A Conspiracy of Incompetence: How Bell Blew UBB

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Sometimes, the more things change, the more they don’t stay the same. Much to the chagrin of those Masters of the Universe at Bell Canada.

The CRTC’s January 25 decision on usage-based billing (UBB) didn’t simply make a lot of Canadians hopping mad at Bell (been there, done that). In a more fundamental vein, it has had the entirely unintended consequence of busting open the fossilized rules of regulatory engagement in this country (see Telecom Decision CRTC 2011-44).

It’s difficult to predict whether the UBB uproar will some day lead to meaningful policy reform. One thing we know: the genie is out of the bottle. And Bell now has something a lot more serious to worry about than unbundling rules: a new threat we’ll call the educated consumer.

In its stormy aftermath, the decision has managed to get editorialists, politicians and mainstream consumers talking out loud about bandwidth, data caps and other arcane regulatory concepts. As Columbia Law prof Tim Wu noted in a Globe and Mail commentary on February 9: “It’s not every day that one sees national leaders weigh in on something seemingly as obscure as ‘bandwidth caps.’” Wu should know: he practically invented the concept of Net neutrality (Wu, 2003, “Network Neutrality, Broadband Discrimination”).

Oh what a difference a month can make – helped along by Bell’s unbridled greed, the Commission’s digital incompetence and the Tories’ populist opportunism.

Jan.5: Move along, we’re in charge here! In an interview with Allison Smith published in the Wire Report on January 5, Bell’s VP Regulatory Law, Jonathan Daniels, struck a world-weary tone as he commented on the then pace of the UBB proceeding:

“[Bell] voluntarily pushed the date to March 1. The issue has been on hold since the fall. This is just an effort by the wholesale ISPs to delay it further. We don’t expect that the CRTC will grant further delays.”

Simultaneous interpretation: We granted these poor slobs a favor and they’ve let things drag on for a whole three or four months! This is a cheap tactic, not an attempt to address substance. If anybody’s gonna delay this process, it’ll be the Commission – which of course they won’t. It’ll be March 1, period. And btw, we’re Bell and you’re not.

Feb.10: Hog fighters unite! A month later, at the Commons Standing Committee on Industry, the boys from Bell weren’t sitting quite so pretty. After more silver-tongued bafflegab from Bell regulatory point man Mirko Bibic, the redoubtable Dan McTeague (Liberal, Pickering-Scarborough East) was not mincing his words:

“How is possible that you can come here today to defend charging data over [a cap of] 25 GB when it has no bearing on the costs your company has to incur to provide that service?

“Coming from a 120-year advantage, I find it a little rich for you to be here to say that somehow you need these kinds of changes that are onerous not only for consumers, but that will ultimately stifle innovation. That’s a charge, Mr. Bibic, and I want you to answer it.”

By the time Bibic was being confronted by this degree of candor, many of us felt Bell’s case for UBB had been thoroughly discredited, in the blogosphere and elsewhere. But Bibic is a guy who believes in staying on message. And until UBB became headline news, his tactic worked pretty well. So well in fact that von Finckenstein had come to sound like he was being groomed for Bibic’s job. A week before Bibic’s appearance at the Industry Committee, the CRTC Chair articulated this cyber-credo:

“We are convinced that Internet services are no different than other public utilities, and the vast majority of Internet users should not be asked to subsidize a small minority of heavy users. For us, it is a question of fundamental fairness. Let me restate: ordinary users should not be forced to subsidize heavy users.”

This pronouncement betrays a profound ignorance of how the Internet actually works, as well as of the unintended consequences of the CRTC’s unregulated economic solution to alleged traffic congestion. What’s worse, that could have been Bibic talking. Bibic’s version:

“We believe fundamentally that what is ultimately ruled on by the CRTC has got to accept the principle that those who use the most, pay the most.”

Notice that in both pronouncements the term “fundamental” plays a key role: fundamental fairness, fundamental belief. A rhetorical flourish that neatly avoids any need for a factual demonstration. (They don’t call it fundamentalism for nothing.) Bibic may have taken a slapping around at the Standing Committee; over at the CRTC, however, he’s preaching to the choir. The two deciders aren’t merely compatible bed-fellows on the issues. They also share the unsettling habit of resisting any and all empirical evidence that doesn’t fit their preconceptions – the bandwidth hogs dogma being a perfect example.

Bibic’s parting promise to the Standing Committee was that the Bell crew were going back to the office to put on their “thinking caps.” But true to form, Bibic had no sooner suggested minds would be open and assumptions revisited, when he blurted out yet again that the hog principle must stand willy-nilly: “those who use the most, pay the most.” In other words, no amount of “thinking” is going to change the two core beliefs behind Bell’s dogmatic and anti-competitive approach to UBB: we have hogs to discipline and we have congestion to manage. This degree of tenacity suggests Bibic is getting a little too good at his job.

“Reconsideration” gets the minimalist treatment

Over the course of that same February week, the CRTC Chair demonstrated the extent to which he too is unwilling to listen to views that might upset his applecart. Even the political dressing-down the CRTC got from Clement and Harper had little effect where it was most needed – in the “reconsideration” process launched on February 8, via Telecom Notice of Consultation CRTC 2011-77. Instead of leaving the door open on basic assumptions about the billing framework, the PN does exactly the opposite. It asks intervenors to come to the Commission with fresh ideas for how to preserve the very belief system that should be getting called into question.

Thus, in the Call for Comments (para 12), the Commission asks how it might best implement the following two principles:

“a. As a general rule, ordinary consumers served by Small ISPs should not have to fund the bandwidth used by the heaviest retail Internet service consumers.
“b. It is in the best interest of consumers that Small ISPs, which offer competitive alternatives to the incumbent carriers, should continue to do so.”

What’s wrong with this picture? I mean aside from just asking to get rescinded…

As for (a), so-called ordinary consumers do not “fund” the bandwidth hogs; they fund the economic rents collected by the incumbent ISPs. In a series of blog posts I wrote in October, I showed how Rogers’ highly skewed rate card punishes not those subs on the fast tiers, but those on the slowest tiers (see especially post of Oct.29, Data caps: industry myths, policy failures). “Ordinary consumers” on the slowest tier, who can’t afford or don’t need a lot of bandwidth, pay 56 times more per Mbps per month than subs on the highest tier. And the slow users pay a much higher penalty than the big users for going over Rogers’ “generous” allotment. That’s how the Commission’s ingenious economic ITMP solution is working – making the Internet much more expensive for light users and relatively much less expensive for heavy users. Result: a dismal policy failure the Commission won’t even acknowledge.

As for (b), here we have yet another example of the Commission making an assertion that is purely wishful and designed to deceive the Canadian public. The bald assertion that the small ISPs offer “competitive alternatives to the incumbent carriers” is simply not true, no matter how you define “competitive.” On my reseller DSL, I can’t get more speed than 5 meg, I can’t escape traffic-shaping, I can’t escape data caps – and my service was about to get much less competitive after the January 25 decision, with my cap dropping from 200 gigs to 25.

Bibic and von Finckenstein approach intellectual discourse like an endurance contest. If you repeat the lie often enough, people will eventually believe it.

(to be continued…)

D.E.