Open Media is asking candidates to declare themselves as pro-internet. It is part of an initiative that has contributed to a raised awareness of digital issues. When I first heard about Open Media’s “pro-internet” campaign, I had to ask,”Why wouldn’t you sign on?” After all, as a colleague put it, if you aren’t on such a list, you must be a Neanderthal. If you aren’t pro-internet, you’re must be against it, right?
But political candidates should be careful to read the fine print on how “pro-internet” is being defined. The fine print seeks to set Canada apart in the world. Open Media wants candidates to agree to have the government regulate retail internet prices:
By signing up here, you are agreeing to stop the pay meter on our Internet if elected.
What does that mean? If elected, candidates will be expected to stop usage sensitive prices. Sounds good if say it quickly enough, but stop to think about what that means in practice. For the majority of customers, it means that prices will increase. But let’s ignore that for a moment, because there are many who believe that the cost should be borne by shareholders or the government (and if profits decline, then the government will be bearing some of that cost).
More importantly, eliminating “the meter” means restricting choice for consumers. It means that at whatever speed, service providers would be forbidden from offering an “entry level” service. As I wrote a month ago, it means that seniors who may not need unlimited throughput wouldn’t have a choice of a lower price plan at the same speed. For half of Canadian households in the lowest income quintile (who don’t even own a computer, let alone have internet access), Open Media wants politicians to commit to restricting the flexibility of service providers to develop creative price plans to get them connected.
I wrote an OpEd a few weeks ago about why we should resist calls to regulate retail internet pricing: Don’t regulate my internet.
Stopping the meter isn’t pro-internet. It is a populist way of demanding retail internet price regulation. The rest of the Open Media candidate commitment, committing “to increase broadband access, competition, transparency, and choice”? I’m all in favour. Who isn’t?
Regulating retail prices won’t increase broadband access and it reduces competition by restricting choice. The pro-internet pledge, as currently phrased with government price regulation, just isn’t pro-internet.
You are using unsupported claims when you say share holders would bear the costs and choice would be restricted. Look at Europe. Most countries (France, UK, Italy.) make us look like the third world. Even the US has better rates then we do. You should really consider supporting your claims because evidence worldwide suggests you think your readers stupid.
Mark,
The meter has to be stopped until we have ample competition in the ISP service sector. Right now the incumbent ISPs are abusing the monopoly situation they have nurtured for themselves through regulatory capture. Plain and simple.
Open media seemed to have nailed it correctly. Until there is open access to the last mile and the back bone nationalized or take into custody of an organization whose sole purpose is to maintain, expand and rent out the back bone to all ISPs for a fair price we will not have market efficient prices.
Currently the situation is ripe for abuse and it has been used as thus by the incumbents. agree?
“For the majority of customers, it means that prices will increase.”
I read your article many times, I could not grasp on what facts you are basing this statement on?
Mr Goldberg, I’m a supporter of the openmedia.ca site. Personally I want to be treated fairly by the telecoms. Up here in the Northern Canada in the NWT, most of us have between a 10 gb – 30 gb cap in place by Northwestel (owned by Bell Canada) Once we go over our cap we are charged between $10.00 – $25.00 a gb, depending where you are in the North. Do I think this is fair NO, do I think any other company could survive by making a 4000% minimum markup on a product NO. Do I think that the telecoms should make money, absolutly, every needs to make a profit. But making 4000% is just wow.
You can go to DSL reports, and find out our (Canada’s)standings in regards to speed, pricing, caps etc as in comparision to the rest of the world. Unfortunetly we are lagging far behind the rest of the world in all of these areas. This is what we are asking for, to be treated like the rest of the world in terms of being a consumer on the internet. We’re not asking for it to be free, just comparable to the rest of the world. We want the CRTC to work for us, not the big Telecoms. The telecoms cannot police themselves, would love to see them broken up into two divisions. One for wholesale, and on for retail, like they have in the UK. All wholesalers buy at the same costs, thus allowing them to decide the fair markup on their packages. This would spur competition, not hinder it. They want my money, well offer fair pricing matched with good unthrottled speeds. The telecoms would still offer packages, just based on speed, not caps. Can’t afford the higher speeds, go with the lower, and its priced fairly.
We as Canadians usually sit back and take whatever crap we are handed without saying anything, well 500,00 of us stood up, and said enough is enough.
The shill has spoken.
This is such a tiring debate. Much of the data comparing the internet in Canada to the rest of the world is questionable at best which allows each side of the debate to spin the story anyway they want. I know from my personal experience, having a home in Canada and and a home in the US I pay $40 a month for 1.5 Mbps connection in the US and $37 a month for a 15 Mbps connection in Canada. From my own personal experience, Canada wins on the price/value scale. Maybe they get internet a bit cheaper in the UK, but look what they pay for gasoline, housing and groceries – I think most would still say the cost of living in Canada is much lower than the UK.
I believe the 4000% markup that Mr Whitton refers to is also a bogus sound byte created by lobbyists to shock consumers. If the margins were really 4000% everybody on the planet would be rushing to get into that business – and guess what, they aren’t. In fact the CRTC has to incent ISP’s to get into the business by giving them discounted access to the networks of bigger ISPs.
What I am very concerned about is the lobbying of OpenMedia for the regulation and/or nationalization of the internet in Canada. I would prefer my taxes go towards healthcare, education, defence, and basic infrastructure. I don’t want the government deciding for me how to connect to the internet – it’s a very slippery slope to permitted uses and permitted sites.
Frankly, if it ain’t broke, don’t fix it.
Mr Goldberg,
You claim that you do not want your internet regulated. That I agree with. The internet should be free (as in speech), open for all, and affordable. Unfortunately, our internet is already heavily regulated by the telecoms. They use throttling and traffic shaping technology to impede services that “inconvenience” them, and are now looking for new ways to discourage consumers from using online services that compete with their other products, such as Cable TV. Enter Usage Based Billing, or UBB.
Usage Based Billing, while the telecoms try to make it sound fair and reasonable, is all about restricting consumer choice, discouraging competition, and increasing prices for the consumer. As our consumption of information continues to move increasingly online and away from the traditional sources of media, the telecom companies are looking to recoup some of the revenue they stand to lose. Also, what better way is there to discourage migration to online video (and away from Cable TV) than to make it more expensive? Shaw even said in their annual report to their shareholders that UBB is an opportunity to “monetize [their] broadband business.” For some reason, they did not cite the usual excuse of network congestion in that document.
Of course, business has a right to make a profit, as you rightly point out. However, the consumer also has a right to a fair price and to not be gouged. Fair competition is essential to making sure the consumer gets the best price and that business gets a fair profit. However, in Canada’s internet market, there is already little to no competition, effectively creating an oligopoly that can gouge customers as it sees fit. The proposed “overage” fees that the telecoms want to charge-which equat to profit margins in the thousands of percent-are a clear example of gouging. As for competition, UBB will ensure there are even fewer companies who can compete with the big players.
When broadband was deregulated, the government, as part of the terms of deregulation, required the telecoms to make their network bandwidth available to smaller internet providers at wholesale rates. This was to make sure that other companies could get into the internet business and that there would be competition. Many of the successful startup internet service companies that offer internet access to Canadians still must buy wholesale bandwidth from the big telecom companies. Implementing UBB would eliminate the smaller companies’ ability to offer services such as unlimited download plans, and would likewise eliminate their ability to compete. The end result for the consumer will be higher prices and less choice.
Your assertion that eliminating the meter on internet usage will lead to less choice for consumers and no “entry level plan” is patently false. Internet connections are sold by speed, not by the amount of data used. This makes sense, because the nodes that users connect to can process a certain amount of data per second. For example, if you have a node that can process 100M bits/second, and you have 5 people connected to that node, they can each download as much data as they want at 10M bits/second and only use half of the node’s capacity. However, if someone wants to be able to download at 20M bits/second, they would use as much capacity as two other people on the node, and would have to pay more.
As you can see, the more bits someone wants to be able to download per second, the more of that node’s processing power they need. However, it does not matter how many bits they download, as the amount of the node’s processing power set aside for them to use remains the same whether they are downloading or not. If a user moves to a higher speed connection, they need more of the node’s per-second processing power and would put more demand on the network, even if they don’t start downloading larger files. Likewise, if they move to a slower connection, less of the node’s processing power needs to be allocated to them, the demand they place on the network is less, and they would pay less.
Let’s take your hypothetical senior citizen who only uses her connection for email and light surfing. True, she might only use 1 or 2 GB per month. However, that would also mean she would have no reason to buy an extremely fast connection when a slower speed would work just as well. After all, you do not need a 50Mbps pipe to check email or read the news. Think about it-when was the last time you saw an internet plan with a super high speed but a low data cap? Speed and data caps are always proportional because it is the speed that determines the cost to the provider, not the amount of data transferred.
If the internet is, in fact, becoming more congested, the issue is not with the amount of data customers are downloading. Rather, the issue is with the speed of the nodes they are connected to. If the telecoms are not able to keep up with internet usage, the only explanation is that they oversold their network speeds and connected too many people to the same nodes. If congestion is in fact the problem, Usage Based Billing will not solve it, the situation will only get worse until the telecoms upgrade their networks.
Ironically, the telecoms successfully lobbied the government for more deregulation with the mantra “Let the market decide.” Now, the market is clearly saying that customers want more internet service at a fairer price. What do the telecoms do? Rather than follow the market, they go back to the government and lobby for protection from the market. Instead of listening to the customer, they demand more power to regulate what the customer does online. This power of the telecom industry to regulate our internet usage is what is unacceptable about the Usage Based Billing proposal.
In the end, I simply want what you claim to want-an open internet where our access to media and information is not regulated by entrenched interests. I believe that should be something every candidate can get behind this election. What say you?
@ Martin believe the 4000% markup that Mr Whitton refers to is also a bogus sound byte created by lobbyists to shock consumers.
Cost of sending a Gb of information has been pegged as low as .03 cents up to .10 cents a gig, We up north that have only Northwestel are charged between 10.00 and 25.00 a gig once we have hit our cap, So something that costs .08 cents to “ship” and they are charging 25.00 for.Lets even just run with the .10 cents ( I assume no one will argue this amount ) charging us 10.00 is 10,000% difference. Going up to .25 cents a gig because as Northwestel says its more expensive to “SHIP” up north here, that is a 4000% increase over their cost to ship it. I’m a normal family guy, who can work the math pretty quick. I am a business owner and I know if I charged a 4000% markup I wouldn’t be in business to long. My numbers are right, check out yourself before you think i’m saying it just to shock anyone.
Randy – Let’s at least be fair in the discussion. I doubt that anyone would seriously suggest that the costs for NWTel are even in the same ballpark (perhaps not even the same league) as costs in the urban centres. So yes, I think most people would argue the 10 cents.
Glenn – as difficult as it may be for many to relate, the data indicates that most subscribers don’t come close to 25GB in usage, but still want 6Mbps or faster connections for their web browsing or file attachments or Youtube, etc. For those who want more, there are choices. For example, look at how Bell has priced its Fibe 6 plan. You have a choice of 25GB included for $45; 65GB for $50; 105GB for $55; 145GB for $55; or, unlimited for $105. If you want faster speeds, there is a 12 Mbps service that has similar options: 50GB included for $55; 95GB included for $60; 135GB included for $65; 175GB for $70; or, unlimited for $115.
This illustrates that for $55, Bell subscribers have two options: do you want 6 Mbps with 105GB or 12 Mbps with just 50GB. Why wouldn’t we continue to let consumers make those decisions?
Mark, I have made my decision and subscribed to a service that does not put a cap on the amount of data I upload or download. Apparently, the big telecoms don’t like my choice and want to negate it, and the choice of everyone one else who did the same, by subjecting me to the same gouging as their own customers through whole Usage-Based Billing.
Face it. This issue isn’t about consumer choice, but corporate anti-competitive practises. We should not be debating this issue at all. Instead, the government should be pressing charges.
Randy – I don’t know what business you are in but I do know that there are plenty of products that are marked up at amazing multiples. What could be simpler than water – the cost of water coming out of your tap is $0.0015 per liter but that same liter of water is going cost $1.50, or 1000 times more at a convenience store.
But the mark up over cost isn’t the real point here. Let’s be honest with ourselves – your ISP isn’t making 4000% of the service he is selling you at all. Perhaps he’s charging you $50 a month for your connection and maybe he has a 10% ($5) margin on that. Then if you go over your cap by 1 GB your ISP slaps you with a $10 ($9.90 profit) overage charge. Your ISP then has a profit of $5 + $9.90 = $14.90, which works out to about 30%.
It may be that your ISP’s primary objective is simply to discourage heavy use, because at some point he is going to be forced to add more capacity. Running a fiber cable from the NWT down to Vancouver or Edmonton or renting another satellite channel won’t come cheap. Or maybe your ISP is tucking the extra profit into a capital reserve fund because he knows it’s only a matter of time before he has to spend some serious money to add capacity.
So we end up back at the same fundamental question – should consumers be able to select a service tier that meets their needs and budget or should we have an universal unlimited model where everybody pays a bit more so the heaviest users don’t have to.
Francis – We’ve all seen the hype about “corporate conspiracies” but the evidence simply isn’t there. Some say the big ISP’s are lowering their caps to shut out NetFlix and Hulu but two major ISPs (Cogeco and Telus) just raised theirs several months ago, why would they break from the herd?
In fact, over the last 10 years my ISP has increased my usage cap by 2000% to 125 GB per month, increased my access speed by 1000% to 15 Mb/s and dropped my price by 10% to $37 per month. As a consumer, I’m actually quite pleased with this.
Some say the big ISPs are trying to force their resellers to match their retail pricing plans to squeeze them out of business. But the reality is only Bell was proposing to do so per CRTC 2010-255.
It is interesting to note that the actual CRTC UBB decision happened in May of 2010 yet it went strangely un-noticed by our industry minister until January of 2011. I don’t see evidence of a corporate conspiracy but I do see evidence of a desperate minority government grabbing onto a populist opportunity on the eve of an election – sadly, thousands of Canadians were duped into taking the bait.
I want to briefly address the argument that, if ISPs charge according to speed, they don’t need to charge according to usage as well. In my view, costs to the ISP will vary according to both speed and volume. There is a big difference between a user who wants very high speed for ten minutes only, and a user who wants the same very high speed but will use it for three hours. The user who is on for three hours is much more likely to hit the true peak in his section of the network than the user who is on for ten minutes, and so has a much bigger chance of contributing to true peak traffic — traffic that triggers the need for relief.
In general we can say pro-internet is only the protection of Internet,but is difficult to do!
Thanks
Are my previous comments still awaiting moderation Mr. Goldberg?
yes they are. I sent an email to your email address asking you to confirm. There has been no response. Was that a fake email address?
Martin – I didn’t say there was a ‘conspiracy’ here but clearly a bit of “follow the leader” as each of the large ISP jump on the UBB bandwagon. Since you did bring up the C-word yourself, perhaps a future judicial inquiry would be in order to discover such things in Corporate Canada and put such nasty rumours to rest.
In any case, as someone who has worked in the technology industry for almost three decades I know how these things work. I also know that the excuses the Big Telecoms have been using to justify wholesale UBB (eg. deter ‘excessive’ downloading, ‘normal’ users subsidising Internet ‘hogs,’ ease traffic congestion) are simply not true. Not to put too fine a point on it, they are lying to us. In other words, there is no technical justification for UBB either on their wholesale customers or on their own residential customers. They are simply gouging its customer base and making up excuses to justify it. To use the more inocuous spin phrase, they are “maximizing profits.”
As for your allusion to populism, I prefer to call it “market forces.” I remember a Big Telecom representative at a hearing telling the CRTC that they should be allowed to set prices and policies as they see fit and let the ‘market’ decide what is appropriate. Well, here it is: 470,000+ signatures telling Big Telecom NO WAY! This huge backlash against UBB is that very market that telecom was talking about. It seems that when the industry wants something, they call it “market forces”, when the consumer base tells them what they should do, it’s derisively called ‘populism.’
Francis,
You keep referring to “they” as if to suggest there are multiple big telecoms engaged in wholesale UBB. But there were only two, Bell and one of it’s subsidiaries Bell Aliant. It’s not fair to extrapolate that to the entire Canadian ISP industry especially when some of them are clearly moving in opposite directions as I mentioned in my earlier comments.
I too have worked in the tech industry for 3 decades and I have seen my share of conspiracy theories come and go. This whole UBB debate reminds me of the 2008 hoax that was started by a Belgium based group called I-Power. Check out the attached LA Times article and I-Power video. It’s especially fascinating in that this Belgium based group alleged the collapse of the entire global internet was being orchestrated by Canada’s own Bell and Telus – OpenMedia got 470,000 signatures but these kids from Belgium got millions of hits on YouTube so the lesson to us all is don’t mess with a kid’s internet.
If nothing else, it’s a good Friday evening chuckle.
Have a good weekend all!
http://latimesblogs.latimes.com/technology/2008/06/a-net-neutralit.html
Martin, a corporation is not a ‘he’ or a ‘she’ or even and it; it is a ‘they.’ That is neither here nor there. In any case, the UBB issue itself goes beyond just the wholesale side, which all the major ISP are looking very seriously at. It goes to UBB charges to retail customers also against which the market is pushing back.
In any case, however OpenMedia.ca managed its near half-million signatures, it is merely the conduit through which “market forces” are clearly demonstrating to the major telecoms that UBB in and of itself is unacceptable. Economists and economic thinkers may prefer to think that “market forces” are formed by choosing available products from what buyers have to sell, but the true “market” has never worked in such a simplistic way, “Economic man” is not the one dimensional automaton they want him to be. Economic man, when aroused, are the crowds that toppled Mubarak; it is Tienanmen Square and a whole lot of other revolutionary movements.
All industries have been giving people nothing but bread and circuses. Big Telecoms in Canada have been attempting to tamper with that and they are unleashing the very “market forces” they so dearly espouse. They should be be celebrating, not going to the government for protection.
Did you get the confirmation now?
Intereting that you suggest that ‘the “Big Telecoms” have been going to the government for protection.’ I must have missed that news item. Can you send a link? I thought that the consistent message has been for the government to stay out of regulating retail prices.
Francis
With respect to UBB you say all the major ISP are looking very seriously at it. How do you know that? You still haven’t offered an explanation why two major ISPs have recently increased their caps. Could it be that the fear-mongering campaigns of groups like from OpenMedia and I-Power have painted a picture that simply isn’t true?
I think people have to be careful what they wish for. The simplest way for the government to give the OpenMedia lobby what it wants is to regulate retail internet prices. The government has already tried creating a protective environment for independent ISPs to startup and grow and the results have been pretty disappointing.
Regulating retail internet prices would be a total disaster for Canadians as it would eliminate choice, eliminate innovation driven by competition and reduce incentive for ISPs to invest in network infrastructure.
I don’t put a lot of faith in petitions like the OpenMedia campaign because they are just too simplistic – who doesn’t want flat rate unlimited everything? Imagine the response if you asked Canadians if they wanted to pay a monthly flat rate for unlimited gasoline or beer.
Remy,
You suggest the meter has to be stopped until we have ample competition in the sector. I live in Ottawa and by my count I have a choice of one phone company, one cable company, 4 independent ISPs, one satellite company, one wimax operator and at least 6 cellphone companies who are competing for my internet business – how many more companies are you looking for before you would be satisfied that there is sufficient competition in the internet sector? Fourteen companies competing for my internet business is far from a monopoly.
Hit too close to home, have I? Martin, major ISPs have been raising their caps as a result of market forces. You call it populism. The market will not be satisfied until all caps are removed, even if the market has to nationalise the industry.
Mark, I am not suggesting anything. I am saying it outright: Big Business is seeking protection from the government against the people of Canada, and they are getting it. Are you suggesting otherwise?
I haven’t seen “Big Business” seeking protection – I thought they were asking government to stay out of the way and let them provide services to “the people of Canada” [otherwise known as their customers].
Francis
No, you haven’t hit close to home at all. In fact I don’t see that you have hit anything at all yet. Your position is based on platitudes and generalities – you haven’t yet offered any facts/studies to support your perspective. It looks like you just simply have a pro-socialist and anti-business bias. Don’t get me wrong, I respect your right to your your socialist perspective and I trust that you will respect my pro-business perspective.
When I think back to the $2 billion that was spent by the government on something as technically simple as the national gun registry I just shudder at the thought of the government taking over the management and construction of Canada’s internet and what that will do to my income taxes!!