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The Impending Wireless Spectrum Shortage

Back in September, I wrote about how we were running out of internet addresses under the current IP addressing system (update: as of this moment, about 173 million addresses remain). But that’s not the only high-tech shortage on the horizon.

According to the FCC, the proliferation of  broadband data usage is threatening to use up all the available wireless spectrum space. A report released last month outlined the scope of the problem. Today, 42% of consumers own a smartphone, up from 16% three years ago. In that same timeframe, AT&T, the exclusive U.S. carrier of the iPhone, has seen its mobile network traffic increase by 5,000%. In just the latest six months of reporting, subscription to mobile data services have increased by 40% and between the first quarter of 2009 and the second quarter of 2010, the amount of data used per line has increased by 450%. Obviously this has put a strain on network capacity.

Mobile data demand is expected to outstrip capacity at current levels by 2014. According to FCC Chairman Julius Genachowski this shortage could have dire consequences:

“If we don’t act to update our spectrum policies for the 21st century, we’re going to run into a wall — a spectrum crunch — that will stifle American innovation and economic growth and cost us the opportunity to lead the world in mobile communications,” he warned.

In June, President Obama pledged to make an additional 500 megahertz of wireless spectrum available over the next decade as part of the National Broadband Plan. The FCC has recommended that at least 300 megahertz should be made available in the next five years and that such a move would create $100 billion of economic value. The extra space is expected to come from a reallocation of government-controlled bands and from unused spectrum currently owned by television stations (the stations would be reimbursed after the spectrum is sold in auction to wireless companies).

The reallocation process has already begun. This week the U.S. Department of Commerce’s National Telecommunications and Information Administration announced that it had identified 115 megahertz of spectrum that could be repurposed from weather satellites and Department of Defense radar systems, in effect making one of the first down payments on the 10-year plan.

Ultimately, wireless spectrum is a finite resource so one of the keys to making sure that the demand for wireless services is met now and in the future will have to be a more efficient allocation of space, whether it is through improved technology or just reassigning megahertz where they are needed most. The National Broadband Plan is a step in the right direction.

And thankfully, it looks like it’s still safe to get a smartphone.

smartphones

The 5 Safest Places on Earth

Security is a critical component of risk management. If company employees and assets are not considered safe and sound, little else matters. Some locations take protection to the extreme, however.

Of course, many military facilities are incredibly hardened, of course, but there are a handful of other quirkier institutions (as well as one world-famous bank) that virtually guarantee their people and property are secure — both from manmade and natural threats.

Here is a list of those five safest places on earth.

5. Istanbul’s Earthquake-Safe Airport

2010 has been the year of the earthquake. The decade began with the devastating quake in Haiti that killed hundreds of thousands. Soon after, seismic activity in Chile, China, Mexicali and New Zealand rocked all regions of the globe.

If we can learn from an earthquake-proof airport in Istanbul, however, perhaps future quakes will be much less damaging than they have been throughout history.

The world’s largest seismically isolated building, the new international terminal at Istanbul’s Sabiha Gökçen Airport, is now complete and open for business.

Stretching across more than 2 million square feet, the terminal doesn’t sit directly on the soil, but rather on more than 300 isolators, bearings that can move side-to-side during an earthquake. The whole building moves as a single unit, which prevents damage from uneven forces acting on the structure.

Given that a massive, 7.4-magnitude temblor struck Turkey in 1999, killing some 17,000 and destroying billions of dollars worth of property, this seems like a great development in a city that geologists expect to see another major quake within the next few decades.

4. Bahnhof’s Underground Data Center

Swedish internet service provider Bahnhof set out to find a safe place for its data. For them, an old nuclear bomb shelter 100 feet below a mountain in Stockholm seemed safe enough. And its not just the ISP that thinks so.

The infamous Wikileaks has also moved some of its servers to the bunker that was built in 1943 and renovated in the 1970s to house governmental officials should catastrophe strike.

Apparently, the Bahnhof people are pretty happy to host Wikileaks in their ultra-secure bunker, safe from any political pressure and physical assaults. Wikileaks is under attack by the US government for the publications of many of its secrets. Most recently, Wikileaks released 100,000 internal military documents from the Afghanistan war.

Wikileaks has since unveiled a trove of documents on the current war in Iraq. Neither the company nor its founder, Julian Assange, are making any friend in the Department of Defense, but failing a full military assault on their servers, Wikileaks can at least rest assured that its computers are safe.

3. The Terror-Proof 7 World Trade Center

Along with the Two Towers, the nearby 7 World Trade Center building was also destroyed on 9/11. Unlike the larger structures, however, this one has been rebuilt. It maintains the original name, but when it comes to protection, this one will not be destroyed.

It has been hailed as the safest building in the world, its 52-stories of glass elegance belying a concrete core built to be a bunker in the sky. It is the first skyscraper to be completed at the World Trade Center site, and as it approaches its second anniversary, its innovative architecture and endlessly redundant security features – most of them designed from the lessons of the Twin Towers catastrophic collapse – offer a template for high-rise buildings in a post-9/11 world.

“The biggest change in high-rise construction now is this sealed, hardened core,” says Dr. Herb Hauser, president of New York-based Midtown Technologies, a firm that specializes in security technologies for buildings. “This means that the structure around the core can go down, or be on fire, or be invested with a biological or chemical problem, but the actual core itself will be protected.”

Many other buildings are now being designed and built with the new 7 World Trade as a model.

2. The Svalsgaard Doomsday Seed Vault

Deep beneath the ice of a remote, arctic Norwegian island lies humanity’s last hope to restore agricultural production if any worst-case scenario ever happens. From climate change and nuclear winter to global pandemic and asteroid strikes, humankind has little trouble envisioning any number of catastrophes that could qualify as extinction-level events. But this seed bank now houses the genetic code for all of the critical crops we would need to reboot civilization.

How secure it is? Well, here’s what I wrote about the Svalbard seed vault a few years ago.

Physically, it is virtually impervious to disaster. Earthquakes, such as the 6.2 magnitude quake that struck nearby in February, cannot damage the underground bunker as its steel and reinforced concrete structure is even strong enough to withstand a direct nuclear strike to the mountain. Time, too, will cause minimal harm-Global Crop Diversity Trust’s executive director Cary Fowler expects the vault’s life span to rival the Great Pyramid of Giza.
The vault uses a series of electric cooling units and enormous fans to maintain its constant zero-degree temperature. In the event of mechanical failure, however, its depth below the arctic permafrost would keep the vault cold enough to ensure adequate conservation for multiple years, even presuming the most drastic climate change-related temperature increases.
Human-instigated sabotage is almost equally unlikely. The remoteness of Svalbard, a Norwegian island chain located about 600 miles from the North Pole, is one of the seed bank’s greatest safeguards. The closest community to the vault, Longyearbyen, has a population of 2,000, which easily makes the sparsely populated mining community the metropolis of the archipelago. By contrast, the islands are home to an estimated 3,000 polar bears, which if the armed security guards, steel doors, air locks and video surveillance all fail, can presumably provide a final line of defense against would-be trespassers.

Physically, it is virtually impervious to disaster. Earthquakes, such as the 6.2 magnitude quake that struck nearby in February, cannot damage the underground bunker as its steel and reinforced concrete structure is even strong enough to withstand a direct nuclear strike to the mountain. Time, too, will cause minimal harm-Global Crop Diversity Trust’s executive director Cary Fowler expects the vault’s life span to rival the Great Pyramid of Giza.

The vault uses a series of electric cooling units and enormous fans to maintain its constant zero-degree temperature. In the event of mechanical failure, however, its depth below the arctic permafrost would keep the vault cold enough to ensure adequate conservation for multiple years, even presuming the most drastic climate change-related temperature increases.

Human-instigated sabotage is almost equally unlikely. The remoteness of Svalbard, a Norwegian island chain located about 600 miles from the North Pole, is one of the seed bank’s greatest safeguards. The closest community to the vault, Longyearbyen, has a population of 2,000, which easily makes the sparsely populated mining community the metropolis of the archipelago. By contrast, the islands are home to an estimated 3,000 polar bears, which if the armed security guards, steel doors, air locks and video surveillance all fail, can presumably provide a final line of defense against would-be trespassers.

I think it’s safe to say that, no matter what, we’ll always have seeds.

1. Fort Knox

Everyone knows that Fort Knox, the colloquial name for the U.S. Bullion Depository, is where the United States houses much of its gold. But did you know that the nearly 5,000 tons of precious metal valued at some $137 billion stored there is protected by a 22-ton door? Good luck getting through that.

The vault door, which has a combination that must be entered by some 10 different staff members — none of which know anything but their part of the code, is the crown jewel of a nearly impregnable fortress. And while this is a fantastic security measure, it’s not like anyone could ever get inside the building anyway, what with the tanks, Apache helicopters, armed guards, fences, concrete-lined granite walls, video surveillance and alarms that all safeguard the facility. It’s no wonder, then, that at the height of World War II, Fort Knox stored the Magna Carta, the Crown Jewels of the United Kingdom, the gold reserves of several occupied European nations, the Declaration of Independence and the U.S. Constitution. The Gettysburg Address and the Guttenberg Bible have both reportedly been protected inside Fort Knox as well.

Improving Ratings Agencies After the Financial Crisis

Within the financial sector and around the Beltway, credit ratings agencies took a pounding for their role in the financial crisis of 2008. While it was the mortgage lenders, banks and regulators who drew the most public scorn, many insiders spoke up to point out that, while the commercial interests of the lenders and bankers was understandable given that they were (irresponsibly) chasing profits and the regulators’ failings were understandable because they were … well … regulators, it was the theoretically independent and thought-to-be wise ratings agencies that really let down the market.

They continued to rate junk as investment grade, helping to maintain a status quo of insanity.

As this Wall Street Journal piece notes, at least one person saw this coming — 70 years ago.

Decades before anybody had ever heard of a mortgage derivative, an economist named Melchior Palyi predicted key causes of the 2008-2009 financial crisis with precision that makes a modern reader’s hair stand on end.

His warnings help explain why investors insist on trusting market gatekeepers they know to be fallible—such as policy makers, regulators and credit-ratings firms.

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The root of the problem, in Palyi’s eyes was that the 1936 reforms of the Banking Act mandated federal banks to only hold securities rated as investment-grad by at least two ratings firms.

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Many people have asked “how did these ratings agencies get all this power over the market?”

If you want to pinpoint one date, it was this one.

Mr. Palyi, then teaching at the University of Chicago, was a vocal skeptic from the outset. Looking back into the 1920s, he found that investment-grade bonds went bust with alarming frequency, often in the same year they were rated. On average, he showed, a bank that followed the new rules would end up with a third of its bond portfolio going into default

Decades before anybody had ever heard of a mortgage derivative, an economist named Melchior Palyi predicted key causes of the 2008-2009 financial crisis with precision that makes a modern reader’s hair stand on end.
His warnings help explain why investors insist on trusting market gatekeepers they know to be fallible—such as policy makers, regulators and credit-ratings firms.
The seeds of today’s problem were planted long ago, and its forgotten history holds important lessons. In 1936, as part of reforms under the new Banking Act, the U.S. government mandated that federally regulated banks could no longer hold securities that weren’t rated investment-grade by at least two ratings firms.
To determine how to implement the new policy, the government launched a massive project—with experts from the Federal Deposit Insurance Corp., the National Bureau of Economic Research and the Works Progress Administration—to study how credit ratings should be used.
Mr. Palyi, then teaching at the University of Chicago, was a vocal skeptic from the outset. Looking back into the 1920s, he found that investment-grade bonds went bust with alarming frequency, often in the same year they were rated. On average, he showed, a bank that followed the new rules would end up with a third of its bond portfolio going into default

The record was so unreliable that it would be “still more responsible,” Mr. Palyi growled, to “stop the publication of ratings altogether.” He was especially troubled that the new banking rules switched the responsibility for credit safety from bankers—and even bank regulators—to ratings firms.

“From there,” he warned, it “will have to be shifted again—to someone else,” presumably taxpayers. Liquidity, Mr. Palyi argued, was being replaced by what he scornfully called “shiftability,” a new kind of risk that could someday “be magnified into catastrophic dimensions.”

The whole WSJ piece on Palyi is interesting, so I encourage you to click through and finish the rest.

Meanwhile, now that we know ratings agencies are flawed, what can we do about it? Sheila Keefe offers an unfortunate yet poignant perspective: if not the ratings agencies, who else?

This knee-jerk reaction by Congress to limit the power of an industry that contributed to the meltdown ignores the need for independent credit-rating agencies. In the vacuum in credit rating information created by the Congressional, there are no other effective and efficient sources for evaluating investments.

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Since the passage of Dodd-Frank other credit-rating mechanisms have been discussed, and all of them seem to be either: (a) onerous to small investors and banks who lack the resources larger institutions possess or (b) eerily similar to the process and function previously filled by the credit-rating agencies.

As noted in the Wall Street Journal on November 16, 2010 in “Rating Firms Maintain Their Hold’: Among the possibilities being floated: having regulators gauge the risk level of individual assets, requiring banks to perform in-house assessments subject to oversight, or allowing firms to use a third-party ‘financial assessor’ to gauge the risk level of assets.

The reforms implemented by the credit rating agencies could be are a good start, and with additional regulatory efforts to ensure that credit rating agencies have processes in place to ensure that they are providing independent, sound advice, continued use of credit-rating agencies could be just what America needs to restore confidence in its capital markets.

Under this lens, it seems to be a damned-if-you-do, damned-if-you-don’t scenario.

But of course, there is a third way. Maintain the importance and the authority of the ratings agencies but also have a reformed, better regulatory system that can ensure things are not veering too far off the reservation. Some of the things Sheila mentions sound like a way to get there.

Now, as always comes the hard part — making it reality.

Terrorist Attacks: The Countries Most at Risk

terrorism

When we think of countries most at risk of terrorist attacks, we usually think of Iraq, Pakistan or Afghanistan. But according to a report from Maplecroft, Somalia is now more at risk than any other country in the world. The firm’s global ranking assessed the frequency and intensity of terrorist incidents in 196 countries and found the following countries qualify as “extreme risk” territories:

  1. Somalia
  2. Pakistan
  3. Iraq
  4. Afghanistan
  5. Palestinian Occupied Territory
  6. Columbia
  7. Thailand
  8. Philippines
  9. Yemen
  10. Russia

The report found that between June 2009 and June 2010, Somalia experienced 556 terrorist attacks, killing a total of 1,437 people and wounding 3,408.

The principal threat in Somalia comes from the Islamist al Shabaab, which has claimed responsibility for several deadly suicide bombings, including one in February 2009, which killed eleven Burundian soldiers on an AU peacekeeping mission.

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In a recent and worrying change of tactics, the group carried out its first major international attack in July 2010, when it bombed the Ugandan capital, Kampala, killing at least 74 people.

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Yemen makes its first appearance in the “extreme risk” category, with 109 attacks in the one-year period ending June 2010. The country’s primary source of terrorism is al-Qaeda, “which is causing growing alarm among Western intelligence services as the group plots more attacks abroad.

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Greece overtook Spain to become the European country most at risk from terrorist attacks. Though most Greek attacks tend to be non-fatal, they are highly disruptive, as we saw in the November 2010 letter bombs that targeted embassies in Athens and foreign leaders both in Greece and abroad.

Greece