Connecticut Auto Dealers War on Tesla, Elon Musk, and the Future

Connecticut Auto Dealers have declared war on Tesla Motors. Lead by Jim Fleming they are deploying a cynical and misleading public relations campaign against America’s newest domestic manufacturer of automobiles. Their bone of contention is S.B. 198 An Act Concerning Electric Vehicles and H.B. 6682 An Act Concerning the Licensing of New and Used Car Dealers. S.B. 198 is more narrow and would create an exemption for Tesla while H.B. 6682 is a little more broad. The passing of either bill would be a win for consumers and for making Connecticut a more friendly place for innovators and start-ups.

Manufacturer and company owned retail is already here. In the clothing industry companies like Brooks Brothers, Victoria’s Secret, and New Balance all sell their products in stores that they own. In the electronics industry consumers buy from manufacturers like Apple Computer and Microsoft. Chipotle, the hottest property in the restaurant industry right now, has eschewed the franchise model to build its burrito empire. The majority of Starbucks coffee shops are company owned. Todays consumers are voting with their feet for the more innovative and enjoyable experiences provided in retail by company owned operations than those that are run by third parties.

Furthermore Tesla’s direct sales model is simpler and more equitable than the dealer system. Tesla cars are sold at sticker price without negotiation. Yale professor Ian Ayres conducted a study that showed auto dealers engage in race and gender discrimination when they negotiate prices with consumers. This disproportiontely impacts populations that are already disadvantaged in our economic marketplace. While Tesla only sells a small number of automobiles in comparison to its competitors, encouraging this system of selling would lead us closer to achieving a broader policy goal of reducing racism and sexism in our society.

Finally while there are some advantages to the dealer system, consumers should have the right to choose between a dealer purchase and a direct purchase the way they pick between Starbucks and Dunkin Donuts. Car dealers are no less at risk of going under themselves than Radio Shack. In fact it seems they already are heading that way as there is consistantly a year over year decline in the number of auto dealerships in the United States. I am less scared of the publicly traded Tesla Motors company going under and being unable to service my car than I am the local auto dealer.

If auto dealers want to win in the marketplace they should do so through customer service and innovation and not through lobbying. If dealers are able to do a better job of selling Tesla automobiles then Tesla will rationally ask them for their help. If consumers believe that the dealer experience and products are better than the direct sale experience and products then dealers will prosper and direct sale companies will fail. If the direct sale employees of auto dealers truly are skilled at selling than the direct sale companies will likely try to recruit them into new jobs. This misguided public relations war makes no sense and I cannot wait for it to end.

Could your town in Connecticut soon have gigabit Internet?

With all the hype around Google Fiber it is easy to be jealous of people in places like Kansas City that have gigabit Internet. That is why I was glad to see that yesterday Comptroller Kevin Lembo and New Haven Mayor Toni Harp testified in favor of An Act Concerning Gigabit Internet Access. The bill itself is a placeholder so it takes some digging to figure out what exactly is happening. Fortunately the Office of Consumer Counsel and Comptroller’s Office have both been putting out a lot of material on this effort that I describe and link below.

What do the existing broadband companies think?

Predictably their submitted testimony discusses the work they have done so far, says that the situation is not bad, and that gigabit service is already available. However testimony from Katz and Lembo include anecdotes about companies that were not able to acquire gigabit service or could only do so at prohibitive prices and a slow pace. The existing companies are likely concerned about increased competition. Maybe that is why the New Haven Register reports that Comcast is planning on rolling out gigabit service soon.

What actual changes are being made to the law to facilitate this?

So far not many that I can discern. Previously a law was passed that gave towns access rights to part of the utility poles in their towns. Presumably they would then use this right to allow the buildout of their community network. Sen. Looney proposed creating an Office of Broadband Advocacy under the Office of Consumer Counsel. On the federal level Rosa DeLauro recently re-introduced a bill to create and fund a public bank that would provide loans and loan guarentees for infrastructure projects like the community broadband networks, but without bipartisan support it is unlikely to pass.

How close are we to doing this?

Part of the proposal by Katz is to develop community networks that connect to the Nutmeg Network. The Nutmeg Network already provides gigabit Internet service to educational institutions and governments in Connecticut. I used the Nutmeg Network when I was a student at UConn Law and it is fast and reliable. The goal, as described by Katz, is to get private companies to build out the last-mile of the network and then for multiple ISPs to offer service across it.1 If rollout runs on a timetable similar to Google Fiber it would take a little over a year from when a company announces it is bringing service to a municipality to having it go live.2

Will this cost taxpayers money?

So far it does not appear to be an expensive proposal. The Nutmeg Network is already built, and the utility poles are also already there. State government would merely be leveraging its existing resources and allow private companies access to build the gigabit service. However even if it does cost money, these kinds of infrastrcuture projects often return much more in economic benefit than is spent.

  1. This is similar to how you get electricity. One company built the infrastructure and then others pay that company to provide service across it 

  2. Don’t take this as gospel, the capabilities and challenges in each municipality can vary. 

Medical Students Get Residencies via Algorithm

From FiveThirtyEight:

It works like this: Each of the women proposes to her first-choice man, and he rejects or accepts. Women still without a partner approach their second-choice man (the women can propose to men who have already accepted an offer, and the men can choose to reject an initial proposal if a better offer comes along). This continues until there are no women left who want to propose to a man.

I found this article interesting because a friend of mine is experiencing this process, but also because I think it would be a simpler way to job search. The FiveThirtyEight twitter account seemed to think it could be applied to college applications too. The ironic thing is that I do not believe that any online dating website has actually implemented this algorithm.

Using Social Security Numbers to Verify Identity is Negligence

Bruce Schneier on identity theft in 2005:

The second issue is the ease with which a criminal can use personal data to commit fraud. It doesn’t take much personal information to apply for a credit card in someone else’s name. It doesn’t take much to submit fraudulent bank transactions in someone else’s name. It’s surprisingly easy to get an identification card in someone else’s name. Our current culture, where identity is verified simply and sloppily, makes it easier for a criminal to impersonate his victim.

With the recent Anthem data breach it is clear that the world is now on notice that for a significant portion of the United States population, the combination of a Social Security number and a birth date is not a secure way to verify identity. The financial services industry has thus developed new identity verification schemes and fraud detection tools. The IRS now uses big data to detect and prevent fraud. PayPal, Dropbox, and Google have all adopted two factor authentication. Stripe has adopted a machine learning model that adapts itself to your business. The tools to mitigate and prevent identity fraud exist, and companies and governments should employ them.

Harvard Used GoPros and Machine Learning to Monitor Lecture Attendance

An interesting slide deck on something that I think most professors already knew and noticed. Students often skip lectures and attendance drops off near the end of the semester. This happened in both my undergrad and in law school. My general sense is that a lot of students felt they could simply learn through self-study and did not get much value out of the lectures. If you can pull it off it’s probably not a huge problem, but for students who struggle to get good grades I think that this kind of data will be critical in trying to figure out how to engage them and help them improve their performance.

Of course this data is not nearly as bad as the rather dismal completion rate for MOOCs.

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This work by Matt Zagaja is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.