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  • 02/09/2011 (8:11 pm)

    My thoughts on usage based billing

    Filed under: News ::

    As most already know, the CRTC recently attempted to make usage based billing (aka UBB) mandatory for all ISPs in Canada.  Due to public outcry the CRTC was forced to go back to the drawing board, but it isn’t over yet.  If you live in Canada and have not yet done so, sign the petition at http://stopthemeter.ca.

    Now for my thoughts…

    The main problem that I have with the attempt at mandatory UBB is the ludicrously unrealistic pricing.  It is well known that transmitting 1GB of data costs around 1 or 2 cents.  The overage fees that they are proposing would require Canadians to pay $2 to $4 per gigabyte.  That’s a 10000% to 40000% markup.

    Currently an ISP such as Teksavvy is able to provide a 200GB/month plan at a standard DSL speed of 5Mbps for $39.95.  They are also able to provide an unlimited plan at the same speed for $42.95.  They also have a 200GB cable plan at 15Mbps for $42.95 and a unlimited cable plan at 15Mbps for $54.95.

    Let’s take a look at the proposed UBB plans.  Let’s say I’m a heavy downloader who downloads on average around 250GB per month.  So I’ve got my wonderful new UBB plan with a 25GB cap for $31.  Now I have some choices.  I can add another 40GB for about $6 or another 80GB for $12 (which are the only 2 add-ons that have pricing that makes sense).  Let’s add another 80GB for $12.  Ok, so now we’re up to $43 so we’re already at the price of the 200GB DSL plan, but we only have 105GB of download before we start being charged overage fees.  Now let’s say the overage fees are $2/GB (which is completely realistic since some ISPs charge $2.5/GB).  Now I’m going to have to make up for the rest of that 250GB of download, so I need 145GB of data.  145GB * $2 = $290.  So now I’m up to $333.  Now let’s calculate, in reality, how much that data actually cost to transmit.  250GB * $0.02 == $5.  So I’m paying $333 for $5 worth of data.  If I didn’t use the add-ons and just stuck with the 25GB base plan, it would have cost $481.

    This is a perfect example of how ridiculous the pricing they proposed is:

    For your average grandmother who only checks her email once a week, the 2GB or 25GB plans are reasonable.  For anyone else who isn’t a technological dinosaur it is FAR from adequate.  Everyone seems to be focusing on the story that this is somehow supposed to regulate our internet use.  A more appropriate way to put it would be; to chastise us for our internet use.  God forbid if you want to watch streaming video in Canada, and it isn’t coming from Rogers’ or Bell’s video on demand services.

    I pay roughly $8 per month for Netflix, yet even after licensing all of the movies, shows, and actually paying for the massive data transmission to deliver them to their customers, they are still able to only charge $8 per month.  Either math works differently in Canada or our big telecom companies are robbing us blind (I think we know which).

    They want to implement UBB?  Fine, make the monthly starting price $5 per month to cover basic operational costs, then charge us $0.10/GB.  That way they’re still making a large profit yet my 250GB of download only ends up costing $30, which is completely reasonable considering the unlimited teksavvy plan for $39.95 (which I could potentially download terabytes with).  Oh but wait, that would cut in to the massive profits that they are currently making from gouging their casual users.

    They’ve tried to reach just a little too deep in to our pockets this time and enough is enough.

    I will also add that I am all for the dissolution of the CRTC.  They are preventing all foreign competition in Television, Telecommunications, and Internet from entering Canada which is making our market stagnant.  This opens the door for Bell and Rogers to have ever decreasing customer service standards and ever increasing prices.  I’m sure that Bell and Rogers would suddenly smarten up if companies like Verizon and T-Mobile were setting up shop in Canada.  The CRTC also has a well known track record of passing regulations which work in Bell and Roger’s favours, while ignoring the fact that many of these changes are detrimental to smaller competing companies.

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