Home > Internet > The Canadian Pay-Per Internet Model — Update

The Canadian Pay-Per Internet Model — Update

This is a quick note summarizing a few recent adn ongoing developments over Usage Based Billing in Canada, or what I have called the transition to from the Open, User-Centric Internet to the Pay-Per Internet Model.

As I’ve indicated in previous posts, the CRTC triggered a firestorm of protest with its now infamous UBB decision of January 25, 2011. Among other things, in quick order, the decision spawned an online ‘stop-the-meter’ campaign by Open Media.ca that soon garnered nearly half-a-million signatures, mostly by Canadians who seem to have mistakenly believed that the metered Internet was about to be imposed in Canada for the first time. A House of Commons Standing Commitee on Industry, Science and Technology was also called in early February to look into the matter.

The CRTC offered some hope that it might turn the tide when it stepped in on February 8 to announce that it would revisit the matter. Within a month, however, any hope for a far-ranging review were dashed.  The focus, the CRTC declared, would not be on the steps that it and the telecom and cable companies had implemented steadily, even if stealthily, over the past decade, and with much added momentum in the past five, that have led to the near universal adoption of the pay-per Internet model in Canada.

According to the CRTC, the Internet access market in Canada is competitive and just fine. Its review will be strictly limited to the wholesale markets that small ISPs depend upon for survival and the January 25th UBB decision. For Internet users, this meant that perhaps 5 percent might be affected; for the other 95 percent, this arcane process would be irrelevant.

This past Monday was the deadline for those wanting to participate in the upcoming hearings to file their interventions. Bell seemed to steal the show with its proposal to withdraw the UBB model for wholesale Internet access services that got us to this place to begin with. Instead, it would offer a new model, one that it called the Aggregate Volume Pricing Model, or AVP for short.

Michael Geist and Ian Marlow in the Globe & Mail have already offered good reviews of the new idea.  Geist has also published a new comparative international study on Internet user fees and bandwidth that shows, among other things, that Canada is pretty much alone “in the world where virtually all providers utilize some form of UBB” (Geist on UBB).  As I’ve indicated in earlier posts, Bell led the way by adopting bandwidth caps and so-called excess user fees in late-2006, and the rest of the ‘big six’ — Rogers, Shaw, Telus, Videotron and Cogeco — quickly followed suit. As Geist shows, some other providers in some other countries have adopted similar measures, but nowhere are such practices the norm.

Here’s the key things to note about Bell’s new proposal to replace the wholesale UBB model with what it calls the AVP model:

First, it does nothing to change the pricing or use of the pay-per model and bandwidth caps for 95 percent of Internet users in Canada. In other words, so-called excess usage charges of between $2 and $5 per GB remain intact for the overwhelming majority of Canadians.

Second, for small ISPs (Teksavvy, Primus, etc.) that serve the other 5 percent, and rely on Bell and the other big cable and telecom companies for ‘last mile’ access services, it does mark an advance. It reduces the rates for gateway access services to $200 per Terabit (TB), or about  .20 per GB. It also implements these charges on an ‘aggregate level’ versus a per user model, allowing smaller ISPs some room to carve out their own business models, ie. unlimited, preset caps and excess usage charges, etc.

Third, it retains the ‘excess usage charge’, but at roughly .30 per GB this is much lower than the prices indicated above and previous proposals. The idea that bandwidth is pooled allows the small ISPs to decide for themselves how to deal with ‘too much’ Internet use.

Overall, the proposal offers something. It is a reversal of sorts, but one that applies to a very small segment of Internet users. Together with the CRTC’s refusal to take a fulsome look at the issues, Bell’s proposal delivers a double blow to those who want a wide ranging review of measures and practices that have steadily tilted the open, user-centric model to the pay-per, provider controlled model in Canada.

The insistence on tightly focused remedial action by Bell and the regulator should also remind us that there are two basic problems standing in the way of a more open Internet. First, a profound lack of competition and highly concentrated media, telecom and Internet access markets in Canada relative to historical and global standards and, second, a compliant regulator that have sanctioned this state of affairs almost every step of the way.

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