CRTC Goes with Capacity Rate Model for Internet Billing

by Jordan Richardson on November 16, 2011

The Canadian Radio-television and Telecommunications Commission has taken what is being termed the “middle road” in tackling the ubiquitous issue of Internet billing, settling on a “capacity rate model.”

Usage-based billing has perhaps been THE telecommunications issue for Canadians in 2011. With the CRTC having reached a decision after months of hearings and statements from telecom superpowers and activist groups alike, the larger Internet service providers can go forward in billing for wholesale services based on capacity.

By charging smaller wholesale Internet providers for the amount of data customers download, the CRTC has allowed a variation of usage-based billing. But it appears to be a variation many can live with, as even OpenMedia.ca has been calling the decision a triumph of sorts.

“While there is easily room for criticism, the CRTC’s decision today should allow independent ISPs to survive and help them facilitate an unlimited and unmetered Internet for Canadians. Unfortunately, many Canadians will continue to lack independent, affordable, unmetered Internet access,” says an OpenMedia.ca release.

The CRTC decision is a rebuff of at least one major provider’s scheme. Bell Canada wanted to charge based on total volume of data used by wholesale customers, but the regulator rejected that proposal after initially allowing overage fees.

Under the capacity rate model, Bell and Canada’s other major providers will charge based on what could best be termed the speed of the service. In other words, the small service providers will be “paying for the size of the pipe, not the amount of data that flows through the pipe.” This means that companies will have to pony up more coin to provide faster service.

Also under the new model, smaller Internet service providers will need to plan for how much Internet they’ll be using for each period. If they go over their calculated “allotment,” they’ll be charged extra.

In many respects, the billing decision does reflect at least a partial reply to escalating public pressure over usage-based billing. It has led to some reformation of Internet service plans, especially out in Western Canada with Shaw and Telus remodelling their billing packages with more generous usage caps.

There’s no word as to when the capacity rate model will be implemented or if the federal government will back the plan, but at least there’s some official movement on the front after a lengthy process. As more specifics emerge, we’ll have more analysis and commentary.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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