Metered Internet in Canada

The CRTC set off a powderkeg, when they ruled to allow big service providers to force smaller resellers to impose usage caps and overage fees on their end-users.

Now that the issue has been opened up for debate, it’s time to re-examine Internet pricing in general. As Netflix has pointed out, the big Canadian ISPs are charging overage rates of about $1 (I’ve seen as high as $2.50) for a gigabyte that costs them something like $0.01 to deliver. That’s quite a markup. (My own conversations with smaller ISPs roughly confirm this math. For example, last summer I was told that the average cost per gigabyte is “below 3 cents.”)

Much of the pro-metering argument has hinged on vague, emotional talk about “making the bandwidth hogs pay.” This assumes that the cost of that extra bandwidth is actually significant. At $0.01 per gigabyte, it’s clearly not. The difference between the mythical ‘light user’ and ‘bandwidth hog’ simply isn’t enough to argue about. We need to recognize this reality: that the cost of bandwidth today is insignificant compared to the cost of simply maintaining a connection.

Let’s say the heaviest user grabs 350 gigabytes in a month. (Not easy, even over the fastest Canadian connection.) Total cost: $3.50. That’s what we’re arguing about: $3.50 a month. Given that the ‘bandwidth hog’ is almost certainly on a higher-speed plan, he’s probably already paying more than enough to cover the extra usage. But never mind. Just add the $3.50 to their bill, and we can all move on.

Clearly, the argument isn’t about metered or non-metered billing. It’s about fair pricing.

It’s also not about a few ‘bandwidth hogs.’ Very soon, we’re all going to be ‘bandwidth hogs.’ As services like Netflix open up streaming video, monthly caps of 25GB are going to seem ridiculous. In fact, there’s a general agreement that all television may be shifting to the Internet: ‘IPTV.’ Right now, you can leave the soaps running while you cook. Do that with metered billing, and you’re going to have a very nasty shock at the end of the month.

With digital technology, prices should be going down, not up. Yes, digital is better. But it’s also cheaper. A CD sounds better than an LP (get over it), but it’s also cheaper to manufacture. Digital TVs are better than analog, but are also cheaper to make. DVD players (or digital video recorders, in so far as they’ve been allowed to exist) are better, simpler and cheaper than VCRs.

Unfortunately, the markup on delivery of traditional TV services (cable and satellite) is much, much larger than anything ISPs can ever hope to make on Internet service. The big ISPs who are in both businesses are going to be reluctant to abandon their role as gatekeepers of content, in favor of one as vendors of commodity connection services. But that’s where things are headed, and Canada needs to keep up.

One way to help is to speak up.  The Internet is vital to our entertainment, our livelihood, our democratic process. Canadians don’t mind paying our way, but the price has to be a fair one, not a crippling penalty specifically aimed at holding back the future.

The CRTC has asked for input. We need to give it to them. is the group that’s done most to champion this issue, and they have all the info about how to send comments to the CRTC on this page. Do it now.


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