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01/27/2011

CRTC ruling angers net neutrality advocates

Are you about to pay more for your Internet bandwidth? A decision made yesterday by the CRTC makes it more likely. According to some industry activists, it made it more difficult for independent Internet Service Providers to make their Internet costs significantly cheaper than the large incumbents.

The issue revolves around usage-based billing. Most ISPs in Canada impose a cap on Internet usage. Providing you with bandwidth costs them money thanks to equipment maintenance and peering agreements, and the argument goes that if you use a disproportionate amount of it, you will be exceeding your share of the bandwidth allocated to Internet users in your neighbourhood. Generally speaking, though, ISPs have historically done little when someone exceeds bandwidth, other than perhaps sending them a letter asking them to take it down a notch.

Things have been changing, though. People are watching more video and downloading or streaming more large files such as movies than ever before. This is conflicting directly with the businesses of those ISPs that also sell you TV services. If you're using their bandwidth to download video that you might otherwise pay the ISP for, that threatens their profits.

In May last year, the CRTC allowed ISPs in Canada to impose usage-based billing, meaning that they could charge people for bandwidth if they exceeded their quota rather than simply grumbling at them - as long as they gave people fair warning. The signs are that, while it costs them money to provide you extra bandwidth, they're charging far more than they need to for the extra data you download. But, you could always go to a small competitor if you weren't happy with that, right?

Not necessarily. Yesterday, the Commission made another important decision about the relationship between the large Internet service providers and the smaller independent ones, who buy bandwidth from them to resell to their own residential customers.

Smaller ISPs have to pay the larger ones for extra bandwidth, just like residential customers do. That's makes it difficult for them to stay competitive with their larger counterparts, so they asked for a discount on the usage-based billing costs that they would have to pay for the Internet bandwidth that they buy from large ISPs.

The CRTC agreed - kind of. It decided that although small ISPs would have to pay usage-based billing costs to larger ISPs, they would get a 15% discount on the fees.

This leaves independent, small ISPs with a small margin that they can use to differentiate their services from the larger players. That is problematic, because the large incumbents already have economies of scale on their side that enable them to offer more goodies to their customers. Companies like Telus and Rogers can provide extra promotions and services that the smaller guys cannot afford. They can create service tie-ins with other areas of their business, such as mobile and TV services, for example.

It also effectively confirms the right for larger ISPs to charge you for your extra bandwidth. This might not be a problem for you now, but it might be as you become increasingly reliant on the Internet. And it limits what competing smaller ISPs are able to do to differentiate themselves.

The whole issue has angered advocates of net neutrality - the concept that the Internet should be freely available and unhindered by ISPs. They are continuing to ask people to sign their petition, protesting the issue.

What do you think? Will you sign it, or do you think the large ISPs have a point?

Danny Bradbury, MSN Tech & Gadgets

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Danny BradburyDanny Bradbury

Danny Bradbury is a technology journalist with 20 years' experience. He writes regularly for publications including the Guardian, the Financial Times, the Financial Post, and Backbone magazine. Danny also writes and directs documentaries.

Maurice CachoMaurice Cacho

Maurice Cacho is a Toronto-based journalist mixing his love for tech with a passion for news. He's also CP24's Web Journalist and appears daily on CP24 Breakfast and weekly on the channel's tech show, Webnation, discussing tech news and trends.

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