Canadian ISPs to Impose Usage-Based Billing

The Canadian Radio-Telecommunications Commission (CRTC) has sanctioned “Usage-Based Billing” for Bell Canada, effectively killing all forms of competition in the ISP space.

Telco goliath Bell leases their lines to smaller providers, such as TekSavvy, at a rate governed by the CRTC. As a reseller, TekSavvy previously offered high-bandwidth plans at a lower cost than Bell. With UBB in place, TekSavvy is forced to lower their $31.95 premium data caps from 200GB to a miserable 25GB per month (both download and upload combined), with overages costing users an additional CAN $1.90 per gigabyte.

Canadian customers are appropriately outraged: While 25GB might seem to be more than enough for any law-abiding user, in actuality, it can quickly be gulped down by bandwidth-heavy services such as Steam and Netflix.

TekSavvy will offer overage insurance for $4.75 per 40GB to users who feel that they will exceed their limit, allowing customers to “buy back” their previous 200GB cap for roughly $21 extra per month.

Rocky Gaudrault, TekSavvy CEO has this to say on the matter:

“We are discouraged by the decision by the CRTC to force us to charge virtually the same amount to our customers for the bandwidth they use that Bell does. This essentially gives the opportunity for incumbents like Bell, at zero cost, to increase their margins and stifle competition. If Bell wants to charge an economically unjustifiable amount for downloading to its customers, that is their business. However, we should not be forced to do the same. In the decision we asked for a discount of 50% to give us flexibility in serving our customers, but the CRTC limited the discount to 15%, so we are essentially stuck with pricing that serves Bell’s interests, but no one else’s.”

Usage-based billing has been approved — but not yet implemented — for Rogers‘ third party Internet access providers, but there is a decent chance that the cable company will follow Bell’s lead, further cementing their duopoly. If this happens, services like Netflix could be pushed out of Canada due to the high cost of streaming — which raises additional anti-competition issues, as Bell owns CTV, Canada’s largest private television network. State-side, the recent Comcast/NBC merger raises similar problems: Comcast could throttle Netflix connections and favor their own from NBC’s steaming video service.