Who Owns Customer Data?

Our homes are starting to get filled with Internet-enabled devices. I recently looked around my own home, and in addition to the expected devices like computers, printers, tablets and smartphones we have many other devices that can connect to the Internet. We have a smart TV, an eero WiFi network, three Amazon Echos, several fitness trackers, and a smart watch. Many homes have other Internet-connected devices like smart burglar alarms, smart thermostats, smart lighting and even smart major appliances. Kids can have smart toys and game consoles these days which have more computing power than most PCs.

Every one of these devices gathers data on us and a good argument can be made that we are all being spied on by our devices. Each device witnesses a different part of our lives, but add them all together and they paint a detailed picture of the activity in your home and of each person living there.

There are numerous examples of companies that we know are using our data:

  • Last year it was revealed that Roomba was selling detailed information about the layouts of homes to data brokers.
  • The year before we found out that Samsung smart TVs were capable of listening to conversations in our living rooms and also had backdoor connections to the Internet.
  • There has been an uproar about smart talking toys that not only interact with kids but also listen and essentially build profiles on them.
  • Smart devices like smart phones, tablets and computers come with software that is aimed at gathering data on us for marketing purposes. This software generally is baked in and can’t be easily removed. Some companies like Lenovo (and their Superfish malware) went even further and hijacked user web traffic in favor of vendors willing to pay Lenovo.
  • Buyers of John Deere tractors found out that while they own the tractor they don’t own the software. The company penalizes customers who try to repair their tractor by anybody other than an authorized John Deere repairperson.

Probably the most insidious result of all of this spying is that there are now data brokers who gather and sell data that can paint a detailed profile of us. These data profiles are then used to market directly to us or are sold to politicians who can target those most sympathetic to their message. It’s also been reported that smart criminals are using this data to choose victims for their crimes.

I’m sure by now that everybody has searched for something on the web, and then noticed that for the next few weeks they are plastered with ads trying to sell them the subject of their search. This happened to me a few years ago when I was looking at new pick-up trucks on the web. But today this goes a lot farther and people complain about getting medical ads after they have searched the web about an illness.

To make matters worse, we have a government regulatory policy in this country that benefits the corporations that are spying on us. Last year Congress passed privacy rules that let ISPs and anybody else gathering raw digital data off the hook. There are essentially no real privacy rules today. Data privacy is now under the purview of the Federal Trade Commission. They might intervene in a particularly egregious case of invasion of privacy, but their rules are not proactive and only can be used to find companies that have already broken the rules. Unless fines grow to be gargantuan it’s unlikely that the FTC will change much of the worst practices using our data.

The European Union is in the process of enacting rules that will clamp down on data gathering. Their rules that go into effect in a few months will require that customers buy-in to being monitored. That is great in concept, but my guess that it’s going to take a decade of significant fines to get the attention of those companies that gather our data. Unless the fines are larger than the gains from spying on people then companies will continue to monitor us, and they will just work harder to hide evidence of spying from the government.

I think there are very few of us who don’t believe our data should belong solely to us. Nobody really wants outsiders knowing about their web searches. Nobody wants unknown companies tracking their movement inside their homes, their purchases and even their conversations. But for now, the companies that are gathering and using our data have the upper hand and are largely free do nearly anything they want with our data.

New WiFi Technologies

Wi-FiThere are some interesting breakthroughs coming out in WiFi that will change how we use the frequency.

First, a group of student engineers at the University of Washington have released a report that may enable the use of WiFi as the primary method of communicating with Internet of Things devices.

The primary shortcoming of current WiFi technology for IoT is that it is power-hungry. A typical current WiFi transmission between two devices requires a radio at both ends of the transmission path along with a baseband chip that is used to encode the data onto the radio wave. Because the WiFi spectrum is expected to always be busy and have interference, the typical WiFi transmission requires several hundreds of milliwatts of power at each end of the transmission path in order to have a strong enough signal to distinguish it from the background noise from other WiFi signals. And that means that a typical WiFi router is a big user of power in a home.

It is the need for big power that has made it impractical to consider WiFi as the technology for talking to large numbers of tiny IoT sensors in the environment. There is no practical way to power such devices.

The student engineers invented a new type of hardware that uses 10,000 times less power than a traditional WiFi device. They are calling the technology ‘passive WiFi’. The technology uses only one WiFi router in the system that send out signals to the many IoT sensors. Those sensors then mirror the signal back to the transmitting device. In doing so the sensors transmit their current status back to the original router using almost no power – 10 to 50 microwatts. The technique involved takes advantage of what is called frequency backscatter and the whole process uses only a fraction of the full WiFi spectrum.

This technique has a lot of promise. Up until now the best option for talking to small sensors has been Bluetooth. But WiFi spectrum is almost 1,000 times more efficient than Bluetooth and also can include security features that aren’t possible with Bluetooth.

In another breakthrough, Samsung has developed WiFi that can deliver up to 4.6 gigabit speeds using the 60 GHz spectrum. This is the spectrum that is often referred to as millimeter wave radio. Samsung’s breakthrough not only takes advantage of this higher frequency, but the company has also made a breakthrough that allows a data transfer rate that is almost 10 times faster than current WiFi.

This technology means that soon we will have to talk differently about different pieces of the WiFi spectrum. The term ‘WiFi’ is a set of standards that can be applied to many different slices of frequency, but different frequencies have very different operating characteristics.

The 60 GHz frequency cannot pass through walls or almost anything else, and that means that it is going to be used to make very fast wireless data connections within a room. Further, this frequency dissipates very quickly with distance and its effective range is only a few meters, meaning that this frequency will not be usable for outdoor hotspots. It’s a one-room application only. This technology presupposes that a room utilizing it will be connected to fiber.

The antenna array needed for 60 GHz is very different than that used for traditional WiFi and so I am expecting it will be many years before we see too many devices designed to use both regular WiFi and 60 GHz spectrum. It’s more likely until the higher spectrum is widely used that there will be a dongle receiver that you could connect to a laptop or other device.

I would expect the early market for this technology to be applications that need a lot of bandwidth but that don’t lend themselves easily to running fiber. That might mean future virtual reality or augmented reality headsets and systems, factory floors to connect to equipment or in crowded hospital emergency rooms. There are not that many applications today that need more bandwidth than can be supplied by normal WIFi, so expect this to be initially used for those applications that do. But over time there will be more and more real world applications that need more bandwidth and this will be another tool to deliver bandwidth over short distance.

What’s the Case for Home IoT?

Goneywell LyricSome of the biggest names in tech have invested heavily into the Internet of Things for the home. But when I look around the marketplace and among people I know, almost nobody is yet using any of this technology. In fact, several recent polls have shown that over half of the people in the country haven’t yet even heard of IoT. This leads me to ask if there is yet a business case for home IoT.

The initial promise of home IoT is that it will make our life easier. The picture painted by the industry is one of having scores of smart devices in the home that all act in harmony to make daily life easier. I’m a huge fan of Star Trek and I look at their future with automatic doors and lights, background music, holodecks, and food replicators and I get it – and I want it.

But the IoT devices on the market today are still a long way away from that Star Trek future. The reality of the situation is that this is an industry that so far only caters to geeks and hobbyists. Today the technology involves buying some sort of central console and then connecting all of your devices to the hub. That alone looks like a lot of work. There are also no standards in the industry and each of the many hubs is proprietary, so you have to worry if a new device you buy will even work with the hub you selected.

Samsung has taken perhaps the first step to pull this all together. They bought a startup called SmartThings that has developed a hub that is controlled entirely by smartphone. Samsung is then developing their whole suite of products to work with this hub.

But I don’t think even the Samsung solution is going to make much of a difference. Just consider smart lights as an example. My house easily has fifty light bulbs, maybe more. Upgrading them all to smart lights sounds extravagantly expensive. And then I am imagining trying to use the smartphone to control my lights. In the time I could fish through a menu and find the right lights to adjust I could have just changed them manually and gone on to do what I was doing. The smartphone idea certainly provides a central way to control everything, but has it really made life easier than today? Unless this works a whole lot easier than I imagine it, what I’ve done is to create a new chore for myself whenever I want to do something simple like dim a light. Unless I’m bedridden, the manual way still requires less effort than a smartphone.

And that is the big catch right now for the industry. They are coming out with devices that do all sorts of neat things, but they have not made life easier. Consider energy management. Programmable thermostats have been around for years and it’s been relatively easy to lower the heat while you sleep or to tone back the air conditioning when you are away at work. The newer smart thermostats go a step farther and help you understand your electric usage in detail so that you can save even more money than with a programmable thermostat. But in doing so they have not made life easier, they have instead created a new monthly chore, which is to interpret the data coming out of the energy monitoring system and then make changes in the way you use electricity. My electric bill is pretty affordable, and so I might be doing all of this new effort to save $20–40 dollars per month. That is certainly a good thing, and it’s probably the right social thing to do, but it is not compelling enough for me to add a new task into my already busy life.

I am guessing that home IoT isn’t going to really go very far until the whole system is smart, like in Star Trek. When I can sit in a room and say, “Dim lights” and it happens, then we are starting to get somewhere. When I can tell my house to play a certain piece of music and then have that music follow me around from room to room, then we are getting somewhere. That sounds like something that almost everybody is going to want, assuming it’s affordable, and assuming it doesn’t take too much effort to set it up and to make work.

That day will come. It’s going to require both better language interfaces that always understand me (something that is improving rapidly) as well as a computer assistant that is smart enough to know what I want and to be able to turn my wishes into real world events. And that is going to take smarter and more powerful computers, something that is also coming soon.

But until then I can’t make a case for home IoT in my own home. I’ve considered a smart security system and video monitoring, and that is likely to be the first thing I might buy. But most of the other things on the market seem to be more work than the satisfaction they will produce. Until that equation flips I am not yet sold, and I don’t think I am unusual in this.

Selling Our Personal Data

SpyVsSpyRecently, the CEO of Apple, Tim Cook, has been making speeches in multiple forums that contrasts Apple’s privacy practices to those of other large consumer-based companies like Google, Facebook, and Yahoo. Cook says that his company is selling superior products and that they are not in the business of gathering or selling information about their customers.

Certainly he can’t say that Apple doesn’t use customer information, because they do. I have a Macbook and there are tons of ways that Apple uses my data to make my experience better. If I travel, the Mac will display the right time and local weather, for example. And various Apple software products will get to know me and make customized suggestions for me over time. But Cook’s point is that Apple doesn’t sell that data to others.

Of course, the companies that Cook is comparing himself to do not sell electronics like Apple but rather software. Probably the closest analog to Apple is Samsung and they can’t make the same claim as Apple. Late last year it was discovered that Samsung smart TVs were capable of listening to customer conversations all of the time. It’s not clear that Samsung gathers data directly from its smart phones, but they have chosen Android and one can imagine that part of that arrangement is to let Google gather data from Samsung smartphones.

Companies like Facebook and Google have a hard time not using your data, because that is really the only way they can generate value. It’s wonderful to have millions of loyal users on your platform, but both companies make most of their money from advertising. Certainly Google’s search engine advertising doesn’t require any data from users and that revenue is driven from the companies who want their products to be at the top of the list in a search. But Google and Facebook also sells web advertising, and the name of that game is to know the user in order to direct the most relevant ads to each customer.

I think if using our information stopped with advertising that most people would be fundamentally comfortable with having these companies invade their privacy. I know I find it eerie when I do a Google search and for the next three days I see ads that are related to for something I searched for. But I can personally live with that, because most of the time Google is wasting their time on me and I wasn’t looking to shop. I find it funny that I will look up the latest information about smart cars and then get flooded with car ads (because I exclusively drive Ford trucks and I buy one every twenty years, whether I need a new one or not).

The real rub is that these companies do a lot more than build advertising profiles on us. They know all sorts of other personal data about us and they associate that data with our name. While I am not bothered by getting car ads for vehicles I am never going to buy, I frequently hear about people getting bombarded with ads or even mailings and phone calls about far more personal topics like rehab centers or the latest diabetes treatments. That is going over the line in my opinion.

The invasion of our privacy seems to be going even further. Facebook, for example, is the world leader in facial recognition technology and they are building a huge database of every time you show up in somebody’s picture. They not only know about you, but they are learning where you go and who you associate with. That is a bit unnerving.

But to me the real scary thing is that these companies then sell this data to others. And there is no telling how that data is used. Even should the large companies have some sense of morality and responsibility (and many believe they do not), the companies that buy this data can do anything with it they please. It’s very easy these days to buy a data dump about other people, and that kind of information can be a powerful tool in the hands of an ex-spouse, an employer, or a scammer.

The problem that we all face is that it’s too easy to use the services that watch us. Google has a spectacular set of software products. And for my generation there are a ton of friends and relatives on Facebook. If you don’t want to be spied on you have to make a very conscious effort to wall yourself off from these sorts of data-gathering web activities, and that is hard to do. And no matter what you do online, your ISP or the government might be gathering all of this data anyway.

These large companies sometimes hide behind the fact that they mostly sell ‘metadata’ which is data that has been scrubbed to hide the identify of individuals. But numerous articles point out that with data mining it’s only necessary to know a few facts about you in order to pull out facts about you from metadata files.

We may come to a day when there is massive pushback against these companies that are collecting, using, and selling our personal data. It will probably take a string of tragedies and disasters for this to become a worry for the average person. And if that happens, then either the large companies will stop spying on us or somebody who promises not to will take their place. But it is extremely profitable today for the big companies to spy on people, and until there is more pain than profit from using our data, one has to imagine that this is going to continue.

The Demand for Energy Monitoring Services

Goneywell LyricThe energy monitoring business is getting interesting to watch. I looked a few years ago and found dozens of companies offering some kind of energy monitoring services. On top of that, within the last year a lot of large companies like Apple, Google (Nest), Samsung, Verizon, ADT, and Wal-Mart have entered the market. I have a number of smaller ISPs clients that offer the service in rural markets, but that is quite an array of big names to compete against.

Let me start by defining what I mean by energy monitoring, specifically. The traditional kind of monitor is a whole-house monitor. This is a device that is installed near to your electric meter and it records your energy usage over time. These devices let you see both usage and cost at different times of the day, which gives you the ability to look around your home during the times of expensive usage to see what is costing you the most money. These devices normally need to be installed by an electrician because they are on the main power feed of the home. People who use them say that they help them to curtail electricity usage.

The next step up in energy management is to install a smart thermostat. Since heating and cooling are generally a major bill for many households, a smart thermostat can help you use energy wisely. For example, you can program your system to supply less heating or cooling at different times as appropriate, like when you are sleeping. And you can tie these into a burglar alarm system to curtail electricity when you are not home.

The final step in sophistication for home monitoring is to put additional monitors on specific high-energy appliances such as a washer/dryer, pool pump, dehumidifier, hot water heater, etc. These device-specific monitors can help you save money on the devices that use the most juice in your house.

The various companies in the energy monitoring business offer a wide array of services. Some simply sell the smart devices, which are often linked to your smartphone, and then monitoring and modifying usage is up to the homeowner. But a number of these businesses are now selling monitoring services where they will look at your usage for you and make recommendations on how you can save money. Again, there is a wide range of both services offered and prices charged and there is not yet any standard way today of selling energy management services.

I saw the results of a nationwide survey published a few months ago by Parks Associates of Dallas, Texas. This survey asked people a wide range of questions energy management services. One of the most interesting results of the survey was the number of households willing to pay for monitoring services. The survey showed that 25% of households were interested in an overall energy monitoring service. 22% of households said that they were interested in an appliance monitoring service of the biggest electricity users in the home. And 26% said specifically that they were interested in a heating/air conditioning monitoring service.

Those are huge potential penetration rates for such a new industry and one would expect those to grow over time as more people attest to the benefits of watching and controlling energy consumption. However, the survey was not all good news; over 50% of homes interested in the services said that they would not be willing to spend more than $2.99 per month for all three services.

Our firm has given surveys to households for years and so we understand that when it comes to price-related questions that what people say is often different than what they do, and ideally people want things for almost nothing. But not many of the big companies going after this business are going to find a revenue that low to be attractive.

To put into perspective, according to a National Home Builder’s Association study, the average monthly electric bill in the US in 2013 was $110 per month. The estimates are that the bills in 2015 are probably slightly lower than that figure. If energy monitoring can help people save between 10-20% on their electric bills, which is the claim often made, then that average savings is $11 to $22 per month. On top of that there is a savings on the heating bills for people that heat with something other than electricity. The real question is how much are people willing to pay for those savings?

Of course, electric rates vary widely by state, which is a factor both of the cost per kilowatt hour, and also of how the electricity is used. For example, as one might expect due to the summer heat, the highest electric bills are in the southeast while the lowest are in the northwest, which has milder weather, as well as a lot of hydroelectric generation.

If you are thinking about getting into this business you need to not only look at what your local Wal-Mart is offering, but also make sure you understand what people in your area pay for electricity and heating.