For several months, we've been reporting on Canadian consumer reaction to the government's decision to allow Bell Canada to charge smaller, competitive ISPs for network access on a metered or Usage Based Billing (UBB) basis. The Canadian Radio-Television Telecommunications Commission withdrew the decision in response to consumer outrage over the move, and is now considering new rules.

But what about Bell Canada's perspective? A transcript of a Canadian Parliament hearing on the UBB question is now available, and according to Bell Canada Senior Vice President Mirco Bibic, metered billing is just about being fair.

"What is at issue and what we do not believe has been fully addressed as part of your meetings thus far are several fundamental questions related to fairness," Bibic told the Standing Committee on Industry, Science and Technology.

What are these fundamental questions? Here goes:

Heavy users

First, Bibic noted that the cable industry gets to charge smaller ISPs on a metered basis.

"All that Bell is asking from the CRTC," he explained, "is an opportunity to set, on the same basis as the cable companies—who are our biggest competitors—the prices billed to the wholesale Internet service providers who share the network with Bell's retail Internet clients."

Second, since Bell can already charge its own retail subscribers on a UBB basis, it's not right that they can't do the same with smaller ISPs.

"We believe there should be no discrimination between retail and wholesale customers," Bibic insisted. "All customers should be treated in the same way, and usage-based billing is the fair way to price Internet use. Simply put, the heaviest users should pay more than those who use less."

What do the "heaviest users" (in terms of broadband consumption, not girth) have to do with this? Bell Canada contended that that your typical wholesale ISP subscriber uses double the bandwidth of Bell retail subscribers. "These heavy users, on the same network as our users, clearly affect everyone's Internet experience."

Plainly wrong

Then came a variety of specific assertions. Wholesale ISPs get a "50 percent to 60 percent [discount] reduction relative to our own retail offers," Bibic noted. True, but the CRTC's ruling put the discount for metered billing at 15 percent.

The CRTC's decision affects "only about 1 percent of Canadian Internet subscribers," he added. Maybe, but the Commission recently estimated the total number of buyers of broadband from smaller ISPs at around six percent of the market. Three-quarters of these are residential subscribers.

And the move "does not require these ISPs to charge their own customers on a usage basis." Maybe not, but it certainly would put pressure on them to do so. One indie ISP (TekSavvy) was on the verge of implementing tough data caps when the UBB rules were scheduled to go into effect.

But the suggestion that UBB will make the Internet "unaffordable" is "plainly wrong," Bell Canada insisted.

With Bell, customers can purchase blocks of Internet time that provide three times the average monthly usage for only $5. A block of Internet time that provides eight times the average usage can be purchased for $15. With that, a customer can watch nearly 600 hours of additional online video each month. That's over and above the hundreds of hours of online time included as part of our monthly plans.

The disparity is striking

No question about it, Bell Canada customers are buying those blocks. In fact, as Ottawa telecom law professor Michael Geist observes, UBB is delivering a hefty chunk of the telco's revenue growth. But to us, the question isn't so much whether metered billing will make the Internet "unaffordable," as whether it will make non-ISP affiliated streaming video (e.g., Netflix) less competitive, as consumers worry about going over data limits.

But to Bell, the whole debate is a simple one. "We're certainly not trying to penalize anybody," said Bibic. "We just want to make sure there is fairness in our billing system, so that the vast majority of users don't subsidize the heavy users... The difficulty is that those allegations [of being punitive] wish away the billions that need to be spent to build the networks—the engineering costs, the construction costs, the equipment costs, the employee costs. You can't just wish away those costs, and we have to recover all those sunk and fixed costs over a long period of time."

This basic answer, repeated over and over, sounds so reasonable, and the major ISPs at the hearing insisted that raising their paltry bandwidth caps (25GB and 40GB are common in Canada) and building out more service might result in a doubling of prices to senior citizens, something no one wants to see. Infrastructure is expensive! Reading the hearing transcript is like stepping into a bubble where low data caps are absolutely necessary, where virtuous ISPs invest heavily, and where they all care about "fairness."

It's a bubble where the outside world vanishes... and where the big ISPs ignore the obvious point that every major Internet provider in America somehow manages to make huge profits with much higher—or no—data caps at all.