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Canada likely to overturn usage-based Internet billing

updated 08:50 am EST, Thu February 3, 2011

Canadian government seen reversing CRTC rule

The Canadian government is expected to reverse a controversial ruling that many had seen as hurting Internet video and competition. Following a Canadian Radio-television Telecommunications Commission decision that would not only allow but in some cases require usage-based billing for independent Internet providers, a Conservative party official claimed late Wednesday that Prime Minister Harper and Industry Minister Tony Clement had already settled on overturning the CRTC's new rule. The regulator would have a chance to do so voluntarily but would be forced to make the change if it disagreed, the Toronto Star understood.

While the Conservatives have often been pro-business, the party is concerned enough about the anti-competitive nature of the ruling to take action. "A decision like this is clearly not in the best interest of consumers," the anonymous official said.

Clement in a Twitter conversation with a CBC reporter suggested it was virtually certain the CRTC measure would have to go back to the "drawing board."

Public reaction also likely played a factor. A petition with over 200,000 signatures, along with tens of thousands of e-mails to Clement and increasingly high-profile media coverage, may have signaled broad public opposition. A federal election is considered a possibility this year and could have seen usage-based billing as a major platform issue. Both the opposing Liberals and New Democratic Party were the first to formally object to the CRTC's ruling.

Bell Canada and Rogers, the providers considered to be the main architects of the usage-based policy, have argued that smaller, independent providers had to implement usage-based Internet billing if they used it themselves in order to keep bandwidth consumption in check. The increasing use of data required the change, the carriers said, pointing to sharp spikes in Internet use due to online video. Canadian carriers, like their American counterparts, have often referred to the "exaflood" concept of unmanageable increases in traffic, but the accuracy of these reports has been called into question as they have been drafted by paid pro-industry advocates.

Critics have argued that Bell, Rogers and other major ISPs have an anti-competitive incentive for usage-based billing rules. The approach prevents an independent provider from becoming a genuine competitor, even if it can fully afford to offer better service than its major rival. Incumbents have their own TV services and, after Bell's new CTV acquisition, now have their own TV channels as well. The conflict of interest can encourage them to impose artificially low bandwidth caps on themselves, and on independents, to discourage customers from using video services like iTunes or Netflix that cut into their more lucrative traditional businesses.

Under the rule, providers like TekSavvy could see their monthly caps drop from 200GB to 25GB as of March 1 and would effectively see Internet video services rendered useless. At 4GB for a typical two-hour 720p movie on iTunes, subscribers would start facing high overage fees after just six movies in a given month, even if they did nothing else online.

Observers have also noted that arguments about traffic increases often don't hold. The cost of supplying the bandwidth has usually decreased as quickly or faster than the increases in activity.

None of the carriers have commented on the claims. The rule could be overturned as soon as early next week.



By Electronista Staff
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Comments

  1. shaggudaddy

    Fresh-Faced Recruit

    Joined: Feb 2011

    +12

    down with the crtc

    I think they should scrap the CRTC and replace it with a with a neutral modern group the old f*** like Van finklestine

  1. facebook_Chris

    Via Facebook

    Joined: Feb 2011

    -4

    makes sense

    I don't have a problem with bandwidth hogs being charged, but the amounts that Rogers and Bell want to charge for this are ridiculous. There's a particularly interesting article in the Globe and Mail that breaks down the costs. If it's accurate, the CRTC should be taking a MUCH closer look at what the telco's are charging for internet use overall.

  1. erics

    Fresh-Faced Recruit

    Joined: Sep 2010

    +8

    Doh! Canaduh!!

    I would be in the poor house with the amount of data my house hold consumes. And thats just two people living there, can you imagine a family of 3+?
    Insane I tell yaa!!
    The CRTC has been the bane of evil up here for years.
    Sure the US has the FCC but these guys are honestly pure evil I tell yaa!!
    Were suppose to be a creative diverse nation...not with the CRTC involved :P

  1. facebook_Kimma

    Via Facebook

    Joined: Feb 2011

    +11

    guess what

    their is no one who a bandwith hog, that's a term the isp made up and people are believing. some people actually use the net they pay for and if you talk about the break down, a person who pays on average of 50 dollars for his net, could be aloud to use over 1 terabyte of bandwidth. And the isp would still make 100 percent profit on the net they sold. net cost them on average 2.5 cent per gig to transport across their network. yet they wanna charge 2-4 doallars per gig. That's 80-160 time the cost to them.
    don't be fooled their, are only a few products in the world where you can charge 160 times the worth, and almost all of them are own the telcos. Go figure

  1. Seluhir

    Fresh-Faced Recruit

    Joined: Feb 2011

    -1

    @ facebook_Kimma

    What are you talking about? There is such a thing as a bandwidth hog. Why? Not because they pay a lot per gig, but because the Node, Cable card, CMTS, or switch you connect to has a finite amount of available bandwidth for all people connected to it at any given time.
    Say for example a node has to serve 50 people(some more, some less). If it were designed to serve 50 people, it would PROBABLY have about 150 Mbps of available bandwidth. That might even be a bit high. Say, for example, that you are using 15 Mbps between 6 and 10 PM every night. That means that for the prime hours you're using 10% of the available bandwidth. Your share is 2%. You are a bandwidth hog.
    ISP infrastructures are designed around the concepts of people using their bandwidth for quick spurts, and then going back to low usage. This is the way the internet used to be. A person would go to youtube, quickly download the video(30 seconds or so) then watch it. Once the buffering is complete, your transfer is almost non-existent. This is why services like powerboost exist. ISPs want you to FINISH your download and upload as quickly as possible and get back to not using anything so that that portion is available for someone else.

  1. Seluhir

    Fresh-Faced Recruit

    Joined: Feb 2011

    -1

    Continued:

    However, now enter the scene things like Torrents and Netflix and all of a sudden people are reasonably able to use their ENTIRE downstream allotment for HOURS on end in stead of a few seconds, maybe 1-2 minutes, then back to minimal usage for a while. This is having a huge negative impact on ISPs - not because the 'bandwidth costs them a lot' but because you're not using more than the amount the node has available for hours on end.(also a clarification, the money you pay for your internet isn't 100% profit, the amount of money spent on maintenance, technical support, billing support, infrastructure improvements, equipment repair/replacement by your average ISP is staggering and probably takes up a VERY significant portion of that '100% profit' you talk about)
    Sure, you are absolutely within your rights to do so, however... for the ISPs to restructure to allow everyone to do this would cost them BILLIONS and BILLIONS of upfront investment. This is money that they can't afford, with even profitable ISPs only having a few hundred million dollars in available cash flow. So, to help fund upgrades like this, they want to charge people who are using more than their fair share an a per gig basis once they go over the amounts within their service agreements.
    Now I can agree, >2 dollars is excessive... but 1 dollar per gig is a reasonable expense since it isn't exactly like its even a NOTABLE percentage of their subscribers who go over the allotment. Maybe 2-5%.

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