Commerce

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.

The Morality of Network Neutrality

On Monday (11.10.14) President Obama came out strongly in favor of network neutrality.  The President had always been a supporter of the idea, but on Monday he made his most definitive statement yet.

The idea behind network neutrality is that once access to the Internet has been purchased, all usage is equal.  Once a subscriber has paid his monthly fee then his actions on the network (the websites he visits or the information he downloads) is treated equally to anyone else’s.  He can download as much as he wants when he wants, as long as it is legal material.  The network is “neutral” as to what occurs inside of it.  No person or company can pay for a “fast lane” that allows their information to travel along the network faster than another.  Imagine Facebook paying a fee so that its page downloads faster than the local community college’s.  Network neutrality means that Internet service providers like Verizon, Cox, and Time Warner would be in possession of so-called dump pipes.  They could collect a fee for its use, but they can’t flip switches and turn diodes to manipulate the speed of data that flows through those pipes.

Currently, service providers can discriminate “reasonably”.  This was due to a temporary armistice between network neutrality advocates and service providers codified in the Federal Communication Commission’s Open Internet Act of 2010.  I don’t get reasonable discrimination.  Reasonable discrimination is still discrimination, whether it is reasonable or not.  I believe I was discriminated against by my service provider:

reasonable_discrim

Some may see network neutrality as inherently just.  They may make an analogy to the Interstate or the DMV, where people are not treated differently as long as they are taxpaying citizens.  They may see the Internet as not just a way to order things from Amazon, but the primary means of being an active participant in society.  Allowing people or companies to pay more to participate will disenfranchise those who cannot afford to pay the same price for the same service.  Moreover, it stifles innovation.  If upstart companies cannot pay for faster download speeds, then they can’t possibly compete with the big boys.  All this manic innovation that the Internet is known for will dry up.  Providing Internet service, for the pro-network neutrality camp, is not unlike a public utility.

Some, however, may see network neutrality as unnecessary government regulation, hindering the workings of the market.  Why not let bigger companies or wealthier people pay more for faster service? It’d be just like letting people pay more for luxury seats at a baseball game.  Moreover, companies could be hindered by network neutrality rules.  There are some users who use large amounts of data (like me), and this clogs the network.  The best model would be to let me pay more for my service, which would then allow companies to provide a low cost option for those who only need the Internet for email, checking a government website, and the occasional purchase.  Providing Internet service, for this group, is primarily a business.

Both sides would be right.  It is clearly a public good, at the same time people are making money hand over fist.  It was developed by scientists, funded by the government, in an effort to provide communications.  On the other hand, it exploded when businesses were allowed to provide Internet service to the masses.

This murkiness is why I believe network neutrality advocates  should cast the issue as a moral one.

Let me explain…

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Black Barbershops, Korean Greengrocers, and The Long Tail of Market Segments

When I try to explain the notion of the digital environment to people, I start by contrasting it with the physical environment.  The physical environment is the world of brick and mortar, flesh and bone.  Whereas the digital environment  is made up of symbols and meanings  – text, music, videos, and data.  These two worlds are distinct, with different rules governing them.  But they are connected, as people move back and forth between them, importing and exporting norms and understandings.   This way of thinking about the digital environment makes it fun for the sociologist, because she can use all the ideas and tools developed to study the physical and apply them to the digital.

A few weeks back, I had a minor adventure.  I got three haircuts in the span of 20 days.  I found it difficult to find a barber who could give me the trim I wanted.  Consequently, I have very little hair left (a bit of a concern, because at my age there is a real possibility that the hair will not grow back).   Once the shock of my buzz cut went away, I became aware of the fact that all of those barbershops were black owned and operated businesses.  Indeed, I have never gone into a non-black owned barbershop.  Now that I think of it, I’ve never gone to a family funeral that was not conducted by a black owned and operated funeral home.

Brick and mortar businesses owned by minorities and immigrants are common components of the American economy.  They tend to be local and they tend to fill a very specific niche – take the Thai nail salon, the Korean greengrocer, the Indian convenience store…or the black barbershop (unfortunately, there are not enough black owned businesses…but that is a different issue).

A question we can ask ourselves is whether the pattern of immigrants and minorities owning niche businesses in the world of brick and mortar reconstitutes itself in the world of bits and bytes…

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The Iron Cage and Alienation – Applying Some Sociological Ideas to Success in the Digital Environment

Imagine two companies with competing products.

One company develops their product by employing the brightest minds from the nation’s best universities.  Millions are invested in marketing, advertising, and copyright protection.  Through the selling of licenses of their product the company is able to fund their enterprise and make a handsome profit.  Meanwhile a second company develops their product with minimal capital investment.  They make the product’s design openly available and let anyone use and modify it.  They do not charge for the use of their product.  Its free.

What company should produce the best product?  Obviously, if I am taking the time to write this, it must mean that the second company has counterintuitively produced the best product.

I’m talking about statistics programs (yawn).  The two competing ones are IBM’S SPSS (or Statistical Package for the Social Sciences) and the R Program for Statistical Computing.

I spent most of my PHD years learning SPSS.  The strength of SPSS is its ease of use.  It is incredibly user friendly and is ideal for someone like me who has to work hard to wrap my head around things like standard deviations and alpha scores.  But over the last few years, I have migrated over to R.  R is, by contrast, not as user friendly as SPSS.  But if one goes through the trouble of learning how to use the software, it becomes clear fairly early that it is far and away more powerful, more customizable, and more flexible than its counterpart.  It is simply a higher quality software.

What makes R so interesting is not that it is better, but how and why it is better.  Let me explain using the ideas of a few classical sociologists.  Max Weber and Karl Marx represent two-thirds of the Holy Sociological Trinity (the other being Emile Durkheim).  They formulated their ideas during a time when the social patterns of the world were changing rapidly, from rural and agrarian to urban and industrial – not coincidentally this was the time when sociology as a discipline was born.  I’m going to cherry-pick a few of their ideas to help me explain why R is beating SPSS.

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Pornography, Google’s Monopoly, and the Need for Civic Digital Literacy

On Monday, May 30th, Google stopped running ads for pornography, a move reported by several news organizations including the Guardian, CNET, and Slate.  According to the article in Slate, the move was partly the result of Google bowing to pressure from family values groups.  The Slate article references comments made on the Morality in Media website stating that they had a “productive meeting” with Google in May. Morality in Media publishes an annual Dirty Dozen list of businesses that facilitate the “the spread of pornography and exploitation”.  Google has consistently made the list.

Because Google is by far the dominant search engine, commanding a whopping 68% of the market according to Search Engine Watch, they will always be the target of interest groups that are not happy with this or that website.  People know that as Google goes, the web goes.  If Google does not acknowledge you, you do not exist.  This is a problem.

University of Virginia professor Siva Vaidhyanathan’s much discussed book  The Googlization of Everything (And Why We Should Worry) explores this very issue.  In the beginning pages, Vaidhyanathan points to the problem clearly when he writes:

“We may see Google as a savior, but it rules like Caesar. The mythology of the Web leads us to assume that it is a wild, ungovernable, and thus ungoverned realm. This could not be further from the truth. There was a power vacuum in the Web not so long ago, but we have invited Google to fill it. Overwhelmingly, we now allow Google to determine what is important, relevant, and true on the Web and in the world. We trust and believe that Google acts in our best interest. But we have surrendered control over the values, methods, and processes that make sense of our information ecosystem.”

Vaidhyanathan’s book explains much better than I can why Google’s dominance is troubling.  But in short, Google is a profit seeking company that must conform to business logic.  Decisions about whether or not to show pornographic ads are not based on morality (reason for removing the ads) or constitutional principles of free speech (maybe a reason for not removing them), but instead a cold, hard, capitalistic logic.  Calculations are made based on what will cost the most – losing ads from pornographers or getting a public black eye from morality groups.  After the calculation, then the decision.

There is nothing wrong this.  Google is a business.  They made their name and fortune by connecting us to places in the digital environment.

The trouble is not Google’s policy, but our reaction to it.

 

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