Canadians are up in arms over a government decision that will impose drastically reduced download caps on internet users and force the end of unlimited internet packages.
The Canadian Radio-television and Telecommunications Commission ruled last week that Bell, one of the country’s largest telecom companies, may begin charging its wholesale customers, primarily smaller, regional internet providers, the same usage-based rates for internet access it charges its own customers, minus a 15 percent discount. As a result, those smaller ISPs will be forced to dramatically slash download caps, abandon their unlimited access programs and effectively give up their competitive advantage.
One such company, Teksavvy, has already sent out emails to customers informing them that as of March 1, their download caps will be reduced from 200 GB per month to 60 GB per month in Quebec and only 25 GB per month in Ontario. The company now offers “insurance blocks” of extra data in 40 GB increments at a cost of $4.75 per block above the standard monthly rate, to a maximum of 300 GB.
The CRTC’s decision only affects internet customers in Ontario and Quebec but Tom Copeland, chairman of the Canadian Association of Internet Providers, said he expects similar caps will now be rolled out by major ISPs in other parts of the country, like Telus and Bell Aliant. “In the marketplace here in Canada, it’s monkey see, monkey do,” he said.
But the decision is being met with considerable resistance. A petition at stopthemeter.ca has garnered over 250,000 signatures at last count, while the Liberal Party is calling on the government to review and reverse the decision. NDP technology critic Charlie Angus said students and small and new businesses are going to be “hammered” by the changes, which he described as anti-competitive because it will keep people from exploring alternatives to major media providers like Bell, Rogers and Shaw – the same companies who dominate the internet industry.
Referring to Netflix, which only became available in Canada in September 2010, Angus said, “Now they’re saying it’s not going to be financially worth their while to explore these new media offerings, so they’ll end up back in the hands of the ISPs who are also the content providers.”
Minister of Industry Tony Clement said in a statement that he was aware that an appeal of the CRTC decision had been filed. “As Canada’s Industry Minister, it is my job to help encourage an innovative and competitive marketplace, and to ensure Canadian consumers have real choices in the services they purchase,” he said. “I can assure that, as with any ruling, this decision will be studied carefully to ensure that competition, innovation and consumers were all fairly considered.”
University of Ottawa professor and media and copyright critic Michael Geist, however, said the CRTC’s decision is ill-informed and off-base, calling the imposition of caps a cash-grab that has nothing to do with Bell’s claim that it is necessary to fend off network congestion. He noted that download caps in Canada are typically a fraction of what they are in the U.S. and elsewhere, and that roughly ten percent of Bell’s subscribers exceed their monthly cap.
But the real problem for Canadian internet customers, according to Geist, is not the imposition of caps that will affect independent ISPs but the caps that already exist for the vast majority of the country. Major ISPs like Bell and Rogers currently control 96 percent of the market, meaning that even if the CRTC had denied Bell’s application, the actual impact would be tiny.
“Arguments in support of UBB [usage-based billing] are frequently accompanied by the claim that the approach is like any other service – you pay for what you use. Yet Bell’s UBB plan approved by the CRTC does not function like this at all,” Geist explained. “Its plan features a 60 GB cap with an overage charge for the next 20 GB. After 80 GB, there is no further cap until the user hits 300 GB. In other words, using 80 GB and 300 GB costs the same thing. This suggests that the plan has nothing to do with pay-what-you-use but is rather designed to compete with similar cable ISP bandwidth caps.”
He also pointed out that Primus Vice President Matt Stein admitted earlier in January that the caps are nothing but an “economic disincentive” to keep people from using the internet. “It’s not meant to recover costs,” Stein told the CBC. “In fact these charges that Bell has levied are many, many, many times what it costs to actually deliver it.”
Bottom line? Things are a mess and despite the CRTC’s mandate to “ensure the public interest,” they’re getting worse, not better. “While there is great anger with the CRTC and the dominant ISPs, we should recognize that the current market is a product of years of regulatory neglect and policy choices that created one of the most converged communications markets in the world,” Geist wrote. “As Canada’s global rankings slide down, we are now paying the price for those choices and it will take a concerted policy effort by governments and regulators to put us back on course.”