Why do we still have a regulatory differentiation between business and residential users on a wholesale level?

I understand the retail purposes for market segmentation and to help with cross subsidization. But it seems to me that mandated access to wholesale services should be more cost based. The CRTC agreed. In the case of business services, the CRTC said:

The Commission has decided that the flat rate tariff structure for wholesale business high-speed access services remains appropriate. The Commission has also decided that rates for these services should be based on the incumbent local exchange carriers’ (ILECs) incremental costs of providing the services plus an appropriate markup.

And for residential services, the Commission said:

The Commission has also decided that rates for either model should be based on each of the individual large cable and telephone companies’ costs to provide the service plus a reasonable markup, and further, that these markups be comparable for all cable and telephone companies.

So if these rates are cost based, and if the commission got those rates right, why is it a problem if wholesale ISPs route residential traffic over a business tariff? If the tariffs are costed properly, then it shouldn’t be a problem – costs are being recovered.

Filings associated with wholesale internet services leave me believing that the artificial segmentation for wholesale purposes should be abandoned.

In the case of wholesale internet access, Bell is concerned that the tariffs may have incentives for competitors to “circumvent Capacity Based Billing charges by diverting residential traffic onto a business interface.” In other words, the CRTC regime for wholesale has somehow made it less expensive to carry business traffic than residential. Does that strike anyone else as bizarre?

If the tariffs were actually cost based with the correct driving variables, then it shouldn’t matter what the source of the traffic is on a retail level.

There are small businesses that operate from homes; there are large businesses with very low use compared to some power residential users. The need to segregate business and residential users and guard against ISPs “gaming” the system by putting residences into the business traffic mix should be telling the regulators that their decision needs to be revisited.

Something is wrong with the wholesale regime.

It started with a report in the New York Times, citing a study from Arieso, saying that “Top 1% of Mobile Users Consume Half of World’s Bandwidth“:

The world’s congested mobile airwaves are being divided in a lopsided manner, with 1 percent of consumers generating half of all traffic. The top 10 percent of users, meanwhile, are consuming 90 percent of wireless bandwidth.

The Times article had another tidbit in it:

Arieso researchers, in their latest survey, found that users of Apple’s iPhone 4S downloaded 276 percent more data from an operator’s network than did people with the Apple 3G, which has been on the market since June 2008.

Arieso said that part of the reason for the increase in download volumes may be Apple’s Siri voice feature on the iPhone 4S which allows consumers to dictate to the phone and enter more text and data into the network in an easier way.

Other news outlets picked up the story and lost all perspective. The Globe carried a Reuters story titled “iPhone 4S devours data twice as fast as previous model“. Let’s overlook the mathematical incorrectness of the headline (“twice as fast” would have meant only 100% more data, not the 276% – or nearly 4 times as much). The Financial Post carried a Bloomberg story proclaiming in its headline “Siri doubles iPhone data usage“.

The Globe/Reuters story more accurately hints at user consumption patterns, rather than the device itself, but it doesn’t do much more than recite raw data:

IPhone 4S users transfer on average three times more data than users of the older iPhone 3G model which was used as the benchmark in a study by telecom network technology firm Arieso.

Data usage of the previous model, the iPhone 4, was only 1.6 times higher than the iPhone 3G, while iPad 2 tablets consumed 2.5 times more data than the iPhone 3G, the study showed.

It is possible – and more likely – that the data is demonstrating important market information: that the heaviest users of mobile data are the ones most likely to own the latest devices. It isn’t the device that is “devouring” data; it is power users that own the devices. These are the early adopters – the people who line-up to buy the latest device on launch day.

That was what I found most interesting, with important implications for consumer marketing and network development strategists.

Roam Mobility is about to make cross border roaming easier and cheaper for Canadians.

Launching January 16, travelers will see Roam Mobility SIM cards, phones and mobile hot spots at duty free shops in major airports and land crossings. The service is live when customers turn it on in the US. Your phone is active and able to make calls from the get go – waiting for the flight attendants to authorize you to use your electronic devices.

Simple activation and unlimited US/Canada talk and text make this an attractive option for short term and even longer stay visitors, with thirty day plans for $60 per month. Add 2 GB of mobile data for $40 more.

The predictability of flat rate, unlimited calling should prove to be popular; among the keys to success for Roam Mobility will be development of brand awareness, distribution channels and customer service excellence. As a frequent cross border traveler, it is good to see more options.

Intel sent an interesting infographic: What Happens in an Internet Minute.

Looking at the traffic data, Intel asks if there is sufficient attention being paid to investment in infrastructure.

Imagine the state of the network in three years, when the number of connected devices is projected to be double the world’s population. Can our networks scale to handle predicted traffic and meet consumer expectations for immediate access from multiple devices?

What about security?

Among highlights from the infographic:

• Nearly 640 Terabytes of traffic are being transferred each minute by global IP networks;
• 6 million Facebook views; 2 million Google search queries;
• 30 hours of video are being uploaded to YouTube; and
• 1.3 million videos are being viewed.

The email I received put it this way:

Governments invest in infrastructure every day – roads, bridges and airports – but what about network infrastructure?

Hopefully, network operators will not follow the practice of governments in infrastructure investment. The state of our roads, bridges and airports seem to be case studies on why network investment is best handled by the private sector. My experience is that governments tend to use “just too late” provisioning.

The 2012 Canadian Telecom Summit will feature a number of sessions relevant to this theme. The event opens 5 months from today. Have you registered yet?

In early January, I wrote a piece calling for a million computers for low income Canadian households.

It didn’t happen. Yet.

But I have been feeling momentum building, aided in part by a program launched in early November by US cable companies. Greg O’Brien at Cartt.ca has joined in the effort and Open Media recently carried a commentary in support.

This needs to be a priority for us in Canada. Nearly one in 5 Canadian households has no computer, skewed heavily by income. I want to see every household with a school aged child have a home computer. If we want to build a competitive knowledge-based economy, this is table stakes.

As we approach the new year, I’d like to make this an objective for 2012. Next year, I’d like to be able to reflect on success for this new year’s resolution.

It has a better chance than my resolution to drop 20 pounds.

Happy New Year to all – best wishes for a year of health and peace.