The CRTC hearing on usage based billing opens this morning with two of the big players – Bell and Open Media – both slated to appear. Since the CRTC refused to extend the hearing to retail usage based billing issues, I suspect the outcome will be anti-climatic. There may be some new rules for wholesale UBB (which will only serve to demonstrate how badly the CRTC has bungled this issue), but the broader data cap issues will remain unchanged for now.

The UBB hearing comes immediately on the heels of my report last week on two years of failed enforcement of the net neutrality guidelines, known as Internet Traffic Management practices. My report has received wide media coverage (Montreal Gazette, CBC, Wire Report, GeekTown) as well as responses from both the NDP and Liberal parties. While net neutrality and UBB are ostensibly separate issues, it is important to recognize the clear linkage between them. As the title of this post suggest, they are two sides of the same coin.

The numerous violations of net neutrality (and make no mistake, over one complaint per month when the burden is exclusively on the shoulders of individual Canadians is significant) and the near-universal use of UBB are both a function of the lack of competition within the Canadian market and the inability (or unwillingness) of the CRTC to play a more proactive regulatory function in the absence of robust competition. For the dominant ISPs, they jointly provide the means to erect barriers to competitive services by rendering such services either unusable (throttling speeds) or more costly (data caps).

The net neutrality complaint against Barrett Xplore, which throttled Internet telephony services so badly they could not be used, while offering customers their own telephony services, provides a perfect example of how violations of net neutrality can be used to anti-competitive effect. In the realm of UBB, the reduction of data caps that greeted the entry of Netflix last year demonstrated how the UBB can be used to hurt the competitiveness of online video services and the wholesale UBB plans were clearly a mechanism to undermine independent ISPs.

Given the similar competitive effects and the lack of broadband competition in Canada, both net neutrality and UBB require a strong regulatory response. The experience with net neutrality places the spotlight on the limits of guidelines without enforcement and screams out for enforcement transparency with full disclosure of all complaints and resolutions, penalties for violations, and audits of leading ISPs.

As for UBB, I argued earlier this year that the CRTC made a critical mistake in establishing traffic management guidelines for technical measures (ie. throttling) but leaving so-called economic measures (caps) untouched. Instead, I argued that guidelines are also needed for economic measures, which I called iBUMPs – Internet Billing Usage Management Practices. They featured both transparency and disclosure requirements as well as a reasonableness standard. Without real enforcement, however, all the guidelines in the world will make little difference for net neutrality or uncompetitive data caps.