11/15/2011 04:37 EST | Updated 11/16/2011 10:54 EST

Usage-Based Billing: Ottawa To Review CRTC's Ruling On Download Caps


UPDATE: The federal government will review the CRTC's ruling on Internet billing, Industry Minister Christian Paradis has said in a statement.

"We will study the CRTC's decision carefully to ensure that it meets our objectives of encouraging competition and network investment and enabling consumer choice," the statement said.

"Canadians have been very clear in expressing their concerns about earlier UBB decisions.

"Let me be clear: our government's policy will always be to encourage competition, ensure consumer choice and minimize regulation."

Independent Internet providers in Canada won’t be forced to impose download limits on their customers, but may still choose to do so, the CRTC ruled Tuesday.

Under intense pressure from the public and the government in Ottawa, Canada’s telecom regulator reversed itself on a ruling from earlier this year that would have allowed Bell to effectively force download limits on customers of independent ISPs who buy their bandwidth from the company.

Under the new regulatory structure, “the decision to impose such caps is left to the ISP and not mandated by the CRTC,” the commission stated in its ruling.

Owners of Internet infrastructure such as Bell and Shaw and independent resellers, such as TekSavvy and Primus, will be able to choose from two billing models: A flat-rate model, similar to what had previously been in place before the push for usage-based billing, and a capacity-based model, where the infrastrucure owner can set monthly limits, but the retail Internet provider can decide whether or not to pass that cost on to the consumer.

Initial public reaction on social media suggested a mixed response from stakeholders. Rocky Gaudrault, CEO of TekSavvy, was quoted on Twitter as saying his company was "pleased" with the ruling, but that it nonetheless amounted to a "step backward" for Canadian consumers as it would likely increase the cost of Internet to consumers. Media consumer advocacy group OpenMedia praised the ruling as "a step forward for the open and affordable Internet."

"The decision is a clear loss for Bell -- its hopes to charge based on volume are out (which keeps the door open for independent ISPs to offer unlimited plans)," digital law professor Michael Geist blogged, "but the bigger question is whether Canadian consumers are winners."

Usage-based billing has become a hot-button political issue in Canada over the past year, in no small part because it marries pocketbook issues with a debate on freedom of expression.

While customers of many of Canada’s largest ISPs have lived with download caps for years, the issue didn’t explode into a public debate until Bell decided last year to impose caps on customers of resellers -- independent ISPs who buy bandwidth on Bell’s DSL network.

As Bell planned to charge the same retail rates for excess bandwidth to independent ISPs as the company charges to its own customers, the ISPs would have had no choice but to pass the cost on to customers, effectively forcing the businesses to follow the exact same business model as Bell.

Independent ISPs objected, but the CRTC ruled in Bell’s favour in February, prompting an angry backlash from consumers and media activists who saw in the CRTC’s ruling the elimination of any hope for unlimited Internet in Canada.

Opponents of the CRTC’s move argued that Canada ran the risk of becoming a country where a handful of companies would decide how much access Canadians would have to the Internet. The message resonated with Canadians: A petition against bandwidth caps, launched by the media activist group OpenMedia, gathered more than half a million signatures.

That, in turn, resonated with the government in Ottawa. Then-Industry Minister Tony Clement promised to overturn the CRTC’s decision if the commission didn’t do so itself, prompting the review that led to today’s CRTC decision.

The tension between CRTC Chairman Konrad von Finckenstein and the government in Ottawa became evident earlier this fall when Ottawa declined to reappoint von Finckenstein to another five-year term.

In the months since the CRTC's initial ruling, circumstances changed somewhat. Shaw, one of the dominant ISPs in Western Canada, significantly increased the bandwidth cap on its cable Internet lines, throwing into doubt the argument put forward by the large ISPs that usage-based billing is necessary because of the strain heavy users place on the network.

That argument was further weakened when Bell announced it would be pulling back on traffic throttling, the practice of slowing down certain kinds of Internet traffic. (Even as Bell announced that decision, tech journalist Peter Nowak reported that Rogers is among the world's worst throttlers.)

Bell had also softened its stance in the intervening months, offering a lower rate to resellers for bandwidth overages than it charges to its retail customers.


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