Eli5 – How does data work and how do mobile and internet companies create it ? Can they create as much as they want ? Do they control the quota to control prices ?
In: Technology
The mobile/internet companies don’t create the data. We do. They provide the infrastructure to transport that data to/from people who need it. That infrastructure has limited capacity (how much and how fast it can be moved).
It’s kind of like a shipping company or mail service. We create the mail and they agree to deliver it to whoever it needs to be sent to. The quota is them saying how much mail they will deliver, given how much you’re paying them each month. The monthly billing is largely because people prefer predicable billing and it’s hard to estimate how much data we will expect to send/receive.
As for pricing, that’s a complicated question. In a perfect market, it’s determined by the intersection of how much we value the service and how difficult it is to meet that demand. Almost every data transmission service, however, is also subject to regulations/subsidies/etc. (most famously cable companies in the US) which tend to hamper competition and drive prices up (because consumers may not have the choice to switch to a cheaper competitor).
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