There’s been a storm in Canada in the last few days that didn’t involve snow or high winds. It is a storm of controversy over a recent CRTC decision to allow the big telecom companies to do Usage Based Billing. This would have affected the independent ISPs who currently offer unlimited plans but run their traffic over the telecom company infrastructure.
As of this morning, the decision has apparently been reversed, in response to a public outcry.
Terence Corcoran of the Globe and Mail finds the whole thing a false controversy. He says that there was no indication that this would cost the end consumer any more than what it costs for Internet connectivity now.
It’s possible he’s right. After all, the official word from the telecom companies is that this merely covers the cost of their infrastructure and is more “fair” because heavy users will now be paying their share. Remember what “fair” means next time the telecoms announce their annual profits. But for now, let’s just look at common wisdom in this controversy.
- Easy and cheap access to digital “pipes” fosters innovation. YouTube and other higher-bandwidth Web destinations rose out of the capacity of today’s pipes.
- Canada now pays less than other countries for download rates. In my view this merely means the telecoms have “room” to increase prices.
- All of the big ISPs who “own the backbone” of Canada’s Internet are also television signal providers. Their offerings like “on-demand”, pay-per-view, and premium channels are in direct competition with innovative Internet-based services like NetFlix and iTunes.
Corcoran addresses some of these points. But he doesn’t come to the same conclusions as I do. To me, everything points to our Internet connectivity costs rising substantially.
I also take issue with Corcoran’s statement: “not pricing based on usage is economically crazy.” Loss leaders, bundling, freemium… there are plenty of successful (non-crazy) business models that do not rely on usage to set prices… especially for something as intangible and infinite as bits flowing over a wire. Even water (which is far more tangible and demonstrably scarce than bits) is flat-priced in some jurisdictions. The telecoms themselves say that they need to cover the cost of the massive infrastructure they have put in place. Okay, but show us how the massive profits are reinvested in infrastructure and I’ll be happier. After all, we’re not on IPv6 or fibre optic everywhere yet. Many other countries are already there. The US and Canada, with some of the highest Internet costs, are lagging.
All in all, I hold a pessimistic outlook: the telecoms will get their money one way or another. Hang on for the ride.