There’s been a ton of opinion generated on this already, so I’m not entirely sure if there’s much original that I’ll say, but I’ve been following the issue and retweeting folks like Michael Geist and Peter Nowak since the CRTC decision came down. So I thought I’d just try to sum up what I’ve been thinking and observing on the issue.
Overall, I hate the concept of Usage Based Billing, but I’ll admit there’s been a fair amount of misinformation that’s been forwarded by those opposed to the decision. It’s a confusing issue, and the largely technical aspects of it are understood by few (including myself). But the number one issue many opposed to the issue may not be aware of is that the specifics of the decision affect relatively few people. The decision is intended to force Usage Based Billing down to resellers of Internet service who are operating on top of Bell and Rogers infrastructure. Customers of Rogers and Bell currently satisfied with their service will theoretically see no changes to their bills, because the overages they pay for exceeding their download limits are already in place. I happen to be a customer of TekSavvy, one of these resellers, so the decision does affect me. But I’m willing to bet many signatories to the OpenMedia.ca petition don’t realize the decision doesn’t affect them. It may be wrong for other reasons, but the telecoms’ arguments may have some sway with many of these people once they realize that their bills won’t be affected immediately.
I happen to think these arguments are flawed, but here they are:
A stat trotted out by Bell during hearings and media is that 14% of the users on their network account for 83% of the total traffic. Making heavy users of bandwidth pay for what they use is a way to prevent “abuse” and prevents the unfair situation of lighter users subsidizing heavier users. This is an argument that CRTC chairman Konrad von Finckenstein appears to have bought hook, line and sinker:
The vast majority of Internet users should not be asked to subsidize a small minority of heavy users. For us, it is a question of fundamental fairness.
Now, the seeming equation of a “heavy user” with “abuse” is bullshit, but it’s one the telcos love to bring up. There’s lots of legit uses of heavy bandwidth. For example, a Netflix user uses about 2GB per movie they watch. Now, while this is a direct shot across the bow of the Rogers cable franchise, it’s not “abuse”.
However, even I have a bit of sympathy with this argument. Users who use more should pay more. But it is somewhat arbitrary in how it is applied in this case. Many telecom services are indeed “unlimited”, and there is no squawking on the part of the telcos. Do I pay more for my home phone service if I talk “too much”? Do I pay more for my cable if I watch “too much” TV? Pricing for these services seems to recognize that we’re not talking about a scarce resource (like my gas and electric bill). Delivery is definitely a component of cost, but the incremental cost of delivering data is pennies per Gigabyte by even conservative measures. I’m sure those 86% of users using the other 17% of the total traffic might LOVE the opportunity to be billed for their light usage, but instead, they pay their 50 bucks a month or so REGARDLESS of how little traffic they use.
As well, anecdotally, the telcos need to be kept honest to provide better service. I have been a TekSavvy customer for several years. It was only when I became a TekSavvy customer on their 5Mbps service I learned that although my line had been rated for 5Mbps delivery, Bell had been providing me 1 Mbps service for YEARS. TekSavvy made Bell upgrade my lines. I could never become a “heavy” user on the Bell service, because I was being underserviced.
Another chestnut trotted out by Bell is that it’s unfair for the policy makers to force them to grant their competitors’ access to their networks. Since competitors like TekSavvy don’t have to invest in the network, they can compete with unfair offerings (such as unlimited bandwidth) without suffering the possible consequences of that decision.
Again, I have some sympathy with this argument. It is an unfair way for the policy makers to foster competition. My real issue here is that it is an inefficient way of fostering competition. It is sort of competition “lite.” How Canadian. Support some little guys like TekSavvy and let them compete with the big boys and pretend we have more consumer choice. At the same time, it keeps Bell and Rogers somewhat honest and in check.
A much more efficient way of fostering competition is the one that the telcos seem to be terrified of: Allow foreign investment and/or flat out allow foreign carriers to operate here. Personally, I’d love to see a big US or European operator come in here and start shaking things up. I think it would be good for consumers and would ultimately make Bell and Rogers stronger companies.
Given the choice, I’m sure the telcos would choose competition “lite”. I could draw a (admittedly abbreviated and probably flawed) historical analogy here to the Long Distance market that existed here before deregulation. Pricing was outrageous and the government stepped in and forced carriers to give new competitors access to their networks. Prices fell drastically, the consumer benefited, society benefited and a fact that Bell may be reluctant to admit is that they benefited. Instead of hanging on and continuing to milk that cash cow, they were forced to innovate, invest and compete. They’re a better company as a result.
And can you imagine a Canada without unregulated Long Distance today? How damaging would this be to our economy? How many companies would stay away because of the cost of doing business here? How many local companies would shy away from doing business outside of Canada because of the cost? It would be awful and Canada would be a much worse place.
And from a policy perspective, this is what this really comes down to for me. Do we want to foster the innovation and creativity that will come with making access to high quality broadband easy and affordable? Or do we want to leave the decision of what is “too much” Internet to the telcos. Canada as a nation is better off with more Internet, not less. Companies will get started, jobs will get created, and consumers will get more and better services.
Now we can get this one of two ways. The telcos can give competitors access to their networks and the regulators and policy makers can let competitors price however they want. Or AT&T and Vodafone can come in here, invest billions and start bringing the pain. I think Bell would rather compete with the nice little parasitic Canadian companies on their networks.