Usage-based billing debate: Bandwidth hogs or business bulls?

I spoke with a couple of "bandwidth hogs" this week.

You know, they're the internet gluttons who are at the root of the "usage-based billing" problem with internet access, the issue that outraged and galvanized Canadians last week. It's the fault of this small pack of hogs who gobble up more than 80 per cent of Canada's available bandwidth (according to numbers from Bell Canada and quoted by the chairman of the CRTC last week) — they created this scenario where internet access will have to be "capped" and all consumers face a new system of billing.

At least, that's how the big telecommunications companies tell it. 

The politicians (and the hogs themselves) have a different version of the story. In that version the heavy users are in fact heroes, the most innovative of entrepreneurs, creative small business people who represent Canada's future high-tech economic prospects. They require and deserve unlimited internet access.

Picking sides

Those are two very different views and, I have to admit, my sympathies are torn. I usually empathize with entrepreneurs, even internet-gobbling ones. They are typically optimistic, resourceful, hard-working people who create jobs in their communities and are up against enough challenges without having to foot massive bills to telecom giants such as Bell, Rogers and Shaw. 

But I'm also the member of the household who pays the internet bills, and I'm not too thrilled that my family's downloading habits could soon lead to even bigger bills. 

'I don't feel like I'm a bandwidth hog, I'm just ahead of the curve.' —Spencer Hart, Deadline Media

So I checked in with a couple of internet entrepreneurs on the issue, starting by asking whether they do indeed "hog" the internet. 

"Totally!" laughs Kelly Fallis. "Oh yeah, totally."

Fallis runs an interior design firm called Remotestylist.com. All the design work is done on-line — clients upload photos and floor plans, answer some questions and then get matched with a designer. 

"Basically you work on our on-line platform to discuss your needs, and you get a portfolio back on-line," she explains. "It has layouts and floor plans and colour palettes, and different products are suggested for your space."

With a business model that relies entirely on the internet, Fallis has seen the warning pop up on her screen to tell her she's over her limit. But the only way she could use less internet would be to take on less business, and that's hardly hardly an option for a two-year-old company that's still in start-up mode.

"I'm already paying over-usage fees with every single provider I've been with, but the cost is just going to keep going up and up," she says. 

She's worried that even though the CRTC is reviewing the issue, eventually the price of service will go up.

But shouldn't it? Hasn't the system been unfair in the past, where people who download enough data to fill the online equivalent of an entire Costco outlet pay barely any more than people whose internet use wouldn't even fill a grocery cart?

"I don't feel like I'm a bandwidth hog, I'm just ahead of the curve," says Spencer Hart of Deadline Media. 

He makes commercials and short films in Lethbridge, Alta., and is a heavy internet user, distributing his product on-line and communicating with clients over the internet as well. "Right now I'm the person that'll be getting the giant bill. But apparently Canadians are using 40 per cent more internet every year, so pretty soon everybody's going to be a bandwidth hog."

Internet generation

He's right — most of us are watching movies and videos on-line more and more these days, and as the most wired generation ever gets older that consumption is going to rise even higher. 

Hart was paying $56 a month for internet, then his provider called to say that with the new system he'll be paying $600. "That's what the same as my mortgage!" says Hart. 

He then wrote to Charlie Angus, the NDP's digital affairs critic, to say if the new billing system is allowed, he won't be able to afford to stay in business. "As far as I am concerned I have lost a job that I love due to the CRTC allowing the internet service providers (ISPs)to screw me," he wrote.

And as Hart also rightly points out, there's no way to know if you're getting close to your limit in terms of internet access. "It's as if the police set a new speed limit and then went around and removed everyone's speedometers on their cars!"

But neither Spencer Hart or Kelly Fallis had much of an argument when I asked "isn't it fair that people who use more should pay more?" Each of them simply reiterated how tough it is to make it as a small business person, and how any cost increase is a problem. 

I get it — innovative, forward-thinking entrepreneurs need their internet. And now that this particular Pandora's box is open, maybe the challenge isn't to fight the principle, but to fight the price. For now, it seems the internet providers are going to be able to charge dollars for bandwidth thatcosts them pennies. And the CRTC isn't able to regulate their prices. 

Interesting that Canada's national newspaper, The Globe and Mail, ran a front page commentary this week suggesting foreign companies be allowed in to provide more competition for internet access. Although that's another quagmire — look at the case of Wind Mobile, one of the newer competitors in the cellphone arena. When the CRTC ruled in 2009 that Wind had too much foreign ownership, the cabinet knocked the ruling down, saying competition was more important. 

Late last week the Federal Court said cabinet was wrong to do that, the CRTC's decision was based on Canadian law and it should stand. So maybe the government needs to change some laws, instead of pushing aside the rulings that are based on obeying them. 

Last week's outcry has definitely had a good result. The CRTC is reviewing its decision, chairman Konrad von Finckenstein announced Tuesday.

"The great concern expressed by Canadians over this issue is telling of how much the internet has become an integral part of their lives," he said in a statement. "Our approach is based on two fundamental principles: as a general rule, ordinary consumers served by Small ISPs should not have to fund the bandwidth used by the heaviest residential internet consumers; and it is in the best interest of consumers that Small ISPs, which offer competitive alternatives to the large distributors, should continue to do so. With these principles in mind, we will be reviewing our decisions with fresh eyes and look forward to hearing the views of Canadians."

Let's hope all involved will contribute to a better solution next time around. Those hogs need to be treated fairly.

(Dianne Buckner has reported on entrepreneurs for two decades. She hosts Dragons' Den on CBC Television and is part of the business news team at CBC News Network.)