Earlier this year, I wrote a report and a blog post that attempted to estimate the cost for Canadian ISPs to transport a gigabyte of data. While there is nothing magical about a gigabyte, since overage charges typically levy by the gigabyte, it is useful to link actual costs with consumer costs that can reach as much as $10 per gigabyte. In fact, this data is likely to become increasingly important as the wholesale usage based billing battle has shifted toward a cost-based approach.

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.

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