The Public Interest Advocacy Centre warns politicians that usage-based billing will end up causing trouble for digital content companies

Businesses hurt by UBB, says public group

Digital businesses will be hurt if the country’s major Internet transport carriers are allowed to impose usage-based billing on consumer subscribers, a parliamentary committee has been told.

John Lawford, counsel for the Public Interest Advocacy Centre, warned the House of Commons Industry Committee on Tuesday that the controversial billing strategy will cause Internet subscribers to cut back on their use of broadband to avoid usage penalties.

As a result, he said, a company with a high-bandwidth service will have trouble raising capital.

“The first question from a banker, I’m sure, would be, ‘So how are you going to get this [application] through the network? It appears you use this many gigabytes per item, or film or whatever. It would be a very difficult thing to capitalize,’” – unless he added, the content creator already had a deal with a large provider.

“It just creates an environment of almost fear.”
It was part of an afternoon of anti-UBB testimony from several of the country’s biggest independent Internet service providers (ISPs) who are lobbying parliamentarians to force the Canadian Radio-television and Telecommunications Commission (CRTC) to overturn its decision allowing BCE Inc.’s Bell Canada to impose its usage-based billing structure on them.
The committe hearings on UBB continue Thursday with testimony from BCE Inc.’s Bell Canada, Calgary-based cable giant Shaw Communications, MTS Allstream as well as groups representing a number of ISPs. 

UBB structures are monthly rate plans built around data limits with extra fees for going over the limit. Bell has changed from unlimited to UBB plans as a way to control ever-increasing traffic on its network to consumers. But ISPs who continue to sell unlimited data plans threaten this structure because their customers could drain capacity. So Bell convinced the CRTC to let it extend its UBB rates to ISPs.

Only weeks away from implementing the decision, the commission has decided to take a second look after a wave of public and political protests.

Also on Tuesday the commission said it will give the public until April 29 to file submissions on whether its review should be conducted online or if there should be public hearings.

However, Lawson objected to one of the main assumptions the CRTC says underlines its review: That the majority of Internet subscribers shouldn’t have to fund the heavy bandwidth use of a minority, which is the reason Bell says ISPs should have to follow the usage-based billing it imposes on Bell’s own subscribers.

Logically, Lawson said, if there is any network congestion it would only impact Bell’s network during peak times. And that’s the only time when any pricing penalty should be imposed.

Bell hasn’t shown any evidence publicly there is network congestion at peak times, Lawson said, nor has it shown evidence that heavy users are the cause or that UBB is tailored at reducing congestion.

Bell has created a “devil” creating the “mythical” heavy Internet user that eats up bandwidth, he said.

The politicians also heard from executives of two Ontario-based ISPs. Matt Stein, vice-president of network services at Primus Telecommunications Canada, said UBB will limit the ability of ISPs to provide differentiated services to consumers because their rates will have to be the same as the big carriers they buy access from.

Before usage-based billing, he said, ISPs paid reasonable rates to carriers based on cost plus a fair markup. But UBB isn’t based on cost, he said. “They’re expensive by design. They’re expensive to be a disincentive to heavy Internet use. Accordingly, imposing these rates on wholesale services represents a fundamental and inappropriate change to the pricing of services.”

Rocky Gaudrault, CEO of Chatham, Ont.-based ISP TekSavvy Solutions Inc., say his company doesn’t ride on the backs on phone and cable companies who have to build networks. TekSavvy pays them “tens of millions of dollars” a year for access, he said.

“Sadly, despite its market dominance, Bell’s key objective (in UBB) is minimizing competition to maintain its pricing power.”

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