The more you drive the more you pay for gas. Same with hydro. The more electricity you use, the more you pay. Even with water, the more you use the more you pay. Yet when it comes to the Internet people don’t see it that way. They refuse to believe that the more they stream or download, the more they are using and the more they must pay.

Paying for what you use is called usage-based billing. Does it make sense that a light user who only checks email and surfs the net would pay the same as someone who streams video, plays online games, shares music and makes phone calls? These other activities demand far more resources from the ISP (Internet Service Provider). Those resources cost money. Someone has to pay.

Most people seem unaware that we’ve been living with UBB on retail Internet — the service we get at our homes — for several years. Most people never noticed. The furor erupted after Bell proposed to extend UBB to its wholesale pricing — the prices it charges competing independent ISPs who use Bell’s network to deliver competitive services to our homes.

The independent ISPs howled and turned UBB into a political hot potato. But UBB isn’t bad. The way Bell wanted to implement it was bad.

When all we did was check email and surf, bandwidth usage wasn’t an issue. The game-changer was video. Video downloading and video streaming eat up lots of bandwidth and require a much higher grade of equipment throughout a network to handle the flow. And as more people use the Internet for video, the more the network will have to keep being upgraded. It’s like the evolution from a two-lane highway to the 12-lane Highway 401. And there’s no turning back.

The advent of Netflix brought video and TV over the Internet to the mainstream. At the small rural ISP in which I was a partner, Netflix went from not existing to being the No. 1 source of network traffic in just six weeks.

My ISP introduced UBB five years ago. We offered a choice of packages with different bandwidth allowances. That way we could charge more for those customers who used more bandwidth. There were no howls of protest. Customers seemed to understand when we explained why we had implemented UBB.

With services like Netflix as a viable alternative source of television programming, people have begun to “cut the cord.” They rely on their Internet connection for TV, telephone and traditional Internet services. Their numbers will grow.

It makes sense to cut the cord. You can save money. A typical basic monthly telephone bill, cable fee and basic high-speed Internet add up to at least $135. And that doesn’t account for the inevitable extra monthly fees that are tagged onto your bill.

By comparison, Rogers offers a $100 Internet package that lets you make telephone calls, surf, get your email and watch up to 300 hours of high-definition movies or TV programs. Three hundred hours is three times as much TV programming as the average Canadian consumed each month for the past 20 years. Net monthly savings are about $35, or 25 per cent.

The savings offered by Rogers are nothing compared to the pricing of independent ISPs like Teksavvy. Independents offer similar packages to Rogers for as little as $32. These independents are the ISPs of choice for heavy users. These independents were the target of Bell’s UBB proposal.

How can an independent offer a package for $32 that Rogers sells for $100? It’s because independents don’t pay the real costs of network infrastructure and bandwidth.

The operating costs of the independent ISPs are artificially low because they do not reflect the costs incurred by providers like Bell to continually upgrade the network infrastructure. The rates were set years ago by the Canadian Radio-television and Telecommunications Commission (CRTC) long before anyone even dreamed of Netflix. The independents are getting a free ride. Surely that is not fair. The CRTC needs to address the rate issue. But Bell’s plan — which the CRTC approved — was wrong.

There’s no doubt the UBB plan originally proposed by Bell was bad. It was all about killing competition and had little to do with fairer pricing. The Bell plan would have eliminated the ability of independent providers to offer Internet service at a better price than Bell. It would have put Bell’s competitors out of business.

People were right to protest the CRTC’s decision. And former industry minister Tony Clement was right to send it back to the CRTC for review. But they were wrong to reject UBB outright.

UBB opponents seem to relate to ISPs as public utilities or not-for-profit charities. Make no mistake — ISPs exist to make money for their shareholders. If they don’t make money, they go out of business. Indeed, hundreds of independent ISPs have disappeared over the past 15 years.

UBB is the fairest way to charge for Internet usage. You pay for what you use. And you have an abundance of independent providers from which to choose.

Loading... Loading... Loading... Loading... Loading... Loading...

UBB can also be fair at the wholesale level. Just not the way it was originally proposed by Bell. The network operator that has to maintain and upgrade the network to meet the growing demands of Canadian Internet users needs to be compensated at a rate that reflects rising costs. The current rates were set long ago and do not reflect those increased costs.

Bell has submitted a revised proposal to the CRTC that is much fairer to independent providers. The CRTC will issue its decision on Tuesday, Nov. 15. Hopefully it will get it right this time. If we want reliable high-speed Internet in Canada, the companies investing to provide the delivery system have got to be able to get a reasonable return on those investments. Some form of UBB is the fairest way.

Eric Rothschild is president of Rothschild & Co., a Toronto-based business consulting firm, and a former owner and managing director of RipNET Ltd., an independent ISP based in Brockville.