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CRTC Rules on Usage-Based Billing
CRTC Backs Away From Consumption Model
by Karl Bode 04:22PM Tuesday Nov 15 2011
After taking unprecedented political and public heat earlier this year for blindly allowing Canadian incumbent ISPs to strangle independent carriers and consumers with new usage-based pricing, Canadian regulators the CRTC had to back off helping bell implement their public vision. After a series of hearings, the full ruling has been released the CRTC website.

The CRTC does appear to be backtracking on their original decision, acknowledging that the original UBB idea would harm independent ISPs by preventing them from offering differentiated services. Under this new ruling, incumbents can charge independent ISPs a flat rate or a rate based on capacity and the number of users, but not based on the total data volume used by wholesale customers. Bell had originally wanted to bill independent ISPs 17.8 cents per gigabyte of usage, and effort independent ISPs insisted was double dipping and intended to put them out of business.

In short, while this has to be seen as a loss for Bell, independent ISPs will still have to pay significantly more. However, it will be less than the original CRTC order, based more on the traditional speed and capacity sale model and not on overall usage. From the ruling:
quote:
The Commission has decided that there are two acceptable billing models. The first is a capacity-based billing model in which independent service providers determine in advance the amount of capacity they will need. Should demand exceed this capacity, they will have to manage their network capacity until they purchase more. The second model is the existing flat rate model, where independent service providers pay a flat fee per month regardless of usage.

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. As an exception to this and consistent with the Commission’s decisions in Telecom Regulatory Policy 2010-632, the telephone companies may charge an additional 10 percent markup for usage and access to the faster fibre-to-the-node services. This will encourage companies to continue to invest in this new technology.
I'm still reading the ruling, but I'll go out on a limb and guess this ruling comes with more than a few loopholes designed for incumbent operator benefit. You can find some additional discussion about the ruling in our Canadian broadband forum.

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FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

4 edits

Decision allow internet wholesalers charge based on capacity

CBC news has their take on the ruling:
»www.cbc.ca/news/politics/story/2 ··· ion.html

Decision allows internet wholesalers to charge based on speed, but not volume.

The CRTC’s decision gives the incumbents two options for charging the independent internet service providers — a flat rate or a rate based on capacity and the number of users.

Bell had asked to be able to charge based on the total volume of internet data used by its wholesale customers. The regulator rejected that model.

The capacity rate model charges based on the speed of the service — meaning the small ISPs will be paying for the size of the pipe, not the amount of data that flows through the pipe. And it means small ISPs will have to pay more to provide faster internet to their customers.

Part of the rationale for going with a capacity model is that it costs more for the infrastructure to provide faster internet. The infrastructure is much of the cost for providers like Bell and Rogers, who are the only ones who directly reach consumers' homes.

»www.ctv.ca/generic/generated/sta ··· 141.html

“Under the CRTC's new capacity-based approach, large telephone and cable companies will sell wholesale bandwidth to independent ISPs on a monthly basis,” the regulator said in a release on Tuesday.

“Independent ISPs will have to determine in advance the amount they need to serve their retail customers and then manage network capacity until they are able to purchase more.


Alternatively, large companies can continue to charge independent ISPs a flat monthly fee for wholesale access, regardless of how much bandwidth their customers use. Both billing options give independent ISPs the ability to design service plans and charge their own customers as they see fit.”

If an independent ISP has miscalculated how much bandwidth they need, and needs to buy more from an incumbent, the main issue then becomes how long will it take the incumbent to provide the added capacity. If it takes a long time(due to real issues of providing more capacity or to just anti-competitive incumbent foot dragging), then the independent ISP will have to purchase more capacity than they need or face angry customers. So, this can cause independent ISPs to charge higher rates than they might need to if additional capacity is easily expanded.

The point being that if incumbents move REAL SLOW on adding capacity requests from independent ISPs, that either drives up the independents costs(because they have to overbuy capacity) or causes them to have unhappy customers when a capacity crunch hits. In any case, my bet is that the incumbents will move EXTRA SLOWLY to capacity increase requests from independent ISPs, thereby giving themselves a competitive advantage.

Gone
Premium
join:2011-01-24
Fort Erie, ON
kudos:4

Re: Decision allows internet wholesalers charge based on speed

The CBC article is so incorrect that it isn't even funny. The incumbent providers gets to choose the billing model, not the indie ISP. The Ontario and Quebec incumbents all chose capacity-based models while the Western Canadian incumbents and Aliant all chose flat-rate. The CRTC created tariffs for those chosen method as a result and are included in the ruling.

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: Decision allow internet wholesalers charge based on capacity

»www.michaelgeist.ca/content/view ··· 132/125/

The Commission chose a variant on the MTS Allstream model that involves both a monthly access fee and a monthly capacity charge that can increase in increments of 100 Mbps.

In addition to this model (which the Commission calls an approved capacity model), the large ISPs can continue to use flat rate models which provide for unlimited usage.

CRTC has tried to craft a vehicle to create much-needed competition. That is a good first step. Yet the reality is the overwhelming majority of Canadians will still be left waiting for measures that will address data caps at the retail level. The wholesale UBB fight attracted national attention, but it always was about six percent of the marketplace. That six percent - the current marketshare of independent ISPs - is absolutely necessary to inject some competition into the Canadian broadband market, yet the large players are most responsive to what the other large players are doing.

In a nutshell, solving wholesale UBB was never enough. The retail issues that truly sparked the public outrage have been left largely unchecked.

With only 6% of the market the independent ISPs aren't going to do much to change broadband in Canada.
--
The nine most terrifying words in the English language are, I'm from the government and I'm here to help.
»www.politico.com/rss/2012-electi ··· blog.xml

resa1983
Premium
join:2008-03-10
North York, ON
kudos:10

Re: Decision allow internet wholesalers charge based on capacity

said by FFH5:

With only 6% of the market the independent ISPs aren't going to do much to change broadband in Canada.

You'd be surprised.
25% of Rogers new customers switched from DSL to Rogers wholesale - thats not even counting the customers who switched from Rogers to Rogers Wholesale.

Due to the increase in wholesale users, Rogers was forced to increase their caps to attempt to stay competitive, and keep their own customers (they get more money if their customers dont switch to wholesale).

Bill Neilson
Premium
join:2009-07-08
Arlington, VA

Shocking to see major ISP's doing

everything they can to put all others out of business

The local people/businesses rarely can ever compete strictly because of the laughable rules/loopholes put into place by the major ISP's.....then the major ISP's say that the reason they dont have any competition is because nobody can do what they do.

Why we continue to allow such ridiculous rules that basically AT&T, Verizon, and others write....should be criminal

elwoodblues
Elwood Blues
Premium
join:2006-08-30
Somewhere in
kudos:2
Reviews:
·VMedia

Re: Shocking to see major ISP's doing

said by Bill Neilson:

everything they can to put all others out of business

The local people/businesses rarely can ever compete strictly because of the laughable rules/loopholes put into place by the major ISP's.....then the major ISP's say that the reason they dont have any competition is because nobody can do what they do.

Why we continue to allow such ridiculous rules that basically AT&T, Verizon, and others write....should be criminal

DING DING DING, give the man a Cigar, that's exactly what it is.
--
It's got a cop motor, a 440 cubic inch plant, it's got cop tires, cop suspensions, cop shocks. It's a model made before catalytic converters so it'll run good on regular gas. What do you say, is it the new Bluesmobile or what?
minimal

join:2009-09-30

Re: Shocking to see major ISP's doing

Incorrect. Companies can't compete not because of the ISP's, but because of the government. Explain to me how companies compete with tax money? How can companies compete with regulations that favour the Bell's, Rogers, etc? That includes wireless spectrum. Government kills competition and paves the way for monopolies. If you had true competition, where the government stays out of the way, the people would get to vote with their wallet and you wouldn't have monopolies.
minimal

join:2009-09-30
You do realize it's the government, through your tax money, that allowed these companies to become monopolies right? It is also government regulations which work in the favor of these monopolies that further stifle competition. I always see blame shift to Bell, Rogers, etc, but they are the symptoms, the root problem is the government. The absurdity now of all this is how people are protesting for even more government regulation to control these companies. Explain to me how those that are the root cause of the problem (the government) is supposed to make it better for the consumer? When the government kills competition the consumer always loses.

Bill Neilson
Premium
join:2009-07-08
Arlington, VA

Re: Shocking to see major ISP's doing

said by minimal:

You do realize it's the government, through your tax money, that allowed these companies to become monopolies right? It is also government regulations which work in the favor of these monopolies that further stifle competition. I always see blame shift to Bell, Rogers, etc, but they are the symptoms, the root problem is the government. The absurdity now of all this is how people are protesting for even more government regulation to control these companies. Explain to me how those that are the root cause of the problem (the government) is supposed to make it better for the consumer? When the government kills competition the consumer always loses.

Yes, I do realize that. I realize that the ISP's pay enough money to corrupt the government who then puts into these rules that allow the major players to basically do whatever they want, whenever they want, however they want. So, asking these same people to write new, better, or more strict rules does in fact sound idiotic.

I guess my only hope is that sooner or later we can get actual human beings to get into our government and make legitimate, consumer-friendly changes.

But I am not sure why we should think that deregulating everything would be better for us....in fact, why and how would we expect anything but worse service at higher prices?

Farmer Chuck

@teksavvy.com

Hopefully the third party isp's can appeal the decision

for at least a few years. Needless to say Canada will be the most expensive place in the world for internet. Not sure how this will affect all the wireless hackers. I guess many will return to dial-up or just give up.
themagicone

join:2003-08-13
Osseo, MN

Big reason I haven't moved there yet

Few years back I had a few job openings in Edmonton, Alberta. But after I looked into the cost for utilities and the like I gave up. Internet is basically useless, caped at low amounts and you pay large amounts for it. I may dislike America but at least we have someone decent internet at some what alright prices.

Gone
Premium
join:2011-01-24
Fort Erie, ON
kudos:4

Re: Big reason I haven't moved there yet

said by themagicone:

Few years back I had a few job openings in Edmonton, Alberta. But after I looked into the cost for utilities and the like I gave up. Internet is basically useless, caped at low amounts and you pay large amounts for it. I may dislike America but at least we have someone decent internet at some what alright prices.

You must not have looked very hard because Western Canada is the only place in the country where you can actually get extremely fast unlimited/nearly-unlimited Internet that won't bankrupt you.

cork1958
Cork
Premium
join:2000-02-26

PW

So,
It sounds like Canada's CRTC is about as PW as the United States FCC is, huh?

Both about a couple of useless branches of government!!
--
The Firefox alternative.
»www.mozilla.org/projects/seamonk ··· amonkey/

ChucksTruck

@teksavvy.com

Re: PW

It's like the old line in the O.J. Simpson case that went like "who polices the police"? You do with your vote. In Canada the CRTC are all former members of both Bell and Rogers. We have no one to "police the police".

derekm

join:2008-02-26
kudos:1

Re: PW

That reminds me of the old line "who watches the watchers":

»en.wikipedia.org/wiki/Quis_custo ··· todes%3F
ryusoma

join:2006-09-30
Edmonton, AB

Blaming government is a crock..

Government aided and abetted these companies in becoming monopolies in the first place as 'back in the day' this WAS advantageous to consumers - fixed rate, ubiquitous analog services. But now the corporations have an overwhelming advantage over any newcomers as the technological and infrastructure investment to compete is enormous.

Logically there is no way a Teksavvy or Primus can compete outright, and 'letting the market decide' has always been specious Teabagger bullshit when the odds pit a monopolist against new entrants- it's like asking who will win a fight between a gorilla and a toddler.

'Letting the market decide' only works when all entrants were more or less equal to start with, it's Economics 101.

As shown in EVERY industry from airlines to gasoline to cellular to groceries, the incumbent will ALWAYS use predatory pricing, or any legal barrier to entry and competition it can generate to drive the competition out of business and simply wait and bleed its own money until the new competitor fails or gives up first. Then it can recoup those losses by raising prices again.

Regulation to prevent that blatant predation is the only way to level the playing field anymore.
bt

join:2009-02-26
canada
kudos:1

Not so clear cut

In short, while this has to be seen as a loss for Bell, independent ISPs will still have to pay significantly more

It's worth noting that for some services, the IISPs will see their costs drop.

IISP cable access on the Videotron network is expected to become a whole lot cheaper. Rogers cable access is expected to be around the same price, depending on the different usage models of the individual IISPs. Higher speed packages from Bell could also be cheaper, if some of the estimates are correct.

The flip side is that the far more common "legacy" DSL connections from Bell are expected to be a few dollars more expensive per customer for just about every IISP.
tyciol

join:2007-01-29
Richmond Hill, ON

Confused by article terms

"Under this new ruling, incumbents can charge independent ISPs a flat rate or a rate based on capacity and the number of users"

I don't fully understand this ruling. What is a 'flat rate' based on? What is 'capacity'? is it bandwidth? The maximum speed at a given time?

How does it work based on number of users?