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UBB ruling will put government in crosshairs

The CRTC is set to announce the results of its usage-based Internet billing proceeding.

CB_von_finckenstein

(Photo: Sean Kilpatrick/CP)

The CRTC is set to announce the results of its usage-based Internet billing proceeding Tuesday afternoon. Far from being one of the regulator’s many dull procedural announcements, this one is surely the most anticipated, at least in recent memory. I’ll have an analysis on Wednesday (my posts generally go live at midnight, Eastern time) and probably some knee-jerk reactions on Twitter beforehand, if you want to check those out. In the meantime’s here a primer of what the ruling will involve and why it’s so important.

In the broader sense, usage-based billing is about charging Internet customers for how much they download and upload. In Canada, a typical home user gets between 50 and 60 gigabytes included with their monthly fee; going over means more charges, just like a cellphone bill. Pretty much every Canadian is living with UBB right now.

As it relates to the CRTC drama for most of the past year, UBB is a more specific issue that has to do with smaller ISPs that use a portion of the networks owned by big telecom companies such as Bell to deliver their services to customers. Bell has been charging its own customers UBB for years and wanted to impose the scheme on these smaller ISPs. The CRTC gave Bell’s plan its blessing, agreeing with the thinking that all customers need to be treated equally. The logic is that if Bell was only giving subscribers 50 GB of monthly usage, yet an ISP such as TekSavvy was allowing 300 GB or more, then the smaller provider had an advantage.

Despite that apparent advantage, about 95% of Canadians get their Internet service from big providers such as Bell, Rogers, Telus, Shaw and Videotron. Still, all hell broke loose earlier this year just before UBB was to take effect. The Open Media advocacy group got involved and motivated more than 500,000 people to sign a petition opposing it. While the ruling would affect only a few people, it was to be the final elimination of unlimited Internet usage in Canada, the group argued. With UBB imposed on small ISPs, the big providers could effectively decide how much Canadians could use the Internet. While many people who signed the petition were not customers of smaller providers, they did so to effectively draw a line in the sand and tell large companies that they shall go no further.

The government got involved, with both Prime Minister Stephen Harper and then-Industry Minister Tony Clement signalling they would take action on the CRTC decision if the regulator itself didn’t overturn it. And so, the CRTC went back to the drawing board, bringing us to Tuesday’s decision.

Since then, a few things have happened. Bell submitted a new proposal, called Aggregated Volume Pricing, that is a sort of diet-UBB. Rather than charging smaller ISPs for each of their users, the new scheme would total up their usage instead. Indie ISPs have said that while AVP is not as crippling as UBB would have been to their business, it’s still not exactly desirable.

Out west, UBB became a non-issue last spring when Shaw announced new plans with generous usage limits, which forced its main competitor Telus to match. The large Western ISPs added an interesting dimension to the debate—such large usage buckets completely negate the argument for UBB, which Bell and others have said is necessary to combat network congestion. If Shaw and Telus can give their customers so much usage without congesting their networks, why can’t their eastern counterparts?

On a related note, Bell also recently announced it was easing up on slowing down file-sharing by its customers. This “throttling” is another activity that is technically allowed by the CRTC, but which is hugely controversial and hated by many users. Many believe throttling is a violation of the regulator’s own net neutrality rules, yet the CRTC is doing nothing to stop it. As if to contrast Bell’s announcement, news also recently broke about how big Canadian ISPs are some of the heaviest throttlers in the world.

Also perhaps relevant is the fact that the current CRTC chair, Konrad von Finckenstein, is on his way out. Von Finckenstein reportedly wanted to stay on for a second term, but given his penchant for disagreeing with his employer (the government), that was a highly unlikely scenario.

So why is the upcoming announcement on UBB so important? There are a number of reasons. Aside from the half-million signatures on the Open Media petition, there were also more than 100,000 submissions to the CRTC from the public. A lot of people are watching this one, which means the government is too. It’s safe to bet our friends to the south in the U.S., where large ISPs are testing the waters on UBB, are also watching.

I speculated recently that Bell’s announcement on throttling was a bit of quid-pro-quo with the regulator, as in you (CRTC) scratch our back on UBB, we’ll scratch your back on this other stuff. If the regulator approves Bell’s AVP proposal, as I suspect, it will sure look that way. There’s also the side drama of the outgoing chairman—will he stick to his guns in the face of government opposition one final time, perhaps just to make a point?

Chances are good that anything less than a total rejection of AVP and any other flavour of UBB won’t be accepted by opponents, which means attention will turn to the government. New-ish Industry Minister Christian Paradis has been doing his best impression of the Invisible Man since taking office early this year. If the UBB decision ends up being anti-consumer, he’s going to have to lie in the bed made for him by Harper and Clement.

If the unlikely happens and the CRTC actually comes up with a solution that everyone can live with, thereby restoring relative harmony to the Canadian broadband environment, it will clear a major issue from the table and put even more pressure on the government to get some sort of digital/broadband strategy going. Either way, it looks like the buck is about to be passed to the industry minister. That means no more hiding in the shadows.