Usage Based Billing: What you don’t know can hurt you

By now, you’ve probably heard of usage based billing (UBB) or Internet metering on the news. Simply put, UBB allows large telecom companies like Rogers, Bell and Shaw to charge customers an overage fee based on the amount of bandwidth used per month.

Companies are pushing for UBB because of the growth in Internet traffic and the resulting load that it puts on the network. Cisco Systems predicted that Internet traffic would quadruple between 2009 and 2014, a compound annual growth rate of 34 per cent. According to the University of Minnesota’s Internet Traffic Studies and Cisco Systems, monthly Internet traffic in North America in the last decade has grown  between 40 and 50 per cent.

Because the Internet is limited, these companies say the heaviest users must pay their fair share. According to them, the overage fee is needed to pay for the cost to sustain the infrastructure that allows them to provide the service. Sounds logical enough? Unfortunately, it’s not that simple.

The definition of heavy usage is rapidly changing as the Internet evolves. In the pre-Netflix and Apple TV era, an Internet plan with a 15 GB limit would’ve been sufficient for average users. But nowadays, download 10 high definition movies or TV shows a month and you can easily go over your limit.

In the meantime, cost of operations has been greatly reduced as electronic equipment used to provide Internet service has dramatically improved, both in energy efficiency as well as capacity. The University of Minnesota research shows that over the same period of rapid Internet growth, processing power, hard disk densities and transmission rates grew by 60 per cent.

So what is the actual cost? The telecom companies are mum on the subject, but under the original UBB documents, the CRTC allowed Bell to charge smaller ISPs $4.25 for a 40 GB block of additional data transfer. That’s about 10.5 cents per gigabyte wholesale. Reports are saying the actual cost is closer to three cents per gigabyte of data. Instead, the telecoms want to charge anywhere from $1 to $5 per GB in overage fees to the end user.

Internet metering was brought to the forefront by an online petition called “Stop the Meter” that’s generated more than 450,000 signatures as of print date.

Opponents of UBB say that this system doesn’t only gouge the consumers, it also has the potential of halting online innovation in Canada. Multimedia content producers—especially independent filmmakers, graphic artists, musicians and software developers from where the country reaps its upcoming talents—could be restricted in delivering content to the public because of the cost. In addition, innovative programs, such as online libraries which aim to make information accessible to a greater demographic at a lower cost, will be forced to either increase operation funding or cease to exist.

Usage based billing is now under review by CRTC and the online petition is  ongoing.

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