Sale on words… 50 cents a pound

In the summer of 1996 I presented a series on CBC Radio’s Island Morning program, produced by Ann Thurlow, called Consumed by Technology. I’ve managed to recover the audio of the episodes, along with the “show notes” and transcripts, from The Internet Archive and I’m posting each episode here for posterity.

This second episode of Consumed by Technology focused on the economics of moving around information on the Internet; it aired on July 16, 1996. Karen Mair was the host.

In 1837, a retired school teacher named Rowland Hill wrote an essay which shook the world of “moving information from place to place,” an essay which is perhaps even more relevant today than it was when he wrote it.

Show Notes

These are the original links that I released with the episode; each is a link to the Internet Archive’s cache of the site at the time.


INTRO: In 1837, a retired school teacher named Rowland Hill wrote an essay which shook the world of “moving information from place to place,” an essay which is perhaps even more relevant today than it was when he wrote it.

To talk about this retired school teacher and about “moving information around from place to place,” Peter Rukavina joins me now in another in the series “Consumed by Technology.”

QUESTION: What exactly was in this essay that shook up the world?

ANSWER: Well, in 1837, Rowland Hill was living in England after retiring from a career as a teacher and administrator. He was quite an eclectic man; he was know for his somewhat innovative teaching methods and his interests in printing, astronomy, mathematics, and transportation.

And in that year, 1837, he produced a pamphlet called “Post Office Reform: Its Importance and Practicability”. And, quite simply, the theories he forwarded in this pamphlet revolutionised the postal system, not only in England, but around the world. And not only in 1837, but in ways which live on today.

You see up until that time, the cost of sending a letter was based on a rather complex set of factors like the distance the letter was to travel and the number sheets of paper you sent and so on. And in fact the cost was usually charged to the person receiving a letter, not the person sending it.

This all resulted in the need for something of an overwhelming postal bureaucracy: not only did the people delivering the mail have to charge for every letter they delivered, but they had to charge a different amount for each one. And that amount had to be figured out.

The system required large number of people, cost so much that is was hard for the common person to use it, and was just generally inefficient.

And then Rowland Hill can along with three relatively simple suggestions:

  1. Postal rates should be lower.
  2. The cost of sending a letter should be the same, regardless of distance.
  3. Costs should be paid by the sender, not the recipient

Although Hill faced some political challenges getting his ideas across, in the end, nothing could stop common sense and by 1840 uniform postal rates, and postage stamps purchased by the sender, were in place across England. Within 25 years his ideas had spread around the world.

What we end up with, 159 years later, is a system here in Canada where you can send a standard letter to any of 12 million addresses in the country, for just 45 cents.

QUESTION: So Rowland Hill gave us a world with cheap, universal postal rates?

ANSWER: Exactly. And not only that, but his ideas changed the model for the way that information was moved from to place to place.

Now that we live in an “information economy” where we’re moving around more and more information and less and less tractors and sheet metal and rolls of carpet, how we pay to send and receive information becomes only more important.

Imagine, for example, a world where it cost $73 to send a letter to Toronto. Or what if international telephone calls were free? Or we had to pay for Island Morning by the minute? What if it cost five dollars to run a TV commercial during Compass?

In a world where money is so important to us, how we pay to move information dramatically affects how we deal with that information. Generally, the cheaper it is, the more we use it.

Now, in addition to the sort of “all you can eat” way we pay for postal service — one fee, as much information as you can stuff in an envelope — there are generally three factors used to charge for moving information from place to place: how much, how far, and how long. Which of these is in place for a particular “information moving device” tends to determine how we use that device in our daily lives.

QUESTION: Well what about telephone service as an example?

Telephone service is an interesting case because the way we pay for it changes depending on where we’re calling. Local calls are “all you can eat” and long distance calls are charged using a combination of time and distance — not unlike postal service before 1837.

Now think of the difference in the way we make local phone calls versus the way we make long distance calls. In any given day, I might make 20 or 30 local phone calls. Because I don’t have to pay for each one, I don’t even think about picking up the phone at the drop of a hat to make a local call.

Long distance calls, however, are a different matter. Because I have to pay for each one, even thinking about making a long distance call is a different kind of thing altogether from making a local call, to say nothing of the experience of actually making a long distance call with the clock silently ticking all the time in the background.

Not it sort of seems a little silly to be describing all of this is such intimate detail; it seems like such a natural part of our lives that we just take it for granted that to call across the street is free and to call Halifax costs. But sometimes it’s useful to step back for a minute and realize that all of these distinctions are ones we’ve allowed to be put in place; take these arbitrary distinctions as to where is “near” and where is “far” and multiply their effect over millions of phone calls over the years, and you’re talking about a pretty major issue. And an issue which not only affects the size of our phone bills at the end of the month but which can determine how communities relate to each other.

Take North and South Granville, for example, close to Hunter River in the middle of the Island.

South Granville is in the Hunter River “964” telephone exchange and North Granville, just over the hill, really, is in the New London “886” exchange. Now I’ve been told that the natural inclination of people in South Granville is towards Hunter River and Charlottetown, both local calls, whereas the natural inclination of people in North Granville is towards Kensington and Summerside, again, both local calls. As a result, the natural inclination of North and South Granville is not towards each other. It seems like such a simple and insignificant thing on one level, but when you start to think about all of the friendships and marriages and business arrangements that have been subtly affected by this over the years, it looms pretty large in the grander scheme of things.

And again, it’s really all about how we charge for moving information from place to place.

QUESTION: You mentioned the “information economy”… how do things like the Internet fit into all of this?

ANSWER: Well, although the Internet has been around, in one form or another, for over 20 years, it’s only in the last couple that people like you and me have started to use it. And so how we pay for using it — what “information moving” model will apply is only in the process of being figured out.

By far the dominant model right now is something which shares something in common with long distance phone service and something in common with the revolutionary postal system of Rowland Hill. In most cases when you sign up for an Internet account you pay a certain fixed monthly fee which allows you to spend a certain number of hours connected to the Internet… $30 for 30 hours, for example. Any time that you spend online over that fixed monthly amount is billed by the hour.

QUESTION: So the clock is always ticking?

ANSWER: Yes indeed, and, as you might imagine, that affects the way that people use their time online.

The Internet is often compared to the public library; they’re both places where lots of information is stored and organized.

Think of the feeling you get from wandering around a public library: you might wander over to the magazine section and read the latest issue of the New Yorker, browse though the Irish travel book section for a while, maybe try and find the latest John Grisham novel. Because using public libraries is free, and because you can take as much time as you want to find what you need, there’s a certain kind of freedom that libraries bring to gathering information.

On the “billed by the hour” Internet, however, that freedom is gone. Although you can wander around the Internet in much the same way you can wander around a library, and although you’re not paying for the actual information you’re browsing, there’s always that feeling that the clock is ticking. It’s not unlike the feeling that you get making a long distance telephone call.

One of the reasons I know this is true is because I’ve experienced another way of using the Internet, a model which is gradually becoming more common, and that is paying a fixed monthly fee for unlimited Internet use. This is a model very similar to the way we pay for cable television; in essence, “all you can eat.” Without that invisible clock ticking in the background, “surfing the net” is an entirely different experience.

QUESTION: Do you expect that this “all you can eat” approach is going to be the way of the future?

Well, it’s certainly preferable from a consumer’s point of view, but it also makes it hard for someone in the Internet business to make any money.

The third possible model for paying for the Internet, and the one which perhaps makes the most amount of sense for someone in the Internet business and the least amount of sense for consumers, is the “pay by the byte” model. This is similar to the way we pay for telegrams: by the word.

In essence, we would pay for the actual amount of information we browsed on the Internet, no matter how long it took. If we look up two books in the Library of Congress online catalogue, it might cost us 5 cents. I we look up ten books, it might cost us 25 cents.

Just to give you some idea of the relative size of pieces of information: the book Anne of Green Gables weighs in at just under half a million bytes — one byte equals one letter or space in the book. The entire Canadian Constitution is about 100,000 bytes long while the American Declaration of Independence is about 7,000 bytes long. The Encyclopaedia Britannica article on dandelions is 508 bytes long.

Now remember, in this “pay by the byte” model, the clock isn’t ticking, but the “information meter” is. It’s more the bookstore way of doing things than the public library way of doing things.

The “pay by the byte” way of charging for Internet use isn’t really common for consumers yet, but it’s becoming an increasingly common model for charging businesses for Internet access.

QUESTION: So the Internet will be “pay by the minute,” “all you can eat,” or “pay by the byte?”

ANSWER: In the end it will probably be some combination of the three. No matter what the final model is, however, its going to have a dramatic affect on the role that the Internet plays in our life.

Just to introduce one final wrench in the works: there’s a lot of talk now about “convergence” — about telephone and television and radio and the Internet all merging into one sort of “digital appliance.” When you hear people talking about a “set top box” this is what they’re talking about.

Things start to get really weird when you start thinking about telephone service — the new “digital appliance” telephone service — being billed not by the minute or by distance like we’re used to, but by the amount of information that is communicated.

Hello mother, I’m doing well” might cost you a tenth of a cent, “Hi Mom, all okay!” might cost you half as much. We could end up with a whole generation of people talking in a weird abbreviated code.

QUESTION: We’d have old Rowland Hill rolling over in his grave…

ANSWER: Indeed. Just remember, the next time that you pick up the phone or send a letter or pick up the newspaper, or watch TV, you’re helping to move information from place to place. And how you’re paying for it probably has a lot more to do with how you’re doing it than you realize.

EXTRO: Peter Rukavina operates Digital Island in Kingston. He’ll be back next week for another in the series “Consumed by Technology.”