CRTC Hearings: Small ISPs Present Billing Idea

by Jordan Richardson on July 13, 2011

Tuesday’s action at the CRTC hearings on Internet billing featured independent Internet service providers and their suggestion as to how they would handle billing if they had their druthers.

The smaller Canadian ISPs certainly have a stake in how they are billed by the larger ISPs, as the situation directly impacts how they bill their customers.

On Monday, we heard from BCE Inc. on the issue. They proposed something called “aggregated volume billing,” a plan that would have smaller ISPs buying blocks of space to divvy out to their customers as they choose. Bell argued that they were the ones making the investments in the network, not the smaller ISPs, so they should be able to have a heavier hand in the billing apparatus.

The Canadian Network Operators Consortium, representing a group of small ISPs, proposes a monthly billing scheme that has small ISPs billed on peak traffic as opposed to total Internet usage. According to CNOC, data networks are like pipes and, as such, it doesn’t cost very much to move data through the pipes. The initial investments, building the pipes for instance, are much more significant.

The costs the larger ISPs bear occurs when the peak traffic approaches the capacity of said pipe. “Our model is focused on compensating the incumbents for costs they actually incur, but not providing them a windfall when they do not incur costs,” said Peter Rocca, a CNOC member.

Indeed, actual costs could form the foundation of these hearings. Some critics argue that the larger ISPs inflate the infrastructure costs and oversell their investments in Canadian Internet.

Open Media and the Canadian Internet Policy and Public Interest Clinic at the University of Ottawa agreed with the small ISPs’ proposal, noting that it seemed more in line with what big providers actual pay to run their networks.

The larger ISPs could easily tackle the problem of peak traffic stretching pipe capacity by making more network investments, argued Open Media’s executive director Steve Anderson. “Functional marketplaces meet demand by increasing supply — not by squashing demand and seeing who can gouge Canadians most,” he said.

Anderson added that some telecommunications giants, like Telus, can handle the additional network weight without deferring to usage-based billing or similar systems. And how? “They seem to be doing fine with network investment,” said Anderson.

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