Looming cap on Internet usage affects us all

14 Feb

February 14, 2011

By Geoff Meeker

There’s been quite an uproar lately about the issue of Internet caps, or Usage Based Billing (UBB).

In a nutshell, the big Internet service providers (ISP) like Bell and Rogers want to impose limits on Internet use for every Canadian – not just their own customers.

There’s a lot of anger and protest from Internet users, spineless and inconsistent pronouncements from the CRTC, and even some political posturing from the federal Conservatives, who recently said there will not be a cap. (Believe it when you see it.)

However, it’s a confusing issue, because we already do have a cap. Right now, Bell and Rogers both impose monthly limits on the number off gigabytes (GB) you can download – after that, you pay anywhere from $1 to $2.50 for every GB above the limit. Or, you upgrade your monthly limit, paying extra for a higher cap.

What the latest kerfuffle is about – and most people don’t seem aware of this – is that large providers, like Bell and Rogers, want to impose similar caps on the smaller ISPs that purchase space on their networks.

This may seem trivial, but it’s a critically important point, even if you don’t buy your Internet from an independent.

Here’s the nub of it. Small service providers purchase a chunk of bandwidth, and sell it to their customers, often in plans with unlimited monthly usage. With the rising popularity of videogames and streaming movies online, savvy consumers are moving to these unlimited plans, wherever they exist. And because the GB are cheap to buy, the small providers can offer unlimited plans and still make a profit.

That’s right, the GB are cheap. The poor-mouthing you hear from Bell and Rogers is nonsense. They, like any business, want to make more profit. I can’t fault them for that. But I do fault the CRTC if they allow this last loophole to close, and give the big ISPs a stranglehold on what we pay for Internet services in Canada.

This cap on the small service providers is nothing more than an attempt to kill competition. After all, if small companies can lease space and sell it at a profit, what business is that of Bell or Rogers? Why should the big companies care how many GB are being used by individual customers?

This is a tremendously important issue for all of us. First of all, if these small service providers can lease and resell Internet services without a cap, it stands that they will grow and prosper, and the number of such companies will proliferate. As they grow, Bell and Rogers will be forced to respond, by allowing unlimited plans of their own.

Which is why I say their actions are anti-competitive. They want to stop this now, before things get out of hand.

Secondly, Bell and Rogers are in a serious conflict of interest. More and more people are watching online movies, which eat a lot of GB. According to Sandvine, an Internet consulting firm, the Netflix site alone accounts for 95 percent of all bandwidth use in Canada during peak evening hours.

Bell and Rogers both sell cable TV and pay per view movie services. The case could easily be made that they are trying to ‘cap’ the growth of an exciting new competitor, by effectively pricing it out of the market.

A majority of people seem to be confusing the latest CRTC decision on UBB with Internet caps they’ve been paying for several years now. What odds, I say! We should protest those caps too, loudly and vigorously.

In order for our knowledge-based industries to compete internationally, we need a level playing field – and we are paying more for Internet than our friends in the United States.

Furthermore, if you are within your cap now, I wouldn’t feel smug about it. Usage of the Internet is going to increase, based on growth of existing services like Netflix and online videogames, and whatever else is coming down the pipe.

However, the service providers have us where they want us. With caps already in place, they can squeeze us for every GB as our usage increases. They stand to make obscene profit, at our expense.

Just today, I called my service provider and gave them an earful about my monthly cap. I told the hapless operator that I am going to shop around, and see if I can find a better deal. When I do, I will call back and cancel.

You should do the same.

Geoff Meeker is a communications consultant with a soft spot for technology. He also writes a blog about the local media scene, which is hosted at http://www.thetelegram.com.

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