Usage Based Billion Decision?

[leungly]

Full Article: http://www.crtc.gc.ca/eng/archive/2011/2011-44.htm

Commission’s analysis and determinations

9. The Commission notes that carriers’ retail UBB rates are market-based and are not subject to prior Commission approval – that is, they are forborne from regulation. The Commission also notes that the flat-rate component of the carriers’ retail Internet service rates recovers most, if not all, of the associated retail UBB costs. In the Commission’s view, this situation provides carriers with the flexibility to adjust or waive retail UBB rates on a promotional basis.

10. However, the Commission considers that, for competitors, carriers’ wholesale UBB rates are an additional, direct, and unavoidable cost that competitors will need to recover from rates paid by their retail customers. The Commission also considers that wholesale UBB charges will result in additional customer care costs for competitors, including a review of the relevant carrier’s wholesale usage records and associated UBB charges.

11. Further, the Commission notes its view in Telecom Regulatory Policy 2010-632 that services provided by smaller competitors bring pricing discipline, innovation, and consumer choice to the retail Internet service market. The Commission considers that, in the absence of a discount on carriers’ wholesale UBB rates relative to their comparable retail UBB rates, smaller competitors’ ability to continue to differentiate their retail Internet services would be unduly impaired.

12. In light of the above, the Commission concludes that wholesale UBB rates should be established at a discount relative to carriers’ comparable retail UBB rates and that, in the absence of such a discount, the wholesale UBB rates would not be just and reasonable, contrary to subsection 27(1) of the Telecommunications Act (the Act).

13. Regarding the amount of the wholesale UBB discount, the Commission considers that if it is too large, the effectiveness of UBB as an economic ITMP will be reduced, while if it is too small, competitors’ capacity to recover costs will be undermined.

14. The Commission concludes that a discount of 15 percent for carriers’ wholesale UBB rates relative to their retail UBB rates recognizes these considerations appropriately.

[Fuyuzora]

... 15% off of usage-based billing? Seriously? :loco

They phrase it as though it's some kind of benevolent peace offering, but it's more like a slap in the face.

The CRTC is a joke. Wish these dinosaurs would get disbanded and reformed with a group of people whose median age is closer to the demographics that are most impacted by their misinformed decisions.

Thanks for sharing.

[Fobio]

wow...great info...but really ****ed up title...

so...are they raising rates or not?

[Fuyuzora]

wow...great info...but really ****ed up title...

so...are they raising rates or not?

The decision basically boils down to:

Bell and Rogers have the right to not only implement usage-based billing on its own customers, but also to impose usage-based billing upon other ISP wholesalers' customers, whose companies make use of Bell's/Roger's infrastructure. (Wholesaler UBB rate can be 15% lower than supplier's rate)

i.e. Bell and Rogers have more or less complete control over Internet access, and can now restrict the amount of transfer you use in a month in order to discourage you from using new-media services such as STEAM and NETFLIX in favour of their own antiquated business models.

Also, note that usage-based billing is often in the league of $1~2 per gigabyte. The cost to supply 1 gigabyte of throughput to a consumer? Approximately $0.03.

Yes, that's a 3300% markup. EDIT: Can't find a reference to back this up, so take it with a grain of salt. Will reply when/if I find concrete numbers.

And the CRTC doesn't see the problem with any of this.

[bman13]

Read about this a while back....

Sign http://openmedia.ca/meter and share on facebook, like on facebook, tweet....being that the CRTC = all big 3 former execs, makes no difference but yeah at least we are trying.

[Fuyuzora]

Read about this a while back....

Sign http://openmedia.ca/meter and share on facebook, like on facebook, tweet....being that the CRTC = all big 3 former execs, makes no difference but yeah at least we are trying.

To clarify, the game's changed now - the OpenMedia campaign was an attempt to get the CRTC to wake up and smell the coffee before they made their decision.

That decision came today, and they (the CRTC) still don't understand what they've done.

So now the fight is on the retake the Internet in Canada, whether it be by having this CRTC decision struck down in court, having the CRTC disbanded, government intervention. (or some other means)

[bman13]

To clarify, the game's changed now - the OpenMedia campaign was an attempt to get the CRTC to wake up and smell the coffee before they made their decision.

That decision came today, and they (the CRTC) still don't understand what they've done.

So now the fight is on the retake the Internet in Canada, whether it be by having this CRTC decision struck down in court, having the CRTC disbanded, government intervention. (or some other means)

Well the CRTC disbanded is just a pipe dream. It should be an election issue but mainstream media would never help MAKE IT an election issue and majority of Canada would only care whether or not their Tim Hortons coffee is raised to $2.00 vs. this lol

I've posted on twitter, signed, posted on facebook everything from the 'disband the CRTC' letter to this'...I know nothing will happen but at least I'm feeling better that I'm actually attempting to do my part.

[Slade]

The decision basically boils down to:

Bell and Rogers have the right to not only implement usage-based billing on its own customers, but also to impose usage-based billing upon other ISP wholesalers' customers, whose companies make use of Bell's/Roger's infrastructure. (Wholesaler UBB rate can be 15% lower than supplier's rate)

i.e. Bell and Rogers have more or less complete control over Internet access, and can now restrict the amount of transfer you use in a month in order to discourage you from using new-media services such as STEAM and NETFLIX in favour of their own antiquated business models.

Also, note that usage-based billing is often in the league of $1~2 per gigabyte. The cost to supply 1 gigabyte of throughput to a consumer? Approximately $0.03.

Yes, that's a 3300% markup.

And the CRTC doesn't see the problem with any of this.


Can you show me evidence or PROOF that it only cost $0.03 for 1gig of data?

FYI, I do capacity management/budgeting/technology implementation for a large MSO, I see ALL the cost from the modem in your house, to the drop connected to your home, to the CMTS its connected to, to the backbone its connected to, and then out to the interwebs...I love seeing people say it only cost pennies...what about the millions invested in backbone transport, new technology implementation...do you wanna stay at 10Mbps for the rest of your life?

I don't like getting in these debates because I see the "real" cost, as opposed to the people who say it only cost you a nickel to get the data from the interconnects to your home...

/end rant.

[Fuyuzora]

I've seen LCA results presented previously that suggested the total end-of-pipe cost was in the sub-10-cent range.

I don't have any such studies available at the moment; I'll try to find them again and if the results are different I would be happy to post them here and adjust the numbers accordingly.

Costs aside though, I do strongly feel this is a thinly-veiled attack on digital distribution mechanisms (as I mentioned), and for that reason is largely anti-competitive.

[Slade]

Also, i'm not saying I agree 100% with usage based billing the way it is now or at all...I totally think you should pay an "access fee" for your speed tier/network access, and then pay for each gig/meg you download, then you can monitor your own network :)

[Fuyuzora]

Also, i'm not saying I agree 100% with usage based billing the way it is now or at all...I totally think you should pay an "access fee" for your speed tier/network access, and then pay for each gig/meg you download, then you can monitor your own network :)

If the ISPs agreed to end all throttling/DPI/prioritization activities, and adjusted their pricing schemes accordingly (both in terms of connection cost and transfer costs)... I think that probably would work for the best. :)

For the time being though, they don't appear (to me) to be doing any of the three: some modes of traffic are being interfered with, base costs remain in line with former 'unlimited plans', and now have transfer caps plus levies on further data at a very high rate. :(

Going to add a note to my earlier post, as I'm having a hard time finding any decent life-cycle analyses for ISPs.

[Pyro]

Can you show me evidence or PROOF that it only cost $0.03 for 1gig of data?

FYI, I do capacity management/budgeting/technology implementation for a large MSO, I see ALL the cost from the modem in your house, to the drop connected to your home, to the CMTS its connected to, to the backbone its connected to, and then out to the interwebs...I love seeing people say it only cost pennies...what about the millions invested in backbone transport, new technology implementation...do you wanna stay at 10Mbps for the rest of your life?

I don't like getting in these debates because I see the "real" cost, as opposed to the people who say it only cost you a nickel to get the data from the interconnects to your home...

/end rant.

honest question
don't these companies get large subsidies from the goverment for building this kind of infrastructure?
since it's in the public interest

I'm not denying that the big 3 have to put up big bucks for their infrastructure investment
but this ruling allows them to act in anti competitive ways - as Fuyuzora alluded to

1) against business models based on internet bandwidth - netflix etc

2) against the smaller isps that need to work on the same infrastructure. will they be able to make an honest profit with a 15% discount? yet these large companies need to post huge profits for the shareholders... the smaller isps won't be able to offer any packages that are competitive - they can't offer huge discounts that rogers or bell can (deeper pockets) and now they can't offer "unlimited" packages. Basically, how can they differentiate themselves from the Telecoms then?

Why would any normal consumer choose a smaller ISP if the package is no different (price or features) from the large corporation?

[bman13]

Also, i'm not saying I agree 100% with usage based billing the way it is now or at all...I totally think you should pay an "access fee" for your speed tier/network access, and then pay for each gig/meg you download, then you can monitor your own network :)

Do you have family or stake in CRTC? Just curious lol...first person I've ever come across to think this way.

Regardless of whether it's $0.03 or not every gig we are charged, that should not matter. This is just greed at it's best. While outside north america internet continues to get faster and cheaper, these kinds of regulations/measures put us at a disadvantage. Long term this hurts Canadians in more ways then you think. Not trying to discredit your professional opinion just want you to look at it big picture, how this doesn't move us forward but backwards.

Also, I just want to say I'll never want to pay an access fee cause to this day the fastest speed in my area is 6Mbps (that's the fastest from my ISP). It's 2011...lol like really these companies are laughing all the way to the bank.

[Zoom Zoom Boy]

See my comments in red.


honest question
don't these companies get large subsidies from the goverment for building this kind of infrastructure?
since it's in the public interest
(Sometimes yes, but most times, no. Usually only when they are building services to remote,under-served regions where it is a government initiative.
I'm not denying that the big 3 have to put up big bucks for their infrastructure investment
but this ruling allows them to act in anti competitive ways - as Fuyuzora alluded to

1) against business models based on internet bandwidth - netflix etc That is the whole point. Bell doesn't even hide this fact in telecom symposiums.It is part of their corporate strategy. Rogers is more subtle in these matters, but ditto for them.

2) against the smaller isps that need to work on the same infrastructure. will they be able to make an honest profit with a 15% discount? yet these large companies need to post huge profits for the shareholders... the smaller isps won't be able to offer any packages that are competitive - they can't offer huge discounts that rogers or bell can (deeper pockets) and now they can't offer "unlimited" packages. Basically, how can they differentiate themselves from the Telecoms then?
They can't. Which is why most small ISP's and start-up's went bankrupt and then had their assets eaten and divvied up by the large teleco's (see Grouptelecom) and the ones that are still solvent (see Primus), are barely so.

Why would any normal consumer choose a smaller ISP if the package is no different (price or features) from the large corporation?
Small ISP's are trying to differentiate themselves with the cut-rate pricing of unlimited services and bundling for local, long distance, IPTV and standard IP based services. Obviously this recent ruling hurts the IP side.

[Pyro]

That is the whole point. Bell doesn't even hide this fact in telecom symposiums.It is part of their corporate strategy. Rogers is more subtle in these matters, but ditto for them.

They can't. Which is why most small ISP's and start-up's had their assets eaten up by the large teleco's (see Grouptelecom) and the ones that are still solvent (see Primus), are barely so.



isn't this anti competitive?

[Zoom Zoom Boy]

isn't this anti competitive?

Yup. Big time. I am agreeing with you. There are tons of anti-competitive CRTC backed regulations in this country. This is just another good example. Bell, Rogers, Telus and others, don't want competition and are happy when their flunkies at the CRTC agree with them.