January 31, 2011

Usage Based Billing. The Good, The Bad and The Ugly.

Usage Based Billing (UBB) is a new pricing regulation that was passed by the Canadian Radio-television Telecommunications Commission. There's a lot of anger regarding this new bill and I'm going to try and break down the arguments of all three parties (CRTC, ISPs, Consumers) into the good, the bad and the ugly.

Before the Bill
Canada's Internet Service Providers are broken up into Incumbent Local Exchange Carriers (ILEC) and Competitive Local Exchange Carriers (CLEC). Essentially an ILEC is the monopoly telecommunications company that built the infrastructure in an area, say, Bell, Rogers, Shaw and SaskTel; on the other hand you have a CLEC that will buy access to an ILEC's network, without having to worry about installing any expensive hardware, such as lines directly to a home, or trenching fibre, because all of that infrastructure is provided by the ILEC - this is called Gateway Access System (GAS). Thanks to the CRTC ILECs are forced to provide CLECs with access to the infrastructure to encourage competition.

What the Bill Wants
The UBB bill gives the ILECs the right to charge their customers, including CLECs, for the amount of data used, instead of giving unlimited access to the ILEC's infrastructure. The bill also dictates that an ILEC must give a 15% discount to CLEC for the per GB overage rate.

The Good
ILECs have a massive infrastructure they need to manage and pay for. CLECs on the other hand have a minor subset of said infrastructure and have a lot less cost. They paid a flatrate to their ILEC per customer they served. In turn that customer got unlimited access at a given speed. UBB changes that agreement so that the ILEC can charge a customer for the bandwidth they use. There seems to be a lot of problems regarding this, but this charge makes perfect sense. An infrastructure, that obviously has been oversold, needs to be maintained (hopefully expanded), which costs a lot of money. Charging people for the amount they use is only fair. Nobody expects to buy a car and expect the manufacturer to pay for gas.

The Bad
UBB is expensive. The "normal" overage rate on a 60GB/m transfer is $2.50/GB. So, a customer that pays $39.99/m for 60GB may transfer 70GB - their bill will show the base cost of the connection plus 10GB at $2.50/GB, so an additional $25. That's a bit steep. I strongly believe that if UBB was a reasonable rate, lower than $0.50/GB, nobody would be complaining.

The Ugly
What is really disgusting is that, especially, Bell is lowering these caps to such low, low figures that it's almost impossible to not go over - only solution: buy a bigger package... for more money. These low figures are an obvious money grab. Interestingly UBB become a big issue for ILECs that offer TV services as well (Shaw, Rogers, Bell, Telus) shortly after new streaming services were introduced to Canada. These services include Netflix, Apple's TV/Movie Rentals, Sony's PSNetwork movies and more. Considering that a Netflix movie of 1.5 hours in length probably streams around 800MB in standard definition one can see that bandwidth usage will rise with increased consumption of unlimited movie services.

By introducing low bandwidth caps, ILECs are essentially eliminating rich media (video, music) from a user's browsing habits and ensuring that customers continue to subscribe to their TV package. Think of it as a really messed up customer retention strategy. (Messed up for the consumer, brilliant for the company)

Conclusion
The UBB ruling by the CRTC is only fair. Wholesale customers on ILECs should be paying for usage of an expensive infrastructure. Sadly, passing that cost off to the customer, and stifling usage by ridiculously low caps will hurt Canadian Internet use (and wallets) in the long run. I would have no problem with an overage rate on my ISP if the rate were set at a reasonable rate.

January 5, 2011

John's Phone - Followup

This is a follow up to the John's Phone post a few months back, after I'd found the perfect phone for my grandmother that was advertised to work on any "3G GSM" network (exceptions didn't include Canada).

Now that I have my hands on the device and had my grandmother play with it, I can assert that it is the perfect senior phone. It's large enough and uncomplicated to work with arthritic fingers and doesn't require many instructions to work. Most actions can be completed in less than 3 steps.

The only problem? It doesn't work on most carriers in Canada. John's advertises advertised the phone as a "3G GSM" phone and even after some correspondance with a representative, questioning whether the phone would work on a pure HSPA/UMTS network (such as SaskTel or Telus), I was told that the phone would work without problems. The phone will connect to Rogers (that has a full GSM stack) but not to SaskTel (pure HSPA).

Update: Their site has been corrected and no longer mentions "3G GSM" it is listed as a quad-band GSM phone, which correctly identifies the requirement of a GSM stack.