OTTAWA – As Bell Canada stole the show with its usage-based billing (UBB) backdown earlier this week, the fact that the cable companies also suggested that billing on an aggregate use basis might be a more palatable approach was overlooked.
Under this type of model, the independent ISP which leases network capacity from a facilities-based carrier would be charged for a pre-determined amount of bandwidth that it could then offer to all of its customers. If the small ISP exceeds this amount, it would be charged additional fees. The current UBB approach contemplates charging independent ISPs on per-customer basis.
In a joint submission to the CRTC’s proceeding to reconsider UBB, Rogers Communications, Cogeco Cable and Quebecor Media argue that while they believe UBB is an appropriate method, billing the independent ISPs based on the aggregate amount of usage among all their customers could work. “The small ISPs would be able to offer competitive alternatives with prices, usage quotas and/or charges for additional usage that differ from the cable carriers’ own retail services,” they tell the Commission in their March 28 submission.
Shaw Communications was less committed to an aggregated approach than its cable brethren. The company says it’s “open to considering alternatives” such as an aggregated approach but wouldn’t fully endorse it.
“If the Commission chooses to revise its current approach, in such a fashion, it must ensure that it does not discourage the network investments that have driven Canada’s broadband success. In addition, the Commission must ensure, consistent with the 2006 Policy Direction, that any revised model does not promote inefficient entry into the broadband market,” insists Shaw.
Telus acknowledges that the approved UBB approach may not afford independent ISPs the flexibility they need to price retail services to compete with the facilities-based Internet providers. It agrees with the cable companies that an aggregated usage model addresses this.
“As a result, the wholesale ISP can choose how to recover the UBB charges from its customer base, rather than charging it directly to an individual end-customer,” states Telus. “This provides the wholesale ISP with greater flexibility in how it designs its retail Internet plans so that it does not have to mirror the plans or UBB rates that the incumbent charges to its retail customers.”
The company adds that since UBB is considered an economic Internet traffic management practice (ITMP) it must be used in a symmetrical manner on both retail and wholesale customers because regardless of where the traffic comes from – retail or wholesale – it all uses network resources.
“If a network provider has implemented UBB as an ITMP (on retail services), it makes sense for that provider to have the ability to impose UBB rates on wholesale ISPs, because wholesale end-customers’ usage contributes to overall bandwidth demands to the same degree as retail end-customers’ usage,” Telus tells the Commission.
The Public Interest Advocacy Centre and the Consumers’ Association of Canada say any methodology that relies on independent ISPs having to pay what amounts to a markup on retail rates won’t work. And they say small ISPs shouldn’t have to pay for access to wholesale services that are being used to provide value-added retail services.
“We do not believe that competitors’ customers should be paying for network investments made by the Bell companies for enhancements these companies have made to accommodate IPTV or any other of their retail services,” PIAC wrote in its March 28 comments.
The PIAC submission suggests that the Commission impose a wholesale services regime under which the small ISPs would only have to pay for the incremental costs of using those facilities.
“If the Bell companies’ principal concern is really to ensure that their wholesale customers should be charged based on what they use, why not, then, apply a rate which recovers the costs the Bell companies incur to provide the capacity these wholesale customers use?” asks PIAC. “What we are proposing are tariffs for the use of components of the Bell companies’ network which recover the ILEC’s incremental costs and which, to a reasonable extent, promote the continuation of competition from independent ISPs.”
The cable carriers insist that economic ITMPs – pricing based on usage – must be applied equally to retail and wholesale customers. If they aren’t applied on a wholesale basis, the independent ISPs will offer flat rate plans, therefore attracting large numbers of high-volume users. This, they say, will result in congestion on the network and a degraded customer experience for all retail Internet subscribers and those of the wholesale customers.
And while this will cause increased investments in the network, “there is no means to recover the increase in costs caused by the higher usage of the Small ISPs’ end-users.
“The cable carriers remain of the view that setting wholesale UBB prices based on a narrow assessment of incremental costs would be detrimental to ensuring that UBB functions as an effective economic ITMP on the shared resources of the cable network. The integrity of economic ITMPs should not be sacrificed simply to artificially promote resale competition,” reads the joint submission.
