Yesterday was the deadline for parties to the CRTC's hearing into usage
based billing to submit their comments. Bell stole the show by dropping
its wholesale UBB proposal and substituting it with a new acronym -
Aggregated Volume Pricing (AVP) - that should allow independent ISPs to
retain some flexibility when it comes to their Internet service plans.
The headlines
rightly note that this is a significant backtrack for Bell. Just over
two months ago, Bell wrote
to the Commission to urge it to grant final approval to wholesale UBB,
arguing "the
implementation of the Companies' wholesale UBB has already been delayed
for far too long." Of course, that was before UBB became a political
firestorm and Industry Minister Tony Clement made it clear he would not
approve the Bell proposal as it then was.
Bell obviously saw the writing on the wall and has come back with a
plan that allows independent ISPs to purchase 1 TB of data for $200
with an overage charge of 29.5 cents per GB. The aggregation of
independent ISP subscriber traffic means that those ISPs can choose to
offer whatever plans they like - unlimited, capped, or variations
thereof - simply by purchasing aggregated data from Bell under the
tariff. The aggregated pricing model was proposed by several people
(even I figured it out in my first long
UBB post on February 1st) and is certainly better than the
wholesale UBB approach it replaces.
Notwithstanding the proposed improvement on wholesale terms, this
represents only a small part of the broader UBB issue.
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The cable company submission to the CRTC on
usage based billing confirms what has been readily apparent to
consumers for some time: there is no link between the prices charged by
ISPs for usage pricing and the actual costs to ISPs. According to the
cable companies:
In order to be effective as an
economic ITMP, the usage based price component needs to be established
so as to discourage use above the set limit. The price should incent
use in excess of the limit only to the extent that the consumer would
gain significant value from that usage. If the price is set
substantially below the consumer’s value, it will have little influence
on usage. It follows that the price does not necessarily reflect the
cost of supplying the network capacity.
In other words, UBB is behaviour based billing, not usage based
billing. Notwithstanding the claims about fairness, paying what you use, or costs to the network, overage pricing is not connected to cost or even value - it
is
designed to price above the real value to stop Canadians from
"overusing" the Internet.
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