By the time you read this, I’ll be deep in the throes of the Consumer Electronics Show in Las Vegas, which is why I’m running this post. It originally appeared on the Macleans and Canadian Business sites last week, since I was in the process of running Sex, Bombs and Burgers-related posts here in conjunction with the U.S. release of the book. Since many readers don’t visit either of those sites, I thought I’d cross post it here too, so here it is:
Last week, independent Canadian ISP Teksavvy announced its new service plans, effectively dropping the other shoe in the long-running usage-based internet billing debate. While on the surface there are some things to like, at the core the new plans – and the regulatory system they’re based on – paint a disturbing picture of Canada’s future internet.
The CRTC set things in motion in November with its government-ordered revisit of the issue and came up with something called capacity-based billing, a sort of diet UBB. In essence, rather than large network owners charging indie ISPs for every byte their customers download, the new system requires the smaller companies to buy chunks of capacity based on how much they think they’re going to need on a monthly basis.
While some commentators praised the decision, others – including Teksavvy – said the regulator screwed things up again. While the system itself was okay, the fees that a few big network owners are allowed to charge through it were way too high, they said, which will inevitably result in price increases for customers.
All eyes have since been on Teksavvy, one of the largest and most vocal of the UBB opponents, to see what it would do. In the end, the company’s new plans and the accompanying explanation are something of a mixed bag. On the one hand, most existing plans are going up by $3 to $4, which fits the predictions of 10% to 15% increases some observers pegged at the time of the CRTC’s ruling. The issue, as Teksavvy puts it, is that while the fixed portion of its costs actually went down somewhat thanks to the decision, the variable costs can potentially go up significantly:
If left to stand, these prices will ensure that residential Internet service prices will increase dramatically as consumer usage at peak times increases… in the face of the recent decision, we have to modestly adjust our rates.
On this front, if Teksavvy is to be believed and the rate increases are essentially going to further compensate network providers, capacity-based billing has achieved the same effect as the intention behind usage-based billing: prices for consumers are going up.
On the plus side, Teksavvy is now officially offering higher speeds – up to 24 megabits per second – with usage limits that are generally much more generous than incumbents at prices that are significantly lower. As many people pointed out on Twitter, even with the price increases, the company’s plans are still way better than what can be found elsewhere.
But there are plenty of downsides as well. For one, Teksavvy has introduced the concept of non-peak usage – customers can download all they want in the wee hours of the night without it counting against their caps. Some observers call this “innovative,” but it seems more like the first step down a slippery slope. It heralds a future where internet usage is further compartmentalized – if it starts with file-sharing overnight, how long till someone makes it more expensive to watch online video in the evening, or Skyping during the afternoon? Not only can this approach become confusing, it can also become expensive and limiting in a hurry.
The only countries I know of that have adopted such non-peak usage concepts are Australia and New Zealand, both of which are in the process of building multi-billion-dollar next-generation fibre networks because their telco monopolies have failed to provide decent infrastructure on their own. The two countries, along with Iceland and Canada, are also the only ones where unlimited usage plans are uncommon if not completely absent. As I’ve pointed out before, one those countries (cough, Canada, cough) is not like the others. As far as anyone can tell, Canada is not an isolated island that must buy capacity on cables that run under the ocean.
Is the idea of compartmentalized internet service, where Canadians can only watch Netflix or other online video in the early hours of the morning for fear of exceeding their caps, an absurdist notion? Yes indeed, that’s a dystopian future that is perhaps an exaggeration of the issue, but it’s no less absurd than imposing a capacity-based billing scheme in response to congestion problems that large network owners have yet to prove.
It’s also thoroughly absurd to suggest that limiting how Canadians can use the internet – rather than expanding their use of it – is in any way “innovative.”
UPDATE: The Canadian Network Operators Consortium, a group representing dozens of small ISPs, also last week filed a complaint with the CRTC that challenges a number of aspects of the capacity-based billing ruling. The group doesn’t like the distinctions made between business and retail users under the system, as well as a number of technical issues, and asked for an expedited review of the issues, which the regulator promptly turned down. CNOC also said it may formally challenge the prices being charged by some big network owners in a separate complaint.
Some observers have pointed out that capacity-based billing is a fine system because it’s one that smaller ISPs are happy with, but that’s a bit of a misnomer. CBB is indeed a preferable alternative to UBB, which is the figurative gun to the smaller ISP’s head. Of course they’re going to like CBB over the alternative.
(Image courtesy of Zoomers.ca)