Intellectually dishonest apply within

The CEO of Comcast is making the rounds talking about how his cosmically disliked unregulated monopoly should be getting less heat about their deployment of data caps on residential broadband Internet connections because “the more bits you use, the more you pay“, comparing data use to electricity or gasoline use.  Except it is nothing like them at all.

To begin with,we need to define some terms.

  • Energy is measured in Joules.  A joule is the amount of energy transferred to a one kilogram object moved one meter in one second.
  • Gasoline is sold by the gallon, which has about 122,600,000 joules of energy (122.6MJ)
  • A Watt is a measure of energy transfer (also called work).  One watt is equal to the transfer of one joule per second.
  • Grid electricity is billed in kilowatt-hours, which is the transfer of 1000 Watts (1000 joules per second) continuously for one hour.
  • One kWh is 3,600,000 joules of energy (3.6MJ)

Now, with that set of reference terms, it should be clear that the gasoline analogy is asinine because of the structural differences between transportation energy and both household energy and Internet connectivity.  When I go to the gas station, I am buying joules to use later, in the form of gasoline, priced by volume.  We do this for transportation energy, in part because it fits well with transportation technology and in part because transportation infrastructure doesn’t fit well with grid electricity. What I mean by that is that if we could use grid electricity for our transportation energy needs we wouldn’t buy it by the joule, we’d buy it the same way that we buy our other grid electricity – by the watt.  Electric train, subway, tram, and trolley systems consume grid electricity and pay by the watt; an all-electric car like a Prius or Tesla consumes stored electricity and while you might be paying for that electricity by the watt when you fill the battery, the motor is consuming joules from a battery, not joules per second from a grid.

I don’t really have a way of buying Watts in a discrete package at levels that I can efficiently consume – batteries are heavy and take up space and don’t really have the capacities that I need for my standard of living – and this is the analogous usage behavior to gasoline.  It is possible to envision an electrical distribution system where I have to take a battery to a charging station to have it filled up, am charged by the joule, and then return to my domicile and consume the joules.  Similarly, we could go to an “Internet station” and buy bytes of content, then return home and consume them.  Structurally, that is what you mean when you compare the Internet to the gasoline pump.  The key to this structural parallelism is that while you pay for stationary energy that is transferred independent of the distribution system when you buy gasoline and put it into a tank or can, you are paying for moving energy that is transferred as an inherent part of the distribution system when you buy electricity for your home.

To-the-home electricity service is a regulated utility, with unit prices capped by the government, in one form or the other, for the purpose of protecting the consumer from profiteering.  It also has a standard rate-based unit of sale, something that the Internet lacks.  “But what about Gigabits?” you ask.  Gigabits are not a rate based measure.  Here is an example of the difference:

Let us say I have a refrigerator and I want to run it for an hour, and that to do that, I need 180 Watts.  Everyone agrees that I don’t want to just run my refrigerator for only one hour – I want it to continuously do work to keep things cold, and that buying Watts is insufficient, because I might run out of Watts at an inopportune time.    So what I do is connect my house to the power grid and arrange to buy Watts in increments of “1000 Watts continuously for an entire hour” and that is called a kilowatt-hour.  The price of a kWh is set by municipal or regional authorities, but the average national price of a kWh in the United States in September 2015 was $0.1081; about eleven cents.

What would that kind of consumption based pricing look like for the Internet?  To start, there is no equivalent to a Watt in the Internet.  Recall that a Watt is a representation of energy transfer, in the Internet we talk about data transfer, and we usually talk about that in terms of bits per second.  This is the unit that we use when we talk about how fast the Internet is – an LTE device can get up to about 20 megabits per second, a cable modem can get up to 300 megabits per second, and a server in a data center might be capable of 10 or 40 or even 100 gigabits per seconds.  We use bits because it is the smallest unit of information.  Comcast advertises this kind of number when they talk about “High-speed” Internet, but they use a different unit when they talk about data-caps; they talk about Bytes.  Bytes are the smallest container for holding bits in most computers.  For this reason, storage is measured in bytes, whether that storage is a disk drive or memory card or the scratch-pad space the computer uses when making calculations, and for all practical purposes eight bits equals one byte.  For our back of the envelope economic musings, let it be such that the relationship between kilowatt-hour and gigabyte-hour are structurally equivalent.

So, in the world that Comcast CEO Brian Roberts is suggesting we live in when he compares the Internet to the electric grid:

I connect my house to the data grid and arrange to buy bits in increments of “a Gigabyte of data transfer (8,000,000,000 bits per second) continuously for an entire hour” at a price that is set by some authority, and lets say for the sake of this argument, that it is twice the price or a kWh:  $0.2162, or about twenty-two cents.  If I use 300 gBh , then I own Comcast $66, so my bill is probably something about the same when I add in taxes and fees as I pay now, but they have transferred 1.26 petabytes of data to me.

This is what intellectual dishonesty looks like:  Brian Roberts wants you to believe that 1.26PB is the same as 350GB, that you should believe the marketing that tells you that you are getting “always-on”; “high-speed”; or “the speed you need” when at they are actually offering to sell you 0.09722 gBh of data transfer at a cost of anywhere from $29.99 to $299.99, because the price changes based on the rate, but has a fixed consumption limit.  No matter what level you buy, on a data-capped connection you are buying one size of cup and being sold different sized straws at different prices.  The quicker you run out of drink in the cup, the more you pay.  And if you want refills, they are more expensive than the

For those of you keeping score at home, a 300GB monthly cap, in terms of gBh equates to “about 1783 bits per second continuously for an entire hour”  or a 2Kbps connection.  In other words, a slow dial-up connection.  And a 1GB mountly cap, in terms of gBh equates to “about 6 bits per second continuously for an entire hour”.

Now, lets be real – reasonable people don’t actually need to transfer 1.26 PB of data, and  it isn’t reasonable to expect that someone will max-out a connection for 730 hours per month.  In fact, beyond a reasonable threshold, speed of transfer has almost no impact on the user-experience.  Other factors, such as latency, play a much bigger role in things like video or voice, but even something as simple as gigabyte-hours makes the economics of data transfer much clearer and reveals that the business models of commercial Internet access providers, even though they are skewed in their favor, are deeply and unsustainable flawed by the way that they mask reality.  “We sell bytes, not byte-hours” becomes a cancer as you report on the business to yourselves, your stockholders, your customers, and your regulators.  “We sell bytes not byte-hours” and “we are not a dumb pipe” are the two fatal conceits of the commercial access provider and most providers believe both of them wholeheartedly.

By selling bytes while marketing byte-hours features like “always-on” and “high-speed”, the business is creating demand for something they neither measure nor report.  By following that up with pricing and restrictions based on bytes they manufacture animosity in their customers who are already unhappy.  This works for them because  they get the competitive landscape of a utility and the profitability of a free market capitalist.  (Is it any wonder that they would rather spend millions on lawyers and lobbyists than lose billions under a more rational regulatory landscape?)  The technical problem with this is that they make poor decisions about technology because of this conceit, fighting precisely the technology that would make gBh rating practical by putting the control of how to consume data transfer back into the hands of those at the ends of the dumb pipe.  Why?  Television and content ownership.  Linear programming (video streaming) that must be delivered in real time to viewers who have been given infinite choices from which to select is perhaps the worst use of the Internet we’ve built.

How do I measure gigabyte-hours?  That actually turns out to be a hard question to answer because I obviously just made the unit up in the course of writing this blog post.  But it is informative as to how electric meter measure kWh: calculate the average rate of joules per second for the previous 15 minutes, then average the previous four results together every hour and multiply by the price per kWh.  So to calculate gBh, we could start by calculating the average rate of bits per second for the previous 15 minutes, then averaging the previous four results together every hour.  But because the Internet is the Internet, we can probably do better and measure the bits per second every minute, then average 60 results every hour.

 

 


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