Tag Archives: ubb

How to Unsuck Canada’s Internet – creating the right incentives

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This week at the Mesh conference in Toronto (where I’ll be talking Open Data) the always thoughtful Jesse Brown, of TVO’s Search Engine will be running a session title How to Unsuck Canada’s Internet.

As part of the lead up to the session he asked me if I could write him a sentence or two about my thoughts on how to unsuck our internet. In his words:

The idea is to take a practical approach to fixing Canada's lousy
Internet (policies/infrastructure/open data/culture- interpret the
suck as you will).

So my first thought is that we should prevent anyone who owns any telecommunications infrastructure from owning content. Period. Delivery mechanisms should compete with delivery mechanisms and content should compete with content. But don’t let them mix, cause it screws up all the incentives.

A second thought would be to allocate the freed up broadcast spectrum to new internet providers (which is really what all the cell phone providers are about to become anyways). I’m actually deeply confident that we may be 5 years away from this problem becoming moot in the main urban areas. Once our internet access is freed from cables and the last mile, then all bets are off. That won’t help rural areas, but it may end up transforming urban access and costs. Just like cities clustered around seaports and key places nodes along trade networks, cities (and workers) will cluster around better telecommunication access.

But the longer thought comes from some reflections over the timely recent release of OpenMedia.ca/CIPPIC’s second submission to the CRTC’s proceedings on usage-based billing (UBB) which I think is actually fairly aligned with the piece I wrote back in February on titled Why the CRTC was right about User Based Billing (please read the piece and the comments below before freaking out).

Here, I think our goal shouldn’t be punitive (that will only encourage the telco’s to do “just enough” to comply. What we need to do is get the incentives right (which is, again, why they shouldn’t be allowed to own content, but I digress).

An important part of getting the incentives right is understanding what the actual constraints on internet access. One of the main problems is that people often get confused about what is scarce and what is abundant when talking about the internet. I think what everyone realizes is that content is abundant. There are probably over a trillion websites out there, billions of videos and god knows what else. There is no scarcity there.

This is why any description of access that uses an image like the one below will, in my mind, fail.

Charging per byte shouldn’t be permitted if the pipe has infinite capacity (or at least it wouldn’t make sense in a truly competitive market). What should happen is that companies would be able to charge the cost of the infrastructure plus a reasonable rate of return.

But while the pipe may have infinite capacity over time, at any given moment it does not. The issue isn’t about how many bytes you consume, it’s about the capacity to deliver those bytes in a given moment when you have lots of competing users. This is why it isn’t the “where the data is coming from/going to” that matters, but rather how much of it is in the pipe at a given moment. What matters is not the cable, but the it’s cross section.

A cable that is empty or only at 40% capacity should deliver rip-roaring internet to anyone who wants it. My understanding is that the problem is when the cable is at 100% or more capacity. Then users start crowding each other out and performance (for everyone) suffers.

 

 

 

 

 

 

 

Indeed this is where the OpenMeida/CIPPIC document left me confused. On the one hand they correctly argue that the internet’s content is not a limited resource (such as natural gas). But they seem to be arguing that the network capacity is not a finite resource (sections 21 and 22) while at the same time accepting that there may be constraints on capacity during peak hours (sections 27 and 30 where they seem to accept that off peak users should not be subsidizing peak time users and again in the conclusion where they state “As noted in far greater detail above, ISP provisioning costs are driven primarily by peak period usage.” If you have peak period usage then, by definition, you have scarcity). The last two points seem to be in conflict. The network capacity cannot be both infinite and constrained during peak hours? Can it?

Now, it may be that there is more network capacity in Canada then there is demand – even at peak times – at which point, any modicum of sympathy I might have felt for the telcos disappears immediately. However, if there is a peak consumption period that does stress the network’s capacity, I’d be relatively comfortable adopting a pricing mechanism that allocates the “scarce” amount of broadband pie. Maybe there are users – especially many BitTorrenters – whose activities are not time sensitive. Having a system in place that encourages them to bittorrent during off-peak hours would create a network that was better utilized.

So the OpenMedia piece seems to be open to the idea of peak usage pricing (which was what I was getting at in my UBB piece) so I think we are actually aligned (which is good since I like the people at OpenMedia.ca).

The question is, does this create the right incentives for the telco’s to invest more in capacity? My hope would be yes, that competition would cause users to migrate to networks that provided high speeds and competitive low and/or peak usage time fees. But I’m open to the possibility that it wouldn’t. It’s a complicated problem and I don’t pretend to think that I’ve solved it in one blog post. Just trying to work it though in my head.

 

 

 

The problem with the UBB debate

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I reley dont wan to say this, but I have to now.

This debate isso esey!

– Axman13

Really, it is.

The back and forth for and against UBB has – for me – sadly so missed the mark on the real issue it is beyond frustrating. It’s been nice to see a voice or two like Michael Geist begin to note the real issue – lack of competition – but by and large, we continue to have the wrong debate and, more importantly, blame the wrong people.

This really struck home with me while reading David Beers’s piece in the Globe. The first half is fantastic, demanding greater transparency into the cost of delivering bandwidth and of developing a network; this is indeed needed. Sadly, the second half completely lost me, as it makes no argument, notably doesn’t call for foreign investment (though he wants the telcos’ oligarchy broken up – so it’s unclear where he thinks that competition is going to come from) and worse, the CRTC is blamed for the crisis.

It all prompted me – reluctantly – to outline what I think are the three problems with the debate we’ve been having, from least to most important.

1. It’s not about UBB; it’s about cost.

Are people mad about UBB? Maybe. However, I’m willing to wager that most people who have signed the petition about UBB don’t know what UBB is, or what it means. What they do know is that their Internet Service Provider has been charging a lot for internet access. Too much. And they are tired of it.

A more basic question is: do people hate the telcos? And the answer is yes. I know I dislike them all. Intensely. (You should see my cell phone bill; my American friends laugh at me as it is 4x theirs). The recent decision has simply allowed for that frustration to boil over. It has become yet another example of how a telecommunication oligarchy is allowed to charge whatever it wants for service that is substandard to what is often found elsewhere in the world. Of course Canadians are angry. But I suspect they were angry before UBB.

So, if getting gouged is the issue the problem of making the debate about UBB is we risk taking our eye off the real issue – the cost of getting online. Even if the CRTC reverses its decision, we will still be stuck with some of the highest rates in for internet access in the world. This is the real issue and should be the focus of the debate.

2. If the real issue is about price, the real solution is competition.

Here Geist’s piece, along with the Globe editorial, is worth reading. Geist states clearly that the root of the problem is a lack of competition. It may be that UBB – especially in a world of WiMax or other highspeed wireless solutions – could become the most effective way to charge for access and encourage investment. Why would we want to forestall such a business model from emerging?

I’m hoping, and am seeing hints, that that this part of the debate is beginning to come to the fore, but so long as the focus is on banning UBB, and not increasing competition, we’ll be stuck having the wrong conversation.

3. The real enemy is not the CRTC; it’s the Minister of Industry Canada.

This, of course, is both the most problematic part of this debate and the most ironic. The opponents to UBB have made the wrong people the enemy. While people may not agree with the CRTC’s decision, the real problem is not of their making. They can only act within the regulatory regime they have been given.

The truth of the matter is, after 40 years of the internet, Canada has no digital economy strategy. Given it is 2011 this is a stunning fact. Of course, we’ve been promised one but we’ve heard next to nothing about it since the consultation has been closed. Indeed – and I hope that I’ll be corrected here – we haven’t even heard when it will land.

The point, to make it clear, is that this is not a crisis or regulatory oversight. This is a crisis of policy mismanagement. So the real people to blame are the politicians – and in particular the Industry Minister who is in charge of this file. But since those in opposition to UBB have made it their goal to scream at the CRTC, the government has been all too happy to play along and scream at them as well. Indeed, the biggest irony of this all is that it has allowed the government to take a populist approach and look responsive to a crises that they are ultimately responsible for.

P.S. Left-wing bonus reason

So if you are a left leaning anti-UBB advocate – particularly one who publishes opinion pieces – the most ironic part about this debate is that you are the PMO’s favourite person. Not only have you deflected blame over this crisis away from the government and onto the CRTC you’ve created the perfect conditions for the government to demand an overhaul (or simply just the resignation) of key people on the CRTC board.

The only reson this is ironic is beacuase Konrad W. von Finckenstein (head of the CRTC) may be the main reason why Sun Media’s Category 1 application for its “Fox News North” channel was denied. There is probably nothing the PMO would like more than to brush Kinchenstein aside and be to reshape the CRTC so as to make this plan a reality.

Wouldn’t it be ironic if a left-leaning coalition enabled the Harper PMO and Sun Media to create their Fox News North?

And who said Canadian politics was boring?

P.P.S. If you haven’t figured out the spelling mistake easter eggs, I’ll make it more obvious: click here. It’s an example of why internet bandwidth consumption is climbing at double digits.

Why the CRTC was right on Usage-Based Billing

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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.