While pundits from both sides of the usage based billing argument have been busy taking swings at each other for the past month, a few startling facts have reared their heads, which expose just how poor a job Internet providers in Canada are doing.
The CRTC’s decision, which would see bandwidth caps drastically cut for smaller Internet providers, sparked an uproar among the Canadian public.
It wasn’t until Industry Minister Tony Clement, in true ‘knight in shining armour’ fashion, tweeted that the government would overturn the CRTC’s ruling if they didn’t reverse it themselves, that Internet users could breathe a sigh of relief.
But Canadians shouldn’t be so quick to celebrate.
Consider this: according to a study of Internet quality in different countries, conducted by netindex.com, Canada ranks 64th in upload speed among countries surveyed. Some nations that finished ahead of Canada include less-developed countries like Mozambique, Swaziland, Kenya and Kazakhstan.
In a different study, Harvard’s Berkman Center for Internet and Society looked at Internet pricing in different countries and ranked them based on affordability and services provided. Of the 30 nations surveyed, Canada finished 25th.
The problem lies in the fact that Rogers and Bell, along with several others, form an oligopoly on the Canadian telecommunications industry.
Because of this, there is virtually no drive to innovate and certainly no competition to force prices down.
In fact, the few providers that do breathe an air of competition into the telecommunications industry, like TekSavvy – a small Internet provider known for its unlimited bandwidth packages – were the ones that would have been crippled by the CRTC’s ruling.
Usage based billing isn’t the most outrageous aspect of the CRTC’s proposal. In fact since 2006, the major providers have been under the UBB system . If consumers go over the monthly bandwidth cap, they are billed accordingly.
The fact that they want to lower the bandwidth caps of smaller Internet providers so drastically, and charge absurd rates to those who exceed it is what makes the reasoning behind the decision disingenuous at best and criminal at worst.
In the United States, Comcast – an American Internet provider – offers a plan similar in cost to its Canadian counterparts with a 200 gigabyte monthly cap. The CRTC’s ruling would cap monthly bandwidth of smaller companies at 25GB.
The CRTC claims the ruling was put in place to make sure everyone is paying their fair share for the Internet, but it looks more like the ideal way for the oligopoly to strangle out any competition.
Initial reports suggest consumers would be charged anywhere from $2 to $5 per gigabyte over the cap.
What’s more alarming is that the money wouldn’t be going to the small Internet providers, but straight to the major ones who own the landlines being rented to the small companies.
The major providers like Bell and Rogers are reluctant to reveal that independent auditors say it only costs them approximately $0.10 per gigabyte.
This means they would essentially be making between 2,000 per cent and 5,000 per cent pure profit on each gigabyte over the cap.
What’s most disheartening is that the CRTC fails to see just how important fair Internet access is not only to Canadian consumers, but also to Canadian businesses. In an age of globalization, being connected is of utmost importance and smaller, tech-based Canadian businesses would be handcuffed if this ruling were to take effect.
Speaking of globalization, perhaps it’s time to allow some foreign competition. This way, there would be a true ‘open market’ and Internet providers would be forced to compete for their customers.
Perhaps that would be too radical a decision, but it's clear that industry-wide changes need to take place.
At this rate, it’s only a matter of time before the Canadian economy is so disadvantaged by soaring telecommunications prices that consumers and businesses alike simply won’t stand for it.
At the very least, regulators like the CRTC can start basing their decisions on what will benefit the Canadian people and not the big corporations.