Sunday, January 30, 2011

Say NO to download caps: It's bad for business

With the recent ruling by the CRTC, internet providers such as Shaw and Aliant have been given the green light to effectively provide metered-billing to all consumers in Canada for internet bandwidth used. If you think this won't bother your current internet usage, WRONG. Allow me to explain why this ruling is out dated and bad for business. It also reinforces the corrupt oligarchy of the current telecommunications scenario in Canada today.

Providers are Terrified

Just the thought of Shaw losing out on lucrative subscribers is enough to send them into panic mode. As more and more customers ditch cable and regular phone lines, they're moving their bandwidth consumption towards products such as Netflix, Skype, and Google Voice. The ridiculously low caps proposed by Shaw are echoing the recent offerings that were attempted by Verizon and AT&T in the USA last year. If you are given a bandwidth cap (monthly) of 50 gigabytes, that entitles you to watch just about 10 blue-ray movies. Nothing more, nothing less.


Thankfully the big internet providers have thought about this and have helpfully offered some solutions for you. They will offer you "bandwidth insurance" for a low fee of say $9.99 per month. And while this fee may sound like an ideal solution, it will only protect you up to a certain amount of bandwidth excess. Are you too cheap to buy into this scam? No worry. For every gigabyte that you exceed on your bandwidth, the I.S.P. will charge you anywhere between $1 and $2.5 per gigabyte. That's about a 1,000 percent markup. Really, how much does bandwidth cost when you take into account the infrastructure, people, and effort needed to move this information? I could setup an ISP shop easily enough if I had enough hardware and server racks (and access to to a fiber-optic backbone).

Caps Squeeze out Smaller ISP's

If you're an ISP that is allocated an OC3 or better connection, and Shaw decides to 'cap' their connection to say, 100 TB per month, how many customers do you think would sign up if they exceeded their mandated cap in 3 days? What incentive is given to smaller ISP's to compete in an environment that has marginal profit margins?

Going Offline

As more and more consumers get frustrated with more and more restrictions such as bandwidth caps, lowered transfer rates, prioritization of packets, crappy ping rates, terrible customer service, outrageous overage charges, etc -- they'll just be forced to ditch cable and internet all together. But let's be honest: Giving up the Internet is easier said that done. All of the big ISP's know this. But if there were enough consumers who joined this revolt, the ISP's would soon see their glittering golden empire shattered into a dusty memory in history.

The CRTC is Corrupt

When the big ISP's and telecommunication companies start to influence the CRTC, you kinda know there's corruption going on. There hasn't been any real honesty within the CRTC for a long, long time. Remember when they tried to pass the updated Canadian Copyright act? It failed because enough consumers raged about how restrictive and backwards it is.

Now is the time to ACT! Please go to OPENMEDIA.CA and have your VOICE HEARD!

EDIT: I grabbed the below from a Reddit thread.

I’ve read a couple of “why do I care?” comments, and also a couple of “it’s not that bad” comments below, so I feel like I should maybe add some explanation here.
Originally all ISPs in Canada were using UBB models for dial-up access. The large providers like Bell and Rogers argued to the CRTC that they should be able to provide unlimited access. This was allowed, and it effectively put all the small independent ISPs out of business because they couldn’t compete with companies the size of Bell.
Now, they are arguing the opposite.
Bell wants to be able to charge UBB not only to home owners, but also small ISPs who rent lines from Bell. Bell’s plan is to charge the same rate to both. How would a small independent ISP be able to offer competitive rates if they are paying the same as the customer base? In a recent appeal Bell offered ISPs a 15% discount. Sadly most businesses need at least a 24 - 28% profit margin in order to cover costs.
Rogers, Shaw and Cogeco have always had unlimited download capacity. In fact, I remember a series of TV ads a number of years ago where they flaunted this as a selling feature. My own ISP (Cogeco) started this bullshit in January of this year, and I was switched over myself from an unlimited plan to a UBB plan. When I called to ask wtf?, I was told by customer service that this is the way it is know, and Bell is doing it too, so too bad. When I checked Bell’s web page they had already started their UBB. My Internet rate WAS $34 per month for unlimited. I know pay $60 a month for 125g per month. The worst of this is that they WILL NOT guarantee transfer speed. They can only promise that speeds “can be UP TO 30mbps”.
According to Reed Hastings, the CEO of Netflix, the true cost of supplying bandwidth to users is about $.01 per gig. True, he probably has an agenda, so lets multiply that by 10 and say its really $.10 per gig. If I am receiving 125gig per month, then the cost to Cogeco is $12.50 for bandwidth, if I use ALL of it. The remaining $47.50 is money in the bank for Cogeco.
Why else should you care?
Well, Bell, Shaw, Cogeco, and most diabolically Rogers are all multi service providers. They give you TV, Internet, Phone, and a couple provide cell phones. As media providers they all have a vested interest in eliminating as much outside competition as possible. Because the CRTC will not let them throttle service to Netflix (and maybe someday Hulu), the best way to get Netflix out of Canada is to limit the potential use of the service. Netflix service is $8 per month for unlimited viewing (commercial free). The closest Bell can get to this is pay per view movies at about $5 a shot. If more services like Netflix move into Canada, Rogers, Bell, etc may as well close up their Tv services today.
Why else should you care?
As I mentioned above, the large corporate ISPs in Canada are multi service providers. It’s not outrageous to imagine that in a few years ALL TV and phone services will be provided digitally through their available Internet lines. If they make this move, then it basically allows these companies to begin metering your TV viewing and phone calling, as well as your Internet services. Essentially you would have a monthly financial cap on how much TV you watch before you have to start paying overage fees.
Why else should you care?
Because Canada has some of the slowest Internet speeds in the world, and we have been paying some of the highest rates world wide (between $24 - $40, but about $6.50 per mbps) a month for it since the mid nineties. Bell has barely upgraded any of their transfer lines in about 15 years. WTF? We have been paying for a premium service to a company for all this time, and now the arguments they make (to charge us more money) is that providing any available bandwidth is too expensive for them. Why is it our problem that they took the profits from 15 years of Internet usage and blew it on cell phone towers, satellites and movie rental stores.
Japan has recently upgraded their lines to the fastest in the world. Transfer speeds are 160mbps. The total cost to J:com was apparently about $20 U.S. per household for the lines and an additional $60 per modem.
Canada is one of the only hold out countries which does not provide unlimited data plans for cell phones. It took years for the iPhone to make it into Canada because Rogers REFUSED to offer an unlimited data plan, and Apple insisted on it.
The final and most important reason you should care is that every single business that uses the Internet for anything will also have their costs increase. I can guarantee you they will not absorb this cost, but pass it along to their consumers. For example, I do not personally buy crude oil, but I care about the price of it because if the price of crude goes up, that price increase will eventually be reflected in the bread that I buy at the grocery store. ( Crude goes up --> refinery charges more for petroleum products --> farmer pays more for diesel fuel ---> farmer charges more for grain --> bakery charges more for bread)
Usage Based Billing is like the Holy Grail for huge Internet providers. They have been trying to get us to pay per use since phones were fist invented. Bell happily got long distance calling all to themselves many many years ago and companies like Rogers have been trying to get a piece of the action ever since.
The reason you should care is because this issue is just the tip of the iceberg.
Honestly, this has been an issue that me and my girlfriend have been rallying against for a few weeks. If you want to help squash this, visit and start writing emails. Email the Prime Minister, the cabinet ministers listed on that page, and also your MP. Also, email the opposition MPs. Email your city council (Vancouver city council has requested Ottawa over turn this). Lastly, don’t forget to email the CRTC.

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