CRTC gets it right again! (sort of, maybe)

So yesterday our old friends at the CRTC came down with a decent decision. Another one! But it may not really be the awesome win for you and me that you think it is. Let’s take a look at this whole usage-based billing business (say that five times fast) after the jump.

So what was this whole kerfuffle about? For once, the CRTC decision has a decent explanation that you may even be able to understand. To the blockquote!

The objective of the proceeding was to decide how large telephone and cable companies should charge independent service providers for access to and use of their networks. The proceeding was initiated following a proposal by Bell Canada to introduce a usage-based billing (UBB) model for these wholesale services. Concern was raised that if UBB rates were applied to independent service providers, those independent service providers would also be forced to impose UBB on their own retail customers.

What’s important in there is this – and this was never clear to a lot of people imho – this was only ever about the Bells of this world charging the little independent ISPs (Teksavvvvyyyyy!) based on usage. The Teksavvy’s of the world don’t have their own bandwidth for internet services; they just buy it from the big companies and resell it to the end user (you!). So that’s what this was about – “wholesale” sale of bandwidth. It was never about the Bells charging their own retail customers based on usage (though in some ways they already do, as you can be charged X dollars for X amount of bandwidth per month). So in reality, it only affected the 4-6% of Canadians (no one seems to agree on the exact proportion) who use one of the small ISPs. Though no doubt it would have had ripple effects throughout the industry had the CRTC allowed it.

But they did not! In analyzing all the possible pricing models for wholesale reselling of bandwidth, the CRTC concluded:

In light of the above, the Commission considers that capacity-based models are more appropriate than volume-based models.

WTF? Oh CRTC, you do go off and make things complicated don’t you. Let me try to explain. Capacity-based models mean that “we’ll charge you x dollars for x amount of space on the network per month.” Volume-based models essentially mean usage-based billing – “we’ll charge you x dollars for every x megabyte that flows through the network.” To use a well-worn analogy, imagine Bell controls the 16 lanes of traffic on the 401 in Toronto, and wants to rent / sell some of that space out to a smaller company. They could either sell the company two lanes per month to drive whatever cars they want on those two lanes (capacity-based) or charge the smaller company for every car the smaller company drives that gets into any lane (volume-based). Replace car with “data” and lanes with “series of tubes” and you’re set! Does that make sense?

Maybe the CRTC can explain what they’re up to, from their press release:

Under the CRTC’s new capacity-based approach, large telephone and cable companies will sell wholesale bandwidth to independent ISPs on a monthly basis. Independent ISPs will have to determine in advance the amount they need to serve their retail customers and then manage network capacity until they are able to purchase more.

OK so basically the CRTC came up with a whole new way for the Bells to charge the Teksavvys. Nice. That’s why no one seems so happy with this. Bell wanted their usage-based billing, and Teksavvy wanted to continue getting full access to all the lanes for a flat fee per month. That’s why Teksavvy’s president called this (in the Globe article linked above, and their press release) “a step back”. The gang over at openmedia.ca called this “a step forward.” They can’t both be right, or we’d be tripping over our own metaphorical feet here.

The CRTC actually heard Teksavvy’s call, and did say that the big co’s can continue to use the old system:

Alternatively, large companies can continue to charge independent ISPs a flat monthly fee for wholesale access, regardless of how much bandwidth their customers use.

HAHAHAHA. You kill me, CRTC. No way in hell any company will do that, because you can bet the farm that the new compromise system will be more profitable.

So who’s the winner here? Well no one really. Consumers get a small win because the little guys can continue to operate at least and not have to pass on usage-based billing to their customers. But if those same little guys are to be believed, they may not be able to provide the unlimited bandwidth plans that have made them famous, and even if they can, the rates will be going up for sure.

As Geist says, “the reality is the overwhelming majority of Canadians will still be left waiting for measures that will address data caps at the retail level.” Remember, this decision was only ever about the 4-6%. The rest of us are still dealing with the crappiest most expensive high-speed internet access in the developed world. Vidéotron just sent me a letter telling me my internet fees were going up another $2 per month for my dinky 50 Gb package. That’s the real problem here – me, me, me.