Canadian regulators ditch usage-based billing for independent ISPs

For the last year, the Canadian Radio-television and Telecommunications Commission has been at the center of a raging debate over the future of Internet access pricing. After the CRTC approved a shift to usage-based wholesale rates for competitive Internet service providers, a furious backlash caused the Canadian government to pressure the CRTC to take another look at the policy. Canada has a line-sharing regime for broadband similar to the one the United States abandoned under President George Bush. Under this scheme, ISPs whose networks don't reach the "last mile" to a customer's home can lease connectivity from an incumbent at wholesale rates set by the government. In the past, the wholesale rates were on a per-connection basis, but the incumbents have been lobbying for a switch to usage-based billing, which they argue is needed to help pay for the costs of capacity expansion.

In a Nov 15 ruling, the CRTC, which has powers similar to the Federal Communications Commission, tried to split the difference with a capacity-based usage model. Under this model, competitive ISPs must decide at the start of each month how much network capacity it wants at each point where it interfaces with the incumbent's network. If it overestimates its traffic needs, it will pay more than it needs to. If it underestimates, its customers will suffer from increased congestion.