The recent debacle surrounding the approval of usage-based billing plans in Canada seems finally to be coming to a close–the Prime Minister there has taken an interest, and a plurality of parties have realized that quashing this particular bit of regulation is likely in their best interests.
It started when the largest telecom providers–the ones who own all the copper and fiber that the internet travels over in Canada, infrastructure that was paid for in part by the taxpayers–decided that there was no way they could continue to provide so-called “unlimited”* service to their customers. Accordingly, they sought–and received, from a regulatory body that was mostly composed of persons with strong ties to the telecommunications industry–approval to implement so-called “Usage Based Billing.”
By itself, as a concept, the idea isn’t quite so bad–you use more, you pay more–but the Devil, as the proverb goes, lies in the details. Previous plans with an imposed cap allowed usage up to greater than 100 GB; for your typical web surfer, that’s not too onerous and well within their ability to comply. Under the new regulations, however, the cap above which overages could be charged was lowered significantly; 20 GB was deemed fair–at the same price point, resulting in an effective fivefold increase in cost to the consumer.
The overages themselves were onerous as well, with costs exceeding $1/GB–unless you live in a French-speaking area, where that cost doubled for some reason–despite the marginal cost to the ISP (the actual resources used to deliver that data) being somewhere around the one or two cent per GB range.
Add to this that the resellers of bandwidth–those ISPs that did not own the fiber, but instead leased capacity from the major telecoms–were to be mandated to follow the same low-cap structure rather than to continue to offer so-called “unlimited” plans, and the new regulations begin to appear somewhat onerous.
Absent a wikileaks-style exposure of the internal logic behind the move, there can be only speculation as to the underlying cause–but there are some very suggestive details that may indicate a logical reason why the larger telecom companies would take such steps.
First, there is no real competition between them: each of these top-level telecoms has what amounts to a regional monopoly; there are few markets that are served by more than one of them. This is much like the cable TV operators in the US; they’ve expanded regionally, and once they were in a region there was no cause for any other operator to arrive.
Second, they also own the content: the programming and other services that the infrastructure carries are sold by the owners of said infrastructure.
Third, these content services directly compete with internet services–and here’s where the strongest evidence for their motivations surfaces. Pay-per-view programming (as well as the TV programming) is delivered digitally, along the same data connection that is used for the internet services. It takes up a comparable slice of bandwidth to internet video services (especially those specifically called out–youtube and netflix) but does not count towards the bandwidth caps mentioned above.
Logically, then, if the “preferred” content is delivered without a cap but the non-”preferred” content is capped, and if said “preferred” content is directly owned by the company doing the delivery, and it makes significantly more revenue for the company than the non-preferred content, there is a strong motivation for the delivery company to do everything it can to steer people towards this content–and to penalize customers who do not wish to consume it.
The evidence here strongly suggests that the large Canadian telecoms are attempting to monetize youtube, netflix, and similar services for their own gain.
This is similar to the tactic that the larger US ISPs have begun suggesting, that of attempting to charge the “large users” of bandwidth–again, netflix, which competes with their own video programming–for the “usage” of their infrastructure. It is worth noting that certain interested parties are attempting to neuter the FCC’s recent decision to attempt to regulate this sort of activity; “follow the money,” as the saying goes, to determine the influence in this instance as well.
Further, there have been numerous attempts by US ISPs over the past few years to implement low-cap internet plans. Wireless has had the greatest success here; the noted iPhone plans are limited to a 200 MB quota for normal consumers–a paltry amount of data, barely worth using. The operators plead infrastructure overload, but have made no moves to upgrade their supply to meet the obvious demand, despite the clear profitability of doing so.
Given that ecommerce increasingly depends upon fairly significant data transfers–most modern online stores have fairly bandwidth-intensive displays with pictures and video of products, flash animations, etc.–the institution of low caps can only serve to harm commercial interests.
*The so-called unlimited plans have an inherent cap built in, which can be determined through multiplying the maximum “allowed” speed advertised for the rate by the number of seconds in a billing cycle. The resulting product, by simple cancellation of terms, will be the theoretical maximum amount of data that can be transferred during that time. Given that most advertised connections do not connect at the advertised speed much of the time, and given that usage drops off significantly on ‘non-peak’ hours and, hence, the link is not saturated, the implications as to the reasonableness of the caps in question should become apparent.