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CRTC decision 2011-44 on usage-based billing (UBB)

6/Feb/2011 initial publication.
10/Feb/2011 last reviewed & updated for accuracy.
10/Sep/2011 last modification. 

Table of Contents

Explanation of UBB and why it is unfair.

  1. UBB fees aren't for Internet bandwidth.
  2. Sympatico excused from UBB; small ISPs not.
  3. UBB disallows aggregating (except for Sympatico).
  4. UBB applies to ISPs who are already prevented from excessive use.
  5. Conclusion.

Summary.

Several TFN members inquired about UBB — what it is and how it affects them.

Usage-based billing (UBB) impacts Toronto Free-Net users.  If the CRTC's recent decisions are not reversed, our service levels must change drastically.  In the worst case scenario, we will at least try to prevent unpredictable extra charges from hitting Lite and HiSpeed users.

UBB is unfair in many ways: it penalizes TFN and its users for using services for which we already pay.  It exempts Bell Sympatico, thus giving Bell a dramatic advantage over smaller ISPs.  It prevents us from pooling our usage together to save costs.

This affects all Canadians, not just TFN users.  Competition from smaller ISPs, like TFN, forces big players, like Bell Sympatico, to lower prices for their own users.  Decision 2011-44 will help Bell gain a dramatic advantage and, ultimately, eliminate Bell's competition.

Under public pressure, the CRTC announced a new hearing to review its UBB policy.

How you can help.

UBB affects all TFN members, not just high speed users — its anti-competitive nature puts TFN's very survival in jeopardy.  Here's how you can help:

Background.

TFN has had a large membership since its foundation in 1993, though, when Bell started Sympatico and entered the ISP market, we were dwarfed by comparison.  We continue to fulfil our non-profit mandate by providing reliable and affordable Internet access to Torontonians and by helping our most vulnerable citizens to cross the digital divide.

On 25/Jan/2011, the CRTC issued decision 2011-44 to force TFN and other competitors of Bell to adopt exorbitant usage-based billing, starting on 1/Mar/2011.  This is only the latest in an ongoing dispute, spanning many decisions over several years, about the price of high speed Internet connections.  The last three decisions, culminating with 2011-44, have increasingly favoured Bell's position, to the detriment of all smaller Canadian ISPs.

Under pressure from the public, from the government, and from all political parties, on 3/Feb/2011 the CRTC announced that it would postpone the decision's implementation, and hold a new hearing.  On 8/Feb/2011, the CRTC issued notice 2011-77, commencing this hearing.  It will run through to April.  The CRTC will then re-assess the issue, and possibly give a new ruling.

How UBB will affect TFN's Lite & HiSpeed users.

For now, there will be no change to TFN high speed services.

TFN high speed users are unavoidably impacted by 2011-44.  Far more so than by the previous two decisions.  We were in the process of analyzing the latest decision's impact, and formulating service changes to comply, when the CRTC announced the reprieve.  If that CRTC decision is not overturned or substantially changed by the next hearing, significant changes will be unavoidable.

If it comes to that, TFN's solution will probably be to dramatically lower monthly usage caps but to keep monthly prices same, to add some purchase options for increased monthly caps, and to apply dialup-style disconnections, so as to never bill overage fees to TFN members for what the CRTC declared "excessive" usage.  Dialup access can perhaps be used as a fallback by users who reach their cap before the end of the month.  But many TFN high speed users lack dialup capability.

Explanation of UBB and why it is unfair.

TFN's non-profit mandate includes educating our community to function effectively in a digital world.  The less publicized parts of how small ISPs build their networks, and of how 2011-44 applies, are explained below, to fill the gap between over-simplified news media coverage and over-technical CRTC documents.

1. UBB fees aren't for Internet bandwidth.

[image: ISPs connecting to Internet & residences]
How your home reaches the Internet through high speed DSL. 

Internet bandwidth is something that independent Internet service providers (ISPs), like Toronto Free-Net, provide on their own to their end-users.  Bell Sympatico makes arrangements to obtain Internet bandwidth for its retail customers; we, the independent ISPs, make our own, separate arrangements to obtain bandwidth for our own users.

What we do obtain from Bell is access to telephone wiring and to associated infrastructure, in the areas we serve, in order to reach our own users, to deliver our Internet bandwidth to them.  Bell gets paid the legislated price for access to that infrastructure, which the CRTC usually mandates as Bell's cost of ownership + 10% profit for Bell (20% for fiber sections).  Bell's cost is calculated like so: Bell reports, to the CRTC, its proprietary detailed and itemized costs for that wiring, and the CRTC, for the most part, accepts and legislates Bell's report.

Thus, (a) Bell incurs no cost for the Internet bandwidth consumed by our users and (b) a good price has been paid to Bell for the use of the telephone infrastructure over which we deliver our bandwidth.  It is to this that UBB would apply — to our access to this telephone infrastructure.  Bell wants to merely measure what we deliver to our own end-users, and to charge us a second time for delivering our bandwidth over those wires.

2. Sympatico excused from UBB; small ISPs not.

Bell said to the CRTC that it is necessary to discourage Canadians from using overly much the part of Bell's infrastructure through which both we and Bell Sympatico, deliver high speed Internet connections.  Bell proposed to solve the "problem" by imposing a financial penalty on "excess" usage.  The CRTC felt bound to accept Bell's proposal because, as Bell repeatedly pointed out, the CRTC had previously ruled similarly for cable companies.  The prices and the maximum usage caps were chosen for their effectiveness at discouraging consumption — they are not based on any actual cost.

(NB: a few years ago, Bell used the same argument to justify throttling (the slowing down of an end-user's speed), based on criteria to be chosen, and changed on an on-going basis, by Bell, at its discretion.  The CRTC accepted that too, and now Bell slows down "excessive" Internet use every evening from 4 pm till 2 am.  An example of connections that Bell targets and slows down is Internet telephony, like Skype.  Doing so renders useless this alternative to paying long distance telephone charges over a landline.  Bell applies throttling indiscriminately to our end-users too.  The UBB decision is in addition to throttling.)

When Bell said that it wanted to start charging us UBB, the CRTC imposed one condition: that before Bell would be allowed to apply excess charges to small ISPs, Sympatico must start charging its own retail customers.  Sympatico was already moving in that direction; customers who signed up for residential service, in the last few years, did so under Sympatico's UBB terms of service.

Then, Bell requested and got (in CRTC decision 2010-802, issued on 28/Oct/2010) an exemption: Sympatico doesn't have to charge UBB to its own retail customers; it is free to waive it at any time and for any length of time, at its sole discretion.  For example, as part of a promotion to entice the competition's customers or as part of a negotiation to pacify an angered customer who threatens to leave Bell for the competition.  Only we, the independent ISPs and our users, are required to always pay UBB — to Bell.  That money is not mandated to go towards infrastructure improvements to alleviate the "problem" of "excess" usage; it is simply money that Bell gets to keep.  It is essentially a subsidy to Bell from us and from our users.

3. UBB disallows aggregating (except for Sympatico).

Aggregating, in the field of networking, is the practice of building a cost-effective network based on the assumption that some users are active at times when others are away or asleep, and that some users tend to make heavy use but others tend to make light use.  In designing a network, one takes into account these usage variations, and averages them out over a large number of users.  Then, one builds a network at the least possible cost that is capacious enough to supply the averaged out ("aggregated") consumption.  This makes it possible to provide retail access at low prices.

Now, the UBB decisions say that, in Ontario, there will be a maximum consumption cap of 25 gigabytes (GB) per month per user.

If during a particular month, one of our users consumes 5 GB while another consumes 45, UBB would force us to pay to Bell an excess usage charge, for the one heavy user, of  45 minus 25 = 20 GB.  UBB lets Bell bill us without regard for the fact that the consumption of those two users, when averaged, was only (45+5)/2 = 25 GB per average user.

No retail network is ever designed this way.  It is absurd.  Even if we were to accept the premise that we should start paying twice for infrastructure which we already leased from Bell, and swallow Bell's throttling of our traffic, this ruling completely eliminates our economies of scale and prevents us from delivering affordable Internet access to our users.

4. UBB applies to ISPs who are already prevented from excessive use.

Bell said to the CRTC that throttling and usage-based billing were needed to combat excessive, abusive traffic.

Well, it is physically impossible for us to exceed our allotted capacity of the Bell infrastructure through which we deliver our Internet bandwidth to our end-users.  The "problem" of "excess" usage, which justified both UBB and throttling, is non-existent or else it certainly isn't caused by us nor by our end-users.  Here is why:

To connect to Bell's infrastructure, an independent ISP typically pays Bell for a special type of connection at an agreed upon speed (often 100 Mbps).  All of that ISP's end-user traffic necessarily traverses that connection.  Obviously, it is not possible for traffic to flow through a connection faster than the connection's speed.  Thus the connection itself acts as a throttle that prevents excess usage.  If an ISP wants to serve more users or to transmit more data to its existing end-users, then that ISP must pay for a faster connection (or for multiple connections).

By the way, these connections are carrier-grade, not retail.  Unlike retail high speed, these connections are rated (and accordingly heftily priced by Bell) for continuous and sustained use at capacity.  So, if we operated at peak efficiency, our total traffic would exactly match the speed of our connection and we would get everything we paid for.  This being an imperfect world, one is always somewhat below capacity, and the existence of any excess usage is imaginary.

Conclusion.

The CRTC's UBB decisions are partial to Bell to an anti-competitive degree.  They are shockingly divorced from technical reality.  They are fair only in the sense of putting the telephone companies on par with the cable companies.  But the CRTC's job is to rule fairly for all parties, while serving the long-term interests of Canadians.  Its job isn't to maintain a monopoly of two players.

Links to relevant CRTC documents.

CRTC decisions on usage-based billing, in chronological order:

Next CRTC hearing on UBB:


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