As requested by
Liz:
Alright so about a week ago, the CRTC hearing surrounding wholesale internet billing methodologies wrapped up with some pretty interesting developments.
To bring everyone up to speed, back in February, Bell was able to get the CRTC to approve the ability to start charging its wholesale customers based on the volume of internet packets it sends through its network (i.e. usage-based billing). What ensued was a massive online protest with 400,000+ people signing a petition started by
OpenMedia. This in turn prompted at-the-time Industry Minister Tony Clement to call for the CRTC to review its decision since UBB was not considered appropriate. Players in the market appeared before a Standing Committee on Science & Technology, were grilled about why UBB was good, bad, how to deal with pipe congestion, etc...
And that's where we stood until last week when new proposals for wholesale billing models were put forward.
Not to get too wrapped up in the details of the hearings (or list off the ludicrous number of analogies put forward to try and get the CRTC to understand how a fucking network works), the crux of the hearing boiled down to two competing views:
Bell - given the disaster that UBB caused, they came forward with a new model known as AVP (Aggregate Volume Pricing). Essentially, it's UBB but instead of billing on an individual customer basis, they'd bill each ISP based on the aggregate amount of data used. In addition, ISPs can buy data in bulk up front (at something like $200/TB) and any overage charges would be extra (don't remember the exact rate, think it was $0.1768/GB or something).
CNOC - the group of individual ISPs have said they should be billed based on the peak capacity (measured in MBps, not GB) that they cause on the incumbents network. Measurements of their capacity (not volume) usage would be measured at 5-minute increments over the month and the 95th percentile would determine the level at which the ISP would be charged for the month. Brief description of 95th percentile is
here.
Other players in the market has suggested slight modifications of the two above approaches (95th percentile with commitments, average AVP over the month, etc..).
Personally, I think Bell's AVP is the same wolf that UBB was, just with a pretty pink tutu put on it. The basic problem is that AVP measures the wrong metric when determining costs associated with a network. It was made pretty clear during the UBB uproar that the cost of transporting a GB across a network cost pennies (if that) and Bell is charging rates that are at least 10x higher. Not only that, when networks are built out and created, they're created on the basis of the capacity usage, not how much volume goes through.
CNOC's proposal does attempt to measure the appropriate metric when determining cost and it pointed out that other regimes around the world that have wholesale internet access policies use 95th percentile to compensate incumbents. That being said, it's pretty clear that building out networks (as Bell, Rogers, Telus, Shaw, Videotron have done) is bloody expensive. Using simply 95th percentile may not be sharing enough of the business risk associated with expanding the facilities, especially given the CRTCs decision on speed matching that says incumbents can't offer speeds in retail for some services unless they're also offered in wholesale.
So where does that leave us? Well, my feeling is that the model put forward by MTS/Andrew Moore [slight alterations of each other] makes the most sense. Essentially, usage would be billed on the 95th percentile, but commitments/access charges on how much capacity the ISP wants on a monthly basis would be charged up front. What this allows is for the incumbents to use that money to provision the appropriate size of the pipe to be given to the ISP. Once that's been done, the ISP is able to use as much of that pipe as possible and would be billed on the 95th percentile. In addition, if the ISP begins to exceed the capacity they've been allocated, their customers would experience packet loss, slow down, etc...Why this makes sense is it forces ISPs to make judgements on the amount of capacity they wish to purchase up front and compensates the incumbents for that cost, while still billing on capacity basis [which is the appropriate usage metric for networks].
The CRTC is scheduled to render a decision sometime in November and my hope is that they see the MTS model as a good compromise between the two polar opposite views of Bell v.s. CNOC. It's important that we measure internet usage on the appropriate metric, but incumbents must be adequately compensated for the investments that they do make in their networks (on a cost + small markup basis).
"The more you limit my tubes, the more time I have to protest" - Unknown Protester
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