Bell is pulling out all the stops trying to defend its justification for Internet Overcharging through so-called usage-based billing.  In a published debate between the telecom giant and TekSavvy — a small independent ISP trying to preserve flat rate broadband service in Canada, Bell claims Canadian broadband is the third best in the world, ahead of the United States, all of Europe, and just barely trailing Japan and Korea:

At the same time, Canada has increasingly become a world leader when it comes to broadband. When it comes to actual download speeds, Canada ranks third in the G20, behind only densely populated Korea and Japan. And prices are low — in fact, for higher-speed services, lower than in both the U.S. and Japan.

Michael Geist, a popular columnist fighting against Canadian Internet Overcharging, scoffs at the notion:

I’m not sure where these claims come from – Canada does not appear in the top 10 on Akamai’s latest State of the Internet report for Internet speed and no Canadian city makes Akamai’s top 100 for peak speed. The OECD report ranks Canada well back in terms of speed and price as does the Berkman report.  The NetIndex report ranks Canada 36th in the world for residential speed. Moreover, the shift away from the OECD to the G20 has the effect of excluding many developed countries with faster and cheaper broadband than Canada (while bringing in large, developing world economies that unsurprisingly rank below Canada on these issues). While there is probably a report somewhere that validates the claim, the consensus is that Canada is not a leader.

Bell’s Magic Pony-stories are at best exaggerated and at worst, phoney-baloney from the telco’s government relations department.

Stop the Cap! compared prices across several providers and found no value for money in broadband plans from all of the country’s major phone and cable companies.  Without fail, all were heavily usage limited, most throttled broadband speeds for peer-to-peer applications, engaged in overlimit fees the credit card industry would be proud to charge, and simply were almost always behind their counterparts to the south — in the United States.  In fact, some consumers are importing their broadband from the USA when they can manage it.

“Bell can’t win the argument on the merits, so it is making things up,” writes London, Ontario resident Hugh MacDonald.  “I have had Bell DSL for years now, and there isn’t anything fast or cheap about it.”

MacDonald’s broadband service from Bell tops out at around 4Mbps.

Mirko Bibic, senior vice-president for regulatory and government affairs at Bell claims consumers have to pay more to fund infrastructure expansion, and even challenges our long-standing assertion that telephone network comparisons don’t apply:

Bell provides all our customers with the best possible Internet experience available — the result of heavy and ongoing investment to expand our network capacity both to meet fast-growing demand and to manage the congestion that threatens everyone’s Internet experience.

Internet congestion is a fact and it cannot be wished away. Network providers like Bell must, like hydro utilities, build our networks to handle the heaviest usage times, not just an average of usage over time. At 8:30 in the evening, demand is at its absolute peak. And we have to deliver based on the volume at that time.

Keeping up with growing volume obviously means these network investments are not one-time costs. Between 2006 and 2009, Internet usage more than doubled, and Bell has invested more than $8-billion in the last five years in network growth and enhancement to keep pace. Yet at the same time, the CRTC has found that the average price per gigabyte downloaded has actually declined by 20%.

That’s why the long distance analogy, so often used by those with an interest in confusing the issue, is fundamentally misleading. In the case of long distance, it’s the simple transmission of voice over long-established legacy networks.

But Bibic ignores several important facts and doesn’t disclose others:

What broadband network does not have to make regular investments to expand to meet demand?  Cable and telephone company DSL business models, in place for at least a decade, priced network expansion, infrastructure return on investment, and data transmission into pricing formulas.  While data demands are increasing, the costs to meet those demands are, as Bell openly admits, declining.

What amount of revenue and profit has been earned from selling broadband service to Canadian consumers and the wholesale market and how does that compare to the dollar amount invested?  Bell Canada’s financial report for the third quarter of 2010 shows the company will earn an estimated $3.5 billion in revenue from its broadband Internet division alone.  Bell’s capital spending numbers also include network investments for its fiber to the neighborhood service, Fibe.  Bell’s revenue from selling the video side of that service were on track to deliver an additional $1.5 billion in revenue in 2010.  Not including the enormous wholesale broadband market, Bell will earn at least $5 billion a year from its broadband division.

In fact, Bell’s financial report also openly admits much of its capital spending increases have been spent on deploying its IPTV network Fibe in Ontario and Quebec, not on Internet backbone traffic management.

What are some of Bell’s biggest risks to a happy-clappy shareholder report for investors next quarter?  To quote:

• “Our ability to implement our strategies and plans in order to produce the expected benefits;
• Our ability to continue to implement our cost reduction initiatives and contain capital intensity;
• The potential adverse effects on our Internet and wireless businesses of the significant increase in broadband demand;
• Our ability to discontinue certain traditional services as necessary to improve capital and operating efficiencies;
• Regulatory initiatives or proceedings, litigation and changes in laws or regulations.”

Bibic

As for Bell’s claims about the “long distance analogy,” it’s only slightly ironic that a telecommunications company considers today’s voice networks radically different from data networks.  Analog transmission of voice calls went the way of the telegraph around a decade ago, with the last analog, step-by-step telephone switch in North America in Nantes, Quebec switched off in late 2001.  Today, telephone traffic is digital data, no different than any other kind of data transported across the country.

Bell cannot afford to have comparisons made between the telephone company’s move towards flat rate billing for phone calls and their broadband service moving away from it, because it torpedoes their entire argument.

Bibic then argues UBB is the right way to go because… major providers already charge it:

UBB has been the established framework for Internet services in Canada for years. Bell, for example, offers standard Internet service packages ranging from 25 gigabytes up to 75 gigabytes per month. As well, customers can sign up for 40 GB more for $5 per month, 80 GB for $10 or a whopping 120 GB more for $15. Keep in mind that 120 GB will get you 600 hours of standard definition video streaming or 100 hours of HD video streaming.

Not a bad deal when you consider average usage on our network is 16 GB per month and half of our customer base uses just five GB a month.

Most Canadians don’t see the “good deal” Bell says they will get from dramatically increased broadband prices. In fact, polls reveal the only groups in Canada that support such pricing are Big Telecom executives and the CRTC.

A new Angus Reid/Toronto Star poll illustrates what we’ve found to be true wherever ripoff “usage-based” pricing appears: people despise it, no matter how much Internet they use:

In the online survey of a representative national sample of 1,024 Canadian adults, three-in-four respondents (76%) disagree with the recent decision from the Canada Radio-television Telecommunications Commission (CRTC), which set the stage to eliminate unlimited use plans.

Bibic can relax as long as the current panel of commissioners at the CRTC, largely drawn from telecommunications companies, remain in place.  They continue to agree with Bell’s point of view and ignore the citizens they are supposed to represent.

Finckenstein at Thursday's hearing. Turn me over when I'm done on one side.

Canadian Radio-television and Telecommunications Commission chairman Konrad von Finckenstein appeared before a Commons committee last Thursday to answer questions regarding the growing scandal of so-called “usage-based billing (UBB).”  The Commission’s decision to enforce this pricing scheme, ending unlimited broadband service in Canada, has created major headaches for the Conservative government of Prime Minister Stephen Harper.

Seasoned political observers were shocked when Industry Minister Tony Clement earlier tweeted his support for overturning the CRTC decision.  Thursday’s hearing at the Standing Committee on Industry, Science and Technology also suggested the decision was made without any prior consultation with von Finckenstein, who appeared to be learning most of the details of the Clement’s decision at the hearing itself or in the morning newspapers.

Facing a grilling from members from just about every major political party in Canada, from the Liberals to the Bloc Quebecois, von Finckenstein only managed to add fuel to the fire, blaming “heavy users” for forcing the end of unlimited usage plans, all to protect what he called “innocent users.”  He also blamed online video services like Netflix for forcing new pricing policies on Canadian consumers, who were increasingly using their broadband connections for more than just “e-mail and Facebook.”

At times exasperated, the chairman seemed to rely on industry talking points to address concerns with MP’s in attendance, occasionally without fully understanding their meaning.

At one point, he insisted Internet Protocol TV (IPTV), was never delivered over the Internet.  At another, he claimed that providers would certainly use all of the funds collected from new, higher-priced broadband plans to rebuild their networks, asking rhetorically, “how else would they use that money?”

The head of the agency that is tasked with protecting the interests of Canadian consumers regularly compared the Internet to a power, gas, or water utility, which he said justified usage pricing.  But von Finckenstein ignored landline telephone service, which is most related to broadband — a service moving towards flat rate pricing.  Instead, he relied on cell phone pricing, which caused several reporters to cringe, as they reflected on newly-introduced flat-rate calling plans among new wireless competitors.

At this point a reporter for the Globe & Mail bemused with all of the utility comparisons tweeted: “Main difference is I can’t watch movies on my furnace.”

Watch the entire 90-minute hearing by clicking here and choosing the English version, which provides simultaneous translation as the hearing moves back and forth from French to English.

The CRTC’s decision to ignore hundreds of thousands of petition signers across Canada while quickly acceding to Bell’s request for a 60-day temporary delay in implementing the pricing scheme brought an angry response from Openmedia.ca, a pro-consumer group highly critical of UBB.

“The CRTC’s stubbornness in the face of a mass public outcry demonstrates the strength of the Big Telecom lobby’s influence,” said founder and national coordinator Steve Anderson . “While government officials have recognized the need to protect citizens’ communications interests, the CRTC has made it clear that their priorities lie elsewhere. Now is the time for citizens to demonstrate that they, rather than incumbent ISPs, are the real stakeholders.”

Some media observers and consumer groups are also scoffing at the government’s suggestion the CRTC should be allowed to review its own, earlier decision, claiming it is a virtual certainty the regulator will find their original decision was the correct one.

In fact, von Finckenstein’s relentless defense of usage-based pricing, even in light of recent political realities, suggest the Commission’s authority could be swept aside to keep the matter from becoming an issue in future elections.

“I would like to reiterate the Commission’s view that usage-based billing is a legitimate principle for pricing Internet services,” the chairman told members attending the hearing. “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.”

The CRTC also claims the UBB policy will only impact residential customers — business accounts are exempt.  But several MPs questioned that statement, suggesting home-based businesses, farmers and other entrepreneurs would face Internet Overcharging schemes.

Canada’s Liberal Party is using the occasion to embarrass the Tories’ handling of what they’ve called an Internet fiasco.  Liberal’s industry critic, Marc Garneau, used some of his seven minutes of question time to ask whether the CRTC first heard of the Harper government’s stance on UBB through social media network Twitter.

Quotes from the CRTC Chairman; Image by Vojtěch Sedlák & Openmedia.ca

This message appears in place of the original websites that were formerly hosted under the domains seized by the U.S. government.

Just days before the Super Bowl, the U.S. Department of Homeland Security temporarily disrupted several popular online video websites that showed live streams of major sporting events.  Late last week, the agency launched “Operation In Our Sites,” which redirected site visitors to a notification claiming the “domain name has been seized.”

But critics charge the effort ultimately was a waste of U.S. taxpayer dollars and questions are being raised about the legality of interfering with one of the websites based in Spain, deemed legal by that country’s courts.

Rojadirecta, a Spanish website, does not actually host any live web streams itself, instead publishing links to other websites that do.  In operation since 2005, the enormously popular site today attracts more than one million visitors a day, most looking for live streams of game coverage.  After two Spanish courts found the website operating within Spanish law, the site’s profile and popularity only increased.

Since the domain names affected were registered through a U.S. registrar, it opened the door for the Department of Homeland Security to obtain a seizure warrant through the United States Attorney’s Office for the Southern District of New York.

An affidavit filed with the court stated that piracy threatens “the leagues’ ability to sell game tickets and secure local television and radio carriage, and the value of advertising revenue generated by broadcast, radio and new media partners.” The agency also blamed online video piracy for high prices charged for stadium admission and for cable networks showing sporting events. “Sports fans are also victims, as the costs expended by sports leagues in an effort to address online piracy are passed on to fans when they purchase tickets or subscribe to sports networks.”

Rojadirecta wasn’t alone.  Other web addresses seized included:

• ATDHE.net
• Firstrow.net
• ChannelSurfing.net
• HQ-streams.com
• Ilemi.com

The agency’s actions commenced without any prior notification to the website owners.

“We have not been notified,” Rojadirecta’s Igor Seoane told TorrentFreak, a BitTorrent news site. “In our opinion the U.S. authorities are completely despising the Spanish justice system and sovereignty.”

Critics have attacked the agency for wasting taxpayer money chasing the video websites instead of finding Osama bin Laden.

Thanks to lobbying from Hollywood studios, language was inserted in the Patriot Act directing the agency to enforce U.S. copyright law at home and abroad.

U.S. Senator Ron Wyden (D-Oregon) called the web domain seizures “alarmingly unprecedented,” and could “stifle constitutionally protected speech.”  Wyden’s office has been in touch with the agency seeking clarification and justification for the domain seizures.

Questions about how worthwhile the effort ultimately was are also being raised, considering virtually all of the affected websites were restored and re-indexed by major search engines under new domain names within hours, sometimes minutes, after being seized.

• Rojadirecta is now Rojadirecta.es
• ATDHE.net is now atdhenet.tv
• Firstrow.net is now p2p4u.net
• ChannelSurfing.net is now Channelsurf.eu
• Ilemi.com transferred over to Ilemi.tv

Several of our readers who shared this story with us suggest the move by the federal agency backfired, because it gave new prominence to these websites many never heard of before last week.  We sure didn’t.  There are no sports enthusiasts here at Stop the Cap! HQ, but we were intrigued to find several of these sites linking live-streaming news channels, including CNN, CNBC, MSNBC, BBC World, and Fox News.  In fact, a few are even streaming ABC, CBS, and NBC stations for free.  Quality varies considerably.  The MSNBC feed has audio sync problems and CNN stutters.

At least one angry fan of the websites compiled a guide recommending websites be removed from Hollywood’s copyright enforcement ‘overreach’ by registering domain names through overseas providers.  They do not answer to the Department of Homeland Security.

"Too rich for my blood."

How do you cushion the blow of a 46-percent rate increase for your fiber-optic television service that will cause consumers to flee?  Don’t tell them about it.

Regulators in the Pacific Northwest are beside themselves over news that their new local phone company, Frontier Communications, is going to raise rates $30 or more for its FiOS cable television service.  The company earlier promised no rate increases as a result of its purchase of landlines from Verizon.

But the only way customers in Oregon know about the impending rate hike is from The Oregonian newspaper; Frontier has yet to formally notify subscribers of the dramatic price hike.

The newspaper reports the higher rates were supposed to take effect at the beginning of the year for new customers, and Feb. 18 for current customers with expiring contracts.

But Frontier has not yet notified its customers of the rate increases.  Spokeswoman Stephanie Beasly told the paper the company was working on “specific messaging.”  Namely, how does Frontier tell customers their bills are going up $30 and still have them as customers after that.

Until the deck chairs can be re-arranged, the rate increase will not take effect.  But Beasly emphasized it eventually will.

Washington County regulators (in Oregon state) are questioning Frontier’s justification for the rate hikes, namely “increased programming costs,” noting their competitors are charging far less for the same type of service:

Bend Broadband, an Oregon system providing a similar level of programming and services as Frontier, is able to manage its costs and keep subscriber rates at or below the range of large cable operators and significantly below those that Frontier has announced.

Some regulators are wondering if they were deceived by the company’s earlier promises to deliver “competitive prices” in the region.  Metropolitan Area Communications Commission administrator Bruce Crest wrote the company suggesting they are not living up to their end of the deal:

However, Frontier’s recent decision to place a significant and unjustified rate increase on its customers, along with the incongruity of Frontier’s justification for that increase against the statements made in 2009 and 2010, makes us question whether Frontier has, or ever had, a good faith commitment to fulfill the terms of the franchise.

Frontier responded to the Commission’s inquiry by essentially telling them to bug off — they have no authority to question Frontier’s prices. Company vice-president Steven Crosby waved-off MACC’s concerns:

While Frontier recognizes that the MACC is interested in any Frontier FiOS video price increases and alternative offerings Frontier provides to its customers, Frontier respectfully notes that the MACC does not have authority to regulate the rates Frontier may charge for FiOS video service, nor does the MACC have authority to regulate Frontier’s commercial relationships with content providers. Accordingly, Frontier reserves the right to decline to respond to inquiries directed to topics that are beyond the MACC’s jurisdiction and may be competitively sensitive. Furthermore, Frontier objects to the MACC’s letter of January 20th to the extent that it contains characterizations and questions that misstate facts and conclusions or are otherwise misleading.

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MACC Letter to Frontier FiOS

High gain Wi-Fi antennas like this one allowed one Ontario couple to leave Canada's cable companies behind and sign up for Time Warner service in the United States.

Last week, Stop the Cap! compared prices from two Internet Service Providers — Rogers Communications on the western side of the Niagara River — in Ontario, and Time Warner Cable on the eastern side in Niagara Falls, N.Y.

The price disparity is no secret to one Canadian family who read our piece and let us know they import their broadband service, thanks to long distance Wi-Fi, from the United States.

The couple, Neil and Michelle (we’ve been asked not their reveal their real names) and their three boys have lived along the Niagara River, which divides the United States and Canada, for over a decade.  Jim has been fascinated with low power, long distance communications since his days in amateur radio.

“I’ve always been trying to see what stations I can pick up, especially low power ones,” Neil tells us.

That curiosity came with Neil to his interest in broadband wireless communications.  Living along the river, Neil was fascinated to see Wi-Fi signals make their way across the river from the United States’ side.

“Thanks to a clear shot across the river, and a lot of businesses located adjacent to the Robert Moses Parkway, it’s easy to pickup Wi-Fi signals from businesses on the American side,” says Neil.

Neil discovered many networks wide open for public use and began to consider the implications of “importing” his broadband service from the United States to escape Rogers’ high prices.

“For Canadians, the idea of escaping the country’s communications providers is not that unusual,” Neil says.  “Some already have ‘gray market’ satellite dish accounts with America’s DISH or DirecTV, and some even use American prepaid cell phones, which are much cheaper than our own services and get good local reception across Niagara Falls down to Fort Erie.”

“So I began wondering what would happen if we could install a decent Wi-Fi system high enough on the house to get a good signal from a partner on the other side of the river,” Neil pondered.  “We started by putting a test signal up and driving through some Niagara Falls neighborhoods on the American side and found some good prospects.”

A long-shot advertisement on a well-known “for-sale/trade” website paid off, when an American family responded, intrigued by the experiment.

“The fact we were willing to pay their cable bill as compensation didn’t hurt either,” Neil suggests.  “The chances appeared very good for success, because we can see some of their trees from our roof.”

Niagara Falls, Ontario (left) and Niagara Falls, N.Y. (right), divided by the Niagara River.

Neil guessed right because today, with the help of two raised directional, roof-mounted high-gain Wi-Fi antennas that can literally “see” one another, the Ontario family enjoys its cable-TV and broadband service from Time Warner Cable.

“The signal is rock solid and the only time we get some speed problems is if someone in one of the bed and breakfast places nearby ends up on our channel,” Neil says.  “We can even watch television with the help of a Slingbox we installed on the American side which works perfectly fine on a Wireless N connection.”

Since the rise of Canada’s exchange rate against America’s declining dollar, the savings are dramatic. A comparable cable-TV plan with Rogers runs $80 a month for standard service, equipment fees, and HD service charges.  Add another $50 for broadband service with the modem rental fee and Neil would pay Rogers $130 a month before taxes for the two services.

“And we would be limited to just 60GB of usage per month before the $2/GB overlimit fee started making the bill even higher,” Neil says.

Time Warner Cable currently charges Neil’s adopted family $87 a month for television and broadband on a promotion.

Today, Neil’s conscience (and savings) led him to decide “borrowing” another family’s account wasn’t fair, so now he pays for -two- accounts with Time Warner, one for the New York family, the other belonging to him.

“Time Warner thinks of us as apartment renters and bills a post office box,” Neil says.  “The other family doesn’t care about cable-TV anymore so we’re just paying for their broadband account.”

The neighbors are certainly amused.

“When they come over, they call us ‘the American Embassy in Niagara Falls’ because of all the ads for Time Warner they see across the cable channels we get and because American cable systems ignore virtually all Canadian TV networks.”

Why go through all this?

“Now that we’re paying for two accounts, it’s a matter of principle,” Neil says. “I will not do business with a company that slaps usage limits on broadband, and now I don’t have to.”

In fact, now that the family’s sons are getting close to teen years, their Internet use is growing.

“We almost don’t care about the cable-TV anymore ourselves — we’re watching shows online, on-demand in this household,” Neil says.  “For my kids, they are growing up with the concept of television being always on-demand and it works around their schedule, not the other way around.”

Besides, Americans have access to Hulu, and Canada does not.

“Hulu is very important, and Netflix was even before it was sold in Canada,” Neil says.  “Now we can watch what we want, as much as we want, and pay a fair price for unlimited broadband.”

Neil can’t complain about Time Warner Cable, except for the fact it provides him with a U.S. IP address, which locks him out of a lot of Canadian online video-on-demand services from the CBC and other networks’ websites.

“They do a much better job than Rogers ever did with consistent broadband speeds and fewer outages, and we can live without replays of 18 to Life and Little Mosque on the Prairie,” Neil says. “I’m just glad you folks at Stop the Cap! convinced Time Warner to abandon the kind of pricing that is ruining the hell out of Canada’s broadband.”