On Tuesday, independent Canadian ISP Teksavvy announced its new service plans, effectively dropping the other shoe in the long-running usage-based internet billing debate. While on the surface there are some things to like, at the core the new plans–and regulatory system they’re based on–paint a disturbing picture of the future of Canada’s Internet.

The CRTC set things in motion in November with its government-ordered revisit of the issue and came up with something called capacity-based billing, a sort of diet UBB. In essence, instead of large network owners charging indie ISPs for every byte their customers download, the new system requires the smaller companies to buy chunks of capacity based on how much they think they’re going to need on a monthly basis.

As Jesse Brown noted on this site earlier this week, while some commentators praised the decision, others–including Teksavvy–said the regulator screwed things up again. While the system itself was okay, the fees that a few big network owners are allowed to charge through it were way too high, the company said, which will inevitably result in price increases for customers.

All eyes have since been on Teksavvy, one of the largest and most vocal of the UBB opponents, to see what it would do. In the end, the company’s new plans and the accompanying explanation are something of a mixed bag. On the one hand, most existing plans are going up by $3 to $4, which fits the predictions by some observers that the CRTC’s ruling would push up rates by 10 to 15 per cent. The issue, as Teksavvy puts it, is that while its fixed costs actually went down somewhat thanks to the decision, the variable ones can potentially go up significantly. The company’s pricing notice reads:

If left to stand, these prices will ensure that residential Internet service prices will increase dramatically as consumer usage at peak times increases… in the face of the recent decision, we have to modestly adjust our rates.

On this front, if Teksavvy is to be believed and the rate increases are essentially going to further compensate network providers, the impact of capacity-based is the same as the intended effect of usage-based billing: Prices for consumers are going up.

On the plus side, Teksavvy is now officially offering higher speeds–up to 24 megabits per second–with usage limits that are generally much more generous than those of the incumbents at significantly lower prices. As many people pointed out on Twitter, even with the price increases, the company’s plans are still way better than what can be found elsewhere.

But there are plenty of downsides as well. For one, Teksavvy has introduced the concept of non-peak usage–meaning that customers can download all they want in the wee hours of the night without it counting against their caps. Some observers call this “innovative,” but it may well be the first step down a slippery slope. It heralds a future where internet usage is further compartmentalized–if it starts with file-sharing overnight, how long till someone makes it more expensive to watch online video in the evening, or call on Skype during the afternoon? Not only can this approach become confusing, it can also become expensive and limiting.

The only countries I know of that have adopted such non-peak usage concepts are Australia and New Zealand, both of which are in the process of building multi-billion-dollar next-generation fibre networks because their telco monopolies have failed to provide decent infrastructure on their own. The two countries, along with Iceland and Canada, are also the only ones where unlimited usage plans are uncommon if not completely absent. As I’ve pointed out before, one those countries (cough, Canada, cough) is unlike all the others. As far as anyone can tell, in fact, Canada is not an isolated island that must buy capacity on cables that run under the ocean.

Is the idea of compartmentalized internet service–where Canadians can only watch Netflix or other online video in the early hours of the morning for fear of exceeding their caps– an absurdist notion? It is indeed. It portends a dystopian scenario, which may or may not come true, but would be just as absurd as imposing a capacity-based billing scheme in response to congestion problems that large network owners have yet to prove exist.

It’s also thoroughly absurd to suggest that limiting how Canadians use the Internet–rather than expanding their use of it–is in any way “innovative.”