The CRTC has set the pricing for the usage sensitive component for wholesale internet service.
In Decision 2011-44, the Commission determined that smaller Internet Service Providers (ISPs) will get a 15% discount off the major carriers’ retail usage sensitive rates when the ISPs subscribe to telco gateway access services or cable third-party internet access.
In an interview yesterday, I said that I don’t think this means the end of smaller ISPs. The ISPs have had a lot of time to prepare for this decision, the last component needed to implement usage sensitive billing. The better ISPs have looked at ways to evolve their business model and network configuration.
UBB does not mean the end of flat rate internet, but to be successful, ISPs will have to know more about their customers and work hard to balance their customer mix. Internet service is joining the rest of telecommunications services that have both fixed and variable wholesale cost components.
Long distance prices may have come down dramatically, but there is still a marginal cost for every call you make. Still, there are a number of companies that offer flat rate plans, unlimited calling province-wide, nation-wide, North America or even to many countries overseas. How can they do this?
An all you can eat buffet owner has to balance their customer load; the restaurant needs to attract some patrons that don’t subscribe to the plate loading antics of the high school football players that are also regular customers. I wrote last week that ISPs need to know more about their customers and who they want to attract.
It may be counter-intuitive, but the result should be that consumers will see more differentiation between ISPs as they stake out their turf.
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There are some insurmountable flaws in your reasoning here. First off is that we have no proof that a continuation of this approach will work. It has not in any way helped the situation for cell phones and ISPs to date. Both markets are in a frantic race to the bottom to inflate service levels of over a decade ago. When in reality, the costs should be going down if anything.
The only way to get competition going is to dissolve the CRTC and return stewardship of the public infrastructure to the government.
The only way to have internet in Canada is to have it as unlimited use or we as a nation will fall behind countless others.
Smaller ISPs can’t differentiate because their billing is dictated to them by a bigger fish before them that suffers their presence as a token gesture. This situation makes us all look like a self destructive and greedy nation.
I would say that the CRTC decision allowing the Telecom’s to dictate a retail business model is a fundamental flaw in their decision.
This is not about “Balancing” usage at a flat rate. The “Wholesalers” are not longer able to operate in that model.
It already requires knowledge of your customers to buy 100 gigs of data transit a month and sell that to 100 customers a month. They already know that x% uses above a certain amount. If they don’t there will be capacity shortages that degrade the experience of the customer (who is then rightfully free to leave for another ISP)
What is now dictated is a single billing mechanism. They have to bill the customer that hits over a cap of data an overage fee. They don’t get a discount for customers that go under the estimated amount (nor can they pool the bandwidth between them). There is no room for that in the fee structure being imposed. The telecom providers are also open to offer “unlimited promotions” to their customers (imposing no such business model restriction).
Resellers may still exist but independent “wholesale” ISPs will disapear all together or significantly.
There is nothing in the CRTC decision that dictates a retail business model. You are incorrect that anyone has dictated a single billing mechanism. There is a lot of mis-information floating around.
If there is a lot of mis-information floating around, perhaps you could take the time to clarify? Is “mis-information” the same as “spin”?
Ok Mark you Genius,
This is an Economic IMPT designed at REDUCING INTERNTET USAGE.
Can you provide some data, with your incumbent connections, on data transfer volumes in Canada? Have they been declining over the last decade?
The most Canadians have heard so far in favor of UBB is marketing and propaganda. Likely the mis-information Mark is eluding to.
Be it misuse of terminology (“bandwidth”), or misleading use of technical statistics to come to conclusions on network usage.
Data caps are all bluster in the end to try and scare people with big numbers. But we can prove how absurd and inapplicable they are just by asking some smart questions…
Say I’m with a provider that has a 60GB data cap over a billing period of 30 days, can you explain to me:
1) How do I strain the network if I transmit 60GB over two days and do nothing for the remaining 28?
2) How much network strain is presented by transmitting the whole 60GB across the billing period?
3) What analysis was done to conclude that current billing periods technically merit or are a fair match for the data caps? How do we know that they aren’t arbitrary?
Here are the answers:
1) You aren’t. To transmit 60GB consistently for two days is an effective data rate of 364kBps. Which most people will tell you is roughly one half to one third the maximum rate of transfer of most $50 internet connections in Canada.
2) Once again, anyone who knows a bit about “how fast is fast” will know that 24kBps is nothing. But that’s the maximum speed you can reach to transmit 60GB over a month. About a 30th of the maximum potential of your connection – worst case.
3) None. This is a mad dash to the wallets of Canadians because we are victims of regulatory capture in the CRTC. http://en.wikipedia.org/wiki/Regulatory_capture
None of this has been rationalized, it has simply been chosen because the money was too good to pass up. For as long as we’ve had internet connections, the rate of transfer is how we’ve measured capacity. Proven by the various service levels providers have offered for the past 20 years.
The most important lesson people need to learn is that the amount of data someone transmits in total offers no insight into the burden to provide service. If service providers are having troubles living up to the level of service they’ve been selling, why were they selling it to us in the first place? If my ISP can’t sustain a 768kbps-1Mbps connection, how did I end up getting it?
Usage based billing will take something like the internet and render it hostile to anyone who wants to use it effectively.
Does anybody really understand the MAIN issue here?
It’s just money grab and controlling the ordinary people.
Bell has to prepare bandwith useage for its TV over the NET!
Let’s boycott Bell and all of it services. I’m sure that if not in a month then in two they will back up of this idea, and be begging CRTC to revers everything!