The problems, and some solutions, to the whole mess of Usage-Based Billing for Internet coming in Canada are summed up well here: Unpacking The Policy Issues Behind Bandwidth Caps & Usage Based Billing.
But, the debate, at least online, is turning fairly ridiculous. ”This is the end of the Internet in Canada” and “UBB is evil” and commonly heard online lately.
First of all, let’s be clear: 96% of Canadians already have UBB. Our Rogers and Bell Internet plans already have caps and overage fees. This scandal is all about the regulations that forced Bell to resell last-mile connectivity to consumers through smaller ISPs. These regulations still don’t sound like a bad idea, because apparently us taxpayers already paid for most of that last-mile connectivity ourselves. (Bell is a private company now but connecting everyone nationwide is not a profitable business, and this apparently was bankrolled by us)
Second, UBB is not necessarily a bad thing for consumers. The rate of $2/GB that the CRTC has apparently allowed Bell to charge smaller ISPs is absolutely ridiculous, but a fair usage price is probably good for almost everyone. Personally, I wouldn’t mind paying a fair price for my usage, just like everything else in life. We all pay by use for water, electricity, gas, etc. Those items are all at least as fundamental to modern life as is access to the Internet.
One thing a lot of people seem to overlook: bandwidth isn’t free. The cost to build and maintain a network that can transfer 1TB a day is vastly less than one that can transfer 1,000TB or 100,000TB. But, the incremental cost to transfer one more byte is very small, which is why so many people assume it’s easy to provide unlimited Internet plans. These networks are not one-time costs: the initial investment is amortized over many years, plus then you have the maintenance costs. If we all pay the same flat fee, someone who just checks email and uses 50MB/mo is paying the same fee as some massive torrenter who transfers 500GB/mo.
Let’s take my current Internet bill as an example. For 100GB/mo I pay $60 I believe. If I use all my cap, I’m effectively paying $0.60/GB. I know my ISP has baked into that price a hefty profit margin and assumptions about how much other heavy users on the network will transfer, so I’m not sure how to hazard a guess at how much the real incremental cost is to transfer one GB. But, let’s just pretend for a second that we knew the real cost to maintain my last-mile connectivity and other account services was $20/mo. The remaining $40 of my bill would then be for transfer costs, which works out to $0.40/GB. Let’s also just pretend that in a pure UBB environment, where each user got charged fairly for transfer on top of the $20 connectivity fee, we knew the ISP could really transfer 1GB for $0.10 or $0.20 (I assume it’s much lower, but I’m sure they want their 500% profit, right?.
In that scenario my bill, on a month where I used 100GB @ $0.20/GB, would be $20 + (100 x 0.20) = $40. The bill for the person transferring 50MB checking email would be $20. The bill for the torrenter would be $20 + (500 x 0.20) = $120. So, this is great for everyone except the torrenter. I don’t mind this imaginary scenario so much. One yard stick would be that as long as someone can watch TV on the Internet and it doesn’t cost more than a cable TV subscription in transfer costs, then things aren’t too bad. Considering TV is delivered along the same cable lines as the Internet (at least for Rogers) obviously the incremental transfer costs can’t be higher to watch TV on a website.