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UBB is Dead. Long Live UBB

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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Cable Companies on UBB: No Link Between Cost and Price

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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