Appeared in the Toronto Star on November 20, 2011 as Doors Open for Internet Providers to Truly Compete Last week, the Canadian Radio-television and Telecommunications Commission released its much-anticipated usage based billing decision. While the ruling only focused on the use of data caps (or UBB) as between Internet providers, […]
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On the specific decision, the CRTC rejected the UBB model it approved less than a year ago, acknowledging that it was too inflexible and could block independent ISPs from differentiating their services. The issue then boiled down to Bell’s preferred model based on volume and the independent ISPs’ approach who preferred capacity based models. The Commission ruled that capacity-based models are a better approach since they are more consistent with how network providers plan their networks and less susceptible to billing disputes.
With Bell’s preferred approach out of the way, the Commission was left to choose between two capacity models – the independent providers’ “95th percentile” solution and MTS Allstream’s capacity model. The Commission chose a variant on the MTS Allstream model that involves both a monthly access fee and a monthly capacity charge that can increase in increments of 100 Mbps. That model is even more flexible than what MTS proposed, suggesting that the Commission was primarily focused on building in as much flexibility for independent providers as possible. In addition to this model (which the Commission calls an approved capacity model), the large ISPs can continue to use flat rate models which provide for unlimited usage.
The CRTC will release its much anticipated usage based billing decision this afternoon at 4:00. There is no shortage of backgroud information for those looking to get up-to-speed. My post on the conclusion of the summer hearing – The Usage Based Billing Hearing Concludes: Has the CRTC Come to Competition […]
A new UK report on the open Internet finds that ISPs are prone to exaggerate the costs of data.
Unfortunately, there is little reliable information on actual costs with ISPs typically claiming that such information is a trade secret that should be kept confidential. My report noted that there are two elements to the actual costs. One is the Internet-facing data costs, which arise once a user’s traffic travels onto the public Internet. This cost is very low, estimated in the report at about one cent per GB and falling. This is consistent with public transit arrangement pricing and is likely even cheaper for large ISPs that use peering arrangements to cover off most actual costs.
The more difficult calculation involves the internal ISP network leading to the public Internet. As CRTC Commissioner Candice Molnar noted during the usage based billing hearing, “we all, I think, can hopefully agree that there is no marginal cost to using the network when you are not causing augmentation.” While there are no marginal costs, there is a capital cost of building the network and ongoing maintenance and augmentation costs when congestion arises due to traffic growth. My report used Bell’s data in the deferral account case (one of the only ones to put information on the public record) to estimate that seven cents per gigabyte (for a total of eight cents) was a best guess among a range of possibilities.