Competition in the Last Mile

My local cable company, Cogeco, has announced that they're joining the ranks of ISPs engaging in "usage billing". This basically means that users who exceed a certain amount of traffic (called a "bitcap") will be billed on a per-gigabyte basis to a certain maximum, after which their service is subject to disconnection if the excess usage is degrading the service of other customers.

I won't bother debating whether this is "fair", or an effective way of dealing with whatever problems might be caused by high-volume users. Those points are moot. The real problem is more complicated.

First, it's important to remember that Cogeco, like all Canadian cable companies, enjoys a de facto monopoly within its designated service areas. They are under no direct competitive pressure. Yes, I have other ways of getting telephone, television, and Internet service, but I have no other way of getting cable. This is significant because cable is, in almost all cases, the best broadband technology available. I, and most other Canadians, must either deal with their designated cable provider or settle for an inferior technology. With the advent of usage billing, this leads to a very real impediment to broadband usage by Canadians, which in turn impedes the progress of IP-based consumer services technologies.

Let me give you an example. Right now, I can watch as much digital TV as I want. Let's say I've got three receivers, one of which is high-definition. That means I can, without penalty and for a mere $60 per month, suck down at least 20 megabits per second all day, every day (that's 6.5 terabytes per month). In fact, since I never turn off my set-top boxes, I'm probably doing that already. Why, then, would I be willing to pay twice as much to watch IP-based TV? I wouldn't. So, if you, like me, recognize that traditional television networks, channels and stations are obsolete and are waiting for limitless on-demand programming delivered directly to the consumer by the producer, you're probably going to have to keep waiting. Ditto the myriad high-bandwidth IP-based services that are perhaps only dreams in the minds of our innovators. Without an affordable IP delivery system, those dreams will never become reality.

Poor regulation of our Internet infrastructure today, in the information age, is as dangerous to our economy as poor regulation of transportation, power, and water infrastructures would have been in the industrial age. It must not be allowed to happen. If you're reading this, I urge you to contact the CRTC at http://www.crtc.gc.ca/ and your local MP via this link, and make yourself heard on this issue. Hopefully, they will follow the lead of forward-thinking US politicians like Charles Schumer and stop this thing in its tracks.