Usage-based billing: The CRTC's fallacious reasoning

Ignore the scaremongers — today's "bandwidth hog" is tomorrow's "average user" and that's you.

(Photo: fotoARION)

If you’re a typical Canadian, you pay an average of about $54 a month for your cable television. Now imagine if your bill were to go up commensurately depending on how long you had your TV on for.

Your neighbour, who watches only an hour or so a day, would see his bill stay at $54. But you like to regularly watch sports, the news and American Idol, so your bill climbs to $80. You’d probably be pretty steamed, right?

That’s why Canadians are mad about usage-based internet billing and why the government is interjecting itself into a seemingly obscure regulatory dispute between the Canadian Radio-television and Telecommunications Commission and small service providers.

The CRTC last year approved a request by Bell Canada to charge its wholesale ISPs based on how much their customers use the Internet, but the firestorm kicked off two weeks ago when the rates were finalized. Hundreds of thousands flocked to an online petition and the Conservatives last week vowed to overturn the CRTC’s decision if it doesn’t do so itself.

Along the way, Bell has managed to convince the CRTC and some media commentators, including , Canadian Business editorial writers, that the Internet is a utility like electricity or gas, where heavy users should have to pay more than light users.

It’s a fallacy because Internet data is nothing like a utility. It’s not a finite resource that disappears once it is used, it’s simply ones and zeros that flow back and forth across the network. The data that is YouTube videos and Netflix movies is comprised of the same infinite electrons that make up the Super Bowl and American Idol on a television. We don’t pay extra for using more of those electrons, so why should the Internet be different?

Indeed, this is why research firm Telegeography says the cost of bandwidth has been plummeting around the world despite traffic growing correspondingly, to the point where it is almost free. Estimates peg the cost of a gigabyte at somewhere between a penny and 10 cents, yet Bell and other big ISPs want to charge up to $4 per.

To be fair, the pipes over which the data flows are physically finite and there is a cost to maintaining and upgrading them, but one would like to believe that’s an expense our monthly Internet access bills are supposed to cover.

Tied to this utility fallacy is the concept of the ‘bandwidth hogs,’ or the heavy users who are responsible for 80% of all internet traffic in Canada. Usage-based billing is supposed to discourage these miscreants, so that ISPs’ allegedly rising bandwidth costs aren’t spread out to regular users.

But bandwidth hogs are merely the early adopters that we will all be sooner rather than later. Two years ago, the hogs were chewing up bandwith by illegally file-sharing movies. Today, supposed ‘regular’ users are becoming hogs by legally watching movies on Netflix.

Only a few years ago, the average Canadian used five gigabytes of data a month. Today, the CRTC says it’s 15. Either the average Internet user has discovered file-sharing, or the amount of things they want to do online — legally — has increased.

Canada is an international rarity in that service providers here want customers to use less of their product. According to 2009 numbers from the Organization for Economic Co-operation and Development, Canada was one of three member countries — Australia and New Zealand being the others — where unlimited Internet plans were practically impossible to get.

If ISPs in the other 27 member countries can somehow make it economical to cater to the bandwidth hogs, shouldn’t we be able to? Or are we content to be alone in the world by following the wishes of our big ISPs, which is to encourage our citizens to use the Internet less, not more?

Ultimately, the issue of usage-based billing has nothing to do with data costs or bandwidth hogs. At its best, it’s a cash-grab by big ISPs while at its worst it’s a concerted effort to stifle online services that compete with other parts of their business, like all that unmetered television we watch.

Peter Nowak is an award-winning technology journalist. His first book, Sex, Bombs and Burgers: How War, Porn and Fast Food Created Technology As We Know It , was published in March 2010 by Penguin Canada.