Home > Canada, TV and Movies > $100 Milk–UBB Controversy In Plain English

$100 Milk–UBB Controversy In Plain English

So there’s lots of talk recently about Usage-Based Billing for internet service in Canada. While it’s very easy for geeks like me to get passionate about the details, I want to focus on why this matters to everyone.

Let’s start here:

You should only be paying $7.99 for TV service.

imageAcross the US, people are beginning to cancel their cable and satellite TV service and opting instead for internet TV services that let you watch what you want, when you want, wherever you want. It’s cheap, it’s convenient, and it’s a much better experience than the one you’re paying Bell or Rogers many times more for today.  The going price is $7.99.

To be fair, all of that video needs to flow over the Internet and it costs money to build and maintain the Internet pipes which carry that content.   More specifically, it costs an extra $0.03 per gigabyte.

imageIn plain English, every time you watch a TV show or movie online it costs your internet provider about three cents.  If the trend south of the border continues northwards, then more and more of us will start to cut the cord and all those three cents will add up pretty quickly.  Somebody has to pay for that.

So Bell Canada went to the government asking for permission to charge more.  Alright, cool, I can respect that, this stuff isn’t free.  They went through the long process, made their argument to a group of regulators who are there to watch out for Canada’s best interests, and they ended up with, wait for it… $2.00 per gigabyte.  For everyone.

What?!?! Who the heck agreed to a 6000% markup, and who agreed that basically every single DSL Internet provider in the country had to charge the same price?  Well you did of course, through the people who you elected.

Imagine for a minute that we mandated a sweeping 6000% markup on other items you use every day, like milk. Head out every day to your local Loblaws, drop a c-note on a 2 litre carton of milk, and enjoy the cool refreshing goodness™.  Every store in the country, $100 milk, with no alternatives, because the government thinks it’s in your best interest.  Thanks government!image

While the spin doctors have done an excellent job of portraying internet usage as a problem for only a small number of pimply-faced teenagers stealing internet porn from their mom’s basement, that’s not what this is about.  It’s really about you, and making it so expensive to use the internet that you’ll never even consider the alternatives that are just around the corner.

You will continue to pay those huge TV bills to Bell & Rogers
You will drive to Rogers Video in the snowstorm to rent a DVD
You will dutifully continue to lock into that bundle to save $5 off your TV, phone, and internet

This has nothing to do with the cost of providing internet service. Three pennies? Sure, here you go, please excuse the pocket lint.

No, this has everything to do with ensuring that your entertainment dollars continue to flow to Bell and nobody else.  All of those amazing competitive imageservices that the rest of the world enjoys, they require fast and cheap internet. If Bell controls access to the internet, well then Bell controls access to the competition.  And if somehow you could pull off a scam where you could control all of your competition AND enjoy a 6000% markup while doing it then by golly you should get a frickin’ award!  It’s pure evil genius!

But surely nobody would be naive enough to let you get away with it, would they?
Unfortunately that’s exactly what has just happened.

You should only be paying $7.99 for TV service.
You’re not.
You never will.
Because you live in Canada.
And your government thinks $100 is a fair price for milk.

Kudos to MP Tony Clement for pushing back on this one.

Disclaimer: Obviously there are far more complexities and intricacies involved here, I’ve deliberately simplified the math.  For the details I refer you to Michael Geist’s blog. Click here for one of his articles which does a very good job of explaining the detail.

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Categories: Canada, TV and Movies
  1. kevin
    February 3, 2011 at 11:03 pm

    you are absolutely true, Internet is not just for teens to watch porno…. ground men also watch them 🙂

  2. Peter Hominuk
    February 4, 2011 at 9:47 am

    As a resident of Canada I agree 100% with Peter’s comments. The CRTC’s decision is a very foolish one that will stifle innovation and development of new applications and uses for the internet in Canada.

    One of the things the CRTC has not addressed is the whole question of access to the internet in rural areas. Rogers now offers the Rogers Rocket Hub with a maximum limit of 10 GB per month. Cost per additional GB is $10. If you live in a rural area like I do… you are quite limited in your internet use. I cringe every time my 3 year clicks on a video on the TVOntario or TFO website to watch his favorite kids show.

    My internet usage passes the 10 GB limit most months.

    Welcome to the great white north!

    Peter

  3. Brad Wilson
    February 4, 2011 at 11:19 am

    You are aware that the CRTC decision has been put on hold for 60 days aren’t you? If the government said they will overturn the CRTC if they come back with this UBB approved.

  4. February 4, 2011 at 11:44 am

    Brad: Yes I’m aware that this is going back to the CRTC. Even more important then that we make sure everyone knows how this impacts them. I’d hate for the revised ruling to continue to ignore the needs of everyone.

  5. February 4, 2011 at 1:06 pm

    Here is the problem: “…a group of regulators who are there to watch out for Canada’s best interests…” A committee is neither willing nor able to set prices at their economically efficient level. Only competition will drive prices down to marginal (or average) cost. Theory and experience have shown this over and over again (I cite F.A. Hayek and the USSR). Every interest is a special interest, there are almost no so-called “natural monopolies,” and price fixing always hurts somebody. Your excellent article shows that government is in the business of choosing winners and losers, not delivering excellent products at the lowest possible cost.

    • February 4, 2011 at 2:26 pm

      Agree Bo, and in this case the pushback from the Minister of Industry revolves around just that – competition. He wants to see a framework that encourages competition and choice instead of government-fixed pricing.
      The challenge here is the single fixed resource – a pair of copper wires entering the home which due to history are owned by one company. They own the last mile, and in a completely unregulated environment would simply not allow anyone else access. Assuming we don’t want our neighbourhoods dug up to add new copper for every ISP that might want access to the market, we need some fair framework to allow competition on that existing copper pair.

      • February 4, 2011 at 3:20 pm

        Peter Near for Prime Minister!
        It sounds like your Minister of Industry, Orwellian as that title sounds to me, is on the right track. It can and should, however, be taken further. First, why assume people don’t want neighborhoods dug up? Let them choose. Second, those wires aren’t the only way to get Internet. Phone, cable, tower-based wireless, and satellite can all do the job. The “natural monopoly” argument just doesn’t hold up to close scrutiny (see http://go-ecm.com/f1BvsT). “Competition always has been and always will be troublesome to those who have to meet it.” – Frederic Bastiat, quoted in Thomas Sowell, _Basic Economics_

  6. February 4, 2011 at 4:16 pm

    Nice! 🙂 Great article!

  7. February 4, 2011 at 6:45 pm

    Bo makes a fairly bold statement about Mr. Near that I think touches on the real issue. That being, why is Peter Near not in politics? I suspect it is a question of economics and therefore the obvious solution would be to simply pay our politicians more money so that their jobs are more attractive to smart people like Pete.

    Pay politicians more = Pete in politics = Cheaper internet

  8. James Cowell
    February 5, 2011 at 2:29 pm

    It is funny how we all forget that the “Phone Lines” that we all enjoy including microwave ect; all came from Canadian Tax $$$. Bell was given the whole thing and we paid for it. I do not feel for Bell or anyone eles who took my money and used it as they pleased and than thought I should just keep giving and giving as they continued to ingnore the changing world and my needs; as they and the CRTC knew what was best for me (to shut-up and just keep paying).

  9. trorbychoft
    June 29, 2012 at 6:09 pm

    juwst quick hello

  1. February 22, 2011 at 9:42 am

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