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Canadian ISP: Overage Fees “Not Meant to Recover Costs”

Canadian ISP: Overage Fees “Not Meant to Recover Costs”

Matt Stein, vice-president of network services for Primus, calls overage fees an “economic disincentive for internet use” since the charges levied by Bell Canada are “many, many, many times what it costs to actually deliver it.”

Last May, the Canadian Radio-television and Telecommunications Commission (CRTC) gave Bell Canada, Canada’s largest telephone and telecommunications company, the green light to proceed with the “economic Internet traffic management practice (ITMP),” i.e. consumption-based billing, and there’s a growing consensus that the plan has nothing to do with recovering costs from excessive usage, and rather everything to do with disincentivizing Internet usage.

“It’s an economic disincentive for internet use,” said Matt Stein, VP of network services for Primus. “It’s not meant to recover costs. In fact these charges that Bell has levied are many, many, many times what it costs to actually deliver it.”

A few months ago the CRTC approved Bell Canada’s request to expand consumption-based billing to their Gateway Access Services (GAS) customers, and set a timetable of 90 days for what it called a “reasonable implementation period” of the new policy. The expansion meant that smaller ISPS could no longer offer unlimited Internet usage packages, and will have to implement monthly data caps of their own.

The caps and higher fees have already begun, but it’s interesting to observe the fact that they still bear little correlation to the costs actually incurred by ISPs.

“The rates are absolutely atrocious,” noted Rocky Gaudrault, president of Ont.-based ISP Teksavvy, last May. “The rates are absolutely atrocious. How the hell are we doing above one dollar for extra usage? It’s in the thousands of multiples beyond what the costs are.”

While it’s true that more people are using more bandwidth than they did in the past thanks to streaming services like Netflix or Hulu, the increased consumption, doesn’t mean, as Tony Werner, the chief technical officer of US ISP Comcast told a group of investors last April, that “they drive more cost.”

“All of our economics are based on engineering for the peak hour,” he said.

The cost of the equipment necessary to expand network capacity is decreasing all the time as technology improves. Werner even told investors at that same meeting that it only costs an average of $6.85 per home to DOUBLE the bandwidth capacity of an entire neighborhood, and that the equipment necessary to provide 50Mbps costs less than what it paid for the 6Mbps equipment.

Think about the next time you hear some ISPs like Videotron who was trying to charge a customer $1,800 in overage fees for exceeding her 30GB monthly data cap. It turns out her router was hacked and they were “kind enough” to lop off $313, but you get the picture.

Stay tuned.

[email protected]

[Hat Tip]

Jared Moya
I've been interested in P2P since the early, high-flying days of Napster and KaZaA. I believe that analog copyright laws are ill-suited to the digital age, and that art and culture shouldn't be subject to the whims of international entertainment industry conglomerates. Twitter | Google Plus
Spidey
Spidey

As many have said, this has nothing to do with increased cost in providing service, it has everything to do with stopping or slowing Canadians from using the internet for entertainment, information, and education. Bell, Rogers and Shaw want you to keep using their native services instead, i.e. television, video and telephone. While the rest of the world is moving towards greater utilisation of the internet, improving it and providing it to all citizens, the large Canadian internet providers (the "big guys") and CRTC don't want this to happen in Canada, at least that's what their actions show. The "big guys" are more interested in making more profits and keeping the status quo rather than moving Canada into the 21 century. Don't expect the CRTC to do much as some of its top level staff are ex-employees of the "big guys". Don't expect the Conservatives to do much either as they favour big corporations and provide them with tax breaks. Once again the Canadian public have been screwed by the big telecom corporations, the CRTC and the Conservatives. When will it end? Maybe it will with the next election, only if the Conservatives don't get in!

BJC
BJC

I am looking forward to February when everyone begins receiving their new doubled and tripled Internet bills. There will be public outcry and there will (hopefully) be mass cancellations of Bell services.The telecom monopolies seem to have no regard for the fact that they are killing Canada's technological leadership. They have completely resisted upgrading their infrastructure for the 21st century and instead have begun relying on throttled connections and now extreme billing so they can keep using 1990's network.Did you know that, because of peering arrangements with other big Internet providers, Bell Canada pays ZERO to 5 cents per gigabyte of bandwidth. How much of a markup is it to charge customers up to $2.50 for that same Gig?When you buy a litre of gas or a kilogram of fruit, the gas pump and grocery store scale have stickers certifying that they have been calibrated and tested by Measurement Canada as accurate. WHERE is the oversight in bandwidth billing? WHO decides what exactly we are billed for? Are we billed for the communications between Bell's billing servers and our modems? How about traffic related to network maintenance? How do we know Bell is only charging for our own usage and not our neighbours, or the usage for Bell TV service?Canada ranks 33rd in the world in terms of Internet download speeds and 57th in upload speeds (source: http://www.speedtest.net/global.php#0 ). You can get better Internet service in Malawi than you can in Canada. Nice work Bell, excellent oversight CRTC!

Eloh
Eloh

You Canadians should make your own 'rogue' networks. Lay your own wire/cables etc...Or just overthrow the ISPs LOL.

Bando
Bando

A few years ago, I thought it would be impressive if some budding new company decided to start introducing fiber to home consumers at an affordable cost, throwing the market on its side. Is this still possible?

FreeSCV
FreeSCV

Shaw has done the same so no getting around it. DSL AND Cable are both doing this.Until Fiber to the home is available, Canadians are stuck /w what they got. Hopefully more competition will be allowed to step in and increase advancement...

Thefarce IsWithUs
Thefarce IsWithUs

Had an unlimited DSL contract (or so I thought) with Primus. Received the E-mail from them informing me of the rule change just before New Years along with thousands of others. A bunch of us got together and on mass canceled our dealings with Primus. Given the very, very low threshold from Primus before the extra charges kicked in (25GB) there can indeed be no doubt that companies like Netflix have to be the target. We all have also registered formal complaints with the CRTC but that frankly is like pissing into the wind. May as well complain to a rock. We have all gone our various ways to find alternatives but the consensus seems to be to avoid all dealings with anything Bell so basically DSL is out and a Broadband solution needs to be found. This of course is easier said than done for residential type users. Lot's of luck folks.

badabing11
badabing11

Cancel enmass and send emails enmass to CRTC and the Minister who isn't doing a good job for Canadians

Drew Wilson
Drew Wilson

This story is spreading like wildfire. I heard that even in small communities, the last place you'd think would even hear about things like this, are already writing in newspapers and to MPs, furious over the news.I was talking to a former Telus employee about this and she suggested to wait and see how consumers are going to react. If they complain, then it's going to be much more tricky to implement this. If they don't, the bills become par for the course. So far, there's no shortage of complaints thus far. So, lots of complaints everywhere is more than welcome if you find the idea of usage based billing offensive!

X
X

Its funny how in Europe they are trying to get every household a broadband connection, but in Canada they are driving the costs high enough for average people probably being forced to cancel their subscription. Making them rely on TV and Radio again sounds suspicious no?

Jonathan
Jonathan

CRTC, Rogers and Bell are all in on this because they are all worried about delivering content through a medium with which they don't have a monopoly on (the internet).I signed up for Netflix in mid-January. By January 22nd, I had received a notice that I had used 75% of my bandwidth allocation. Despite stopping all internet downloading and Netflix, by January 24th I was up to 62GB, or 2GB over my limit. I've had to unplug my internet.Netflix just launched and now this issue comes up. It's not only suspicious. It makes me question our democracy, and the right for CRTC to even exist. Canadians are free. We fought for it. Don't let corporate monopolies tell you what to do. Get rid of them!

Jonathan
Jonathan

I wonder how many people are going to leave Rogers and Bell for Netflix and other internet video services? Millions. They know it. This is a way to ensure that they continue to make the same profits even as Canadians switch to cheaper and better television services.



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