Recently our national department of influence and lobbying – the Canadian Radio-television Telecommunications Commission or CRTC (Canada’s version of the FCC) – approved of usage based billing for internet service providers. This means that owners of the big pipes can charge the little providers of your access for all the bits and bytes they send down the line.
So a bit of Netflix or Apple TV here, a big update or a new distro there, a Skype session that never got shutdown, and all of a sudden your mortgage payment is looking like a bargain compared to your monthly internet bill! If you’re wondering why everyone else gets all excited about the latest internet thing but we don’t have it here this is (primarily) why! Apple TV might cost $100, Google TV might be included in your next wide screen, but if you’re going to have to pay a premium data charge to use those features they’re suddenly no longer appealing!
But we pay for our gas right?
You pay for the gas you put in your car; and the electricity you consume in your home; and a lot of other monthly bills are consumption, or usage, based.
The electrons (or photons if you’re lucky) that deliver the internet to your home though are not really consumed. They don’t die and and float up in the atmosphere to tear holes in the ozone like that billion year old dinosaur you’re burning up in the car.
Granted delivering the internet requires some infrastructure and people to run that infrastructure. And the more internet that gets delivered the bigger an infrastructure is required. So theoretically the more internet you consume the more you contribute to the next iteration of infrastructure. But we’re all going to benefit from the next upgrade, not just the heavy duty users.
Broadly, deeply, totally integrated!
The other issue we have here is the owners of the big pipes are so broadly and vertically integrated they have little incentive to invest in one infrastructure over another and lots of reason to keep milking the old models as long as they can. The TV stations, newspapers, and other media producers are owned by the same people who own the satellite/cable, wireless, and internet distribution channels.
There’s no reason for them to build bigger internet pipes since more people using Netflix (for example) means less people buying their TV offerings. More people reading the news online (or wirelessly) means less people buying their newspapers.
They come up with competing offers, like Video-on-Demand to counter Netflix; and they sweeten the deal by saying it won’t count towards your bandwidth cap (and then they raise your rates so ultimately it’s the same thing, but that’s another article) . But really, can one regional service provider compete with a multinational like Netflix or Apple or Google when it comes to securing the rights to hot new TV shows, sporting events, and other audio-visual entertainment?
We’re not all the same
Granted, not everyone of us wants to watch every video on Youtube each month; or has a dozen computers that need to be upgraded simultaneously. A bit of e-mail and some Facebook certainly won’t clog the pipes or require fibre to the home. These people would be okay with a trickle of data and really low cap. Wouldn’t it be unfair for them to share the bill of a bigger, faster internet?
At the same time, even some of us who want more internet can’t because the copper lines running to our house were installed by Alex himself and haven’t been changed since! Why should these people pay for something they can’t even have if they wanted it?!
For the first group I say progress is inevitable. Your friends are going to send you links to Youtube videos and power points full of sappy pictures. The corner video store is going to close down. The news paper will eventually be delivered wirelessly. The sooner our internet flows freer the sooner we can all progress, even if a few curmudgeons don’t like it.
And if you’re paying for better internet than you can possibly get in your neighbourhood then you’re going to insist on getting it. There won’t be any excuse for the providers not to give it to you (although, today they’ll happily sell you services they can’t deliver but that’s yet another article). The rationalization argument will be gone and soon you too can watch Top Gear on Netflix whenever you fancy. Or get IPTV or VOIP or plethora of other internet based services we only dream of!
Is tiered-billing good or bad?
In economic theory and practical business tiered-billing is great! It allows more people to participate in the market and for companies to reach a wider audience. That’s why we have student and senior rates, mid-week deals, etc.
How does tiered-billing apply to internet access? Some how the ISP’s have to make the internet proposition appealing at different prices so that grandma who just wants to see pictures of her grandkids is as enthusiastic about signing-up as the gamer who wants to watch Netflix while torrenting warez and boot-legged concerts.
But if grandma’s overage charges are ridiculously high and the gamer can’t get unlimited bandwidth at a reasonable price it’s not appealing. The ISP’s could always ask for our income tax returns and charge us a percentage our gross income, but really?! In a way we already do that, most – if not all – the cables running across this country and down our streets were subsidized by our taxes. Or at least our parent’s taxes.
The ISP’s need to find a way to package the internet so the unlimited packages are reasonably priced for heavy-duty users; and casual users can find cheaper packages that suit there needs. But never should the excess data charges on your package make it immediately more expensive than an unlimited plan!
In the end
Canada is one of the only, if not the only, country in the world that meters their internet usage. We’re also one of the last countries in the world to get cool new services delivered over the internet or to take advantage of them. I realise it’s not just a matter of having unlimited bandwidth (at a reasonable price) but it’s certainly not going to encourage adoption if I have to figure I can join Netflix for $8 a month but it will cost me $100 in excess data charges to watch a couple movies a week!