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Decision on usage-based billing expected to affect prices

ON JULY 11, the Canadian Radio-television and Telecommunications Commission (CRTC) launched hearings to determine the fate of usage-based billing (UBB)—a widely controversial practice proposed by large Internet service providers (ISPs). If allowed, UBB will raise prices for small ISPs and, by extension, consumers.

Bell Canada kicked off the proceedings, asking the commission to consider costs of maintaining the information highway. Currently, small ISPs have the ability to offer competitive plans and innovation in the industry as they purchase bandwidth from the bigger Internet providers. However, some larger telecom companies want to put a cap on how much Internet bandwidth the smaller ISPs can offer, charging them extra if their users go over a set limit.

“If we were manufacturing jellybeans, and if we were to sell jellybeans in boxes of five, 10, 15, and 100, we would be selling it wholesale to you,” explained Mirko Bibic, Bell Canada’s chief of regulatory affairs. “If you’re a small ISP and you want to sell jellybeans, you can buy 3,000 jellybeans from us and you [can] package them however you want.”

If UBB were implemented, small ISPs would be unable to offer unlimited bandwidth to their consumers. Bibic justifies this change in billing with the cost of maintenance that smaller ISPs don’t have to pay.

“Small ISPs offer service on our network. We’re the ones making the investments to build these [networks] … but now they’re paying for usage in big buckets and they get to shape their plans how they see fit,” said Bibic.

There has been resistance toward UBB by small ISPs and consumer groups. Lindsy Pinto, the communications manager for OpenMedia—a non-profit communications organization against usage-based billing—says that nearly half a million people signed their online petition to stop UBB.

“Large incumbent service providers are trying to impose usage-based billing on their independent competitors, which means that independent ISPs can no longer offer unlimited plans,” said Pinto. “We’re essentially fighting for diversity.”

OpenMedia presented its case to the CRTC last week, as did many small businesses and audience members who chose to attend the hearing. President of the University of Ottawa’s Communication Students’ Association, Logan Ouellette, encouraged students to attend the meetings and speak up.

“I think it’s important for students to be engaged in this dialogue, because it affects the future of our Internet usage, and we are uniquely suited to help educate the wider population about the implications of UBB,” wrote Ouellette in an email to the Fulcrum. “We should be pushing the CRTC to address the real issue, which is the retail rates that affect consumers, as big cable companies continue to gouge their customers.”

Bibic said he did not want to predict the outcome of the hearings, while Pinto remained optimistic. She put her trust in CRTC chair Konrad von Finckenstein, who comes from a fairly consumer-friendly background, which she believes could help him see OpenMedia’s case.

“The pricing model for wholesale high-speed Internet services should drive large companies and independent ISPs to invest in their respective networks and maximize innovation,” said von Finkenstein during the hearing.

“In addition, we will examine the proposals with a view of providing independent ISPs the flexibility to offer innovative services and pricing options.”