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.