The usage-based billing fracas has calmed down considerably over the past few weeks, but a few people continue to beat the drum in support of it despite the fact that it’s looking dead in the water. UBB is, if you’ve forgotten, essentially an increase in prices by big internet providers on a wholesale service they provide to smaller rivals. The increase means it’ll be a lot more expensive, if not impossible, for smaller ISPs to offer the large internet usage buckets they’ve been selling.
People got freaked out over this and hundreds of thousands signed an online petition, prompting the government to promise it will overturn the plan if the regulator, the CRTC, doesn’t do so first. The CRTC is going back to the drawing board and UBB is in a holding pattern until this all gets resolved, if it ever does.
Still, some folks - like the editorial writers at Maclean’s - continue to maintain that UBB is the right way to go. Supporters usually latch on to one or both of the arguments of fairness - that heavy internet users should be forced to pay more - or that bandwidth is like a utility. Many commentators, myself included, have argued against these talking points but evidently they still continue to percolate. Here then, are 10 reasons why the arguments for UBB don’t hold water.
10. Data is not a utility. There have been many attempts, including by the CRTC, to equate internet usage to a utility such as electricity or gas. Very simply put: it is not. The electrons that make up the data that passes to and fro over the internet are limitless and are not consumed and destroyed every time a YouTube video is watched. The “pipes” and other equipment over which these electrons flow are, of course, finite and therefore need to be continually expanded as the amount of traffic grows. These are two very different things, however. In electric-bill parlance, we’re talking about delivery and usage - the nice people at the hydro company bill us for both and the big ISPs would like to do the same. The difference is, the actual kilowatts that go over the hydro company’s pipes ARE finite and ARE destroyed once they are used. If you want to talk about fairness, then yes, it is okay to charge internet users for delivery, but how is it fair to charge for consuming a non-consumable?
9. Delivery cost is paying for expansion. In 2003, the average Canadian household spent $170 a year for an internet connection while in 2009, it was $340. There was a big shift by many from dial-up to broadband over that time, but the fact remains: the price we pay for delivery has doubled in six years. That’s a higher increase than just about any service over that time, with the possible exception of television, which not coincidentally is sold by the same companies. Shouldn’t this tremendous increase cover the cost of all the necessary network upgrades?
8. Congestion has not been proven. Okay, so the amount of data going over ISPs’ pipes is growing continually, which means that unless they’re expanded, they’re going to get congested, right? Well, the big ISPs like to tell us about the billions they invest in their networks, so the expansion is presumably happening. The congestion issue was at the forefront a few years ago during the whole related throttling/net neutrality hearing before the CRTC, where Bell Canada was being investigated for slowing peer-to-peer software usage. Bell argued that it needed to slow down greedy peer-to-peer users because they were congesting the network, yet all of the data presented to the CRTC that supposedly proved this congestion was heavily redacted for “competitive reasons.” No one but the CRTC has seen this data, so we have only the word of Bell and the regulator that congestion did exist, and that it continues to. Given that the throttling seems to be in effect 24 hours a day, including during the middle of the night when presumably very few people are using the network, this seems to suggest that congestion is not a problem and that these measures are in place for an entirely different reason.
7. Investment is not making big ISPs poor. In fact, it’s anything but. Bell just posted a 13% increase in annual profit over last year, driven by “strong growth in its wireless, internet and television subscribers.” Indeed, the number of Bell internet subscribers grew by 2% from last year. The song the company likes to sing is “boo hoo, all these heavy users are forcing us to spend zillions on upgrading our infrastructure,” but that investment doesn’t appear to be hurting the bottom line. If anything, it’s helping.
6. Heavy users are not all pirates. This is usually what the crux of the UBB argument comes down to. There’s a mistaken belief among UBB supporters that all the internet is good for is email, surfing the web and watching the occasional cat playing piano on YouTube, so 5 gigabytes a month or so should do it. Anyone who needs more is clearly a file-sharing pirate, so if the law can’t stop ‘em, maybe usage limits will - and should. That’s so wrong it’s not even funny. There are no “heavy ” and “light” users, only early adopters and mainstream users. Yesterday’s Napster users are today’s iTunes customers, while yesterday’s peer-to-peer file-sharers are today’s Netflix subscribers. The proof is in the pudding: In a 2009 survey of Canadian internet users, Statscan found that 31% went online to download or watch television and movies, up from only 12% in 2005. More and more non-pirate Canadians are moving toward heavy-bandwidth services, such as online video, while more and more perfectly legal services that use lots of bandwidth are also coming online every day - things like internet radio, online video game service Steam, HD video-conferencing, and so on. This means more and more Canadians are becoming so-called “heavy users” every day. If UBB supporters want to punish these heavy users, they’re eventually going to punish themselves.
5. Pirates are not necessarily bad. Further to that, just as all virus creators and hackers are not necessarily evil because they do point out flaws in products, so too do illegal file-sharers actually perform a public service. The iTunes store would not have started if Napster’s success hadn’t concretely established public demand for online music. The same goes for Netflix and BitTorrent. File-sharers are often feathered and tarred for their questionably legal activities, which often result in heavy bandwidth consumption, but they do blaze economic and technological trails for new online business models.
4. Not all opponents of UBB are hogs. What bugged me most about the Maclean’s editorial was the claim that the government got involved because of “wild online outcries from the heaviest users and their internet service providers.” I’m not sure if I was included in that statement, but let me just say for the record: I’m a Rogers subscriber with a 60-gigabyte cap that I’ve never exceeded. I’m not what such people would consider a “heavy user,” even though I use Skype and play games on Xbox Live virtually daily, watch Netflix occasionally and generally rely on the internet for my livelihood. My concern, and I’m sure the concerns of many other such “non-hogs,” stems from the fact that if you limit internet usage in Canada then you limit the development and proliferation of new online business models. For months I’ve marveled at Netflix’s figurative balls of steel for entering Canada in the face of our small usage limits. But when the CEO publicly states that he’s wondering how they’re going to do here because of it, that’s not exactly a vote of confidence for other, similar services looking to start up here. In regards to video, services that millions of Canadians would love to have - such as Hulu - are already handcuffed by an extra layer of content licensing requirements from Canadian rights owners. This problem is now compounded by the perverse fact that those licensing roadblocks are now in the hands of the very same big ISPs that are trying to curtail internet usage (i.e. Shaw owns Global, Bell owns CTV). Through a series of well-orchestrated machinations, our big ISPs have made it virtually impossible for a service like Hulu to start up here without their involvement. UBB is just the icing on that cake.
3. Market forces won’t take care of problems. Part-time commentators on Canada’s telecommunications market like to pretend it is ultimately subject to Adam Smith’s “Invisible Hand” theory, where the nature of competition between companies will stamp out any issues that arise. If you’ve read just about anything I’ve written on this subject, you know that this is impossible in Canada because we do not have a proper, open market because of foreign ownership restrictions. Telecom is an expensive game to play and very few Canadian companies have the deep pockets to do it. The invisible hand cannot exist until ownership restrictions are done away with.
2. Facilities-based competition is not the holy grail. Lots of people, from the CRTC to media commentators, believe that so-called facilities-based competition - the cable company’s network versus the phone company’s network - is the way to go. An earlier Canadian Business editorial even suggested the entire open-access wholesale system we have, where smaller ISPs can use portions of incumbent networks, is completely stupid. Here’s the thing: both of these set-ups are yesterday’s models and they are both wrong in today’s world. Cable versus phone got Canada an early lead, but countries that adopted stronger open-access rules have over the past decade sprinted ahead as our facilities-based competitors stopped competing against each other. Now, as many countries are looking ahead to super-fast, next-generation fibre internet connections, a new trend is emerging: network-owning companies that are separate and independent of any access seller. The trend started in 2005 when BT created Openreach, a separate entity that owns the network and neutrally sells access to it to all comers. Australia and New Zealand have followed suit and several European countries are contemplating it too. Suggesting such an arrangement should be adopted in North America is akin to heresy, but it makes all kinds of sense. Heck, despite their public rhetoric, even the telecom companies themselves don’t actually think facilities-based competition makes logical sense any more. Why else would Bell and Telus jointly build their new wireless network?
1. Everyone else makes it work. I love pointing out how unlimited or practically unlimited internet usage is common in just about every other country because this disproves every argument there is in support of UBB. If ISPs in every OECD country except Canada, Australia and New Zealand can make it economical to give customers big or non-existent usage limits, why can’t we? (See OECD broadband portal, table 4g.) The price of bandwidth continues to fall globally, so those countries aren’t having conversations about whether the internet is like electricity or whether it’s fair to charge heavy users extra, they’re talking about how to make all of their citizens heavy users. The reason we’re not having that conversation is because all those other countries have something we don’t: competition and consumer choice between providers, which keeps prices reasonable and usage limits high.
Russell McOrmond
February 22, 2011 at 8:02 am
You forgot one: Gateway Access Service (GAS) is not an *Internet* service, so any congestion that may or may not exist on the *Internet* is irrelevant to any discussion of GAS.
While I welcome the separate discussion of UBB charged by ISPs for Internet transit, we need to never lose sight that this must be considered as an entirely separate conversation from UBB on GAS.
To make sense of any of these issues you need to go down to the wires. For this service you have:
a) Wire from DSL modem in home to DSLAM in Central Office, with this part often called the “last mile”. If congestion exists here, it is customer specific and policy should be set by customer. In the case of ADSL-CO, this is where an ISP would connect — but the phone companies are fighting strongly against allowing ISPs to connect here.
b) Connections between CO’s and to ISP. This is the cheapest part of the network to build, and any congestion here is largely manufactured. This part of the network is used by GAS, and at this point is still a raw data network.
c) Connections from ISP out to the Internet — this is where things become “Internet”, and where any congestion on the Internet may or may not be a factor. At this level there is congestion that needs to be managed, such as over submarine connections across continents.
Remember that the companies offering these last mile connections exist as an exception to property rights in order to be allowed to put wires above and below public and private property without needing permission from or make payments to the owners. Third party access to these raw data connections should be mandatory as a condition of being offered this right-of-way privilege.
Any monitoring (DPI), manipulating (shaping), metering (UBB, whatever) should be done by the ISP and never by the provider of the government granted monopoly raw data provider connecting between ISPs and their customers.
Note: The proposal I made in front of the CRTC is to split up the phone companies such that the data network (last mile + CO interconnections) are managed as a utility, and then the services built on top would be a competitive marketplace. This would then allow this service to mirror the electricity market in Ontario where generation and distribution are separate. http://BillC32.ca/5096
Rui
February 22, 2011 at 9:26 am
Just to add a further point to the “bandwidth hogs” nonsense. I am an independent database admin. I work from home 1 to 2 days of the week (sometimes more). I use a lot of gigs remotely administering my clients databases (database patches can be big, dataset massaging is definitely big, etc). You think I am a hog? Yes I can use a business line but it’s overpriced and also LIMITED. Now, think about companies like HP in Canada who have a number of employees (DBA’s, sys admins, and so on) who work from home 100% of the time. Are they hogs?
JPTN
February 22, 2011 at 9:40 am
Excellent write-up. If only the mainstream media could be more thorough and balanced. South Korea just announced they plan on connecting every single household with 1Gbps Internet connections. It’s sad that the country that invented the telephone is so far behind with the times.
Ben Myers
February 22, 2011 at 9:40 am
There has been a serious misinformation campaign launched by proponents of UBB, and it has clouded the mind of many normally level-headed consumers. The one I really take issue with is the subsidy argument that some have embraced - the internet is not like public transit or similar not-for-profit services…
http://benkmyers.com/post/3216583971/internet-unlimited-cake
Michael Kalus
February 25, 2011 at 1:34 am
The “subsidy” argument sticks with a lot of people because they do see internet like electricity.
If there is any subsidizing going on it is by those people like me who have bigger packages and pay more per month than the “low end users”. All of the capital outlay is essentially in the last mile and CO equipment and that cost does not change from user to user.
Dale Dietrich
February 22, 2011 at 9:47 am
Well Hallelujah!
It’s nice to see someone else making the connection between:
(a) foreign ownership restrictions
(b) Bell/Shaw/Rogers content ownership/licensing issues
as major forces that eliminate Canadian consumer choice and have kept Internet-based content available to Canadians being limited to only a small fraction of what is available in the U.S.
…Dale
schultzter
February 22, 2011 at 9:55 am
Yeah, business’ decisions and the economy are way more complex than a 30-second news bite. I love how people who remember the term “invisible hand” from high economics class throw it around like the solution to all our woes!
I’m not sure you realise though, but you point out the Canada, New Zealand, and Australia are the worst offenders when it comes to caps & UBB. Have you ever visited either of those two other countries? Apart from from the fact we’re all originally British colonies and share that legal and government heritage we also share serious geographical and population density issues! There may be something to that!!!
petenowak2000
February 22, 2011 at 10:03 am
I actually lived in New Zealand and covered these goings-on in both NZ and Australia. The problem wasn’t so much population densities but that the governments/regulators trusted their big ISPs to provide good prices and speeds. That didn’t happen, which is why both governments have cracked down and are building billion-dollar fibre networks independent of the service providers.
Chris
February 24, 2011 at 4:28 pm
Surely you meant “serious lack of competition issues”, not the “low density” argument that has been used, overused and abused by the incumbents… The fact is, the problem is not density (we’re almost all living on a thin border along the 45th parallel), it’s that everything has to pass though only two highways: Bell and Rogers…
BT
February 22, 2011 at 11:04 am
A slight correction to #8, Bell’s throttling is not 24 hours a day, it’s from 4:30pm to 2am. Rogers however, does throttle 24/7. Not sure about other ISPs off the top of my head.
#5 is factually correct maybe, but to imply that the benefits outweigh the downsides is a bit of a stretch IMO, and the resulting sub-argument over that one could distract from the real issue at hand.
Completely agree on #4, I’m in the same situation. Never hit my 60GB cap, but am strongly opposed to enforcing retail UBB on wholesale.
#3 would still be a red herring even with foreign ownership restrictions abolished. Doing away with them would likely be an improvement, but there would still be 2 wires coming to most homes, and the same duopoly situation in each market (though maybe “under new management”). Nothing less than forced operations segregation (ie: wholesale operations segregated completely from retail operations) will solve #3.
Not only is #2 not the holy grail, it was also cut off at the knees by other recent CRTC decisions.
I would have liked to see you debunk the standard argument against #1 - “Oh, but our population density!” Last time I checked, you couldn’t get wireline broadband service in most of the ultra-low density areas of the country.
petenowak2000
February 22, 2011 at 12:08 pm
Truth be told, I wondered about including #5 for the exact reasons you mention. Getting into the merits/problems of piracy is somewhat off topic, but I only included it to make the point. Hopefully things don’t devolve in that direction!
I think #3 would combine very nicely with #2. In an ideal world, one company would own the network and allow anyone who wanted it - Canadian or foreign - to lease it. That would allow market forces to work. The one question it does raise, though, is that the network company would then have a monopoly. Would this matter, and would it have an incentive to keep its access prices low. Must think on that more…
The population density argument has never held water because, yes, there are wide swatches of tundra that are hard (and pointless) to wire, but the majority of our population is very concentrated in cities. More than half the people in Canada live in our 10 biggest cities. “Hub” also makes good points below - Canada isn’t in the middle of the ocean. Australia and New Zealand have very limited pipes connecting them to the rest of the internet, whereas Canada does not. They have a bit of an excuse for having lower usage limits.
Myles
March 20, 2011 at 12:53 am
I am a Bell DSL internet subscriber with an old “unlimited” high speed internet package. My usual download speed is 7.8 Mbps. When I try to download ANY torrent bell throttles it down to about 0.020 Mbps (20 Kbps) and OFTEN it goes down to 0.001 Mbps (1 Kbps) and even to ZERO. This practice occurs 24 HOURS A DAY: at 10 AM, 10 PM, and even 4 AM! When I try to do a file download from any website at the same time that my torrent is throttled down to zero (with tons of seeders and leechers) I can still get 7-8 mbps full download speed so that confirms that my connection is working fine, but that BELL IS TAMPERING WITH THE SPEED THEY ARE BILLING ME FOR.
I have cancelled both my Bell phone and Bell internet and I am now on the 30-day waiting list to switch to TekSavvy DSL for HALF THE PRICE and 300 Gig cap, and with a multi-link PPP modem that will not be affected by Bell’s speed throttling.
Long live competition! And an end to corporate greed!
Chris
March 21, 2011 at 7:47 am
Myles, BRAVO.
If every one of those who signed the openmedia.ca petition in February who were still with the incumbents actually switched, it would send a REALLY strong message to these shylocks, that we won’t be intimidated anymore and that THEIR TIME IS UP.
In any case, it’s not over. I can assure you they are trying everything to sweeten the pill, because they intend to proceed. It’s not for no reason that they asked for a three month extension. Come summer, most people will be enjoying the good weather and they count on that to pass the pill.
Hub
February 22, 2011 at 11:10 am
The argument that Canada is a big country does not stand for UBB. It stand for the “access” issue, and in that case, if you look closely, it is very bad.
But in urban zones, which is where most of Canada’s population is, it is just like any other country. When it comes to connecting to the rest of the Internet, Canada is very unlike Australia and New Zealand that face the challenge of being in the middle of the ocean. Canada is next to the USA, which is the *biggest* hub, and most of Canada’s population is is less than 300km from the US border anyway.
igakoga
February 22, 2011 at 11:49 am
we have duopoly trying to tell us what we want and need, what if duopoly controled ur food or ur water how about ur air. they are seriously gonna hold us back and cut down our competitive edge even more, the world is becoming increasingly connected tv is online, phone r online, maybe they should let in more competition willing to invest in us the customer for now and future gens wich will obviously b heavy users. just like its pretty hard to not have a laptop at school its pretty backwards to not have unlimited acces to the internet i work online 8 hours a day trading, to get charged x amount for something that cost y amount to make is not fair, it’s about as fair as only having 4 choices for ISPs
investor perspective
February 22, 2011 at 1:40 pm
although you might think these are myths, you fail to make arguments that would convince me your myths aren’t any better then UBB supporters myths.
10. oil and gas pipelines charge by usage, why shouldn’t internet pipes?
9. for a doubling in prices, I’m getting 19.5x the speed. Is that not a decent trade off?
8. congestion may not have been proven but it has not been disproven. investments need to be made ahead of the increase in usage. picture a day 5 years from now when 20 or 30% of people have cut their cable and get all their video over the internet. That’s the kind of future the ISPs probably have to consider in their plans.
7. the long term record of the telecom industry delivering adequate return on capital is dismal.
6. agreed but i don’t think this is a heavily used argument anyways.
5. ridiculous sidebar to the actual issue. what myth does this argue against?
4. they aren’t all hogs but many are misinformed. its really only video applications that can put someone over their cap. The problem is that the opponents of UBB aren’t honest enough to tell the 90% of users who are nowhere near their caps that they have no need to get worked up about the issue.
3. 2. 1. You have valid points here. But unless you want to blow up foreign ownership rules and the Canadian content system all at once (or god forbid, nationalize broadband access), it may be the best we can do. And you may have no problem blowing those things up but there is about $135B currently invested in the shares and debt of Cdn telecom, cable and broadcast media companies in Canada (not to mention. You may not care about the investor’s perspective but the majority of that capital is funded by pension funds, coupon and dividend clipping seniors, individual investors. Bell is probably one of the most widely held companies in Canada.
petenowak2000
February 22, 2011 at 3:19 pm
There seem to be several inaccuracies and/or inconsistencies in the points you make. Chief among them: if returns on capital are so dismal in telecom, why are so many people & pension funds invested in them? Also, if we’re to follow your logic on speed pricing, a 100-megabit connection should therefore cost upward of $500 and we should be okay with that?
investor perspective
February 22, 2011 at 4:35 pm
if returns on capital are so dismal in telecom, why are so many people & pension funds invested in them?
-Many investors avoid do them. Do you want even more to? Canadian telecom has produced an annual return of 2.45% over the past 10 years. I’m just trying to point out the view from the other side. If everyone was being gouged so badly wouldn’t you expect shareholders to have done better?
i asked the question - “isn’t that a decent trade off?” You have an opinion. I have an opinion. It hardly busts a myth.
Obviously as consumers we always want more for less. The way you phrased it made it sound like its one-sided but in fact the amount of speed we can get has increased dramatically more than the cost.
investor perspective
February 22, 2011 at 7:06 pm
Speaking of inaccuracies, the Cansim averages based on ALL households. In other words, your “doubling of cost” doesn’t take into account the increase in penetration. From Cansim link: “Average spending for a specific good or service was calculated for all households, including those with and those without expenditures for the category”
In 2002 54% of households were internet subscribers. The average of ALL households was $157. So the average of those who actually subscribed was about $290. ($157/.54)
In 2009 78% of households were internet subscribers. The average of ALL households was $340. So the average for those who actually subscribed was $436 (340/.78).
So actual subscribers only saw a 50% increase in cost to go along with their speed increase. That’s only 2-3% per year higher than inflation.
Bob
February 22, 2011 at 3:20 pm
Seriously? Oil and Gas are charged by usage because they are “used” - they are consumed, and are limited or have to be produced. For companies like Bell to charge for the data being consumed is ridiculous - they don’t produce the data/content, so it costs them nothing. The incumbents’ propoganda purposely confuses bandwidth with volume of data. We’re paying for the access/connection to get the data, and the maintenance and upgrading of the “pipe” it comes down. And as it’s been pointed out, if we’re going to treat it like a utility, it should be priced as such…which means if we use less, we should be charged less…so those 98% that don’t use very much data should only be paying a few dollars per month. Of course, companies like Bell would never go for that, though they argue it should be treated like a utility. Can’t have it both ways.
“Congestion may not have been proven but it has not been disproven.” That’s just a circular argument. Ok, so it hasn’t been disproven - but then they shouldn’t be allowed to charge based on something they can’t prove either…if they’re not willing to show the actual numbers as to why UBB is necessary, how is it right to use the congestion argument to charge us?
And please…companies like Bell own pretty much everything, telephone, magazines, tv..to say they don’t make a profit is bull.
And video applications, though significant isn’t the only thing that puts people over the cap, especially as we look forward in the next few years…online businesses use significant amounts of data daily, online gaming/game resources like Steam where you download the full discs worth of data instead of having physical discs…I have to log into work constantly from home, and I’m not a data admin like one of the earlier posters who use a significant amount of bandwidth and data volume. Every service is becoming online, so though not everything we use may be “heavy” use at any one time, over the course of each month everything we do, entertainment or business brings us closer and over the low caps that we are given.
Either more competition (foreign or otherwise) has to be brought in, or the ownership of tv, telephone, internet, media has to be separated…it’s a complete conflict of interest for companies like Bell to have as stake in all of that.
investor perspective
February 22, 2011 at 4:56 pm
You totally missed the point. Pipelines DO NOT charge for the oil and gas consumed and I didn’t say they did. They pay for the transportation of it. Suncor =Netflix (supplier of oil or bits). TransCanada Pipe = Bell/Telus/Shaw (transporter). Ontario Power Gen = Consumer (user).
And despite the fact that the marginal cost of transporting a GJ of gas is near zero, they have to recoup their capital cost. The best way to do this is by charging by USAGE. How would TransCanada Pipe’s business look if they were forced to offer flat rate pricing?
“That’s just a circular argument” - it is supposed to be. For Nowak to post his list of myth busting arguments, I expect facts and evidence. It works both ways.
Didn’t say they don’t make a profit. There is a difference between a profit and an acceptable return on capital. If you think of a business that can make $1mm a year is that a good business? It is if the investment required was something like $5mm or less. But if it requires an investment of $50mm…its a bad idea!
“online businesses use significant amounts of data daily, online gaming/game resources like Steam where you download the full discs worth of data instead of having physical discs…I have to log into work constantly from home, and I’m not a data admin like one of the earlier posters who use a significant amount of bandwidth and data volume”
So should I pay the same flat rate that you do? You can’t argue that capacity isn’t finite and eventually increased traffic causes the ISPs to upgrade and its more likely to be because of the heavy user. There are very few goods or services where someone using 1/10th that of another user would pay the same amount. To someone trained in economics, its hard to imagine such systems not involving significant subsidization of heavy users/consumers by light users.
Not a bandwidth hog
February 22, 2011 at 9:43 pm
Thank you “investor perspective”! Finally someone who thinks for themselves and does not accept the opinions of people that have a very limited understanding the situation. There’s hope for the Internet in Canada yet.
You should also point out that all of the telco/cable operators are/were subsidizing their Internet product with either their Wireless or cable revenues. Now that competition is heating up in those areas, it is time for the Internet customers to pay the full costs. And the fairest way is to make the heaviest users pay the most. Otherwise we all will be paying a lot more for Internet.
FailMaster
February 23, 2011 at 3:42 pm
You are just beyond help. I just cannot fathom that you are seriously this stupid.
Mike in Vancouver
February 23, 2011 at 11:07 pm
One positive note I get from your attempt at standing out, Investor Dude, is that your skills at obfuscation, circular reasoning, topic changing, selective reading, and redirection are remarkable, almost pathological, and the conservatives or one of the telcos might just have a job for you. And that, I hate to admit, puts you one up on me and my Shaw bill.
Michael Kalus
February 25, 2011 at 1:38 am
“9. for a doubling in prices, I’m getting 19.5x the speed. Is that not a decent trade off?”
Only that the there is no physical difference between the person who gets the 20x speed and the ones who does not. The Equipment is the same regardless on how much bandwidth you get.
Or how do you think Shaw can offer me 100MBit connections? Do you think they run a new fibre line from the CO to my apartment for that?
The limits are arbitrary and with no basis in fact. The cost for hookup is the same, regardless of speed or bandwidth used, the “limits” and “packages” are creations of a marketing department, nothing more, nothing less.
Jesse
February 22, 2011 at 3:11 pm
Wow, been reading a lot from both sides on this. Pretty complex issue it seems. Tell me this… I am an audio engineer soon to be starting up a business from home. I plan or getting a 24mbps at a current cost of $100.00 / month connection and will host and FTP where clients will be able to upload and download data such as project files from editors & video files for reference. It is not uncommon for a project file to be several gigs, (largest recent I had was 6gigs for one project) and the reference video’s can be even larger. If Telecom’s get there way with this is it gonna cost me more than the $1200.00 per year I will already pay? This could really hurt my startup chances, as I will be partially dependent on work coming from afar.
Mike
February 22, 2011 at 4:08 pm
Wow, another way they’re screwing us is in their upload speed caps…24 Mbps down is fairly nice, but what’s your upload speed? Mine is 800 kbps….good luck uploading gigs at that speed.
Bhell and Robbers artificially destroy your upload speed in order to prevent servers from popping up all over the place (also why your IP address changes constantly). Why do we live in the Internet ghetto?
Mikkel
February 23, 2011 at 3:31 am
You’re not getting a 24 Mbps residential connection. I don’t know what your ISP is, but you’ll likely end up with 5 Mbps upload (what others get when they download from you). Get a dedicated server instead, which costs a bit less for 100 Mbps, and just use your residential connection for accessing the files as necessary.
Even in an ideal environment, some things are better off in a datacenter.
Mikkel
February 23, 2011 at 3:34 am
Sorry, shoulda clarified that first statement. What your ISP advertises as a 24 Mbps connection is only 24 Mbps down (when clients upload to you). It’s considerably slower going the other way.
mgtoronto
February 22, 2011 at 4:10 pm
When it comes down to it, most of these points are not that relevant/applicable except for the final three, and those are sufficient. The thing that annoys me is that this has been a problem for years, and it seems that most people only start complaining when it affects them directly. Frankly, I think we only have ourselves to blame for this mess. Blaming Rogers or Bell is like blaming an inanimate object. Their investors expect them to extract every last penny they can from their customer base… and that’s what they do.
bwalzer
February 22, 2011 at 4:11 pm
The “Data is not a utility” argument really doesn’t get anyone anywhere. Data has no intrinsic value. Thus the service of moving that data from place to place has no intrinsic value. People sell things with no intrinsic value all the time. These sorts of things are normally priced at whatever the market can withstand and in whatever way the customer can tolerate. Punitive pricing to control demand is common too. A theatre owner can normally only deal with the problem of excessively sold out shows by increasing prices, not by expanding the size of the theatre.
mgtoronto
February 22, 2011 at 5:07 pm
Analog voice is also a form of data and phone utilities have always charged people for both usage and delivery (though unlimited options exist). Michael Geist explains it better when he points out that the utilities are highly regulated and that utilities can’t be allowed to charge whatever they want especially when competition is limited. http://www.michaelgeist.ca/content/view/5620/125/
petenowak2000
February 22, 2011 at 5:43 pm
You haven’t answered your own contradiction: if Bell is such a bad investment, why is it one of the most widely held stocks? Surely it must have some appeal, or are the majority of investors just dummies?
As for speed-versus-cost increase, yes, there has been a trade-off - users have indeed received faster service in exchange for a higher monthly price. As we both know, the price of these types of services is not based on the cost of providing them but rather on what the market will bear. Given all the outrage over UBB, it seems the market is bearing as much as it will take.
You also wanted evidence that there isn’t congestion. The presence of unlimited usage in other countries in the face of similarly continually rising traffic and the lack of complaints about congestion in those places seems to be a pretty good proof that either a) Canadian congestion is a myth, or b) our networks are substandard.
Lastly, in my experience it’s pretty unusual for someone to take your line of reasoning without having some sort of financial stake in the telecom companies. I don’t suppose you’d care to disclose who you are or what that might be?
investor perspective
February 23, 2011 at 11:53 am
A stock price is a product of supply and demand but at some price every share will be held by someone. So just because it is held by investors does not mean it is a good investment. Nortel had many shareholders just before it went bankrupt. What the price does reflect is the cost of capital.
The fact that BCE shares have gone nowhere in over 10 years actually means their cost of capital has gone up. My point is simply that while consumers believe they are being gouged by greedy telecom companies, from the other side of the fence - the owners - the picture is not that clear. There is an argument to be made that they don’t charge enough and that would explain the low return on capital over very long periods of time. I’m just trying to bring a perspective that is not well understood by the anti UBB crowd.
Since we often compare our pricing to the US, its worth pointing out that their telecom industry’s return on capital record is even worse. See a 10 year chart for Verizon and AT&T.
Although its easy for consumers to dismiss the profit motive, it’s what makes a huge part of our economy work. Profit motive drives investment - at Bell and at innovative start ups.
How would you have guessed that I have a stake in telecom companies? maybe the name?
Maybe the investment based arguments. But don’t form the picture of some wealthy investor in it to get themselves rich. I buy telecom companies on behalf of thousands of people who trust us with their pensions. We’re looking for 8-10% returns including a solid dividend.
Millions of Canadians have a financial stake in telecom companies - even though many might not know it. Anyone with a pension plan or a mutual fund in their RSP probably has some stake.
I’m on both sides of this - as a consumer and investor. Personally I use about 4-5GB a month and do think its odd that I pay the same as someone using 150GB. At some point usage drives the need for more investment. In my mind that is an irrefutable fact. I’m not saying the pricing is necessarily right but the concept of usage based pricing is.
petenowak2000
February 23, 2011 at 3:27 pm
You probably should know that I spent most of my 14 years working in business sections including the FP and ROB, so I’m well acquainted with the investors’ side of such arguments. I would contend the reason why telecom companies - phone companies especially - don’t return well is because they are descendant from government-owned monopolies. While their markets have changed and become dramatically more competitive in recent years, they still haven’t completely shaken that old mentality. No phone company anywhere that I know of is nimble and quick to respond to changes in the market, which is why their stocks go nowhere. Instead of innovating and competing, they engage in regulatory capitalism (you probably know what that is, but look it up if not).
I got a real kick a few years back at the Telecom Summit when a Quebecor exec told a Bell exec that if Bell spent nearly as much money on its networks as it does on lobbyists, it wouldn’t be getting pummeled by cable companies. Too true.
What phone companies have historically been good for is a relatively stable stream of dividends, which is why a company like Bell is so widely held (I was being rhetorical when I asked you why). Cable companies have typically been a little different. They were generally started by entrepreneurs and therefore more willing to take risks, resulting in relatively volatile stocks but usually better returns.
Personally, I would never willingly invest in a traditional phone incumbent regardless of how much it pulls in if that revenue is contingent on its gaming of regulators and government. If the underlying company is not well run that beefy revenue is only one bad government/regulatory ruling away from disappearing.
toxology
February 23, 2011 at 3:42 pm
There are so many countries that offer unlimited data usage, with the exact same kind of network we currently have and the same kind of rising demand. Why have there been no complaints about “congestion” from these companies? Umm maybe because the internet doesn’t work like a utility? How can you explain that?
Answer that question and maybe I’ll hear the rest of your arguments although I am pretty sure you don’t really have a grasp on how the internet actually functions.
The fact is that congestion is a non-issue and should not be the main driving point behind capping my bandwidth and then charging me more.
themusicgod1
February 22, 2011 at 7:36 pm
1) “the price we pay for delivery has doubled in six years.”
is dishonest. Inflation has doubled the cost of practically everything in 6 years. Also — the internet is significantly more useful, so it is worth paying more for it in any case, even if so.
2) Foreign ownership isn’t the only regulation keeping this game from being a free market one.
Stanley Pain
February 22, 2011 at 7:38 pm
/!\ PLEASE STOP COMPARING INTERNET TO UTILITIES /!\
/!\ THEY ARE NOT THE SAME THING /!\
Now that I have that out of the way, I just wanted to say how atrocious the price gouging is. Why is it that in Toronto I can get a 100/100Mbps UNMETERED connection (I can pull terrabytes of data each month at no extra cost) for around $80/month WHICH ACTUALLY INCLUDES HOUSING A SERVER INSIDE A DATA CENTRE yet my residential connection of 25/1Mpbs (which is throttled and at times slow) costs me in excess of $120/month?
@investor perspective has not a clue about how the infrastructure works and should be ignored.
Not a bandwidth hog
February 23, 2011 at 1:47 am
Stanley,
The issue is the last mile. Getting those bytes to your house from the data centre. That is the expensive part. Just like getting a package delivered to the FedEx distribution warehouse is cheap (economies of scale) but getting that same package to your door is expensive.
Unless you want to live in a data centre, you need to pay for that last mile infrastructure.
Daniel Friesen
February 23, 2011 at 9:17 pm
Pardon me if I don’t get your argument straight.
But it sounds like you’re either arguing that:
- Like delivering a package each bundle of GB costs money to transport.
Trying to argue that the transportation of electrons across an existing line consumes some sort of external (at cost/billable) energy in the way that transporting packages consumes costly fuel.
Or more likely that:
- The creation of the connection of a specific point connecting to the network is the expensive part. In the case of a datacenter it’s all in one place so you only have to build one thing. But for residential use you have individual customers with thousands of lines to build and hence it costs more.
In which case, if the cost is the creation of the infrastructure which is universal to anyone using it. Then why would someone using 5GB/mo pay less than someone using 250GB/mo if it costs relatively the same to create the infrastructure?
Unless you weren’t making any pro-UBB argument.
Genik61
February 23, 2011 at 7:09 am
Compare cable Internet to cable TV… Same cable, same data “usage”, somebody have Basic TV, somebody all chanales (including HD), somebody watching 1 hour a day, somebody 12 h, is it fair? What about Usage meter on TV usage?
just a thought
February 24, 2011 at 4:13 am
good point, but with tv the cable companies have to pay licencing fees to broadcast channels, so there is a cost associated with the tv channel itself unlike internet data where there is no cost for the data itself.
Sandro
February 23, 2011 at 8:45 am
> 9. Delivery cost is paying for expansion.
> 8. Congestion has not been proven.
I think the more important point that’s missed is that the cost of bandwidth has been falling by roughly 60% per year for 40 years, so why have our internet costs gone up? Why do they continue to go up? Consumption of bandwidth only increases by 40% per year, so congestion arguments are pure bullshit, and increasing delivery costs are pure bullshit.
These numbers are cited in numerous studies on North American infrastructure, and there is no data supporting Bell and Rogers’ positions.
Dom
February 23, 2011 at 11:15 am
I think his point #10 is slightly misconstrued.
In some sense, data (or information) IS consumed by people.
The network will route and transport the requested binary data (say a webpage) to an endpoint (my computer), that data is translated into visual, auditory information that I perceive. When I move to another page, or close my browser, or turn off my computer, the information that I retrieved and have stored on my computer is lost. Nobody else gets to consume my information, unless I retransmit that information back through the network to someone else. The limited resource involved here is the capacity of the network, and sadly this is controlled by very few players.
I’m in favour of people paying for their internet usage, but at a fair rate. The main problem I see is that there is not enough competition to drive fair rates, and Ma Bell gets to continue to build a business that was born from of the public wallet many decades ago.
Sandro
February 23, 2011 at 11:22 am
> In some sense, data (or information) IS consumed by people.
What you describe is not consumption in any meaningful sense. You are correct that the network capacity is limited, and as a customer you’re paying for a certain *connection speed*, not for what flows over that connection.
If they can’t handle that speed for all their users, that’s their problem, not ours. As I stated earlier in the comments, cost of bandwidth has fallen faster than increased consumption for over 40 years. Any congestion is due to mismanagement and attempts to gouge you.
schultzter
February 23, 2011 at 12:06 pm
Yeah, but not in any sense that’s billable!
That’s the problem with this argument. If you buy 25 litres of gas then NO ONE ELSE can buy that same 25 litres!
But when you view a web page that in no way prevents me or 1,000 other people from viewing it at the same time.
UBB is like an airline over-selling it’s flights. Like the airlines the ISP could offer a credit to people who’s connection is blocked when there’s no more bandwidth. Unlike the airlines (who could get a bigger plane but don’t) the ISP’s could get bigger pipes. But what UBB proposes is to charge people a premium over what they already paid for the privilege of getting strapped to the wing when the plane is full!!!
UBB is a business model. Like any business model it attempts to extract money from people’s wallets for something they value. THERE IS NOTHING INHERENTLY WRONG WITH THAT!
The problem is the structure of the market prevents consumers from making rational choices! Either no choices exist (or won’t exist with this UBB proposal) or there’s insufficient information to make a rational choice (How many bytes do you use? How many will you use? What bytes are capped which ones are not? Etc.).
schultzter
February 23, 2011 at 12:16 pm
Their dividend has increased by nearly 40% over 10 years and although the stock price fell victim to economic circumstance it has recovered quite nicely. Blue chips are typically not capital growth stocks, they’re income stocks. That’s why people who need reliable income (pension funds, etc.) hold them. Even when the stock price dropped like a rock the dividend was un-affected.
someone
February 23, 2011 at 1:17 pm
Gov should buy or take over “last mile” then lease/rent back to all isp’s equally. the end. work out details before or after it actually happens. imo
Russell McOrmond
February 23, 2011 at 1:52 pm
Given the phone and cable companies have to get right-of-way access, there is already a policy lever. As I suggested in the first comment, structural separation may be ideal, but we need some shorter-term solutions to shorter-term problems.
This thread is interesting, and demonstrates the problem with the debate.
The specific issue before the CRTC was whether the companies granted that right-of-way access should be allowed to impose a usage based surcharge on ISPs who must use the existing infrastructure. This wasn’t understood by key CRTC commissioners and the chair who confuse this with the question of whether ISPs should be able to charge their customers based on usage.
These are *not* the same question. The last-mile connection and the GAS service are not *Internet* services at all, and what ISPs should or should not be able to charge is a separate question.
To me it is obvious that last-mile and GAS should be fixed-price based on width (maximum speed) available (aggregate in the case of GAS between CO and ISP). ISPs should also be allowed to get as close to their customers as possible, so phone companies shouldn’t be blocking ADSL-CO type services.
Nothing else is reasonable, and offering fixed-price raw data services should be a condition of getting the right-of-way access in the first place. In this capacity they are not acting as an ISP at all, but as a point-to-point distribution utility in the same way that other municipal utilities work.
How ISPs then wish to charge their customers should then be left up to the free market. Whether the anonymous coward alleging to offer an “investor perspective” is correct, or whether well known technology journalist Peter Nowak is correct, can be worked out in the open in a free market. Allowing a government-granted monopoly to non-transparently and unaccountably “tax” ISPs is simply wrong.
Peter: I wish your comment system had authentication. Then you could verify the credentials of citizen participants, and allow readers to more easily separate them from the anonymous comments. I don’t think these anonymous comments should or can be taken very seriously. In my case I have written about this issue on my BLOG, so people can tell it is me.
Transfer of $100 from Rogers to OpenMedia.ca
http://BillC32.ca/5286
Anyone wanting to know my credentials in this area can look up my resume/etc (Co-owned/operated a co-location Internet hosting service, etc)
petenowak2000
February 23, 2011 at 3:33 pm
Hey Russell - I have a pretty good idea who “Investor Perspective” is and I’m totally down with your points. I’d rather commenters manned up and used their real names but I permit anonymous handles so long as they’re civil (he’s been borderline on a few occasions). I don’t mind opposing viewpoints as they do often raise good points. Commenters who are overtly shilling are pretty easy to spot and I probably won’t allow those, although I haven’t seen any yet (crossing my fingers).
investor perspective
February 23, 2011 at 4:12 pm
Russell - in spite of your name calling I appreciate your comment and your knowledge of what is going on from a network perspective.
I have been trying to understand the dynamics of the GAS service. From your description flat pricing would make sense but according to others it works differently. http://mhgoldberg.com/blog/?p=4446
“for GAS, the ISP does not connect at the Bell local office; the traffic is aggregated with all other ISPs’ access traffic and carried to the point of network interconnection. This middle network – from the local switching centre to the point of network interconnection – is traffic sensitive”
Yes, I know Mark’s name is mud around here but as a non-technical observer of this debate, getting the truth on the investment required to sell ISPs GAS service is difficult.
As for being an anonymous coward, I actually agree. But unfortunately, due to the nature of my job and a duty to clients I think its would be innapropriate to use my real name. In terms of credentials as an investor, I jointly manage several billions of dollars in investment assets. That should give me some credibility to argue the “investor perspective”.
toxology
February 23, 2011 at 4:19 pm
It makes no sense to cap and charge me more, there is no internet congestion problem in Canada nor anywhere else in the world because there have been absolutely no complaints from countries where unlimited data usage is the norm. How can you say that companies are being hurt by internet congestion when similar companies like in Japan, US, Germany, all have unlimited data plans and are doing fine? With NO customer complaints about “slow internet due to congestion”.
epoxypatch
February 23, 2011 at 2:10 pm
well so what if millions of canadians hold telecom stock directly or indirectly. All that equity can be diverted very quickly when businesses crumble, and they do. Besides most funds are so diversified its usually a small percentage of any one portfolio. these days with millisecond buy and sell orders and stop loss, i don’t think worrying about big telecom falling and ruining our ‘economy’ is reason enough to hold up a rickety business model.
Dim
February 23, 2011 at 2:16 pm
Speaking of Big Telecoms wanting to get into Netflix. Whose fault is that?
Why would anyone want to pay $70/month for cable and watch endless commercials when you can get the same stuff with no commercials from online?
They should pay me to watch their cable services!!
Mike
February 23, 2011 at 2:21 pm
I’m glad i live in nova scotia and rely on eastlink for my internet services. it may only be a 15 megabit connection, but its unlimited bandwidth and not throttled on any protocols at all at any time of the day. i don’t mind paying the $60 a month i pay for it, because of the reason. and the only other choice here in nova scotia is bell aliant.
Derek
February 23, 2011 at 4:01 pm
To add to the discussion of facilities-based competition, Rogers recently bought out Atria Networks. Atria bought out a number of local fibre ISPs, thereby reducing the number of facilities-based competitors yet again. So the cycle continues.
petenowak2000
February 23, 2011 at 4:03 pm
Folks, let’s keep it civil. I don’t want to have to start banning people.
someone
February 23, 2011 at 4:50 pm
July 1, 2011 that might end. that is the cable UBB in affect date. they might change there minds to make more money just because they can, like Bell.
Derek
February 23, 2011 at 5:01 pm
If UBB billing goes through, how do you feel when you load a webpage that is 90% advertisements? of the 500k you were “charged for”, 450k of that was for the host of the website to support their servers. I, for one would want my ISP to either not charge me for the bandwidth associated with someone else’s advertising, or block the advertising entirely (PPV certainly doesn’t have commercials).
This is all a game that will continue to be played until the masses put a stop to it.
As many people well know, cable TV and cable internet run over the same network. Why is it that cable TV is charged by the month while cable internet should be changed by the GB? The sole purpose of cable TV is to bring video into your home, and now more and more channels are being offered in “HD” which simply means more and more data being sent over the same network. Why is it that as soon as someone signs up for a netflix account they are considered to be a “heavy user” and charged more than a “normal user”? Is someone who watches 30 hours of cable TV a month charged more than someone who watches 300 hours?
Furthermore, will my rate go down if I only use 10 of my 25GB for any particular month? Not a chance.
How can these companies continue to claim that Canada is on the forefront of telecommunications when our service has “improved” to what was available in the states 10 years ago, and was was available in the far east 20 years ago (exaggeration, I know).
Just something to get a few people thinking.
investor perspective
February 23, 2011 at 6:44 pm
The delivery of internet video like Netflix is very different from cable TV. Cable is a broadcast medium meaning every channel is being transmitted all the time. Also, everyone is getting the same signal simultaneously. Basically you have a pipe and you fill it constantly with as many channels as you can. You can split the signal and still get every channel to the end of each cable. If I had 100 TV’s in my house I could theortically split the cable 100 times and watch 100 different channels. But there would be no additional strain on the network. It would be like having 100 TV’s picking up over the air signals or 100 radios. Cable is very efficient at delivering linear TV.
Internet delivered video is a unique stream for each request. If I had 100 PCs and tried to watch 100 Netflix streams at once, 100 different streams would be required. Even if I had the last mile speed to be able to do this (400+ Mbps), each stream would be all incremental traffic on the network.
This is a less efficient way of delivering video but does a better job of delvering what you want, when you want it - something cable does not do well.
Since cable is broadcasting all channels all the time, there is very little justification for UBB. But since every internet video stream reprsents incremental traffic, UBB makes sense (to some of us anyways!).
Derek
February 23, 2011 at 7:44 pm
Each time you split the cable to receive a different channel you are increasing the load on that line. Admittedly, cable TV does function more like an ATM network where you have a guaranteed minimum, but current cable services allow you to watch up to 4 shows at once, that means 4 different video streams. These still pass through the same line that brings your video from netflix into your house, and I don’t see cable companies offering reductions for people who only watch 1 channel at a time vs those who watch all 4.
Please remember they are now charging a flat monthly fee for the theoretical maximum of the line (no guaranteed minimum), as well as the amount of bytes you send over that line. Since the proposed prices for either of these would more than satisfy the financial needs of expanding the network to accommodate the increased traffic of the future of the internet, I find it appalling that these companies would try to slap us in the face with both price tags. Especially when these “lightweight” users can go through over 1 GB in a day of facebook-ing.
Juliusz
February 23, 2011 at 5:10 pm
I have an idea… what if new upstarts were to put up their own antennae in downtown toronto. a private hotspot? Charge would be $5/month and a 1gb cap/month.
It would be really popular with light users and make a huge profit. Now do this every 10 blocks or so.
shawn
February 23, 2011 at 5:14 pm
the bell rep said on camera that more than 90% of users never come close to their caps. if that is true then they are paying for “usage” that they aren’t even getting. that money-for-nothing should be good enough for the isps. if you are in favor of ubb then demand that you and the other 90% of users pay ONLY for what you use because that is not what you’re being offered
James Hebbard
February 23, 2011 at 5:44 pm
lets face it , were getting ripped off and if you don,t believe that then god help you all who believe there charging fair rates . Bell , rogers and teleus leading the way in in fair charges over cable and phone rates , they have told me even tho i don,t download etc i always go over my usage . It is complete frigging greed and what scares me is the goverment , crtc don,t really care , ( why should they wonder what there cut is ) <<< think that comment is way off , ok then think if it is so wrong why aren,t they putting a stop to it now , yes this very moment ???
peter
February 23, 2011 at 6:04 pm
With regard to Australia and New Zealand, it’s worthwhile noting that the comparison with Canada is inexact. Both these countries are at the far end of trans-Pacific pipes which, like it or not, are narrowed and fewer than the links between Canada and the U.S. where so much traffic originates.
There is a lot more justification for UBB in Australia and New Zealand than there is for it in Canada. Actually, the case for it in Canada is quite thin.
Clarity
February 23, 2011 at 6:20 pm
I’ve been trying to get my head around the whole UBB argument and why regular people aren’t getting it and I think it’s because the argument from the “against UBB side” lacks clarity for the average lay person (like me), and the “for UBB” side is doing everything possible to make it less clear.
I’m by no means an expert on how the internet works but I’ve been trying to get my head around the theory, and after looking at all the arguments, here’s my understanding of the situation, or more accurately, the myth vs. the reality. Please correct me if I’m wrong.
The Myth:
The “for UBB” side is trying to make the average, not tech savvy person, believe that congestion is caused by accumulated quantity of use that an individual “consumes” over a finite period of time, in this case 1 month. That’s easy for the average person to understand, because it’s like every other utility that they use.
The Reality:
What the “against UBB” side doesn’t seem to be getting across, is that an accumulated amount of bytes over time is irrelevant. It’s the number of bytes at a particular point in time that causes the proposed problem. Before a byte is downloaded, it doesn’t really exist (at least not on the network, the Telecoms aren’t storing it somewhere for somebody, they can’t even access it), and once it is downloaded it again doesn’t exist anywhere on the network. It’s only in that fraction of a second that it’s passing from one point to another that it actually/theoretically “exists”, at least in the potentially “congestion” causing sense that the Telecoms are talking about. What’s not getting across to the lay person very well I don’t think is the fact that if everyone in the city were to go online at exactly the same time, and download 1 MB, the “congestion” they are trying to stop would occur. Once the 1 MB is downloaded however, the congestion will again be instantly non-existent, because the “congestion” is speed related and not quantity related. The only thing putting a cap on usage does, is minimize the chance that everybody will sign on and download at exactly the same time by “scaring away” a portion of the users, with out of scale overage fees. The fact remains though that everyone could still sign on at the exact same time, download a file at the same time and cause the very “congestion” they would have us believe, usage limits will prevent. Not true.
Basically they’re waving a gun at a crowd people in the hopes that it will stop them from all rushing the same door at the same time, rather than making the door big enough to accommodate that split-second worst-case scenario. A few people will risk it and make a run for the door and take the shot, but the Telecoms are counting on the gun keeping most people back. Problem is, that the more people who get in line, the more people will rush the door until eventually you’re going to reach the capacity of the door. They’re just delaying the inevitable, and letting it build, rather than dealing with it now.
Seems to me, what they need to be doing is asking the government to start building bigger “doors” that everyone can use (Telecom’s and ISP’s), rather than waving guns around and in doing so keeping the entire country on the wrong side of a door that the rest of the world has already gone through. Of course if the government builds big, public-use “doors”, the Telecoms will lose all their business, so in reality, they aren’t looking for a solution to the problem, they’re looking for legal ways to take advantage of it, and using mis-direction and mis-information to help them get there.
Am I understanding that correctly, because I think most lay-people don’t get it.
petenowak2000
February 23, 2011 at 7:31 pm
Hey there - I think you can probably boil it down to point #1 that I made above. It’s nonsensical that we’re basically the only country thinking of doing this.
Aeth
February 23, 2011 at 6:27 pm
I am a fairly heavy bandwidth user. I surround myself with media all the time, and Steam, with modern games I can sometimes download 10gb or more in a single night. However, I am not against UBB in principle. What I am against is the ridiculously inflated prices suggested per gb. If it costs ~$.01 to deliver 1 gb of data, I’m not willing to pay 100x that. On top of that they were also suggesting a high flat fee. If UBB was reasonable, something along the lines of 10-15$ a month for the connection itself and 10-20 cents per gigabyte, it would be something I could accept. That way, if I’m a heavy user I pay 40-50$ a month as opposed to a light user who pays 20-25$. That, in my mind, is reasonable.
The implementations imposed on indie ISP’s in Canada however, are something I will always argue against, because of how heavily they gouge the customer.
Aeth
February 23, 2011 at 6:29 pm
*For clarification I’m not a big fan of UBB, but I do believe it is possible to implement reasonably. As long as monopoly telcos aren’t the ones writing the rules of implementation.
Russell McOrmond
February 23, 2011 at 7:04 pm
The reason why Mark’s name becomes mud in these conversations is because he is a telecom lobbiest. Part of his job, and he does it well, is to spin the facts in ways that favour the interests of a specific subset of the Canadian economy. He isn’t concerned with what makes good government policy, such as what would be good for the larger economy as a whole as opposed to the bottom line of a tiny few.
We agree where the issue is that was raised with the recent CRTC decision. From my first comment it isn’t (a) (wire from DSL modem to DSLAM, which is customer specific), and it isn’t (c) (connections from the ISP to the rest of the Internet, which would be competitive and thus would have been invisible to everyone).
The issue is at (b): The connections between CO’s and from CO’s to service providers.
I don’t want to say ISPs as Internet service is only one such service, and there is no reason that we shouldn’t be equally talking any other service (voice, video conferencing, IPTV, LAN extension, VPN, etc) that can be digitally encoded and offered. Since the place where congestion is alleged to be happening isn’t part of the *Internet*, the *Internet* should never have been part of the discussion.
While Bell representatives lied at committee and claimed otherwise, this is the same network that Bell wants to offer IPTV over, and thus their non-Internet service would be creating “congestion”, and yet they wouldn’t be charging IPTV customer a per-hour (AKA: per-GB) surcharge depending on how long their TV is on.
There are a few options available to us to deal with the issues at (b):
1) Allow/encourage service providers to connect within each CO that they have customers for. One such method is called ADSL-CO, which is where the right-of-way oligopolies must provide the service from the customers home to a DSLAM, and then the service provider connects their own equipment to the other side of the DSLAM. This has been actively opposed by Bell/etc, and you can ask them why. It is hard to feel any sympathy for their claim that they have congestion within their network when it is their own refusal to allow service providers options that is why that part of the network is shared.
2) If service providers can’t connect within a CO, then the backhaul between CO’s to a “master CO” which providers are allowed to connect to should be strictly regulated (cost+, where there is no cost to usage at this point and thus no justification for usage billing).
This is by far the cheapest part of the network for anyone to build out, and would for the most part involve lighting up some dark fiber, upgrading some equipment, and making better use of existing infrastructure. I won’t go into details (partly because I don’t have them), but in discussing this with people deeper into the system I’ve been told that Bell massively mis-configures equipment such that they aren’t utilising much of what they have installed and paid for already. From everything I’ve been told (by those not lobbiests for the incumbents), it would be cheaper to increase capacity at this part of the network than to install equipment to inspect and meter it. This is the same debate we had years ago with the introduction of DPI where the equipment to do DPI is much slower than the network connections and routing equipment to just route everything to a service provider and allow any inspection to happen there. Like UBB, locating DPI within the inter-CO network rather than elsewhere has nothing to do with network management, and everything to do with anti-competitive practises.
3) Give up, and allow Canada to become an outsider to the emerging knowledge economy in order to (at least temporarily) line the pockets of a few telecom executives and their lobbiests. Allowing the right-of-way oligopolies to punitively tax the knowledge economy at such an excessive rate would mean that innovators would be forced to leave. I would have to be honest and suspect it would be highly unlikely I would still be Canadian at retirement if such a policy were retained.
Russell McOrmond
February 23, 2011 at 7:37 pm
I don’t think I’ve successfully explained these types of issues to a lay-person without a whiteboard and the ability to draw and discuss with them several network diagrams. And I’ve been at this a few decades now, long before the current round of discussions
Stanley Pain
February 23, 2011 at 7:43 pm
Stanley Pain
February 23, 2011 at 7:44 pm
Meant to quote only Russell and not investor :/
Stanley Pain
February 23, 2011 at 7:51 pm
As far as explaining this to a lay person I’ve found the follow ->CAR<- analogy to work quite well. I know some of you might be cringing already
You have a 4 lane highway (the highway is the last mile connection to your house from Bell/Rogers/Whoever). Traffic (amount of cars/BANDWIDTH) increases year over year. Instead of upgrading the highway to accommodate more cars (bandwidth), they tell you can only travel X amount of kilometers (so many GB/month) on the road before they start to charge you more. I seem to get fairly non-doe-eyed looks from people when I explain it this way. Who knows if I'm actually making sense.
Al Worobetz
February 23, 2011 at 8:28 pm
The world desperately needs more of this type of investigative journalism.
Russell McOrmond
February 23, 2011 at 8:57 pm
This analogy is a great start and explains clearly how congestion is a separate issue from usage. One is tied to a part of infrastructure at a given time, and the other is not.
The analogy unfortunately breaks down when you get into details about how to solve the congestion issues.
Roads are (for the large part, with very few exceptions) managed by the public sector. We recognised early in the industrial revolution that transportation was strategic for the industrial economy, but Canadians have not yet recognised that communication is strategic for the knowledge economy.
We are citizens, taxpayers as well as users of that publicly funded and managed transportation system. We have the influence of being taxpayers/citizens to influence that management. We as a society generally consider over-taxation to be a sin, not something presented as good from the “investors perspective” *grins*
There is no taxation without representation, so congestion statistics and all relevant costs are made fully transparent and available for a $5 access to information request (or increasingly under proactive disclosure, published in the media, etc). We have all the facts and figures to have a public debate to be decided as part of consultations to the government, etc.
Governments often hire private contracting firms to do the actual road work. Governments would *never* grant these private firms the ability to charge users of the road whatever they wanted, including allowing them to deliberately under-build the road at key (and least expensive to build) parts of the road network in order to create a method to “tax” road users.
There would be no roads that would have special carriage deals with private firms, where travelling on a city road is cheaper if you are going to Walmart rather than Canadian Tire (and who can afford to travel to Grandma’s house any more…) The road builders wouldn’t be allowed to do illegal search and seizures (DPI + shaping=packets dropped) of the contents of vehicles.
I could go on, but you see where I’m going. We already have structural separation with road networks between those who are hired to build the roads, the public sector who fund/manage/etc the infrastructure, and the various users of the road. Given this we don’t have the problems we see in telecommunications.
Julian
February 23, 2011 at 9:10 pm
UBB hurts internet startups like mine: publicrecords.org / publicrcrds.wordpress.org
mindcrash
February 23, 2011 at 9:17 pm
Dear investor perspective, since your traffic is ~5 GB a month, I might safely assume that you’re nearing your 50′s and still haven’t ridden off the bad habit of doing everything on and with paper.
By the way, where are annoying green supporters? More bandwidth usage - less plastic for distributing digital material
Now, since you’re claiming your knowledge of economic postulates you should know the difference between tangible and non-tangible goods. Let me open your eyes here: the data is not tangible. The data is worth for someone who produces and/or distributes it and on the other end who receives and/or utilizes it. You will say: they should pay for transfer! Both parties are paying for the access to the network to push data back and forth.
Here is some food for thought though. Bell, Rogers, Shaw not only own the data-channels, they are content providers as well, only they rely on old-school media delivery methods. Newly emerging services of data age are stepping on toes of these corporate giants by providing better and more affordable service. As an example, Netflix vs Pay Per View, going a little bit back there is p2p and VoIP throttling - that is, my friend, gouging competition.
You also mentioned that the price is formed via supply and demand. The entry level of economics teaches you that monopoly (in our case duopoly) creates an artificial equilibrium point which does not reflect the actual price.
investor perspective
February 24, 2011 at 1:28 pm
Mindcrash,
No- your assumption is not a safe one. Still in my 30s. I get my video via cable/DVR. I don’t use P2P. I use youtube and vimeo but other than that have not embraced online video. Tried and cancelled Netflix because the lack of decent content.
Other than that I sit at a computer 10 hours a day for work and when I get home to my 2 kids have little time to do much. I’m an online (Xbox) gamer but my understanding is that other than content downloads, actual gaming uses very little bandwidth.
I don’t really see the value of your “tangible/intangible” lesson. What point are you arguing against? I agree ISPs have nothing to do with the value of the bits but just the transfer of them. I’ve argued they are like a pipeline which doesn’t own the oil or gas but just moves it on behalf of suppliers and consumers. They pay based on usage.
As for your “food for thought”, I agree. The CRTC has allowed an incredible concentration of power and its hard to imagine alternative methods of media distribution flourishing in Canada given the vertical integration.
(btw, can we have a discussion without the condecending comments:
“since you’re claiming your knowledge of economic postulates ”
“Let me open your eyes here”
” safely assume that you’re nearing your 50′s”)
Stanley Pain
February 23, 2011 at 9:33 pm
I completely agree, but to a lay-person that’s complete overload of information. One of the things we have to remember is that most people don’t actually really care about the minute details. Apparently Investors don’t either
In a perfect world the last mile would be owned by us, the tax payers, and allow the real competition to happen where it should, providing Internet Service.
Clarity
February 23, 2011 at 11:02 pm
“I completely agree, but to a lay-person that’s complete overload of information.”
That’s exactly what the big telecoms are counting on I think, and further adding to the confusion by comparing it to other “utilities”. It’s easy for people to understand that if everybody were to leave there water on 24/7 at full blast that eventually the water would run out, therefore UBB, for water, makes sense. The big telecoms are counting on that understanding to allow them to slide by on their similar justification for doing the same thing to internet use. What no one has effectively explained to the lay-people yet is why that’s not a relevant comparison.
A more accurate analogy would be to compare it to the hot water in a house. If you have a giant hot water tank, and you’re the only person in the house you can have a nice hot, high pressure shower for as long as you want. If however, there are 100 other showers in your house, and 100 other people, if everyone tries to shower 24/7 the water is going to get cold in a quick hurry, and turn into a trickle or even a drip. The big telecoms would have people believe that they are providing the water, or at the very least the heat, but the fact is they aren’t proving either, they’re simply providing the empty tank. Someone else is providing the water and the heater to heat the water, but the Telecoms want to charge the user for both.
They would also have people believe that by charging people for using the water and the heat (that they aren’t providing) that they will permanently solve the problem of losing heat and pressure. With UBB they would have us believe people instead of everyone showering 24/7 for 100 days in a row, 1 person will shower each day for 100 days and all will be happy. Clearly they have never been in my house with my kids. The reality is that everyone will shower on the first day and everyone will have a cold, weak shower and will continue to have a cold, weak shower for 25 days at which point UBB will kick in and they will pay to have a cold, weak shower for the next 75 days, by a multiple of 1000 times the actual cost. The tank will never change from one day to the next but the company that made the tank is the only company that will profit from the use of the water and the heat, neither of which they provide.
At no point does the tank ever get larger or get replaced to solve the problem and accommodate the number of users properly, it’s creator just penalizes people for using it’s contents, in the hopes that people will realize a cold shower isn’t worth paying money for and step out, so that everyone else can have a slightly warmer, slighter harder shower.
Unfortunately most of us have to have a shower everyday, and stepping out really isn’t an option. For most people however, a cold, weak shower is better than no shower at all.
The only time it becomes a problem is when a provider of the water and the heat guarantees that the water will always be hot and high pressure, and never cost a penny more, then a flat rate fee.
Enter Fibe TV.
Interesting that just before all of this started Bell began offering Fibe TV (to carry the anology, the hottest most high pressure water available to date), a service provided over the internet that unlike most other internet based services demands a specific and very high level of bandwidth (heat and pressure) to function. Without that bandwidth the service will fail, unlike other internet services that will simply slow down, but still function.
It uses far more bandwidth and downloads massive amounts of data per month over the same infrastructure they’re saying is overloaded by small ISP’s, but because it’s a TV service, they can’t charge a usage based fee for the TV portion, or it won’t survive against other sources of television. I guarantee if you compared the Fibe TV use of the bandwidth, it would dwarf the use of small ISP’s, but good luck getting those kinds of stats.
So how do they ensure the product will maintain the required high bandwidth, and can expand to all of the homes they can possibly reach? They improve the infrastructure of course, and what better way to do that than to figure out a way to make their competitors pay for a disproportionate amount of the upgrades, while at the same time forcing them to step aside to allow as much bandwidth as possible for Fibe TV in the interim. As an added bonus, they guarantee that their biggest competitor in the On-Demand TV market (Netflix -who transfers much smaller files by comparison) is mortally wounded in the process.
Pure (evil) genius, dressed up as a solution to a problem, that it actually doesn’t solve in any way whatsoever.
Stanley Pain
February 23, 2011 at 11:20 pm
I’ve always laughed at Rogers and Bell screaming bloody murder about THOSE DIRTY, HEAVY USERS!!! More specifically Rogers before Bell was offering Fibe TV/IPTIV. The nature of the way cable works has been to broadcast all the channels down the pipe. Those HD channels require a very nice chunk of bandwidth. Must be nice to own the last mile
Traveler
February 24, 2011 at 12:35 am
I was just traveling in SE Asia, and pretty much every connection I picked up in hostels in Cambodia, coffee shops in Thailand was 2 gigabit. I was ftping to my server in the US, and it was way faster than from my office in NYC. I did a little research, and it looks like those connections cost about $20 us/month on average. Just saying…
Your pal, Cookie
February 24, 2011 at 3:04 am
There is a common statement floating around from various folks that goes something like, “when I think about how I pay the same amount for my 5 GB as my neighbour does for their 150 GB, I think I should pay less.” This kind of statement reveals a fundamental misunderstanding about the internet. For non-technical people, this is understandable — the internet is a sort of counter-intuitive thing when you are used to thinking of things in terms of electricity and gas. I agree with other posters who have accused pro-UBBers of taking advantage of this fact.
I would like to take a moment to make some metaphorical comparisons, some examples, that represent how this sort of statement sounds to me.
“My neighbour’s television is on all the time. They even stay up late to watch movies. I just watch an hour or two and turn it off, so I should pay less for my cable package.”
“My neighbour is on the phone all the time, but I just use mine to order pizza once a week. I should pay less for my phone line.”
“My neighbour is out boating on the lake every night. I only take my boat out twice, maybe three times a year. I should get my boat for less, like a rebate or something.”
“My neighbour makes a couple hundred bucks some weekends by helping people move with his truck. That’s not right. My truck should be cheaper, and maybe my neighbour should give me fifty bucks a week to subsidize my truck to boot.”
“My neighbour has a vegetable garden, and I do too, but my neighbour plants more and harvests and uses more of what grows each season. I don’t plant nearly so much, and half the stuff I grow, well, I never get around to eating it. I don’t really have any good recipes, and it mostly gets thrown away. My neighbour is a chef, and really knows how to use those zucchinis, but I am involved in the management of billions of dollars of investor cash. My mortgage/rent should be way less than theirs, and I should get a deal on the seeds, too.”
Now, I hit you over the head with it. On the internet, the factor of value is bandwidth, not total transfer. That means you should be able to get yourself a connection to it, pay for your bandwidth, and use it as you see fit. The actual cost of moving gigabytes of data is so cheap that it is virtually free. Let’s be generous and say it’s even a few cents. Of course, where are the buckets of cash doing things that way, all fair and junk?
When you start comparing how much data you moved compared to the neighbour, what you are really saying is, “my neighbour is getting more use out of their connection than I am,” like one person might get more use out of a power drill, or a brandy snifter. Most people would probably not think it was quite fair if the cashier at the hardware store asked you how much they planned to use the drill before coming up with a price, or worse, checking a drill-odometer every month. Folks with piles of unopened tools and unstarted projects might disagree.
Now, I think you should be able to pay for and get less bandwidth, if you’d like, and ISPs like Shaw purport to do this, but that is more like a less powerful drill that can’t do drilly things quite as quickly. It’s not a brandy snifter you are only allowed to fill two times a month.
Because that would be ridiculous.
investor perspective
February 24, 2011 at 12:52 pm
I don’t think most of your examples have many parallels with the internet. The boat, the truck and garden examples don’t work because they are not at any point shared resources. TV is broadcast - you and your neighbour could split your cable and both watch 24/7 without altering the demands on the network. Phone could be charged by usage and in some ways still is - like LD.
The internet is a shared resource. Your bits travel along side others.
Try this one:
Toll highways. I don’t commute every day but need to once in a while. But I do like to travel quickly when I do so I pay to take the toll road. So as a light user I don’t create alot of traffic in a month but I do still want to go a higher speed so I take the toll road.
A guy who commutes daily might want to go fast too so he takes the toll highway. But he uses it every day and thus, over a month, pays much higher tolls than I do.
When the company that runs the toll highway realizes that traffic is starting to slow because more people are using the highway, they use the money from tolls to fund the construction of new lanes. Because the heavy commuter has paid more each month, he is funding more of the cost. I am funding a smaller piece of it since I use it less.
The highway operator has made a promise of a certain speed to users but there is no way that if traffic doubles commuters will still get the speeds they expect. The additional traffic congestion eventually causes the need to invest more capital.
Its true that the next car that drives onto the highway has no marginal cost. But eventually more cars neccesitate more lanes.
******
So to “hit you over the head with it”: I’m the guy who wants fast access when I use the internet but I don’t use it heavily. My neighbour uses it everyday to get his video fix and do video conferencing.
Yes the cost of adding lanes to the internet are not as great as a highway but then again highway traffic doesn’t grow exponentially.
So its not just speed but also usage. If every end user expected to achieve their promised speed 24/7 don’t you think there would be a congestion issue? Speed is promised (well - not really promised
) based on expectations of total usage (probably as they affect bottlenecks).
You can’t argue that over time investment isn’t required and traffic increases. How would our broadband service look if nothing had been invested in the last 10 years?
********
Look - I’m not an idiot. I know there is a motivation to stop Netflix. I know that Canada looks expensive relative to other countries. I just think the principle of UBB makes sense.
Go back to my original post. I gave Peter credit on his final 3 pts which are the most important anyways.
Your pal, Cookie
February 24, 2011 at 1:50 pm
What you’re saying shows that you are still thinking about the internet like another utility, which it is not. The metaphors provided are meant to illustrate this distinction. In fact, they are meant to specifically contrast your inaccurate claims. I am glad they don’t align with your position. That is the point.
If you insist on being misinformed, there’s nothing I can do for you. Frankly, my comments are not for your benefit, but for others who might fall for your nonsense.
The bottom line is that delivering bandwidth costs money. This is what you should pay for monthly. Moving data in that bandwidth costs virtually nothing.
ISPs charge you for “excessive” data transfer because they can, and they managed to make it mandated by the CRTC. What a party that must have been! “It’s just like electricity,” they say, which it is not, and you eat it up, because you can understand your power bill and you don’t understand data networks.
Now, say I am an ISP. I look at the two main factors of my business: bandwidth and data transfer. If I sell bandwidth, the thing that costs me money, everyone just buys a connection, they rent my bandwidth. As every house and business finally gets a connection, I stop seeing any real growth. What to do? Well, there is this other part of my business that is growing, but costs me virtually nothing — can I somehow tax my customers for that…? So I manufacture false scarcity in data transfer. That’s the dimension my business grows in.
I’m not saying you’re an idiot, I’m saying you’re ignorant. I feel bad to belabour the point, so I acknowledge I’m laying it on thick, “hitting you over the head with it.” Big ISPs are taking advantage of your common ignorance to charge you exorbitant amounts for something negligible. If you knew better, you would be outraged, too.
Your pal, Cookie
February 24, 2011 at 2:45 pm
Probably, huh? This is the best part of your whole argument. You know there are little lies in what ISPs tell you. “They say they are selling you a speed, but,” wink wink, “you’ll never get it.” They let you think it’s your pirating neighbour gumming up the pipes. That’s a convenient scapegoat. When did this become acceptable?
The problem here is that ISPs are double booking bandwidth. They rent you a spot on the internet and they turned around and rented it to a bunch of other people, too, hoping that none of you would ever show up at the same time to notice.
The phone network works in a similar way — not everyone in the network can be on the phone at the same time. That’s why phone networks go down in emergencies — everyone uses the phone at once.
The fact is, if all the users show up at, say, 5:30 PM and download, say, 1MB, all at the same time, there will be congestion. This has nothing to do with the amount of data you have transferred before or after this point. That could be the only MB you download all month and it still caused congestion. But why?
Again, the internet is bound by bandwidth, not data transfer. The amount of data you move in the month is basically irrelevant, but the ISP has you sharing the bandwidth you paid for, so when you use the internet at a peak time, you (wink, wink) don’t get the speed you weren’t really promised.
Sean Cullen
February 24, 2011 at 3:54 am
The biggest issue I had with the MacLean’s write up is that MacLeans is owned by Rogers. So why is this never brought up? It’s completely biased and lacking of any facts. It’s sad when one of Canada’s leading news magazine and probably one of the more respected in the past is now being used as a propaganda machine to try and sway opinions about it’s parent company. I love Canada but this is sad and pathetic. We used to be proud of our technological feats (ie. the Canadarm and the Avro Arrow) but when we have a chance to grow with other nations these companies would rather make a few bucks now and get left behind. 17 years ago every ISP would offer unlimited internet but now when everything in someway or another is able to connect to the internet we put limits. This is sad and embarrassing to Canada
Mark Giberson
February 24, 2011 at 8:15 am
A friend recently got a Rogers Rocket Stick, 500 MB plan. He is a light users, he found out part way through his first month that he was over his limit…. turns out it was the microsoft,apple and adobe updates that were eating his bandwidth. Ilike most other people feel that UBB is nothing but a revenue stream, the same way cell access fee were/are. They have nothing to do with managing the network.
Shawfail
February 24, 2011 at 8:23 am
A lot of switchs havea switching capacity of 48gbps. Transfering data is cheap. switches nowadays can handle gigabit speeds and fibre even higher. Look at korea. I work with networks, it doesn’t make sense. Current networks are completely capable
Jesse Rae Lukin
February 24, 2011 at 11:39 am
I’m a total know-nothing technically about the internet. However, I spend part of every year in a country where my useage is unlimited and costs me about $25 Canadian per month. This is third world country. The connection is slow, usually plus or minus one meg, but it never fails. Korea, not too far away, is in fact delivering one Gig to almost half their country right now and expanding rapidly.
As I stated, I’m a complete dummy about technical matters. However, I do know politics and this issue has implications beyond the CRTC. The internet is more than entertainment. As OpenMedia has shown clearly, it’s a communication tool that can engage people in a common cause. Pure democracy. To a politician, this is a frightening proposition. I’m happy to see that so many people are still contributing their voices and their donations against the CRTC decision. But face the fact. Economics aside, the government wants this issue to go away. Their overriding concern is maintaining the status quo. If this initiative succeeds…well…
PAULETA
February 24, 2011 at 12:47 pm
Hi. I live with my parents. we have a 60gig limit. Both my parents works from home. I play online gamesand use netflix. My sister uses itunes. It costs us 50$ a month with a 5mbps speed from bell. we use about 70 gigs of bandwith.that extra 10 costs us 30$ more wich i pay to help my parents. Every discussion i’ve seen has spoken as individuals who use internet. What about the families that use internet. Is it fair for families to spend more using ubb? Does that make us hogs because we use 70 gigs as a family wich comes out as 15- 20 gigs aperson on averege? We also pay 100$ a month for tv from bell. I watch my tv shows online even though i pay for the channels since it’s hard sharing a tv with a teenage sister. Should i pay more for ubb since bell feels their losing on the tv end because people like me watch tv on tv? just asking since i don’t think its fair!
Your pal, Cookie
February 24, 2011 at 2:16 pm
What I am hearing is, “I’m the guy who wants a powerful snowblower to clear my sidewalk quickly and easily, but I’ll only use it once in a while. My neighbour uses his snowblower regularly. He’s always thinking of new ways to use that damn snowblower. I should pay less for my snowblower and he should pay more.”
This will sound like nonsense to you if you think the internet costs money in terms of data transfer. But it’s not nonsense because the internet costs money in terms of bandwidth.
Your pal, Cookie
February 24, 2011 at 2:17 pm
What the heck? Why did this end up here?
Clarity
February 24, 2011 at 1:20 pm
Of course the network is completely capable, this is just a huge scam by the big telecoms to get their competitors to fund a disproportionate amount of their own upgrades, that are only immediately necessary because they have plans to add a huge amount of load to the system via their own bandwidth-hogging IPTV products.
They’re just using a theoretical worst-case scenario to justify it. That is, everyone in the country going online at exactly the same time and streaming large amounts of data. Something that could really only happen if a significant percentage of the population converts to IPTV. And the only thing that would suffer irreperably from that scenario is IPTV, as everything else would still work, it would just slow down.
The best and really only solution is for the government to bite the bullet and buy the infrastructure off of the big telecoms (basically buy back the roads), and call on all of the companies, big telecoms and small ISP’s to fund a proportionate share of upgrades to bandwidth as deemed necessary by all parties.
Yes it would be a significant cost and there would likely be a lot of taxpayer complaints, but it has to happen sooner or later. It may as well be now, in these early stages before the cost of the infrastructure explodes, and before expensive upgrades are unilaterally made to the system that really only benefit, for the most part, IPTV providers, at the cost of internet users. Sure internet users would benefit to some degree, but for most it would be an uneceesary luxury that they’re being forced to pay for, to fund other people’s unlimited-use TV habits.
Right now the government has no control and no real understanding of what’s going on and are taking the Telecoms word at face value. It would be like City governments giving private asphalt companies free reign to decide when and where to fix city roads, or lay down new ones, then allowing them to force car dealerships to pay for it, per car, per use. Meanwhile, all the work the asphalt companies are doing is actually being done to turn the roads into runways, so that their sister company (that makes airplanes) has somewhere to land and takeoff from for free.
It’s crazy, but because the government hasn’t taken control of the parts of the infrastructure that should truly be part of the public domain, there’s no one in charge with a technical understanding of the issues, that can look at all aspects with public interests in mind.
The Big Telecoms would like people to believe that current high-users are being subsidized by average users, which isn’t true, whereas UBB would see Internet users subsidizing IPTV users. Essentially putting in place the very thing that Big Telecoms would have everyone believe they are stopping.
The government needs to catch up to the 21st century, and get some checks and balances in place, with proper, unbiased experts who can see behind the curtain and put a stop to this now before it really gets out of hand.
Either that or someone needs to figure out a way to get the internet through the already government owned and controlled electrical system….but that seems a little less likely, though probably not impossible.
Hannah
February 24, 2011 at 2:14 pm
I have followed through all the comments to date and find the conversation very interesting. I am a Shaw customer and was highly annoyed that this company chose to lower its caps without any notification to its customers and, at the same time, start charging for extra usage at the $2/GB rate. I don’t consider myself a ‘heavy’ user but by Shaw’s definition I definitely am. Both my husband I like to listen to Internet radio, to different stations, and some are transmitting at 192kbps. If one listens all through the day, like we do, just doing this adds up quickly. However, I doubt it adds much congestion.
As a result of this move by Shaw, I started monitoring my usage, by putting software on all our computers as well as installing monitoring software on my router. To date, I have noticed a huge discrepancy between what I see as my usage and what Shaw says is my usage. Shaw’s display of my usage is 48 hours old so I can never know precisely at any point how much Shaw thinks I am using. Why should I trust them? If one is going to liken this to utilities (which I think is a poor analogy), then I expect to have an accurate meter, that I can look at in real time. I do with hydro and water.
If these companies want to maintain the UBB model, then they also should be obligated to provide these ‘real time’ tools to its users so that one does not have to ‘guess’ at the usage amount.
I have to say, though, that I am glad that this CRTC/UBB issue has become so visible. I had never really thought about my internet provider all that much but now I can say, thanks to Shaw’s moves to limit usage, that I am glad to discover that there are many indie ISPs in the Vancouver area. One of them will probably have my business in the near future.
Derek
February 24, 2011 at 2:27 pm
Let me give you a little bit of perspective on “cost”. The Cisco CRS-1 is capable of switching up to 40gbps with a price tag somewhere around $450 000. A typical home DSL connection is 5mbps. That means that this router can handle up to 8000 such 5mbps connections simultaneously transferring at max speed (never happens) without any interruption to any of them. Each such connection costs a generous $30 per month. 30*8000=240 000 in monthly revenue. That means that in 2 months, Bell has regained the cost of the router. In 4 months they could buy a second and still have cash left over. I would love to be able to find a similar investment.
Now consider that Bell assumes that all 8000 connections won’t be simultaneously downloading at max speed. They ca increase that 8000 to 16000 and less than 1% of the time will there even be a noticeable difference. The issue of congestion comes up when those 8000 connections have been expanded to 40000 and everyone is now home from work at 6pm and 3 kids are on facebook while mom and dad do some online banking to figure out of they can afford that new computer that Dell advertised on tv. 2 or 3 people request a new page every 10 seconds on 40000 connections, and some packets are dropped at the router. Bell gets a bunch of complaints and upper management sees this as a way to get more money by putting the proper spin on the issue. Now suddenly “heavy users” are the enemy as their torrents “hog” all the bandwidth at 6am while you sleep in your bed not caring about whether the network is congested or not.
I, like you, am all for UBB. My issue is that in the current state of the issue the “light users” will not see their costs drop as they no longer support the “heavy users”, while everyone else will see their costs shoot through the roof. Returning to your toll road example, why do you care if the road is congested at 4pm if you drive down the road at 8pm? Perhaps it is time to connect those smart meters to the internet as well, although most T1 ISPs already throttle in one way or another.
Chris
February 24, 2011 at 4:41 pm
In other words, we have been paying 2-3% more per year for a service (bandwidth, which is at stake here) that has been decreasing in cost by 50% per year. Nice. Keep investing, but please! Don’t insult our intelligence with your flawed argumentation.
Chris
February 24, 2011 at 4:55 pm
Excellent Post, and one that should be published more widely (sorry for the editing - don’t want to be an Internet Hog
). The Telcos are once again trying to pull the wool over the consumer’s eyes with their doublespeak to covertly support their high bandwidth services and are asking the government to kill the competition. Unbelievable? No, Canadian!
Chris
February 24, 2011 at 5:03 pm
Exactly, and now is the time to teach these sharks a lesson and all switch to independent ISPs. There are absolutely NO advantages staying with the incumbents. And if you believe their propaganda of getting a higher speed, think again. My nest door neighbour on Sympatico was all proud of his 7Mbits connection, but in reality he only gets 2, while I, with securenet, on 5Mbits, get 4.3. Ha! How is that possible, you say? Easy… Just look at your contract where it says… “UP TO” 7Mbits…
Chris
February 24, 2011 at 5:05 pm
Yeah, same here, I guess the webmaster has some homework to do…
Chris
February 24, 2011 at 5:19 pm
Simple: cancel your overpriced satellite and internet package AND SWITCH TO AN INDEPENDENT ISP! If you are on DSL, there is NOTHING to prevent you from going to an independednt ISP. Once the technology is there, it’s YOUR CHOICE to get robbed blind or be smart about it. Of course, when you let them know you’re leaving, they are going to try VERY HARD to dissuade you, will offer rock bottom price or free service for a few months (then REALLY charge for it the months after that) and even convince you that their internet service is best because it’s ‘faster’… Yeah, right! You should ask my neighbours how THEY feel about how fast their ’7Mbit’ internet service is… “I guess I should upgrade my computer” is one of the most common justifications I hear from those in denial, LOL!!!
David
February 24, 2011 at 6:07 pm
Of course MacLeans is going to argue for UBB, they’re owned by Rogers.
Look at the bottom of this page: http://www2.macleans.ca/about-macleans/
Valter Vilar
February 24, 2011 at 10:40 pm
Bravo Maestro! Just to put things into perspective: What kind of Internet can you have in Japan for less than 10 dollars (no taxe$) a month? 200 Mbps down 100 Mbps up. Japanese don’t know what a down/up cap means.
Michael Kalus
February 25, 2011 at 1:54 am
Only that the capital layout for a pipeline is several times bigger than for an ISP. They have and are transitioning more and more services to an IP backbone, so they will already expanding their backbone capacity anyway, it’s in their interest as IP equipment gets cheaper and cheaper.
Meanwhile, a pipline operator not only has to physycially lay new pipes every time they want to increase capacity but they also have extensive overhead costs due to security regulations alone.
Now now, as pointed out above, they use the pipes for their other businesses as well. Besides, the initial capital outlay has been made long ago (last mile), the cost for upgrading / improving the backbone isn’t cheap but it isn’t really backbreaking either.
They already have packages based on bandwidth that you can get on the down/upstream. Isn’t that good enough for you? The main cost to hook you up (last mile and CO port costs) are the same, regardless if you pull down one byte or have bittorrent running 24/7.
Heavy users ARE subsidizing the lower volume (and cheaper) users.
Think about this. Let’s say the amortized cost for CO and last mile upgrade are $5/month, this is the base cost incurred by the ISP for every user they hook up. On top of that they charge you extra though. My Shaw bill is $62/month. So $57/month cover my bandwidth expenses and their profits.
Rule of thumb is a gig costs the ISP around 2 cents, but obviously they want a profit, so let’s give them 5 cents a gig and also another $5 for “future upgrades”. That means $52/month are paid for my updates, at 5 cents a gig that comes down to a bandwidth “allowance” of 1040GB/month or a bit over a Terabyte.
My downstream bandwith is 15MBit/s and my upstream is 1MBit/s, so theoretically in a month (31 days) I can push through my pipe: 5.3TB, that is if I use all of the 16MBit/s 24/7 at max, which is highly unlikely.
So I would say Shaw still makes a nice profit on me.
Genik61
February 25, 2011 at 2:24 am
Is anybody really think that Rogers, Bell, and … start this UBB thing to protect light internet users (85%) against heavy internet users(15%)? or plan is to use human nature in some of those light users (most of them have “light” knowledge in internet)to protect there almost monopolies (they have exclusive right to put there wires in our houses) and destroy dangerous competition - independent ISP. Thank you 85%…
What is next? Those light users will become heavy users and will pay for that, how?
1. 1GB in internet now and 10 years before it is huge diff., and what will be in 5-10 years: TV, Phone, and many other thing is going on internet and Rogers, Bell understand that they loosing TV, Phone bus. and they looking for way to charge a household max in future.
2. They can change usage cup to what ewer they want, any time and you became heavy user in second, even now when they have competition (many ISP). For example Rogers internet plans:
a)Ultra light- $27.99- download speed 500Kbps, Monthly usage is 2GB !!!, additional GB is $5.00 !!! It is for month, but with these speed you can finish these 2GB for a 1 hour !? Why they doing it, just to push you to next level to pay more! Again, even we still have small ISP now.
b)They have 6 int. plans and most expensive is $99.99
In those $27.99 is everything included (cost, profit and …) but they need more.
We pay for internet based on internet speed, in Rogers case cheapest is $27.99 and most expensive is $99.99. It is big difference in price, and “heavy” users paying for that.
And if ISP have congestion in there network they have 2 choices:
1.Build new modern network, what most developed countries do, or
2. Sell dial-up internet or 500Kbps and do not sell 25-50Mbps internet.
UBB is double charging system, it is similar like tomorrow Taxi will have 10 min usage cup
and after 10 minutes they will charge for kilometers and $5.00 for 1 min add. time, let say because they afraid of congestion in traffic or after 10 min driving they too tired.
Do they have right to do it, maybe.. but we need many many of Taxi companies and maybe regulation and hopefully it is never happens.
Tyler R.
February 26, 2011 at 1:11 am
I would just like to point something out here. If they really are having congestion problems, why did Shaw increase their download speeds by 50% FOR FREE on ALL PLANS last year? (in Vancouver )
It would just add to the congestion. Unless they were trying to create congestion, to justify UBB.
UBB
February 26, 2011 at 3:22 am
I am on techsavvy now, all because of Bell’s terrible “up to” serivce, and Rogers 60GB caps….
Techsavvy is pretty good though, slightly slower than rogers, but 300GB is solid.
Cory
February 26, 2011 at 1:36 pm
I too changed my service to 3WEB cable because of this UBB issue and that fact that I got tired of dealing with Rogers CAP (I never once went over but was always close). While I find 3WEBs service a bit less stable than Rogers (super high and low speeds at times), I love no longer having to monitor that 60gig CAP.
Cellulearn
February 26, 2011 at 3:18 pm
Taking a broader perspective is also important. Use of devices such as smartphones and tablets also provide access to the internet. Along with the more traditional access these will allow people, companies and organisations to do business in ways not even though of yet. The rest of the World is getting on board and recognise the benefits of this. If we allow our hands to be tied in Canada then it’s not difficult to see what will happen here. We’ll become increasingly uncompetitive at an ever increasing rate. Those wonderfully excessive short term profits the providers are making now will all too soon diminish and they will suffer in the medium to long term. Any shareholder should seriously question the wisdom of this.
takloo
March 2, 2011 at 9:58 pm
great post!
wouldn’t most if not all myths apply to wireless data usage? radio frequency spectrum is finite and can be expanded to accommodate more data but yet these oligarchic orgy of 3 ISPs rip-off consumers
Chad Cunningham
March 3, 2011 at 1:46 pm
Re: myth #10 - we run a small regional ISP (not affected by UBB decision) but here is an analogy on the arguement that BW is in fact like a utility. Our ISP business is like a toll highway. We lease the highway from a wholesale provider - our cost is determined by the number of lanes on the road. Imagine that each car is equal to 1 gigabyte of data. True that we don’t pay for each car that drives on the road - however as more cars go on the road we have to add more lanes to avoid congestion and therefore costs increase. So the cost of goods sold as an ISP increases as the amount of bandwidth used per customer increases.
in the past 5-years, we have seen a decrease of 2% in the average revenue per customer, over the same period we have seen an increase of 114% in average cost per customer for bandwidth. This trend is not sustainable - and therefore the business model must change. It is no longer feasible to provide one price for all users regardless of how much they use - not for our company anyway.
So maybe this is the crux of the arguement - politicians and public keep trying to paint all corners of the country with one brush - and the truth is that the economics are very different in remote areas than in metro areas.
Your pal, Cookie
March 3, 2011 at 2:26 pm
Chad, it sounds like your solution is to punitively tax people using the lanes you have instead of leasing enough lanes for the amount of business you’ve sold.
This approach, selling someone something and then punishing them for using it too much, feels like a scam when the consumer realizes you’re doing it. Can you blame them for being upset about it? If you lease 2 lanes (say, 16mbps) and then sell 8 people a lane each (8mbps), then tax them for using their lane more than you’d like (too many trips back from youtube and netflix), it feels to the consumer that someone is being dishonest. The response? “Well, you guys must all be illegal downloaders, anyway. Pay up.”
Nobody in this country should want to use punitive measures to restrict Canadians use of the internet. It inhibits innovation and our ability to remain relevant in the world economy. Instead of penalizing me for using what I’ve bought from you, do less over-selling. Get more lanes or stop selling.
The only sensible counter argument I can think of for this is that it’s too expensive to get more lanes. This would mean that adoption is growing faster than technology. This would mean that your lanes are probably under-priced, or you are selling more lanes than you need to to some individuals.
Have you considered selling smaller lanes to “light” users and fatter lanes to others, and doing away with taxing people who are discovering new ways to use, produce and consume digital services? It would mean, for a change, that the price of internet would more closely reflect its cost. Maybe, just maybe, it would actually be fair. That’s the sort of usage-based billing I can be on board with.
Chad Cunningham
March 3, 2011 at 7:37 pm
Cookie - you’ve hit on another alternative yes you could sell customers different plans with varying degrees of speeds, and most ISP’s do. I know for us anyway an “unlimited” plan will need to cost more than it does now in order for it to be sustainable. So back to the argument of should the price of the plan go up for everyone or just for those who consume more.
And in our market the issue is that it’s too expensive to get more lanes.
last point is your comment on how people are being penalized for using what you’ve bought from me. Fair point if you bought and unlimted plan that has now changed - but our customers bought a plan with defined usage limits, that was the deal. But in the case of an unlimited plan, a business has the right to stop selling something if they aren’t making money on the product.
Thats the retail side argument anyway - which is different than the wholesale argument that the CRTC is currently reviewing.
Your pal, Cookie
March 4, 2011 at 2:30 pm
This is the sticky situation I find the most confusing.
You are right - a business should be able to stop selling a product if they aren’t making money. A better option might be to adjust the price of the product to cover costs. So, a business can stop selling bandwidth it can’t afford to sell, or it can change the price to something it can afford.
This certainly seems to be a grey area, because your response is to charge people for something (data transfer) that costs virtually nothing to you (one could argue that you do not even own it), and your ability to measure it accurately is questionable (elements outside a customer’s control will consume their transfer quota). To myself and clearly several others, this seems morally dubious at best. Some of us, awoken by absurd rates and having seen the big picture, find it hard to stomach any caps at all, now.
I can’t think of another business where this sort of pricing model is justified. That is, a model where you get customers to pay a subscription for a service, then charge them extra for how much that service benefits them, all the while not providing the service at the level promised. This is wrong. Clearly, people get upset about it.
So, the point of confusion: why do it?
It can’t be for congestion management, we already know a minuscule amount of data per user can congest a data network without ever reaching a cap and very large amounts of data can run through data networks without causing any congestion at all. Why? Because congestion isn’t related to data volume, but you know this, Chad.
It can’t be to cover costs because you don’t provide data transfer so that has no cost to you.
It can’t be because it’s what people want. People who know what is going on (and there are more of them now) are outraged.
Why is it Chad? Why is data transfer suddenly the scape goat for the pricing shell game that some ISPs (by your description, yours included) are playing?
If bandwidth is more expensive than you charge for it, you can charge more or stop selling. Why not charge more for the bandwidth? Why charge me for something that isn’t really yours to sell?
Chris
March 4, 2011 at 6:18 am
“We lease the highway from a wholesale provider – our cost is determined by the number of lanes on the road. Imagine that each car is equal to 1 gigabyte of data. True that we don’t pay for each car that drives on the road – however as more cars go on the road we have to add more lanes to avoid congestion and therefore costs increase. So the cost of goods sold as an ISP increases as the amount of bandwidth used per customer increases.”
I am astonished to see that much confusion from someone who claims to be an ISP!
“We lease the highway from a wholesale provider – our cost is determined by the number of lanes on the road. True that we don’t pay for each car that drives on the road” There, you said it: congestion has nothing to do with time spent on the highway (total capacity transported, the basis of UBB) and everything to do with when that highway is used. Many light users will actually contribute much more to the problem of congestion by insisting on being online when everyone else is, that savvy users downloading large files at 3AM in the morning.
Punishing large capacity users for the problem would therefore be penalizing those who actually contribute the least to congestion.
Furthermore, charging for capacity when the highway stays the same is totally unjustified, precisely because it’s the same bloody highway.
You say: “however as more cars go on the road we have to add more lanes to avoid congestion and therefore costs increase. So the cost of goods sold as an ISP increases as the amount of bandwidth used per customer increases.”
That’s odd, because I am still using the same 5MBPS connection I was using before, and, furthermore, that speed has actually DECREASED at peak hours. Hmmm… I should actually be paying my ISP LESS for the reduced bandwidth, NOT MORE!
What you say is actually very suspicious. It would actually prove that in fact, you sold the same bandwidth to several people at the same time, hoping they would NEVER actually use it! And we should be penalized for it, when in fact we are ALREADY PENALIZED by the slowdowns and inevitable throttling?
So let me get this straight: not only should users be penalized for using what they paid for, but also accept getting LESS at peak times AND be charged for you to buy what we should have gotten in the first place, all the while when actual costs are diminishing dramatically?
Do you really think users are that stupid?
I’m sorry, man, but how do you expect users to believe this BS, especially when in the rest of the world the Internet costs much less and offers much more than here?
Like Mr. Clement said so clearly: you guys have to get back to your offices and start sharpening your pencils, because we see clearly though the BS. And in your particular case, YOU should be asking these exact questions I have asked, to the shyster who is leasing your bandwidth, because it’s clear to me that he’s done a fine job brainwashing you.
***
Users would be more than happy to pay for more bandwidth, if they actually were going to get more bandwidth, provided it was justified. Considering costs of Internet traffic has been decreasing exponentially as technology improves, I seriously doubt the industry can actually justify it. In any case, charging $2.00 per GB when it costs pennies when it is obvious that the amount of data transported has nothing to do with congestion is not only ludicrous, but it is also criminal.
Chris
March 4, 2011 at 7:24 am
“We lease the highway from a wholesale provider – our cost is determined by the number of lanes on the road. Imagine that each car is equal to 1 gigabyte of data. True that we don’t pay for each car that drives on the road – however as more cars go on the road we have to add more lanes to avoid congestion and therefore costs increase. So the cost of goods sold as an ISP increases as the amount of bandwidth used per customer increases.”
I am astonished to see that much confusion from someone who claims to be an ISP!
“We lease the highway from a wholesale provider – our cost is determined by the number of lanes on the road. True that we don’t pay for each car that drives on the road” There, you said it: congestion has nothing to do with time spent on the highway (total capacity transported, the basis of UBB) and everything to do with when that highway is used. Many light users will actually contribute much more to the problem of congestion by insisting on being online when everyone else is, that savvy users downloading large files at 3AM in the morning.
Punishing large capacity users for the problem would therefore be penalizing those who actually contribute the least to congestion.
Furthermore, charging for capacity when the highway stays the same is totally unjustified, precisely because it’s the same bloody highway.
You say: “however as more cars go on the road we have to add more lanes to avoid congestion and therefore costs increase. So the cost of goods sold as an ISP increases as the amount of bandwidth used per customer increases.”
That’s odd, because I am still using the same 5MBPS connection I was using before, and, furthermore, that speed has actually DECREASED at peak hours. Hmmm… I should actually be paying my ISP LESS for the reduced bandwidth, NOT MORE!
What you say is actually very suspicious. It would actually prove that in fact, you sold the same bandwidth to several people at the same time, hoping they would NEVER actually use it! And we should be penalized for it, when in fact we are ALREADY PENALIZED by the slowdowns and inevitable throttling?
So let me get this straight: not only should users be penalized for using what they paid for, but also accept getting LESS at peak times AND be charged for you to buy what we should have gotten in the first place, all the while when actual costs are diminishing dramatically?
Do you really think users are that stupid?
I’m sorry, man, but how do you expect users to believe this BS, especially when in the rest of the world the Internet costs much less and offers much more than here?
Like Mr. Clement said so clearly: you guys have to get back to your offices and start sharpening your pencils, because we see clearly though the BS. And in your particular case, YOU should be asking these exact questions I have asked, to the shyster who is leasing your bandwidth, because it’s clear to me that he’s done a fine job brainwashing you.
***
Users would be more than happy to pay for more bandwidth, if they actually were going to get more bandwidth and provided it was justified. Considering costs of Internet traffic has been decreasing exponentially as technology has been improving, I seriously doubt the industry can actually justify it. In any case, charging $2.00 per GB when it costs pennies when it is obvious that the amount of data transported has nothing to do with congestion is not only ludicrous, but it is also criminal.
Your pal, Cookie
March 4, 2011 at 11:29 am
Chad, I’m really trying to put myself in the position of an ISP to have a really full understanding of the situation, but some stuff just isn’t sitting right. Maybe you could clarify a few points. Also, it seems everyone is writing anti-UBB articles. Does anyone have a link to a sensible, factual article that is pro-UBB?
Anyway, on to my first issue of confusion.
You say you have seen a decrease of 2% in the average revenue per customer. I am assuming average revenue per customer is (total revenue/total customers). There are two ways this value can go down, three if both happen together: total revenue goes down (you have decreased your prices or lost high-earning business) or total customers goes up (with an insufficient increase in revenue to maintain or grow your total revenue).
This tells me that you have decreased your prices (apparently in spite of somehow having higher costs) or clients are bringing in less money per capita, which would indicate a client preference for a cheaper package in comparison to a more expensive option they previously preferred (perhaps because the cheaper option was only recently introduced).
Further, if these numbers are not sustainable, it means you cannot afford to offer the smaller package, but could afford the larger one when it was preferred, which implies that you used your higher-revenue business to subsidize a lower-revenue option. I am guessing the idea was to increase your customer base. I can only imagine the strategy was some sort of poorly thought out, “make it up in volume” scheme.
Here is where I get confused: pricing is something your company is in control of. A loss in greater volume is just a bigger loss. It sounds like pricing of your offerings was mishandled. Can you explain how it was not, and how now an arbitrary tax on your clients use of your product is justified?
Your pal, Cookie
March 4, 2011 at 12:17 pm
Okay, next point of confusion:
I am assuming average cost per customer for bandwidth is (total bandwidth cost/total customers). I think we know how this exercise goes: how can this number go up? I see two ways. One is that total bandwidth cost goes up without a sufficient increase in total customers to sustain the ratio. The other is that the total customers goes down and the total bandwidth has not been reduced commensurately.
It could be that the cost of X bandwidth has gone up in the past 5 years, but every accountable source I’ve seen reports that the cost of bandwidth has gone down, so that can’t be it.
It could be that you’ve lost customers but you haven’t pared back your bandwidth. That’s so thoughtless, I won’t accuse you of that.
So, is there another option? I want your numbers to not be fabricated, so I am reaching here. Perhaps you can only lease bandwidth in chunks? I think this must be it. You can’t just get “1 more user’s worth of bandwidth, please.” Let me know if I’ve mis-figured this.
This would mean that you are in a pickle such that you have X bandwidth you can buy in chunks of size C, but only enough customers for something like X - (C/2), so you can’t release a chunk of bandwidth (then you will have too little). What do you do?
This seems like an inefficiency of pretty meager proportions, Chad. Since I have to assume X is at least one C, and probably a multiple, and we know you are double, triple, quadruple, or more booking your bandwidth, there is some leeway that your company clearly plays in as it makes commitments to new and existing clients to deliver certain bandwidth. When you say you see an increase in 114% over 5 years, what that must mean is that you have just rolled into a less efficient area between X-C and X bandwidth than you were in 5 years ago, a problem inherent to the business you are in, that should have been accounted for in your pricing or marketing strategies. As an amount that fluctuates with normal customer attrition and adoption, it’s hardly a number you can point to to say, “the business is no longer feasible.” It’s just where your business is at right now.
Here is where I am confused: how is an arbitrary tax on the customers you have for using the product you sold them justified because your organization has some efficiency (and probably pricing) problems. Why isn’t the right thing to do here to correct your pricing or correctly size your business?
Also, are there other indie ISPs in your area? Could you pool together to lease C more bandwidth and then work out the cost between each other on how much you each actually use/sell to your clients? You could increase the effective resolution of C this way and improve your efficiency. Is there a technical reason that sort of solution isn’t possible?
petenowak2000
March 6, 2011 at 1:18 am
I have to agree with Cookie here, Chad. You’ll need to explain how your revenue has decreased while your costs have increased. Both suggestions seem to be fairly illogical.
Chad Cunningham
March 3, 2011 at 1:59 pm
Sorry one more point - other countries have spent far more on broadband than Canada has - and Canada has the second a larget landmass in the world. So if you break it down to public spending per square mile, Canada has probabley spent less than any country.
refer to this comparison on national broadband plans around the world:
http://en.wikipedia.org/wiki/National_broadband_plans_from_around_the_world
notice that Canada is spending $225 million over 3-years - where S. Korea who leads the world in bw to the home has spent over $50 billion in the past 5-10 years.
To put this disparity ino perspective - Canada is spending $22.5 per sqaure KM whle S. Korea is spending $500,000 per square KM.
This is why everyone in Korea has 100 mbps Interent - and will soon have 1 gbps Internet at affordable rates. In Canada, we have relied on private investment to build the network, and therefore the consumer is the one subsidizing the capital cost.
Your pal, Cookie
March 3, 2011 at 2:43 pm
This is a convenient and dangerous statistic - landmass. We’ve got one of the biggest ones in the world, and barely anyone lives here in contrast.
There is no way service providers are spreading infrastructure dollars over the entire Canadian landmass. Let’s not confuse UBB with “internet for all in every corner of the country”.
That said, you are right about one thing, at least. There has been a disparity in reinvestment in Canadian networks. I don’t see this as a fault of the public, however. Considering the profits posted by our core service providers, they have themselves to blame for squandering the opportunity to gradually develop our infrastructure. Now, we can all see who they want to pay for that ineptitude.
Should the infrastructure be public? Considering that it seems the market can’t be trusted to steward it, maybe it should. There are other options, though. Maybe there should be a service provider co-op that runs the central infrastructure, or maybe the government should use trade law to force service providing companies to split from their media-interested motherships. Just saying privatization and government control are two ends of a spectrum.
Derek
March 3, 2011 at 4:39 pm
I might suggest investing more where you will be getting the most return. Some 90% of the population of Canada is within 200km of the US boarder. Rather than investing in broadband on Baffin Island, upgrade Toronto from 5mbps to 20mbps for the same price. I promise you will get a better return on your investment. The population near the boarder can support it’s own growing needs.
As I am coming to understand more and more of the business model, what is 1 disappointed customer when the other 9 are happy?
mrG
March 4, 2011 at 9:10 am
fwiw, Brazil is ahead of us in Internet, and only slightly behind us in landmass. Besides, as others have readily pointed out, the useful and inhabited landmass of Canada is really very small and really very accessible to the bandwidth south of the border. And then yes, one in ten Canadians lives in Toronto, another tenth in Montreal, that’s a fifth of the population right there.
As to why ATM machines in Western Canada are routed through a switchbox on Front Street in Toronto (as was evidenced when said switchbox blew up a few years back) you would have to ask Bell about that. Ditto on why nearly all traffic outbound from Canada had to go through Chicago (does it still?)
mrG
March 4, 2011 at 9:04 am
so I says to the Bell telecanvasser, “You’re not selling me ‘high speed’, you are selling me modem-scale service that is only burstable, providing I don’t use it! Simply divide the bitcap by the bandwidth and you can see that you will only actually allow me to use this ‘high-speed’ service for a few minutes per day! If I divide the bitcap by the number of hours in the month, its really no better than dialup.” He offered to transfer me to a supervisor who would sell me their “$20 Unlimited Premium Service” but I declined, having already tired of their doublespeak.
Derek
March 4, 2011 at 1:22 pm
Small quote taken from your response so as not to clutter up everything.
This is a number that ISPs are looking at and saying “OMG PROFITS AREN’T AS LARGE HERE AS THEY USED TO BE!” The major telecoms saw this and decided to implement UBB (I believe somewhere around 2005) as a way to make up for the extra costs associated with increased web traffic. This whole UBB thing doesn’t have anything to do with congestion on the network, as has already been stated. It has been about sliding that profit arrow further into the green.
While that worked out nicely, a major hit was taken on the subscriber portion as people moved to indie ISPs who offered the “same” (using up to in the contract is so nice…) service except without the caps. Since the major telecoms are already locked in to contracts with the indies, they had to move up to the people who could force UBB into the contract. I cannot be sure what the CRTC heard from them but apparently it seemed like a good idea. Perhaps they are just as confused as to how the internet works as most others.
A little competition at the top end might be nice here. Prices will come down as companies compete for your business. They prefer to cooperate with each other so as to not have to spend the cash to expand, but rather make the consumer feel like they are responsible. The internet is evolving but Canadian growth is being stunted.
As an aside, please stop referencing ISPs to highways, you are more the access ramps to these highways. You are responsible for the last mile and that is all. You have nothing to do with the actual content (cars on the highway), nor do you have anything to do with the lanes on the highway. You are responsible for that measly little access point, as well as the stoplight at the end of it.
Myles
March 20, 2011 at 12:57 am
Pete, excellent article. Your article here should be required reading for all MPPs so they can finally upend the incompetent and biased CRTC and restructure the bias out.
I am a Bell DSL internet subscriber with an old “unlimited” high speed internet package. My usual download speed is 7.8 Mbps. When I try to download ANY torrent bell throttles it down to about 0.020 Mbps (20 Kbps) and OFTEN it goes down to 0.001 Mbps (1 Kbps) and even to ZERO. This practice occurs 24 HOURS A DAY: at 10 AM, 10 PM, and even 4 AM! When I try to do a file download from any website at the same time that my torrent is throttled down to zero (with tons of seeders and leechers) I can still get 7-8 mbps full download speed so that confirms that my connection is working fine, but that BELL IS TAMPERING WITH THE SPEED THEY ARE BILLING ME $71/month FOR.
I have just cancelled both my Bell phone and Bell internet and I am now on the 30-day waiting list to switch to TekSavvy DSL for HALF THE PRICE and 300 Gig cap, and with a multi-link PPP modem that will not be affected by Bell’s speed throttling.
Long live competition! And an end to corporate greed!