Are You Paying to Spy on Yourself?

Geoffrey A. Fowler of the Washington Post recently engaged a data expert to track everything going on behind the scenes with his iPhone. What he found was surprising since Apple touts itself as a company that doesn’t invade user privacy. The various apps on his phone were routinely handing out his personal data on a scale that shocked him.

Fowler’s information was being gathered by trackers. This is software built directly into apps and is different than ad tracking cookies that we pick up from web sites. App makers deliberately build trackers into apps and a user can’t get rid of them without getting rid of the app.

Most apps on his phone had these trackers. That included sites like Microsoft OneDrive, Intuit’s Mint, Nike, Spotify, The Washington Post, and the Weather Channel. Some apps came with numerous trackers. He had a food delivery service called DashDoor that included nine separate trackers. Third parties must be paying to share app space because the DashDoor app included trackers for Facebook and Google – those two companies know every time that app is used to order food.

Almost none of these apps disclosed the nature of what they were tracking. When first loaded, most apps ask for somewhat generic permission to track user certain data but don’t disclose the frequency and the extent to which they will gather data from a user.

This issue has relevance beyond privacy concerns because the apps on Fowler’s phone could collectively use as much as 1.5 gigabytes of data per month on his phone. Industry statistics show that the fastest-growing segment of Internet traffic is machine-to-machine communication, and these app trackers make a significant contribution to that traffic. Put bluntly, a lot of machine-to-machine traffic is either being used to back up files or to spy on us.

This has to be concerning to people who are still on measured cellular data plans. This unintended usage can cost real money and a user can end up paying to have trackers spy on them. Our cellphones are generating broadband usage without our knowledge, and mostly without our explicit permission. I’ve had months where I’ve barely roamed with my cellphone and still have seen more than a gigabyte of usage – I now understand where it’s probably coming from.

PCs and tablets have the same problems, with the data tracking coming more from marketing cookies that are loaded when we visit web sites. I scrub these cookies from my computer routinely. My desktop is only used for work and I still find 40 – 100 cookies every week. One of my blogs last year mentioned a guy who had gone on vacation for a month and was shocked when he returned and discovered that his home network had used several gigabytes of data in his absence.

There are ways to block the trackers on your phone, but this mostly involves deleting apps or turning off permission in your privacy setting, and that largely means the apps won’t work. You can also take steps to disguise your data by passing everything through a VPN, but that doesn’t stop the data from being transmitted.

The phone manufacturers are complicit in this tracking. I just got a new Samsung Galaxy and my new phone came with over 300 apps – most for services I don’t use like Facebook, Spotify, and ton of others. These various companies must have paid Samsung (or perhaps AT&T) to include their apps and their trackers. I’ll be spending a few days deleting or disabling most of these apps. I find it creepy that Facebook follows me even though I stopped using the site several years ago. And unlike when I download a new app, I didn’t have the opportunity to allow or deny permission to the many apps on my new phone – I assume AT&T gave that permission.

It might be a generational thing, but it bothers me to have companies reaping my personal data without my permission, without disclosing what they are gathering, and how they are using it. I know young people who are not bothered by tracking and assume that this is just a part of being connected.

The other big concern is that the tracking apps are contributing to the capacity problems on cellular network. I just saw last week that the average US cellphone now uses about 6 GB of data per month. If trackers are pushing out even half a gigabyte per month in usage that is a significant contributor to swamped cellular networks. Cellphone companies are working furiously to keep ahead of the demand and it must be maddening to cellular network engineers to know that 15% – 20% of network usage is being created behind the scenes with app trackers and not from actions taken by users.

In an ideal world, this is something regulators would be investigating to establish rules. Apps like DashDoor shouldn’t be allowed to install a Facebook tracker on your phone without asking for specific and explicit permission. All trackers should have to disclose the exact information they gather about a user and the frequency of that tracking. Unfortunately, this FCC has walked away from any regulatory role in this area. Congress could address the issue – something that European regulators are considering – but this doesn’t seem to be high on anybody’s radar.

How We Use More Bandwidth

We’ve known for decades that the demand for broadband growth has been doubling every three years since 1980. Like at any time along that growth curve, there are those that look at the statistics and think that we are nearing the end of the growth curve. It’s hard for a lot of people to accept that bandwidth demand keeps growing on that steep curve.

But the growth is continuing. The company OpenVault measures broadband usage for big ISPs and they recently reported that the average monthly data use for households grew from 201.6 gigabytes in 2017 to 268.7 gigabytes in 2018 – a growth rate of 33%. What is astounding is the magnitude of growth, with an increase of 67.1 gigabytes in just a year. You don’t have to go back very many years to find a time when that number couldn’t have been imagined.

That kind of growth means that households are finding applications that use more bandwidth. Just in the last few weeks I saw several announcements that highlight how bandwidth consumptions keep growing. I wrote a blog last week describing how Google and Microsoft are migrating gaming to the cloud. Interactive gaming already uses a significant amount of bandwidth, but that usage is going to explode upwards when the machine operating the game is in a data center rather than on a local computer or game console. Google says most of its games will operate using 4K video, meaning a download speed of at least 25 Mbps for one stream plus an hourly download usage of 7.2 GB.

I also saw an announcement from Apple that the users of the Apple TV stick or box can now use it on Playstation Vue to watch up to four separate video steams simultaneously. That’s intended for the serious sports fan and there are plenty of households that would love to keep track of four sporting events at the same time. If the four separate video streams are broadcast in HD that would mean downloading 12 GB per hour. If the broadcasts are in 4K that would be an astounding 29 GB per hour.

The announcement that really caught my eye is that Samsung is now selling an 8K video-capable TV. It takes a screen of over 80 inches for the human eye to perceive any benefit from 8K video. There are no immediate plans for anybody to broadcast in 8K, but the same was true when the first 4K TVs were sold. When people buy these TVs, somebody is going to film and stream content in the format. I’m sure that 8K video will have some improved compression techniques, but without a new compression scheme, an 8K video stream is 16 times larger than an HD stream – meaning a theoretical download of 48 GB per hour.

Even without these new gadgets and toys, video usage is certainly the primary driver of the growth of household broadband. In 2014 only 1% of homes had a 4K-capable TV – the industry projects that to go over 50% by the end of this year. As recently as two years ago you had to search to find 4K programming. Today almost all original programming from Netflix, Amazon, and others is shot in 4K, and the web services automatically feed 4K speeds to any customer connection able to accept it. User-generated 4K video, often non-compressed, is all over YouTube. There are now 4K security cameras on the market, just when HD cameras have completely replaced older analog cameras.

Broadband usage is growing in other ways. Cisco projects machine-to-machine connections will represent 51% of all online connections by 2022, up from 40% today. Parks and Associates just reported that the average broadband home now has ten connected devices, and those devices all make internet connections on their own. Our computers and cellphone automatically update software over our broadband connections. Many of us set our devices to automatically back-up our hard drives, pictures, and videos in the cloud. Smart home devices constantly report back to the alarm monitoring service. None of these connections sound large, but in aggregate they really add up.

And sadly, we’re also growing more inefficient. As households download multiple streams of music, video, and file downloads we overload our WiFi connection and/or our broadband connection and thus request significant retransmission of missing or incomplete packets. I’ve seen estimates that this overhead can easily average 20% of the bandwidth used when households try to do multiple things at the same time.

I also know that when we look up a few years from now to see that broadband usage is still growing that there will be a new list of reasons for the growth. It may seem obvious, but when handed enough bandwidth, households are finding a way to use it.

The Slow Deployment of 5G

Somebody asked me a few days ago why I write so much about 5G. My response is that I am intrigued by the 5G hype. The major players in the industry have been devoting big dollars to promote a technology that is still mostly vaporware. The most interesting thing about 5G is how politicians, regulators and the public have bought into the hype. I’ve never seen anything like it. I can remember other times when the world was abuzz over a new technology, but this was usually a reaction to an actual technology you could buy like the first laptop computers, the first iPhone and the first iPod.

Anybody that understands our industry knew that it will take a number of years to roll out any major new technology, particularly a wireless technology since wireless behaves differently in the field compared to the lab. We’re only a year past the release of 5G standards, and it’s unrealistic to think those standards could be translated into operation hardware and software systems in such a short time. You only have to look back at the history of 4G, which started as slowly as 5G and which finally had the first fully-compliant 4G cell site late last year.  It’s going to take just as long until we see a fully functional 5G cell site. What we will see, over time, is the incremental introduction of some of the aspects of 5G as they get translated from lab to the field. That rollout is further complicated for cellular use by the timeline needed to get 5G-ready handsets into peoples’ hands.

This blog was prompted by a Verizon announcement that 5G mobile services will be coming to 30 cities later this year. Of course, the announcement was short on details, because those details would probably be embarrassing for Verizon. I would expect that the company will introduce a tiny few aspects of 5G into the cell sites in business districts of major cities and claim that as a 5G roll-out.

What does that a roll-out this year mean for cellular customers? There are not yet any 5G capable cellphones. Both AT&T and Verizon have been working with Samsung to introduce a 5G version of their S10 phone later this year. Verizon has also been reported to be working with Lenovo for a 5G modular upgrade later this year. I’m guessing these phones are going to come with a premium price tag for the early adaptors willing to pay for 5G bragging rights. These phones will only work as 5G from the handful of cell sites with 5G gear – and that will only be for a tiny subset of the 5G specifications. I remember when one of my friends bought one of the first 4G phones and crowed about how it worked in downtown DC. At the time I told him his great performance was because he was probably the only guy using 4G – and sure enough, his performance dropped as others joined the new technology.

On the same day that I saw this Verizon announcement I also saw a prediction by Cisco that only 3% of cellular connections will occur over a 5G network by the end of 2022. This might be the best thing I’ve seen that pops the 5G hype. Even for folks buying the early 5G phones, there will be a dearth of cell sites around the country that will work with 5G for a number of years. Anybody who understands the lifecycle of cellular upgrades agrees with the Cisco timeline. It takes years to work through the cycle of upgrading cell sites, upgrading handsets and then getting those handsets to the public.

The same is true for the other technologies that are also being called 5G. Verizon made a huge splash just a few months ago about introducing 5G broadband using millimeter wave spectrum in four cities. Even at the time of that announcement, it was clear that those radios were not using the 5G standard, and Verizon quietly announced recently that they were ceasing those deployments while they wait for actual 5G technology. Those deployments were actually a beta test of millimeter wave radios, not the start of a rapid nationwide deployment of 5G broadband from poles.

AT&T had an even more ludicrous announcement at the end of 2018 where they announced 5G broadband that involved deployment of WiFi hotspots that were supposedly fed by 5G. However, this was a true phantom product for which they had no pricing and that nobody could order. And since no AT&T cell sites have been upgraded to 5G, one had to wonder how this involved any 5G technology. It’s clear this was technology roll-out by press release only so that they could have the bragging rights of saying they were the first ones to have 5G.

The final announcement I saw on that same day was one by T-Mobile saying they would begin deploying early 5G in cell sites in 2020. But the real news is that they aren’t planning on charging any more for any extra 5G speeds or features.

I come back to my original question about why I write about 5G so often. A lot of my clients ask me if they should be worried about 5G and I don’t have an answer for them. I can see that actual 5G technology is going to take a lot longer to come to market than the big carriers would have you believe. But I look at T-Mobile’s announcement on price and I also have to wonder what the cellular companies will really do once 5G works. Will AT&T and Verizon both spend billions to put 5G small cells in residential neighborhoods if it doesn’t drive any new cellular revenues? I have to admit that I’m skeptical – we’re going to have to wait to see what the carriers do rather than listen to what they say.

AT&T’s 5G Strategy

AT&T recently described their long-term 5G strategy using what they call the 3 pillars of 5G – the three areas where the company is putting their 5G focus. The first pillar is a concentration on 5G cellular, and the company’s goal is to launch a 5G-based cellular service, with some cities coming on board in the second half of 2020. This launch will use frequencies in the sub-6 GHz range. This admission that there won’t be any AT&T 5G until at least 2020 contradicts the AT&T marketing folks who are currently trying to paint the company’s 4G LTE as pre-5G.

The biggest problem for the public will be getting a 5G cellphone. AT&T is working with Samsung to hopefully launch two phones later this year that have some 5G capability. As always with a new generation of wireless technology, the bottleneck will be in handsets. The cell phone makers can’t just make generic 5G phones – they have to work with the carriers to be ready to support the spectific subset of 5G features that are released. You might recall that the 5G cellular specification contains 13 improvements, and only the first generation of a few of those will be included in the first generation 5G cell sites. Cellphone manufacturers will also have to wrestle with the fact that each big cellular carrier will introduce a different set of 5G features.

This is a real gamble for cellphone makers because a 5G phone will become quickly obsolete. A 5G phone sold in late 2019 probably won’t include all of the 5G features that will be on the market by late 2020 – and this is likely to be true for the next 3 or 4 years as the carriers roll out incremental 5G improvements. It’s also a gamble for customers because anybody that buys an early 5G cellphone will have early bragging rights, but those cool benefits can be out of date in six months. I think most people will be like me and will wait a few years until the 5G dust settles.

AT&T’s second pillar is fixed wireless. This one is a head-scratcher because they are talking about the fixed cellular product they’ve already been using for several years – and that product is not 5G. This is the product that delivers broadband to homes using existing low-band cellular frequencies. This is not the same as Verizon’s product that delivers hundreds of megabits per second but is instead a product that delivers speeds up to 50 Mbps depending upon how far a customer lives from a cell tower – with reports that most households are getting 15 Mbps at best. This is the product that AT&T is mostly using to satisfy its CAF II requirements in rural America. All of the engineers I’ve talked to don’t think that 5G is going to materially improve this product.

The final pillar of AT&T’s strategy is edge computing. What AT&T means by this is to put fast processors at customer sites when there is the need to process low-latency, high-bandwidth data. Like other carriers, AT&T has found that not everything is suited for the cloud and that trying to send big data to and from the cloud can create a bandwidth bottleneck and add latency. This strategy doesn’t require 5G and AT&T has already been deploying edge routers. However, 5G will enhance this ability at customer sites that need to connect a huge number of devices simultaneously. 5G can make it easier to connect to a huge number of IoT devices in a hospital or to 50,000 cell phones in a stadium. The bottom line is that the migration to more edge computing is not a 5G issue and applies equally to AT&T’s fiber customers.

There is really nothing new in the three-pillar announcement and AT&T has been talking about all three applications from some time – but the announcement does highlight the company’s focus for stockholders.

In what was mostly a dig at Verizon, AT&T’s CEO Randall Stephenson did hold out the possibility of AT&T following Verizon into the 5G fixed wireless local loop using millimeter wave spectrum – however, he said such a product offering is probably three to five years into the future. He envisions the product as an enhancement to AT&T’s fiber products, not necessarily a replacement. He emphasized that AT&T is happy with the current fiber deployments. He provided some new statistics on a recent earnings call and said the company is seeing customer penetration rates between 33% and 40% within 18 months of new fiber deployment and penetration around 50% after three years. Those are impressive statistics because AT&T’s fiber deployments have been largely in urban areas competing with the big cable companies.

A year ago, Stephenson said that getting sufficient backhaul was his number one concern with deploying high-bandwidth wireless. While he hasn’t repeated that recently, it fits in with his narrative of seeing millimeter wave radio deployments in the 3-5 year time frame. The company recently released a new policy paper on its AirGig product that says that the product is still under development and might play well with 5G. AirGig is the mysterious wireless product that shoots wireless signals along power lines and somehow uses the power lines to maintain focus of the signal. Perhaps the company is seeing a future path for using AirGig as the backhaul to 5G fixed wireless deployments.

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.