You may have heard much clamouring around the Canadian Internet about a recent CRTC decision to mandate usage-based billing. What does this mean?
Smaller ISPs buy network resources wholesale from the big players (Bell/Rogers/Shaw) to resell to us. This arrangement was put into place because, as I understand it, those resources were subsidized by our tax dollars and because the massive telecom companies needed some competition. Previously, a decision was made to allow the big ISPs to impose throttling (based on the type of traffic) on the resellers, which was met with a great deal of disapproval from consumers. The big telecoms seemingly backed off of this, or at least they don’t explicitly state that they practice it. As a Rogers customer I’ve seen no evidence of throttling of specific types of traffic on my cable internet connection. But that was apparently not enough.
Now, the CRTC has decided that the large telecoms are allowed to impose usage-based billing on the resellers. This means that ISPs buying wholesale network resources from the big guys have a cap on their usage of those resources and overage is charged at rates similar to what is charged to consumers. Naturally, the smaller ISPs must pass those costs on to their customers.
For example, TekSavvy is announcing that they must drop the cap on their 5Mbps “High Speed Internet Premium” plan from 200GB to 25GB and that overage will be charged at almost $2/GB. Their unlimited plan will be no more. This pretty much puts their pricing in lockstep with plans from Bell, which illustrates the consequence of the CRTC’s decision: mandating usage-based billing on the reseller ISPs effectively eliminates competition for the large ISPs. Providers like TekSavvy can no longer differentiate themselves from the big boys in any significant way.
While the official line is that this is a measure to prevent “bandwidth hogs” from congesting the networks, there is speculation that this is actually the big telecoms attempting to tighten their grip on old media business models. After all, these companies also own companies that produce content and provide satellite and cable TV services. It’s not hard to see that Rogers, for example, might be interested in pulling the plug on Netflix’s on-demand TV and movie service. Why pay for deluxe digital cable plans with HD channels ranging from $50-100 (separately from any Internet plan and with the cost of the receiver) when you can pay Netflix $7/month to stream a growing library of shows and movies in HD (plus many, many more in SD) over the Internet connection you’re already paying for?
(Oh, hey, did you know that Rogers has an online on-demand service? Did you know that Bell’s got one too? How very interesting… I wonder if they’ll apply the caps and usage billing to those, too. Food for thought.)
So it shouldn’t come as a surprise that Netflix is worried about this. But Netflix is just the tip of the iceberg. Video and teleconferencing via Skype, iChat, and Facetime. Software delivery via Steam, Playstation Network, and the shiny new Mac App Store. This decision will have a greatly negative impact on innovative Internet services and threatens to set back our technological progress by at least a decade. We can literally get better prices for data transfer by putting our data on expensive solid-state hard drives and shipping it to its destination, even if we throw out the hard drives afterward!
So what do we do? I’ve written my MP. I’ve signed the “Stop the Meter” petition, which has soared into the hundreds of thousands of signatures. You should do the same. This nonsense cannot be allowed to continue. We already pay some of the most exhorbitant rates for some of the worst Internet plans in the developed world, mobile and broadband. We cannot let ourselves fall behind while the rest of the world, with access to the seemingly unlimited potential of the world’s high-speed Internet infrastructure, dances circles around us.
This is an anti-competitive cash grab and must be stopped.