I had lunch yesterday with Chris Berry, and inevitably conversation drifted to the CRTC and usage based billing. Usage based billing sounds like a good idea on it’s face. Those who use it more should pay more, right? We do it with electricity and natural gas, so it’s not like this is a revolutionary idea. However we know that in some cases people resist usage based billing out of principle, for example with garbage.
Freakonomics radio produced a segment on trying to get people to throw out less garbage. What is interesting about this is while most people did reduce their garbage with the pay-as-you-throw system, some started dumping it in the woods. Studies have shown that people are more loss adverse than gain seeking. Meaning people will try much harder to hang onto what they have than try to gain something new.
Take driving for example, how quick would you be to sign up for usage based driving? Imagine your odometer gets read every year and you get sent a bill according to how much you drive. Or we put toll booths up all over the place. Most Canadians would balk at the idea, especially those who live in a rural areas. It would seem that if you start with usage based billing then all is good but trying to switch later on is an issue. Also, with most usage based billing, you only pay for what you use. No garbage? No charge. That is not the case with the internet billing proposed by the CRTC.
The issue with the CRTC’s decision is three fold as I see it. First, paying $2.00 per gigabyte is stupidly expensive. It works out cheaper for Netflix or whoever to fill a hard drive and mail it than it to you than it would be for you to download their products. Considering bandwidth costs (at most) $.05/GB there is no excuse for that kind of mark up. Bell and Rogers are not offering to only charge you for the amount you use, they are wanting to charge you on top of what you already pay. Regardless of the fact that you may have signed up years ago for “unlimited bandwidth”. We are supposedly living in an age where people can telecommute, and work remotely but at $1.50 per gigabyte we don’t. It will not be economically sensible for me as an employee to ever work at home. Unless of course the company is willing to pick up the tab.
Secondly, producers already pay for bandwidth once. Take the CBC for example, you can watch episodes of Being Erica, or live HNL games online streamed to your computer. I don’t think I am giving away any trade secrets when I mention the CBC spends a considerable amount of money on terabytes of bandwidth. If the CBC spends money to serve it, and then you pay again to watch it, then we are getting dung twice for the content. Because the CBC and other content producers are able to offset their costs through advertising it’s okay to pay for content distribution, but if no one is willing to pay for the content because it is now too expensive to download, that model dies. no audience = no ad revenue = no content
Thirdly it kills porn innovation. I jest but actually lots major advancement in web technology arrived from porn. Flash? – porn. Video streaming? – porn. Online payment systems ? – porn. Live chat? – porn. In a world which is increasing it’s broadband capabilities, you have to wonder why Canada is attempting to stifle it.
It will kill the blossoming online gaming industry. Why bother downloading a game from a service like Steam if a 25 Gb game is going to cost $50 just go buy it. Companies like Steam should be screaming at the CRTC that this will kill their business in Canada. World of Warcraft? I don’t think so, if playing for an evening is going to cost you $6 a night in bandwidth costs above the $18/month you are already paying. I have a Flickr account with gigabytes of photos, it will now cost me more to upload and download my own files. Uploading to YouTube, Facebook and on and on it goes.
There isn’t a pipeline clog as the communication companies would have you believe. Any blockages are in the last 100 metres. Meaning it is the cable in your house or apartment that is the issue, not the fiber optic networks. We as Canadians payed to have the cables lines put in, not Rogers or Bell and as such we need to express to the CRTC in no uncertain terms we will not accept this sort of nonsense any longer. It is time for Canada’s to have real competition in it’s cable and communication markets.