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.

It only applies to the wholesale services as Bell’s retail pricing remains unchanged. In other words, those cheering a 29.5 cent/GB overage charge should note that this is the wholesale price for the independent ISPs. The retail overage pricing, which can run as high as $5/GB, remains unchanged for now. In fact, all the concerns with retail UBB that affect the overwhelming majority of Canadian Internet users remains the same. As I argued in my piece on what to do next, addressing the wholesale issue is a necessary but not sufficient condition to dealing with the broader competition concerns in the Canadian market. Independent ISPs have functioned without wholesale UBB for years, yet have failed to make a serious dent in the dominance of the incumbent cable and DSL providers.

I will have more to say about what to do next in a paper and a series of posts coming out later this week. In the meantime, my primary takeaway from Bell’s backtrack is to note how it affirms that there are two paths to keeping dominant market players from taking advantage of their position to the detriment of consumers and smaller businesses. The first is competition – with enough competition, dominant players become less dominant and are forced to respond with better pricing and services. The second – which arises in the absence of such competition – is regulatory or political pressure.

Bell’s backtrack, which is entirely the result of political and public pressure (the independent ISPs were powerless and the regulator approved the wholesale UBB approach), is a reminder that Canada still does not have a sufficiently competitive environment to effect change. Instead, Canada still needs regulatory or political pressure to help foster a more competitive outcome. Relying on market forces may be the preferred approach, but at the present time there should be little doubt that market forces alone (particularly an artificially restricted market without foreign competitors) will not provide Canada with globally competitive Internet services and pricing.


  1. I don’t understand
    Why do they insist on billing for the amount of data you transfer? Don’t they pay only for the throughput capacity of their connections?

    And $200/TB? That’s insane. A dedicated web server I rent costs me $50/month for 2TB of transfer (that includes the server). It’s also an older plan that no longer exists. Newer plans are in the ballpark of $40 and include 5TB of transfer per month.

  2. Jason Martyn says:

    Bit of Disagreement
    I don’t see any need to regulate how bell prices it’s retail services. Wholesaling gives independent ISPs access to the network, and the ability to compete on their own terms. On its own, this competition is going to drive down prices and improve business models.

    What does need consideration is whether the pricing Bell has chosen for AVP is fair. If we say that the average customer of an independent ISP (who chose the service for the lack of UBB) uses 100GB per month, we are looking at 10$/month for each customer. Presumably the independent ISPs will still price competitively with current market standards, so they should be able to make a reasonable profit. For now.

    In order to drive competition and reduce costs to consumers, we will need to see that AVP price drop over time.

  3. Surprisingly…
    This kind of makes more sense, as teksavvy’s clients are none of bell’s concerns, bell should never have had the ability to insist on a price-per-client approach.

    This is a price-for-the-business approach which is far more legitimate… I don’t agree with it (it’s still paying unecessarily), but it is far more “fair” to the ISPs then the previous solution.

    Note: TO THE ISPS. It’s still a slap in the face to consumers and emerging technologies.

  4. Something stinks though…
    1 TB for 200$ – period? 30 cents per GB after that, period?

    The intitial chunk, shouldn’t it be dependent on at least the number of clients the independent ISP is service? 1 TB split 10 ways vs 1 TB split 10 000 ways, quite a bit freaking difference. 30 cents per GB reduces that to 67 GB per 200$ after the first 1 TB……

    It seems to be this pricing scheme is meant to penalize independant ISPs with larger client bases. Not very fair, wouldn’t you say?

  5. Sébastien Duquette says:

    @Jason Martyn

    With 200$/TB (1000 GB), it would cost 20 cents per GB, so for an average consumption of 100GB it would be 20$ and not 10$.

  6. I would completely agree wit Jason if his math was right. (As Sébastien pointed out) At $100/TB I think there would be sufficient independent competition, and sufficient profit for Bell. The only thing I would add is that there needs to be a built in review process so that as the cost of data goes does over time, that cost change will be reflected in the prices charged to independent ISPs

  7. RE: Darryl
    “sufficient profit for Bell”

    Haha. Yep, the biggest concern for all of us right now is that the monopoly has sufficient profit in one of their markets. ‘Cause damn, if they didn’t have this ability to control the price, they may actually have to innovate and increase the value of the service.

  8. It may not be the biggest concern, but they control the last mile, and if you want to make sure that the last mile is remains sufficiently up to date, then yeah; ensuring there is sufficient profit for bell should be somewhere on your radar.

  9. How to Shoot Yourself in the Foot
    Bell is doing this simply because they have a semi-monopoly on the last mile (with the cable company having the other half of the monopoly). The lack of foresight is that everyone is going wireless. Independent ISPs, which can’t afford to connect to every house and business in a city, can afford to erect cell towers and connect them together. Using shyster tricks to get the CRTC to raise its billing just means that the ISPs can reach the break-even point faster.

  10. @Darryl
    Or, ya know, Bell could just *not* control the last mile… what are competitors to do? Rip out all their cables and install their own?

  11. I agree with Scott (1st post)

    I lease rack space in a data center in Toronto which is owned by Bell but operated by a 3rd party, and I only pay $30/month for 1 TB of bandwidth, with overage fees around 2~3 cents per GB.

    I understand the data center is connected directly to various back bones, but even if it had to travel over several hops (COs, etc.) the price shouldn’t go up that much.

    $200/TB is outrageous!

  12. NotoriousWebmaster says:

    Give Canadians Control
    I live for the day when we get control of our own digital destinies. The so-called “homes with tails” proposal ( championed by Bill St Arnaud (CANARIE), and submitted by Tim Wu (New America Foundation) and Derek Slater (Google) , seems to have died the death Big Telco wished it would.

    Now is the time to revive it and create true competition at the Point of Presence.

  13. kellythedog says:

    UBB name change
    Isn’t part of this simply a way to remove UBB from the election platform and divert attention?
    Wait….look over here….now look back…… see it’s changed.

  14. Concerned Hamster says:

    Back-haul for data consumed by DSL customers costs money and setting a rate for that service is fair, reasonable, and even expected. That is not what this tariff covers. This tariff covers data passing through the gateway access service. This is double charging for usage of Bell’s DSL lines, modems, and aggregation infrastructure. This likely also includes Bell’s traffic shaping equipment that preforms deep packet inspection upon the data passing through and can limit various types of traffic. This traffic shaping equipment is highly likely the choke point for the DSL service and source of prime time congestion, if such congestion actually exists beyond over-subscription. This traffic shaping equipment shouldn’t even touch the data of third party customers and definitely shouldn’t be subsidised by third party ISP’s.

    If Bell has congestion issues that arise from a poorly designed gateway access service, rather than regular over subscription of back-haul, then they should give lower level access to their third parties to alleiviate the congestion as it should be impossible for the customers of a third party ISP to have any effect upon the service of Bell’s customers. If Bell currently funnels third party ISP traffic through its traffic shaping equipment then they should fundamentally stop such outrageous practice.

    If this tariff was for back-haul it would be understandable although hardly a competitive market rate and third-party ISP’s would look to other backbone providers for their back-haul. As a tariff on the already leased gateway access service this charge is ridiculous at any price and certainly shouldn’t be mandated by the CRTC. Certainly $200 per terabyte is an obscene surcharge on the gateway access service that is already rented by the third party ISP’s.

  15. Don't understand says:

    Why do people assume data transfer is free?
    I think the UBB rates Bell wanted to charge the wholesalers were insane, and I don’t even know about these new ones, but the rates are the problem.

    As a techie, I can tell you that data transfer is not free. There is a significant difference in the costs for infrastructure, monitoring and upkeep for a data center that can handle transfers of 100 TB/day versus 1 TB/day, above and beyond just the bigger pipe. The cost to transfer one extra byte is typically considered to be zero, but that’s actually false – it’s so small we round it to zero. But, that incorrectly leads people to assume that any number of extra bytes costs an extra zero, which is false.

  16. It’s now high time….
    …that major sites like youtube, google, facebook start billing Bell by the GB. You’re selling our data by the byte? We want our share too….

    Of course Bell could just block them so they don’t have to pay, but then how could you sell “internet” without google…..

    Good luck.


  17. I understand says:

    Don’t understand
    Data networks are not built to deliver a number of TB/Day. They are built to give reasonable performance during the few seconds per day that the load is the greatest. The peaks might only last a few 100ms, but they define the capacity of the network. The costs are all for dealing with the peaks. The overall traffic in a day makes no difference to the cost of the network, it is all about how the traffic is distributed in the day.

    Away from the peak times (topically early evening) bits cost nothing.

  18. Bell is a private company. Why the hell do I care if they have sufficient profits? Businesses fail, others take their place. Let Bell compete and if they can’t well then that’s just too bad isn’t it?

  19. @Steve
    Compete with who? Lack of competition is exactly the problem here. They CAN’T fail because they’re the only provider of the service.

  20. Steve, because they are a private company with a MONOPOLY. We don’t have to give them generous incentives to maintain the last mile, but they do require some incentive.

    The better way of course would have been to keep the last mile nationalized and allow smaller companies to bid on maintaining portions of it. Then we would have competition right to your house. I don’t know how easy it would be to back that train up back into the station.

  21. Remember to vote!
    This is a crucial watershed time for determining the digital future of our country. We need a balanced combination of regulation, common sense and reasonable allowance for profits. We ain’t got that now.

    Let’s just hope that the Cons do not get a majority, they are too close bedfellows to big business where profits are king. Don’t let their (nor Bell’s) pre-election UBB Hail Mary lull you.

    This is an issue where the youth vote is important, speak to those in your lives and encourage them to go to the polls.

  22. @Crockett:

    In my neck of the woods people are more interested in stashing guns than in having internet access.

    Nap. 🙁

  23. Dead Canadian says:

    When Does This All End ?
    …and this is obviously why Corporate “Capitalism” ain’t working in Canada is it ?!, lol, except for a few monopolistic corporations’.
    -wow, Bell Canada/Rogers/Telus/….has never “owned” the telephone poles, cables, and wires,…and never will.
    WE, ALL Canadians, own all that hardware and we ALL should be controlling and maintaing it, NOT for the benefit of a few foreign and/or domestic “high-tech landlord(s)”, but ONLY for the interest of all Canadian Consumers. It is, afterall, OUR Internet and NOT their’s.
    Our monthly paid “bills” to all of them has proved this for the last 100 years or so.
    Our Candian gov’t, yet again, proves that it has no testicalae, and therefore, they must be thrown out with the trash too.

  24. Now that I look at it…
    “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.”

    Now that I look at the pricing a little more (it just hadn’t occurred to me before a couple minutes ago). Independent ISPs still would be unable to comfortably charge less than $50 for $250GB/month without imposing extra fees for overages. That’s if they sell it at their cost, which they can’t do. That’s actually worse than it looked to me at first glance. The only thing that’s significantly changed is the price per GB for overages, which is still extremely high.

    That would still force smaller ISPs to charge Bell-like prices and doesn’t give them any sort of competitive edge whatsoever.

  25. pat donovan says:

    gig /sec
    Jeez! highest prices, lowest possible service, rogers getting ham-handed with world of warcraft torrents…

    ‘If it’s on the wire, they want to own it’ is next. is this an all-party thing like c-6?
    I’m voting pirate.

  26. Don't understand says:

    @ I understand

    A few things:

    1. Yes, data networks are sized for peak times. But, everyone expects to be using their connection at peak times, so I’m not clear how that means anything costs less. Both the initial cost and ongoing maintenance costs of a data center that can handle peak loads of 100 TB/day are significantly higher than 1 TB/day, no?

    2. Again, nothing is free. It is never free to move a byte, whether it’s at peak times or not. Do you think the electricity to power the data centers and transmission equipment (which is significant) is free during off-peak hours? I’m pretty sure Ontario Hydro would disagree.

    As a consumer, how could anyone think it’s reasonable for me to assume I should pay the same low rate if I transfer 1GB/month or 1TB/month? Sure, if I were the only one doing it then that’s a drop in the bucket and has no real cost impact on the ISP. But, as ALL consumers start transferring more, where does that extra cost come from? Increase the flat rate for all the (unlimited) users? If I’m still only doing 1GB/month, screw that! How is it unfair to be charged proportionally for how much you use, assuming the rates were reasonable?

  27. Darrell Fraser says:

    Retail overage fees
    “The retail overage pricing, which can run as high as $5/GB, remains unchanged for now.”

    I see this figure quoted a lot and I would like to point out that in Canada’s North our overage fee is $10.00/GB. The sole provider is NorthwestTel, a subsidiary of Bell. While I am sure NorthwesTel regularly cites geographical challenges to providing Internet up north, the fact still remains that it was a heavily subsidized affair by the feds.

  28. Kari Byron is my woman says:

    Losertarian logic
    If Bell charges too much, then switch to Rogers. If Rogers follows suit, then do without.

    Down with big government! Let the market decide!

  29. Hands in my pocket …
    @Don’t Understand “assuming the rates were reasonable?” … There’s your answer.

    A few things are happening here that are anti-competitive and unfair.

    With the acquisition of broadcasting companies and their associated licences it is imperative for the ISPs to block competing services such as Netflix & Hulu lest their business plan based on profits form that sector will dry up. IMO the purchase of those companies was a mistake based on wrong assumptions of regulatory and public compliance. The UBB charges have been admitted to be a tool to limit subscribers bandwidth consumption (most of which is for video) while freeing their own video delivery products which are running over that same ‘pipeline’ from such restrictions. Plain as day predatory behavior depriving me of the use of a competing product.

  30. Radical Extremist Socialist non-Separatist says:

    @Michael: “Relying on market forces may be the preferred approach, but at the present time there should be little doubt that market forces alone (particularly an artificially restricted market without foreign competitors) will not provide Canada with globally competitive Internet services and pricing.”

    Ain’t it nice how Michael needed such a long article in order to reach this conclusion.

    Isn’t it easier just to name those “market forces” from the beginning. Yes, let’s do it. They’re called GREED. “Greed is good” said Gekko, it’s an universal trait, and lets build a society that relies on it as the principal force that keeps people moving.

    So now let’s translate Michael’s conclusion. And I’ll make it generic, so it applies to any industry. And I’ll remove the remark in parenthesis since the nationality of greed is irrelevant.

    Relying on greed may be the preferred approach, but at the present time there should be little doubt that greed alone will not provide Canada with globally competitive *you name it* services and pricing.