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.