Solar power has a bright future - provided sensible government policy is applied

This morning in the Oil Drum there is an excellent article on pricing of solar power.

Takeaway messages from this article are:

• Solar power prices are now in many markets lower than what consumers pay for electricity on the grid. This is due to dramatically reduced prices of panels and inverters due to economies of scale and technological improvement. This trend will continue; just as computer prices trend down as technology improves, the same thing will happen for solar photovoltaics.

• Due to the above it now pays to install and generate your own power at sunny southern latitudes and the positive-payoff geographical regions will steadily expand (latitude is the biggest factor, but cloud cover is also an issue). Hence more and more people will install such systems, including both private consumers and companies. In the long run this bodes very well for lowering fossil fuel consumption and reducing future climate change.

• The market for producing solar equipment has shifted to low production-cost markets, as happened with other technology products. That is harmful to the production industry in developed countries, but on the other hand the installation industries should continue to experience growth and profits due to demand for installation, and energy-intensive industries will benefit from cheaper power. Ultimately there should be tremendous net gains to economies that encourage installation.

• Governments have been fouling up marketing by suddenly chopping feed-in tariffs. These are fixed rates paid for electricity produced on your rooftop. The problem was that these were set at extremely high levels, and then governments realized that with the dramatically lower costs of solar production, the tariffs were way too high. However, rather than cutting them entirely, they need to be brought down to sensible levels, so it is still possible to sell to the grid. Society will benefit tremendously from having a solar generator on most roofs. But since the sun only shines some of the time, and on sunny summer afternoons such installations make much more electricity than needed in the underlying building, it is necessary to sell excess power to the grid. Without this ability the impetus to install is significantly reduced. Rates should be set at an economically justifiable level that changes over time and that is sufficient to ensure people will install systems, but also ensures no windfall profits.

• Governments also need to set up the right environment for investment in transmission and storage of solar-generated power.

• Even going off-grid entirely (which requires setting up your own storage system) is beginning to become an attractive option, and will become more attractive over time for all consumers. 

• The market for electric cars will be boosted in tandem with in increasing installation of solar photovoltaics, since recharging your own vehicles will result in big cost savings, and also your vehicle, when not in use, serves as a storage.

• Systems installed today can be expected to last 10-20 years with significant maintenance (inverter replacement) at about 10 years. However as with all technology, reliability is likely to improve, so even longer time horizons may be possible, and systems installed today may last longer than expected.

The article has a lot of very interesting equations that can be used by businesses, consumers and economists to properly work out the business case for solar power.

A consumer charter for net neutrality, transparency and pricing

Internet service is one of the consumer utilities that the majority of people in wealthier countries now subscribe to. In some areas landline Internet service is a monopoly, like water, electricity or natural gas; in other areas it is a duopoly supplied by your choice of cable-TV or phone company (DSL or fiber). As such, the providers have a lot of market power. There are some factors reducing the market power: One can subscribe to satellite Internet, although this is expensive; and one can use 3G or 4G cellular service, but this has limited bandwidth and is also expensive. Regulators require some providers to share their lines on a wholesale basis, but this is not universal.

I think Internet service should be subject to more competition and the providers should be held to high standards. Consumers should know they will always benefit from net neutrality,  have fair and competitively priced services, and be able to transparently see information about all aspects of their service.

In the following I consider small business owners to also be consumers, provided their main business is not network services. By 'quality of service' I am referring to the combination of factors such as the throughput (amount of data per unit time), latency (delay in having data sent or received), and jitter (variability in that delay). By ISPs, I include not just landline, but also wireless and satellite providers, unless I state otherwise.

As a consumer of Internet service here's what I would like to see all ISPs provide:

1.  Full access to the Internet: A consumer should be able to access any server on any IP address on the Internet,  should be able to use any DNS server to resolve any valid domain, and should be able to use any protocol supported by both the server and the Internet Engineering Task Force. Exceptions to this can only be made with the consumer's explicit consent, such as to protect children from inappropriate content, to prevent accidental access to dangerous sites like those that perform phishing. Rationale: Allowing ISPs to judge the appropriateness of Internet sites gives them too much power. There are certainly dangerous and illegal sites out there, but there are alternatives, such as security software and education measures, that are better than turning the ISP into a branch of the police.

2. Fair connection to all services. An ISP should not provide unfavourable routing or quality of service to any particular server or protocol on the Internet. It may provide faster direct connections or caching to popular services in order to speed up its overall service, but in making such arrangements with popular services, payments from services must be arranged only on a cost-recovery basis, and quality of services to other services must not be degraded. Any such arrangements with popular services must be disclosed to all consumers. Rationale: Consumers should be able to choose the services they access, rather than having to put up with what the ISP has chosen to favor.

3. Fair competition in value-added services: An ISP may not charge extra for routing Internet services of any kind to an external provider; this includes VOIP telephony, video services, tethering of one device to another (see my earlier post), and peer-to-peer services. An ISP may provide such services itself at extra cost, but if it does so, then the access to these services must also be available at no extra cost from anywhere on the Internet, and there must not be a reduction in price due to 'bundling' of more than 20% on any such service. Rationale: ISPs want to provide value added content however it is anti-competitive for them to make it faster or cheaper for consumers to choose their particular brand of content.

4. Special service quality for some doesn't affect others: A consumer may make arrangements to pay extra for particular quality of service for a particular application, such as guaranteed low latency and high bandwidth for a telemedicine application. However capacity for such services must be built and reserved separately such that quality of service for other consumers cannot decline, no matter how intensively this special service is used.

5. Throttling is transparent and kept to a minimum: An ISP may limit (throttle) the maximum bandwidth of a consumer's connection only if the following conditions are met:
a) The consumer's connection to the ISP is shared (wireless or shared cable for example);
b) The capacity of the connection is near its maximum;
c) The consumers subject to throttling are using substantially more capacity than many other users and it is occurring over an extended period of time;
d) The throttling will only be to the degree necessary and continue only as long as necessary to ensure users with lesser demands on the network can obtain good quality of service;
e) The throttling will applied gradually, not in a drastic manner (i.e. reducing maximum bandwidth by 10%, then 20%, then 30%, etc. as necessary);
f) The consumer is notified about the exact policy for throttling, and can opt to be notified whenever throttling is initiated, by methods such as email or text messaging;
g) Limitations on bandwidth are fairly applied to all of the user's connections, and protocols;
h) The consumer can at all times query the ISP to find out the exact amount of throttling currently in effect, and the amount applied at any given time over at least the last two billing cycles.
Rationale: Some people object outright to throttling, however all network connections to some extent involve sharing of a limited resource. The sum total of every customer's potential maximum throughput will always exceed the network's capacity. Therefore the ability to slow down the heaviest users in a fair way on an occasional basis is a necessary evil. Other utilities are also subject to throttling: In a drought, watering of lawns and filling of pools is limited. If a transmission line goes down, people will be asked to limit consumption or else suffer rolling blackouts. The criteria listed make throttling transparent, which it currently is not. This transparency will force ISPs to build capacity such that throttling becomes unnecessary.

6. Strictly limited packet inspection: An ISP must not perform  packet inspection other than, a) to determine the protocol and routing of the user's communication for the purposes described in this document; b) to detect malware or hacking; c) under court order. Rationale: Deep packet inspection is intrusive and is akin to reading postal mail or wiretapping of traditional phone lines. Even the postal service would open a package to help determine where to deliver it to if the mailing label fell off, and would set aside packages that seemed dangerous.

7. No data modification without opt-in: An ISP must not modify packets or protocols, such as to place advertisements on web pages or to providing search pages when a DNS lookup fails, unless prior arrangements have been made with the consumer to allow this to happen. Such modification must only take place when the consumer explicitly opts in, and the consumer must be able to easily opt out at no cost at any time. Rationale: More and more ISPs deliver search pages and ads when a DNS lookup fails. Others place ads on web pages by hijacking parts of the html. This is unacceptable without explicit consent.

8. Free choice of anti-virus or security software: If an ISP provides at no charge its own custom or branded software for virus protection and other aspects of security, it must also provide deep discounts on other brands of similar software: Rationale: This type of software doesn't just benefit the consumer, it benefits the ISP too. However, consumers get locked into the ISP's brand, which may not work on all operating systems, and may double as a tool for selling bundled value-added services. Consumers need to be free to say no to the ISP's software, without feeling that they then must pay full price for something they could have got free.

9. No bloatware: An ISP must not require or even strongly suggest to users to install software provided by the ISP, nor must it partner with hardware providers to have such 'bloatware' pre-installed.

10. Free choice of hardware: An ISP must allow and facilitate consumers to use of their own modem and wireless network hardware, and must not price their own hardware at rates that unduly coerce consumers to choose their own brand. The only exception would be hardware that damages the network.

11. Stable IP Address: An ISP should refrain, where possible, from changing a user's IP address. Where this is not possible, the consumer must be able to determine the policies for when IP addresses will be changed. Rationale: Many ISPs rotate IP addresses, to make it harder for consumers to run servers and to make it harder for attackers to attack a particular consumer. However, there are unfortunate unintended consequences: Often websites that have been attacked will blacklist a particular IP address. When this is rotated to some other unsuspecting consumer, that new consumer will be denied services. Also long-lived client connections can crash as can home routers. Finally, as the next item points out, consumers should be able to run servers.

12. Servers allowed on a limited basis: Consumers should be able to run small-scale web and other servers as long as the total bandwidth of connections to servers does not exceed 10% of the consumer's allowed bandwidth on landlines, and 5% on wireless and connections. Excess usage would be subject to throttling in the manner described above. Rationale: The days when upload capacity was minuscule are long past except in satellite connections. Allowing people to run small-scale servers will make the Internet more open, as it was intended to be, and will foster innovation.

13. Usage limits with reasonable charges for overages: Internet access may be sold with soft limits on total usage per billing cycle, only if the following is respected: a) The consumer should be able to see their history of usage, and their usage limit; c) A mechanism must be in place for informing consumers by a variety of means, including email and text messaging, when they are approaching their limit, have reached it, or are likely to reach it before the end of the billing period; c) the incremental cost of additional usage, beyond the basic amount, should be no more than 20% more costly on a per-gigabytes basis than the marginal cost of ISPs to provide service. (See my previous post for a suggested rate for landline connections as of early 2011). Rationale: Flat charges for significant amounts of usage per month allow consumers to use the service in innovative ways without constantly worrying about how much capacity they are using, but it must be possible for ISPs to recoup at a fair rate the cost of extra service for their heaviest users.

14. Short-term access at fair prices: Access to the Internet sold on a per-minute or per-hour basis, such as at WiFi hotspots or hotels, should be no more than three times more expensive, per unit time, than an equivalent service sold on a monthly basis, although a fixed account setup fee or per-computer setup charge may be levied. Rationale: Hotel or hotspot access varies from free to egregiously expensive. It varies a lot from country to country too. For example, if an ISP would provide 100 GB for  30 days service to a resident for $30, then it would seem reasonable that if the ISP sets up a hotspot, a traveller should be able to access 3GB of data over the course of a day for $3.

15. Reasonable roaming charges: Access to the Internet using 'roaming' where billing is to be to a home ISP or wireless provider should cost no more than twice what either the home ISP or the remote ISP would charge for local users. This applies to wireless data roaming, and also roaming to WiFi hotspots. Rationale: Roaming charges are obscenely expensive. They can be hundreds of times what non-roaming charges would be, even though the marginal cost of providing roaming is minimal. For a connected, intelligent society, this kind of pricing abuse has to stop.

16. Commitment to build capacity to meet excellence in service levels: It is common for ISPs, especially wireless ones, to be overwhelmed by traffic volumes, such that service becomes poor. An ISP should commit to detecting all sections of their network that regularly suffer from congestion and building capacity such that congestion in those sections is lowered within 8 months. Rationale: If customers are paying for service and experience network slowdowns, they are not getting the service they have paid for.

17. Wholesale service at reasonable prices: Landline-owning ISPs (with copper wires, fibers or cables) must sell their services on a wholesale basis so other ISPs can offer competing services. The wholesale arrangement should be such that consumers can choose the ISP they deal with to obtain service. Furthermore, the landline owner must guarantee sufficient bandwidth on segments of the network they control such that the ISPs can independently follow all the policies in the above document.  Rationale: It is required in Canada, for example, that phone companies provide the lines on a wholesale basis to other ISPs, but cable TV companies are not under any obligation. The arguments against this are that it is a disincentive for landline owners to build their landline service. However, wholesale phone, electricity and natural gas distribution is widespread, and infrastructure investments continue to be made. Wholesale phone and long distance pricing caused precipitous price reductions when introduced many years ago.

18: Transparency in all aspects of service: The methods and extent to which all of the above items are being adhered to should be prominently published on each ISP's website.

Due to the monopoly/duopoly situation, it is my expectation that some form of government regulation will always be required. Note that in the EU there are several directives providing for a form of Internet User Bill of Rights. The Ofcom regulator in the UK regulates the open Internet market much more than it is regulated in the US or Canada. The FCC in the US is trying to establish a compromise on net neutrality, but the charter I have presented above covers considerably wider ground. For more on the FCC rules, go to this website, and look at the items under the heading 12-23-10.

Keep credit card pricing simple: Neither consumers nor merchants should be forced to pay more

Currently in Canada there is a controversy surrounding what merchants are charged by Visa and MasterCard to process credit cards, and in particular the higher charges for 'premium' cards. As this article points out, the head of the Competition Bureau thinks that it is ridiculous for the credit card-companies to think they are being pro-consumer.

I agree, but I think some issues in this controversy are being missed in the news reports.

The problem is that Visa and MasterCard have 'premium' lines of credit cards that typically give consumers high-valued benefits. That is fine. The problem however, is threefold: 1) Merchants have to pay higher fees when consumers purchase with these cards; 2) Merchants are not allowed to opt-out of these cards; if they accept Visa at all, they must accept the high-fee and low-fee ones; 3) This fact is largely hidden from consumers; all consumers see is the 'Visa' or 'MasterCard' brand.

Everybody knows that American Express often charges more. But merchants don't have to accept Amex, and consumers know that fewer merchants do so.

To me there are three key rules to solve this controversy:

1. If Visa or Mastercard want to have premium brands, they should not call them Visa and Mastercard, and merchants should be able to choose whether or not to accept the separately-named premium brands, just like they can choose not to accept American Express. Separate naming is essential so that a merchant can clearly on their door which brands they accept, and which brands they do not accept.

2. Merchants should continue to not be allowed to charge consumers more for using credit cards. The 'price you see is the price you pay' is a great simplification for consumers and has other benefits I will discuss below. I think this should apply to premium credit cards too; allowing merchants to charge more just for these (while not charging excess fees for 'regular' cards) would result in a lot of confusion in the market.

Many merchants like rule 1, but not rule 2. Visa and Mastercard like Rule 2 but not rule 1. To properly serve consumers, both rules need to be in place.

Some would argue against rule 2 on the grounds that consumers can always use cash. However if all of a sudden consumers had to pay a few percent more to use a credit card, many would stop using them as much. I am sure I would be one of the many to considerably reduce my use of cards; I almost never use debit cards myself now since it costs more than both credit cards and cash.

I think such reduced use of credit cards would have several unintended consequences:

• With people carrying around lots more cash it would increase the incentive for crime, including counterfeiting, consumer pickpocketing and merchant robberies.
• People would buy less on credit, which may be a good thing for those with debt problems, but it would likely serve to slow down the economy.
• Merchants would have higher cash-handling costs. Remember that the costs to safely store and count cash are not zero for merchants. In fact, a cashless society where everything is done by electronically should cut merchant's administrative costs quite a bit.

So let's keep the status quo regarding fees for credit cards, and have the Competition Bureau force credit card companies to use different brand names for their premium brands, and allow merchants to opt out of them.

And while we are at it, lets make it such that paying by debit card also doesn't cost any more for consumers than paying cash. I am fairly convinced that the cost of running an electronic payments network must in fact be cheaper than running the 'physical cash' network, and the fees for the latter are paid by the merchants, the banks (which charge the merchants just like they charge the merchants for the debit card system) and, yes the taxpayers (since the government pays for the operation of the Bank of Canada, the mint, etc.)

The ridiculous fashion for limiting salaries of politicians: Pay them properly so politics can become a more respected profession

I had already drafted this blog post on how I think politicians should be paid when I read this article in today's Globe and Mail on how Toronto councillors turned down this year's increase. Way to go Toronto! If you want to avoid attracting skilled people as your future councillors, this is exactly what you should be doing.

We need good people as our elected officials. Highly educated and intelligent people are able to command high salaries as a reward for skills that are in high demand, responsibility for managing a large enterprise or in compensation for extended periods of education where they received low pay and may have amassed high debts (e.g the medical profession, or university professors).

High achievers, however, are unlikely to want to run for public office because in general they will have to take a pay cut that will severely impact themselves and their families. Accomplished people in addition have to consider the stress of public life; the exposure to ridicule, the risk of not being re-elected, and in the case of our provincial and national leaders, the need to travel to a distant parliament and potentially live away from their families for long periods.

Taken all together, this argues for our political representatives receiving far higher pay than they have right now. I would argue that a city councilor in a big city like Toronto or Ottawa should command a salary on the order of $150,000 per year, whereas they currently typically receive less than $100,000. A member of a provincial or federal parliament should command somewhat more because of the need to be away from home so much (perhaps $160,000 + and an extra $5000 for every 1000km that the farthest point of their electoral district is from the Parliament). After the above reform, political salaries should then just be indexed to the lower of a) the cost of living, and b) the average increase in the civil service or city staff. Laws should then be passed that would make it very difficult to meddle with the salaries in future.


I am not opposed to a zero-percent increase for politicians some years, if that is what the staff are getting, and if the base salary is already at a reasonable level. The problem is that it is ridiculous for full-time politicians to be routinely paid less than senior people in the agencies that the politicians ultimately govern.

Stipends above the base salaries for executive politicians (ministers, mayors, etc.) should probably be performance-based. There should be a reduced or no stipend if certain measures are not acheieved, such meeting zero-deficit targets, service levels, unemployment levels, etc.


It is considered unethical in many professions to systematically under-price skilled services. The Code of Ethics of Professional Engineers Ontario (of which I am a member) makes it clear that the principle of adequate compensation must be upheld. Adequate compensation not only attracts and keeps accomplished people, but helps command respect for the profession. This does not mean that altrusitic or bro-bono service is forbidden, just that it shouldn't become the norm for basic work of the profession.

Arguments for a cost of 5 cents per GB for usage based billing

In my post yesterday, I argued that I think that usage-based billing (UBB) does make sense, but only if the rate is on the order of 5 cents per GB, and dropping over time. ISPs in Canada are charging 10 to 100 times this, which makes downloading video outrageously expensive.

My argument yesterday was that 5 cents per GB would be sustainable from a consumer's perspective since the cost of downloading a high-definition movie would be limited to be around a dollar (above and beyond the rental/purchase price of course).

Today I will add some additional arguments, both in favor of very cheap per-GB rates, and also in favor of usage based billing at those low rates. I will try to be conservative in my estimates so by arguments will be hard to challenge.

What is the marginal cost of providing an extra GB of download to a consumer? We don't know exactly, and it will vary from neighbourhood to neighbourhood, but we can do some 'back of the envelope' calculations to show that it must be extremely small.

In the worst case, the ISP's lines to the network might be near capacity. In this scenario, the ISP would need to provide an extra line along its existing conduits, with the attendant switching hardware and head-end equipment. These days, 1Gbps lines are typical. What return on investment could an ISP get from such a line at 3 cents per GB (which is less than the 5 cents I talked about earlier to allow for wholesaling and profit)? The total number of GB the line could serve in a month would be 328725. If that entire number of GB were sold, then the revenue would be $9861 per month. In reality, the line will only be used to capacity at peak periods, and it may take years before it reaches capacity even then. So lets imagine it is used on average at 25% capacity over a 10 year lifespan, that gives revenue of $2465 per month. If this was used to pay interest at 5%, then the ISP could afford to pay $232,000 to install the new line. I am certain that in the vast majority of cases, the line would cost less than this.

Today there is a report from Netflix, which suggests that the actual marginal costs would be 1 cent or less for each GB. Of course they have a conflict of interest, so they are likely to argue for a smaller cost. However, it should be clear beyond any doubt that the 50 cents to $5 currently being charged by Canadian ISPs is vastly out of line.

Netflix argues that at one cent per GB, usage-based billing becomes nonsensical. However let's take the ISP's perspective for a minute. If you allow unlimited downloads, some people will decide to download all the free video they can find on the Internet. We can play devil's advocate and imagine an obsessive-compulsive character that finds a way to download video 24 hours per day; at 10GB/h they could consume 7300GB per month; I think it fair that such a download-fiend might be expected to pay the $365 he would be charged at 5 cents per GB. Clearly he would be consuming capacity at a level greater than the ISP's marginal of providing the service.

Let's look at two other cases: The first is the person who entirely replaces their 7h of cable-TV-watching per day, by watching 7h of Internet video per day. They would consume 2120GB per month, and at my rate it would cost them $105. This would be a lot more than the equivalent cost of buying cable TV. However I think the extra cost is justifiable: Cable TV channels broadcast to multiple customers at once so makes much more economical use of the infrastructure. Put that $105 in perspective though, at the current ISP rates our Internet-TV watcher would be paying $1050 to $10500. Obviously excessive. Yet Internet TV served by multiple vendors is clearly the way of the future. Cable/Phone/Internet companies are only protecting their existing duopoly by charging per-GB rates that make this impossible.

The final case is the person who rents three two-hour movies per week, or watches 6 hours of ordinary TV per week. That would take 260GB per month at the good-quality 10GB/h rate I have been using, and would cost them $13. At current ISP rates it would be between $130 and $1300.

There is a lot of backlash in Canada against UBB and the recent CRTC decision forcing independent ISPs, which buy capacity wholesale from the the major operators. to be subjected to the same excessive UBB rates, with only 15% discount. I suggest that the independents should be either able to buy a fixed percentage of total capacity on each line, or else be charged a wholesale UBB rate of something like 3.5 cents per GB.

It is  clear to me that the CRTC made a terrible decision by failing to consider the actual cost of capacity.

Usage-based billing for Internet service: Only evil if it is out of line with incremental costs and cramps people's style

Most of us pay for electricity, water, and natural gas by usage-based billing (UBB). Yet there is a great outcry against Internet Service Providers applying UBB.

An example of this outcry is this opinion piece by David Beers in today's Globe and Mail. His basic argument is that the increasing tendency for ISPs to use UBB will kill Canada's ability to compete in the global information economy. He feels his Canadians will stop being able to afford to download video.

His argument is valid to the extent that ISPs charge excessively, which to me means well beyond the incremental cost of providing additional Gigabytes. However, that does not invalidate the entire concept of UBB.  I believe that a good argument can be made for metering at a rate of about 5 cents per GB to allow ISPs to recover the incremental costs of extreme volumes of use.

When I was a child in England, phone calls were all paid for using UBB. Even local calls cost money, and long distance was considered an expensive luxury. This definitely had an impact on everybody's life; people avoided using the telephone, and kept calls very short, for fear of raking up huge charges. Over the decades, the incremental cost of providing minutes of phone service, including long-distance, have diminished to almost nil. The main cost to phone companies is the fixed infrastructure, which is why it is common now to pay a flat rate for unlimited calls.

However voice is cheap to transmit digitally. High definition video, on the other hand, requires vastly more network capacity. So the incremental costs have not yet come down to the level where 'unlimited' Internet usage makes sense. This is especially true for wireless services, where spectrum and towers are a limited and expensive resource, but is true also for cable and DSL landline service, where there are limited-capacity lines into neighborhoods that are shared. ISPs used to offer unlimited plans, but they have largely stopped doing this due to the fact that today's heavy Internet usage is largely due to watching video.

In the following I am going to use a round figure of 10GB per hour for good quality video (in practice it can range from 2GB/h to 40GB/h depending on the quality you want). If a two-hour movie costs $5 to rent, then paying $1 to download it would not be unreasonable. But download prices in excess of this would indeed likely start to cramp people's Internet usage style, as Beers suggests, just like telephone usage style was cramped when I was a child. Rough calculations suggest that five cents per GB might be a tolerable metered rate for wired Internet, with even that amount diminishing over time as networking technology gets better and cheaper.

If you look at Rogers' Internet service rates, this is exactly ten times the 50 cents per GB they currently charge. But you only get this rate if you are paying for their 'Ultimate' package, at $99/mo, and exceed the 175GB cap. Unfortunately, people with 'Ultralight' service pay 100 times my suggested 5 cents per GB base rate (for $28/mo and when exceeding the 2GB limit). This to me is clearly excessive, since the incremental cost to Rogers is the same. Rogers defines their service levels based on three factors: a) speed in Mb/s), b) the usage cap, and c) and cost per GB for excess usage. I think that the cost per GB for excess usage should be fixed for all service levels at my suggested rate, so as to not overly cramp people's style. Note that competing Internet services in Canada, such as those from Bell, are roughly comparable in terms of their charge for excess GB..

I think that the ISPs are charging these rates currently for two reasons: Firstly they don't want competition from other video providers (as they provide their own video services), and secondly, they can get away with it since in recent years, most users have only consumed a small amount of video. However if we want proper competition for video, and stimulation of innovation, the cost of obtaining it through cable TV, satellite TV or through Cable, DSL an fibre-based Internet need to be roughly similar.

It should be noted that cable operators are already sending vast volumes of GB/s into each neighborhood by way of digital HD video channels, including on-demand video. They don't charge anywhere near 50 cents per GB for their own on-demand video service, so the argument that this is their incremental cost is facetious.

Consumer awareness and pressure may help to push the rates into  'reasonable' territory. Regulatory action may also be needed. Unfortunately competition in the market is not going to work on its own since Internet service operates as a cable/DSL duopoly.

Unfortunately arguing that UBB is evil and unlimited service should always be provided is disingenuous. It damages the ability to make a sound argument for a reasonable 5 cents per GB metered rate.

Thoughts on Tethering: How to keep and improve its flexibllity and usefulness

Tethering (using an iPhone or other smartphone to connect a laptop to the cellular data network) is a feature I use frequently. I use it when I am waiting for one of my kids to finish a sporting event, when waiting in a garage for car service to be complete, or when on a train trip – it is currently far faster and more reliable than Via Rail's free WiFi for example. I also us it when a passenger on a car trip. For example, when working on a pressing deadline I maintained an almost continuous Internet session on a road trip from Ottawa to London down the 401 highway. I also sometimes find myself using tethering when parked at a parking lot to do a quick task that requires my laptop.

Luckily my wireless data provider (Rogers) doesn't currently charge extra for tethering, or restrict it entirely, as is the case with providers in some countries. It would annoy me tremendously if they decided to change this policy and treat tethering usage as a separate billable item. All I am doing, after all, is using up some of my allocation of data usage. I think all data usage should be treated the same and billed in the same way. I do find it acceptable to throttle connections that try to maximise bandwidth use on a 3G network for extended periods (e.g. video download for extended periods) if total bandwidth at a cell tower (on the cable to the tower, or from the tower to connected devices) is near capacity. However, that should not affect how the data usage is billed.

My ISP sells separate USB devices for Internet access. It seems a waste to have to get one of these when you have a perfectly good smartphone that can do the job. I would not want to carry around another device that happens to be small enough to get lost easily.

Tethering can be done on iOS using a USB cable or a Bluetooth connection. I normally use a cable since it is distinctly faster. iOS is purportdly going to offer instant WiFi hotspot capability in the next release; essentially this amounts to a capability to tether up to three devices at once. This would certainly be useful in many contexts, such as enabling two people on a train to work together. Many iOS apps for sharing data require both devices to be on the same WiFi network. Hopfully the WiFi hotspot capability would also work for these apps. I would like it if you could create a WiFi hotspot when not even connected to a data network. For example, it could be used in a foreign country or the wilderness  just to share data between several devices. We will see what level of flexibility Apple comes up with. I hope they won't be too much influenced by the demands of cellular carriers.

There is one thing, that currently bothers me about tethering on the iPhone: Whenever I connect my computer to the phone to charge it or back it up, a tethering session is established. I can turn tethering off, but then I have to painstakingly turn it on and back off again repeatedly. On the flip side, whenever I connect my computer to the phone to initiate tethering, iTunes initiates a synchronization/backup session. Finer control is needed. I therefore suggest the following behaviour should be implemented in iOS:

• There should be an option when you turn on tethering in iOS to declare: 'Do not activate tethering when connected to a WiFi network'. If my phone is connected to a WiFi network, I can most of the time directly connect my computer. This would prevent unnecessary tethering when at home or work.
• There should be an option in iTunes that says, 'Sync iPhone automatically at most once per n hours.' I think 2 would be a good default for n, but the user could easily adjust this, and can always sync manually.

Mac App Store - A good idea with some rough edges

The Mac App Store went live today, and I have had a look around. In this post I  give some observations about pricing and usability.

In almost every detail, Apple has copied the iOS App Store that has proved so successful. This is both good and bad. The good is that it is a familiar interface; the bad is that it brings along some iOS app store weaknesses such as being too busy, and lacking in discoverability.

I think having an app store is fantastic. The ease of installation, purchase and update will make consumers install (and pay for) much more software. The benefits are clear for consumers and for new and small developers, or developers with inexpensive apps: the benefits for these developers will trump complaints such as the  fact that Apple reviews all submissions and gets a 30% cut.

Apple's cut on purchases as a disincentive for developers: Thankfully, it looks as though Apple does not intend to restrict alternative ways of installing apps, so developers can continue to use their own sales and installation channels. This is critical, since I predict that many existing app developers, and developers of expensive apps, will be reluctant to sell on the app store. The 30% cut apple charges is unreasonable when the price exceeds about $15. I think Apple should have a sliding scale that reduces its cut for more expensive apps. How about 30% of the first $15, 20% of the next $15 and 10% above this level. That would encourage developers to use this channel for their more expensive apps.


Flat pricing as a disincentive for consumers: There is the lack of a sensible way to 'try out' expensive apps. The price points of Mac apps are in general much higher than iOS apps. If all I have to spend is 99 cents each, I am willing to be bold and download a bunch of apps that may prove to be not very useful. But there is no way I will explore a bunch of $20-or-more apps. And even if I do want to use an app, I am highly reluctant to pay $40 or more for an app I might use only once or occasionally. Apple needs to do two things, both of which should be win-win propositions:

• Firstly Apple needs to build into all its sales (above, say, $5) an automatic 'demo' mode, where you can use the app for a couple of days at no charge, and only be charged after that period if you don't 'return' the app. With the Digital Rights Management (DRM) Apple has built into its store, this should be quite easy to do.
• Secondly, Apple needs to provide a capability to charge for the app on a metered basis, up to a certain maximum. For example, I might want to use a particular image-editing capability for just one small operation, and perhaps imagine I will use it 3 times ever. If an app for this costs $50, I would be reluctant to pay, especially if I am not even sure if the app can do precisely what I want. I would like to be able to buy the app on the understanding that I would only be charged $5 for every day that I make any use of it, up to a maximum of $60. This would cut my risk as a consumer, and would benefit developers since it would attract many more sales of their expensive apps. Apple has a micro-payments infrastructure in place, so this shouldn't cost Apple much. I think a 20% premium for this would be reasonable, hence my suggestion above that the cap is $60, whereas an outright initial purchase would only be $50. I would buy many, many apps on this basis, that I otherwise would never try.

Deletion and accidental installation: There is no obvious way to delete an app, even a free one. In your list of purchases the only choice available is to go to the app's page. I manually deleted an app from my Applications folder, but the app still appeared in the purchases list, now with an 'Install' button ready for you to reinstall it. Uninstalling has always been non-intuitive on iOS; now it seems impossible to do so without trace. Apple needs to provide a 'uninstall' and 'delete' menu items wherever it displays the word 'installed' in its interface (it should also have 'return' as an option for demo mode, as discussed above).

I also found it too easy to accidentally install apps. Like with the iOS app store, once you have signed in you can do several operations over a short period of time. Simply clicking on the word 'free' installs an app with no prompts. There should always be a confirmation before installing any app.

Discoverability and search: Even with only 1000 apps on opening day, navigation of the apps to find good ones was tricky. They are categorized into broad categories, and you can search by keyword. However, the interface is busy (like that of iTunes and the iOS app store). I would like the ability to list or search for 'tags' that would identify features within categories.

You can examine an app in the store by displaying the entire page describing the app, or you can show lists with just the short name and icon of each app. It would be much better if you could also see lists of apps with an intermediate level of description, perhaps 3-4 lines describing the key features.

Also when you search by keyword, the 'hits' that result don't show the context of the keyword, in other words, I want to know where in the app's listing the keyword appears. This is irritating at times. I would like search results to show me the sentence containing the keyword, as Google search does.


A final usability issue: The App Store was very fussy about allowing me to paste text into it when writing an app review. Beware of writing a review in an external text editor, you may not be able to paste it into the app store.

Incidentally, most of the above issues apply to the iOS store too