Why you should care about Usage Based Billing

How did this happen? It's actually been happening for a long time but it's only recently become a hot button issue. It comes down to the topography of Canada's internet marketplace and who controls what is commonly referred to as the "last mile"—the bit of copper/fibre that connects your home or office with the networked infrastructure of our communications system. Michael Geist, the Canada Research Chair of Internet and E-commerce Law at the University of Ottawa, offers an excellent explanation of the issue in a recent Ottawa Citizen story and on his blog.

To paraphrase Geist, we've arrived at the current situation as a result of regulatory neglect and dithering government policy decisions that have created much confusion and misinformation around UBB for consumers. Many of us have had UBB in place for some time, but most of us have failed to put a dent in our ISPs limit cap. Recently, those caps have been significantly lowered. Combined with the CRTC's recent decision on UBB and you have a perfect storm of conditions that has emboldened an understandably angry consumer base who are tired of receiving less value-for-money to voice their frustrations and threaten revolt.

It's hard not to see the establishment of arbitrary and artificial cap limits as an all and out protectionist move on the part of the Telco industry to head off what represents a potentially hemorrhaging loss of customers as the content offerings of services such as Netflix.ca come online. Canada's Telcos profit from both suppling the means of delivery and the traditional source of much of the content that now flows through broadband connections. Every Canadian that subscribes to Netflix represents a loss of advertising, cable subscription and PPV revenue for our country's established broadcast companies. Applying bandwidth caps forces users to rethink their online behaviour, but in my opinion UBB only delays the inevitable.

I believe the Telco industry already realizes this, having identified a worrying trend as digital natives eschew the industry's content media delivered through cable and phone for online alternatives. Ask anyone you know under the age of 30 how they consume what we think of as broadcast media and I will bet you that the majority are consuming that media online instead of through broadcast/cable/satellite networks. Which is why so many Canadians feel UBB is nothing more than government-sanctioned price-gouging.

Canadian consumers have long suffered with service launch delay syndrome. A decade of neglect has created an innovation vacuum perfectly captured by Jesse Brown's recent #blockedupnorth blog post. Ironically, the levelling influence of the internet has empowered us to demand what we feel is our due. We are starting to get pissed that we can't subscribe to services like Hulu, Google TV, Google Voice, and Skype-In Numbers. We know about them and we want them.

Consumer frustration notwithstanding I believe the greater issue with UBB is its impact on innovation. In the future, data usage and demand will grow exponentially as we more fully integrate online. Product and service based businesses have been forced to tackle this issue by becoming more competitive as their customers move online. Imagine the outrage if the travel industry lobbied the CRTC to restrict consumer access to websites like Travelocity or Expedia. Why should media companies expect it would be any different? It's not right that the Telco/Media conglomerates should control the pipe and be able to tell us exactly what to do with it once it arrives in our home. 

In defending UBB the Telcos argue that they are shifting the burden of cost recovery from light users that currently subsidize heavy downloaders to a pay-as-you-go system that offers fairness to all. The fallacy in this argument is the assumption that heavier network use results in higher delivery costs, which is simply not true. Treating internet access like a finite resource only serves to extend old-world business models past their best-before date.  

I'm passionate about this debate because I'm inspired by Smallbox customers and the ways in which they are developing innovative online delivery models for their business. I'm also inspired by the vision our design partners bring to the table as they grapple with how to shape the ideas and requirements of a diverse and ever-shifting user-base. The innovation and creativity the internet makes possible drives our economy and our culture. I see no good reason why we should encumber this vast potential of energy and creative output with usage based metering.

Today's internet, and more importantly tomorrow's, is unimaginably different from where it was even three years ago. Some confusion and uncertainty is to be expected as the market adjusts to the incredible pace of online innovation. However, what's clearly kicked the hornets' nest for consumers is our collective sense that things are about to seriously change in the online arena, and the justifiable fear (based on current business practices) of being excessively billed by Canada's Telco industry for the crime of keeping pace with innovation.