Andrew Clarke

systems architect, internet developer, team leader

Andrew Clarke

The (bear guarding the) fox guarding the henhouse

February 3, 2011 · No Comments

In case you haven't heard, we Canadians have been recently hit with a ruling from the Canadian Radio & Telecommunications Council (CRTC), allowing Bell Canada the right to charge its wholesale customers usage-based billing.  I wrote the blog article below yesterday, basically right around the time that Prime Minister Stephen Harper was busily responding to the overwhelmingly negative response from Canadian citizens.  Harper has promised to reverse the decision (let's hope it happens) but I thought I'd post my article here anyway since I'd gone to the trouble of writing it.

Many other people have written articles and commentary about the CRTC's decision to allow Bell to force its wholesale customers to accept usage-based billing (UBB). This is my take on it.

I've been a very happy customer of Teksavvy for the past few years. Teksavvy's prices and policies are fair and reasonable. Teksavvy provides jobs to Canadians. Teksavvy has been one of the companies leading the charge to protect customers Bell's dishonest and anticompetitive practices. Currently I pay $32 per month for DSL from Teksavvy, which gives me 200GB per month of data use.

Thanks to the CRTC's decision in line with Bell Canada and against Canadians, my monthly cap is going to be reduced to 25GB. In Ontario, the cost per gigabyte of overage is going to be $1.90. Fortunately, my base rate will also be decreasing in acknowledgement of the fact that my bandwidth allotment is being reduced by 87.5 percent. No wait, I lied. Of course it's not. This is just a cash grab by Bell, sanctioned by the CRTC, at the expense of Canadians.

How much is this extra bandwidth going to cost? Bandwidth needs for HD movies range from about 1.5-2 GB per hour. Therefore a two hour movie will cost about $6.70 to stream in overage charges. Put another way, if you stream one hour of HD TV a day, you'll use about 53GB of data a month, just in video streaming. That's before you've done things like check your email or the weather. You'll be looking at about $52 in overage charges. That pays for a reasonable cable or satellite TV plan. I use this comparison because, of course, Bell also provides satellite television and does not want you to stop paying them $50+ per month for that in order to watch your TV online. I'm reminded of Roger's announcement last year of a reduction in bandwidth that they publicized the day after Netflix announced they were coming to Canada. An interesting coincidence.

Back to that $6.70 in streaming charges. If you rent a movie on iTunes, you'll pay $6 to rent the movie. That means if (when) you're over your bandwidth cap, to actually watch a movie, you'll be spending $12.70. That's completely ridiculous!

I read somewhere, I think in a post from Teksavvy, that this is over one thousand times the actual incremental cost that Bell incurs. In other words, Bell pays less than one fifth of one cent per GB, yet the CRTC thinks it's fair to charge consumers almost two dollars. To use another comparison, it costs Netflix at most about $0.03 per GB to stream videos. If the owners of the network between Netflix and me are able to make money off Netflix by charging them $0.03 per GB, how is it even remotely approaching fair that Bell is allowed to charge me $1.90 for that same data?

I'll admit, I'm a heavy user. I'm not sure exactly how much bandwidth I use, but it's a lot. I'm a self-employed e-commerce consultant and I work at home. My job involves me regularly uploading and downloading very large files of several gigabytes each. We have two children and probably watch about an hour of TV per day that's been streamed or downloaded off the internet. We cancelled our satellite service as we found we were paying about $15 per hour of TV actually watched, and all our video entertainment comes from the internet. We subscribe to Netflix and rent movies from iTunes. Of course Bell doesn't like people like me, as I've given up on paying for their last-century business model of paying huge monthly fees for television to be broadcast to me on the network's agenda and time schedule. Punishing me with exhorbitant excess bandwidth fees though is anticompetitive.

I don't mind paying more for my internet usage than the average user, as I use more than the average user. However, incremental overage fees should not be punitive, but should rather reflect the actual costs involved with the incremental usage. As a small business owner, this also hurts me. I now have increased costs that I have to absorb somehow.

I don't mind paying more than someone who only uses 200MB of data per month. Then again, I already am paying more as I'm on a more substantial data plan. I just want to see the CRTC upholding regulations that are fair to Canadian citizens and don't just allow Bell and other big business to push through their self-serving, anti-competitive and anti-consumer agendas.


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