WordsByNowak

Last week, I posted about a study emanating from Northwestern University in Illinois that predicted the extinction of religion in nine developed countries. Well, those researchers at Northwestern must not like God very much because they’ve released another study that links obesity to religion.

The study found that young adults who frequently attend religious activities are 50 per cent more likely to become obese later in life. While it’s an interesting finding, the researchers couldn’t really explain it.

“It’s possible that getting together once a week and associating good works and happiness with eating unhealthy foods could lead to the development of habits that are associated with greater body weight and obesity,” according to the lead researcher.

That lack of explanation sounds like a good opportunity to jump in with some correlations. In my post last week, I pointed out that U.S. states with the lowest GDP per capita were also the ones with the highest rates of church and synagogue attendance. There is also a very clear correlation with those two factors when compared to the most obese states. In other words, all three of these things - religion, income and obesity - go together.

Obesity and income level have been linked in many studies to the point where we can probably move beyond correlation and think causality - that poorer people are more likely to be obese because they can’t afford healthier food. The cheapest stuff in the grocery store and at restaurants is almost always the least healthy and therefore the most likely to contribute to obesity. That religious people also have a higher tendency to become obese should therefore come as no surprise - they are also more likely to be less educated and have lower incomes. That’s another correlation that I’ll try to prove in book #2.

It is worth pointing out, however, that bad food does not cause obesity alone, a fact that much media reporting often omits. As the World Health Organization defines it, obesity is caused by a high intake of energy-dense foods and “a decrease in physical activity due to the increasingly sedentary nature of many forms of work, changing modes of transportation, and increasing urbanization.” So it’s not just McDonald’s et al that cause obesity, it’s also parents who don’t teach their kids how to live healthy and active lifestyles.

The better question to ask then, is are religious people more lazy? The sarcastic answer might be that anyone who prays to a higher power for breaks in life rather than making their own certainly qualifies as lazy, but I don’t think the science on that one has been done.

Interestingly, the link between obesity and poverty is a relatively recent phenomenon. Historically, being fat was the ultimate status symbol - because food was relatively rare and hard to come by, having a lot of it in your belly meant you were well off and could afford to eat lots. Up until about a century ago, being chubby was like owning a Lexus.

Things are obviously different today, at least in developed countries. With food being cheap and plentiful, girth of the waistline has lost its social cachet. Size still does matter, though - but people now show off their wealth with big houses and cars.

As expected, Netflix’s move on Monday night to introduce lower-quality video streaming for us Flinstones-era Canadians got a lot of media attention outside of Canada. But, with Americans being Americans, much of the coverage seemed worried about their own skins - as in, with restrictive internet usage caps being the norm here, are they going to migrate south and will Netflix have to enact similar measures there?

A few weeks ago, I spoke with an official at the Organization for Economic Co-operation and Development in Paris about the global trends regarding internet caps. He said, in unequivocal terms, that the general worldwide trend was toward larger and larger caps, not smaller ones like we’re seeing here in Canada and like the ones pundits in the U.S. are worried about. I’ve talked about this before - how North America’s bucking of the trend has everything to do with the fact that our governments take a largely hands-off approach to managing their internet markets. There are many people convinced that’s the wrong approach to take in such an important field - myself included - but it looks like it’s a lesson we’re going to have to learn the hard way.

In any event, I had a sit-down with Netflix CEO Reed Hastings yesterday, wherein we chatted about the new quality settings, acquiring new content, usage-based billing and lobbying. The full Q&A is up on CBC.ca, so check it out if you’re interested.

Today’s post hits on a related issue. A few weeks back when I wrote about the myths surrounding usage-based billing, a chap calling himself “Investor’s Perspective” stirred up the comments section by supporting Bell’s desire to make more money. The fellow posted anonymously but claimed to be an investment manager who helped oversee billions of investors’ money. Whether he was who he said he was, he made some comments about how big telecom companies are not good investments because they usually don’t see good returns on the amount of capital they sink into their businesses.

Having covered the industry from the investors’ perspective for a number of years, I can’t say I agree with him. While companies such as Bell have not seen much movement in their stock prices for years, they have generally been pretty steady sources of dividends. Both of those phenomena can be explained by the same factor - they’re poorly run companies that make steady money because they enjoy dominant positions in uncompetitive markets. In other words, while the money continues to steadily roll in, there really isn’t much hope for growth, which is why the stock never goes anywhere. As such, while you can’t really get rich from investing in a company like Bell, it certainly won’t hurt your portfolio either.

It’s worth noting that some cable companies, such as Rogers, have historically performed quite differently. Ten years ago, Rogers stock was around $11 a share. Today, it’s more than triple that. Rogers took a pounding back then because it spent and spent on necessary infrastructure, both cable and wireless. Over the next decade, it reaped the rewards and came to dominate Bell and other competitors in almost every area because of that. Investors who stuck with some of these cable companies love them because they did, in fact, make them rich. It’s a classic case of high-risk, high-reward.

There’s a reason for the difference in performance. While Ted Rogers cut a lot of throats in building his empire, all on the back of his own cable monopoly, at the end of the day he was a fiercely competitive entrepreneur. Most big phone companies in the world, on the other hand, were at one point in time government-own monopolies before they eventually spun off into publicly owned entities. And as we all know, nothing is fatter and lazier than a government-owned monopoly.

Those early attitudes are still somewhat present and still drive both types of companies today. Telecommunications markets across Canada and in some other parts of the world have for the past few decades been dominated by the more nimble and hungry cable companies, with the sluggish phone companies doing all they can to avoid being left in the dust.

The reason for Bell’s sluggish stock performance is therefore not some innate nature of the business it is in, it’s because the company is - simply put - poorly run, to the point of being stupidly run.

Need proof? Okay, how about this. The Canadian public is now on high alert about the state of internet access in this country. Nearly half a million people signed a petition that on the surface is against usage-based billing, but which is really an indictment of the larger situation. The government is ticked off and breathing down Bell’s neck. This is, by the way, a relatively right-wing government that strongly advocates letting market forces do their thing. Yet still, the Prime Minister himself is ready to meddle with those forces. Moreover, the whole UBB fiasco has made Canadians more aware than ever that there are other, cheaper options out there as far as internet service providers are concerned. Many Canadians hadn’t even heard of Teksavvy before this mess came along.

So what would be the stupidest thing Bell could do in this situation? What would piss people - especially customers - off even more and drive them to those smaller competitors, as well attract even more attention from politicians of all stripes? Hmm… how about raising prices? Yup, that would be about the dumbest thing the company could do. There’s no way they’d do that, right?

Wrong. That’s exactly what Bell is doing. Effective as of May, all of Bell’s retail internet services are going up by $3. Wow. Just wow.

There are two possible explanations for why Bell would make such a move, which is seemingly daring the government - whoever that may be at the conclusion of our pending election - to give it a good, old-fashioned spanking. One is that the company’s bean counters figured that its revised usage-based-billing proposal will result in less revenue, which are dollars that need to be made up elsewhere. The other possibility is that one hand - the side of the company that sets prices - doesn’t know what the other hand, namely the regulatory people dealing with the UBB fracas, is doing. At this point, I’d lay 50-50 odds on either being the answer. Neither is smart.

I hate to keep bringing up New Zealand but I swear this is like watching a rerun. The big phone company there kept making similarly moronic moves like these until the public and the government just couldn’t take it anymore. The company, Telecom New Zealand, was subsequently forcibly broken up into three pieces, thereby losing more than half its stock value. For the longest time, I haven’t thought that could happen here, but perhaps I’ve been underestimating just how stupid some companies can be.

Last night saw a pair of new developments in the ongoing saga that is usage-based billing. Firstly, Bell Canada announced it was sort of withdrawing its plan to implement UBB while, a little later in the evening, Netflix said it was implementing a new option that will let subscribers lower the quality of their video and thereby use less of their monthly internet limit.

Let’s start with a quick refresher course on UBB. Essentially, usage-based billing is when an internet service provider bills a subscriber for how much data they download and upload each month. The more a person uses, the more they pay on top of their monthly subscription fee. The big ISPs such as Bell say this is in order to discourage heavy users, who congest the network and slow things down for everybody. A while back, I explored some of the myths the big ISPs and other supporters have put forward to rationalize this - check that out if you haven’t already.

Bell has had this scheme in place with its own retail customers for a few years now, but things only got heated when it tried to foist UBB on its wholesale customers, which are smaller, independent ISPs such as Primus and Teksavvy. The CRTC, Canada’s national regulator, gave its blessing to the move, thereby kicking off a wave of protest that resulted in nearly half a million people signing an online petition in opposition. The government took notice and told the regulator to go back to the drawing board or it would find its decision overturned.

So last night, Bell decided that discretion was the better part of valour and said it would instead propose a new “aggregated volume pricing” scheme to the CRTC. The new plan will simply add up all of the traffic a given wholesale ISP accrues and charge accordingly at a considerably lower rate than under UBB. The idea is a definite improvement because it likely means wholesale ISPs will still be able to offer their large usage plans, since it won’t be individual users who get dinged, but the smaller companies’ costs would still go up. As the folks at OpenMedia, the advocacy group that has been leading the charge against UBB, put it:

While this is a positive move, it is only a Band-Aid solution to a much larger problem. We at OpenMedia.ca hope the CRTC takes Bell’s submission as a sign that widespread usage-based billing is not an acceptable model for Internet pricing, and that it creates policy to support the affordable Internet.

Which brings us to Netflix, the online video-streaming provider that is really at the centre of this whole brouhaha. Prior to last night, watching an hour of standard-definition Netflix video consumed about one gigabyte of monthly usage, or two gigabytes of high definition. Most Canadians are on plans that provide around 50 to 60 gigabytes a month, so if they used their internet connection for nothing but Netflix, they could watch a corresponding amount of hours, or about 25 to 30 hours of HD video. That’s only about seven hours a week, which isn’t a lot. And let’s face it: nobody is going to use their connection solely for Netflix, so really the amount most people would have left over might amount to a smidgen of video per week.

With the announcement last night, Netflix subscribers can now adjust their quality of video downward. The “good” setting uses only about 300 megabytes an hour, or a third of a gigabtye, or they can choose “better” (0.7 GB) or “best,” which was the only setting previously available.

Let’s just say that folks on Twitter were less than amused. As one person said: “I see the incumbents using Netflix’s announcement to prove that caps somehow ‘enhance innovation.’”

It’s not necessary to harp on Bell’s plan because Netflix’s well-timed announcement actually tells us all we need to know about it. Bell’s filing is actually standard operating procedure for big telecom companies and one that I saw repeatedly in New Zealand: when there is the danger of government or regulatory intervention, throw some half-assed solution into the mix and hope it gets traction. If it doesn’t, at least it buys some time from the intervention.

Netflix’s announcement is great, though. As a fast-growing U.S. company that has shareholders very focused on its expansion opportunities outside the country, the move will bring some rather interesting international media attention to Canada. I suspect many of the stories will take the tone of, “Oh look, Netflix is watering its product down for those poor suckers in Canada.” By mid-afternoon Tuesday, Canada will be an even bigger laughing stock of the internet world than it was before.

That may actually be the company’s intent. Netflix is actively lobbying the government and regulators - see here and here - so adding in a little media pressure would go nicely with that.

The company’s move also raises some questions for Netflix Canada subscribers. If they’re forced to take a lower quality of service, shouldn’t they have the option of paying less? That seems logical, but if the subscription price is lowered, that makes the company’s business case considerably tougher. Either way, Netflix is damned if they do, damned if they don’t. Canadians either have to accept that they can’t use the service as much as they want, or they have to settle for a degraded version of it. Here’s a company that seems doomed under the current set-up.

Of course, we need to remember this isn’t just about Netflix. The company just has the unfortunate burden of being the stalking horse for all new and innovative companies that might need big internet pipes to do business. It’s going to take more than half-assed proposals from big ISPs to ensure that such companies have a future here in Canada.

UPDATE: It also occurred to me that it’s not just Netflix that can’t operate properly here, neither can World of Warcraft. Less than a week ago, Rogers - our second-largest cable company - admitted it can’t even control its own internet throttling and that people playing the game would have to implement special settings to get it to work. How can anyone even pretend we don’t have serious, serious problems here?

One of the more fun things I did while in Bangkok was go to the movies. I know, I went all the way to the other side of the world and used my time doing stuff I can do here at home. Truth be told, I wasn’t a big fan of Bangkok - it was too big, busy and hot - and it was toward the end of our trip, so we were perhaps a little weary of Thailand. And besides, we had read in our travel guide that going to the movies was a big deal in the capital.

It sure was - we liked it so much, we actually went to two. For the first one, we picked regular seats for Rango. For the second, we got some super, ultimate VIP seats for Liam Neeson’s latest action pic, Unknown. It was an entertaining enough movie, if pretty preposterous, but the experience is what made it fun. Our VIP tickets gave us two very nice reclining chairs, complete with blankets and service staff - not to mention a tasty welcome drink.

In any event, with both movies, we got assigned seats. That always makes me think about the theatre situation here in North America and how it’s dramatically different from the rest of the world. I’m a movie buff and have been to theatres all over the world - in Europe, Australia, New Zealand and Asia - and the norm is when you buy your ticket, you select your seat. A few theatres in North America, mostly independents, do it this way too but for the most part with the big chains, it’s first come, first served.

Why is that? There are numerous theories. Some people say that first come, first served is better because most attendees arrive before the movie and thereby don’t disturb everyone by looking for their seats once the show has started. There’s also the argument that having assigned seating slows down the ticket-buying process.

Both suggestions are somewhat valid but I’m willing to bet it’s all about money. Specifically, advertising money.

When you buy an assigned seat, if the movie starts at say, 8 pm, you can show up at 8 pm, sit down and enjoy the previews as they start. The movie itself will probably begin at 8:05. When you buy an unassigned seat to a big, brand new blockbuster film that also starts at 8, you have to show up at 7 pm if you want any hope of getting a decent seat, stand in line to get in at 7:30 (maybe), at which point you watch a “pre-game” show comprised of wall-to-wall advertising for the latest bands, gadgets, etc., plus maybe some trivia.

But that’s not the end of the advertising. Once the movie start time arrives, we’re subjected to yet more ads. Here in Canada, AMC theatres aren’t too bad. They may show a few commercials before the movie, but Cineplex takes the cake. I once counted 14 commercials - for Coca-Cola, various car brands and just about every cellphone company there is - before the film began. And none of this includes the movie previews, which are also ads themselves.

There’s a good reason why North American theatres are not likely to take to assigned seating in a big way and that’s because they want us there early. Firstly, the longer we’re there, the more likely we are to buy their expensive food. But secondly and more importantly, if we’re not forced to arrive early in order to get a good seat, they won’t have any eyeballs to sell to advertisers. If movie-goers, armed with assigned seats, showed up just before the movie started, there would be no pre-game show - it would cost too much to produce with no revenue to offset it.

Furthermore, if movie-goers had assigned seats they would soon learn when to actually show up. If the movie “starts” at 8 but there are 10 minutes of commercials, they’d show up at 8:10. Again, bye-bye advertising revenue.

Why does this matter and how does it relate to technology? Well, Liam Lacey - the Globe and Mail’s film critic - recently wrote up a “modest defence of price gouging at movie theatres” that I read with great interest. His suggestion is that we should be thankful for the high price of food at theatres, because they’re what keep prices on the actual tickets low. It’s a good point, but I would also argue that piracy is what keeps ticket prices low. That’s because most movie-goers are young people, the same folks who know about and are capable of getting all their new releases via the internet.

I’ve always found the success of movie theatres in Asia somewhat surprising because every guy on every corner is selling pirated DVDs of all the latest films. The theatres succeed, though, by giving audiences something they can’t duplicate at home - a huge screen, great sound and nice, comfortable chairs, maybe even with blankets and VIP service. It’s a fine line, though - if the prices creep too high, people will just stay home with those cheap, off-the-street DVDs.

What applies in Asia also applies in North America. Theatres have to keep ticket prices low or their primarily young audiences will turn to or stick with piracy. You can’t really blame the chains for trying to make some money with advertising, but that too is a fine line - too much of it, like what Cineplex does, is eventually bound to turn people off the experience too.

A rather provocative headline caught my eye the other day, so I just had to check out the story: “Religion may become extinct in nine nations, study says.”

The nine nations, according to researchers from several U.S. universities, are Australia, Austria, Canada, the Czech Republic, Finland, Ireland, the Netherlands, New Zealand and Switzerland. The researchers used census data and mathematical models to build their predictions, which are based on a growing number of people in those countries saying they are “unaffiliated” with any sort of religion.

Their reasoning behind the growth is interesting, being a blend of math and sociology. Religion will die out in these places because of a sort of snowball effect, the researchers said.

“It posits that social groups that have more members are going to be more attractive to join, and it posits that social groups have a social status or utility,” said Richard Wiener of the Research Corporation for Science Advancement, and the University of Arizona. In other words, people want to be part of the majority, so as more people become non-religious, they in turn attract more people to do the same.

The study is of particular to interest to me because the death of religion will figure prominently in my next book. I was coming at the idea from a very different perspective, though. My theory is that religion’s decline for the past few centuries has moved in lock step with our exponentially growing understanding of science. To put it another way, the smarter we get, the less we believe in religion.

There are many correlations. One of the easiest ones to do, for example, is to compare religious belief with economic affluence, which is almost always highest in well-educated areas. Take a look at U.S. states - the people who live in the most well-heeled ones also go to church or synagogues the least. If you check out those links, you’ll see that South Carolina, Mississippi and Utah place in the top five with the most church and synagogue-goers and not coincidentally in the bottom five in terms of GDP per capita. They also don’t fare well in education rankings.

Things may seem muddier when you apply this theory globally, particularly to the Middle East, but not really. Although many Middle Eastern nations are seemingly rich because of oil, the ones that pass the wealth around the most are also the ones that tend to be less religious and most educated.

It’s not a simple topic - and it’s definitely a hot-button issue - so I don’t mean to give it short shrift here, but it is a correlation that I’m looking to prove as causality in book #2.

One last side note to this whole story - the U.S. researchers were only able to come up with their theories thanks to good, solid information gleaned from years of census reports. This is information the current government of Canada is basically depriving future researchers of by axing the long-form census. We can add that to its list of failures I talked about yesterday.