UBB provides ISP’s (Internet Service Providers) the ability to set data plan for their customers and then charge either overage fees or add “insurance” plans when their customer’s exceed their initial plans. Until late 2010, UBB was a non-issue, as most ISP’s including the big four (Bell, Rogers, Shaw & Telus) offered high-usage customers plans that included unlimited data.
Four Main ISP's Rates and Plans
The CRTC was petitioned last year in a joint effort by these ISP’s to implement UBB. It is important to note here that the petitioners ALL offer internet, phone, television and video-on-demand services under the same branding. They also have agreed to non-compete with each other in various regions, splitting the country down the middle with Bell/Rogers holding over 90% of users in the East and Shaw/Telus holding the west. In essence Canada is beleaguered with the very definition of a duopoly.
At the outset of broadband (mid-to-late 90’s) the CRTC at that time deregulated the transmission of data across phone lines, opening the market to competition. Cable would follow, but was not deregulated in as widespread a fashion. In essence, aging telecom infrastructure that had been installed over the previous 25-50 years and majority-funded by taxpayers was no longer the territory of a single company (Bell). This “last-mile” is the direct connection to the home and the most fiercely desired and fought over aspect of providing internet.
With deregulation, smaller ISP’s sprang up, offering not only dial-up but DSL, using the “last-mile” of wire originally owned and manager by Bell. Eventually these wholesellers would create co-location centers that allowed them to route internet traffic from Bell/Telus on to their own network and out to the last-mile, to be resold to the customer. While the physical maintenance and upgrade of the last-mile infrastructure was still the responsibility of Bell or Telus, the service provided was not. These smaller ISP’s would come to distinguish themselves from the larger competition by offering highly competitive packages, including unlimited data plans and flat rates. They would also gain notice by actively fighting the larger ISP’s in the network management petitions to the CRTC, arguing that while Bell/Telus can choose to throttle their own customer’s service, they had no business managing the wholesellers.
Despite the advantages smaller ISP’s provided, the disadvantages were numerous. Unlike the “fire & forget” nature of dealing with entrenched providers, setting up service with a reseller is often an arduous task of cat and mouse as both the reseller and the seller point fingers as to whose responsibility it is to ensure the service is functioning. In my personal experience, service calls usually end with the caveat that the line-provider (Bell/Telus) will charge $75-100 for a service call if the problem is not associated with infrastructure issues outside of the house. 100% of the time in my case, in three different cities on 5 different occasions with one reseller (Teksavvy) and two separate line-providers (Bell/Telus), services delays were due to infrastructure issue outside of the house.
YMMV
What is clear from my personal experience is the line-providers do everything they can within the letter of the law to make using a third-party ISP as difficult as possible.
Enter Usage Based Billing
In addition to petitioning the CRTC to allow them to charge their own customers for “excess” usage (true UBB would function like utilities, charging for data used, per unit), Bell took an extra step and petitioned to charge the wholesalers as well. Identified as a “cause of network congestion” due to offering unlimited data plans, Bell requested that it be able to charge the reseller on par with what it would charge its own customers. Essentially, resellers would be responsible for paying for their customer excess use over the set cap, independent of their ability to collect from those customers. Ironically, Bell’s own congestion data used in their pursuit of throttling their customers proves their network has virtually no congestion at any time, at this point.
It was no small coincidence that when US video-streaming giant Netflix entered the Canadian market, Rogers immediately reduced their data plans and increased their pricing. Anticipating that Canada would embrace Netflix with the same abandon the US has, Canadian ISP’s could rightly assume their networks would begin to see higher traffic. Years of not supporting, upgrading or reinvesting the massive profits earned from combined internet/cable/telephone services would instantly become a burden, as Canadians are beginning to use the internet as to way to supplant not support their entertainment habits. Cable subscriptions drop as prices get higher, and the advent of VOIP and cheaper cellular plans (often from the same companies) remove the need for home phone. Once only the backbone to deliver the bread and butter services of cable/phone, telecom infrastructure has become the essential service. Therein lays an opportunity to remove competition.
How This Applies to You
Data plans across the board have become smaller, and more expensive, with CRTC approved overages of up to $2/gig offered, well in excess of the cost of delivery. This same set of decisions allows Bell to charge it’s resellers for overages at 15% less than what it charges its own customers (ie. Bell charges $2/gig, Teksavvy can charge $1.75).
Teksavvy immediately released its revised pricing and sent the internet into a fury. Unlimited data would no longer be available ANYWHERE in Canada, and our prices, speeds, and data caps would be be among the highest, the slowest and the lowest among the industrialized world.
The practical reality is that internet will become more expensive. Any gamer (there are a lot of them), movie watcher (there are a lot of them), researcher or student will be negatively affected by this. Netflix adoption will drop as people sign up for unlimited movie viewing only to be hampered by a 25 gig cap. Many people will blow through the data without realizing it, using Skype, video messaging, streaming movies, or buying digital copies of music, video and games.
Quite literally, it will become a level playing field for the large ISP’s, where all of the entrants offer the same service at the same prices with the same overage fees. The differences will lie in how the telecom companies waive or reduce their fees in order to retain or increase subscriptions to home phone and cable. That is the competitive advantage Bell, Rogers, Telus and Shaw have over resellers, and with enforced UBB it cannot be overcome.
What Can You Do About It?
Already an online petition www.stopthemeter.ca has hundred of thousands of names on it. Both NDP and Liberal parties have seized it as the issue of the day, condemning UBB broadly. Minister of Industry Tony Clement has announced he will “review the CRTC decision”. Prime Minister Harper has ordered a review.
Write your MP and CC Tony Clement. You can find your local Member of Parliament by postal code here.
Be polite, concise and clear. Educate yourself about the CRTC decisions as found here.
Demand better from your elected representatives and support competition. Canada once led the world in broadband adoption; let our government know we will once again.
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