dslreports logo

story category
Deconstructing The Top 10 Metered Billing Myths
Canadians Continue To Ask All The Right Questions
by Karl Bode 12:39PM Thursday Feb 24 2011 Tipped by kamm See Profile
For years we've discussed how the arguments put forward by wired carriers looking to implement usage-based billing don't hold water. More specifically, we've noted how companies like Time Warner Cable or Cogeco actually made things worse for themselves by assuming their customers weren't particularly bright -- claiming that charging up to $5 per gigabyte was about altruism and not making money. There's an ocean of ISP disinformation on this topic, from claims that per byte billing is magically inevitable, that it's financially necessary because flat rate isn't sustainable, or that the push away from flat rate is about helping grandmothers.

Part of the reason such efforts in the States failed is because most consumers saw through these flimsy justifications, and realized these pricing models are about already perfectly profitable companies, who often lag on upgrades due to limited competition, greedily trying to cash in on Internet video and protect their cable TV revenues. As Canadians continue to debate forced UBB practices and regulatory capture, one of the more eloquent deconstructions of Bell UBB talking points comes courtesy of reporter/author Peter Nowak. Nowak topples the top ten most common UBB supporter myths, including the ISP claim it makes sense to bill broadband like electricity:
There have been many attempts, including by the CRTC, to equate internet usage to a utility such as electricity or gas. Very simply put: it is not. The electrons that make up the data that passes to and fro over the internet are limitless and are not consumed and destroyed every time a YouTube video is watched. The “pipes” and other equipment over which these electrons flow are, of course, finite and therefore need to be continually expanded as the amount of traffic grows. These are two very different things, however. In electric-bill parlance, we’re talking about delivery and usage – the nice people at the hydro company bill us for both and the big ISPs would like to do the same. The difference is, the actual kilowatts that go over the hydro company’s pipes ARE finite and ARE destroyed once they are used. If you want to talk about fairness, then yes, it is okay to charge internet users for delivery, but how is it fair to charge for consuming a non-consumable?
Don't forget that in addition to broadband not being a truly consumed commodity, you'd be hard pressed to find any big ISP eager to be regulated like a utility to confirm their often flaky meters actually work. Nowak touches on a wide variety of other issues popular among ISP PR folk, including the fact that carriers never actually reveal hard data proving that congestion makes such models necessary (tip: it's because such data doesn't exist, or when it does exist, a perfectly profitable ISP lagged on network upkeep). Most importantly he notes that if you allow ISPs in uncompetitive markets to impose steep overages -- they'll only get worse as there's no way for consumers in these markets to vote with their wallets.

This is all stuff we've covered in probably nauseating detail, though Nowak does a particularly good job at it. It also remains interesting to watch educated and informed Canadians dismantle this punitive pricing push and understand the anti-consumer and anti-innovative ramifications of these kind of billing models. That can't always be said about their neighbors to the South, in part because Canadians are already very familiar with being nickel and dimed to death for each byte, and understand perfectly just the kind of "value" ISPs have in mind when cooking up these pricing plans.

140 comments .. click to read

Recommended comments

Minneapolis, MN

2 recommendations

reply to JackKane

Re: Physics fail

Having read his article, the point is that Nowak is an intellectually dishonest hack.

He doesn't believe that there are congestion issues caused by heavy users because it's not been "proved"? REALLY? He's not seen the complaints from users of poor performance during peak hours? Either he's an imbecile or intentionally dishonest.

The proposed Canadian model was too harsh, but there's a very real incentive for ISPs to try and slow the ever-increasing bandwidth per user consumption that has nothing to do with trying to limit competition. Constant upgrades and capacity expansion aren't cheap, and the simplistic "they make a profit, so they should just keep throwing money at the problem" isn't very convincing.


2 recommendations

Not a fossil fuel

Bandwidth is not a fossil fuel.

Caps due nothing to help "crunch time" congestion, for example 6-7 pm on my garbage Time Warner cable node.

Throttles can help with congestion. But the end came is to create Forced Artificial Scarcity to prevent TV and Voice distribution.