The Price of Bytes. Or, How Many “One”s Can I Listen to Per Month?

Gas prices have really dropped over the last few months.  The cheaper gas prices made the 2014 holiday travel season one of the busiest in quite some time.  Many Americans joined me on the annual trip to mom’s because of the lower cost of travel.  More than spurring travel, the low gas prices is one of the reasons why the economy is doing so well.  Apparently our economy is growing at its fastest pace in 11 years. I say “apparently” because I always take the headlines about the economy with a grain of salt.  These percentage increases in economic growth mean a lot less for most people – until I see that real wages have gone up, all a fast economy means is that the relative few invested in the stock market have seen their profits rise.  But I digress.

This made me think about the price of data.  Like gas, data consumption is a part of people’s everyday life.  But unlike gas, I don’t really know how much I pay for data.  The gallon is the unit of choice for gas.  On my trip home to mom’s, I found gas for $1.99 per gallon.  Yippee!  I think the byte may be the unit of choice for data.   So what is going rate for the price of a byte these days?

How Much Data Do We Use?

A research brief from USTelecom last year reported that the average traffic per internet user in the United States was about 59 gigabytes per month, up from 19 gigabytes in 2009.  Only South Koreans, at 59.8 gigabytes per month, are more active in the digital environment.  Most of this traffic is landline – coming from home subscriptions as opposed to coming from mobile phones.  A separate report puts mobile traffic at only about 1.2 gigabytes coming from mobile Internet traffic.

 

To simplify things, I’ll ignore the difference between mobile and landline.  Also, I’ll work with the nice round number of 60 gigabytes per user.

How Much is 60 Gigabytes of Internet Traffic?

U2’s classic song One is 4 minutes and 30 seconds of great music (as a side note, Mary J. Blige’s remake of that song is almost as good).  The copy of One that I have on my computer is 4.4 megabytes.  For those of us who are metrically challenged, as I often am, 1 gigabyte is equal to 1000 megabytes.  And so 60 gigabytes is equal to streaming that song about 13,636 times.

Movies are more data intensive.  Streaming a movie at the best quality on Netflix is about 1 gigabyte per hour, and so the average 90 minute movie is 1.5 gigabytes.  60 gigabytes is equal to streaming about 40 high quality movies.

Of course, our data usage is not just entertainment – we Skype, use email, browse FaceBook, shop, bank, and so on. But there is no question that the bulk of our internet usage comes in the form of videos.  At least for now.

How much does it cost?

The reason why we don’t know the price per byte of data usage is because most Internet service is sold by access and speed, and not total amount downloaded.   In other words, you first pay for access, and then you pay for levels of speed – but not individual data bytes.  Mobile phones packages are often offered by the byte, but I want to focus on landline services because most of our data traffic is via home service.

A little work must be done –  a little “guesstimation” – to get a grasp of how much data costs by the byte.  Let’s continue with the 60 gigabyte average, and the listing of prices per plan below. The mid-range speed plan offered by the largest Internet service providers – Comcast, Time Warner, Cox, and AT&T – is about $55.

 

At $55 dollars on average a month for service (I did not include Verizon, which is an outlier with a price of $90), and 60 gigabytes on average downloaded per month, the average American is paying about 1 dollar for every 917 megabytes. That is equal to listening to “One” 208 times, 15 hours of music, for 1 dollar!

Ignorance is Bliss

There is no incentive for the public to know the price of data, because service providers simply offer flat rate, tiered pricing plans that cover their expenses.  This is (somewhat) similar to how a landlord who offers “all utilities included” with the price of rent simply charges slightly more than the average utility bill for all their units.  If their calculations are correct, they will end up making a higher profit because the average renter will be true to form (i.e. average), and use less utilities than they are paying for.

Internet service plans are of course more flexible with tiered pricing.  Also, providers have an out, should a subscriber abuse the flat rate – when an subscriber uses far more data than average, service providers have the legal authority to “manage their networks” and slow the speeds of the heavy user.  But still the analogy to utilities included apartment renting is a serviceable one, and thanks to Network Neutrality rules it is the standard.  There is no need to know the price per byte of data for landline services.

I think it’s a good thing.  Ignorance is bliss in this case.

If “price per byte” starts to become a thing, a topic of conversation on television talk shows and around water coolers, then it will mean that service providers have eroded Network Neutrality rules enough so that offering data packages is a legal and viable business model.  Instead of flat tiers organized by speed, we will see data packages like mobile phones.  Imagine 100 gigabytes of data for $80.00 per month, or something.   This will be bad news.  We’ll be introducing another dimension of conflict – I can see kids and adults “conspicuously consuming” data, and inequality – I can see underprivileged families excluded from many data services because this or that service costs too much, into an already highly conflictual and grossly unequal society.

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