Thursday, February 10, 2011

Canadian Internet Bandwidth Costs Less Than $0.05 / GB & Dropping Fast

Despite what the major Canadian ISPs and the Corrupt CRTC would have you believe about the actual cost of Internet bandwidth in Canada, the true cost is barely pennies per GB, and even that cost is dropping rapidly.

Here's the story from the Vancouver Sun (by David Buffer, CEO of Radiant Communications Inc., an independent ISP):

CRTC Internet decision gouges users
Canada lags in broadband performance (speed and price) relative to other developed nations -- and many developing countries. At the same time, all components and costs required to deliver Internet access have gone down, and yet prices for Canadian consumers are going up. Why is that?

For the first time, the recent CRTC ruling uses a retail-minus approach, which means that consumers will pay significantly more for additional usage than the actual costs incurred. What may not be widely understood is how much that extra capacity costs: it's nowhere near the inflated overage fees that the large Internet service providers want to now charge.

The cost associated with transmission and switching on a modern network is a non-issue -- less than five cents per gigabyte and dropping fast.

If the CRTC ruling survives federal government scrutiny, however, consumers will be paying in excess of $2 per gigabyte. (That's about a 400-per-cent markup.)

Simply put, consumers are getting gouged and have little choice in the matter because Canada has little competition in the Internet service market.

A Jan. 28 article in The Vancouver Sun, "Usage-based billing: A concept whose time has come," mentions that the major players invest large amounts of private capital to maintain the infrastructure. However, much of our present infrastructure was built almost entirely under the protection of a government monopoly, outright subsidies and foreign ownership restrictions placing barriers to protect large providers. Canadian citizens paid for the infrastructure long ago.

A quick look at quarterly financials reveals that only a very small fraction of the revenue made today by the large telcos is invested back into maintaining an aging network that the "big three" haven't improved in many years but from which they've made huge profits.

The "it costs money" argument doesn't hold water for major Internet service providers.

What this CRTC ruling is really about is protecting incumbent telco businesses and delivering profits to their shareholders. There is no harm in private corporations doing this but it's being done in an anti-competitive manner.

There is an inherent conflict-of-interest to cry foul about Internet congestion, while in the same breath promoting their companies' video and Internet TV assets.

For instance, if a customer subscribes to IP-TV with an ISP (Netflix, for example), the video downloads are subject to the user-based billing.

If a customer subscribes to IP-TV with Bell or Telus, the downloads are not subject to user-based billing.

With the recent CRTC decision, Canadian consumers and businesses that are already paying the highest costs for the Internet in the developed world will now also be paying inflated usage rates.

That translates into poor international competitiveness, poor productivity, reduced investment infrastructure, stifled innovation and consumer choice.

Konrad von Finckenstein, the Corrupt head of the CRTC (whose right-hand man Len Katz worked for decades for both Rogers and Bell, and obviously is looking out for his former employers' best interests), gave horrifyingly irresponsible, uneducated and completely ignorant testimony to Parliament which only showed how completely uninformed and utterly out-of-his-element he is when dealing with the modern innovation that is the Internet.

Fink talked about applying discipline on Canadians who want to use more bandwidth, instead of pushing for Canadians to embrace the Internet and move to the forefront of innovation on the web. With great innovation, comes a greater need for more bandwidth, I mean, that's common knowledge (at least to those who have a clue about the Internet).

Yet we hear Fink talking about how he only uses the Internet to check his email, so why should he have to pay for someone else to do all kinds of other things on the web. This kind of backwards thinking in the hands of someone who holds so much power in the industry is going to be catastrophic for Canada. It's like sending in a 2 year-old to perform heart surgery on our Prime Minister. Fink is just not mentally equipped to be able to handle this kind of discussion.

His backward thinking also likes to compare the Internet to utilities, so the more you use, the more you pay. But really the Internet should be thought of like a Newspaper, where regardless of whether you only want to read the business section, or if you want to read the entire newspaper, you still have to pay a certain price. Or, we can look at it like the Internet is the sidewalk. Do we expect people who walk more on the sidewalk to pay more taxes for that usage? (Yes, we can come up with analogies that work the other way as well, Fink.)

At the end of the day, Canadians' usage of Internet bandwidth is only going to skyrocket exponentially in the near future, especially as more innovations and content rich technology becomes available online. And applying usage-based-rates on this potential bandwidth usage is only going to make it absolutely unaffordable for Canadians to access the Internet.

Maybe this is what Fink is going for? I mean, how else can you explain it...

And now the CRTC happens to have decided to rethink their decision, right? Oh yeah, now that Canadians are actually listening... My question is, why didn't the CRTC do their full research before they made this stupid decision? And on top of that, how many decisions have been made in the past based purely on the ask of Bell/Rogers, and with absolutely no research going into it on their own? What do we even have the CRTC for, if not to look out for Canadians' best interests? What exactly are they doing??

What a disgrace. Not only should Fink step down, but he should be put in prison for negligence. The entire CRTC board needs to go through a drastic audit review for corruption, as that is the only way to explain how negligent decisions like these are being made on an ongoing basis by this group of corrupt finks.


PS: Did you see this article about Bell's usage tracker failing and overestimating its customers Internet usage by between 50% and 200%?!! Bell can't even track people's usage correctly, and then they make claims about traffic congestion and people needing to be charged based on their usage??? And the CRTC makes decisons based on the word of Bell without doing any research on their own??? Failure... That's the only way to explain the CRTC. Absolute and utter failure.

Here's the story from the Montreal Gazette:
Bell faces its biggest backlash ever - Online use tracker proves faulty
Bell Canada has removed the tool its uses to monitor consumers' Internet data usage and started reversing charges to some customers amid one of the biggest consumer backlashes in the company's history.

Furor over the usage-based billing (UBB) issue reached new heights yesterday after the company posted an acknowledgment that the online tool -meant to allow customers to track data usage so they don't go over their monthly cap -was faulty.

"We have identified an issue that may have caused Internet usage shown on this site to be incorrect in some cases. In order to ensure we provide reliable information to all of our clients, the usage tracker will be unavailable while we resolve the issue," said the message.

Bell has been blasted by smaller Internet service providers and the public for trying to push its usage-based billing practices onto smaller ISPs that use its network.

A Canadian Radio-television and Telecommunications Commission (CRTC) decision would have allowed it to impose the controversial practice before the federal government got involved last week and ordered the CRTC to reconsider.

The company said software it purchased to track customer accounts was faulty and that new software was being obtained.

The Internet usage tracker was being taken off-line until the new software could be tested.

The spokeswoman also said any charges due to the error, which can be as high as $2.50 for every gigabyte over a customer's cap, have been reversed. The company did not respond when asked if it would begin a historical audit of customer accounts.

Response by consumers, many of whom have added their names to a petition against UBB that has collected more than 400,000 signatures, was immediate yesterday.

Bell customers complained that the Internet usage tracker was overestimating their Internet use by between 50 and 200 per cent and cited the problem as another reason why UBB should not be allowed.

Steve Anderson, founder of,the grass-roots consumer organization fighting UBB, said the outcry is justified. Anderson is due to speak about UBB before a parliamentary committee later today.

"This underlines the whole problem -there is no accountability or transparency," said Anderson.

"One of the reasons people are so upset about this is because they have experience with this sort of thing with cellphones.

"It's a bit of a black box. There are tools you can use to look at it, but there are discrepancies."

Anderson argued that the average consumer shouldn't have to personally track Internet usage to make sure bills are accurate.

"This is definitely the worst time for Bell to have problems with their billing system," said Anderson.

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Daniel Isaac said...

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