The Good, The Bad and The Ugly of UBB in Canada

good-bad-ubb-canada

I recently joined in on a podcast with Shaminda (Shum) Attygale, a friend of mine and fellow digital marketer, to discuss UBB and what it means for Canadians. This post will serve as a summary of what we discussed, however, for the full story check out the podcast. You can also check out his other podcasts here.

What is UBB?

UBB is an abbreviation for Usage Based Billing. The name mostly speaks for itself. It is the concept of billing customers based on their internet usage. This is already done to extent today, but a recent decision from the CRTC could change the amount that large telecoms are allowed to charge smaller internet service providers (ISPs). What this means is that smaller ISPs will no longer be able to offer unlimited bandwidth – one of their biggest value-propositions.

Canadians fought back against this decision, however, and this issue is now currently in hot debate between various levels of government, the CRTC, telecoms and ISPs as well as the Canadian public as a whole. To become involved in the discussion and get information on the topic visit: http://www.antiubb.com/

I will now attempt to present my arguments with as little bias as possible. However, it should be very clear that I am very much against UBB.

The Good

  1. Heavier users will pay more for heavier usage

    Currently a relatively small number of users fall into this category, however, soon most of us will as our consumption of media on the internet increases

  2. Economically you should pay more if you use more

    This is true, however, due to the extremely low cost of providing additional data, the actual cost of an additional GB should be much less than ISPs are looking to implement

  3. Will help cover increased provider costs

    There is also merit to this argument. Interesting however, is the idea that although providers have had to incur costs to expand their networks to meet with traffic demands, their overall costs may have actually decreased over time. Technology continually lowers the cost to provide internet service. So arguably provider costs are largely offset by increased technological efficiencies/a growing user-base (more fees)

The Bad

  1. Internet usage is vital for many businesses

    In the digital age, many businesses rely on affordable internet access. If, for example, a video streaming site were to operate under with UBB in place, they would not be able to cope with the cost of delivering rich media that is high in bandwidth. The cost of doing business would quickly become too high, stemming innovation.

  2. Canada is already lagging behind other countries

    Many other countries have comparatively cheaper internet use rates (and mobile as well). If we allow ourselves to increase the cost of accessing the internet we will fall farther behind other developed nations.

  3. It eliminates competition & stems innovation

    As touched on previously, new innovative companies like Netflix attempting to revolutionize the way we consume content will be forced out of business. This is a big problem for consumers. UBB may also indirectly (or directly) be a means of eliminating the competition. Large ISPs like Bell and Rogers that are also cable companies support UBB because it reduces competition for their media businesses.

The Ugly

  1. Unfair pricing

    For a moment, let us assume that UBB is fair and will not hurt the economy (a BIG assumption). What should the price be to deliver a GB of data to the end consumer? Presumably the cost for the provider to deliver it plus a reasonable margin. ISPs are proposing to charge FAR above their costs. It has been estimated that it costs an ISP about 3 cents to deliver a GB of data (Source Article) and yet many ISPs charge overage fees in the neighbourhood of $1-$2 per GB. Margin like that charged for any other product would not be acceptable for consumers – so why should be pay so much for something that is so important in our daily lives?

What do you think of UBB? Agree or Disagree? Do something about it

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