Tuesday, February 1, 2011

Usage-based Billing, the Internet & The CRTC

This is going to be short and sweet, because there's not much to say on this issue. Despite outcries from some protesters that usage-based billing will end freedom of speech by giving more power to "big evil capitalists," this issue can be addressed by remembering that there ain't no such thing as a free lunch.

The big telecommunication guys, like Bell, Rogers and Telus have cables running all over the country and into people's homes. That's how we get internet service. Smaller ISP's (Internet Service Providers) are leasing these cables to offer their own internet service. The problem is that the Small Guys have an unfair advantage as they can offer unlimited bandwidth for consumers on cables they don't even own.

Why is this? All of it has to do with the CRTC (Canadian Radio-television Telecommunications Commission), the State bureaucracy in charge of all forms of communication in this country. Back in 2008 the Small Guys complained to the CRTC because they believed the Big Guys were playing unfair with their "non-competitive" internet rates. So the CRTC interfered and made the Big Guys open up their cable lines to allow the Small Guys the same high internet speeds.

This didn't sit well with the Big Guys, so they charged the Small Guys based on how much bandwidth they (the Small Guys) were using. The Small Guys didn't like that, so once again the CRTC got involved and forced the Big Guys to offer a 15% discount for the Small Guys.

This is where we find ourselves today. The big outcry from Canadians is that the Big Guys are charging the smaller ISPs based on how much bandwidth they use. Now you can see how the Tanstaafl Principle comes into play. Bell, Rogers, Telus, etc., they own these cables. They have every right to see a return on their investment by charging the smaller ISPs by usage. Before this ruling, our unlimited internet access was at the expense of the Big Guys.

There ain't no such thing as a free lunch, somebody was paying for this bandwidth. Now the costs are going to be directed to the Small Guys and consumers instead of the Big Guys.

Of course, the mainstream controlled debate ignores the major problem: The CRTC. There is no place for a communications bureaucracy in a free society.

Think of it like this - You own a car rental business, I come in and rent a car. Now I go out and put a shit load of mileage on this thing. When I return the car, it's going to have a lower value than it did before because of all this mileage. Should I be billed for mileage or just for use of the car?

The “problem” is that the Big Guys own all the cables we get our internet from. The smaller guys could, theoretically, get their own cables and run them into people's homes. Obviously, wiring all of Canada is a huge expense, but locally (the Small Guy's market) this wouldn't be too difficult. The problem is the bureaucratic red tape one has to go through just to do this. Not only does this drive up the costs, but the Big Guys could (and probably do) influence the CRTC to make the process more difficult, thus locking out any competition.

Once again, the problem isn't “big evil capitalists” but the State and its inefficient, ineffective and fundamentally wealth-destroying attitude toward consumer satisfaction.

Usage-based billing is a step in the right direction, but it ignores the fundamental issue: the CRTC's very existence.


  1. Here's a great post by George Bragues on the same issue: http://www.lvmises.ca/posts/blog/stay-out-of-internet-pricing/

  2. Perhaps, there's not much to say on this issue. But nevertheless, you told us a lot. Thanks for sharing! This post is great!

  3. I just wanted to tell you that usage-based billing is a definitely necessary step in the right direction. The post is great, of course!

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