Businessweek Can't Distinguish Bits From Bytes

The Nov. 21-27, 2011 edition of Bloomberg Businessweek incorrectly inserts the word bytes for bits in not one, but two articles (on Indian and U.S. broadband).  Big mistake: bytes typically measure downloaded and uploaded content/file size, e.g., a 2 megabyte movie trailer; bits measure transmission speed, e.g., 2 megabits per second.  Using both concepts: broadband subscribers want a fast bit rate speed so they can download large megabyte files in a short time period.

I'm particurlarly sensitive to this misconception, because many of my students make the same mistake as Businessweek. I have too many folks struggling to understand basic concepts like broadband, bandwidth, channel, bit rate, throughput, etc.  Here's a link to the course syllabus: http://www.personal.psu.edu/faculty/r/m/rmf5/Comm492%20Fall%202011.doc


Bits and bytes are similar concepts as 8 bits correspond to 1 byte.  In application we use bits and bytes differently.  Businessweek noted the problem of slow bit rates in India and the U.S., but by using the bytes measure the magazine did not make sense.  U.S. ISPs do not typically offer 15 megabytes per second service, i.e., 120 megabits per second.  The discounted broadband service offered by cable television companies to low income subscribers will deliver 1 megabit per second not 8 megabits (or 1 megabyte).  Indian broadband subscribers would not complain about getting 256 kilobyte per second service as they would 256 kilobits per second service.

Holiday Reading Part Two

Here's a work in progress that considers the middle ground in the network neutrality debate: Do Conduit Neutrality Mandates Promote or Hinder Trust in Internet-Mediated Transactions?.

The abstract for the paper:

As the Internet evolves and matures, Internet Service Providers (“ISPs”) have begun to create increasingly diversified business models for serving downstream end users and upstream content providers. Increasing subscriber demand for broadband connections necessitates efforts to identify and serve new profit centers and to differentiate retail and wholesale users on the basis of subscriber bandwidth requirements and other customer-specific demand characteristics. ISPs have identified new strategies to differentiate their offerings on the basis of price, quality of service, transmission speeds, permissible amount of capacity uploaded and downloaded, legitimate network management objectives and the demand for customer-specified network features.

Advocates for limiting price and service discrimination contend that absent a “network neutrality” mandate, ISPs will discriminate in ways that harm competitors by favoring corporate affiliates and selected third parties. Network neutrality supporters claim that ISPs have both the incentive and ability to engage in harmful discrimination, typically characterized by ISPs as necessary network management, or a legitimate response to the specific requirements of a customer.

This paper will consider ISP conduit neutrality in the context of whether and how legislatures and national regulatory authorities can enhance trust and network reliability. The paper assesses how network management techniques can offer both quality of service improvements and deliberately inferior service. Because technological innovations provide the ability to build trust in Internet-mediated transactions, the paper will identify legislative and regulatory strategies that promote network management that enhances cloud computing, electronic commerce and other transactions without according ISPs unconditional opportunities also to harm competition and consumers.

Holiday Reading Part One

In the event you tire of television and run out of written material have I got something for you.  Here's a short piece on IPTV entitled The Opportunities and Threats from Next Generation Television: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1954779

Here's the abstract:

The combination of digitization, converging technologies and new business plans has diversified the terms, conditions and options available for consumer access to content. Access opportunities have migrated from producer- or intermediary-specified schedules, i.e., “appointment television,” to a largely consumer specified environment, i.e., “television anytime, anywhere.” As well the means by which consumers access content has shifted from one-way, downstream, to a two-way process whereby consumers can issue upstream commands for access via different receiving devices, subject to commercial constraints such as copyright digital rights management.

This diversification of access opportunities makes it possible for consumers to access more content, and as well to consume the same content via different devices. Content originally available only via a television set - the first screen - now can be received via second and third screens, computer monitors and smartphones respectively. Consumers of content currently have three major types of access options: 1) a direct so-called peer-to-peer link for real time or file-based content; 2) an indirect link through an intermediary who establishes access rules and limitations, but does not intervene in each session; and 3) an indirect link through an intermediary that actively manages access every time.

As content access opportunities have diversified, so too has the nature and type of available content. The proliferation of content and ways to access it present incumbent producers with both new opportunities and threats. Creators of expensive and compelling content may identify additional display windows and new ways to receive payment. Similarly intermediaries, such as cable television operators, can enhance the value proposition of their service and retain subscribers who now have technological opportunities to access identical or similarly expensive and compelling content outside traditional distribution channels.

Content creators and distributors face new threats to their business models, because the proliferating options for consumer access provide more ways to pirate content and to “disintermediate” and eliminate intermediaries. Try as they may content creators and distributors cannot foreclose consumer “self-help” strategies, including using broadband connections to access content “over the top” of incumbent intermediaries such as cable television operators.

This paper will examine the ways by which incumbent content producers and distributors have responded to new consumer access opportunities. This examination considers the incentives of incumbents to deny, restrict and prevent alternative access opportunities, or to embrace changed models. The paper also will consider the impact new access devices and options have on incentives to create and innovate.

The paper concludes that content creators and incumbent distributors, such as cable television operators, face increasingly divergent incentives. The former incur the risk of greater piracy, but also new opportunities to profit from expanding distribution platforms. The latter face the risk of declining subscribership unless they accept the inevitability of expanded content access options that circumvent the traditionally locked-down, largely one-way distribution model. Most cable television operators recognize the need to relax content access restrictions, but these operators have not similarly responded by expanding their efforts to innovate and diversify their supply of content.

The paper provides evidence that the growth of cable television networks has plateaud at the very time consumers can access an ever expanding inventory of new content alternatives. The paper concludes that cable television operators risk significant subscriber defections, or migration to cheaper service tiers absent an increase in the number of new networks and content access options.