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Canada, Elections and Network Congestion

3/14/2011 12:47 PM

Toronto - Last week’s SCTE Canadian Summit brought an odd and unsettling portend of what can happen with usage-based billing for broadband services.

As this column has detailed before, the major telcos and cable companies of Canada launched what they call “additional usage billing” in 2008-2009.

Two years before that, in Rogers’ case, a phased plan educated consumers about which gadgets (cameras, initially) use what bandwidth. Usage totals started showing up on monthly bills. Closer to launch, thermometer-looking meters showed up on people’s PC screens to show ongoing usage.

No consumer freak-out happened at launch, because most subscribers were far from going over the limit (in Rogers’ case, $1.25 per Gigabyte over 95 GB per month on a high-end tier; $5 per Gigabyte over 2 GB for the lowest tier; nobody pays more than $25 in overages ever).

So, as rollouts go, it was highly consumer- focused. For that reason, Canada is often held up as the model about how to go about it when the time comes.

Fast-forward to now. New since then is Netflix streaming; higher since then is a compound annual growth rate of 45% (and growing) for Internet usage.

(Aside: Keynoter Tony Werner, chief technical officer of Comcast, quipped that it’s not just difficult, but impossible, to find historical examples of any consumable product with a 45% compound annual growth rate, over time. “I figured, maybe electricity? Alcohol? Nothing. Although I’ve not seen a bar where $40/ month gets you all you can drink, either.”)

And, in Canada, it’s election season. Part of the buzz at last week’s SCTE event involved a tweet by Canadian industry minister Tony Clement questioning the existence of network congestion.

Suddenly, and not unlike cable’s early toe-dipping into additional usage billing here, cable is the anti-Christ, greedily tipping usage meters into fistfuls of cash.

Never mind that people stream more than they download, or that Netflix traffic represents 20% to 50% of bits carried. Never mind that operators are doubling broadband network capacity every year, on a flat-out sprint to keep up with usage.

Technologists at the Canadian SCTE Summit positioned Clement’s tweet as a compliment. Clement’s skepticism about network congestion “means we’re doing a hell of a good job” in staying ahead of consumption, said Rogers senior vice president of engineering Dermot O’Carroll.

Canada already was doing a hell of a good job. The fact that usage-based billing became an election lightning rod so quickly and venomously? That’s the odd portend.

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