CRTC Rules Against Usage-Based Billing

The future of Internet pricing rules is in the hands of everybody's favourite telecom watchdog.

Updated: The CRTC has ruled that usage-based billing is not an acceptable pricing model for Internet service providers that lease their networks to smaller companies. The regulatory body said that there are two pricing models that will be allowed henceforth:

The first is a capacity-based billing model in which independent service providers determine in advance the amount of capacity they will need. Should demand exceed this capacity, they will have to manage their network capacity until they purchase more. The second model is the existing flat rate model, where independent service providers pay a flat fee per month regardless of usage.

That first model shifts toward what the indie ISPs, such as TekSavvy, had been pushing for, in that they could soon pay based on how many users are downloading at peak periods, and not for the sum total of all data transmitted. Should those ISPs' estimations of how much bandwidth they'll need each month come up a little short, then their consumers' download speeds will take a hit. The other model is what we're already using. Back to the drawing board, Bell.

If you're looking for more depth than what's above, Michael Geist explains it all in better detail than we ever could right here.

The CRTC will release its ruling on Internet service providers' practice of usage-based billing this afternoon. The ruling arises from a Canada-wide protest of digital activists, spearheaded by the folks at OpenMedia.ca, seeking to prevent the major ISPs, such as Bell and Rogers, from forcing smaller ISPs to pay per gigabyte of data downloaded. Critics say that usage-based billing, as the scheme is known, drastically obscures how much a gigabyte is worth and would force consumers who use independent ISPs such as TekSavvy to pay boatloads more to use streaming services such as Netflix. Last year, the CRTC approved Bell's use of UBB, but over the course of the following year, thousands of Canadians signed petitions and wrote to the CRTC to reconsider that ruling. Eventually, then industry minister Tony Clement told the CRTC to review their initial decision and hold public consultations on the matter, the fruits of which will be made public today at 4 p.m.