From the outside in

Thursday, March 31, 2011

Canadian ISPs admit that their pricing is structured to discourage Internet use

via Boing Boing by Cory Doctorow on 3/29/11

Canada's cable-based ISPs have filed regulatory comments on their "Usage-Based Billing" model that caps bandwidth use and then charges high rates for overage. In these comments, they admit that the rates they charge have nothing to do with what it costs them to provide their service, and are instead aimed at punishing their customers for "overusing" the Internet. In other words, they've set out to limit the growth of networked based business and new kinds of services, and to prevent Canadians experimentation that enables them to use the Internet to its fullest.
In order to be effective as an economic ITMP, the usage based price component needs to be established so as to discourage use above the set limit. The price should incent use in excess of the limit only to the extent that the consumer would gain significant value from that usage. If the price is set substantially below the consumer's value, it will have little influence on usage. It follows that the price does not necessarily reflect the cost of supplying the network capacity.

[Michael Geist's commentary:] In other words, UBB is behaviour based billing, not usage based billing. Notwithstanding the claims about fairness, paying what you use, or costs to the network, overage pricing is not connected to cost or even value - it is designed to price above the real value to stop Canadians from "overusing" the Internet.

Cable Companies on UBB: No Link Between Cost and Price

(Image: Girlfriend's aunt network diagram, a Creative Commons Attribution Share-Alike (2.0) image from pitel's photostream)

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