The Internet of things (IOT), and Important Factors in Costs for the Consumer

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The Internet of things (IOT), and Important Factors in Costs for the Consumer

By: Tim Blischke

Weblog Abstract

This Weblog or “BLOG” explores the varying cost relationships facing the Internet of Things “IOT” connected world that consumers will eventually encounter. It characterizes several factors that are beyond the control of the buyer or average person and is designed as a thought provoking tool that can help people understand what the possible future costs of IOT would be – and how they are influenced it’s almost inevitable that there will be a connected device in our domiciles in the immediate future (Curry, 2017). This should be of interest to you as it will change the economic future of you and your family (and it’s not necessarily because we are choosing that option). It’s more likely that the driving factor is a perceived cost reduction from your appliance manufacturer that will be forcing your hand.

Soon your typical Maytag or GE or Whirlpool dishwasher or refrigerator is going to check the internet for updates… your television will self-diagnose if it does not already and your trash can will report when it is full and maybe even what it is full of  (Schiller, 2013). The time is here and we should ready ourselves for the inevitable. Our home and the contents within will recognize our patterns, our behavior and monitor how we live (Bogost, 2016).  We may want this situation… or we may have some trepidation.

Why? because this change is both good and bad – it’s a perplexing mix of connected devices that watch or listen in our environment, our home, there are some factors that allow you to benefit from this change:
Firstly, Consumers will have a built-in validation for purchasing consumables like gas, water and electricity. This will come from their smart appliances checking consumption in real time and comparing it to their prior averages and make changes that could save us all from billing mistakes and overcharges (John, 2017).
Secondly, if you don’t know how to do a task the IoT appliance will be able to make suggestions. For example: You ask “How do I make a béarnaise sauce” – and you get an enhanced experience with a real expert… typical consumer activities such as cooking and shopping could be enhanced by IoT technology linking a grocery list and ingredients to recipe suggestions, or suggesting bake times in an interactive and fun way (Woody, 2009).
Thirdly, Remote control. We see this in use today with garage doors, and many single out this example somewhere in the back of their mind as a typical scenario – the ability to exert control over our home or other appliances while not physically there by checking security systems, turning on and off lights or granting access to a garage or the front door for family or contractors.

IOT has some possible disadvantages to the home. One could argue that the efficiencies that the manufactures would receive from the aggregation of this data –and this is truly big data – would drive the costs down and that this would make an IoT connected device cheaper than those that are not connected when comparing total aggregate costs year to year (Vargas, 2016). However, if history holds true the end consumer will not see these savings. Companies that are squeezed by the inflating costs of raw materials and transportation may be tempted to keep this new-found revenue stream for themselves. If your data has value, by now its collected and analyzed by one company or another, like Google (Glikman, 2015).  It is likely that the manufacturer will keep those dollars to justify the jumpstart into the IOT powered world. The consumer household may not find a win on this playing field.

What is the common denominator, the foundation, the underpinning of these products?
It is connectivity. Connectivity is fast becoming a battle ground. Many people take connectivity for granted, but there are elements to the connected world that can cause heated debates between the best of friends or the people and their government. Due to the increasing role that IOT plays in our day-to-day lives, the introduction of several ideas centered around connectivity has started a debate among both the providers, the government and the consumer, and there are several factors (Leetaru, 2016).

There are three factors to consider as we move into the IOT economy – the first one, and it’s a heated discussion, is the right to be connected and what is the responsibility of the government to provide such a service? In addition, should that connection be neutral? Lastly, should it be taxed and who would regulate those taxes? Let’s begin by talking about taxing the internet. A general statement applies here “There are 2 things you can’t avoid – death and taxes” (Benjamin Franklin) probably true, but should you be taxed on a service like data usage? Many people would argue against such taxes… it’s not a physical object and it is hard to quantify yet taxation is probably inevitable regardless of our efforts to slow or reduce this burden.
The trick of taxation is that it’s pretty much already built into our IOT world. Its reflected in the costs of the product, and the speed at which it connects and in other fees that are embedded into the costs. The internet has become a public utility that has desires to evolve into a monopoly (Grover Norquist, 2015). And it does not stop with taxation, because layered on top of that is the idea of “Internet Neutrality”

Net neutrality has gotten a lot of press time lately. Its definition is somewhat diluted by its continued use by lawyers who position it as the next logical step in connectivity and this will have a significant impact to the connected home. Essentially, providers want to charge more taxes if you view certain types of sites or if you use a certain data type (think Netflix). However, if the net is neutral – a service provider can’t charge additional fees for your latest YouTube posts (Skorup, 2016). This has implications in the world of IOT, and those implications are increasing costs.
Although we may not mind paying AT&T or Verizon or the service provider of our choice a little more here and there for our consumer products to get an update or two as needed… eventually these costs will add up as it becomes more of a normal function than not and with net neutrality, those costs will be put under the control of the Federal Communications Commission. Government who could have a large say in what you do online and how much it costs (Skorup, 2016).

Another battle being fought is one in which people have the right to be connected – is the right for information and knowledge (Internet Society, 2015).  Thank you to Sir Francis Bacon for identifying the relationship between knowledge and power. He said, “Knowledge itself is power” and it is the most forward looking statement of the 1500s. For people without connected devices like phones and computers – the world can be a bit more difficult to navigate. Today many companies, and public facilities only post their schedules and functions in the online world. Most colleges have an online faculty that relies exclusively on the internet and this connectedness has led to more and more consumers and students alike becoming accustomed to doing work online in what is generically known as a “self-service” environment. Without a right to that connection, how will those without it succeed?
The right to be connected is a fragile right – its fraught with factors like physical lines and equipment, costs and accessibility and government oversight. Is it like the right to health care or an education? Perhaps. certainly, the days of access rights and the IOT days are coming, and taxation will probably fund this change (Grover Norquist, 2015).

In summary in the IOT world, costs go up from the pressure of these factors, acting together or alone. With the consumer household paying for the expansion, manufacturers will increase the costs of appliances and use more data without passing the savings to the consumer, and those that want government restrictions have to find a way to pay for that oversight with taxes and internet providers will increase their service costs due to burgeoning demand.

It appears to be a cycle that the consumers will be on for the foreseeable future – IOT will be an expensive proposition that will not be easy to justify but there is still value to be found in the IOT world if the benefits outweigh the costs, if consumers are careful about how they purchase and time the purchase so that they benefit from the technology but don’t pay for the development costs in the same bill and if net neutrality does not come with government oversight and the typical inefficiencies and ineffectiveness.


Sources

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Pauline Glikman, N. G. (2015, 10 13). Whats the value of your data. Retrieved from Tech Crunch: https://techcrunch.com/2015/10/13/whats-the-value-of-your-data/

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Skorup, B. (2016, 6 20). Net Neutrality Is Government Censorship. Retrieved from The National Review: http://www.nationalreview.com/article/436807/net-neutrality-government-control-your-internet-service

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