UBB in Canada: What next?

I think a seg­ment of the Cana­di­an pop­u­la­tion would be hap­py if the whole UBB issue went qui­et­ly away.  Peo­ple who watch Bell and the CRTC, how­ev­er, know that this is not the case.

For those who haven’t read or heard the news today, Indus­try Min­is­ter Tony Cla­ment has con­firmed that he will over­turn the CRTC rul­ing if the CRTC doesn’t do it itself.  This is obvi­ous­ly a reac­tion to the 250,000 strong online peti­tion and to the ire of the oppo­si­tion par­ties — remem­ber that the gov­ern­ment is a minor­i­ty with no coali­tion part­ner.

This fail­ure of UBB is the third time for Bell and they show no sign of acqui­esc­ing.  Bell has con­sis­tent­ly failed to upgrade its net­work over the last 15 years and is now look­ing for addi­tion­al sources of rev­enue to sup­port the net­work upgrades need­ed for the roll­out of tele­vi­sion (com­pet­ing with cable) and oth­er media ser­vices.

The issue that won today was choice… choice for the con­sumer and choice of busi­ness mod­el.  The tra­di­tion­al tele­com busi­ness mod­el is to iden­ti­fy every­thing that can be mea­sured and bill for it.  The tra­di­tion­al inter­net busi­ness mod­el is that you pay for your pipe and use it how­ev­er suits you.  Some would argue that peo­ple who use the inter­net more should pay more — but this mod­el isn’t entire­ly sup­port­ed by the eco­nom­ics of how the inter­net works.

Tele­phone com­pa­nies heav­i­ly over­sell their net­work with the assump­tion that peo­ple will rarely use it.  Cable com­pa­nies heav­i­ly over­sell their net­works with the assump­tion that one mas­ter trans­mis­sion can serve thou­sands of users — with every­one con­sum­ing exact­ly the same thing.  Nei­ther mod­el is rel­e­vant to the inter­net.

When some talk­ing head says that this usage based billing was rea­son­able, con­sid­er that Bell’s pro­posed usage cap would only rep­re­sent sev­er­al evenings of watch­ing HDTV.

As an inter­net ser­vice provider myself, I under­stand the desire for usage based billing.  Net­works aren’t free — they cost mon­ey to oper­ate and the peo­ple that use them do not do so even­ly.  At a cer­tain lev­el, it’s not worth my time to bill peo­ple 1 cent or 2 cents per giga­byte — a large amount of includ­ed band­width makes sense to me.  Band­width at the whole­sale lev­el has nev­er been cheap­er and shows no sign of increas­ing in price.

Equal­ly, I think it’s impor­tant for busi­ness­es to be able to carve their own mod­el out of the real costs.  A Giga­byte doesn’t cost — it’s a syn­thet­ic sta­tis­tic.  Each net­work has a cer­tain speed.  To reflect the cost of net­work at the whole­sale lev­el, the 95-th per­centile of trans­fer speed is used — you can rough­ly equate this to mean that you will have all the band­width you request 95 per­cent of the time.  In real­i­ty, it’s much bet­ter than that.

But the fact remains: ISPs buy band­width based on the speed of the pipe that they use, not by the vol­ume.  While this billing is some­what more com­plex, it address­es the true cost of the net­work and every net­work oper­a­tor under­stands how it works.

So if UBB were to return, yet again (and we have not doubt that it will), it should be rep­re­sent­ed as an amount billed on the 95th per­centile traf­fic rate on the Gate­way Access Ser­vice (GAS) link between Bell and it’s reseller.  This would allow each whole­sale ISP to estab­lish it’s own billing prac­tices and achieve its own effi­cien­cies of scale while respect­ing the cost of Bell’s net­work.

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