Superfluous Matter

I wrote recently about how awesome our new Internet from Teksavvy is. Unfortunately that is about to change. The CRTC recently approved an application put forth by Bell and supported by Rogers to allow those companies to force third party ISPs which rent network capacity from Bell or Rogers to implement bandwidth caps and to charge high amounts of money for bandwidth overages. This is known as Usage-Based Billing (UBB).

This means that Teksavvy will be reducing my monthly bandwidth cap from 200GB to probably 25GB. Also, they are being forced to charge $2/GB for overage. This will essentially kill the advantage Teksavvy has over Bell or Rogers. At face-value, this is sorta fair, since Bell/Rogers are responsible for installing and maintaining the network infrastructure (infrastructure that was in part funded through taxpayer-funded subsidies, but that's a separate issue).

The real problem is the artificially low bandwidth caps and the ridiculous prices the major telecoms charge for overage. These caps are fairly recent changes to Internet plans provided by Bell/Rogers, changes that started appearing just as Internet-based content distribution companies like Netflix started becoming popular. Bell/Rogers claim the caps are needed to help manage network congestion due to the much higher load from all the video streaming people are doing. Perhaps this is the case, although it doesn't seem to be that big of a problem in places like the US, much of Europe or Japan and South Korea.

The real concerning thing about all of this is the fact that Bell/Rogers are not just providers of network capacity, they are also content distributors (Rogers Cable and Bell Satellite). Plus their method of content distribution is fast becoming obsolete. The future is clearly on-demand streaming of content over the Internet, in a manner independent of your Internet provider. Obviously this is bad for Bell/Rogers since it would mean their long standing monopoly on content distribution is about to end. And like many large companies, instead of innovating they are lobbying the government to change the rules to artificially prolong their dated business models.

Many European countries solved this massive conflict of interest long ago. They split the telecom companies into network providers and content distributors. The network providers are responsible for the care and growth of the network and they sell bandwidth to anyone at rates that approximate free market conditions (ie. based on supply/demand with buffer for profit). The distributors rent capacity and pass along those cost to their customers. This seems like a pretty reasonable set up to me. If the costs of providing network capacity go up due to congestion or whatever then the network providers can raise prices accordingly and the reason for price increases is not muddied by monopolistic, anti-competitive practices.

The sad thing about all this is that there are going to be many new and interesting opportunities related to content distribution for enterprising companies. Such opportunities will pass by Canada without stopping due to the restrictive nature of our Internet infrastructure. And customers will miss out on cool new things, and the government will miss out on new tax revenue from companies that will avoid servicing Canada. Netflix in HD is basically unusable with most Canadian Internet plans.

Finally, it's the job of the CRTC to prevent conflicts of interest like this. Seems like they failed. So what good are they?

If you've read this far, perhaps you'd be interested in signing the online petition against UBB and maybe even writing to your MP to protest this decision.

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