Why the CRTC was right on Usage-Based Billing

Up here in Canada (and I say that in the identity sense, since at the moment I’m in Santa Clara at the Strata Conference) a lot of fuss has been made about the CRTC’s decision regarding the approval of usage-based billing. So much fuss, in fact, that appears the government is going to over turn it.

One thing that has bothered me about these complaints is that they have generally come from people who also seem to oppose internet service providers throttling internet access. It’s unclear to me that you can have it both ways – you can’t (responsibly) be against both internet throttling and usage-based billing. As much as I wish it were the case there is not unlimited internet access in Canada. At some point this genuinely is a scarce resource and if you give people unlimited access at a fixed price at some point the system is going to collapse…

Indeed, what really concerns me is the incentive structure forbidding usage-based billing creates. There is a finite market for broadband access in Canada so the capital for increasing capacity can’t come exclusively from signing up new users. If you make it so that fixed bills are the only way to bill customers then what incentives do internet providers have to improve capacity? At best they will be incented only to provide a minimally viable service. I mean, why build out when you won’t be able to get a return on investment for the extra capacity?

I’d prefer to have an internet provider market where the players are building out their network in order to meet the needs of the most demanding users who are willing to pay for the extra bandwidth. Why? Because it will ensure that capacity keeps increasing as the large players continue to fight to meet the needs of that market. This means there is a financial incentive to increase bandwidth – which is ultimately what you want the incentives to be.

Besides, if – like me – you happen to believe that roads should be tolled then it’s unclear why you shouldn’t also feel like  consumers of large quantities of bandwidth should pay more than someone who barely consumes any at all. Why should low bandwidth users subsidize high-bandwidth users (or worse, that innovative services be made useless because the other solution is throttling).

I want to be clear. All of this isn’t to say that we shouldn’t regulate the ISP business or that we should treat the internet service providers as trustworthy. We are still in an oligarchy, something their behaviour reminds me of every day. I agree that the ISPs demands are in part an effort to make less attractive services like Netflix that threaten many of the ISPs other business – cable TV. So, if we are going to engage in usage-based billing then I’d expect a few things, including:

  • a generous baseline of fixed-fee internet usage a month. (In an ideal world I’d actually say a basic amount should be free – as I believe access to the internet, like access to books in a library, is increasingly becoming a necessary basic service of our society)
  • let’s have REAL usage-based billing. This means, let’s do usage-based billing that will make us more efficient. Charge me more at peak times, less during off peak times the way electricity companies do. That way I’ll bittorrent my files at night when it costs next to nothing, and be smarter about consumption during peak hours.
  • real transparency into how much the ISPs are investing into increasing their capacity.
  • bandwidth from certain IP addresses – like Parliament, Provincial Legislatures and City Halls should be unlimited. No one should be eating into their fix-priced limit or charged extra while engaging in their most basic democratic rights (so unlimited CSPAN video watching)
  • your network now must be neutral. One reason I like usage-based billing is that it destroys a major argument used to justify traffic shaping – that the network can’t handle the demand. Well, not you get rewarded for high demand – so satisfy it! If consumer advocates can’t oppose both usage-based billing and throttling, then telcos and cable companies can’t have both either.

I can imagine that this post will make some of my colleagues upset. Please fire away, tell me how I’ve got it all wrong. But please make sure that you’ve got an answer that addresses some of the concerns raised here. If you’ve been against throttling (and you know who you are), explain to me how it is that we can both (sustainably) have zero throttling and unlimited fixed fee internet access? In a world where online video is taking off, I’m just not sure I see it. Unless, of course, we think Google is going to provide the answer.

Finally, if you haven’t read it, Richard French has a very thoughtful piece in the Globe and Mail entitled Second-Guessing the CRTC Comes at a Price check it out. It certainly helped reaffirm some of my own thinking.

66 thoughts on “Why the CRTC was right on Usage-Based Billing

  1. James Schumann

    First, I haven’t had the time to follow all the nuances of this debate, so I apologize if I’m making some wrong assumptions. That said:

    “If you make it so that fixed bills are the only way to bill customers then what incentives do
    internet providers have to improve capacity?”

    If overturning the CRTC’s ruling means status quo, it seems the answer to this question is offering bigger, or faster, or both, fixed plans for more money. I’m not saying that’s a good solution, but it seems to follow, and hasn’t yet led to a situation where capacity hits a ceiling.

    More to the point, though, I can’t help but think there might be a slightly more creative solution that doesn’t require ISPs to nickel-and-dime their customers, including other ISPs, for every byte, and doesn’t require a fundamental shift in the way we all do business.

    Why does the window for a fixed bill have to be a month, with access granted all day, every day? Can’t an ISP offer a cheap, large plan for nighttime-only access under the current regulations, to satisfy the needs of your bit torrent scenario? Couldn’t I sign up for 3-4 fixed bills, each for a different time of day, speed, etc., each with a different ISP, under the current regulations?

    My guess, and it’s only a guess, is that ISPs are too accustomed to thinking of their billing systems and cycles as a monthly utility bill, and that their customers are too.

    Reply
  2. kev

    I don’t think you’ve got it wrong, I think you’ve just put a different spin on the same issue. You don’t address competitive pressures at all, and I think that’s a very big factor here, in that there really aren’t any – building a network ain’t cheap, and there are hurdles beyond cost that the non-incumbents face. The biggest question is “what’s a good baseline for the value of a bit, and the speed at which it can be delivered?”

    The incumbents will always charge what they can get away with. They’ll continue to point at their infrastructure costs without splitting out the infrastructure by segment (e.g. wireless, broadband, POTS, back-end network, etc.), and use the largest number they can to justify those costs. These same incumbents also have competing interests with IP-delivered services, and costly bandwidth charges help to create a disincentive for Canadians using those new services.

    The ISPs who are screaming the loudest are the ones who don’t have any last mile infrastructure, and who really haven’t invested in anything other than end-points and access. They do provide competition, but if they get unthrottled, unlimited access to the incumbents network, then there’s absolutely no incentive to control anything that’s not on their network. There’s hurdles to putting in their own last-mile infra, but it’d be interesting to see if any of them have even tried.

    The end-users of both services are ultimately the ones who pay, whether for their own access or to subsidize the access of others. Some places are still broadband backwaters because of proximity to the CO despite being in a large city of subdivision. Despite an awful lot of lip service, very few rural communities have seen any major improvement in services over the last decade. What’s fair to them?

    I don’t think this issue is about UBB or pay-for use. I think this is a larger question around “what’s fair?” This means finding out the real cost of data transfer and the speed at which it’s delivered, which requires effort and is something neither the incumbents or smaller ISPs have been willing to put in, because it’s hard (that is opinion only).

    I’m certainly not against throttling to ensure a consistent user experience, or to mitigate the effects of a very small percentage of users against the whole. All ISPs need to be able to manage the available bandwidth, and the reality is there’s a finite amount of that in the last mile, in the uplinks, and in the transit connections (and the wireless spectrum, too).

    I am very much against how most of the incumbents have implemented it with sweeping policies that don’t discriminate and/or take current conditions into effect. There’s smarter ways it can be done, and the policies I’ve seen thus far seem to involve the smallest amount of effort which punish everyone equally. They never benefit the user, despite being pitched as being done in their name.

    I’m rambling, so I’ll stop. The CRTC’s mandate is to strike a balance between what’s in the best interest of consumers and the companies that serve them. In order to do that, they need to have all of the information to determine what’s fair. I don’t think they have that and, having watched some of the regulatory games the incumbents play, I also don’t think the consumer has nearly as much sway as they should. I agree you should pay for what you use, and I think what it costs is where you start, because no one has a good idea of what that is right now.

    Reply
    1. David Eaves

      Hi Kev – super thoughtful response. Thanks you! I agree that these are different frames on the same issues. What I think is interesting is that, if you scratch beneath the surface, many of the people “opposed” to ubb are actual not really that opposed in principle – they just want a fair (reasonably priced) system. So I feel like we share the same core interests. Ultimately I got around to writing the post because the discussion has reduced to “a metered internet is bad” which I think does a disservice to the debate and eliminates an option that could acutally become quite effective. Thanks man.

      Reply
      1. Andrew Coyne

        Agreed. There’s a difference between the structure of rates and the level. Are the large carriers an oligopoly? Without a doubt. Are rates higher than they would be under a more competitive industrial structure? Quite probably. Should we do all we can to encourage greater competition, including opening the market to foreign carriers? Absolutely. Does any of that make the case for all-you-can-eat pricing? No.

        Reply
        1. Craig Bamford

          So how will adding foreign ISPs solve the problem of telcoms’ natural monopolies, Andrew? Are you going to advocate that we let AT&T and Verizon tear up our streets to put down their very own “last mile” copper?

          Reply
        1. Tyler Bryant

          Andrew… you didn’t respond to me last night. Is foreign competition going to lay an all new set of fibre to compete with the oligopoly? No. The issue here is that the regulator is incompetent or unable to regulate a market that veers to natural monopoly.

          Reply
          1. Craig Bamford

            I’m anxious to see what the equivalent of public transportation is supposed to be. Perhaps public libraries?

            (Assuming, of course, that Mr. Coyne doesn’t wish to close those down as well.)

            Reply
    2. David Eaves

      Hi Kev – super thoughtful response. Thanks you! I agree that these are different frames on the same issues. What I think is interesting is that, if you scratch beneath the surface, many of the people “opposed” to ubb are actual not really that opposed in principle – they just want a fair (reasonably priced) system. So I feel like we share the same core interests. Ultimately I got around to writing the post because the discussion has reduced to “a metered internet is bad” which I think does a disservice to the debate and eliminates an option that could acutally become quite effective. Thanks man.

      Reply
  3. Yeekli

    UBB actually could be a great idea for both ISPs and Consumers if the priced it fairly.

    True UBB should start from 0 GB, and charge based on the usage. For a fair price, how about 15 cents, that is about 1500% profit margin for the ISPs since the cost for them is only about 1 penny. For management and administration, it’s ok to add on top of it with a $5 adminf fee.

    So people who only used 10GB on a month pay $5 admin fee + $1.5 usage + tax = $7.35
    who used 100GB pays $5 admin fee + $15 usage + tax = $22.6
    who used 1000GB pays $5 admin fee + $150 usage + tax = $175.15

    Reply
    1. Cjottawa

      I agree with your pricing model, Yeekli, with one caveat:
      The thresholds would need to have room for “inflation” over time.
      1,000GB is huge now and may be “low use” ten years from now.

      Reply
    2. Octavian Cismasu

      UBB is fundamentally and ethically wrong in the context of the Internet.

      Access to information should not be quantified in any way, especially not in a democratic system based on the respect of human rights and free speech. I should not have to pay more to learn more, nor to express more opinions. Nor should I have to pay more to watch a video from an independent news network broadcasting on the Internet. Nor should I have to pay extra to download a piece of software. Etc. I will pay for *access* but not for *quantity*. I will pay for a higher download speed aka *bandwidth*, but not for *quantity*.

      When you turn on your TV, does your cable provider charge you by the number of bytes your cable box downloads? Do you get charged by the minute when watching TV? By your rationale, if you watch 5 hours of TV/day, you should pay more than someone who’s watching only 1 hour of TV/day. Does that make sense to you?

      Moreover, the Internet is a democratic medium of expression from inception. It does not “belong” to anyone in particular, nor should it ever be the case. It is regulated by various organizations, and that is ok. But for an organization (be it a public or private – like Bell) to claim control over “the lines” is, in my view, a case for the Supreme Court to decide. What’s at stake here is, again, a fundamental right – in a battle that has already gone in the wrong direction for far too long, here in Canada.

      Reply
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  5. Stephen Downes

    Well, I don’t agree with you that the roads should be tolled, and for the same sort of reasons I don’t support usage based billing for internet services.

    But before that main argument, let me reiterate the point made by some commenters, that what has transpired in the era of UBB in Canada thus far is blatant gouging by the ISPs. As reported in the Globe and Mail today, the cost for ISPs is as low as 3 cents per gigabyte, while providers like Rogers are turning around and charging consumers $5 for that gigabyte. They could raise their rate $10 a month, thus allowing consumers an additional 300+ gigabytes a month, a limit that would never likely be reached.

    Additionally, a secondaryt point to the main argument is that the charging of bandwidth fees are in response, not to the cost of providing bandwidth, but rather, their desire to eliminate the competition. ISPs in Canada are content providers as well. So services like Netflix pose direct competition to the content end of their business. So the rates are increased in order to establish an ISP content monopoly. Such conditions are not conducive the creation of new industry, especially in internet content and services, and this will have a double impact when the inevitable happens under the current realm of CRTC-non-regulation and the ISPs are sold to American interests.

    But the main point about UBB, as with tolls on the roads, is that it’s an inefficient cost-allocation mechanism that creates a drain on the economy, with no gain in productivity. The imposition of tolls on roads requires the creation of an infrastructure to collect these tolls. This infrastructure does not produce any wealth; it merely drains it.

    Moreover, it makes the roads less usable. That’s why tolls are actually used only in a few places, on major highways. Anything like an actual toll on all roads would be so cumbersome as to render road traffic entirely unusable. Similar tolls on the internet, which while they may appear to be simple and straightforward, like a highway toll, risk becoming a cumbersome overhead, as providers in our un-regulated and non-net-neutral internet reach special deals with various providers. This means that each stream of internet traffic would be billed differently, which in turn entails an entire overhead for monitoring and managing those streams.

    Finally, because of the overhead, and because of borrowing costs required in order to acquire and establish a UBB internet, the tolls may never actually serve their purpose. Just like highway management companies (or manyother private enterprises that begin as privatizationb but evolve into PPPs) the proprieters will return to the government well for subsidies and additional funding again and again. Like the managers of the Saint John Harbour Bridge toll, they will collect money for 25 years and actually lose ground, the entire total having gone to pay back overhead.

    Reply
    1. David Eaves

      Stephen – I confess being surprised to read this from you. I think the idea that tolls are inefficient as a system is a weird logic – especially when applied to roads! (I’m open to the possibility that they may be inefficient for monitoring internet traffic). But electronic tolls on highways have made the system very efficient, and London’s downtown toll is one of the great success stories of modern urban planning. THat said I can’t speak to the Saint John harbour toll… but when you have a scarce resource you need to find a way to allocate it (or create incentives to increase the amount of it) and I don’t see that part of the discussion taking place.

      I think we are aligned though around wanting a fair price for access – so I’d love for their to be a fair usage based billing rate. Indeed, looking at the Globe article you referenced, that fact was raised by the commentor who talked about the price. Yes, it only costs a few pennies to deliver a gigabyte, but it doesn’t cost a few pennies to deliver an additional gigabyte.

      Scotia Capital analyst Jeff Fan said that if the government tears down the usage-based billing decision, it would essentially break the link between Internet traffic volume and revenues, and could discourage network investments by large telecom and cable companies.

      Mr. Fan added that current estimates – that it costs less than a penny to transport a gigabyte of data, while companies such as Bell want to charge as much as $2.50 per gigabyte when customers go over their limits – may not hold true as traffic increases on networks where there is no investment.

      “Without building more capacity, that math, or that cost-per-bit, probably wouldn’t be sustainable,” Mr. Fan said. “It’s become political, but I’m not sure the politicians have thought things through.”

      Again, I think we are mostly aligned. And I’m open to the possibility that tolling on the internet may not be efficient, but haven’t seen evidence of that yet, and I”m not finding the claim that isn’t efficient for roads persuasive.

      Reply
      1. Stephen Downes

        The London system isn’t exactly an example of usage based billing. It doesn’t measure, for example, how many kilometers you drive, so a fleet-based vehicle making deliveries pays exactly the same amount as a vehicle driving a block into the ring and then parking (actually, the fleet vehicles pay less). Traffic that originates and stays within the zone is not (apparently) billed at all.

        Meanwhile, we could question how efficient the system is. “TfL’s annual report for 2006–7 shows that revenues from the congestion charge were £252.4m over the financial year, representing 8.5% of TfL’s annual revenues. More than half of this was spent on the cost of running the toll system, at £130.1 million. Once other charges were deducted, the congestion charge brought in an annual operating net income of £89.1m for TfL.” http://en.wikipedia.org/wiki/London_congestion_charge Certainly, as a mechanism for *paying* for roads, it would be a miserable failure.

        Moreover, this does not take into account much of the inefficiency that has simply been offloaded. Leaving aside the financial encumbrance of paying the toll (which can be significant – 2,000 pounds for 200 days of work-day travel in a year) drivers must also manage to pay tolls their own way, paying the charge online, by SMS text message, in certain shops, or by phone. If you don’t pay, you have to pay a fine – and a significant percentage of the revenues are based on fines, a testament to how inefficient the payment system is. And if you pay but were not detected as having used the road, there’s no refund.

        Of course, the *purpose* of the London toll isn’t to pay for the roads, it’s to reduce congestion. That’s why it can be so inefficient and still be claimed to be a success. Indeed, it becomes successful by being inefficient, as it forces a higher toll, resulting in less traffic (and I would imagine a significantly different demographic of traffic as well; no doubt it keeps the riff-raff out).

        Now this seems to resonate with what you say: “when you have a scarce resource you need to find a way to allocate it.” Quite so. Economics wouldn’t exist without such a requirement. But there is scarcity, and then there’s scarcity. It is arguable that space for traffic in downtown London was genuinely scarce – you couldn’t alleviate it by building more capacity, do it becomes necessary to regulate it by other means. But bandwidth, it could be argued, is not scarce, at least, not in this way. The current supply of bandwidth is such that it costs only 3 cents a gigabyte to provide. Traffic levels are nowhere what they would need to be in order to justify metered-billing at all, much less the current rates being charged by ISPs.

        It is arguable, therefore – and I would argue – that insofar as there is a scarcity of bandwidth, it is an *artificial* scarcity. It is in the interests of ISPs to ensure that there is a limited supply of bandwidth, in order to be able to justify charging higher rates.

        But even more to the point – ISPs traditionally charged for band *width* – that is, for a pipe of a certain size. That is what I (ostensively) buy when I buy internet access at home; that is what subcontractors literally buy. It was like buying a cable package, or telephone service. It didn’t matter how much or how little TV you watch, or how many phone calls you made, you were paying for the *channel*

        But what has happened is that ISPs started charging more than one customer for the same bandwidth. Using technoiques like traffic shaping, throttling and metering, they could *say* they were selling x bandwidth, but actually allocate less than x bandwidth per customer. This worked fine until customers started to actually use the bandwidth they were paying for. Then the ISPs were caught in their own practices, and that’s where the bandwidth ‘shortage’ originated.

        The suggestion now seems to be that ISPs should be rewarded for this practice. Fair enough; we could raise the cost for band *width* up to what it actually costs to provide that bandwidth. Nobody would complain about that. Except – the rates charged to consumers are *still* well above what it actually costs to provide the bandwidth, 10 to 40 times as much.

        The other argument is that non-UBB would create a disincentive on the part of ISPs to invest in new bandwidth. Of course, utterly anything that increases costs and reduces revenues is interpreted by business as a “disincentive”, so the flat “disincentive” argument is a bit disingenuous. The real question is whether it is *enough* of a disincentive to cause ISPs to cease investing in bandwidth.

        Well, suppose it is. Then we (as a nation) could provide the next bit of bandwidth the way we provided the last bit – by building it as a government infrastructure project (a la CANARIE and similar programs, or via crown corporations, a la the old government telecoms). Because the reason the “additional gigabyte” costs so much more than the current gigabyte is that there was a significant social investment in bandwidth, which was inherited by the ISPs (that’s why a lot of people feel that UBB is to a certain degree a betrayal of trust).

        There was a proposal, in the last days of the Chretien administration, before we got the pro-business Martin and Harper governments, to engage in a national broadband program. As I recall, the pricetag was $10 billion. Cheaper, in other words, than the much less useful F-35 jets. This was shelved when Martin took power, and we never did see the expected expansion of capacity that we expected. ISPs simply reaped the windfall until usage increased. Then they said there’s a bandwidth shortage.

        Meanwhile, ISPs were not deterred from *investing* during this time. Rather, they decided that they didn’t need to invest in bandwidth; for them, it was effectively free (for consumers, of course, it was a rapidly increasing expense). Instead, they borrowed and spent billions acquiring each other. The empires of Bell-Globe, Rogers and Telus were built almost entirely on credit. And it is *that* rtaher than infrastructure that we are being asked to subsidize.

        If the same logic could take place in roads, it would be as though the government game me a freeway system, which I sold to municipalities as 6-lane freeways, but actually delivered 4-lane freeways with a reduction in speed limit to 45 mph, and then borrowed money to acquire additional freeways from other owners (who got their freeways from their governments), spent nothing on the construction of new freeways, and then, when traffic on the freeway network threatened to approach what I was selling it for, demanded that a system be put into place to charge individual drivers for each kilometer they drove (which the entire cost of the metering system also to be borne by the drivers), so I wouldn’t actually need to increase capacity, on the grounds that it would be a ‘disincentive’ to invest in new capacity to do otherwise.

        It’s a very bad idea, and UBB rewards ISPs for some very questionable business practices, meanwhile punishing the taxpayers who basically funded this entire infrastructure in the first place.

        Reply
      2. Tyler Bryant

        In a competitive market investment and innovation help acquire market share and revenues. The competitive incentive forces companies to continually offer better services while pressuring prices down.

        The quote you posted applies under the paradigm that internet is provisioned only through large telecom companies with significant market shares. Yes, there is very little to augment profits at that point beyond per user revenue increases.

        UBB as advocated by the telcos still does not apply well in that situation mentioned above because in other oligopolistic markets that are regulated, the rate structure is set by a regulator to ensure a reasonable rate of return (most specifically in electricity markets). If you want an oligopoly and are concerned about return then just have the internet rates regulated based on a transparent calculation to provide a return. What the CRTC did was just take the rate structure proposed by the monopoly!

        Reply
      3. David Warde-Farley

        The unfortunate truth of the matter is that while the penny-per-gigabyte figure is misleading, the $2.50 per gigabyte is still more than an order of magnitude above cost.

        The real problem is Bell’s chronic underinvestment in new infrastructure to meet demand, partially with the government to blame since they are not subsidizing new fiber in the same way that the original copper networks were. And why would they invest in infrastructure all but as a reluctant last resort? While they are technically in competition with TIAPs the growth of the entire industry is dependent on the big providers as a bottleneck.

        I see two only two real solutions: massive investment in competing infrastructure on the part of third party ISPs, possibly involving some sort of subsidy or massive tax break, or nationalization of the last mile.

        Reply
      4. kensan22

        The main purpose of toll booths is not money. It is a traffic management technic to limit the rate of car entering the highway.
        So let’s build up on that. But first let me correct some misconceptions :
        1-Data is unlimited/infinite it grows all the time.
        2-Internet is not a scarce resource per say (meaning I can’t exclude from it and me)
        3-Bandwidth is a RATE how much data over time.
        which mean : Internet is not a cake that we must split. It is a network of networks of networks interconnected and the only sane metric for access since the quantities of data are infinite is not the how much data we put or take from it. It is how fast we can do that -> BANDWIDTH.
        See, bandwidth is a scarce/limited resource. Me hogging bandwidth will exclude you indeed. Which is why we have/had and will have BANDWIDTH (56Kbps, 7Mbps ..etc) caps from the start. That is what we actually are paying for and subsidizing one for another. More the ISP has customers the less it should cost individuals but that’s something we don’t have to deal with the market does just that.
        Saying that X downloading Y GB is free rinding on Z downloading only Y/10 GB is non sense. On the other hand saying that X is downloading at Y GB/s is free rinding on Z downloading only at Y/10 GB/s might make sense (in some context).
        So see the economic excuse for UBB doesn’t really stand her.
        Congestion one might argue ? Well, the toll analogy.
        The toll on highway is there (to make money in the process) to manage traffic by reducing it. How? one might ask. Simply by imposing a fee to get on the highway so there are less cars which mean less congestion. Why not do the same with the internet? After all less data on the network => less congestion. Yeah might work, but let’s see it from an other angle.
        Why is there congestion on the highway to begin with? Cars are entering faster than they’re exiting. Hence the Toll booth reduces the RATE of cars entering on the highway thus reducing overall number of cars. Back to the internet, don;t we already have something similar? Say bandwidth cap? Yes indeed we have that.
        But we still have congestion?
        Well that means : either the network is really a mess. Or Simply Capacity is oversold. In highway terms : Build bigger/more access ramps to the same old 2 lane highway which is limited to 100Km/h.
        Which actually bell did 3-4 years ago. While Throttling traffic saying the network is congested they went up from 5Mbps to 7-8Mbps.
        Again UBB fails.

        Reply
  6. Neil Ernst

    I think you mean “usage-based billing”, although user-based makes sense too.

    The underlying problem is that there is no fair market for internet service in Canada. After all, with some exceptions, government owns the roads we drive on and the electrical infrastructure for powering our devices. I think, particularly in light of happenings in Egypt, we are shifting to a recognition that internet access is as essential as electricity. The question we have to ask is whether Rogers, Bell et al. are who we want to keep that network running.

    Reply
    1. David Eaves

      Neil – great catch re usage-based billing – am going to edit asap.

      Think your point about Egypt is particularly poignant but for the opposite reasons. It is very, very unclear that you want the government running the internet. If the Egyptian government had exclusive control over access in Egypt it would have been easier still for them to shut it down. Indeed, the only reasons the internet in Egypt didn’t get totally shut down was because one of the private sector ISPs kept operating (only was only serving a very small percentage of people sadly).

      Reply
      1. David Warde-Farley

        Private companies in charge of the Internet networks and the cellular networks didn’t stop the majority of Egypt going dark. So your counter-argument is bunk. The private sector ISP that did keep operating did so with the government’s blessing, from what I understand, mainly because they operated the Egyptian stock exchange’s website and other infrastructure.

        Reply
    2. Andrei Tokarev

      Thus lies the problem:
      We have a so called *duopoly* in our ISP space where Rogers, Bell, Shaw and Videotron take turns at eliminating their closest competitors in their areas of influence. And, let’s not forget that until recently, except for those mentioned, you couldn’t do “the last mile infrastructure”. I’m disgusted how the new condos sold in the city of Toronto come with only one provider allowed (looking at you Rogers). Nobody here argues that the access should be free – it has to be fair and balanced. Unfortunately, given the track record of the said companies, we have not seen any improvements in their infrastructure and that’s despite of constant price increases for a lesser product(Bell comes to mind here). We need a real competitive market where the back door deals such as this one cannot be made possible,and the tiered pricing is dictated by the market. Hopefully, we’ll come to the point where the Internet access is considered a right like it is now in Estonia. EU.
      Here is to the better future.

      Reply
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  8. Harley Young

    An issue with UBB that seems to be missed here is this: the smaller ISPs who suffer most as a result of this ruling do not actually provide internet content to subscribers using the same “pipe” that the incumbents use. Some infrastructure is shared, but TekSavvy (for example) actually buys internet access from companies like Peer1, Cogent, etc. So, the 200GB that a TekSavvy customer transferred to download Linux images, have her kids watch a bunch of NetFlix movies, watch a season of Dexter from iTunes, and stream internet radio for a few hours a day isn’t coming out of the imagined pool of finite Bell internet capacity, and could be routed in a way to take additional load off Bell infrastructure.

    Michael Geist has a more detailed explanation of the architectural components that comprise Bell’s Gateway Access Service (GAS) — a service used by companies like TekSavvy as a foundational piece of their offering: http://goo.gl/PIETa

    The Vaxination petition to the CRTC includes some drawings (page 5) of the arrangement: http://goo.gl/qsDpq

    Reply
    1. David Eaves

      Hey Harvey – agreed, which is why I don’t support the current arrangement and have made several proposed modifications. The question is, can we create a #ubb system that works (encourages competition, creates competitive prices?). Mostly… we need a digital economy strategy, feels odd that no one is holding the minister’s feet to the fire over that.

      Reply
      1. Octavian Cismasu

        We already have a #UBB system in place that makes some amount of sense. It is implemented via bandwidth caps, as in “download/upload speed caps”. Plans offering a higher bandwidth cap cost more. It is certainly a fair approach.

        However, the current #UBB debate is about data usage billing. Read again: DATA usage. As in quantity of downloaded/uploaded data. It is an additional #UBB policy whose effect would be detrimental to (at least) the following:

        – competition in the ISP market, as it imposes a business model to Bell’s competitors in an area where there should be no such regulation (the last mile)

        – businesses using the Internet, as it would directly impact consumer behaviour vis-
        a-vis services using the Internet as a medium for distribution

        – equal access to information, as it would favour the wealthy

        To answer your question: No, the current #UBB measure cannot be made to work. The ministry and CRTC should go back to the drawing board and re-think the strategy that will foster competition and fairness in this industry.

        Reply
  9. Tim MacKay

    Thoughtful post.

    When I initially heard about the UBB issue being passed, I was alarmed. It sounded terrible because I am used to being gouged by the Canadian communication giants. So mine was an emotional reaction.

    I have been living part time in Canada and Taiwan for the last several years and have seen that every communication cost in Canada is far higher than that in Taiwan. High speed no-cap internet access is about CAD$12/month for example. Taiwan is no backwater, with obviously lower costs but likely more competition.

    It’s hard for any Canadian to trust the big comm or for that matter the CRTC who have been unable to control these companies.

    I see your argument that we must encourage providers to expand capacity and that one of the methods might be to charge usage based billing. But relying on these companies has been part of the Canadian problem in the first place.

    The government response may be right even if it has been a knee-jerk reaction. Because if the already high rates for internet access continue to rise (and they would undoubtedly with UBB for students, academics, businesses and families), then likely more Canadians will choose to go without.

    The response by the government is clearly only a short term solution. I like your suggestions on long term solutions. But politically, I don’t think we’re close and the regulator has just been weakened.

    Reply
  10. Mack D. Male

    UBB would be a whole lot easier to swallow if ISPs made it possible for customers to see how much data they are using each month. It’s part of the transparency angle that you touched on – show us how much it really costs you, and help us understand how much we’re using (and the trend, that we’re using more). Without that information, it just looks and feels like price gouging.

    To me the more important part of this debate is Canada’s global competitiveness. We already have expensive Internet access compared with many other countries in the world, and UBB would just make a bad situation worse. Toll roads and UBB are difficult to compare, but since you have, I’ll just say that accessible, fast Internet access will help us be competitive far more than toll-less roads will.

    Reply
    1. Anonymous

      You certainly don’t want to rely on the bandwidth useage supplied by your ISP. When I was on Rogers, they ALWAYS “accidentally” bill me too much use, which weirdly put me over the cap. I’m talking 10s of Gigs in many cases..

      My router had an excellent measuring tool and I had to call every month and get adjusted.

      Reply
  11. Luke Closs

    Remind me to charge you next time I drive you home David. I think $65 per ride should cover my costs plus provide some incentive to keep my vehicle in good shape and maybe even get another better vehicle in a few years.

    Reply
      1. Nik Garkusha

        Sounds like you just answered your own question: “what incentives do internet providers have to improve capacity?” It’s competition. Want to stay in business? Innovate! Provide value to your end-users, and if you’re an ISP that throttles service OR don’t provide fixed-fee internet, your users switching other providers is a damn good reason to invest into better infrastructure & innovate. I understand that for many smallers ISPs who resell bandwidth it’s more or less a zero-sum game… so this scenario doesn’t quite apply to them. But for large telcos that have fat pipes, but who are not agile with their services and whose business models are a bit outdated (say Netflix compete) — this is a wake up call, IMHO.

        Reply
  12. Michael

    The problem with the UBB and CRTC is that it is not about the end customer. The UBB ruling applied to other ISPs who used Bell et. al. to provide connectivity to their customers.

    The end result was a knock on effect where ISPs like Teksaavy suddenly had to change their plans to be in line with what Bell et. al. were charging. That is an anti-competitive move.

    Nobody is forcing Bell et. al. to give away their bandwidth for free or not institute bandwidth caps now, nothing that is, outside of competition that provides an alternative to them.

    Hence why a lot of the ISPs had bandwidth caps on their accounts for a few years but only sporadically enforced them. They KNEW that if they would implement this full scale they would bleed customers like no tomorrow to the competition who is not trying to subsidize it’s other business ventures by charging imaginary overage fees .

    As the CRTC says themselves, they are NOT regulating end-customer Internet services, they only regulate the “wholesale market”. And in there UBB IS bad news.

    We will see if the Government does overturn UBB or not, if not I would like to see the ISPs forced to use the monies they receive from UBB to be invested into upgrading infrastructure, not to use that money to prop up other parts of their businesses.

    Reply
  13. Luke Closs

    David what is disappointing about this post is that you’re arguing at the theoretical level, not the practical reality.

    In theory, UBB is totally fair. We use it in lots of other places, like taxis and electricity. Nobody has a problem with this concept. In fact I would argue that today our ISPs already do this – for the most part we don’t have truly unlimited plans. I get 200 gigs from Teksavvy and I need to pay if I use over that. Rogers has “lite internet” and regular internet packages that provide different levels of service.

    The problem with the CRTC decision – and why it’s not “right” at a practical level – is that the charges it approved are massively out of line with actual costs. If teksavvy was charged %15 above the real, actual costs of the very limited part of Bell’s infrastructure that they use, this would be much more tolerable.

    So sure, UBB is “right” theoretically, but the implementation is atrocious. This is what people have an issue with.

    Reply
    1. CJOttawa

      I’d planned to write a direct response to David’s post but you did that job for me. I’ll add just these points:

      “The difference between reality and theory is, in theory, there’s no difference between the two.”

      Dave argues “where’s the incentive for telcos to improve infrastructure?”

      I counter with:
      – who paid for the infrastructure in the first place?
      – were there tax incentives to Bell/Rogers to build ANY portion of their infrastructure, at ANY point in time?
      – are there continuing incentives of any kind (corporate tax breaks) to Bell/Rogers for maintaining and/or improving their infrastructure?
      – are there any incentives for Bell/Rogers to be *more efficient?* (delivering services at a lower cost through)

      I suspect Bell has received more than its fair share of indirect subsidies. Pigs get fat and hogs get slaughtered.

      Reply
  14. Kevin Jones

    Hi David.

    I really don’t believe that the big issue here is bandwidth – the issue is the constant anti-competitive behaviour of Canadian telco companies. I have trouble thinking that bandwidth had much to do with their decision to enforce UBB. Rather, there are two reasons I think played a much larger part. (a) netflix is meaning people are cancelling their cable, and (b) people are switching to independent telcos.

    Of course, nobody can really prove that those are the reasons. It’s just terribly coincidental that netflix came out in Canada a few months ago.

    The way the big telcos in Canada deal with competition is rarely to offer a competitive product, but instead they squash their competition and try to force them out of the business altogether. This is something we saw a couple years ago when Novus started offering their service in Vancouver. Novus offered an amazing service that was much better than the only alternative, Shaw. But instead of competing with Novus and improving their own service, Shaw created a deal where Novus customers could switch to Shaw and pay something ridiculous like $10/month. The only purpose of that kind of pricing was to destroy Novus as a company.

    If there truly are people demanding to have unlimited speed and unlimited limits, then I agree with you completely, you can’t have both. But I’m not in the unlimited speed camp, and I haven’t heard a good argument against some form of throttling. All ISPs offer different speed packages at different prices. I can’t imagine how anyone would disagree with being throttled down to the speed you pay for. If I pay for 7mbps, I should get 7mbps, if I pay for 20mpbs I should get 20mbps. If shaw can’t actually provide that bandwidth and they’re losing money over it, then they should stop offering it as a service. But then I wonder if we’re conflating throttling with traffic shaping and net neutrality? or maybe I’m misunderstanding your argument.

    Anyway, the issue with the CRTC decision is that it gives more power to telecom companies to control the pricing of their competition. $2/GB is insane and 60GB as a monthly limit is really low for even moderate internet users, but my issue is not that shaw is being crazy with their pricing, they should have the right to charge what they want. I just need to be able to say “goodbye” to them, and with the CRTC’s decision in place, I think it would be much harder for me to find an alternative. I think this issue really reminds Canadians of the CRTC’s previous decision, to prevent globalive from starting WIND, the new mobile carrier. The CRTC keeps making decisions that appear to prevent competition in Canada. Why is that? and it’s not because of bandwidth. Now thanks to Tony Clement (and I do not vote conservative), we have two new players in the mobile industry that are really changing things for the better.

    So, optimistically, I think that in the future, we’ll solve the lack of competition with much cheaper 4G infrastructure, so that at least in big cities, creating a new ISP will be as simple as putting up a few cell towers.

    Reply
  15. Laurel L Russwurm

    Your statement that “you can’t (responsibly) be against both internet throttling and usage-based billing,” is simply wrong.

    Bell’s version of “throttling” consists of deliberately impeding traffic, which actually artificially inflates use. Worse, they use DPI to discriminate against specific traffic.

    When you add UBB to throttling, the result looks very much like fraud. Which is why the American ISP Comcast was slapped down by the FCC when they did it.

    Because it is such a difficult issue for non technical people to grasp, I’ve written three posts to explain it on my public service Stop UBB blog: “This is How Throttling works”, “Throttling PROVES that the Internet is NOT congested” and “C: Deep Packet Inspection.”
    [ the latter employs graphics ]

    Certainly there is congestion. If you were using a 15 year old computer you would find it much slower than the one you use now.

    Non-discriminatory traffic shaping (slowing everything down, rather than singling out the traffic you don’t like) is the accepted practice in parts of the world where citizen privacy and equality is valued.

    Far from being a genuinely scarce resource, technology is getting faster and storage capacity is increasing while costs drop. Had Bell upgraded the infrastructure to leading edge five years ago it would have much more than it would cost to day for much less.

    I remember when my sister’s 2 gigabyte hard drive was unimaginably large. Today you can get a 2 Terabyte drive for around $100 and a 2 GB flash drive is barely adequate for my kid’s school work.

    Canadians have been paying inflated costs all along that more than pay for infrastructure maintenance and upgrades, yet if there has been any of the latter I’ve not heard a peep about it. So long as the CRTC allows Bell to charge the customers of their competition UBB there certainly is no incentive for Bell to increase capacity.

    The second thing so clearly misunderstood by so many people is the erroneous “bandwidth hog” idea. (“Usage Based Pricing: Why The Buffet Analogy Doesn’t Work” and “There are no bandwidth hogs”)

    UBB is an additional cost added to an already profit generating price structure. Actual usage costs range from less than a Canadian penny to possibly as high as three cents/GB. Yet the big telcos want to charge a range from one to five dollars per gigabyte.

    The Independent ISPs have contracted for finite blocks of bandwidth. They pay Bell what they have contacted for — prices set by Bell — for these blocks of bandwidth. Bell has no business knowing how the wholesalers divvy it up.

    UBB is a bonus that will be paid to Bell in exchange for providing nothing. Zero additional value. Without, say, even having to upgrade.

    Reply
  16. Luke Closs

    David do you support usage based billing for your home Airport wifi access point? Should you pay for that based on how much you use? Should you pay extra to use it to play music streaming from your laptop? It’s only fair that people that use it more should pay more for it. Linksys or Apple is missing out revenue because of freeloaders like you.

    Reply
      1. Sender_the_playa

        not wrong… just live outside of the bubble you live in. There are a few other countries that have limits but they are upwards of 250gig… and their networks are a lot faster than ours…. 50mbs etc

        YOU ARE WRONG

        Reply
  17. ProudCanadian

    I know I’m late to the game, and honestly didn’t read all the comments, but I’m going to throw my chips on the table as well…

    Some others here have mentioned that it’s about very little competition and therefore the teleco’s don’t have to justify their UBB billing, and that they put ridiculously low monthly caps on their service. This is all true, but you notice that I haven’t mentioned anything about the CRTC here?

    Technically, the CRTC upheld the laws that were spelled out in the Telecommunications act. Specifically the part where no one can be put at a major competitive disadvantage. By letting Bell charge the same to GAS customers as retail customers, Bell is making sure that the GAS customer prices are just as unappealing as their own….This is Bell manipulating the system. The CRTC decision also said that Bell could set the pricing this way, not that they had to (but really, do you think they wouldn’t if it meant an extra dollar?).

    So why is everyone so upset at the CRTC? Bell manipulated the system so that they could charge the ridiculous prices that they set for their customers. Shouldn’t everyone be upset at Bell?

    This also brings up the question of why everyone is begging the government to regulate their internet services (wanting gov’t to reverse the CRTC decision) instead of flipping Bell the finger and going to an alternate (Rogers/Yak) or by sucking it up and going without the luxury of the internet? I’m sure that if enough people spoke with their wallets, then the prices/caps would get looked at and more than just a handful of heavy users would benefit. Instead, a handful of heavy users will benefit again from the CRTC’s ruling being overturned. Those Bell retail customers are still going to be stuck with the very low monthly caps.

    When will Canada learn that if we keep running to our parents (the Government) when the bully (a big corporation) takes advantage of us, nothing will change. But if we stand up against the bully, on our own, then we can make Canada be what we, the people, want it to be.

    Reply
  18. Quantumfluxx

    The problem with your argument is that you are trying to make it seem like all the light Internet users are paying for the usage of us evil fiends who transfer 300gb in a month. It’s the same argument the CRTC is using and if people actually thought about it, they would realize that UBB will NOT lower their monthly bills WHATSOEVER. They will still pay the same price they are paying now, only if in 6 months that household makes the decision to subscribe to netflix, the ONLY thing that will happen is their bill will go up.

    This is not proper usage based billing, and this is only one of several points I wanted to say.

    Reply
  19. James Connolly

    if all roads are toll roads would that encourage more creative road development? would that encourage more creative and innovative transportation alternatives to using roads? would there have to be tolls on trains and planes as well?

    is security on the internet a response to hackers or are hackers responding to increased security on the internet? when a certain portion of the populace is told do not do that they promptly go out and do that. that is part of human nature. how long will these UBB systems be up and running before some one finds a way to by pass it?

    has the cost of delivering a GB of data gone up or down in the past 30 years? 20 years? 10 years? 2 years? has the cost of making movies gone up or down in the same time? has the cost of delivering TV gone up or down in the same time frames? has the method of delivering movies and TV remained the same in the the same time frames? after spending billions on expanding networks telcos and cablecos still have billions left to distribute to shareholders. where did all that money come from and where did it all go?

    is it time to rethink how the internet is built and how it is funded and how it is used and how it is accessed?

    Reply
  20. bentrem

    Do pundits intentionally obfuscate? It sure feels like that.

    I take a cab, I don’t pay bus fare.
    You take a bus? You don’t pay cab fare.

    *d’uhh*

    Reply
  21. Mark

    David,

    I agree with your points (on internet, not roads) but I think there’s a few additional details that need to be out in the open. Because we have bandwidth limits on most consumer internet connections from the major ISPs, we already have a form of UBB in place today. Today, I pay $0.56/GB for my internet via Rogers. If I go over my agreed allotment, that rate jumps just more than double to $1.25/GB. By my current agreement, my allotment of 125GB/mth will be provided at speed _up to_ 25Mbps.

    I believe there’s two major factors in play here.

    1) the major ISPs (the Rogers/Telus/Bells of the world) have over-provisioned their services. In the race to outdo each other they’ve kept prices steadily increasing (which benefits all of them) but have tried to win customers from each other by offering faster access speeds and large bandwidth allotments.

    It’s during this race that they’ve far outpaced the capacity to deliver these services. Netflix–which has already been mentioned–is proving to be the tipping point. Clients are finally using their bandwidth allotment. Access speed has always been sold with the * and in the fine print it indicates that speed will vary and the advertised rate is the theoretical maximum. But the bandwidth allotment has always been sold as a hard number. No conditions attached to it other than the overage charges.

    Now that clients are using what they’ve been sold, the major ISPs are rushing to add capacity which is going to require a substantial investment. I believe that the major ISPs are hoping that UBB slows down the rapid increase in demand for bandwidth long enough for the rollout of extra capacity to support what’s already sold and what will be requiring down the road. In addition it sets the precedent to increase overall revenue by getting consumers used to the concept.

    This is similar to the net neutrality debate and the inroads that the “social networking” data packages have made for wireless. In that case there is no difference between bits from Facebook and bits from http://www.gc.ca but they are billed completely differently. Why? The wireless providers (who are the major ISPs) know that we’ll pay for access to certain sites and this sets the precedent for more strata in the future.

    This ties into the 2nd factor in play here.

    2) it’s a substantial conflict of interest having our primary internet providers also provider telephony and TV services. This starts to cross into net neutrality territory but I believe it’s pertinent to UBB. If /GB are in effect at substantially higher rates–which what really has everyone up in arms–the opportunity exists for the major ISPs to simply not count their services against your bandwidth usage.

    This already happens today. Rogers Home Phone service–VoIP–uses your Rogers internet connection to provide telephony services. It doesn’t count against your bandwidth usage. If you use a 3rd party service (e.g., Vonage, Skype, or Primus) it does.

    Not having to pay bandwidth usage for a TV or telephony service would provide a hefty at a competitive advantage.

    What we need is justifiable UBB (similar to existing /GB rates in todays packages) and major ISPs who are only ISPs. If they only provide internet connectivity we would see them make every possible move to encourage us to use more bandwidth, not less.

    Reply
    1. PeterT

      “it’s a substantial conflict of interest having our primary Internet providers also provider telephony and TV services.”
      I agree, and Europe understood that, so the ISPs can’t own both.
      The problem is much bigger then most even understand, the net neutrality bill passed in the US, has nothing to do with net neutrality. It’s bill is designed to put the end to Internet as we know it. Monopolies cannot exist without government support, thats where the problem lies.In a free market system this would never be an issue, they must offer what people want at a reasonable rate or go away for ever.We need to bring back some capitalism into the system or we are all doomed. For that to happen we need a political party that supports capitalism and not their own self interest.This is a call to all Canadians who vote for the big three polital parties your only to blame..

      Reply
  22. blackbane

    BULL! Look if you cap use you are effectively forming the future direction of the internet. We are going to use MORE and more and more data going up at alarming rates every year. Blue Ray wont happen because the internet will replace it. All games will come on the internet. TV everything. EVERYTHING will come on the internet. Not 10 years from now. but in the NEXT YEAR. Our society is changing now. You cannot cap it when its just starting to kill the old paradigm that the telco’s are invested in. We need to stop this now.

    Reply
  23. GLC

    Being very passionate about this issue I have read a lot about what is being said. I read your post with interest; I read every single response with interest. I read the G&M article you suggested with interest and I read the comments there too with interest. The most interesting of all the comments I read in the G&M was a little tid bit left out of the article itself.

    Readers of this blog know David Eaves and generally who he is, who he represents and why. I found it interesting that the author of the G&M article is listed as a professor at Ottawa U and former vice-chair of the CRTC…..then I dug a little deeper

    From his bio at http://www.socialsciences.uottawa.ca/api/eng/profdetails.asp?id=355 it also seems interesting that Prof. French “Upon leaving public life, he held several senior executive positions in the private sector, including vice-president of Bell Canada…”

    His bias is showing a little too much to give him much credibility… In my eye its total bullsh*t…if you’ll pardon my “French”
    ;-)

    Reply
  24. Octavian Cismasu

    My comment be thoughtful or not, I only want to say this: open up the last mile lines. Unless Bell proves it owns them (legal and rightful ownership, not technological ownership), they should have no right to control them.

    Let us look at France (amongst other countries). Take free.fr (http://free.fr) for example. It’s one of the ISPs that emerged after the French government decided to open up France Telecom’s last mile infrastructure. free.fr was a pioneering company in France, in that it paved the way for others to follow in its steps. Today, there are about a dozen ISPs in France and they each implemented their packages and offerings, stiffing up competition in the market.

    For those who DO read french, I encourage you to explore free.fr’s site directly.
    For those who don’t read French, here is a short round-up of the services included in free.fr’s *basic* package (at 29.99 Euros/month) :

    1. Broadband access up to 28 Mbps (ATM)
    2. Hotspots FreeWifi
    3. WiFi MiMo
    4. Router
    5. Mini Switch
    6. Freeplugs – they allow you to build a home network using the power lines in your home
    7. Fixed IP address
    8. IPv6 Address

    9. Phone line with more than 30 customizable services: voicemail, call-display, forwarding, lots of advanced options, etc. etc.

    10. Unlimited long distance calling to metropolitan areas in France and 103 countries

    11. TV over ADSL: access to 422 TV stations (182 included in the basic package)

    Again, it’s all included in the *basic* package that costs 29.99 Euros / month.

    (funny enough, if you go to the free.fr site, you won’t see this price anywhere! weird, no? if you look at the HTML source of the page, it’s there… Care to speculate as to why would the price be hidden when accessing an ISPs site from an IP outside the country where it offers service?)

    I am giving this example to show how much it can change to have proper regulation in place. France went from a state owned FranceTelecom charging users by the minute for all local phone calls to about a dozen ISPs fighting for customers with packages all similar to the above. In Canada, we can only *dream* about the features in those packages. Unless we wake up and speak up.

    So, this UBB discussion needs to shift away from the ‘internet access = limited resource’ standpoint. Labelling the Internet as a resource, the notion of ‘pay for what you use’, do nothing but make Bell’s arguments stand. Bell *wants* you to perceive the Internet as a limited resource. Bell does not want, nor does it have any interest to invest in their infrastructure, because there is simply no market pressure for them to do so. And they want to keep it that way. Status-quo is the name of the game. The same goes for all others: Rogers, Shaw, Videotron. They are each happy with their piece of the pie and do not want any more competition. To please investors and to keep making more profits, they obviously need to invent all sorts of schemes to generate additional revenue. Hence, UBB. They got you used to think that UBB is ok, because bandwidth caps already exist. Today, they want to get you used to the idea that downloading more than 25GB a month is too much. I hear “justifiable UBB” is ok? Where does that bandwidth cap figure come from, anyway? 25GB must be the “sweetspot” that statistically speaking will allow Bell to grow profits (continuously) over time, without pissing off too many people. And don’t forget, Bell will gladly reserve their right to change that 25GB cap to 30GB in 10 years from now, for a small price difference, to show how great a company Bell is to increase the bandwidth cap on its already, “bandwidth handicapped” customers.

    The CRTC, as a regulator, has to break this monopolistic ‘congregation’ of companies up into pieces – Bell, Videotron, Shaw, Rogers – in order to open up the market for ISPs and telecoms. That, and that alone will benefit the end user, online businesses, ISPs and mind you, might benefit Bell a whole lot more in the end.

    So why won’t the CRTC push for such a bold move? I would speculate. But no, that serves no purpose. Let the speculators do the speculation.

    I thank you, David, for engaging in such a great debate.

    Reply
  25. Kisai

    This is how I think things should have gone:
    Connection Plan A (Conventionally known as “Unlimited”)
    1. Pay for the size of the pipe in UP and Down(1Mbit to 1Gbit) (Real cost about 4$/Mbit)
    2. ISP throttles the connection speed to the purchased rate. Users can run whatever they want on it, but will be throttled down to this speed.

    Connection plan B
    1. Pay for an “open” connection speed. So whatever speed the physical connection is capable of (100Mbit for cable as an example) is provisioned, and the user is responsible for their own traffic management, and are free to run anything they want on it.
    2. Pay for bandwidth by the GB over the first 1GB at a real cost ( the real world cost is closer to 0.012$ per GB, yes 1.2 cents) or in blocks of 100GB at discount.

    Rogers plans, currently are a cost per MB for their wireless devices (5 cents per MB) 1/10th their cable (5$ per GB). What’s interesting is that the both Rogers and Bell, reduced their caps, but Shaw and Telus have not. I am curious why this is. Did Rogers and Bell see this decision coming?

    Anyway the Wholesale decision is a joke, because Teksavvy doesn’t “resell bell”, Bell instead wants to charge Teksavvy and other small ISP’s by the byte for data that goes between the customer premesis and the POP. Now this is clearly a move to crush the competition by making false claims about congestion. If it was really about congestion, then it’s Bell’s fault for over-provisioning. Billing the ISP directly is about eliminating competition (did you notice the subsequent reduction in bandwidth caps?) and price gouging these heavy users since now they would be collecting their heavy usage regardless.

    It may be a “right direction” for Usage based billing, but the rate should be regulated and adjusted downwards yearly. Which means that all ISP’s have to agree on what this UBB rate should be, and not be able to discriminate between residential, commercial, data centers, etc. eg I should be able to buy a 10Mbit line from Rogers, and pay the same amount for the bandwidth in my home as I would by having it at a iWeb in Quebec.

    Reply
  26. Cory

    I have read that Internet can be provided over hydro lines. If this is correct, it sounds like a great way to bring in a new competitor?

    Reply
  27. Omega

    You don’t measure network strain in data transmitted over a billing cycle. Someone who downloads 60GB over 30 days only presents a rate of flow of 24kBps for those 30 days. Roughly a 30th of the maximum capacity of most internet connections in Canada.

    The metric of blaming people for being “too heavy” of users falls apart even more the further we test UBB with actual figures. Google is a big help in doing the math, but if you want more info, I’ve collected it together here: http://tinyurl.com/UBBExplained

    Basically, usage based billing is a non-technical solution to a technical problem that doesn’t exist.

    Reply
    1. Omega

      Keeping my “solution answer” separate:

      The real thing with internet in Canada is first that we can’t just charge more and more for it the faster it gets. Under this premise, we’d see service prices in the hundreds of dollars because “well, it just keeps getting better”. This creates a kind of inflation that frightens me.

      Like all technology, new levels of service are going to slide into price brackets as Moore’s Law ambles along. This is the same for processors (a $100 CPU today is vastly superior to a $100 CPU yesterday, a $200 Wii today is better than a $200 GameCube yesterday). In technology, this is an accepted phenomenon.

      An internet connection is only one thing: Potential for data transmission. That is it. You mustn’t look at the data, you mustn’t analyze the data. You must simply take the packet and route it accordingly. Anything above and beyond that and the ISP is basically fishing for excuses to feel special.

      The real service in internet – like with computer hardware – is going to be pushing the envelope at the high end, adding value to the mid range and delivering a stable low range.
      It’s in customer service and it’s in reliability (improving service uptime) and keeping latency low.

      With this in mind, we already know how to determine a “heavy user”. A “heavy user” is someone who uses up so much bandwidth (correctly defined), that they are forced to buy a faster service, or live with what they’ve got. Not have it forced down on them.

      You see, if I buy a 1mbit service from an ISP, I can’t magically break out of that limitation and start using 2Mbit. I’m only ever going to be able to move those packets out of my ISP at 1Mbit/s.

      The rationale behind UBB attempts to define network usage in reductionist terms. You get big numbers that are easy to scare people with. As my earlier example stated, I can transmit 60GB and end up manifesting as so light a load some might say I may as well not even be a subscriber.

      The solution is to ban the measure of network strain by data transmitted over a billing period and stay the course. We already pay for internet connections, it’s not like internet access was free before UBB. Quite to the contrary, even without UBB, Canada ranks very low in terms of price/bandwidth (defined correctly) globally.

      So what are we trying to accomplish by making this worse?

      Reply
  28. Reilly Y.

    david – you’re starting out with a lot of assumptions about the efficiency of markets, and therefore misdirecting your argument: the crux of the issue here is the way the distribution of power and privilege is affecting outcomes, in this case in the telecommunications sector.

    first: i was going to get into the issue of increased fees being necessary for investment, but it seems like stephen downes has adequately tackled this issue above. in our upcoming report on net neutrality, we’ll also take on this question of just how great or unmanageable the need for more infrastructure really is – the increased needs can be met with historically continuous levels of investment. and i love kevin jones’ points above too – the idea that this is all happening to create an incentive to make a better internet for all of us is misguided, at best.

    next: your list of suggestions is for the most part helpful, but how do you propose to address the disproportionate influence that bell et. al. have had on the regulator? that needs to happen before we’ll see telecom policy in the public interest, or even anything akin to the list you’ve got here.  it’s easy to critique something for not having enough nuance when you’re not in the position of organizing a movement against entrenched interests. 

    how do we have zero throttling and unlimited fixed fee internet access? in a purported market economy, like the one we live in, we could start with functional separation and increased competition from smaller providers, which have led to unlimited plans and faster speeds around the world. for that to happen though, we’re going to need a concerted effort to change the trajectory of the regulatory policy. resolving the dilemma of better infrastructure and cheaper services definitely isn’t easy in our world – but if canada keeps going the way it’s going, we’ll be left even father behind countries that are looking at more innovative and systemic solutions. (for a refresher for people who haven’t thought about the wireless issue in a while: http://www.cbc.ca/technology/story/2008/09/04/tech-profit.html). simply settling for UBB as a demand management system is both anti-innovation and anti-equality.

    in a different world, the internet would be public infrastructure (cf. stephen downes). if i had time to go on at length here, i’d like to critique your assumption that we should distribute this resource (or any resource) based on ability to pay, though i appreciate your nod to a basic free amount in an “ideal world”. as you mentioned in your article on wikileaks, we need to be suspicious of those kinds of assumptions, the ones that simply support a status quo in which we’re the privileged parties…but that’s a conversation for another time :)

    Reply
  29. Karl Fogel

    No argument here — I think you’re right on, David. We can’t pretend there’s an infinite supply of something there’s not an infinite supply of, and content-neutral usage-based billing seems like the obvious answer. I’m not sure why people object so vociferously to this idea. Just because something’s a public good doesn’t mean it costs nothing to supply :-).

    A while ago I wrote a tongue-half-in-cheek proposal for billing based on the square root of the usage level. It’s good to flatten the curve (square root is as good a function as any) so that you don’t have to be rich to exchange large amounts of data once in a while. But it’s still necessary that the expense grow with the usage: it doesn’t have to be linear, but there has to be *some* correlation or the pipes will be utterly clogged with video spam. For what it’s worth:

    http://www.rants.org/2010/12/09/hold-that-outcry-charge-by-square-root/

    Reply
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