On The Concern of Usage Based Billing by ISPs

This is not necessarily a follow up, but more of an addition to yesterdays piece on my ISP issues with Shaw Cable.

Earlier today Michael Geist wrote an excellent overview on yesterdays CRTC hearing. Chair Konrad von Finckenstein had a fair chance to explain their case behind usage based billing. I seriously recommend you go and read that first.

Von Finkenstein, who I can’t help but giggle at considering his name reminds me of what could be a Bond villain, had one very disturbing comment to make (among several others).

All ISPs advertise their rates, bandwidth caps and the additional usage charges that apply. Consumers can shop around for the plan that best meet their needs. Internet services are now sold like other public utilities, such as water, gas and electricity. As we reported in our most recent Communications Monitoring Report, Canadians used on average 15.4 gigabits per month in 2009. Most users therefore fall well within the caps currently set by the Large Distributors and would not be charged more unless their monthly usage increased dramatically.

I don’t understand why he and many others keep beating the “bandwidth should be treated like utilities” drum. What’s disturbing is not just this particular statement, which I kind of expect from someone so out of touch with technology as Von Finkenstein, but also these words are coming from some consumers as well.

One commenter on Geist’s piece cited:

The CRTC is right to compare the incumbents to utilities. After all gas and electricity providers have been monitoring how we use their services through DPUI (deep-packet utility inspection).

If you use your electricity for a competing service, such as a coal-powered home power generating system, they will throttle the current to the point where it won’t even charge your iPhone. Same with the natural gas providers. One they detect that you’re using your natural gas to heat an electric heater — well they’ll throttle you until you freeze. I think you should lay off the CRTC, after all the big ISPs are just following the example of the big utilities.

This kind of statement scares the shit out of me. I feel like I keep having to drill this into peoples heads that you absolutely, unequivocally, can’t compare bandwidth to a non-renewable resource like gas. The bandwidth we use will never run out since we’re talking about bits of data, i.e. zeros and ones.

Of course there are infrastructure costs that businesses need to recoup, such as the cost to actually get data to someone. The problem is the actual cost per GB is more around the $0.03 mark if you ask anyone in the industry who knows this stuff. I’m all for businesses making a profit, but when ISPs are charging anywhere from $2-5 on overage, this is clearly price gouging.

I would posit that there shouldn’t be any such thing as data caps. We live in a vastly more robust and rich technological age then we even did 2-5 years ago. More and more consumers are dumping their cable subscriptions in favour of à la carte streaming services such as Netflix and Hulu. It seems that the CRTC now thinks that these people should be considered as “heavy-users”. I would much rather pay a reasonable flat fee for my Internet bill if I require more speed because I download/upload a lot.

One last thing I think that many people either don’t understand due to lack of knowledge, is that infrastructure costs (data centers and the power their require etc) get reduced every year. ISPs and even the people that operate massive data centers are always replacing old inefficient hardware with their cheaper and more energy efficient variants. The cost of power also gets reduced overall as people find greener ways to run these things. Do these savings ever get passed along down to the consumer? No of course not. Instead what we see is ISPs silently changing their data plans, i.e. making your monthly data cap smaller and charging you more for it.

The CRTC is going to delay changing their stance on usage based billing over the next 60 days while they re-review the issue. I sincerely hope that Canadians continue to sign petitions and write to their local MPs to make sure this kind of bullshit doesn’t happen. Of course, even if the federal government overrules any decision made by the CRTC, there is still the issue of passing a bill that would prevent this kind of thing from happening again.

This is far from over so it should be interesting to see how this all plays out over the next few months.

(Via Michael Geist)