Tuesday, November 29, 2011

12 heads in a bag, I read it yesterday, buried like the others on page 27-A

After the last post, I think it's worth nothing that it's not just an isolated lapse. The Guardian has recently been sucking up to the Treasury in a revolting fashion. Yesterday's paper, in an astonishingly hagiographic profile by Nicholas Watt explained how clever George Osborne is in defining his "fiscal mandate" as being to get rid of the current (i.e. ex-capital investment), structural (i.e. what he says it is) deficit over a five-year forecast horizon, on a "rolling" basis so there is no specific date by which it must be judged.

Well-informed readers will remember that inter-war British governments did this with defence plans - the decision was taken that there would be no war for 10 years and this assumption was used as a basis for policy. But the 10 years was considered on a rolling basis, so every passing year extended it further until it was abandoned in 1933, with the result that the British armed forces were just about ready...had the war waited until 1943.

Now you might recall that Gordon Brown also had a set of fiscal rules, and those laid down that the current (i.e. ex-capital investment) budget ought to be in balance averaged over the economic cycle. Put it like that, and you might think that there isn't really that much difference. And we used to hear a great deal from Tories - and even from well-known newspapers dedicated to Liberal principles - about how the judgment of when the current economic cycle began gave the chancellor too much latitude to fudge the numbers. We heard a great deal about this from George Osborne personally.

But now he's apparently thinking of tactfully leaving a bunch of stuff (current, structural) out of the figures to make them add up. And he's quietly letting the day when they have to add up slide right. Fudging the issue, if you like. Just like Crazy Gordon McKiltie Borrowpants. (Did we mention he's Scottish?)

So why is this a secret? Why did the Guardian publish all the information you need to know this, but not say it? Why do I have to read the papers as if I were composing an exegesis of the Talmud or decrypting the VENONA cables? Is it possibly something to do with this quote from Nicholas "You Fucking" Watt's profile:

Even his critics acknowledge that Osborne is tough, which will serve him well, as one said. "George has an incredible strength. Perhaps this is down to the way he made it into the Bullingdon and survived. They were a bit sniffy about George. The Bullingdon is basically for Etonians. But they let him in even though he went to St Paul's, though they did insist on him reverting to his original name of Gideon.

Now that's what I call the sort of experience that builds real character. This is the Guardian! The Guardian!

Respectable mendacity

Why has the Guardian gone so soft on George Osborne? Today's paper is a fine example of the art of journalism as practiced to obscure rather than reveal. On the front page, we have this story headlined: George Osborne exploits fall in borrowing costs to boost growth

Now, that's pretty much precisely what the chancellor would want on the front page, so it's suspect in itself. But you might think there was another major UK economy story about. Something about the OECD estimating that we're back in recession? Or you might even have heard another, something about the Treasury/OBR expecting much lower economic growth? Or that the OBR thinks things are so bad the deficit will rise despite the cuts? Strangely, none of these were considered worthy of front page treatment and were shoved back down the ticket to pages 6 and 2 respectively. Page 2 is of course the classic newspaper graveyard - people flip open the rag and immediately see Page 3, which is why what is on Page 3 is on Page 3 if you see what I mean.

The first number that appears on the front page is the figure of £21.5bn, which is apparently "lower borrowing costs" because gilt rates have fallen since last June. It's not said anywhere how much this is relative to the total bill for debt service (£44bn), or to the government budget (£696bn), so it's impossible for the reader to know if it's a lot of money. It's also completely mysterious whether this is annual, over a parliament, over a Comprehensive Spending Review planning cycle, or what. It is not said, but it is strongly implied, that this money is available now and will be used as an economic stimulus.

But the Chancellor isn't doing that, and if it is a 5-year figure, the money isn't available now. We only find out what's going on over the page, buried on page 2, where we find out without much surprise that it is indeed a figure for the next 5 years, so 80% of it is promises, and anyway the annual figure of £5.3bn is 0.76% of government spending.

The piece moves on to recite a list of eye-catching initiatives - £380 million (woo, isn't it a lot? Or a little?) by 2014-5 (does that mean rising to £380 million annually by 2015, or £380 million divided by five? They're not saying, I'd take the short) for childcare (aww, babies), a "£300 million package of tax breaks for small businesses", "a seed investment enterprise scheme" with no price tag, and - I am not making this up - £50 million for the Caledonian Sleeper.

I mean, it's very cool and all - I took it in July 2005 to get out of town after terrorweek - but it's hardly something that belongs in a front page economics story, is it? It's an utterly trivial and vacuous eye-catching sunday-fer-monday initiative with a canny bit of marginal seat fan service in there too.

So, about that £300 million. Sounds like a lot of money! (After all, we have nothing to compare it with. Again.) You have to read on to page 7 and a story by an actual business desk reporter to find out that £210 million of it is a rates holiday for some small businesses that was sort-of going to end next October, that's now going to end six months - six whole months! - later. To put it another way, it's not new money and it's a trivial amount and it doesn't happen for a year yet.

Let's adjust the £300 million - that's more like £90 million, and we're getting into Caledonian Sleeper levels of insignificance here. Experienced observers will guess that the unpriced "seed investment scheme" is probably included in the £90 million, thus getting twice the propaganda for the money, and they'd be right. Again, you've got to turn to page 7 for this, but not being the New York Times or the Craven Herald & Pioneer, there's no way of telling that you need to. Government sources apparently think it's worth £50 million. That leaves us with £40m to account for, and page 7 tells us that £50m is coming for "co-investment" from the "regional growth fund". Well, the £10m difference can be accounted for by journos trying to add up. But it's worth pointing out that the £1.5bn regional growth fund has been re-announced so many times you wouldn't count on there being anything left in it.

And obviously, this doesn't add up to anything like £21.5bn or even £5.3bn of stimulus.

So what's going on here? It's not as if the OECD or OBR stories weren't running before the Guardian went to press. They're right there in the paper! But by the time you read them, you'll already have had your expectations anchors set by the front page, so you're going to think things aren't so bad. This is of course why the Treasury briefers gave the story to Nicholas Watt, Larry Elliott and Severin Carrell - to inject their own spin ahead of the news. In fact, Elliott is probably innocent, as he wrote both the real news stories, and the other two just quoted some of his work (chunks are identical).

Why Watt or Carrell, or the Guardian editor they answer to, still don't either understand this or don't mind is the real question.

Also, you'd have to read down to the bottom of Elliott's piece on page 7 to learn that the Bank of England is apparently refusing to carry out the government's policy even when it only involves the government's money, rather than the central bank's, and Osborne has cracked and given in.

The measures will augment the £20bn that the chancellor is announcing for so-called "credit easing" — money that will be channelled from existing promises that had been made by the Treasury to the Bank of England to enable Threadneedle Street to buy corporate bonds. The Bank has not purchased many corporate bonds and some of the £50bn of guarantees will now be used, instead, to help banks raise money more cheaply on the markets – and in turn reduce the price of loans to small businesses.
Will Hutton, co-author of a report on how to revive small business lending, said: "As it is structured, this won't add £1 extra of new credit." His report, written with academic Ken Peasnell, argues that the government would have been more effective if it had created a vehicle to buy up small business loans from banks, freeing up their balance sheets. Under the government's scheme, the cost of loans to small businesses should fall by one percentage point, according to Treasury projections, although this may be less if the government does decide to levy a fee for the guarantee.

So, the £20bn - or is it £50bn? - "credit easing" just isn't going to happen, because the Bank doesn't want to do it and Osborne is too weak to sack Mervyn King and appoint someone who will, and too proud to resign and leave the job to someone with balls. Instead, the Treasury's money (i.e. ours) will be used to buy bonds (probably government bonds) off the banks. We're already doing this with money the Bank prints, which costs nothing, but this exercise is funded by government borrowing, which we have to pay back. Why isn't this on the front page?

Friday, November 18, 2011

Operation Logroll is go for launch

So, if you wanted really informed commentary on the Theresa May/Brodie Clark upfuck (now there's some slash), where would you go? Wouldn't you want to ask a distinguished civil servant? I bet you would. Specifically, a career immigration officer with 39 years in the service. Who's just retired, and is therefore allowed to be snarky.

Now you can! Because my dad has a blog.

I'll always remember the day he brought home the video briefcase. I think it's safe to tell the story now.

Sunday, November 13, 2011

belated blogging

So Viktor Bout is guilty. Some discussion is here, including the suggestion that the GRU (Russian Military Intelligence) is losing out politically. Dunno about that, but it's striking that the best politician they could find to speak out for him was someone from Vladimir Zhirinovsky's outfit, and not even Anna Chapman or Andrei Lugovoi at that.

It took me a while to get around to this, but there you go. Apparently his defence was that he was really trying to sell the fake FARC a pair of Ilyushin-76 aircraft and just stringing them along with all the talk about surface-to-air missiles and millions of rounds of ammunition, but then I think if I went out to buy missiles and came back with two Ilyushins and a magic bean I'd think I'd been had.

Other recent things I cared about less than I expected - the Stone Roses reunion. Yes, I had the Facebook tickets app open and my finger on the button, but then it was the end of the month and I could do without spending the money. Was that being responsible or just excessively risk averse?

The world's most expensive mobile network

By the mid-2000s the minimal cost-to-serve a mobile phone user had got down to the point where it was worth Roshan's while to put base stations in places where British soldiers broke down 105mm light guns to carry them piece by piece up a cliff, in order to fire from the hilltop next to the base station and get additional range.

It's fairly well known that the Taliban weren't entirely pleased about this, especially when ISAF started publicising their tip-off hotline and people did just that with their new second-hand Nokias. And they started destroying base stations until the operators agreed to shut down for part of the day. An uneasy settlement was arrived at - after all, Talibs use the phone too, and so do their families and friends. Like the old pattern of the insurgent owning the roads during the night and the government during the day, the insurgent owned the 900MHz band during the night and left it to the government during the day.

(However, their control of radio spectrum is purely negative, as if they were to use it themselves, the government could spy on them doing so, direction-find the transmitters, traffic-analyse the network to find out who is important, and sic drones, attack helicopters, or commandos on them. They can intimidate other people out of using it, but they can't use it themselves without very careful security precautions.)

So I'd like to recommend this really excellent article.

It seems that this shaky modus vivendi has broken down. Not only are the Taliban destroying more sites, they are doing so more thoroughly.

A typical problem for an emerging-market GSM operations engineer is the security of diesel fuel. Some operators in Africa are their countries' biggest electricity generators. This is fiendishly expensive - not only do you have to buy the diesel, you have to pay people to fill up the tanks on thousands of remote cell sites. And other people will steal it, or even steal the whole generator, which is why some of them are half-way up the tower although that means the structure must be much heavier and stronger and more expensive. Highway robbery is a better payoff than burglary as you get the whole truckload and the truck to move it, so you also have to pay for protection. That might mean protection as in guards, or protection as in racket, and quite often the distinction is far from clear.

This also becomes a typical first world GSM operations engineer's problem as soon as a big storm knocks over a few hundred towers and outs the electricity, as some bright spark inevitably notices the backup generator running.

Although you can buy solar and wind-powered base stations, there are still a lot of diesel ones out there. Now, if your objection is not merely financial, this means it's easy to destroy the infrastructure - you force open the valves and set it on fire. Interestingly, though, the Taliban have moved on from just starting a fire to breaking into the equipment cabinet and soaking it with the fuel, then setting that on fire. Thus multiplying the cost of repair and the downtime by an order of magnitude at least.

Alternatively, they sometimes dig a hole and blow the whole thing up with high explosive, wrecking the civil works (budget for quite a bit more including the labour) and demonstrating their aggression to everyone in earshot.

It also looks like they've realised that the backhaul links from the base stations to the switching centre are point-to-point microwave ones, and that the network has a hierarchical structure, with multiple base stations linked by microwave radio to a base station controller (or radio network controller in 3G) site which has a microwave link to the switch, and where there may be a variety of other equipment depending on exactly how the network is designed. As all that suggests, this is a crucial node and therefore a target. It is suspected that they have expert advice.

So the operators shut down service, and then the Afghan government and NATO yell at them to turn it back on.

And this is where it gets interesting. NATO has been installing macro-cells - big high power base stations - on its outposts as well as the private, ruggedised femtocells I wrote about with regard to Mr. Werritty. The idea was that if the commercial network was down, the phones would roam onto the backup network. Take that, forces of Islamofascism! But there's a problem. The commercial operators won't let the new network be in the list of permitted roaming networks on their SIMs, because they fear that if they shut down and service is still available, the Taliban will blow up even more of their stuff and perhaps start murdering engineers.

The government network could run like an IMSI catcher, masquerading as all four networks to capture their subscribers but forwarding everything - but I get the impression the operators don't want to interconnect with it, so calls would have to be routed out of the country and back in via the international gateway and it probably won't work very well.

And as a result, NATO has created the exact opposite of a successful emerging market GSM operator. Rather than cut-down low-power small cells cunningly distributed in the landscape, it's got big expensive pigeon fryers placed whereever seems safe or rather less unsafe. You'd think the same sort of place would do for a radio station as would do for a fort, but radioplanning is far more complicated than just picking hilltops and often deeply counter-intuitive. Rather than rock-bottom cost-to-serve, it's thought to be the most expensive phone network in the world per-user.

It's possible, thinking back to Rory Stewart, that a network designed along the lines of the kind of wireless-mesh broadband system his mates are building for the Penrith area might be more robust against such an attack. The Mexican Zetas seem to think so. Even staying in GSM, the BSC functions can be forward-deployed to the cell sites, and more of the backhaul could be point-to-multipoint rather than point-to-point, and more of the sites could be interlinked, thus getting more redundancy at the expense of worse efficiency. But that would only reduce the number of critical nodes. GSM remains a fundamentally hierarchical network architecture, and some would inevitably be much more important at the system level than others.

And finally, they could still just destroy towers, only with rather less efficiency. Putting more equipment at the cell site might just make it more vulnerable. Also, a problem with mesh networks is that they are more effective the more nodes there are - but the places where we usually want them because other networks are impossible tend to be sparsely populated. It would also make the whole issue personal. Owning the device would make you a target.

In the final analysis, fire remains an effective technology of rebellion.

The Penrith problem - structural incentives and mobile service networks

Eh, Charlie Stross's blog is a machine for destroying time. Anyway. This post is going to be so wonkish it's to not come back from.

An occasional theme on this blog has been the intersection between the Bush wars and the mobile phone industry. In fact, looking back, that's not been so much an occasional theme as more of an obsession, and I'd have written more if I hadn't been subject to non-compete clauses.

Everyone who reads this blog probably knows that Afghanistan got GSM coverage very quickly after 2001, with Roshan and the Afghan Wireless Communications Company or AWCC in the lead. Things went so fast that for a while there were four operators with licenses and a good half-dozen pirate networks. The explanation of this is pretty simple - in the early 2000s the mobile industry had developed a whole package of technology, business models, methods, and personnel that made it possible to unfurl a GSM network pretty much anywhere and make an absolute killing.

Thaksin Shinawatra's career is a case in point - who knows how a Royal Thai Police colonel raised the money to come up as the holder of a GSM licence, but he did, and there were consulting engineers and contractors who would build the network and equipment vendors who would supply the parts with 100% vendor finance. Once it was up, it rained money and he was off to the races.

Of course Thailand is nothing like Afghanistan - a solid middle-income, industrialising economy with the kind of institutions that function by corruption rather than failing because of it. By 2001 there weren't so many plums like that one to pluck and the buccaneers who were first in were beginning to think about cashing out.

On the other hand, the gear kept getting cheaper and the success-stories made it easier and easier to borrow from the World Bank or other friendly local multilateral financial institution, as at this point it looked like about the only development success in 40 years or so. Thanks to people like Mo Ibrahim and the rest at Mobile Systems International, the level of average revenue per user that made it viable to build a GSM network was driven down until now we're operating below $5/month and there is no country that doesn't have at least a little bubble of coverage around the capital city.

So that's why it happened. There was a reliably deployable package of technology and economics and legalities, with a global workforce of Sven-units with frequent flyer points on every-damn-thing, and a set of reliable sources of capital. As well as the Aircom or Ericsson Professional Services guys who would design the network, and the contractors who would recruit the people who dug the foundations on the knolls and warps in the landscape that the radio planners made obscurely significant, there were others who would write the formal licence proposal to fit through the newly established bureaucracy of "regulators" and public procurement systems redesigned to please the IMF and other princes of the Washington consensus. No doubt there were people who specialised in operating the other, informal procurement systems. If you know what I mean. There was a product that sold and that, once sold, became one of the markers of modernity and status. The wheel of capital intensification kept turning, recapitulating the development of the Grand Banks fishery in the 1500s. Or something like what Erik Lund would say.

Of course, there were some problems with the package. Most of all, it structurally favours creating a new operator over extending an existing one's network, which is why Uganda has six mobile phone networks (and two WiMAX DSL-substitute not-officially-mobile networks) when a lot of people who ought to know think the UK only needs three. The turn-key vendor contract is meant to give you all the bits you need to call yourself an operator; the MFI funding is released when the licence application is accepted; the money starts flowing when the 15% or so of the cells that carry 50% of the traffic are on line. Increasing population coverage is mostly cost, which is why a coverage requirement is typically laid down in the licence.

And that's why supposedly (and that should be a big "supposedly") Kabul has better mobile service than Rory Stewart's constituency. Rory may need to consider what kind of mobile service places that stand in the same relation to Kabul as Penrith does to London get, and we're going to discuss this (and some other stuff) in the next post.

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