The Government’s Review of Usage Based Billing: What Should Come Next

Yesterday was a remarkable day for those following the usage based billing and bandwidth cap issue. In the span of 24 hours, an unlikely political consensus emerged that left little doubt that – at a minimum – the CRTC’s UBB decision will be reconsidered.  Prime Minister Harper expressed his concern with the decision, Industry Minister Tony Clement hinted at overturning the decision, and both the Liberals and NDP expressed strong support for overturning the decision. Groups like the Canadian Network Operators Consortium, which represent dozens of independent ISPs, wrote to Clement to call for cabinet to reconsider all the CRTC’s UBB decisions and even the Canadian Federation of Independent Businesses wrote to express its concern about the impact on Canadian small businesses.  An Industry Committee hearing on UBB will apparently begin on Thursday.

With Clement indicating that a decision will be forthcoming by March 1st, there is just one month for cabinet to address the issue.  So what comes next?


As I argued in my lengthy post on UBB and bandwidth caps yesterday, politicians and policy makers must recognize that this particular decision is only a small part of the broader concern over an uncompetitive broadband marketplace that has led to near-universal use of bandwidth caps. Overturning the CRTC decision is necessary, but by no means sufficient to address the current problems.  Government action should be accompanied by a broader strategy to increase competition and to guard against abusive behaviour by the dominant ISPs.  I identified many possibilities in yesterday’s post.

On the specific CRTC UBB decisions, cabinet is faced with the option of asking the CRTC to reconsider the decisions or to overrule the Commission.  While it will be tempting to punt the issue back to the CRTC for reconsideration or varying the decisions with its own regulatory solutions, it should take a clear stand by rescinding the Commission’s various UBB decisions. Section 12 of the Telecommunications Act gives the government the power to rescind a Commission decision within a year of its release (there is no need for a specific petition to vary or rescind a decision):

Within one year after a decision by the Commission, the Governor in Council may, on petition in writing presented to the Governor in Council within ninety days after the decision, or on the Governor in Council’s own motion, by order, vary or rescind the decision or refer it back to the Commission for reconsideration of all or a portion of it.

It should exercise the power to rescind for the following reasons:

1.   The CRTC has gone back and forth on the UBB issue with no clear idea of what it is trying to achieve. Sending the issue back for another decision merely repeats the cycle with little hope for meaningful change. 

2.   The CRTC’s attitude toward independent ISPs has been particularly troubling for those committed to fostering new competition.  As Commissioner Tim Denton concluded in his dissent in the speed matching case:

What is deplorable, in my view, is the disinclination to consider that specialist outfits like small ISPs should be allowed the opportunity for service innovation because the Commission:

a)      substitutes its opinion for what certain players in the market might decide to do; and
b)      declines to investigate the options for innovation in a serious and prolonged way.

The result is that the possibility for service innovation was turned down, without sufficient consideration, in my estimation. The current ambivalence about the role and legitimacy of smaller carriers continues. They are allowed to exist but denied the means to innovate. In a business with as much uncertainty as this, turning down the possibility for technical and business innovation seems a riskier move than letting it go ahead.

3.   Rescinding the decision is consistent with the government’s own policy direction to the CRTC in 2006, which recognized the need to consider independent ISPs within the context of mandated wholesale access.  In particular, the Commission was directed as part of its review to

take into account the principles of technological and competitive neutrality, the potential for incumbents to exercise market power in the wholesale and retail markets for the service in the absence of mandated access to wholesale services, and the impediments faced by new and existing carriers seeking to develop competing network facilities

4.   Sending the decision back to the CRTC for reconsideration virtually guarantees months or years of additional costly hearings and litigation. This would effectively represent a win for Bell at the expense of the independent ISPs.  Bell can clearly afford to spend millions on litigation and lobbying in an effort to wear down the independent ISPs.  For smaller independent ISPs, the ongoing regulatory costs, which are ultimately borne by consumers, are enormous and result in a less competitive market. 

If the government is serious about fostering a more competitive marketplace, ISPs and consumers need policy decisions that promote competition, not more hearings.  It is entirely possible that Bell would reapply for wholesale UBB, but with the government having spoken, the issue would likely be viewed in a new light without the baggage of the poorly reasoned earlier UBB decisions.  As I noted yesterday, there are alternatives to UBB such as bulk wholesale service that would allow for independent ISPs to offer more choice than just passing along Bell’s caps (it should be the companies that propose this, not the government in an order to vary the decision). Rescinding the CRTC’s UBB decisions is the right thing to do and an important first step in addressing the competition concerns in the Canadian market.


  1. What comes next
    Disband CRTC. At least for the audacity to propose to broadcast fake news.


  2. Hopefully they don’t send it back. We’ll see what they decide to do at the end though.

  3. “…consumers need policy decisions that promote competition, not more hearings…”

    Exactly. Methinks the CRTC has outlive it’s usefulness. It now serves only to protect the monopolostic positions of Bell and Rogers.

    Off topic note – The new Captcha graphics are hard to read even with 20/20 vision. Isn’t there a better way to determine that a human is posting rather than a spambot?

  4. One of the most misinformed articles I have recently read …
    This is an op piece on the front webpage of the National Post …

    Even my normally jaded self is aghast at this. Was there any research done by this ‘journalist’ at all or rather a just cut and paste copy from a friendly Bell email?

    Wow .. just wow.

  5. Reform the CRTC
    Currently, its goal is not to seek the best interest of the population. It should be. It should encourage competition. It should seeks ways to drive prices down.

  6. Josh Robinson says:

    I believe that the CRTC still has some work to do and should still be around. I believe that it doesn’t have the human resources to do the job correctly or doesn’t create proper process to verify claims of its members and participants before acting on them. Here’s my post.

    A call for CRTC Inquiry

  7. “The Last Mile” should come next.
    This isn’t the last time we’ll have to deal with Bell (or Rogers) attacks against third-party ISPs.
    Last year the throttling started on non-Bell customers. With MLPPP we got around it.
    At around August/September, they started moving non-Bell customers from COs to slower speeds. I went from 5mbps to 2.6mbps. No way around it.
    UBB was just another attempt.
    Bell and Rogers will not easily give up the last mile. I get it that they’re a business and looking into making money, but I’m finding their need for greed ridiculous.

  8. Ha
    I love how so many people are suddenly getting involved / speaking up on this. Most of us here have known for over a year that this was coming. The time to speak up was then, but I suppose better late then never… Let’s see where this country is going – down the crapper or back to the top.

  9. Internet Access A Human Right
    Internet access should be promoted as “essential service” banning any idea of disconnection for “bad behavior” or overpricing it. Furthermore Internet access should be promoted as a human right.

    #Egypt Blocked in China: Is Internet Access A Human Right?

  10. Thanks for yet another excellent post, Michael. Wish you could speak at the rally here in Ottawa on Saturday.

  11. There is another angle to this, which is that this decision is unlikely to be reversed without consequences. One of these will be that the charges to wholesalers will increase in a way that means all of their customers paying more. The CRTC is largely following government policy that created competition of this artificial nature by ISPs that didn’t build the infrastructure. On any reckoning they should pay more for bandwidth than just the marginal cost of providing it, and it’s hard to see why Bell and the others should be forced to subsidize their own competititors. There are legitimate questions around pricing but if it is the case that 20% of users consume 80% of bandwidth, I don’t see why as one of the 80% I should be paying more for their benefit.

  12. BOB….Small ISPs already pay a LOT….
    Smaller ISPs buy their “bandwidth” from companies like internap. Of a typical monthly unlimited package from a 3rd party ISP (about 30 to 35), about $22 goes straight to bell for that last mile connection to a customer’s house. 3rd party ISPs don’t buy net traffic from bell. Bell just doesn’t want citizen migrating from their existing profit centres of SAT TV/IPTV(future)/and phone to IPTV (like netflix or some other legal/non-legal means) and VOIP phones.

    So…how does Bell stop this? Well the can excerise influence over their own and 3rd party ISP customers by imposing caps to limit this behaviour and help recoup costs lost from their other business…

    And lets face, Bell didn’t just go out and build infrastructure. They were afforded many advantages as a government sanctioned monolpoly.

  13. @JC
    But there are still costs in maintaining and upgrading the last mile and the costs need to be prorated. Unlimited for all would be great but we kid ourselves if we think it won’t cost more.

  14. @Bob
    This is absolutely unrelated to maintenance, the connection for all users must be kept in working order. It’s very unlikely that it has anything to do with upgrading either as all the major ISPs have more bandwidth available than they can currently utilize (dark fiber). This is only about deterring competition from the likes of Netflix who sells unlimited viewing for under $10 a month or Vonage who has 500 minute long distance with almost every calling feature know to man for about $20 a month.

    Shaw, Bell and Rogers can compete but they don’t want to. It’s a lot easier to milk the cash cow if you get to set your competitors pricing policies.

    ISPs should not be allowed to sell anything but a connection to the internet.

  15. Short sightedness …
    Bob, with new services coming out every day the old ‘20% of the users using 80%’ line is going to get old fast. The 20% are just early adopters, soon everyone is going to be affected by this .. including you.

    So yes it is going to cost you more, but not why you thought so.

    “When they capped the internet I did nothing because it didn’t effect me … then they came for me.”

  16. Ugh
    “80% used by 20%” is already going out the door. Anyone currently subscribed to Netflix has been streaming (STREAMING!!!!) a good 5 GB per movie they watch. And guess what? Netflix subscribers get to do this as often as they want.

    You think 20% of the population is using 80%? Think again. The world is moving to massive data transmission, and these caps/costs are obviously aimed at pushing business like Netflix out of the country (so Bell/Rogers can recoupe their On Demand customers)

  17. Engineering scarcity
    They promised us high speed and plenty of GBs to download knowing that that wasn’t sustainable.
    Now that more and more users are using Internet to the standards that they have promoted they are screaming there isn’t enough bandwidth for everyone capping speed (i.e. we are paying for high speed which is not that high as promised) and overcharging bits. Do you still trust them? Instead of engineering abundance they are engineering scarcity.

  18. David Allsebrook says:

    background questions
    Hi folks
    I could use a little context here. One underlying problem is that everyone has to share part of the Internet delivery system. Is there any realistic way that this tariff decision encourages the construction of new “last mile” capabilities top compete with the existing one? Is that happening in the U.S.or elsewhere?
    A second question is as the the use of usage rates measured in Gigabytes. Is the problem actually how much traffic is on the system at any given time? If so, why isn’t the pricing based around a rate of use at given times of day?
    Thanks for any insights.

  19. What about NAFTA for NetFlix?
    Soooo … if Canada Post provides cheap services that are unfair competition to UPS and they can use NAFTA chapter 11 to sue them, doesn’t that mean that NetFlix could use the same provision to sue Bell/The Canadian Gov’t for allowing unfair trade practices?

    From the Council of Canadians “NAFTA Chapter 11 gives corporations the right to sue the Canadian government, often for tens of millions of dollars, if any public policy or government action denies them investment or profit opportunities”.

    Normally I quite despise this ability, but could this not work in this instance? If there’s even a chance of it, isn’t this something the opposition could latch on to?

  20. Usage Rate
    Well the USA can offer unlimited. Canada Bell, Rogers. etc are there for the money. Bell has out country as employees maybe they want a raise. Hey and we pay for it. As for Rogers and others don’t know. It funny not long after Netflix $8.00 a mth for unlimited movies will put a damper on the pay per view TV providers business. Internet TV streaming will put a damper with them also they cry for a usage ban. Makes you wonder who’s pocket in the CRTC that Bell, Rogers etc is greasing for this agreement. Pay, Pay, Pay dear Canadians

  21. The World Narrow Web
    The problem with the metering is not the metering per se but the rating. With flat billing they are just ripping us off. I’m an IT professional and I use internet a lot, probably around 100 GB per month, but I know that with fair and realistic rates I would probably pay less for my consumption than with flat rates. What is not fair is having an hybrid system. Let’s have a flat rate or a real usage rate where we pay all the GBs we use. and not only those we overuse. Having both systems it is just evil.

  22. Brian, you have a pretty good handle on the situation. And the customers would get used to it very quickly.
    An analogy to electricity usage is pretty good, and has a reasonably good match all the way through the infrastructure layers. People know that if they have 100A service, they can only get “power” at that max rate, but they will pay for each KW they use. They want a higher “draw rate” they need to install a bigger service, and they still pay by the KW. If enough people install a bigger service in an area, the “trunks” may need to be upgraded for that area, and is part of the long term planning for the supplier.

    If you reversed things and tried to “map” electricity usage into the existing bandwidth usage pricing patterns, people would very quickly see that *everyone* gets screwed – except the ones that fit into the narrow “sweet spot” in the pricing center.

    The low bandwidth users have always been paying much more than they should have. If we go to a pure service/UBB model, both the high end and the low end users should come out ahead. It’s the ones in the pricing “sweet spot” that will see a price increase. Adding transparency of “what we are getting for our dollar” is a bonus.

    Broadband internet users are interested in 2 main things, speed and usage. For some the speed is important, they don’t want it that often but when they want it they want it fast. For others the usage is more important, they don’t care if it takes a few hours but they want a lot of bandwidth. Some people want both. Some don’t need “fast” or “lots”, they just need always on internet.
    So completely split these in the billing. Let the customers select the combinations they want.

    Everyone is so focused on the heavy users in the discussion of UBB, they tend to forget the low bandwidth users, and how they have been affected up until now. We only see the occasional cry about not wanting to pay for the “heavy users”. With the current models, the low users are already paying “extra” because of *everyone* that uses more than they do. UBB for the extremely heavy users won’t change that ratio one bit.

    I understand that the current broadband model evolved from the old dial-up usage model. But perhaps it is time for a completely fresh look at the models, and perhaps map it into something closer to the electricity usage model.

  23. Lee Doerksen says:

    CEO @ Dragonfly
    Thanks, Michael. Keep this blog rolling!

    I’m in Winnipeg, familiar with Canarie, not to thrilled. Count on me to help activate the network for local and Provincial innovation beyond the current mandate, and in manners like you have alluded to.

    Perhaps we need to make a Facebook page to address this issue.

    By the way, the touring test spam blocker is really hard to pass… and I have great eyesight.

  24. Yadwinder Sidhu says:

    Michael Geist, I would like your opinion!
    Mr. Geist,

    I am very curious what your opinion is on this article:–canada-will-be-test-case.html

    Do you think this is our possible future? Please note it was written in 2008, and so far, it predicted everything correctly. It looks as though UBB was the catalyst to close down the internet.

    Your thoughts would be greatly appreciated.

  25. Yadwinder Sidhu says:

    I’ve been reading the comments, and I have a question. Why can the CRTC fall hook-line-and-sinker for Bell’s story that UBB is “necessary” when obvious it is not necessary in any other countries. Have you seen this chart that was posted yesterday?

    Obviously, metered billing is NOT necessary. Many of those countries ahead of us on the chart face the same geographical challenges that we do, and in some cases, our city centers have far higher populations which should make it easier to offer unlimited access, especially when it costs an ISP less than a penny per GB for data transit over the last mile.

    I believe that “network congestions” is simply an excuse to implement UBB, and UBB is an excuse to limit our access to an ISPs web-based television competitors.

  26. Monopoly Infrastructure Used to Stifle Competition
    The former monopolies are still far too dominant and can easily squeeze the small players. Let’s remember that the majority of their infrastructure and customer base was built while they were monopolies. So, we all paid for that infrastructure.

    Just try to get pole space or right-of-way to place cable and you find that those opportunities are few and far between (or prohibitively expensive). The monopolies built while there was space and it was cheap.

    There should be utility infrastructure that is equally accessible by all retail players. No more selling retail services below the wholesale prices that the competitors have to buy at.

  27. Darryl Wright says:

    Replace the CRTC
    We need to replace the CRTC with a more modern, industry savvy organization which has as its mandate the promotion of competitive services and innovation in Canadian business. This organization should buy, govern and maintain the network independently thus leveling the playing field for incumbent and new businesses and freeing them from the ‘burden’ of maintaining and controlling it.

  28. Random Web Guy
    you know, given the “cost” of bandwidth at just under 1 cent per GB, I’d be okay with a 2-3x profit margin for overage charges… but I pay around 60 a month for a FAST net connection (15MB, which these days isn’t actually all that fast) – for 60 a month, they cover the cost of use up to about 6TB, but my cap is around 200GB?

    that’s just silly.

    UBB would make sense if the cap and overage rates were set in proportion to what we pay – so a 3TB cap on a $60 account, and 2-3 cents per gigabyte of overage would make a lot of sense.

    The CRTC is so blind as to approve gouging as an accepted business practice, which leads me to believe that the CRTC needs to be relieved of duties. They clearly don’t have the ability to do anything that actually benefits the consumers and citizens they claim to represent, unless those said consumers have “CEO of a major telecom” appended to their title.

  29. Time for break up??
    Maybe it is time to consider breaking the internet backbone away from these companies like Bell Telus Shaw etc and forming smaller entities that would compete to provide services to all of the isp’s. The US did it years ago with the telephone companies when they got to large and powerful. Maybe it is time to consider doing that here.

  30. The infrastructure, for phones and well as internet, should not be controlled by a competitor providing services that run on it.

    I’d like to see a crown corporation responsible for the infrastructure.

    I think the CRTC does have an important regulatory role, but either its mandate or its membership should be adjusted.

  31. The future is unclear
    I am afraid CRTC is making decisions base on inflicting fear not and on real time and circumstances for the present. Innovation is embraced by governments, society and companies, but I can see that each on of these entities need to be part of a global solution.

    When on of the entities try to bully the other conflict happens. Companies don`t like many regulations but don`t mind when their monopolies are protected. Consumers don`t like when companies use unfair practices and use excuses to manipulate them.

    Government must govern all entities and be fair towards each one.
    Societies are judge by what they do for the less fortunate members (Consumers).

    Here we have an unfair situation witch this company has been granted protection to operate on a monopoly situation leaving consumers to pay what they intended.
    Many annalists are arguing that bell has its infrastructure and it is not fair to be ordered to open their own infrastructure for the benefit of incumbents.

    I read you article ( Unpacking The Policy Issues Behind Bandwidth Caps & Usage Based Billing ) with this link: .
    I am a so called computer and internet illiterate but I could see that you explained in a way people like me could understand.

    Educate politicians for the well being of all. Job well done.

    I wished more people read your explanation to educate themselves. I listened to the questions they asked the head of CRTC and I was out of my mind, because they asked questions that were geared to fulfilled egos.

    I saw many other annalists commenting and I could see they were bayous towards the establishment the big providers.

    Why they targeted the residential? I think they thought they had a soft target and we (consumers) would roll over and let them continue their ways and keep their monopoly.
    The war room is in action and the lobbyists are summon to make Public Relations fit their views and not the technical reality of the subject

    I am afraid for the future because I can see what happened recently in Egypt. The president said he was not going to run in the next election thinking the people would lower their demands and at the end he was still in place and governing.
    Here I can see CRTC delaying the process to see if the government calls an election and take away the spot light from this issue (UBB).

    The Lion (bell) is wounded that`s why am cautions.

    Thanks for your views.

  32. John Papers says:

    Thanks for sharing such a wonderful article with us.

  33. Bandwidth defined ?
    Hi, can you get a legal definition from the CRTC what they claim bandwidth is ?

    This would be very usefull to have inorder to summit comments to the crtc hearing on UBB.