Over the past week, some pseudo-engineers have been sending me “fan-mail” saying that telco aggregated connections can’t ever be blocking because the ISPs pay for a certain peak rate bandwidth and should be able to use this however they want. These folks are forgetting a number of aspects of internet traffic, perhaps having been sheltered from having to actually operate a real internet access network.
Gather round. This is what we call a teaching moment.
The most important lesson is basic network engineering economics: services are kept affordable by sharing the same network facilities among mutiple customers. The level of sharing is determined by making usage assumptions in order to avoid congestion. To the extent things change from these assumptions, new engineering and network reconfiguration needs to take place. [Note: when you are sold a circuit capable of a specified data transfer rate, there are assumptions that you will not use that circuit around the clock at that speed.]
The wholesale price for aggregate ISP customers connections is kept low by combining the access network with the traffic of other internet access customers. Since the ISPs aren’t specifying the peak traffic requirements of each customer or each switching centre, it is quite possible for one customer to use a disproportionate share of the capacity, again driving a need for re-engineering of the internal network.
This brings us to the current debate, which has nothing to do with retail usage based pricing.
When the price of the wholesale aggregated internet service was developed, there was some kind of assumption made about the average load being generated per end user. This was used in the production of the tariff for Gateway Access Service (GAS) in the order of $20 per month, which covers the carriage of the end user traffic to the network interconnection point of the choosing of the ISP.
The size of the pipe between the telco and ISP varies with the amount of traffic, but this can increase in two ways: by adding more customers, or by each customer using their service more. The phone company gets fully compensated if the increase comes from more customers who have a traffic profile that corresponds to the engineering assumptions; the problem arises when the average traffic has different characteristics from the engineering assumptions.
This is why the CRTC needs to revisit its Usage Based Billing decision and set a threshold based on the loads presumed in the engineering for GAS, with the tariff incorporating appropriate adjustments for aggregate traffic loads that exceed these assumptions.
I note that some ISPs had requested an ability to gather their traffic on a more localized basis and I wonder whether this would have have pre-empted the current wholesale disputes.
If the telcos are looking to revisit these GAS traffic assumptions, wouldn’t it be more logical to reformulate the GAS tariff itself to include some kind of end-user usage charge from the beginning? Instead of bolting on a separate charge based on ‘excessive’ use (defined as above and beyond what was assumed)?
I personally have no problem with UBB (at the GAS level) in principle, if it is done correctly. My specific issues with the current implementation are:
1. Overage charges should be determined on a cost+ basis, not retail-. The costs to the telcos is nowhere near their retail pricing (and nor should it). The idea that this setup is required to ‘ensure fairness in competition’ is nonsense.
2. It restricts competition in determining what is ‘excessive’. As usage goes up over time, revenue from overage charges will be quite attractive, and it will be difficult to justify increasing caps. We will need healthy competition to discipline the market.
3. The GAS tariff should be reformulated to include usage charges from 0, and include both per-user and aggregated consumption aspects. The base charge should be significantly reduced as a result.
In the spirit of teaching and learning, I invite your readers to gather around and think about some recent history and how this has shaped the world we live in.
Every since GAS was established, Bell has taken a hostile approach in its relationship with its wholesale customers. The fact is, they have been kicking and screaming throughout the whole process. It is quite clear that if Bell had a choice, they would never ever have entered this relationship at all.
I can’t help but wonder what things would be like today if Bell had taken a different approach. What if instead of taking a hostile approach, they had worked as a real partnership? What if all the money they have spent fighting this relationship – ie the money they have spent on lobbyists and lawyers – had instead gone towards expanding infrastructure? What if this money had gone towards making their service better, and strengthening their relationship with wholesale partners?
If only….
Can you please read Jean-Francois Mezei’s petition? It’ll shed some light on the details of this whole subject. http://bit.ly/geZhfa
I know it’s long and technical, but it should be considered essential reading for anyone interested in the subject.
Now, to quote from that petition:
“GAS is not a flat rate service. The GAS service is built using three required components:
• GAS per port/line fee – Covers the link between the end user’s modem and the BAS router
• AHSSPI – links to aggregate traffic from all BAS routers to a Bell Facility near the ISP
• EAS (Ethernet Access Service) – to link the ISP’s facilities to the Bell wire centre. ”
What does that mean? It means wholesalers pay a per-customer fee, as well as for the aggregate traffic as a whole, and for any links to their own systems. They pay every way it is possible to pay.
Bell could have sought an increase in any of these fees to cover the cost of usage, but did not. In fact, both Bell and the CRTC have agreed on record that the existing fees more than cover the cost of usage.
UBB is not about usage.
“In the 2010-803 proceeding, the cable carriers and Bell Canada both agreed that the implementation of what they refer to as “UBB” was not cost-based, but rather an ITMP designed to curb the growth of usage, and that the punitive pricing levels proposed were meant to alter the behaviour of consumers”
It’s not about cost. UBB is publicly acknowledged, by the carriers, as being about curbing internet use on a per-customer basis. They want to slow down the growth of internet usage to maximize profits from existing infrastructure, and maximize profits from existing content businesses.
And you can see pretty easily how it would also be in the carriers interest to make the pricing structure as close to their own as possible in order to minimize competition. Again, if it was purely a usage issue, the per/GB rate would be linear starting at or near zero, like any other utility. Instead they’ve forced their pricing structure on competitors, which is transparently anti-competitive.