If usage isn’t curtailed, is an economic traffic management practice ineffective? If there is no congestion being experienced, should traffic management practices (economic or technical) be prohibited?
These are some of the questions raised in arguments submitted last Friday to the CRTC in its wholesale usage based billing review.
MTS Allstream cited evidence from Cogeco (that stated its traffic growth rate had not significantly been impacted by retail usage based billing) to state that
volume-based billing models does nothing to reduce the total amount of traffic on the network… In other words… volume-based billing is ineffective in achieving its stated objective of suppressing volume of data transferred in a month.
Is reduction in traffic really the objective, or are carriers that implement economic traffic management practices looking to align retail prices with the value of service received? If volumes of traffic aren’t being changed, is there a fundamental problem with the practice? What policy objective is being violated?
In a strange twist of logic, some argue that users are generally not seeing evidence of congestion, so traffic management practices are not necessary. Would these people be happier to have degraded service levels first – the way cities manage road expansion. As if we would be better off to have carriers use “just too late” provisioning practices, instead of “just in time.”
Perhaps the most difficult piece to follow was submitted by CAIP. As an aside, CAIP’s piece was submitted late “due to technical problems”. It is somewhat ironic that a division of the Canadian Advanced Technology Association would be subjected to technical problems causing a two day delay in filing. CAIP raised the issue of Canada’s wireless industry to discuss network investment.
If we use wireless telephony services as an example, it becomes apparent that the frequency of investment and the value of these investments are complimentary [sic].
I’m not sure where CAIP was going with this. Like internet services, the wireless retail business is forborne from price regulation, Canada’s wireless industry does not have mandated resale requirements. CAIP acknowledges limited regulatory obligations on wireless:
Similar to the evolution of wireline networks, this is occurring because the three major wireless incumbents in Canada are desperate to gain market share from each other. In the wireless realm the key mandatory regulatory obligation is that the incumbent carriers provide access to their essential tower and site facilities and out‐of‐territory roaming.
Was CAIP suggesting that there may not be a need to have any requirement for regulated wholesale access, except for services provided to other facilities based carriers?
Is reduction in traffic really the objective, or are carriers that implement economic traffic management practices looking to align retail prices with the value of service received?
I’m not sure that’s an “or” proposition. Carriers derive some clear benefit from reducing the rate of growth (note: I don’t think anyone reasonably expects to reduce traffic in absolute terms, but rather to constrain its rise) by deferring capital infrastructure costs AND carriers can benefit economically from ITMPs. Where increased traffic can be accommodated with existing infrastructure, ITMPs are pretty much pure profit.
The latter concept – of “aligning” retail prices with value of service – is, you must admit, pretty subjective. How much profit is too much profit? Is profit a bad thing? I think any carrier can and should be free to use profit as a basis for pricing but the very term ITMP — “traffic management” — makes it clear that their regulatory purpose was to manage traffic and by extension the capital infrastructure costs, not to “align retail prices.” As discussed in the recent wholesale hearings, not everyone is buying the idea that carriers are being eaten out of house and home by those users who move more data over time than those who move less. If this is about profit, just say so. The CRTC can then decide if the benefits of adding to carrier profits through these measures actually outweigh the costs to the consumer. As a consumer I guess I lean a certain way on this point but I respect the CRTC’s jurisdiction. 😉
If volumes of traffic aren’t being changed, is there a fundamental problem with the practice? What policy objective is being violated?
That’s a big if you’ve got going there! Do we have a good way to compare a control group vs a test group where some have ITMPs and some don’t within analogous market conditions? How do we know traffic wouldn’t be three times higher had Cogeco not adopted ITMPs? I think a lot of people are making a lot of assumptions around the effects of ITMPs, but one thing that has been made pretty clear (and I think even the commissioners managed to get their heads around this at the recent wholesale hearings) is that UBB didn’t directly address traffic management in the way that had been hoped when ITMPs were approved. Bell and others have argued that there is no better alternative to this flawed approach, but even they agreed that it’s not perfect. Does that constitute a fundamental problem with the practice? Alas, my CRTC membership card was lost in the postal strike.