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I Am Skooter
So here's us, on the raggedy edge.
It's my father's voice dreaming of / Sailors sailing off in the morning
— Wilco, Poor Places
February 1, 2011
Usage Based Billing: How the CRTC Failed Us Once Again

Usage Based Billing is a term that millions of people probably never expected to know anything about, but thanks to a recent ruling on the part of the CRTC the words are entering the consciousness of the general public. Even the acronym UBB is starting to be used, though I suspect that this will end.

Essentially, the CRTC ruled a while ago that Bell Canada was able to impose caps on the bandwidth used by its customers. In a more recent ruling, the CRTC allowed Bell to impose those same caps on its wholesale customers as long as Bell provides a discount of “at least 15%” Bell is free to charge more for users who exceed these amounts.

Remember when the CRTC said they weren’t going to get involved in regulating Internet usage? I do. Oh for a return to those glorious days.

The CRTC operates under a mandate. You can read it online, if you haven’t exceeded your monthly cap. This mandate notes, in part, that “The CRTC regulates and supervises the Canadian broadcasting system to ensure the objectives of the Act are met.” The mandate goes on to note that “declares the broadcasting policy objectives for Canada. Canadian content, its development and availability to Canadians, is the underlying principle of the policy.”

While it’ s not explicitly stated, the CRTC is the public’s agency, and it’s supposed to act in the public’s best interest. There’s certainly nothing in the mandate that says that the CRTC is supposed to protect the commercial interests of the broadcasters.

With this decision, that’s exactly what the CRTC has done. They’ve defended Bell Canada’s interests instead of the public’s. I’ll summarize some of the many ways they’ve neglect the public interest.

The CRTC Has Ignored a Conflict of Interest

Bell Canada long ago stopped being “just a network” and entered the content distribution market. It did so when it started Sympatico as more than just an ISP but also as an Internet portal. The subsequent of a satellite TV network put bell firmly into the business of distributing content directly to customers.

Simply put: Bell has an active financial interest in you having more than just a single Internet connection. They want you to have a BellTV account, a land line and a cell phone in addition to your Internet connection. Every major Internet provider is in the same position.

More and more entertainment is being delivered by streaming media through your Internet connection. Allowing Bell to charge by usage effectively allows Bell to arbitrarily tax emerging streaming media services such as Netflix, iTunes movie rentals, and the live streams of sporting events that are beginning to become more common.

These services all need bandwidth, and in some cases quite a bit of it. Streaming an a two hour HD movie is uses about 2GB of data. A household that watches fifteen movies a month—not unlikely for a family with two children—would quickly eat through half of the 60GB cap that my high speed plan includes.

All the while, Bell is selling a competing service. This other service means they have no incentive to lower the price they charge for each GB downloaded. They actually have an incentive to increase it, in order to sell you an entire other service based on an old model of media distribution.

Skype, Google Talk and Apple’s iChat allow people to make Internet based long distance phone calls much cheaper than the traditional land lines that Bell and Telus sell, let alone the rates they charge on their cellular networks. Usage based billing makes using these services—which, again, compete with your Internet provider’s services—cost more.

Ignoring this conflict of interest is a major failing of the CRTC.

Usage Based Billing Stifles Innovation

Services like Netflix are just the tip of the iceberg for services delivered over IP. Every day, more and more services are being delivered over Internet based networks. These new services don’t always require large amounts of bandwidth—Twitter requires hardly any bandwidth, but has become a major communications medium in a short time—but when people’s usage is metered they’ll be less likely to explore these new services.

These new services happen because of the low cost of entry required to deliver them online to a large audience. Imposing usage based billing on Canadians effectively erects a a barrier against both building and accessing these services. Small and innovative companies wanting to enter the online space will be faced with higher bills for Internet connections than competitors in other countries. Similarly, Canadian consumers will be less likely to dip their toe into new services at the risk of ringing up bills.

It’s a lose lose situation.

Usage Based Billing Makes the Internet Less Democratic

The Internet has acted as a great leveler in many ways. The music industry has been rapidly transformed, and small independent bands have been able to use online tools to build large audiences that would have been impossible for them to gain in the traditional label system. (Of course it also gave us Justin Bieber…everything has its downside.)

By levelling the playing field, the Internet has allowed relatively unknown artists, filmmakers, writers and others to gain new audiences. In a world where it used to matter who you knew, the Internet gave people who didn’t know anybody the opportunity to get their work out and gain an audience.

Usage caps could change all that, and return us to a world where being popular begets more popularity and who you know matters as much as it used too. In a world where each download of a new movie, album or streaming music carries a potential cost it’s much more likely that people will simply keep listening to U2 than a streaming service such as Pandora, Last.fm or Spotify that helps them discover new music. Mainstream Hollywood movies will gain as much attention as they ever have, while new filmmakers struggle against the cost of the caps.

On the flipside, entrenched power structures will be reinforced as investors become less willing to take on risk. A free, open and flat marketplace for ideas indulges exploring new things. A marketplace where each idea incurs a cost drives investment to the familiar and the known—it’s how we got 11 Star Trek movies, at least 6 of which are shining examples of mediocrity.

The growing careers of artists like Said the Whale, Dan Mangan, The Decemberists, Kurt Vile and a host of other artists are owed to online media. In many cases these bands have built significant followings using Twitter, Facebook and YouTube and outside of the traditional star system. In a usage based billing system, you can pretty much expect more Bryan Adams music as people explore more conservatively.

Usage Based Billing Doesn’t Pay Artists

If usage based billing resulted in funds going to artists and if you could trust that the money was being distributed well I could possibly see justification for it. Unfortunately it doesn’t, and you can’t.

The potential argument here is that the fees could offset the loss of revenue caused by illegal downloading. It’s a silly argument that implies that every Internet user is a media pirate.

Usage Based Billing will enrich only the Internet providers. No money will go to artists. Not a cent.

Even if the commitment to create an fund for artists were made, there’s no reason to trust that the money would get there. The legacy of Canada’s Blank Media Copyright Levy is as clear a demonstration of that as any. The levy has been collected in some form since 1997 with no clear evidence of the money going to artists whose work might have been pirated.

Revenue from Usage Based Billing will allow Bell and other large internet providers to further protect their virtual monopolies.

Usage Based Billing Makes Us Less Social

With increasing numbers of people working online, in small teams and as freelancers access to WiFi has become critical. For many people, this means a trip to the local coffee shop. Places that provide WiFi have becomes hubs of creativity, meeting places for independent business people and community centres of sorts. Starbucks used to describe their stores as the third place—when you’re not at home, or the office you wind up at a Starbucks.

For some freelancers these visits to local coffee shops offer essential time away from desks and home offices. The stimulation that can come from these pseudo public spaces can be an essential part of the work process.

These third places aren’t new either. Intellectuals and artists have gathered in them for years, stretching as far back as Paris’ Left Bank. What has changed is the expectations of them. Writers no longer take block pads and pens but instead work on laptops with Internet connections.

With no control over what their customers are doing, these third places may face crippling Internet bills in Canada and be forced to shut down their connections. Even robust traffic filtering and blocking won’t be a guarantee against overage charges.

Losing these third places is a blow to the people who need them, and a significant blow to the modern economy.

Bandwidth is a Public Resource

Bandwidth, like broadcast spectrum, is a public resource. It should be treated as such. Bell, Telus, Shaw and Rogers were all granted virtual monopolies that allowed them to become the dominant players in their regions. Without the benefit of those decades long monopolies, they wouldn’t have the bandwidth they do.

Those government granted monopolies effectively make bandwidth a public resource, built with public funds. While I wouldn’t argue against Bell’s right to make a profit, that profit should not come with unreasonable restrictions on the use of the public resource.

Bandwidth Usage Has Nothing to do with Monthly Allocations

The notion of capping my monthly usage—even virtually, in the form of a surplus charge—has nothing to do with the way bandwidth is allocated and used. The speed of my internet connection does, but the volume of data I consume is peripheral.

Like most systems, networks are designed to work optimally under a presumed load. In the case of most Internet type networks that load is about 50% of the theoretical maximum capacity at any given time. Go beyond that capacity and the network’s performance starts to degrade.

Here’s the thing: you’re not using all that bandwidth at once. Surprising, I know, but it’s not as if every goes online at the same time and slams the network.

Even if they did the network is designed to accommodate the rush by allocating available bandwidth fairly. Packets can be prioritized so that real time services such as phone calls and video are higher priority, but the network will not grind to a complete halt. It might slow down, and you might get less than the speed you want but that has nothing to do with your monthly usage.

Usage Based Billing based on the data you use is all about fear, uncertainty and doubt. It has nothing to do with quality of service.

Billing based on network speed relates to quality of service, but the providers already do that: Bell, Shaw and Telus all offer different speeds of service at different prices, and that’s completely fair. If people want T1 connections to their homes they can pay for them. For most of us, standard DSL or Cable connections are fine.

Don’t Underestimate Fear Uncertainty & Doubt

Bell, Telus, Shaw and Rogers are all out there saying “Nothing’s changed. You can keep doing that you’ve always gone.”

This, of course, ignores the point. If we kept doing what we’d always done everybody would be sitting at home in front of oak cabinet televisions making calls from landlines.

There’s a famous quote attributed to Henry Ford: “If I’d asked my customers what they wanted, they would have said faster horses.” Your internet providers are telling you to ask for faster horses instead of looking towards the future.

Technology is supposed to be liberating, and by and large it has been. The media world has shifted online and new tools and services have been—and will continue to—emerge. Trying to anticipate the future is dodgy at best when things are moving at their current speed, and imposing limits on the bandwidth available to Canadians is going to leave us sitting on the sidelines.

If it seems like the CRTC isn’t doing its job very well, consider this: Canada has amongst the highest rates in the world for mobile phones, and one of the lowest rates of adoptions for what is an essential tool of the modern economy.

So yes, I’d say the CRTC isn’t doing its job. its job is to act in the public’s best interest, not Bell’s profits. It’s about time they remembered that.

Posted by skooter at 4:03 PM This entry is filed under Politics, Technology.
This entry is tagged: Bell Canada, Conservative Party of Canada, CRTC, Facebook, Liberal Party of Canada, Skype, Twitter, Usage Based Billing

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