IS DATA A COMMODITY? – Teleconnect Service

IS DATA A COMMODITY? – Teleconnect Service

Net neutrality is a debate which has raged on for years, but now the battle is getting bitter.

 Despite all the fantastic arguments from both sides, no-one seems to want to address the root question directly; is data a commodity or not?

It is a simple question which could have massive repercussions. Business models will change, attitudes will be altered and rules will be rewritten. The telecoms, technology and media industries will be forever changed once this question is answered, and perhaps this is the reason no-one is; fear of getting it wrong and being remembered for the wrong reasons. But for all the arguments which are surfacing, whether it would be prioritized traffic, privacy or zero rating, the common mystery is whether data is a commodity or not.

If the commodity question is answered, the blue-sky debates up the value change will be mostly rendered redundant. Let’s look at internet traffic prioritization as an example. If data is a commodity, like electricity, you should not be able to prioritize access; you can’t pay for better data, in the same way you can’t pay for better electricity to power your TV. The GB you use is exactly the same as the one your neighbour does, irrelevant as to how much you paid; the only difference is how much you consume.

That said, on the other side of the coin, providing data coverage is an expensive business, and with the OTTs piggy-backing the vast investments being made, the telcos should be allowed to generate ROI. Unlike electricity, the infrastructure to satisfy our insatiable appetite for connectivity is not there right now. We expect the telcos to build this infrastructure, but become annoyed when they come up with another idea to recapture this investment.

Should the telcos be allowed to prioritize data? If you consider data a commodity, no they shouldn’t. But if you consider it a value product, yes they should.

One of the big problems the telco industry is facing is the supply chain. The telcos ‘generate’ data as well as getting it to your device. In the electricity industry, the supply chain is much more clear cut. In the UK, the consumer buys electricity from Ofgem licensed suppliers (such as SSE), who are customers of distribution network operators (such as National Grid), who are responsible for the construction and maintenance of the infrastructure.

Looking at electricity, you can see why it is a commodity. You pay the suppliers for power, who then pay the distribution network operator to get the power to you. The infrastructure is already there, it is simply a case of maintaining it. The distribution network operators also don’t have to worry about above-the-line advertising to battle for the consumer, therefore can concentrate investments solely on the infrastructure.

In the telco game, you pay the supplier for both data consumption and transmission. Due to our demands, telcos are having to supply use more (volume) in a significantly larger geography (coverage). It’s an expensive game which we have to pay for somehow.

Traffic prioritization one way in which they can generate extra cash without impacting the wallets of the consumer. The money is generated by charging the OTTs, such as Netflix, to access the information toll road. These OTTs have made huge profits off the investments made by telcos, who are left to collect the crumbs. The risk for the OTTs is minimal in this sense as they will never have to dip into their pocket, therefore should be taxed by the telcos somehow.


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