Metered Internet use, called “Usage-Based Billing,” is on its way the Great White North.
Canadian telecom regulators made a ruling last week that will end up making smaller ISPs unable to offer pay-per-month data plans. Currently, many smaller Canadian ISPs lease bandwidth from a larger ISP on a per-customer basis and are able to offer unlimited bandwidth to their customers. The Canadian Radio-Television Telecommunications Commission (CRTC) has now moved to lift restrictions on these larger ISPs, now allowing them to charge their smaller competition per gigabyte for usage, a change in billing that’s making its way to customers.
| TekSavvy Previous Offerings | |||
| Package Name | Base Usage per Month | Max Speeds (Up/Down) | Price (Monthly) |
| High Speed Internet Lite | Unlimited | 640 kbps / 512kbps | $24.95 |
| High Speed Internet Premium | 200 GB | 5 Mbps / 800 kbps | $31.95 |
| High Speed Internet Unlimited | Unlimited | 5 Mbps / 800 kbps | $39.95 |
“Like our customers, and Canadian Internet users everywhere, we are not happy with this new development,” wrote the Ontario-based ISP TekSavvy to its subscribers.
The CRTC did give smaller ISPs a 15% discount — most like TekSavvy had asked for 50% — but the adjustment is still going to hit consumers hard.
The First Plans Emerge
You might need some aspirin for this one.
Starting on March 1, TekSavvy members with the 5Mbps plan have a new usage cap of 25GB, “substantially down from the 200GB or unlimited deals TekSavvy was able to offer before the CRTC’s decision to impose usage-based billing,” the ISP said. The CRTC put data overage rates at CAN $1.90 per gigabyte for the majority of Canada and $2.35 for the French-speaking region of the country.
As a quick comparison, there was a bit of an uproar when Comcast began rolling out its data cap of 250GB in the US.
“Extensive Web surfing, sharing music, video streaming, downloading and playing games, online shopping and e-mail” could quickly put users over the 25GB cap warns TekSavvy. Also, watch out “power users that use multiple computers, smartphones, and game consoles at the same time.”
TekSavvy users who subscribe to the “High Speed Internet Premium” plan for $31.95 will now use around 175GB less capacity per month.
In the age of video, Canada is putting the screws to its citizens.
There’s "Good" News?
Never fear, the CRTC has said there is some “good” news in all of this: users can buy insurance and storage vaults for their broadband! What, no applause?
TekSavvy users can now purchase Web insurance, which TekSavvy defines as “a recurring subscription fee that provides you with additional monthly usage.” For its Ontario users, it’ll run $4.75 for 40GB of additional data, but unlike some cellphone plans, there’s no rollover data.
“Usage vault” plans are also emerging, allowing consumers to pay in advance for extra data. Customers can buy vaults at a rate of $1.90 per gigabyte for up to 300GB in any month — this maxes out at a possible $570 each month but likely won’t see any users reach that maximum.
| TekSavvy New Offerings | |||||
| Lite Packages (640 kbps / 512 kbps) | Base Usage | Flat Fee (Monthly) | Insurance (Monthly) | Total Usage per Month | Total Price per Month |
| No Insurance Option | 2 GB | $24.95 | — | 2 GB | $24.95 |
| 40GB Insurance Option | 2 GB | $24.95 | $4.75 | 42 GB | $29.70 |
| 80GB Insurance Option | 2 GB | $24.95 | $9.50 | 82 GB | $34.45 |
| Premium Packages (5 Mbps / 800 Kbps) | Base Usage | Flat Fee (Monthly) | Insurance (Monthly) | Total Usage per Month | Total Price per Month |
| No Insurance Option | 25 GB | $31.95 | — | 25 GB | $31.95 |
| 40GB Insurance Option | 25 GB | $31.95 | $4.75 | 65 GB | $36.70 |
| 80GB Insurance Option | 25 GB | $31.95 | $9.50 | 105 GB | $41.45 |
Looking at the plans, TekSavvy has gone from a 200GB monthly data plan for $31.95 per month to a $41.45 monthly plan that offers only 105GB of data if the user purchases two units of this insurance.
Migraines Aplenty
Don’t worry, TekSavvy hates this too.
“The ostensible, theoretical reason behind [Usage-Based Billing] is to conserve capacity, but that issue is very questionable,” wrote the ISP’s CEO Rocky Gaudrault.
“One certain result though, is that Bell will make much more profit on its Internet service, and discourage Canadians from watching TV and movies on the Internet instead of CTV, which Bell now owns.”
Bell (Bell Canada Enterprise or BCE) looks like it is in the best seat in the house, owning the broadcaster CTV for first-run airing and then being one of the few big ISPs that can afford to offer unlimited plans because it paid for the rollout of its own network. Bell recently announced plans to charge other mobile companies a fee for providing video from CTV-owned stations such as TSN and the Business News Network on wireless devices, according to BCE chief executive officer George Cope.
Now that’s a triple-play. This brings into question everyone else who may be hurt by these data restrictions.
High-capacity users will definitely suffer, but it may be the likes of Netflix, Apple (iTunes), Zip.ca, Amazon’s Video On Demand and music services like Rdio that end up seeing a lot of consumption loss as these ISP users become very aware of how much usage their activities consume.
Netflix CEO Reed Hastings released a note with his company’s latest quarterly earnings that said, “An independent negative issue for Netflix and other Internet video providers would be a move by wired ISPs to shift consumers to pay-per-gigabyte models instead of the current unlimited-up-to-a-large-cap approach. We hope this doesn’t happen, and will do what we can to promote the unlimited-up-to-a-large-cap model. Wired ISPs have large fixed costs of building and maintaining their last mile network of residential cable and fiber. The ISPs’ costs, however, to deliver a marginal gigabyte, which is about an hour of viewing, from one of our regional interchange points over their last mile wired network to the consumer is less than a penny, and falling, so there is no reason that pay-per-gigabyte is economically necessary. Moreover, at $1 per gigabyte over wired networks, it would be grossly overpriced.”
No one is quite sure how consumption patterns will change, but it truly is the era of Internet video and Internet-connected everything. From smart TVs and game consoles to smartphones and tablets, and let’s not forget PCs, more and more devices are becoming connected, meaning there are more and more access and usage points popping up in the average home.
The ruling is already being challenged, however. Federal Liberals are arguing that the new rule limits competition and choice for consumers, and Canadian Prime Minister Stephen Harper has ordered a review of the decision, saying “We’re very concerned about CRTC’s decision on usage-based billing and its impact on consumers. I’ve asked for a review of the decision.”
According to CBC News, a decision will be reached by March 1 and more than 200,000 citizens have already signed a petition against the new regulations.
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