Canadian ISPs use ‘behavioral billing’ to discourage heavy Internet use

The Canadian Radio and Telecommunications Commission (CRTC), a regulatory agency for broadcasting and telecommunications is currently reviewing billing practices for residential high-speed internet access services. A submission of comments on future regulation by Canadian ISP to the CRTC sparked controversy this week.

The ISPs filed regulatory comments on their pricing scheme called ‘usage based billing’. The comments reveil there is no link between the prices charged by ISPs for usage and the actual costs to ISPs. The cable companies write: “In order to be effective as an economic ITMP, the usage based price component needs to be established so as to discourage use above the set limit. The price should incent use in excess of the limit only to the extent that the consumer would gain significant value from that usage. If the price is set substantially below the consumer’s value, it will have little influence on usage. It follows that the price does not necessarily reflect the cost of supplying the network capacity.”

This means usage based billing is actually about controlling the use of network capacity by customers, rather than a bill based on use. The ISP engage in a behavioral billing model that caps bandwidth use and then charges high rates for overtime. Customers will thus be discouraged to "overuse" the Internet.

Although the ISPs arguments for doing this are understandable, critics are concerned of the fact that overage pricing is not connected to cost or even value of the web connection or the available internet capacity. It may also limit the growth of networked based business and new services. In any event, the additional costs discourage users to experiment with data intensive services and using the full potential of the Internet.

Source: BoingBoing, Telecom Notice of Consultation CRTC 2011-77/2011-77-1

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