Monthly Archives: July 2014

Border Crisis Highlights Lack of Effective Security Metrics

In the midst of the crisis on the southwest border involving the housing and free passage of hundreds of thousands of illegal immigrants, the White House continues to peddle the claim that President Obama has bolstered security of the U.S.-Mexico border, citing as evidence the increased number of apprehensions of illegal immigrants and the unprecedented number of border patrol agents employed by U.S. Customs and Border Protection (CBP).[i]

Even disregarding the current crisis, the argument is laughable: 88 percent of the increase in border patrol agents took place even before Barack Obama took office.[ii] This blatant propagandizing provides a useful exposé into the (double) standards of the Obama administration: An economic anemia persisting five years after the transition of presidential power can be forever blamed on George W. Bush, yet enhancements to border security for which Bush was largely responsible are actually the accomplishments of his successor. As Pat Condell would say, “If not for double standards, they wouldn’t have any standards.”

Momentarily forgetting about the proper allocation of credit for border security enhancements, we can focus on a more pertinent problem: The southwest border is actually very unsecure.

This problem is obscured by the common floating of a few misleading statistics. In addition to the numbers on border patrol agents and border apprehensions, supporters of the President’s immigration policies often note the zero-to-negative growth rate in the population of illegal immigrants within the United States in 2011 and 2012 (though the growth rate has recently trended positive again).[iii]

Those who push these numbers commit a couple basic logical errors. First, they assume that because net growth of the illegal immigrant population is practically zero, the border is secure. But the number of people who illegally enter the country has no bearing on border security. The border is secure only when we have the capability to keep people out. The fact that people are choosing not to immigrate does not mean that, should they change their minds, they would be unable. U.S. Customs and Border Protection (CBP) attributes a considerable portion of the increased percentage of apprehensions to the decline in immigration which accompanied the 2007-2009 recession.

What is CBP’s actual capacity to apprehend illegal immigrants? Before the Department of Homeland Security (DHS) issued changes to the methods for measuring border security in 2011, CBP used a gradient of security classifications to describe the security of the southwest border (see Table 1). The Border Patrol considered a particular stretch of the border to be under “operational control” if its security fell among the top two designations: “controlled” or “managed.” These designations were determined based upon the amount of resources and surveillance capabilities CBP has for a particular sector, and how useful those resources are in deterring or stopping illegal entries.

Table 1: Border Patrol Levels of Border Security 
Levels of Border Security Definition
Controlled Continuous detection and interdiction resources at the immediate border with high probability of apprehension upon entry.
Managed Multi-tiered detection and interdiction resources are in place to fully implement the border control strategy with high probability of apprehension after entry.
Monitored Substantial detection resources in place, but accessibility and resources continue to affect ability to respond.
Low-Level Monitored Some knowledge is available to develop a rudimentary border control strategy, but the area remains vulnerable because of inaccessibility or limited resource availability.
Remote/Low Activity Information is lacking to develop a meaningful border control strategy because of inaccessibility or lack of resources.

Source: GAO analysis of U.S. Border Patrol ORBBP documents.

A 2011 study by the Government Accountability Office, in examining the methods and results of the U.S. Border Patrol, found that of the 2000-mile southern U.S. border, only 873 miles were under “operational control,” and of those 873 miles, only 129 miles (15 percent of the border) were “controlled,” meaning that the Border Patrol has the ability to detect and apprehend all illegal immigrants upon entry. For the rest of the 873 miles, CBP was only able to apprehend illegal immigrants after entry (sometimes 100 miles or more away from the border). For most of the southern border, apprehensions upon entry range from difficult to impossible.[iv]

Since 2011, under direction of the DHS, CBP has abandoned the operational control metrics for assessing border security, and are currently in the process of developing new metrics. In the interim, CBP has used the number of border apprehensions as the standard of measurement for border security. As alluded to earlier, however, this method does not take into account our actual ability to repel entrants, and is too heavily influenced by other factors, such as the United States’ economic health, which partially determines how many potential immigrants attempt a crossing in the first place. In addition, CBP has not yet developed objective goals or targets that would indicate effective control on the border, and this lack of reliable measurements seriously “limits DHS and congressional oversight and accountability.”[v]

Aside from their relative obscurity and lack of accountability, however, the interim metrics’ main problem is that they are simply ineffectual: The GAO found that “studies commissioned by CBP have documented that the number of apprehensions bears little relationship to effectiveness because agency officials do not compare these numbers with the amount of cross-border illegal activity.”[vi] This is generally because, as apprehensions increase along one portion of the border, cross-border activities increase in other areas.[vii]

If the President and his DHS want to regain some semblance of credibility, they should reinstitute border security measurements for CBP based on well-defined goals, rather than sheer inputs or activities. Operational control was a good metric, but no matter what they ultimately choose, it should allow for congressional oversight and accountability to Congress and the DHS. Finally, despite the obfuscation on this issue, we should take this case of bureaucratic mishandling as a renewed impetus to secure the border.

[i] The Whitehouse. (2014). Border Security. Retrieved from: http://www.whitehouse.gov/issues/immigration/border-security

[ii] United States Border Patrol. (2013). Border Patrol Agent Staffing by Fiscal Year. Retrieved from: http://www.cbp.gov/sites/default/files/documents/U.S.%20Border%20Patrol%20Fiscal%20Year%20Staffing%20Statistics%201992-2013.pdf

[iii] Pew Research Center. (2013). Population Decline of Unauthorized Immigrants Stalls, May Have Reversed. Retrieved from: http://www.pewhispanic.org/2013/09/23/population-decline-of-unauthorized-immigrants-stalls-may-have-reversed/

[iv] Securing Our Borders – Operational Control and the Path Forward: Hearing before the Subcommittee on Border and Maritime Security of the Committee on Homeland Security, House of Representatives, 111th Congress. (2011). (testimony of Richard M. Stana). Border Security: Preliminary Observations on Border Control Measures for the Southwest Border. Retrieved from: http://www.gao.gov/assets/130/125500.pdf

[v] What Does a Secure Border Look Like?: Hearing before the Subcommittee on Border and Maritime Security of the Committee on Homeland Security, House of Representatives, 113th Congress. (2013). (testimony of Rebecca Gambler). Goals and Measures Not Yet in Place to Inform Border Security Status and Resource Needs. Retrieved from: http://docs.house.gov/meetings/HM/HM11/20130226/100300/HHRG-113-HM11-Wstate-GamblerR-20130226.pdf

[vi] Ibid.

[vii] Ordonez, K. (2008). Securing the United States Mexico Border: An On-Going Dilemma. Homeland Security Affairs. Retrieved from: http://www.hsaj.org/?special:fullarticle=0.2.5

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Net Neutrality Politics: Moving Us Away from a Free, Open Internet

With the help of corporate sponsors like Netflix and Google, net neutrality has gone from being an unknown issue to garnering national attention. Like most fads, though, net neutrality’s popularity has grown far more rapidly than the public’s understanding of it, and people do not realize how unnecessary and destructive net neutrality policies actually are.

“Net neutrality” refers to a principle under which all types of information on the internet are delivered at equal speeds. In a neutral internet, an email from your grandmother will download to your computer at the same rate as a Netflix video. In a non-neutral internet, by contrast, some information could get prioritized, necessarily slowing the rest. Content producers (such as Netflix) and end-users tend to be in favor of net neutrality because they benefit from a vast diversity of content on the internet, and no one wants to run the risk of having their preferred content throttled (slowed).

Opponents of net neutrality tend to include internet service providers (ISPs), such as phone and cable companies, who believe that tailoring their networks to fast-track certain types of content could lead to better end-user experiences and cost savings.

The net-neutrality principle has been invoked in several pieces legislation and proposed administrative rules over the past eight years. Each of these acts would, to varying degrees, restrict the autonomy of ISPs. As a result, the term “net neutrality” now denotes a specific set of public policies, and not just a principle.

Like the proponents of many government regulations, net neutrality supporters will often invoke the public interest, the protection of some disadvantaged group, and/or the promotion of economic efficiency. Touchy-feely catchphrases like “keep the internet free and open” and “all bits are created equal” abound, along with the assertion that net neutrality will bolster marketplace competition by relieving the burden of bandwidth costs for startup tech companies. Proponents also assert that net neutrality will prevent ISPs from arbitrarily censoring (competitors’) content on their networks.

The proponents of such regulation seem to concede the benefit of market competition—a refreshing sign—but they fail to see the contradiction created by invoking it. Net neutrality is properly seen as a hindrance to competition, not a facilitator.

In order to compete in a market, companies must differentiate themselves in a way that satisfies the consumer. This is innovation. One method ISPs have to satisfy the wants and desires of their customers is to expedite the information their customers consume. The net neutrality regulations proposed by the Federal Communications Commission (FCC)—recently struck down in January—would have prevented this, stifling innovation in the provision of internet services. As Larry Downes noted in November:

In all, the FCC’s Open Internet order itself cataloged a dozen major non-neutral technologies, protocols, and business arrangements that have long been necessary parts of the Internet. Sensibly and of necessity, the agency granted exceptions from the rules for each and every one of them, recognizing that the “open” Internet, at least from an engineering standpoint, was anything but. For the Internet to continue functioning at all, the rhetoric had to give way to reality.

But there was no way for the rules to preemptively grant similar permission to any future network optimization technologies, other than to caveat all of the rules with exemptions for “reasonable network management.” That term couldn’t be defined, however, meaning that any future innovations will require FCC approval before large-scale implementation.[i]

In other words, such an obstacle to innovation and experimentation in network management could spell higher costs and a far lesser quality of service for end-users and content providers alike. This seems like a terrible tradeoff, since even an absence of government net neutrality regulations would not prevent ISPs from adopting net-neutral practices; if consumers demanded such practices, they could simply switch from a non-neutral ISP to a neutral one. The same is true for content providers—not only the giant companies like Facebook, Netflix, and Amazon; smaller companies and (yet-to-exist) startups may also switch among ISPs if they believe that their content is being discriminated against. This would be a system of true market competition.

In response, net neutrality advocates quickly (and rightly) point out the monopolistic state of the broadband internet market. The FCC has reported that of the 132 million households in the United States, only 47 million (roughly 35%) have access to four or more video programming distributors (i.e., cable, satellite, and telephone companies); cable companies alone have a market share of 56% among these distributors, and of the roughly 1,100 cable companies in the United States, the top five of them (in market share) account for nearly 82% of all video programming subscribers.[ii] Given that all of these companies also provide broadband internet services to many of their customers, the ISP market looks incredibly uncompetitive.

The uncompetitive nature of the industry would seem to refute the argument that net neutrality stifles innovation—there’s no need for companies to innovate anyway if the market is cornered. Since Comcast and similar companies so effectively control their respective markets, there is virtually no recourse for a dissatisfied customer, which removes the normal incentives for companies to improve services and cut costs.

For most people, unfortunately, this is where the debate ends. Although many will concede the benefits of competition among ISPs, they dismiss those benefits as immaterial, since an effective monopoly exists in the largest markets. Now the only available option they see for ensuring fair or neutral business practices is for government to impose net neutrality upon the industry.

But this disregards the important question of how the industry became so uncompetitive in the first place. If the ISP market is naturally and inevitably monopolistic, it might lend support to net neutrality advocates. But if it is not, then net neutrality may unnecessarily stifle innovation and raise costs. Before we propose policies, we need to ask, “Why is there effectively a monopoly in internet service markets?”

Basic economic theory informs us that monopolies can only endure as long as no new companies enter the market to provide the same (or better) service at a lower price. So why haven’t more companies entered the market to upend the entrenched giants?

There are a number of up-front costs associated with starting a cable company and/or entering a cable market. Building the initial cable infrastructure is one of these costs, but another significant, yet often unmentioned cost is that of acquiring cable franchises. In most states, cable companies must obtain a cable franchise from each and every municipality in which they want to do business. Large companies can easily expand into new markets because they have lots of cash with which to pay licensing fees; but for smaller/startup companies, the licensing requirements present an insurmountable barrier to market entry. Encouragingly, 21 states have passed cable franchise reform bills, meaning that cable companies need only obtain one license to operate within the entire state. In the 29 remaining states, however, cable companies must still work through the old, inefficient system.

Evidence indicates that the entry of companies into previously uncompetitive ISP markets does reduce cable prices and provoke efforts from the incumbent cable companies to improve services. In response to entry by AT&T, which offers video services over telephone lines (and is thus not subject to cable franchise requirements), Comcast of Santa Rosa, CA, rushed to deliver “new features [video-on-demand, more channels] in Santa Rosa […]” In Houston, similarly, Comcast pledged to offer more “linear and high-definition channels, video-on-demand titles and digital phone features” following potential AT&T entry.[iii] A Bank of America study also observed basic cable price reductions of between 28% and 42% in areas of Virginia, Texas, and Florida where Verizon rolled out its FiOS video service.[iv]

The lesson from these stories is clear: Wherever ISPs are able to circumvent onerous cable franchise requirements and enter the market, services and pricing improve. The solution to the lack of market competition, therefore, is not to implement new government regulations, but to repeal the regulations we already have. Getting rid of cable franchising would abrogate the need for net neutrality while also improving consumer choice and quality of services. These reforms, not innovation-stifling net neutrality, will be a crucial step toward a truly free and open internet.

[i] Downes, L. (2002). What Verizon’s Net Neutrality Challenge Is Really About. Forbes. Retrieved from: http://www.forbes.com/sites/larrydownes/2013/09/11/what-verizons-net-neutrality-challenge-is-really-about/

[ii] Federal Communications Comission. (2013). Fifteenth Report. Retrieved from: https://apps.fcc.gov/edocs_public/attachmatch/FCC-13-99A1.pdf

[iii] Singer, H.J. (2007). The Consumer Benefits of Telco Entry in Video Markets. Retrieved from: http://www.justice.gov/atr/public/workshops/telecom2007/submissions/228100.htm

[iv] Bank of America Equity Research. (2006). Battle for the Bundle: Consumer Wireline Services Pricing.