Canada sends ISPs back to dialup - Usage Based Billing

[Faqa]

ArsLink

Metered Internet usage (also called "Usage-Based Billing") is coming to Canada, and it's going to cost Internet users. While an advance guard of Canadians are expressing creative outrage at the prospect of having to pay inflated prices for Internet use charged by the gigabyte, the consequences probably haven't set in for most consumers. Now, however, independent Canadian ISPs are publishing their revised data plans, and they aren't pretty.

"Like our customers, and Canadian internet users everywhere, we are not happy with this new development," wrote the Ontario-based indie ISP TekSavvy in a recent e-mail message to its subscribers.

But like it or not, the Canadian Radio-Telecommunications Commission (CRTC) approved UBB for the incumbent carrier Bell Canada in September. Competitive ISPs, which connect to Canada's top telco for last-mile copper connections to customers, will also be metered by Bell. Even though the CRTC gave these ISPs a 15 percent discount this month (TekSavvy asked for 50 percent), it's still going to mean a real adjustment for consumers.

This is going to hurt

Starting on March 1, Ontario TekSavvy members who subscribed to the 5Mbps plan have a new usage cap of 25GB, "substantially down from the 200GB or unlimited deals TekSavvy was able to offer before the CRTC's decision to impose usage based billing," the message added.

By way of comparison, Comcast here in the United States has a 250GB data cap. Looks like lots of Canadians can kiss that kind of high ceiling goodbye. And going over will cost you: according to TekSavvy, the CRTC put data overage rates at CAN $1.90 per gigabyte for most of Canada, and $2.35 for the country's French-speaking region.

Bottom line: no more unlimited buffet. TekSavvy users who bought the "High Speed Internet Premium" plan at $31.95 now get 175GB less per month.

"Extensive web surfing, sharing music, video streaming, downloading and playing games, online shopping and email," could put users over the 25GB cap, TekSavvy warns. Also, watch out "power users that use multiple computers, smartphones, and game consoles at the same time."

You need "protection"

Here's the "good" news: TekSavvy users can now buy "insurance," defined as "a recurring subscription fee that provides you with additional monthly usage." For Ontario it's $4.75 for 40GB of additional data (sorry, but the unused data can't be forwarded to the next month).

There are also "usage vault" plans—payments made in advance for extra data. Consumers can buy vault data for $1.90/GB up to 300GB in any month.

Where once TekSavvy consumers could purchase High Speed Internet Premium at a monthly base usage of 200GB for $31.95 a month, now they can get about half of that data (if they buy two units of insurance) at $41.45 a month.


TekSavvy's DSL rates: now and after March 1
Very questionable

Starting to hate this? TekSavvy hates it, too.

"The ostensible, theoretical reason behind UBB is to conserve capacity, but that issue is very questionable," noted the ISP's CEO Rocky Gaudrault on TekSavvy's news page. "One certain result though, is that Bell will make much more profit on its Internet service, and discourage Canadians from watching TV and movies on the internet instead of CTV, which Bell now owns."

Given these dramatic changes, and the fact that ISPs around the world have made clear they wouldn't mind implementing similar schemes, it's no wonder that high-bandwidth businesses are fighting back. Last week, for instance, Netflix started publishing graphs of ISP performance in both the US and Canada, and it plans to update them monthly.

Netflix is also stepping up the war of words against ISPs who try to implement low caps and high overage fees:

"Wired ISPs have large fixed costs of building and maintaining their last mile network of residential cable and fiber. The ISPs' costs, however, to deliver a marginal gigabyte, which is about an hour of viewing, from one of our regional interchange points over their last mile wired network to the consumer is less than a penny, and falling, so there is no reason that pay-per-gigabyte is economically necessary. Moreover, at $1 per gigabyte over wired networks, it would be grossly overpriced."

The big question now is how these kind of billing changes will impact 'Net consumption patterns. Many subscribers use minimal data, but that's changing as Internet video becomes the norm. If these new plans simply discourage data hogs from backing up their 120GB pirated movie collection over the 'Net every night, there's no sleep to be lost. But if they scare consumers away from legitimate non-ISP affiliated movie and content sharing sites, that should be a firebell concern to consumers, entrepreneurs, and regulators.

And not only in Canada.

Short version - Bell Canada was given permission to charge ISPs using it's lines by the gigabyte, thus putting a MASSIVE hurt on those ISPs' ability to in turn sell bandwidth to their customers. I'm of two minds on this issue - "pay for what you use" has justice to it, and bandwidth IS limited by the infrastructure built to provide it, but the lines are not the private property of the companies, since I am given to understand the companies themselves are subsidized by the Canadian governed. Therefore, the issue is... complex, IMO.

[Aorus]

Or not. The federal government has forced the CRTC to reverse the decision: CBC Link.

The CRTC must reverse its decision that ends unlimited internet access plans offered by smaller internet providers or the federal government will intervene, Industry Minister Tony Clement says.
Clement told reporters Thursday that he and Prime Minister Stephen Harper sent a clear signal Wednesday night "that we do expect the CRTC to reverse its decision and to basically go back to the drawing board on this issue, and if they do not do this, we wanted to make it clear cabinet would take its responsiblites to do the same."
Clement said he heard from Canadians on the issue.
"It's a huge issue for a country that wants to move forward on the internet for jobs, for creativity, for innovation," he said. "[We] felt the CRTC ruling would have a huge impact on consumers and would hurt small businesses, would hurt innovators and creators."
Clement said that while he understands bandwidth capacity is a problem, usage-based billing "is the wrong way to do it — to force a business model on independent service providers if they do not want to use that business model."
P.O.V.:
Should the government intervene in the CRTC’s decision on usage-based billing? Take our survey.
Clement also defended the government's intervention on a decision by the CRTC.
"There is always a healthy balance and tension between a regulator that is appointed and a government that is elected, and I'm sure 90 times out of a 100 the regulator may get it right. But there are times when we, acting on behalf of the government, have to weigh in. That's our responsibility and that's our role."
And as he has done several times in the last 24 hours, Clement took to Twitter to explain the decision Thursday afternoon: "[O]f course there are challenges ahead to give consumers more Internet access at reasonable cost. But CRTC decision wasn't the answer," he tweeted.
Revealed intentions Wednesday
Clement made his decision public Wednesday evening on the social media tool.
Asked by the CBC's Rosemary Barton through Twitter whether it's true that Clement would overturn that decision if the Canadian Radio-television and Telecommunications Commission does not back down, the industry minister replied: "True. CRTC must go back to drawing board."
Clement's comments came as CRTC chairman Konrad von Finckenstein is set to testify before a House of Commons committee on Thursday.
Many small internet companies rent network access from Bell and then resell it to consumers or businesses at a discount. These small companies had been able to offer their customers unlimited internet access at a set rate.
But the CRTC recently ruled in favour of Bell, which wanted to put usage caps on the companies that rent its internet access. None of the big internet service providers such as Bell offer unlimited plans.
Bell had argued that extending usage-based billing to wholesale customers was necessary to discourage excessive internet use that caused congestion on its networks.
The ruling means these smaller internet companies can no longer offer unlimited usage plans. Their customers will now have to pay based on how much data they upload to and download from the internet.
The CRTC also said Bell would have to provide the smaller companies a 15 per cent discount on its rates.
According to Michael Geist, Canada research chair of internet and e-commerce law at the University of Ottawa, four per cent of Canadians use a smaller internet provider.
The larger providers have had user-based billing in place since 2006. User-based billing is not regulated by the CRTC, which only regulates the tariffs at which smaller providers buy their internet access from Bell.
But consumer and internet advocates have been lobbying hard against the decision, which they said would lead to higher prices and snuff out competition among internet service providers (ISPs.)
They also argued it would prevent consumers from taking advantage of new services such as Netflix, which allows users to stream high-definition movies and TV episodes over the internet to their television for a monthly flat rate.
OpenMedia.ca, a non-partisan group that drafted an online petition against usage-based billing, welcomed Clement's comments.
"Considering the lack of details, and a huge spectrum of possible actions before the government, OpenMedia.ca vows to increase the pressure until we see an end to unreasonable internet usage fees, and big telecom is held accountable to the public," the organization said in a press release Thursday.
More than 357,000 people had signed the petition as of early Thursday.

[Koolaidkirby]

Short version - Bell Canada was given permission to charge ISPs using it's lines by the gigabyte, thus putting a MASSIVE hurt on those ISPs' ability to in turn sell bandwidth to their customers. I'm of two minds on this issue - "pay for what you use" has justice to it, and bandwidth IS limited by the infrastructure built to provide it, but the lines are not the private property of the companies, since I am given to understand the companies themselves are subsidized by the Canadian governed. Therefore, the issue is... complex, IMO.

This was little better than extortion. Under their proposed plan it would cost consumers less to buy a SSD on the other end of the country, put their files onto it, and have it shipped to themselves via overnight shipping than it would be to download the same files. The infrastructure is owned by the small number of companies whose infrastructure....was built by the Canadian government before going private(I think its like 90% of the cables are owned by bell and Shaw). It was rightfully overturned.

[Zaune]

Short version - Bell Canada was given permission to charge ISPs using it's lines by the gigabyte, thus putting a MASSIVE hurt on those ISPs' ability to in turn sell bandwidth to their customers. I'm of two minds on this issue - "pay for what you use" has justice to it, and bandwidth IS limited by the infrastructure built to provide it, but the lines are not the private property of the companies, since I am given to understand the companies themselves are subsidized by the Canadian governed. Therefore, the issue is... complex, IMO.

Changing the terms that drastically for existing customers is certainly a shitty way to behave, but it rather begs the question of how many of their domestic customers even hit the 25GB limit. Depending on resolution that's something like three to five DVD boxsets a month; I don't have the free time to watch that much TV and I'm on the dole.

[Enigma]

This was little better than extortion. Under their proposed plan it would cost consumers less to buy a SSD on the other end of the country, put their files onto it, and have it shipped to themselves via overnight shipping than it would be to download the same files. The infrastructure is owned by the small number of companies whose infrastructure....was built by the Canadian government before going private(I think its like 90% of the cables are owned by bell and Shaw). It was rightfully overturned.

I think Rogers also owns a huge chunk of the infrastructure. yes/no?

[Koolaidkirby]

This was little better than extortion. Under their proposed plan it would cost consumers less to buy a SSD on the other end of the country, put their files onto it, and have it shipped to themselves via overnight shipping than it would be to download the same files. The infrastructure is owned by the small number of companies whose infrastructure....was built by the Canadian government before going private(I think its like 90% of the cables are owned by bell and Shaw). It was rightfully overturned.

I think Rogers also owns a huge chunk of the infrastructure. yes/no?

my point was that its an Oligopoly and there is no choice in the matter for both the consumers and the smaller service providers, but thank you

[Jawawithagun]

Changing the terms that drastically for existing customers is certainly a shitty way to behave, but it rather begs the question of how many of their domestic customers even hit the 25GB limit. Depending on resolution that's something like three to five DVD boxsets a month; I don't have the free time to watch that much TV and I'm on the dole.

Then try to consider a customer who does not use the connection alone. How about a whole family instead? Regularly watching streamed video - each family member having their own taste, the kids playing MMOs with regular huge updates, using software "in the cloud" and so on. It will get used up very quickly.

[Zaune]

Point taken, though I suspect not a lot of parents give their kids that much freedom to use the Net.

[adam_grif]

I'm confused as to what is going on here. Did Canada have bandwidth caps previously? I got the impression that they did, but somehow they are all getting lowered across the board because of something something monopoly osmething.

How is this being justified? I've heard rumblings of "oh bandwidth is so expensive", but obviously that isn't going to cut it. Low bandwidth users already outnumber high bandwidth users and effectively subsidize them. If bandwidth caps already exist surely the heavy users are already paying more than the low end users?

but it rather begs the question of how many of their domestic customers even hit the 25GB limit.

Actually it raises the question. Begging the question is a formal logical fallacy where the conclusion is assumed in the premise.

[Uraniun235]

Here's a video of George Burger completely destroying some "investor" asshole on this issue.

Short version - Bell Canada was given permission to charge ISPs using it's lines by the gigabyte, thus putting a MASSIVE hurt on those ISPs' ability to in turn sell bandwidth to their customers. I'm of two minds on this issue - "pay for what you use" has justice to it, and bandwidth IS limited by the infrastructure built to provide it, but the lines are not the private property of the companies, since I am given to understand the companies themselves are subsidized by the Canadian governed. Therefore, the issue is... complex, IMO.

This was little better than extortion. Under their proposed plan it would cost consumers less to buy a SSD on the other end of the country, put their files onto it, and have it shipped to themselves via overnight shipping than it would be to download the same files. The infrastructure is owned by the small number of companies whose infrastructure....was built by the Canadian government before going private(I think its like 90% of the cables are owned by bell and Shaw). It was rightfully overturned.

If I remember right, the original calculation showed that it would have been cheaper to buy an SSD, ship it, then throw it away.

Point taken, though I suspect not a lot of parents give their kids that much freedom to use the Net.

There's still lots of people who have roommates, or families with multiple teenagers, or hell even multi-generational households.

[General Zod]

Point taken, though I suspect not a lot of parents give their kids that much freedom to use the Net.

That depends on how you're looking at it. Two or three Steam game downloads is all it takes to completely go over a 25gb cap.

[Mr Bean]

Point taken, though I suspect not a lot of parents give their kids that much freedom to use the Net.

That depends on how you're looking at it. Two or three Steam game downloads is all it takes to completely go over a 25gb cap.

More like one if its an MMO if you count patches.

Also netflix can run you over that cap in a single weekend.

[Phantasee]

That's pretty much the point. The major ISPs, Shaw, Rogers, and Bell, are cable companies and satellite providers, on top of also being phone providers. Their VOD and other television income is under attack by Netflix and other online alternatives to traditional television viewing. $7.99 per month Netflix or $6.99 for one VOD movie from Bell/Shaw?

I switched my phone and Internet back to Telus because our house blows the new cap easily, and Telus has the same higher cap as before and claims they won't charge overages (yet).

[aerius]

Rogers, Bell, and the other major high speed providers have always had a limit of around 25-100GB per month on their plans depending on the package you've purchased. Go over the limit and they ding you with overage fees. This is nothing new, it's been this way for a good 10 years. Smaller ISPs which lease bandwidth & lines off the majors could often charge less because of the way their contracts work out.

As for Netflix, this is why they're all upset, they've been freeloading off of everyone else and that particular business model is now at risk.

[Pu-239]

I thought Netflix was using CDNs based closer to the users in order to reduce the need for long-haul bandwidth? Although maybe that's just the US.

[phongn]

I thought Netflix was using CDNs based closer to the users in order to reduce the need for long-haul bandwidth? Although maybe that's just the US.

They do. The big fight Netflix is having right now is that the cable companies don't want them to put in near-edge CDNs but rather pipe all traffic through as transit.

[Phantasee]

Shaw and Telus have never charged overages, they both would cut you off if you consistently blew your 75 GB cap by 20-30 or more. Then they encouraged you to upgrade your package.

[phongn]

Netflix has always freeloaded off someone else. First, it was the Postal Service. Eventually, they got sick of it and forced Netflix to make changes to be more efficient.

How does one freeload off the USPS when you pay each way (and first-class mail, at that)? There have been problems with the mailers, yes, but Netflix (IIRC) did redesign them to work better with the USPS' automated systems.

Now they're squeezing the ISPs.

They're willing to pay (reasonable) transit costs, IIRC, and want to deploy CDN nodes within the network to further drop their transit use.