Category Archives: ubb

The CRTC decision on usage/capacity-based internet billing is out and, true to form, it’s a complex one with lots of digesting to be done. There have been quick reactions from various parties about how the sky is falling or conversely about how the ruling is great for consumers, but the reality, as usual, falls somewhere in the middle.

The decision can be boiled down to two headline issues: the moderation of cable and DSL wholesale rates, and the elimination of any distinction between business and residential services for wholesale purposes. The first part is contentious, while the second one is definitely good for consumers, businesses and independent internet providers.

It’s probably wise to first set straight how this whole system works. Big network owners such as Bell, Rogers and Videotron are required to allow indie ISPs to access their infrastructure in order to sell their own internet services. This has been a long-held regulation meant to foster competition.

The Canadian Radio-television and Telecommunications Commission’s decision in 2011 implemented a new pricing structure on how these smaller ISPs would pay the network owners. The capacity-based-billing scheme charges them in two ways: once, a set rate for every one of their customers that connects, and twice for the total monthly capacity used by the indie provider. Read the rest of this entry »

How badly are Canadian internet users getting spanked? It’s amazing they can sit, according to numbers from PricewaterhouseCoopers.

Internet access revenues at service providers jumped by 17.5% in 2011, largely thanks to tiered usage plans, the professional services firm says in a new report.

“Canada’s broadband fees were lower than those in the United States in 2007-09, but as a result of large increases during the past two years, the average Canadian broadband subscriber paid 3.9% more in 2011 than the average U.S. subscriber did,” the report says.

But wait, there’s more. The average Canadian internet user can expect their bill to rise to $45 in 2016, from $38.43 in 2011. That’s another 17% increase. Overall broadband access spending, meanwhile, will grow by 9.9%, or nearly double the 5.5% in the United States. Ouch.

Why is this happening? There are two culprits. One is the fact that Canada ironically has a more competitive wireless situation than the United States. A few years ago, when the wireless new entrants - Wind Mobile, Mobilicity et al - were in the process of starting up, it was clear that was going to have repercussions on the wired side of things. With big incumbent cellphone providers set to start losing big bucks in wireless, logic dictated that wired customers would need to be milked.

As they say, you win some, you lose some.

It’s no coincidence that usage-based billing for home access started to become news at about the same time. Enter the second culprit for the steadily rising prices: the Canadian Radio-television and Telecommunications Commission. In the first part, the regulator accepted and condoned incumbent requests to use “economic measures” as an effective way to combat network congestion. In the second part, the CRTC also allowed those same incumbents to foist a watered-down version of this usage-based billing scheme onto smaller indie ISPs.

The actual existence of congestion was not proven in either situation. With monthly usage caps much larger in the United States despite the fact that incumbent ISPs there have considerably more users on their networks, it’s pretty clear that claims of congestion in Canada were largely exaggerated if not completely fabricated. Yet the CRTC swallowed them whole. Usage-based billing has always been a cash grab, plain and simple.

The gouging will continue, and really, why shouldn’t it? As I wrote last week, the regulator is too busy with make-work projects - like finding out whether subscribers are really getting 20 or 15 megabits per second - to focus on the real problems. This continued and increasing bilking of customers would figure high on that list.

When it comes to broadband internet, it seems like you can always count on regulators to turn a positive into a negative. Such was the case earlier this week when Federal Communications Chairman Julius Genachowski defended so-called tiered pricing by internet providers - known in these northern climes as usage-based billing - as worthwhile efforts in fighting network congestion.

Critics in the U.S. quickly jumped on Genachowski for swallowing the industry’s excuses for shrinking caps, which was ironic given that his comments came only days after Comcast - the country’s largest cable provider - announced it was raising or doing away with its limits.

Up here in Canada, the reaction was similarly negative. York University professor David Ellis pointedly points out that Genachowski, who was once admired for his supposed progressiveness on internet issues, has now apparently been suckered by the same fallacious reasoning our own regulators were once (and might possibly still be) enamoured with.

It’s a cliche that Canada might as well exist in a bubble, particularly technologically, as far as the United States is concerned because Genachowski should have looked north, where this topic has been debated ad nauseum, before making such a foolish proclamation. As Ellis points out, caps-as-congestion-fighters is an argument that has been largely discredited here. Too bad nobody told the Americans.

That said, I’m still wondering why many Canadians have such ridiculously low caps compared to Americans (typical plans on Bell and Rogers offer 60 to 70 gigabytes, compared to 300 or more on Comcast and the like). I put the question to Steve Anderson, head of activist group Open Media, and we ended up having a bit of a back-and-forth over email.

He said the reasons why Canadians are still paying too much for internet services boils down to the following: Read the rest of this entry »