CRTC ruling on usage-based billing threatens affordable Internet access, critics say

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A decision by the country’s telecom regulator could lead to higher broadband costs for Canadians, according to an open-Internet advocacy group.

The Canadian Radio-television and Telecommunications Commission gave a continued green light today (January 25) for large, incumbent Internet service providers to bill independent ISPs for wholesale broadband on a usage-based system.

However, the commission made the concession of requiring major telecom companies to bill independent ISPs 15 percent less than retail customers.

To the chair of the Canadian Association of Internet Providers, the discount is little more than a “token acknowledgement” that independent service providers will face a cost to implement the usage-based billing policy.

“The 15-percent discount is nowhere near recognizing the impact that this is going to have on independent providers,” Tom Copeland told the Straight by phone. “The cost to implement this, the cost to deal with the carriers, the ensuing billing problems that come from these sorts of things, and more than anything the cost of dealing with our customers and the repercussions there, just aren’t adequately represented in that 15 percent.

“While the whole industry is becoming homogenous, it’s definitely more difficult for the independents to stand out in the crowd,” he added.

The nonprofit group OpenMedia.ca, which organized an online petition against usage-based billing that now has over 40,000 signatures, also maintains the discount for independent ISPs doesn’t go far enough.

“Unfortunately, that 15 percent is not huge, and it’s not going to be enough for them to meaningfully differentiate themselves from incumbent ISPs or from the big telecom companies,” spokesperson Lindsey Pinto told the Straight by phone.

Today’s ruling comes after the CRTC made decisions in May and October of 2010 that opened the door for large telecom companies like Bell Canada to bill independent service providers on a usage-based model.

Pinto argues that the latest decision stifles competition in the telecom market.

“There’s no longer much of a check on doing things like lowering caps and raising prices,” Pinto said. “The independent Internet service providers would otherwise have provided that check, and now they’ve been more or less incapable of doing so.

Pinto said potential consequences of the usage-based billing scheme to retail consumers could include a deeply widened “digital divide”, and challenges for libraries and coffee shops that provide Wi-Fi service.

Usage-based billing, also known as Internet metering, can allow companies to charge retail or wholesale customers at a higher rate for using more than a predetermined amount of broadband.

Telus spokesperson Shawn Hall said that while today’s decision “doesn’t apply to Telus”, the debate around usage-based billing has been going on “for many, many years now”.

“I think it’s important to note that usage-based billing has been in place since the very first days of the Internet,” Hall told the Straight by phone. “We have to recognize that the Internet isn’t this free-floating cloud that’s out there, but it costs billions of dollars to create, and that those who make more use of the Internet should pay more.”

In today’s ruling, the CRTC acknowledged that it had received “a large number of public comments”, many in opposition to usage-based billing.

The commission has directed carriers with usage-based billing systems to implement the new wholesale billing policy by March 1.

Pinto said OpenMedia plans to continue gathering signatures on their online petition, and to present it to federal industry minister Tony Clement.

Comments (8) Add New Comment
seth
When you look at the enormous amount of dirt cheap (content cost excluded) no penalty no limits network capacity consumed by Big Telecom's television offerings now all integrated with broadband IP, the nonsense about bandwidth limits becomes a sick joke. The Bell/CRTC imposed tariff is 1000 times the cost of providing the capacity.

We could do something about it.

BCHydro or cities like New West with public owned power could be an example to the nation on how to give 1 gbs broadband access for a few dollars a month.

With modern dirt cheap equipment especially combined with the communication's requirements of smart meters, power utilities could easily provide a one gigabit per second ethernet pipe with internet access into every household/business at a fraction of the cost of current Big Telecom offerings.

The cost of a fiber to the block network would be a small fraction of fiber to the home - less than $20 a household/business to the block level wired/wireless N access point plus subscriber connect costs of $100 for Cat 6 copper to most subscribers and fiber to the rare more distant ones, $50 for Phoneline/Powerline, $50 for a WiFi mesh repeater or zilch to the customer's wifi card. A buck or two a month would suffice for O&M.

Smart Phone/ATA based VOIP would cost nothing (Google Voice or City network access) nor would basic cable (see ivi.tv)

The FCC now recognizes that low speed smart meters would be a component on the broadband network they envision. The small incremental cost of the high speed network over the low speed smart meter net power companies are planning, pays for broadband network for a extra few dollars a month per subscriber.

A city network could grow like an amoeba block by block connecting subscribers for a service fee or higher first year monthly payment sufficient to cover network costs to that neighborhood requiring an insignificant investment from the city. Costs would be low enough that close to a 100% penetration should be achievable. If costs for some unforeseen reason spiraled out of control or subscribers stubbornly stuck to Big Telecom the muni Net would know about it after the first neighborhood was hooked up - risk is zilch. The easy peasy approach would be to start in areas with lots of apartment buildings.

The first neighborhood hooked up, would be called a test network to minimize political risk. It would take a public power crew a week or two to wire up a neighborhood to the block level (with wifi) with a few thousand dollars worth of staple to the pole ADSS cable, equipment boxes, and access points.

None of this is going to happen under Canwest/Gordo but with activists infiltrating the Abbot and Horgan campaigns maybe we can git er done. Mayors like Robertson, Wright and Corrigan should be reminded that are there to support the citizen not Big Telecom with its massive campaign donations and unions.

Big Telecom makes 3000% profits on broadband with their ancient antiquated equipment. They could cut their fees to 3% of current level - $1 a month ADSL - and still make money Lots of room for a non profit to provide a service at for a few bucks a month.

Another way to do it.

We pass legislation requiring Big Telecom as a condition of licence to install a bulk purchased $200 a unit outdoor dual band wireless units on every street block in every neigbourhood in Canada serviced by the top of line $50 a month average 30 Mbs highest speed innernet service Big Telecom offers. Each unit would supply 50 roughly households.

There are 13 Million households in Canada so total cost would be about $50M less than Big Telecom spends annually buying booze for compliant CTRC members, "journalists" and politicians. $50M financed at 10% plus $50 a month for the network with 50% broadband penetration works out to about $2 a month per subscriber.

Only corrupt politicians stand between the people and dirt cheap universal broadband access. Give them a call and ask why.
seth
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Jan Lou
Amazing post, Seth, and amazingly informative. I'm thinking content providers and 'content distributors' need to speak up on this or pay the price.
Here's my what-if: If the new CRTC decision re bandwidth prevails, I want the option to to opt out of unsolicited high-bandwidth ads, video and audio content. In my view, anyone streaming this to me unsolicited would be stealing my bandwidth and should cover the bill.
What would happen, I wonder, if I not only choose not to selected and consume heavy-bandwidth content but disabled my capacity to receive video and audio content that comes to me unsolicited?
Do content providers really want to go back to the olden days ... the days of text-only pages? If not, they need to step up and join the battle on behalf of consumers.
CRTC fail.,
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George Faithe
** "UBB" (Usage Based Billing) - Otherwise known as METERED BILLING.  The CRTC is allowing ISPs to put a METER on your internet access, so you PAY BY THE BYTE! **

Matt Stein, Vice-President of Network Services for Primus, calls UBB overage fees:

"an economic disincentive for internet use" since the charges levied by Bell Canada are "many, many, many times what it costs to actually deliver it."

The CEO of Teksavvy ISP said:

"UBB is pure profit. IP transport of internet data is somewhere between $3 and $10/Mbps for companies like ours.... So doing basic math we're talking of $3-$10 per 300GB of data... So 1 to 3 pennies per gig of downloading on the Internet transit side."

Shaw uses misleading information, and tells customers that their limits are generous, and overstates the cost of bandwidth. In fact, bandwidth is 1-3 PENNIES per GB, but Shaw is charging $2 PER GB!

Did you know that just as Shaw began charging for "overuse of the internet", they also (quietly) reduced all of their usage caps by 30% without telling customers?  

Funny part is, the infrastructure most of these ISPs use was FUNDED BY CANADIANS!  Now they are charging us massive overage fees for using it.

Shaw, and other Canadian ISPs are using UBB as a method to control access to their TV competitors, ie: Netflix, Hulu, etc.  It is clearly a conflict of interest to allow a TV Broadcaster who is also an ISP, to limit our access to their competition.  

With these massive new overage fees, once you are over your recently lowered "usage cap" with Shaw, every HD Netflix movie will cost you an extra $8!

If you want to contact your local MP, and ask them what THEY are doing to prevent the destruction of the Canadian internet, please send them a FAX or written letter.  You can find out who your local representative is here:
http://howdtheyvote.ca/findmember.php

Fight back!  Visit Open Media's facebook page, and join the fight - Thousands of Canadians working together to put an END to metered billing!
http://www.facebook.com/openmedia.ca

Please sign the petition!  Forward it to your friends, family, and co-workers. We need to act on this, or every single Windows update, web page, and email will cost you money.
http://openmedia.ca/meter
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Yadwinder Sidhu
This is how Netflix feels about this situation...

http://arstechnica.com/tech-policy/news/2011/01/netflix-charging-by-the-...
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Rod Hebner
If people were to switch off, just stop paying and supporting Shaw, it would send a very strong message to Shaw but getting the affluent to switch off is much like BC Politics, drug dealers and prostitution which isn't about to go away anytime soon. If you pay and support it, then expect higher rates to follow and we pay some of the very highest rates in the world right now. Shaw couldn't sell me the time of day and as soon as I get any overbilling from Telus, they'll be gone the same day I get the bill.
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Ernie
I have worked at one of BC's smaller (than Telus or Shaw) ISPs as a systems administrator for the past 9 years, and I can tell you that Seth is dead wrong. In fact, he has it all backwards. He might know what bandwidth costs (and it's way cheaper than what Shaw is billing for over usage), but he has no idea about the infrastructure costs that go into providing that bandwidth to homes.

Both Telus and Shaw do not provide internet access at a profit. They instead use it (and have always used it) as a driver towards their real profit centers, their monopoly holdings in telephone and cable TV. From the very beginning of their broadband operations, they have used it as a weapon against each other to try to secure a larger part of this market, largely by selling it at a loss. While Telus no longer strictly holds a monopoly on telephone *service*, they do still own all the telephone *lines* in BC and Alberta. Companies like Sprint lease those lines from Telus, and they would have to, or $10,000 connection fees would be the minimum you'd pay for new lines. Just ask any internet provider what it would cost to run a fibre optic connection to your house, and you'll understand for yourself.

But that doesn't explain the gouging of customers for "excess" bandwidth. Especially when you look at Telus' internet TV offering, which coincidentally, is magically not included in their bandwidth cap.

No, what Shaw in particular is worried about, and Telus by extension, is the revenue they stand to lose when you suddenly realize that the very services that they built their entire companies upon, ARE BEING OFFERED FOR FREE ON THE INTERNET. Especially TV! Right this moment, you can watch practically any program you like, right on your favorite station's website. It's not only free, but legal. It is this worry that is driving these providers to charge for excess bandwidth - they need to make sure that TV service is less expensive from them than it is from the internet. Or else you wouldn't *need* them!

10 years from now, noone will have a cable TV or telephone wire hooked up to their house - it will be replaced by the Internet wire (or fibre cable, as it were). And both those companies will be a fading memory, unless they both transform themselves into companies that fully intend to provide internet access and nothing else.

Of course, I am obligated to put in a little dig here about how y'all should accelerate this issue by switching to a company that doesn't sell anything but internet, and as such is not threatened by the new reality. ;)
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PHill
Why is it that Americans pay next to nothing for high speed access and Canadians pay through the nose. Silly me. The Americans own everything -- including The PM and the CRTC. Next week I expect them to reclaim Bell from the 1974 anti-trust ruling, especially now that Bell owns CTV, A channel, CITY, etc...
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Mork
My dad cancelled his entire TV service (cable and all the extras) and only kept the cable. I'm sure a lot of people have been doing that lately and I'm certain it's making the ISPs worried.
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