy today on cable systems -- such as watching 4k Netflix shows.  Additionally, due to the inherent technology with geostationary birds and that you're running a licensed-band transmitter there is a very real potential issue with interference and as a result "professional installation is strongly recommended" (so to speak.)

For this sort of system to replace HughesNet those issues have to be resolved in a way that actually makes sense.  The service has to be cheaper, latency lower, the "fairness algorithm" either gone or greatly attenuated and real two-way (that is, I have to be able to get a reasonable uplink speed that I can actually use) service has to exist. These are not trivial problems.

However they're also not unsolvable problems, providing the financial side works, which I'm not sold on.

In any event were I someone with a financial stake in Hughes I'd be real worried about right now -- if any of these systems actually go online and work as the developers think they will those folks are done.  If two or more them get operating, and they're not connected in some business sort of way, then real competition might show up.  Maybe.

However, and this is a big however, I'm not sold on this being a better mousetrap all-in cost-wise than, for example, mixed-band 5g.  Much is going to depend on installed density; in a rural part of the nation, for example, it is not established which gives you a better all-in cost structure.  Installing terrestrial backlinks and transmitters of course only serves that specific area, which is where the LEO system appears to "win", but the density required for real service to work in an LEO constellation is quite large because by definition those satellites are not in fixed relationship to a space on the surface and thus they only work when the necessary density is present so that the earth and space sides all can "see" each other and be able to pass traffic on a reliable basis, handing off and even passing traffic between satellites as necessary before the relative motion of the antenna on earth and the one in space degrades the signal to the point that the user notices it.

Again -- this isn't a "mobile internet" sort of application that will talk to your phone, as the phased-array antenna requirement (we're talking antenna sizes of perhaps a foot or two on a side, plus the power to operate it) will prohibit it from being used to connect to mobile devices.  But it's certainly something that could trivially blanket rural and even very rugged areas where horizontal "lines of sight" for terrestrial RF is a problem with quality, low-latency service.

IF the numbers work -- which remains to be seen.

View this entry with comments (opens new window)
 



2019-05-12 11:05 by Karl Denninger
in Technology , 202 references
[Comments enabled]  

The entire world "breathlessly awaits" automated cars.

Really automated cars.  No steering wheel or pedals, get in, push a button, have your optional adult beverage or, in the states where legal, marijuana preparation of choice, kick back and relax while said vehicle automatically goes where you told it to.

In this nirvana there are no accidents because there are no stupid drivers.  While there are breakdowns they're less-frequent because the vehicles "knows" how its performing, and most of them are electric with fewer parts.  It won't try to go where it can't get to on its current charge state, for example, so it'll never "run out of gas."  Since this world also has the car connected to Google (or other similar service) all the time you won't run into "unexpected" traffic jams either; the car will know, and so will you, exactly how long it will take to reach your destination before you depart, since it will not only know what the road state is in terms of travel time now but also all the vehicles that are headed in a given direction and their routing.

The driver will be taken out of the equation for taxis, trucks and everything else.  Uber and Lyft will make a crap-ton of money and nobody will care that they are both rampantly violating anti-trust law, which is a criminal felony, at the present time.

SAN FRANCISCO (AP) — A fare war between Uber and Lyft has led to billions of dollars in losses for both ride-hailing companies as they fight for passengers and drivers.

But in one way it has been good for investors who snatched up the newly public companies’ stock: The losses have scared off the competition, giving the leaders a duopoly in almost every American city.

It's illegal to act in concert or individually to "corner" a market -- whether it's between one entity, two or more.  It's not civilly illegal either -- it's a felony carrying 10 years in prison per count for everyone involved, plus a million dollars per count, that is, per incident, for the corporation.

But what if this nirvana is not only never going to show up -- or effectively never (e.g. 50+ years from now) as it's being promoted without evidence.  It's literally the predicate of everything that has powered all three of these firms -- Tesla, Lyft and Uber -- into the limelight and onto public markets, with the last two coming in just the last couple of weeks.

Specifically, what if the presented cost picture of the future is knowingly false?

Let's just take one example.  If I was to buy a robo-car with no pedals and no steering wheel I would never accept paying any amount for liability insurance.  I'm not driving, therefore I'm not liable.  Period, end of discussion.  I also won't accept paying for collision insurance for the same reason.  I would accept paying for comprehensive coverage (someone might steal it, a hailstorm might damage it, etc) much as I accept paying for insurance against theft or destruction due to an act of God with any other expensive piece of personal property, perhaps as a scheduled item on my homeowner's policy.

So the first piece of collateral damage here is going to be the entire auto insurance industry.  It literally disappears.  This is a roughly $200 billion per year industry that becomes a "theft, fire and Act of God" business at perhaps one tenth of its current size -- likely subsumed into homeowners and renters insurance with cars becoming scheduled personal property!  And by the way the replacement, assuming the cars are $15,000 more expensive for the hardware and software to do this, is $300 million a year -- in other words an effective zero.  A literal 1% of the economy just permanently disappeared along with all of its jobs, never to be seen again.

But the risk doesn't go away and if/when there is an accident with such a vehicle the firms that made the vehicle are going to get sued and lose every time, since "who's responsible" will be trivially determinable.  All these vehicles have today and will in the future have even more-comprehensive data logs including cameras and storage, so exactly what vehicle did what and when will be easily retrieved and thus which company gets the liability bill can be determined within minutes if not seconds.

That's just the first and most-obvious "victim" of this pie-in-the-sky fraudfest that Musk and others have foisted on people.  I say victim because if you think the insurance business will sit back and let this happen you're smoking crack.  But if you think people will buy these cars without the insurance premium disappearing at the same time since they're not driving and thus cannot legally be "at fault" in an accident you're also smoking crack.  We're to blame for this, by the way; we could have decades ago demanded an "at risk" model for travel upon public roads.  That is, you accept the inherent risk of injury or death, and damage to your property, by your mere presence on a public road. Other than for gross negligence (e.g. operating while drunk, knowingly driving a truck with no brakes past a runaway truck ramp instead of taking it, etc.) nobody could sue anyone, ever, period.  If you wanted to buy insurance against your potential losses while on or about a public road (e.g. while within the easement for same) you could, or you could choose not to, but the beneficiary of said insurance would always and only be you (or your covered family) since you couldn't be sued.

Instead we bought into the puerile belief that you're an infant, incapable of adulting, and thus you can't accept the inherent risk of being present in a public place designed for things that mass in the tons traveling at velocities high enough to trivially and reliably kill anything that gets in their way, never mind destroying property.  So we built a $200 billion a year business out of transferring the inherent risk you should have simply accepted in the presence of such things so we can whine, cry and demand to be made whole.

Now the apple cart threatens to be upset.  Boo hoo; **** you Allstate.

But more to the point is that these "cost analysis" games by Lyft and Uber, along with the pie-in-the-sky bull**** that Musk continually spews argues that getting rid of the driver in a car is a net cost reduction of enormous size.  For Musk it's about selling you convenience and panache, mostly.  But for Uber and Lyft it's a function of existential need since neither firm has a snowball's chance in Hell of ever making money without firing all the drivers.

The problem for both Uber and Lyft is that their "registration statements" and all the "thinking" by those "analysts" on the street is best devolved down into looking into a toilet bowl after someone has taken a big fat dump in terms of its intellectual honesty.

The insurance cost-shift alone, all of it which instantly lands on Uber and Lyft for every one of the vehicles in their "fleet", will kill their alleged projections of lower cost all by itself and that is not part of what they sold to investors.  Again we're talking about, in aggregate across the economy in America, $200 billion a year.

If 10% of "personal transportation" is robotaxis in 5 or 10 years that's $20 billion a year in cost that lands directly on their balance sheet.

The bigger problem is that a "clock in/out" model for these firms grossly reduces Uber's and Lyft's exposure to expense in today's world while moving to robo-taxis makes that impossible and forces 100% of that expense on the firms all of the time.  Consider the current model; "drivers" clock in when they want to and clock out when not.  Uber and Lyft pay nothing for a vehicle that a driver either owns or is leasing (conveniently, from them!) when not on the clock.  Their only "payment" is to the driver.  Demand for said services is highly variable and the clock in/out as the driver wishes is highly variable too.  Both firms use "surge pricing" to try to entice drivers to clock in during busy times and meet the demand; that it screws customers if drivers refuse (individually or worse, collusively!) is a side effect nobody seems to pay attention to.  In theory "surge pricing" should be extraordinarily short term; if you're willing to wait 15 minutes for a ride instead of having it right now enough drivers should have seen the demand, clocked in, and the surge pricing disappears.  In the world we live in today said "surges" frequently last hours or longer because they're simply not enticing enough to get a driver to clock in and try to exploit it.

Now consider a fully robotic model; Uber and Lyft own the vehicles.  The idle ones are still on their balance sheet all the time and yet they must have enough of them to go into service at peak demand or consumer satisfaction goes in the crapper instantly.  This is the "medallion" model in the cities except Lyft and Uber own all the medallions and control their supply!

How much excess supply of vehicles is required to provide the expected level of service?  A lot!  The average car today has perhaps a 5 or 10% occupancy/use ratio; that is, if you commute two hours a day the vehicle sits idle 90% of the time.  This is one reason your vehicle lasts five, six, ten years; if it was moving all 100% of the time it would wear out a hell of a lot faster and require 10x as much maintenance too!

You'd think Uber and Lyft could optimize this but it's actually the other way around in a robotaxi world.  Someone has to own the taxis for them to be available to meet the spikes in demand but the rest of the time they do nothing and earn no revenue.

Right now Uber and Lyft absorb none of that parasitic cost on a capital, maintenance and upkeep or depreciation basis -- and I haven't even gotten into whether a driver is cheaper, all-in, than a robot.  I suspect the human might well be at an equivalent level of accuracy in execution, even allowing for things like the sometimes-drunk operator.

Under a robotaxi model they are forced to absorb all of it -- that, is, roughly ten times what they absorb now via the imputed fare split plus all of the imputed insurance expense that will be forcibly shoved into the acquisition price of the vehicle since the manufacturer will be the one who gets sued.

Does this shift make Uber and Lyft more likely to earn a profit?  Not a snowball's chance in Hell unless they can force all personal cars off the road via some government scheme in which case the price of using an Uber or Lyft, all robotic, will be 3, 5 or 10x what it is now with a human driver in it.

Oh by the way, this is exactly why 15 USC Chapter 1 makes what they're doing now with intentional loss-making operations a felony and yet our government sits on its ass exactly as it does with the medical industry: They can only "succeed" by colluding and forcing other options out of the marketplace, either by legislation, an effective act of extortion (buy this prepaid thing from us or pay 10x more "on demand"!) -- or both.

In the medical industry this has ultimately led to you being robbed out of $25/per-person/per-day whether you're well or sick.  Uber and Lyft, never mind Tesla, seem to think they can replicate this scam in the personal transportation business.

I'll take the under on that given that the medical scam is going to collapse the finances of the nation before 2024: All three of these firms are zeros.

As an aside: I'd love to be able to personally own a robotic car at a rational price before my eyesight and physical ability deteriorates enough that I cannot safely operate a vehicle manually.  If I reach my ability's expiration date before that is possible then I may well choose to say "check please!" and become one with the worms; my ability to choose where I go and when is one of the defining elements, for me personally, that makes life worth living.  But my wishes have nothing to do with what I expect is actually going to happen, nor does it color my analysis when it comes to the fraudfest being shoved on Boobus Americanus by these firms.

View this entry with comments (opens new window)
 

2019-04-24 14:38 by Karl Denninger
in Technology , 171 references
[Comments enabled]  

But Bitcon is untraceable!

No it's not.

In fact it's digitally irrefutable.

This is the bitCON address of one of the spammers who has been sending around the "you got caught masturbating and if you don't pay me $900 I'll squeal to all your friends!": https://www.blockchain.com/btc/address/17jHsGecV53ro2LGzo53s5trTH6Qf3gksS

Two people paid him or her.

He now has taken the money.

And where he took it to is now also known.

One of those looks like a "dead drop" but the other is a wallet he's used before.

You can transfer Bitcon and other "digital currency" around but that by itself doesn't you any good; eventually you have to transfer it to someone's wallet in exchange for a good or service or you have to transfer it to a wallet on an exchange where it can be turned into dollars, euros or similar.  In either event, or if  a transfer "crosses" a wallet you've used for any transaction in either category in the past or future you are instantly and permanently identified in an irrefutable manner that absolutely pins every related transaction in any related wallet to you personally -- and yes, that will stand up in court.

Oops.

This bull**** is trivially traceable to a real person if anyone cares.

Ok ****heads over at the FBI, DOJ and elsewhere:  DO YOU GIVE A CRAP OR ARE YOU ALL WATCHING PORN ON THE TAXPAYER'S DIME?  THIS IS REAL EXTORTION AND REAL THEFT AND IT'S A CRIME. GET OFF YOUR ASSES AND DO YOUR DAMNED JOB.

The US Government should drone the **********s doing this ****; they obviously are both not being arrested and people are sending the money, which I can trivially trace and so can you.

If that wasn't true they wouldn't keep spamming incessantly -- and they are.

View this entry with comments (opens new window)
 

2018-12-03 09:43 by Karl Denninger
in Technology , 230 references
[Comments enabled]  

Someone -- or more like a few someones -- have screwed the pooch.

IPv6, which is the "new" generation of Internet protocol, is an undeniable good thing.  Among other things it almost-certainly resolves any issues about address exhaustion, since it's a 128 bit space, with 64 bits being "local" and the other 64 bits (by convention, but not necessity) being "global."

This literally collapses the routing table for the Internet to "one entry per internet provider" in terms of address space, which is an undeniable good thing.

However, this presumes it all works as designed. And it's not.

About a month ago there began an intermittent issue where connections over IPv6, but not IPv4, to the same place would often wind up extremely slow or time out entirely.  My first-blush belief was that I had uncovered a bug somewhere in the routing stack of my gateway or local gear, and I spent quite a bit of time chasing that premise.  I got nowhere.

The issue was persistent with both Windows 10 and Unix clients -- and indeed, also with Android phones.  That's three operating systems of varying vintages and patch levels.  Hmmmm.....

Having more or less eliminated that I thought perhaps my ISP at home was responsible -- Cox.

But then, just today, I ran into the exact same connection lockup on ToS's "Trader TV" streaming video while on XFinity in Michigan.  Different provider, different brand cable modem, different brand and model of WiFi gateway.

Uhhhhhh.....

Now I'm starting to think there's something else afoot -- maybe some intentional pollution in the ICMP space, along with inadequate (or no!) filtering in the provider space and inter-provider space to control malicious nonsense.

See, IPv6 requires a whole host of ICMP messages that flow between points in the normal course of operation.  Filter them all out at your gateway and bad things happen --- like terrible performance, or worse, no addressing at all.  But one has to wonder whether the ISP folks have appropriately filtered their networks at the edges to prevent malicious injection of these frames from hackers.

If not you could quite-easily "target" exchange points and routers inside an ISP infrastructure and severely constrict the pipes on an intermittent and damn hard to isolate basis.  

Which, incidentally, matches exactly the behavior I've been seeing.

I can't prove this is what's going on because I have no means to see "inside" a provider's network and the frames in question don't appear to be getting all the way to my end on either end.  But the lockups that it produces, specifically on ToS' "Trader TV", are nasty -- you not only lose the video but if you try to close and re-open the stream you lose the entire application streaming data feed too and are forced to go to the OS, kill the process and restart it.

The latter behavior may be a Windows 10 thing, as when I run into this on my Unix machines it tends to produce an aborted connection eventually, and my software retries that and recovers.  Slowly.

In any event on IPv4 it never happens, but then again IPv4 doesn't use ICMP for the sort of control functionality that IPv6 does.  One therefore has to wonder..... is there a little global game going on here and there that amounts to moderately low-level harassment in the ISP infrastructure -- but which has as its root a lack of appropriate edge-level -- and interchange level -- filtering to prevent it?

Years ago ports 138 and 139 were abused mightily to hack into people's Windows machines, since SMB and Netbios run on them and the original protocol -- which, incidentally, even modern Windows machines will answer to unless turned off -- were notoriously insecure.  Microsoft, for its part, dumped a deuce in the upper tank on this in that turning off V1 will also turn off the "network browse" functionality, which they never reimplemented "cleanly" on V2 and V3 (which are both more-secure.)  Thus many home users and more than a few business ones have it on because it's nice to be able to "see" resources like file storage in a "browser" format.

But in turn nearly all consumer ISPs block those ports from end users because if they're open it can be trivially easy to break into user's computers.

One has to wonder -- is something similar in the IPv6 space going on now, but instead of stealing things the outcome is basically harassment and severe degradation of performance?

Hmmmm....

View this entry with comments (opens new window)
 

2018-06-06 16:23 by Karl Denninger
in Technology , 102 references
[Comments enabled]  

Nope, nope and nope.

Quick demo of the lock support in the HomeDaemon-MCP app including immediate notification of all changes (and why/how) along with a demonstration of the 100% effective prevention of the so-called Z-Shave hack from working.

Simply put it is entirely under the controller's choice whether it permits high-power keying for S0 nodes.  For those controllers that have no batteries and no detachable RF stick, which is a design choice, there's not a lot of option.

But for those who follow best practice that has been in place since the very first Z-Wave networks you're 100% immune to this attack unless you insist and intentionally shut off the protection -- even in a world where S2 adoption becomes commonplace (which certainly isn't today but will become more-so over time.)

HomeDaemon-MCP is available for the entity that wishes to make a huge dent in the market with a highly-secure, very fast and fully-capable automation, security and monitoring appliance, whether for embedded sale (e.g. in the homebuilding industry) or as a stand-alone offering.  Look to the right and email me for more information.

View this entry with comments (opens new window)