113 posts categorized "Reports & Studies" Feed

Facts About Debt Collection Scams And Other Consumer Complaints

Logo for Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) recently released a report about debt collection scams. The report is based upon more than 834,00 complaints filed by consumers nationally with the CFPB about financial products and services: checking and savings accounts, mortgages, credit cards, prepaid cards, consumer loans, student loans, money transfers, payday loans, debt settlement, credit repair, and credit reports. Complaints about debt collection scams accounted for 26 percent of all complaints.

The most frequent scam are attempts to collect money from consumers for debts they don't owe. This accounted for 38 percent of all debt-collection-scam complaints submitted. This included harassment:

"Consumers complained about receiving multiple calls weekly and sometimes daily from debt collectors. Consumers often complained that the collector continued to call even after being repeatedly told that the alleged debtor could not be contacted at the dialed number. Consumers also complained about debt collectors calling their places of employment... Consumers complained that they were not given enough information to verify whether or not they owed the debt that someone was attempting to collect. "

The two companies with the most complaints:

"... were Encore Capital Group and Portfolio Recovery Associates, Inc. Both companies, which are among the largest debt buyers in the country, averaged over 100 complaints submitted to the Bureau each month between October and December 2015. In 2015, the CFPB took enforcement actions against these two large debt buyers for using deceptive tactics to collect bad debts."

Compared to a year ago, debt collection complaints increased the most in Indiana (38 percent), Arizona (27 percent), and New Hampshire (26 percent) during December 2015 through February 2016. Debt collection complaints decreased the most in Maine (-34 percent), Wyoming (-26 percent), and North Dakota (-23 percent). And:

"Of the five most populated states, California (10 percent) experienced the greatest percentage increase and Illinois (-4 percent) experienced the greatest percentage decrease in debt collection complaints..."

The report lists 20 companies with the most debt-collection complaints during October through December 2015. The top five companies with with average monthly complaints about debt collection are Encore Capital Group (139.3), Portfolio Recovery Associates, Inc. (112.3), Enhanced recovery Company, LLC (65.7), Transworld Systems Inc. (63.7), and Citibank (54.7). This top-20 list also includes several banks: Synchrony Bank, Capital One, JPMorgan Chase, Bank of America, and Wells Fargo.

While the March Monthly Complaint Report by the CFPB focused upon debt collection complaints, it also provides plenty of detailed information about all categories of complaints. From December 2015 through February 2016, the CFPB received on average every month about 6,856 debt collection complaints, 4,211 mortgage complaints, 3,556 credit reporting complaints, 2,021 complaints about bank accounts or services, and 1,995 complaints about credit cards. Most categories showed increased complaint volumes compared to the same period a year ago. Only two categories showed a decline in average monthly complaints: credit reporting and payday loans. Debt collection complaints were up 6 percent.

Compared to a year ago, average monthly complaint volume (all categories) increased in 40 states and decreased in 11 states. The top five states with the largest increases (all categories) included Connecticut (31 percent), Kansas (30 percent), Georgia (25 percent), Louisiana (25 percent), and Indiana (24 percent). The top five states with the largest decreases (all categories) included Hawaii (-25 percent), Maine (-19 percent), South Dakota (-14 percent), District of Columbia (-8 percent), and Idaho (-6 percent). Also:

"Of the five most populated states, New York (12 percent) experienced the greatest complaint volume percentage increase, and Texas (-8 percent) experienced the greatest complaint volume percentage decrease from December 2014 to February 2015 to December 2015 to February 2016."

The chart below lists the 10 companies with the most complaints (all categories) during October through December, 2015:

Companies with the most complaints. CFPB March 2016 Monthly Complaints Report. Click to view larger image

The "Other" category includes consumer loans, student loans, prepaid cards, payday loans, prepaid cards, money transfers, and more. During this three-month period, complaints about these companies totaled 46 percent of all complaints. Consumers submit complaints about the national big banks covering several categories. According to the CFPB March complaints report (links added):

"By average monthly complaint volume, Equifax (988), Experian (841), and TransUnion (810) were the most-complained-about companies for October - December 2015. Equifax experienced the greatest percentage increase in average monthly complaint volume (32 percent)... Ocwen experienced the greatest percentage decrease in average monthly complaint volume (-18 percent)... Empowerment Ventures (parent company of RushCard) debuted as the 10th most-complained-about company..."

To learn more about the CFPB, there are plenty of posts in this blog. Simply enter "CFPB" in the search box in the right column.


Survey: Bankers Expect Consumers To Use Wearable And Smart Home Devices For Banking

Pegasystems logo Would you use a smart watch, fitness band, or other wearable device for banking? How about your smart television or refrigerator? Many bankers think you will, and are racing to integrate a broader range of mobile devices and technologies into their banking services. A recent survey of financial executives found that:

"... 20 per cent expect it to be common for consumers to make financial transactions using wearables within one year, 59 per cent within two years and 91 per cent within five years... 87 per cent expect it to be common for consumers to make financial transactions using Smart TVs and 68 per cent via home appliances."

The survey included 500 executives globally in several financial areas: banking, financial advice, consumer finance, investment management, insurance, and payments. So, consumers are likely to see these changes not just at your bank, but in a variety of financial and insurance transactions. Here's why:

"... too many banks are out of touch with what customers really want: one survey found 62 per cent of retail banking executives believed their bank offered excellent service compared to just 35 per cent of customers.... Millennials will have annual spending power of US$1. trillion [in 2020] and represent 30 per cent of total retail sales... Millennials not only have an appetite for disruptive new technologies but also an affinity with brand-savvy digital leaders... The Millennial Disruption Index, a three-year study of industry disruption conducted by Viacom subsidiary Scratch, found that banking was most vulnerable to disruption..."

The report discussed the desire by executives to serve customers via a variety of methods:

"Today’s customers expect a flawless end-to-end experience across all channels, yet fewer than 4 per cent of our respondents say they have achieved full omni-channel integration... by 2020, 89 per cent of our respondents expect to achieve full omni-channel integration. This either suggests a massive surge of investment over the next five years – or an industry in denial about the scale of the task ahead... 70 per cent expect video chat to largely replace branch appointments. Indeed, six out of ten now believe a digital-only channel model is viable."

Bankers view the Internet-of-Things (IoT) as both a collection of endpoint devices to provide services through, and a rich source of data:

"...93 per cent agree that finding innovative ways to provide value-added services to customers based on data-driven insight will be crucial to long-term success... 86 per cent agree that once consumers recognize the data potential of the IoT they will increasingly seek to benchmark their own behavior against their peers..."

Banks will probably develop more non-human (e.g., self-service) interfaces:

"... 76 per cent agree the widespread use of virtual assistants such as Siri on the iPhone means customers are more willing to engage with automated assistance and advice... almost three quarters of our respondents agree that in the future customers will interact with a human-like avatar..."

Another technology being considered:

"... 60 per cent [of survey respondents] believe that blockchain, a distributed public ledger which can securely record any information and the ownership of any asset, will prove to be the most significant technology development to affect financial services since the Internet and 45 per cent think the combination of blockchain wallets and peerto-peer (P2P) lending could herald the end of banking as we know it... 12 per cent expect the settlement of insurance claims using IoT data, blockchain and smart contracts to be mainstream practice within two years and 74 per cent expect it to be mainstream by 2025..."

Don't expect your bank to provide these new services next week or next month. It will take them time. New systems must be built, tested, debugged, and integrated with legacy computer systems and processes. All of this suggests that to fund their investments in innovation projects, banks probably won't lower their retail banking prices and fees (e.g., checking, savings, etc.) any time soon. While writing this blog the past 8+ years, I've found it wise to always keep an eye on the banks.

Download "The Future of Retail Financial Services" report by Cognizant, Marketforce, and Pegasystems.


New Federal Agency For Stronger Protections Of Background Investigations

Office of Personnel Management logo Fallout continues from the massive data breach at the Office of Personnel Management (OPM) in 2015. The U.S. Federal government announced a reorganization to provide stronger protections of sensitive information collected during background investigations for federal employees and contractors. The reorganization features several changes including a new agency, the National Background Investigations Bureau (NBIB). The WhiteHouse.gov site announced:

"... the establishment of the National Background Investigations Bureau (NBIB), which will absorb the U.S. Office of Personnel Management’s (OPM) existing Federal Investigative Services (FIS), and be headquartered in Washington, D.C.  This new government-wide service provider for background investigations will be housed within the OPM. Its mission will be to provide effective, efficient, and secure background investigations for the Federal Government. Unlike the previous structure, the Department of Defense will assume the responsibility for the design, development, security, and operation of the background investigations IT systems for the NBIB."

After the massive data breach at OPM, several federal agencies conducted a joint 90-Day Suitability and Security review. The agencies involved included the Performance Accountability Council (PAC), the Office of Management and Budget (OMB), the Director of National Intelligence (DNI), the Director of the U.S. OPM, the Departments of Defense (DOD), the Treasury, Homeland Security, State, Justice, Energy, the Federal Bureau of Investigation, and others.

According to its Fact Sheet, the OPM’s Federal Investigative Services (FIS) unit currently conducts investigations for more than 100 Federal agencies. The FIS conducts more than 600,000 security clearance investigations and 400,000 suitability investigations annually. An NBIB Transition Team will oversee the migration to the new information technology systems and procedures. Transition project goals include:

  1. Establish a five-year re-investigation requirement for all personnel with security clearances, regardless of the level of access,
  2. Reduce the number of personnel with active security clearances by 17 percent
  3. Introduce programs to continuously evaluate personnel with security clearances to determine whether ongoing security clearances are necessary, and
  4. Develop recommendations to enhance information sharing between State, local, and Federal Law Enforcement agencies regarding background investigations.

The changes were announced jointly on January 22, 2016 by James R. Clapper (the Director of National Intelligence), Beth Cobert (Acting Director of the OPM), Marcel Lettre (Under Secretary of Defense for Intelligence, Department of Defense), Tony Scott (U.S. Chief Information Officer), and J. Michael Daniel (Special Assistant to the President and Cybersecurity Coordinator, National Security Council, The White House).


Are You A Lab Rat, Social Addict, And Crash Test Dummy? Facebook Acted Like You Are

Facebook logo After unannounced tests in 2014 when Facebook manipulated its customers' news feeds without notice nor consent, users complained bitterly. Well, Facebook has done it again. Either executives at the social networking giant haven't learned from their 2014 experience, or don't care.

This time, the unannounced test included Android app users where Facebook intentionally crashed their apps. Forbes magazine reported:

"Facebook conducted secret tests to determine the magnitude of its Android users’ Facebook addiction, according to a new report published yesterday. Like a bunch of crash test dummies, users of the Facebook app for Android were (several years ago) subject to intentional Facebook for Android app crashes without being informed of the tests. These tests were reportedly conducted so Facebook could determine user resilience to app deprivation–that is, whether users would find ways to use Facebook on their Android devices without the Google Play store app..."

Similarly, the dating service OKCupid irritated its users in 2014 after secret tests. People don't like being treated like lab rats. Ethically-challenged executives don't seem to understand this.

Supposedly, Facebook wanted to know if those Android app users would get replacement apps from other sources, or use the browser interface. Reportedly, Facebook has one billion Android app users. The news article didn't say whether Facebook performed similar tests on Apple iPhone app users. It seems wise to assume so.

The news report didn't mention whether Facebook slowed or manipulated the browser interface to see if users would switch to one of its mobile apps. It seems wise to assume so.

What are your opinions of the secret tests? Is this an acceptable "cost" for a service that promises to remain free?


The Ethical Dilemmas Of Self-Driving Cars

There have been plenty of articles in the news media about self-driving cars. What hasn't been discussed so much are the ethical dilemmas. What are the ethical dilemmas? The M.I.T. Technology review explored the topic:

"Here is the nature of the dilemma. Imagine that in the not-too-distant future, you own a self-driving car. One day, while you are driving along, an unfortunate set of events causes the car to head toward a crowd of 10 people crossing the road. It cannot stop in time but it can avoid killing 10 people by steering into a wall. However, this collision would kill you, the owner and occupant. What should it do?”

If one programs self-driving cars to always minimize the loss of life, then in this scenario the owner is sacrificed. Will consumers buy self-driving cars knowing this? Would you?

Researchers posed this and similar ethical dilemmas to workers at Amazon Mechanical Turk, a crowd-sourcing marketplace for developing human intelligence in computers. The researchers found that while people wanted self-driving cars programmed to minimize the loss of life:

"This utilitarian approach is certainly laudable but the participants were willing to go only so far. [Participants] were not as confident that autonomous vehicles would be programmed that way in reality – and for good reason. They actually wished others to cruise in utilitarian autonomous vehicle more than they wanted to buy a utilitarian autonomous vehicle themselves”

So, few people want to sacrifice themselves. They want others to do it, but not themselves.

There are plenty of ethical dilemmas with self-driving cars:

"Is it acceptable for an autonomous vehicle to avoid a motorcycle by swerving into a wall, considering that the probability of survival is greater for the passenger of the card than for the rider of the motorcycle? Should different decisions be made when children are on board, since they both have a longer time ahead of them than adults, and had less agency in being in the car in the first place? If a manufacturer offers different versions of its moral algorithm, and a buyer knowingly chooses one of them, is the buyer to blame for the harmful consequences of the algorithm’s decisions?”

You can probably think of more dilemmas. I know I can. Should self-driving car manufacturers offer different algorithms so each driver can use the algorithm they want? Or should all cars have the same algorithm? If the approach is differing algorithms, how will this affect insurance rates? If you drive from one country to another, must drivers adjust their car's algorithm for each country?

Last, I prefer the term, "self-driving" to describe the new technology. While some technology sites and news organizations have used the term "driverless," the term "self-driving" is a more accurate description, and it places the responsibility where it should be. Something is driving the car, and not a person.

And, there may be hybrid applications in the future, where a driver operates the vehicle remotely, as drone operators do today. So, there will always be drivers: somebody or something.

Read the MIT Technology Review article titled, "Why Self-Driving Cars Must Be Programmed To Kill." Share below your opinions about how self-driving cars should be programmed.


American Adults Who Don't Use The Internet. Who They Are And Why

A few weeks ago, the Pew Research Center released the results of survey about adults in the United States that don't use the Internet. You're probably thinking: everyone uses the Internet. Right? Afterall, 64 percent of Americans have smartphones and 19 percent of them use their phones to go online.

Actually, a substantial chunk of the population doesn't go online. The Pew Research Center survey described American adults who don't use the Internet.

Overall, in 2015 about 15 percent of American adults don't use the Internet. Across the years, things have gotten better. The comparable figure in 2000 was 48 percent, and 24 percent in 2010. However, in 2015 equal portions of men (15 percent) and women (15 percent) don't use the Internet. The numbers vary more by race, age, income, and residence:

U.S. Adults% Don't Use The Internet
White
Black
Hispanic
Asian
14
20
18
5
Less than $30K
$30K - $49.9K
$50K - $74.9K
$75K or more
25
14
5
3
18 - 29
30 - 49
50 - 64
65 or older
3
6
19
39
Less than high school
High school
Some college
College graduates
33
23
9
4
Urban
Suburban
Rural
13
13
24

The 2015 findings are based upon three surveys of 5,005 adults in the United States. In 2013, Pew Research Center surveyed American adults who don't use the Internet:

Reason For Not Using The Internet% Adults
Not interested 21
Don't have a computer 13
Too difficult or frustrating 10
Don't know how / don't have the skills 8
Too old to learn 8
Don't have access 7
Too expensive 6
Don't need it / don't want it 6
Consider it a waste of time 4
Physically unable (e.g., poor eyesight, disabled) 4
Too busy / don't have the time 3
Worried about privacy / spam / spyware / hackers 3

Of these adults that don't use the Internet:

  • 44 percent have asked a friend or family member to look up something online for them,
  • 23 percent live in households were somebody else in that household uses the Internet, and
  • 14 percent used the Internet previously and stopped.

What to make of this? I look at the people who said Internet access is too expensive or they don't have access. While overall our country appears strong, there are areas of the country were citizens lack one or several services we all take for granted. There are Internet deserts, broadband deserts, banking deserts, public library deserts, and food deserts.


Study: American Adults Are Always Connected And Dependent Upon Their Mobile Devices

Bank of America logo Recently, Bank of America released the results of its second annual Trends in Mobility study.The report explored how several generations of adults -- millennials, Generation X, baby boomers, and seniors -- use their mobile devices, including banking. Key findings:

  • About three-quarters (71 percent) of respondents sleep with–or next to–their mobile phones. Younger millennials (ages 18-24) are most likely to sleep with their smartphone on the bed (34%)
  • The first thing people reach for when they wake up is their mobile device (35 percent) compared to coffee (17 percent), their toothbrush (13 percent), and their spouse (10 percent)
  • Similarly, at the end of the day almost one-quarter (23 percent) of survey respondents fall asleep with their smartphone in their hand. 44 percent of  younger millennials (ages 18-24) fall asleep with their devices
  • Throughout the day, 54 percent of younger millennials (and 36 percent of all survey respondents) constantly check and use their mobile devices. 36 percent of younger millennials and 21 percent of all survey respondents check their devices once per hour
  • Almost four in 10 (38 percent) of consumers say they never disconnect from their mobile phones. Only 7 percent unplug during vacation
  • Almost half (44 percent) of survey respondents said they couldn’t last a day without their mobile devices. Younger people are more dependent. 41 percent of older millennials (ages 25-34) and 37 percent of Generation X (ages 35-49) said they couldn't last a day without their devices
  • 46 percent of survey respondents said ages 13 - 15 is the best age for parents to buy smartphones for their children. 19 percent said ages 16 - 18. 14 percent said the best age is when children can buy their own phones
  • The constant online usage extends to online banking

Bank of America Trends in Consumer Mobility study

Mobile seems to be replacing visits to physical bank branches. 83 percent of respondents have visited a physical bank branch during the past 6 months. While half (51 percent) of all survey respondents use either mobile or online as their primary banking method, only 23 percent of respondents and 6 percent of younger millennials use physical bank branches for most transactions. That has implications for low-paid tellers and branch employees.

Earlier this year, Bank of America raised prices for its checking account customers. Last year, the bank paid $16.65 billion to settle investigations by the U.S. Justice Department (DOJ) and several states' attorney generals into the bank's former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch, related to the packaging, marketing, sale, and issuance of residential mortgage-backed securities (RMBS).

The results align with other studies. The Pew Research Center studied mobile etiquette, and found that while 92 percent of American adults have cellphones, 31 percent never turn off their devices and 45 percent rarely turn off their devices. About etiquette, Pew found:

  • 77 percent of survey respondents thought it okay to use phones while walking down the street
  • 75 percent thought it okay to use phones on public transportation (e.g., buses, subways, commuter trains)
  • 38 percent thought it okay to use phones in restaurants
  • 5 percent thought it okay to use phones during meetings
  • 89 percent used their phone during their most recent social gathering

The survey by Pew included 3,217 adults in the U.S. from May 30 to June 30, 2014. Pew also found:

"As a general proposition, Americans view cell phones as distracting and annoying when used in social settings — but at the same time, many use their own devices during group encounters... 82% of adults say that when people use their phones in these settings it frequently or occasionally hurts the conversation. Meanwhile, 33% say that cell phone use in these situations frequently or occasionally contributes to the conversation and atmosphere of the group. Women are more likely than men to feel cell use at social gatherings hurts the group... those over age 50 (45%) are more likely than younger cell owners (29%) to feel that cellphone use frequently hurts group conversations... Young adults have higher tolerance for cellphone use in public and in social settings; they also are more likely to have used their phone during a recent social gathering..."

Why people use their mobile devices during social gatherings:

  • 45 percent: post a photo or video of the social gathering
  • 41 percent: to share something that happened in the group
  • 38 percent: get information that might be of interest to the group
  • 31 percent: connect with others the group knows
  • 16 percent: no longer interested in the group's activity
  • 10 percent: to avoid participating in the group's activity

The survey results are great news for banks, telecommunications companies, mobile device manufacturers, app developers, and data brokers that want to collect location data and serve location-based advertisements.

The Bank of America survey, conducted by Braun Research, Inc. from April 13 - 26, 2015, included 1,000 U.S. adults ages 18 or older. Download the 2015 Trends in Consumer Mobility report (Adobe PDF) by Bank of America.


Silent Phone Calls Indicate The Start Of Identity Theft And Fraud

At some point we all have received these "silent" phone calls. After answering the call, there's nobody on the line. The call is silent and then we hang up. The problem is over, right?

Security experts reported that these "silent" phone calls can be the start of identity theft and fraud. An NPR report explained the identity theft and fraud process.

Step one includes an Internet-based robocall (e.g., an automated phone call using computers) from anywhere in the world -- usually offshore -- by scammers to verify your 10-digit phone number. With the multitude of corporate data breaches, the criminals may have acquired your name and phone number from hackers. Step two is another robocall pretending to be your bank, computer company, collection agency, or tax agency to trick you into revealing sensitive personal information (e.g., e-mail, address, age, bank name, bank account numbers, card numbers, etc.) over the phone.

NPR reported:

"... these robocalls are on the rise because Internet-powered phones make it cheap and easy for scammers to make illegal calls from anywhere in the world... researchers estimate 1 in every 2,200 calls is a fraud attempt."

Experts advise consumers not to disclose any personal information over the phone. Verify the caller first. Demand their name, company name, e-mail, phone number, website address, and how they acquired your phone number. (Most phone scammers will refuse or make excuses.) If the do provide contact information, check to see if matches the contact information you can verify independently (e.g., the phone numbers on the back of your bank card). If it doesn't match, then the caller is probably a scammer.

I always tell callers two things: a) I don't give out personal information over the phone, and b) I need to verify the caller first. If the caller provides a website address, I will check it during the phone call. If the site doesn't exist or looks crappy, that's a huge clue the caller is probably a scammer.

When you disclose personal information over the phone, the criminals' proceed with step three of the identity theft and fraud process. They will contact your bank or credit card company pretending to be you to takeover your account by changing the address on your account. How? The scammers will use the personal information you provided.

What should consumers do when you receive these robocalls? Experts advise that you simply hang up. Don't ask to be taken off their phone lists. Don't access their voicemail system to be removed from their calls. All that does it help the scammers verify your existence.

Parents: now you know what to teach your children about phone calls, privacy, and safety.


Banks Pay Most of Their Tellers Less Than $15 Per Hour

Everyone knows that many low wage employees work in restaurants, fast food, and construction. Add banks to the list.

The National Employment Law Project (NELP) published an August 2015 report about the earnings of employees in banks. The report focused upon retail banks, where consumers and small businesses typically have checking accounts, savings accounts, and loans. NELP studied the pay at banks because:

"Bank tellers constitute the largest banking-related occupation in the United States, with almost half a million workers nationwide. Three in four (74.1 percent) earn less than $15 an hour, compared with 42.4 percent of the total U.S. workforce, according to NELP’s report. Tellers’ median hourly wage is just $12.44. The workforce is overwhelmingly female: more than five in six bank tellers are women."

The media hourly wage is the amount that divides any group in half. Half of the group earns less and half of the group earns more that the median hourly pay. The median hourly pay for several positions in retail banks:

  • Financial clerks: $18.52
  • Secretaries and administrative assistants: $18.22
  • Credit authorizers, checkers, and clerks: $17.65
  • Loan interviewers and clerks: $17.34
  • Bill and account collectors: $17.20
  • Bookkeeping, accounting, and auditing clerks: $17.04
  • New accounts clerks: $16.33
  • Customer service representatives: $15.94
  • Office clerks: $14.64
  • Receptionists and information clerks: $12.93
  • Janitors and cleaners: $10.65

Additional findings from the report (click any image to view a larger version):

Figure 1: Bank employees earning less than $15 per hour. NELP. Click to view larger image

Figure 2: Most bank tellers are women. NELP. Click to view larger image

Figure 3: Most bank tellers are white. Latinos are over-represented. NELP. Click to view larger image

Christine Owens, executive director of NELP said:

“Many people hear about bank profits and lavish CEO compensation and assume that all jobs in banking pay well. But the reality is far different for bank tellers: Though they handle other people’s money all day, many tellers struggle to survive on wages too low to sustain families... In New York, the families of nearly 4 in 10 bank tellers must rely on some form of public assistance to get by; nationally, almost one in three do so.”

The last sentence is worthy of emphasis: 4 in 10 bank tellers must rely on some form of public assistance. So, when companies pay extremely low wages, the rest of us -- taxpayers -- end up paying to support companies that have decided not to pay their employees what many call a "living wage." You can conclude: minimum wage jobs encourage bigger government via assistance programs.

Don't like big government? Then, support minimum wage increases in the state where you live.

Download the full report (Adobe PDF). What are your opinions of these wages?


Drones: Near Misses Over New York, Shoot Down In Kentucky, And DHS Bulletins

On Sunday, CNN reported two near misses between a drone and passenger airplanes in the skies over New York:

"Two airplanes flying near one of the nation's busiest airports each came within 100 feet of a drone on Friday, according to audio from each flight's radio calls. The first, JetBlue Flight 1843, reported spotting a drone at 2:24 p.m. while approaching John F. Kennedy International Airport, according to the Federal Aviation Administration. In the audio recording, the cockpit says that the drone passed just below the planes nose when the jet was flying at an altitude of about 800 to 900 feet."

Details about the second near miss:

"Then at about 5 p.m., Delta Flight 407 -- which had 154 people on board -- was preparing to land when the cockpit reported seeing a drone below its right wing. The Delta flight had its drone encounter near Floyd Bennett Field, located in Gateway National Recreation Area. A Gateway National Recreation Service park ranger told CNN that the field does not permit drone flying but many aviation enthusiasts can be found flying "radio-controlled propeller crafts and unmanned small jets." However, there is a space within Floyd Bennett field where people with a permit and members of an aviation club may fly their own small craft, the ranger said."

The Federal Aviation Administration (FAA) is responsible for maintaining the safety of our skies in the United States. The incident highlights the need for continued and stronger enforcement of aviation safety laws by drone operators:

Unmanned aircraft systems are neither supposed to fly within five miles of an airport without notifying the airport operator and control tower nor are they supposed to go above 400 feet."

On Friday, National Public Radio report a dispute between two Kentucky residents after one shot down a drone the other person was operating:

"William Meredith, 47, of Bullitt County, Ky., was arrested after he used his shotgun to bring down a drone that he said hovered above his property in Hillview, a suburb of Louisville..."

Meredith alleged shot down the drone when it flew over his property. NPR also reported:

"Police were called to the scene; Meredith now faces felony charges of wanton endangerment and criminal mischief, with a court date set for September. The drone's owner, David Boggs, says the drone wasn't hovering low over anyone's property, showing flight tracking data to local media that indicates an altitude of more than 250 feet. And he says he wasn't trying to invade anyone's privacy."

The FAA began investigations in November last year after reports of rogue drones outfitted with cameras at large, outdoor sporting events... college football stadiums.

Last Friday, the Department of Homeland Security (DHS) sent bulletins with intelligence assessments to police departments around the nation. CBS News reported that the bulletins:

"... warned that unmanned aircraft systems (UAS) or drones could be used in the U.S. to advance terrorist and criminal activities... According to federal officials, "The rising trend in UAS incidents within the National Airspace System will continue, as UAS gain wider appeal with recreational users and commercial applications." The bulletin goes on to say, "while many of these encounters are not malicious in nature, they underscore potential security vulnerabilities... that could be used by adversaries..."


Study: Companies Pay Their Senior Executives More Than They Pay In Federal Taxes

The Institute For Policy Studies released the results of a study of executive compensation and corporate taxes. Researchers analyzed the pay of Chief Executive Officers (CEOs) in the largest corporation and the highest paid CEOs. Key findings were:

"Of America’s 30 largest corporations, seven (23 percent) paid their CEOs more than they paid in federal income taxes last year... Of America’s 100 highest-paid CEOs, 29 received more in pay last year than their company paid in federal income taxes—up from 25 out of the top 100 in our 2010 and 2011 surveys."

The pay of those 29 CEOs averaged $32 million. The study also investigated tax shelters. The 29 corporations that paid more to their CEOs than federal income taxes also operated:

"... 237 subsidiaries in tax havens. The company with the most subsidiaries in tax havens was Abbott Laboratories, with 79. The pharmaceutical firm’s CEO paycheck was $4 million larger than its IRS bill in 2013. Of the 29 firms, only 12 reported U.S. losses in 2013. At these 12 unprofitable firms, CEO pay averaged $36.6 million—more than three times the $11.7 million national average for large company CEOs..."

The corporations are familiar brands and names:

"The company that received the largest tax refund was Citigroup, which owes its existence to taxpayer bailouts. In 2013, Citi paid its CEO $18 million while pocketing an IRS refund of $260 million. Three firms have made the list in all three years surveyed. Boeing, Chesapeake Energy, and Ford Motors paid their CEO more than Uncle Sam in 2010, 2011, and 2013."

It would seem that the shareholders at these 12 unprofitable firms either don't care or have allowed the boards of directors to authorize exorbitant pay packages in the face of unprofitable performances. If those seven largest, profitable corporations had paid the full statutory tax rate of 35 percent, they would have paid $25.9 billion in federal taxes, which could have been used instead for:

"... Restoring elementary and high school teaching jobs lost to recession and austerity budget cuts... Resurfacing 22,240 miles of four-lane roads... Running the U.S. Department of Veterans Affairs for two months... Making pre-K [educaton] universal..."

The authors, Scott Klinger and Sarah Anderson, concluded:

"For corporations to reward one individual, no matter how talented, more than they are contributing to the cost of all the public services needed for business success reflects the deep flaws in our corporate tax system. Rather than more tax breaks, Congress should focus on addressing these deep flaws by cracking down on the use of tax havens, eliminating wasteful corporate subsidies, and closing loopholes that encourage excessive executive compensation."

Some specific actions Congress could take (links added):

"... the CUT Loopholes Act would close a variety of loopholes that facilitate tax dodging through offshoring. This bill would treat the foreign subsidiaries of U.S. corporations, whose management and control occur primarily in the United States, as U.S. domestic corporations for income tax purposes. It would also force corporations to take the same expense for stock option grants on their tax returns as they report on their shareholder books... Passing this legislation would reduce the incentive to shift profits and jobs overseas and could raise an additional $189 billion over ten years without raising corporate tax rates... Corporate Tax Fairness Act (S. 250 and H.R. 694)... would eliminate the ability of corporations to defer tax payments on their offshore profits. Instead, all worldwide profits earned by U.S. corporations would be immediately taxable in the United States. Firms would receive a dollar-for-dollar tax credit for any taxes paid to foreign governments. Corporations earning their profits in places like the United Kingdom, Germany, or France, where effective corporate tax rates are similar to U.S. rates, would pay little if any additional tax to the U.S. government. But firms stashing their profits in offshore tax havens would be forced to pay up for their years of tax haven abuse. The bill would raise an estimated $590 billion over ten years."

Download the report, "Fleecing Uncle Sam" (Adobe PDF). A copy is also available here.


FTC Report Recommended Best Practices For Companies Offering Products For The Internet of Things

U.S. Federal Trade Commission logo Earlier this year, the U.S. Federal Trade Commission (FTC) released a report about the Internet of Things (IoT): the set of technologies and devices outfitted with sensors collect data, communicate directly with each other, transmit data to the development company, and publish data to the Internet with human interactions. The FTC recommended:

"... a series of concrete steps that businesses can take to enhance and protect consumers’ privacy and security... The Internet of Things is already impacting the daily lives of millions of Americans through the adoption of health and fitness monitors, home security devices, connected cars and household appliances... Such devices offer the potential for improved health-monitoring, safer highways, and more efficient home energy use... However, the FTC report also notes that connected devices raise numerous privacy and security concerns that could undermine consumer confidence."

Experts have estimated 25 billion connected devices this year, and 50 billion by 2020. FTC Chairwoman Edith Ramirez said:

"The only way for the Internet of Things to reach its full potential for innovation is with the trust of American consumers... We believe that by adopting the best practices we’ve laid out, businesses will be better able to provide consumers the protections they want and allow the benefits of the Internet of Things to be fully realized.”

The FTC held a workshop during November 2013 with interested industry participants. The report listed best practices identified and discussed during that workshop. Some important limitations of the report:

"... our discussion is limited to IoT devices that are sold to or used by consumers. Accordingly, the report does not discuss devices sold in a business-to-business context, nor does it address broader machine-to-machine communications that enable businesses to track inventory, functionality, or efficiency..."

The report listed some of the benefits from IoT devices:

"... connected medical devices can allow consumers with serious medical conditions to work with their physicians to manage their diseases. In the home, smart meters can enable energy providers to analyze consumer energy use, identify issues with home appliances, and enable consumers to be more energy-conscious. On the road, sensors on a car can notify drivers of dangerous road conditions, and software updates can occur wirelessly, obviating the need for consumers to visit the dealership..."

The disadvantages from the Internet of Things:

"... a variety of potential security risks that could be exploited to harm consumers by: (1) enabling unauthorized access and misuse of personal information; (2) facilitating attacks on other systems; and (3) creating risks to personal safety. Participants also noted that privacy risks may flow from the collection of personal information, habits, locations, and physical conditions over time. In particular, some panelists noted that companies might use this data to make credit, insurance, and employment decisions..."

The report listed recommended a "security by design" approach with best practices for security, personnel, data minimization, and legislation. For security best practices, companies should:

  1. Conduct privacy or security risk assessments,
  2. Minimizing the data collected and archived,
  3. Test their security measures before launching products and services, and
  4. Monitor products (and services) throughout the life-cycle and patch known vulnerabilities.

For personnel best practices, the report recommended that companies:

  1. Train all employees about good security, and ensure that security issues are addressed at the appropriate level of responsibility within the organization,
  2. Retain vendor and sub-contractors that are capable of maintaining reasonable security and provide reasonable oversight
  3. Identify significant risks within their systems, and implement corresponding defenses
  4. Consider implementing reasonable access control measures to limit the ability of unauthorized persons to access a consumer’s device, data, or even the consumer’s network

To minimize the amount of consumers' sensitive information collected, companies should:

"... examine their data practices and business needs and develop policies and practices that impose reasonable limits on the collection and retention of consumer data... data minimization is a flexible one that gives companies many options. They can decide not to collect data at all; collect only the fields of data necessary to the product or service being offered; collect data that is less sensitive; or de-identify the data they collect...

Companies that collect consumers' information should obtain consumers' consent before collection. The report seemed to focus more on balancing consumers' needs for notice and consent with companies' needs for streamlined systems (link added):

"This does not mean that every data collection requires choice. The Commission has recognized that providing choices for every instance of data collection is not necessary to protect privacy. In its 2012 Privacy Report, which set forth recommended best practices, the Commission stated that companies should not be compelled to provide choice before collecting and using consumer data for practices that are consistent with the context of a transaction or the company’s relationship with the consumer. Indeed, because these data uses are generally consistent with consumers’ reasonable expectations, the cost to consumers and businesses of providing notice and choice likely outweighs the benefits. This principle applies equally to the Internet of Things."

Many devices connected to the Internet of Things will not have traditional interfaces (e.g., keyboard, screen) like you see today with computers, laptops, tablets, and smart phones. Hence:

"Staff acknowledges the practical difficulty of providing choice when there is no consumer interface and recognizes that there is no one-size-fits-all approach. Some options include developing video tutorials, affixing QR codes on devices, and providing choices at point of sale, within set-up wizards, or in a privacy dashboard. Whatever approach a company decides to take, the privacy choices it offers should be clear and prominent, and not buried within lengthy documents."

The example that comes to mind are Internet-connect refrigerators. For consumers to make informed choices, manufacturers must provide privacy and terms of use policies to consumers before and after purchase. This suggests alternative delivery methods of privacy and terms of use policies. I am sure that other privacy bloggers and privacy advocates will watch closely how these IoT devices are marketed.

Last, the report discussed the current state of legislation. the consensus seemed to be that more is needed at both the state and federal levels.

Download the FTC report: "Internet of Things: Privacy & Security In a Connected World" (Adobe PDF) from the FTC site. A copy is also available here.

What are your opinions of the Internet of Things? Of the recommended best practices? How would you like IoT manufacturers to delivery policies before purchase?


Study: Google May Skew Search Results To Its Content

Consumers use search engines with the assumption that the search results are unbiased. That is, the search results deliver what's available on the Internet and not what the search engine decides for you. The review website Yelp funded a study where researchers at Harvard and Columbia:

"... presented 2,690 web users with two versions of Google. One version showed search results for local businesses as users usually see them, with links to the businesses along with ratings as posted to a Google site. The other version showed links to businesses along with ratings from rival sites like Yelp... The people studied were 45 percent more likely to click on links if Yelp and other competitors were included — a sign, researchers say, that users prefer more diverse search results."

The study is important because it may force government regulators, including the U.S. Federal Trade Commission (FTC), to reopen investigations into online search practices. Google and the FTC reached a settlement in January 2013 about concerns that the company's business practices stifled competition.

Results about the Yelp-funded study were reported in the Focus On The User website:

"You might think that Google gives you the best answers from across the web when you search for something as important as a pediatrician in Munich, a bicycle repair shop in Copenhagen, or a hotel in Madrid. But Google doesn’t actually use its normal organic search algorithm to produce the responses to this question that you see prominently on the first screen. Instead, it promotes a more limited set of results drawn from Google+ ahead of the more relevant ones you would get from using Google's organic search algorithm."

To learn more, I encourage you to watch the six-minute video below, which is also available on Youtube:


Guestworker Programs, Reshoring, And Skilled Workers. The Impacts Upon American Workers

In March 2015, Ron Hira, a Research Associate and Associate Professor of Public Policy at Howard University, testified before the U.S. Senate Judiciary Committee hearing about immigration reforms needed to protect skilled American workers. That classification includes workers in various high-tech jobs. Mr. Hira testified:

"Congress and multiple Administrations have inadvertently created a highly lucrative business model of bringing in cheaper H-1B workers to substitute for Americans. There are mainframe-sized loopholes built into the H-1B program’s design... Some of these loopholes are intentional, some are not, but they all add up to a system that encourages employers to exploit the H-1B program for cheap labor. Given the extraordinarily high profits involved in using guestworkers instead of Americans, it should surprise no one that many employers are taking advantage of this business model and lobbying to expand it... Myth: Employers must prove there are no qualified American workers before hiring an H-1B... Myth: H-1B workers cannot be cheaper than Americans because employers must pay the “prevailing wage”... Myth: Compliance with the program’s rules that protect American workers is robust..."

You may have believed those myths. Now you know otherwise. That abuse of the H-1B visa program may affect you, an employed family member, or somebody you know. How? Mr. Hira explained:

"... This is not just adversely affecting a few workers. The H-1B program is very large with approximately 120,000 new workers admitted annually. Once admitted those workers can remain in the U.S. up to six years. While no one knows exactly how many H-1Bs are currently in the country, analysts estimate the stock of H-1B workers at 600,000..."

Of course, the corporations claim that they can't find skilled American workers. Mr. Hira explained what's really happening and how it extends beyond H-1B visa recipients:

"Most of the H-1B program is now being used to import cheaper foreign guestworkers, replacing American workers, and undercutting their wages... There are hundreds of thousands of additional guestworkers admitted on L-1 and OPT visas, and they too are harming the job prospects of American workers. Because Congress never expected L-1 and OPT workers to be potential competition to American workers those programs have virtually no rules to protect American workers. That expectation was incorrect. As with the H-1B program, these guestworker visa programs are now being used too to replace and undercut American workers."

Sadly, government agencies also perpetuate the problem:

"The recent case of Southern California Edison (SCE) illustrates the most flagrant abuses of the H-1B program and exposes the flaws in the protections for American workers. As reported by ComputerWorld and the Los Angeles Times, SCE is replacing its American workers with H-1B workers hired by outsourcers Tata and Infosys. To add insult to injury, SCE forced its American workers to train their H-1B replacements as a condition of receiving their severance packages. There could not be a clearer case of the H-1B program being used to harm American workers’ wages and working conditions."

You may remember a similar incident at Disney where fired American workers were forced to train their foreign replacements before leaving. Pew Charitable Trusts reported about other alleged abuses:

"A computer programmer from India was promised a $46,500 salary in New York, plus tuition to study for a master’s degree. Instead, his annual pay averaged less than $13,000 and his degree was withheld when his employer failed to make the promised tuition payments. In California, veteran computer workers at a health care company say they were forced to train cheaper foreign replacements before being laid off, even though the replacements were hired under a program meant to fill critical jobs when employers can’t find qualified U.S. citizens or permanent residents who hold green cards to fill them."

I encourage you to visit the Pew Charitable trusts article, because it features an interactive map where you can discover the number H-1B workers in your state.

Some readers in denial may be thinking: I have a college degree, or I work in a high-tech job such as writing code for websites and mobile apps. It won't affect me. I'm immune.

Don't fool yourself. It will affect you. It probably already has. Former U.S. Labor Secretary and professor Robert Reich summarized the problem in a June 16 Facebook post (links added):

"... the [U.S.] Senate is considering a bill to raise the number of skilled foreign workers that can come to the U.S. on H-1B visas... It’s a bad idea. When Secretary of Labor, I was responsible for implementing the H-1B visa program – and again and again found high-tech companies claiming they needed skilled workers from abroad because they couldn’t find ...such workers in the U.S. -- when in reality they just didn’t want to pay higher wages to Americans with those same skills... A study released in April by the National Bureau of Economic Research found that H-1B visa recipients crowd out American workers, lowering wages and raising profits without increasing productivity. A 2013 analysis by the Economic Policy Institute found there are more than enough U.S.-born high-tech workers to fill jobs here, and that companies have been using foreign workers to cut costs, knowing they’re easy to intimidate because if they lose their jobs they have to leave the U.S."

You can read this study by researchers at the University of Notre Dame and University of California at Berkeley (Adobe PDF). They concluded:

"We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits... we robustly find that new H-1Bs cause no significant increase in firm employment..."

Think about that. Firms pay less to other employees. So, even if you aren't replaced, you may be paid less or your annual wage increases are smaller. The savings went to the company's profits, and to senior executives rewarded for those savings via bonuses.

I have experienced the high-tech guest-worker situation. As a freelancer with a master's degree and plenty of experience, I work with a variety of digital agencies to produce websites for corporate clients. Several years ago, I subcontracted with an agency to work on a website redesign project. That project included a client company's internal website (called an "Intranet") to automate and streamline its human resources processes, forms, and performance reviews for both managers and employees. I was hired to perform the usability work and lead several focus-group sessions with the client company's employees and managers.

After meeting my project team members, I saw immediately the situation. Another person and I were the only two American workers on this project team. The rest of the team included workers from India to perform the project management, documentation, website development, quality assurance, and coding work. Plenty of my peers at other digital agencies, and some as freelancers, regularly perform all of these tasks. So, there's no shortage of qualified, experienced American workers.

During this three-month project, the foreign guest workers flew in from Mumbai as needed for their roles, and shared rooms in a rented home (cheaper than a hotel). When their role on the project was finished, they either returned to Mumbai or traveled to another U.S. location for their next project. The math probably went like this: the digital agency probably charged it's corporate client an average of about $120 per hour across all project team members. The digital agency paid me $90.00 per hour, paid the foreign workers maybe $40.00 per hour, and pocketed the difference. So, the agency's profits were $30.00 per hour for American workers like me, but a far higher $80.00 per hour with foreign workers.

This looked to me like a clear corporate choice aided by a willing digital agency. You'd never know it happened unless you worked directly on the project.

Multiply my experience by thousands of others and you get an idea of how vast the problem is. Corporations, politicians, and news media that defend this employment abuse may announce that thousands of jobs are returning to the USA (often called "reshoring"), but you now know what's really happening. Informed voters question announcements and demand to know if the returning jobs are pre-filled with foreign guest-workers while the employers don't bother looking to hire American workers. You now know more to contact your elected officials and demand that they explain what they are doing to protect American workers.

When returning jobs are pre-filled with guest workers, then there's really no benefit to USA citizens and plenty of downside: unemployment levels remain high, it is harder to find full-time work, and for workers over 55 years of age it can be impossible to find full-time work. You now know it's a pro-business free-for-all at the expense of middle-class and skilled workers.

What are your opinions of skilled guest workers? Of the H-1B visa program? Have you had to train foreign guest workers?


Meme: Florida's Approach To Fight Climate Change

Meme: Florida approach to address climate change

Of course, state executives claim no such policy exists, while the employees responsible for protecting the state's environment reported that the policy was communicated verbally. Read more:


Senator Releases Report Calling For Greater Automobile Security And Privacy

Earlier this month, Senator Edward Markey (D-MA) issued a report calling for greater automobile security and privacy for consumers. The "Tracking & Hacking: Security & Privacy Gaps Put American Drivers at Risk" report included questions Senator Market posed to 16 automobile manufacturers during 2014. The questions focused upon how vehicles might be vulnerable to hackers, and how driver information is collected and protected.

Senator Markey sent letters to the following automobile manufacturers:

Automobile Manufacturers Queried
1. Aston Martin The Americas
2. Audi of America**
3. BMW North America*
4. Chrysler Group LLC*
5. Ford Motor Company*
6. General Motors*
7. American Honda Motor Co. Inc.*
8. Hyundai Motors North America*
9. Jaguar Landrover LLC*
10. Automobili Lamborghini America
11. Mazda North American Operations*
12. Mercedes-Benz USA*
13. Mitsubishi Motors North America*
14. Nissan North America*
15. Porsche Cars of North America*
16. Subaru Motors America*
17. Tesla
18. Toyota North American Region*
19. Volkswagen Group of America*
20. Volvo North America
*Provided responses to Senator Markey's inquiry letters.
** Audis response was included with Volkswagon's submission.

Some of the questions asked:

  • How does the company assess whether there are vulnerabilities related to technologies it purchases from other manufacturers as well as wireless entry points of vehicles to ensure malicious code or other infiltrations cannot occur? 
  • Does the company utilize independent third parties to test for vulnerabilities to wireless entry points? 
  • Do any vehicles include technology that detects or monitors for anomalous activity or unauthorized intrusion through wireless entry points or wireless control units? And how are reports or unauthorized intrusion or remote attack responded to? 
  • Has the company been made aware of any intentional or inadvertent effort to infiltrate a wireless entry point, and what, if any, changes were made to protect vehicles from vulnerabilities in the future? 
  • What types of driving history information can be collected by navigation technology or other technologies, and is this information recorded, stored, or sold? 
  • Has the company received any request for data related to the driving history of drivers, and what were the reasons and final disposition of the requests? 
  • Which vehicles include technologies that can enable the remote shutdown of a vehicle, and are consumers made aware of this capability before purchase, lease ore rental of the vehicle?

Regarding automobile data security, the report found four trends:

  1. Almost all vehicles (nearly 100 percent) include wireless technologies that could pose vulnerabilities to hacking.
  2. Most manufacturers were unaware of or unable to report on past hacking incidents,
  3. Security measures to prevent unauthorized, remote access are inconsistent and haphazard across manufacturers.
  4. Only two manufacturers were able to describe any capabilities to identify, diagnose, and/or respond to unauthorized access or hacking in real-time. Most said they rely on technologies that cannot be used for this purpose at all.

Regarding privacy, the report found:

  • Auto manufacturers collect large amounts of data about driving history and vehicle performance
  • A majority of automakers offer technologies that collect and transmit wirelessly driving history information to data centers, including third-party data centers. Most did not describe effective means to secure the information collected.
  • Manufacturers use the data collected in several ways with vague descriptions, such as to “improve the customer experience,” and involve third parties. How long the data collected is retained varies greatly across manufacturers
  • Often, customers are not told about the data collection. When they are told, often they cannot decline or opt out of the data collection without disabling valuable features (e.g., navigation)

Download the "Tracking & Hacking: Security & Privacy Gaps Put American Drivers at Risk" report (Adobe PDF). After reading it, I had several reactions. First, I would love to know why Aston Martin, Lamborghini, and Tesla failed to respond. Are data security and privacy not important to them? If they are important, then does their failure to respond indicate some internal disorganization?

Second, I was struck by the lack of focus on data security among the respondents. Websites and mobile apps provide terms of use and privacy policies. Mobile device manufacturers (e.g., laptops, tablets, smart phones) also provide these policies. Telecommunications providers do, too. Many mobile apps do, too. Why not auto manufacturers? Do they consider themselves a special, exempt class? All auto manufacturers should provide consumers before purchase with terms-of-use and privacy policies that fully discuss data collection, data retention, and data sharing. After purchase, they should inform consumers of changes to those policies

Third, the lack of focus by auto manufacturers on data security and privacy is an alert to the hackers, identity thieves, and fraudsters worldwide that these autos are vulnerable. While writing this blog, I have learned that the bad guys are persistent, creative, and posses the same equipment, software, and technologies as the good guys. Autos contain computing technologies that are similar to other mobile devices (e.g., laptops, smart phones, tablets, fitness devices, and wearables). Autos should have the same data security protections: firewalls, anti-virus software and updates, and so forth. So, it makes sense to keep a strong focus on data security and privacy.

Fourth, the lack of focus by auto manufacturers on data security and privacy is an alert to governments and spy agencies worldwide. Why? They already perform surveillance using other mobile devices. Autos are just another mobile device they'll add to their lists.

The lack of  focus represents a data security and privacy disaster of epic proportions in the making.

What do you think of the automobile security and privacy report?


Report: Researchers Compare High-Speed Internet Services Worldwide. Consumers In The USA Pay More And Get Slower Speeds

Since President Obama will mention competition and high-speed Internet services in his 2015 State of The Union address to the nation Tuesday evening, it seemed appropriate to discuss the state of high-speed Internet services (a/k/a broadband) in the United States. The "Cost of Connectivity 2014" annual report by the Open Technology Institute compared Internet prices and speeds in 24 cities around the world. The overall finding:

"... the data that we have collected in the past three years demonstrates that the majority of U.S. cities surveyed lag behind their international peers, paying more money for slower Internet access."

The researchers investigated both home and mobile high-speed Internet prices and speeds. Data was collected between July and September of 2014. The list of cities:

  • Americas: Bristol (Virginia), Chattanooga (Tennessee), Kansas City (Kansas), Kansas City (Missouri), Lafayette (Louisiana), Los Angeles (California), Mexico City (Mexico), New York (N.Y.), San Francisco (California), Toronto (Canada), Washington (D.C.)
  • Asia: Hong Kong, Seoul (So. Korea), Tokyo (Japan)
  • Europe: Amsterdam (Netherlands), Berlin (Germany), Bucharest (Romania), Copenhagen (Denmark), Dublin Ireland), London (United Kingdom), Paris (France), Prague (Czech Republic), Riga (Latvia), Zurich (Switzerland)

For home usage, the researchers looked at "broadband-only" plans. If a provider didn't offer a broadband-only plan, then they looked for the cheapest bundle (e.g., phone plus Internet, "triple-play bundles of phone, Internet, and television, etc.). Prices in foreign currencies were converted to U.S. Dollars using:

"... the World Bank’s purchasing power parity (PPP) metric."

The researchers used the broadband definition by U.S. Federal Communications Commission (FCC): a minimum of 4 Mbps download and 1 Mbps upload. The researchers collected the following information about each broadband service:

  • Network technology (e.g., DSL, cable, fixed wireless, fiber optic),
  • Download and upload speeds,
  • Monthly subscription costs (excluding promotional prices),
  • Data caps and any penalties (i.e. overage fees or throttled speeds),
  • Activation and installation fees,
  • Modem and equipment rental or purchase fees, and
  • Contract lengths (e.g., number of months, no contract)

Consumers in Asia and Europe get the best value (e.g., highest speeds at the lwest prices):

"Most Asian and European cities provide broadband service in the 25 to 50 megabits per second (Mbps) speed range at a better value on average than North American cities (with a few key exceptions). In addition, when it comes to the estimated speeds a customer could expect to get for $50 in each of the cities we surveyed, the U.S. is middling at best, with many cities falling to the bottom of the pack. Our analysis also finds that, in terms of speed and price, cities with municipal networks are on par with Hong Kong, Seoul, Tokyo, and Zürich and are ahead of the major incumbent ISPs in the U.S."

This merits repeating. The areas in the USA that offer the best value for consumers are municipal broadband networks and not the corporate Internet Service Providers (ISPs). Yet, local laws in 19 states prevent or restrict consumers from building municipal broadband services. Yet politicians in the United States are quick to promote privatization (e.g., corporations are good; government is bad) as a catch-all solution.

And, it is worse for mobile phone and tablet users:

"In the mobile broadband space, USB dongle and wireless hotspot device offerings continue to be expensive substitutes for home broadband connectivity, with consumers in some other countries paying the same price for mobile plans with data caps that are up to as 40 times higher than those offered by U.S. providers."

Providers of home services in cities with the fastest broadband speeds both increased speeds and reduced prices in 2013 compared to 2012, and again in 2014 compared to 2013:

"Virtually every city in this ranking has seen an annual increase in its top speed offering since 2012. In cases where ISPs offer the same speed as last year, those ISPs have tended to lower their prices. For instance, Lafayette, LA charged $999.95 per month for its gigabit service in 2013 and dropped that price to $109.95 per month in 2014. In Mexico City, a 200 Mbps package was available for nearly $100 less than the price offered for that speed by a different provider in 2013. The average download speed of plans in this ranking increased from 233 Mbps in 2012 to around 500 in 2013, and almost 650 Mbps in 2014. Nearly half of all cities in this ranking offer gigabit speeds, and more than two-thirds of all cities offer service over 500 Mbps."

The researchers look at what consumers could get with spending $40 monthly:

"In 2014, five providers offered gigabit service for under $40, up from just one in 2013 and none in 2012. The U.S. cities on this list that are ranked at the middle or higher (Kansas City, KS; Kansas City, MO; and San Francisco, CA) are represented by local, innovative providers who offer competitive alternatives to the services provided by incumbents."

Incumbents are the large, national corporate ISPs (e.g., Verizon, AT&T, etc.). So, the top five best deals under $40 monthly:

Rank - CityMonthly Cost ($ U.S.)ProviderSpeedsNetwork Technology
1. Seoul $30.30 HelloVision 1,000 Mbps download & upload Fiber
2. Hong Kong $37.41 Hong Kong Broadband 1,000 Mbps download & upload Fiber
3. Tokyo $39.15 KDDI 1,000 Mbps download & upload Fiber
4. Paris $38.81 SFR 1,000 Mbps download & 200 Mbps upload Fiber
5. Bucharest $32.35 RCS & RDS 1,000 Mbps download & 30 Mbps upload Fiber

Now, compare the above prices to what you pay and the speed you get. I did. Here in Boston, Comcast charges $66.95 per month for what it calls "Performance Internet." That's the regular price, and not the promotional price. The Comcast website states:

"Restrictions apply. Not available in all areas. Limited to new residential customers. Not available in all areas. Requires subscription to Performance Internet service. Equipment, installation, taxes and fees, and other applicable charges extra, and subject to change during and after the promo. After 12 mos., service charge for Performance Internet increases to $54.99/mo. After promo, or if any service is cancelled or downgraded, regular rates apply. Comcast's service charge for Performance Internet is $66.95/mo. (subject to change). Service limited to a single outlet. May not be combined with other offers. Internet: Wi-Fi claim based on the September 2014 study by Allion Test Labs. Actual speeds vary and are not guaranteed."

So, the site doesn't even disclose what speed consumers get for $66.95 per month. The true price is higher once you add in equipment and taxes. And that is for older cable technology; not fiber. So, it is difficult for consumers to determine the value of Comcast Internet. Yes, Comcast offers a promotion price of $39.99 per month for 12 months, and then the monthly rate increases. I ignored this promotional price since the researchers compared regular rates. You should, too, so you know what the service really costs. And Comcast includes enough caveats that if you change anything in your subscription, regular rates apply.

Verizon FiOS is a fiber Internet service here in Massachusetts. Below are the service's prices:

Verizon FiOS prices in January 2015. Click to view larger image.

The prices are very high, and the speeds are slower than the above leaders mentioned in the "Cost of Connectivity 2014" report. So, it seems appropriate to ask: are you getting good value (e.g., monthly price divided by download speed) for home Internet where you live? Probably not; unless you live in an area with a municipal service provider. Do you have a state-of-the-art fiber connection? Probably not.

The researchers compared high-speed Internet services between Europe and the USA. They found:

"... median prices are higher in the U.S. for speeds equivalent to those in Europe. Except for the lowest speed tier reported in this graph, the median price in every other tier is noticeably higher for the U.S., indicating that customers pay more for the same broadband packages than their European peers."

The researchers analyzed and compared Internet services in several ways. Since consumers often set a household budget for items, the researchers looked at what consumers get with a monthly budget of $50 for Internet services. Providers in the USA didn't fare well:

"Figure 7 demonstrates the estimated speeds a customer could expect to get for $50 in each of the cities we surveyed. Hong Kong and Seoul are far ahead, with around 300 Mbps at $50, while Tokyo and Paris both hover around 200 Mbps. Most of the U.S. cities cluster between 25 and 45 Mbps, with only San Francisco, CA, and Chattanooga, TN, falling out of that range on the high and low end, respectively. Mexico City ranks last with an average of around 8 Mbps."

Sometimes, consumers seek a certain Internet speed to perform certains tasks. So, the researchers looked at which countries provided the best value with a download speed of 25 Mbps or faster. 25 Mbps download is fast enough to download a short video clip in 1.3 seconds, 10 songs in about half a minute, or a 2-hour video in 13 minutes. That speed allows you to do most things you'd want to do, especially since most mobile devices store your files in the cloud. Once again, the USA lagged other countries:

"Figure 8 demonstrates the estimated monthly price for 25 Mbps in each of the cities we surveyed. The results are largely consistent with our other observations, although in this analysis London comes out at the top of the list at around $24 a month, followed closely by Seoul, Bucharest, and Paris. The U.S. cities are still clustered in the bottom half of the pack, with the exceptions of Kansas City, KS and Kansas City, MO. Notably, Hong Kong drops much lower in this analysis, which reflects the fact that some providers offer speeds ranging from 8 to 100 Mbps at very similar or identical prices."

Feeling proud about American exceptionalism? The next time you hear pundits or politicians profess American exceptionalism, ask them what they are doing to lower your monthly high-speed Internet prices, and speed up your connection, so you get the same (or better) value as consumers in other parts of the world. Write to your elected officials and tell them high-speed Internet prices are too high.

What are your opinions of this report? Of the monthly prices you pay? Do you think that ISPs in the U.S.A. are doing a good job?


Study: Web Pages At News Sites Load More Slowly Than At Other Sites

Adweek reported the results of a study about website performance:

"Research by Web performance monitoring company Catchpoint Systems suggests that news sites may be in trouble because publishers are putting too many assets on their Web pages, forcing the content and the advertisements to load too slowly... search engines loaded the quickest. Travel-related pages and Internet retailers loaded at about the same speeds, with retailers loading slightly faster. But overall, news sites tended to load the slowest..."

Wesite pages at the Financial Times took about 29.5 seconds to load. Website pages at Bloomberg averaged about 27 seconds, while pages at CNN averaged 18.8 seconds and The Wall Street Journal averaged 18.6 seconds.

Have you noticed slow load times at websites? If so, please share which sites. I've found pages often load slowly at The Huffington Post. I doubt that most users would wait half a minute for a web page to load. I wouldn't. Would you? Do you wait or go elsewhere?


Dark Social Channels: What They Are, Who Uses Them, And Why

Apparently, there are dark and ligh social channels on the Internet. MediaPost reported:

"Nearly a third (32%) of consumers who share content with other people digitally say they do it via so-called “dark social” channels such as email, SMS or other peer-to-peer platforms that are not as easy to see and monitor as so-called “light social” networks such as Facebook, Twitter, Instagram and Pinterest."

This statistics was based upon an October 2014 survey by Tpoli of 9,000 consumers. However:

"According to RadiumOne, which released the Tpoll findings this morning as part of a new report, “The Light and Dark of Social Sharing,” found that actual content sharing is more like 69% “dark,” based on trends from its PO.ST content-sharing widgets. That finding is much closer to the patterns found by 33Across’s Tynt database, which tracks actual copy-and-pasting of digital content across all channels and has consistently found that more than 70% of content-sharing is via dark social channels."

Reportedly, about one third of users survey only use dark social channels. That sharing rate is higher among older users. Also, users tend to share socially-acceptable content in light social channels; a finding consistent with research about the spiral of silence.


Consumer Opinions And Attitudes About Privacy

The Pew Research Internet Project released the results of a survey of American adults' views about privacy. First, privacy means different things to different people:

"... privacy applies to personal material—their space, their “stuff,” their solitude, and, importantly, their “rights.” Beyond the frequency of individual words, when responses are grouped into themes, the largest block of answers ties to concepts of security, safety, and protection. For many others, notions of secrecy and keeping things “hidden” are top of mind when thinking about privacy."

Former NSA contractor Ed Snowden began leakingd documents in June 2013 about the government ongoing surveillance programs. Pew Research found:

"... 43% of adults have heard “a lot” about “the government collecting information about telephone calls, emails, and other online communications as part of efforts to monitor terrorist activity,” and another 44% have heard “a little.” Just 5% of adults in our panel said they have heard “nothing at all” about these programs."

Survey respondents lack confidence that they have control over their personal information:

"91% of adults in the survey “agree” or “strongly agree” that consumers have lost control over how personal information is collected and used by companies.

88% of adults “agree” or “strongly agree” that it would be very difficult to remove inaccurate information about them online.

80% of those who use social networking sites say they are concerned about third parties like advertisers or businesses accessing the data they share on these sites.

70% of social networking site users say that they are at least somewhat concerned about the government accessing some of the information they share on social networking sites without their knowledge"

Are government spy programs a concern? Should government do more to protect consumers. Here's are survey respondents answered:

"80% of adults “agree” or “strongly agree” that Americans should be concerned about the government’s monitoring of phone calls and internet communications. Just 18% “disagree” or “strongly disagree” with that notion.

64% believe the government should do more to regulate advertisers, compared with 34% who think the government should not get more involved.”

Historically, web sites have typically claim that the online data collection is necessary to serve up relevant advertisements and/or to provide free services. Here's what survey respondents said about that:

"61% of adults “disagree” or “strongly disagree” with the statement: “I appreciate that online services are more efficient because of the increased access they have to my personal data.”

At the same time, 55% “agree” or “strongly agree” with the statement: “I am willing to share some information about myself with companies in order to use online services for free.”

Pew Research found that most repondents felt the most unsecure on social networking websites, followed by chat and instant messaging services. Respondents felt the most secure on landline phones when they need to share private information. Most people want to protect their privacy online, but it feel it is impossible to be anonymous online.

People considered their Social Security Numbers the most sensitive personal data. The rank order of personal data elements from the most to least sensitive:

  1. Social Security Number
  2. State of their health and medications taken
  3. Content of phone conversations
  4. Content of e-mail messages
  5. Physical location over time (geo-location)
  6. Content of text messages
  7. Phone numbers called
  8. Birth date
  9. Relationship history
  10. Websites visited
  11. Keywords used at online search engines
  12. Religious views and religion practiced
  13. List of friends
  14. Political views and candidates supported
  15. Media liked
  16. Purchasing habits (products/services bought)

This list can be used to measure the intrusiveness of  social networking sites. For example, Facebook collects directly via member interactions items 2, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, and 16.

The survey included 607 adults who GfK Knowledge Panel members. The survey was conducted online in english January 11 - 28, 2014.

What are your opinions of the survey results?