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Cable Companies on UBB: No Link Between Cost and Price

By Michael Geist

The cable company submission to the CRTC on usage based billing confirms what has been readily apparent to consumers for some time: there is no link between the prices charged by ISPs for usage pricing and the actual costs to ISPs. According to the cable companies:

In order to be effective as an economic ITMP, the usage based price component needs to be established so as to discourage use above the set limit. The price should incent use in excess of the limit only to the extent that the consumer would gain significant value from that usage. If the price is set substantially below the consumer's value, it will have little influence on usage. It follows that the price does not necessarily reflect the cost of supplying the network capacity.

In other words, UBB is behaviour based billing, not usage based billing. Notwithstanding the claims about fairness, paying what you use, or costs to the network, overage pricing is not connected to cost or even value - it is designed to price above the real value to stop Canadians from "overusing" the Internet.  

Full post as published by Michael Geist on March 29, 2011 (boomark / email).