Some context for Jan 27 CRTC/UBB post

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On Friday I mass-emailed dozens of my closest friends asking them to read my previous day’s post, on the forces turning Canada into a digital banana republic: the Holy Trinity of Cope, Clement and Chairman von Finckenstein.

Several friends emailed me with feedback quite different from the comments that have gone up with the post itself. They break down into three kinds of reactions:

  1. Your post is way too long; why don’t you put in a much shorter summary. Fair enough, I’m not famous for brevity, and will follow up on this suggestion.
  2. I don’t understand any of this stuff, so it’s hard for me to care. Yes, the blog is aimed at a pretty wonky readership. Ironically, I consider myself very good at explaining obscure stuff to other people – and it’s the main gig in a university classroom. Have to think about the right trade-offs.
  3. And a tie-in with the previous point. All I got was, Our monthly costs are going up… so it’s just about the money. Life is too short to fuss about the price of a decent lunch being added to a monthly bill. Now this one I’ve got plenty to say about. Two things to start. One, the broadband crisis in Canada is not just about money, but about social, economic and cultural benefits that are being systematically destroyed by our five incumbent ISPs (Bell, Rogers, Shaw, Telus and Vidéotron, which control over 80% of the residential broadband market). With indispensable help from both the CRTC and the Harper cabinet.

On the other hand, it is also about the money. Not everybody can afford a “decent lunch,” nor expensive broadband. I wouldn’t expect ultra-lite or unsophisticated onliners, especially middle-class ones, to see UBB, for example, as either a personal or civic problem. You have to be interested and prepared to make some effort to understand issues that are murky to say the least.

This little piggy *loves* market forces!

Most Canadians are doubtless unaware that the urge to police, control and filter the Internet is not confined to China and other authoritarian régimes. This urge to censor is alive and well in most Western democracies, including Canada and the United States. It’s bad enough we have intelligence community snooping to worry about. In so-called “free” market societies (free if you own the last-mile wires and not if you don’t), we also have plenty of non-governmental entities that are run by greedy, paranoid control freaks who ain’t about to let consumers do what they choose. These include the incumbent ISPs; the major entertainment companies, especially in music and movies; IT giants like Intel, now selling a processor with hard-wired DRM (their 2nd-gen Core chips); and marketers, advertisers and social media platforms like Facebook whose business models are built on invading your privacy, taking your personal information and selling it to whoever’s buying.

OECD data: a clarification

I posted a comment earlier today from a visitor who says:

“Your stats for ‘Percentage of broadband offers in OECD countries with caps’ is almost certainly off for the UK. We have ‘fair usage policies’ – ie. completely opaque caps decided on whim by the ISP.”

Point taken: it’s often very hard to discern what exactly your ISP is charging you for, which goes to the heart of the problem. Incumbent ISPs have a great deal of market power; control the irreplaceable last-mile residential communications facilities; and deal in a service that is far too arcane and technical for mainstream customers to decipher.

But that’s not exactly the issue our visitor is alluding to. First, the stats on data caps aren’t my stats; they’re entirely from the broadband team at the OECD, which maintains a data portal and publishes its cross-national findings on a regular basis.

Second, the OECD team (with whom I’ve communicated in the past) has never claimed their data are exhaustive. Much of their analysis is based on a sample of ISPs operating in the various member countries. Their methodology is clearly laid out on the portal. One key piece of their methodology for comparing prices and data caps is the selection of a limited number of “offers” – i.e. monthly plans for residential service available to the general public in each member country. No, they don’t look at every offer; that would be prohibitively expensive and unlikely to add much. Here’s what the OECD team says under Prices about how it selects offers to be examined:

Data gathering
a. The minimum set of operators chosen for comparison are: the incumbent telecommunications operator, the largest cable provider (if there is cable coverage) and at least one alternative provider, if available, over DSL, cable or fibre.
b. Offers must be advertised clearly on the operator’s website
c. All DSL, cable and fiber offers are recorded, but not used in calculations if speeds are lower than 256 kbits.
d. Offers are for month to month service
e. Offers should be available in the country’s largest city – or in the largest regional city for firms with only regional coverage.

Now, some critics claim the OECD’s numbers simply aren’t reliable, as they have to gather their information from governments and ISPs, many of whom have an incentive to color the real data in their favor. Others have made much of metrics they use such as penetration per 100 population, rather than per household. Nevertheless, as the 2010 Berkman report on broadband pointed out (see report, pp. 28-29), the OECD has been at this game for many years and does what it does as well as anybody else. (References below to USD PPP mean prices are given in US dollars, using the purchasing power parity formula to control for differences between national economies.)

Dataset 4g provides the following details about the U.K. analysis:

  • No. of offers with bitcaps: 40%
  • No. of offers surveyed to get averages: 10
  • Average data cap among surveyed firms: 10.5 GB
  • Average price per MB after reaching cap (USD PPP): 0.002

In some countries the OECD samples a higher number of offers – as much as 35 or 40 in some cases. It’s quite possible the U.K. figures are off, as our visitor suggests. But so what? All of them may be off. These aren’t census numbers. Their value lies in the power to compare. In other words, even if the U.K. were off by a margin of, say, 50%, the U.K.’s national “capping rate” would still be 60% – as opposed to the five other countries, including Canada, that remain well above that mark.

Which reminds me, in addition to the presence or not of caps, there’s also the matter of cost: i.e., how much an ISP charges per megabyte once the cap is reached. Here again, Canada stands out – and the OECD data don’t take account of the increases that may happen on March 1. With the exception of Australia, Canadian ISPs were (as of late 2009) already charging the highest prices in the OECD for “over-use” – US$ 0.019 per MB. The next most expensive countries among the group of 13 that proudly offer caps are the Slovak Republic (0.011) and Turkey (0.006). The nine remaining countries all come in at 0.004 or less. Go Canada!

One other detail about the extent of cap usage, which links back to the visitor comment about sneaky ISPs in the U.K. Telus claims it doesn’t use caps on its DSL services. If true, that would mean Canada falls short of the 100% cap category. But as always with incumbents and their ever-cautious legal counsel, “unlimited” doesn’t quite mean “unlimited” (where I have heard that refrain before?).

Over at stopthecap.com, Phillip Dampier ran a piece the other day about the exhorbitant prices Shaw may be charging their subs in the near future. His analysis includes the unusual strategy Telus is using on the cap issue:

“Although Telus’ website does show usage limits, company officials claim they are rarely enforced, and not at the subscriber’s expense. Telus could make a significant dent in Shaw’s customer base by dropping them altogether, which will save the phone company from these kinds of  silly legal gymnastics in their FAQ:

“[Q] Why do you call your service unlimited, when my monthly usage is limited?
[A] We refer to TELUS High Speed as being unlimited because you get unlimited hours of monthly access.”

Staff lawyers at the big carriers live in a world in which a cigar is never just a cigar. Must be exhausting.

D.E.

[So much for brevity.]