Bell Canada has defended its call for a new way of billing independent internet service providers who rent portions of its network, saying the changes are a key part of its strategy to battle network congestion.

In a recent submission to the Canadian Radio-television and Telecommunications Commission, Bell proposed introducing usage-based billing instead of a flat rate for wholesale customers. The pricing method is needed to cope with increasing internet traffic, and is in line with changes it has made to its own retail offerings, said Mirko Bibic, Bell's chief of regulatory affairs. Bell stopped offering unlimited downloading plans to its retail customers in 2007.

"Congestion of our pipes is a real issue," said Bibic. "The strategy to deal with that has at least three prongs. One is traffic shaping during peak periods, two is to build more capacity, which we are doing … and the third prong is to modify pricing to effect consumer behaviour."

In the proposal, Bell called for a move away from flat fees for wholesale internet service providers in favor of usage-based billing.

Usage by smaller ISP customers would be measured and billed on a monthly basis, with charges ranging from $1.125 to $1.875 on each full Gigabyte of usage beyond the monthly allowance, depending on the plan offered, according to Bell's filing with the CRTC.

Bell is proposing to begin the billing changes on May 31, 2009.
'Excessive usage' charge proposed

Bell also proposed introducing an "excessive usage charge" to its wholesale clients to target heavy internet users.

Under the proposal, Bell would charge the wholesaler an additional 75 cents for every GB in excess of 300 GB of monthly usage that a wholesaler's customer used. But Bell said the excessive usage charge wouldn't be put into effect until Bell implemented a corresponding charge to its own retail customers of $1 per GB in excess of 300 GB, a change it has yet to implement.

Critics say Bell's introduction of usage-based billing is another attempt to squeeze out small ISPs by robbing them of the ability to differentiate from the large telecommunications company.

"Bell's basically trying every tactic in the book to delay or twist things remove competition," said Rocky Gaudrault, the chief executive officer of Chatham, Ont.-based independent ISP TekSavvy Solutions.

"In the meantime they're not doing any favours for the consumers, as they're the ones who ultimately are going to pay for all of this."

Smaller ISPs were given access to the networks of phone companies in the first place because the incumbents like Bell and Telus held a natural infrastructure monopoly, which was initially created using taxpayer funds.

The rules were put in place to boost the number of competitors selling internet access to the public, and thus keep prices down and service levels up.
Bell challenging previous CRTC ruling

Bell issued the proposal in response to a December 2008 ruling from the CRTC requiring the company to provide wholesale internet service providers access to the same speeds Bell offers.

In March, Bell petitioned the federal government to overturn the ruling, but the company was still required to come up with a plan detailing how it might charge the smaller ISPs for services it did not dispute.

Bibic said the company has been transparent about its plans to move to usage-based billing, and the regulatory filing seemed the perfect time to introduce the new plans.

He said the pricing plan is not unprecedented, as cable companies such as Videotron Ltee and Rogers Communications have already introduced a similar pricing for their equivalent service to small ISPs, called third-party internet access.

Critics who responded to Bell's proposal however said its inclusion was inappropriate and unnecessary.

"Usage-based billing (UBB) represents a radical change to current practice and is not warranted," wrote MTS Allstream Inc. vice-president of regulatory affairs Teresa Griffin-Muir.

"It would effectively prevent competitive ISPs from offering flat-rated Internet services, or any other type of offering that didn't follow Bell's UBB model, since they would have no means of containing their costs, if their customers were to exceed Bell's usage caps," she wrote.
Bell, ISPs, already in fight over network management

A group of nine respondents — including the Canadian Association of Internet Providers (CAIP), AOL Canada and Yak Communications — questioned the timing of the proposal, since the CRTC is already embroiled in a number of regulatory initiatives that could affect, and be affected by, the proposal.

Among these initiatives is the CRTC's plan to hold public hearings on July 6 in Gatineau, Que., on the traffic management practices of internet service providers.

Those hearings were set up following complaints from CAIP that Bell Canada is selectively slowing down or "throttling" internet traffic generated by peer-to-peer (P2P) file-sharing applications such as BitTorrent or "shaping" traffic to favour other applications over P2P in an effort to reduce network congestion.

Bibic said the pricing proposals are a separate issue from how it manages its traffic, however, and the timing of the network management hearings should have no impact on the CRTC approving its pricing changes.

Interested parties had until Tuesday to comment on Bell's proposal, and Bell now has 10 days to respond to those comments, a spokesperson for the CRTC said.

After that time, the CRTC will consider whether to accept the proposal, reject it or ask that it be amended. However, there is no timetable for when that decision would have to be made, the CRTC said.

When we published our look at Bell Canada's just-released congestion numbers, numbers that are offered up as the reason for instituting P2P throttling throughout the company's network, we noted one curious fact: the numbers are low. Really, really low.

In fact, over the last year (May 2007-May 2008), not a single link was congested more than three percent of the time—except at the DSLAM, where the DSL line from the home ends in Bell's local office. What's more, the congestion at the DSLAM has actually increased substantially after Bell implemented its traffic shaping program last fall. All of this leads one industry expert to tell Ars that Bell's traffic problems could be "easily and inexpensively solved" without throttling and at fairly low cost.
DSLAM congestion

Bell's P2P throttling program was allegedly designed to prevent more than 700,000 users from being affected by major congestion on Bell Canada's DSL network, and it has helped to bring down congestion in the aggregation link from the DSLAM to the broadband access server (BAS), in the BAS itself, and further upstream on Bell's backbone.

But the congestion rates weren't high before throttling began. One year ago, in May 2007, the aggregation link was congested 1.8 percent of the time, the BAS was congested 0.4 percent of the time, and the backbone experienced congestion 3 percent of the time.

Data source: Bell Canada

At the DSLAM, though, congestion hovered around 4 percent last year. From October 2007 to May 2008, when Bell was rolling out its traffic-shaping gear, congestion at the DSLAM picked up dramatically, and Bell set three new congestion records (going from 7.8 percent to 8 percent to 8.2 percent).

To get some perspective on these numbers, we talked to Dave Burstein, editor of the trade publication DSL Prime and an expert on DSL operations. Burstein points out that the only real issue Bell is having is at the local DSLAMs, but he notes that DSLAMs from Lucent and Alcatel (the main players in this market) have been non-blocking by design for years now; they can handle all the data that DSL links can throw at them without problems, multiplex it, and pass it upstream. Only FiOS is capable of generating enough local traffic to cause potential blocking.

This means one of two things to Burstein: that Bell is using severely outdated DSLAMs, or that the connection out the back of the DSLAM to the upstream fiber aggregation link is far too slow. The DSLAM box, which aggregates local DSL links and then multiplexes them onto a single line, can have numerous upstream network connection options. Burstein notes that Bell has repeatedly spoken in its filings about saturating OC-3 (150 Mbps) and OC-12 connections (600 Mbps), but says that every DSL network he's familiar with has put in gigabit Ethernet connection (1Gbps) to DSLAMs for at least the last few years. In Japan, one provider was laying no less than 4 GigE connections to each DSLAM... and this was back in 2002.

If Bell's upstream DSLAM links are too slow, the whole problem could be fixed quite cheaply by upgrading the networking board in the back of DSLAM to gigabit Ethernet. For a company already publicly pledging to spend $500 million in capital upgrades this year, such a fix would be pocket change.
Bandwidth is cheap

Once data is out of the DSLAM, speed problems are simple to address. Telecom companies like Bell Canada have laid fiber everywhere for years; whenever you do the expensive work of digging up a street to lay cable, you drop in plenty of cheap dark fiber that can be lit up later. And fiber links can be expanded by pumping more wavelengths through the cable. Upgrades consist of simply replacing the machines on either end of a fiber link or the core routers along the way in your network. While individually these devices cost some serious coin, upgrades aren't particularly expensive in the aggregate.

That's why bandwidth around the world has plummeted so dramatically in cost over the last decade. Our own discussions with experts have shown that the core of the Internet has plenty of capacity and the only real scarcity exists at the edges (and in countries like Japan, it doesn't even exist there). Burstein estimates that most ISPs currently spend about a dollar per month per customer to carry their traffic, and that congestion problems are more about a lack of competition than anything else; useful upgrades could probably be done for about a dime per customer per month.

In the end, though, Bell Canada's politically-risky approach to throttling P2P (it has already spawned a proceeding at Canada's telecoms regulator) may amount to little. Unless throttling is expanded to other forms of totally legal video distribution on the 'Net, massive network upgrades will need to continue. That's because P2P is only one "threat" to an ISP's bottom line.
P2P throttling matters less than you think

Cisco last week released some detailed numbers from its own research that showed P2P traffic dropping as a percentage of total IP traffic. According to the company, "Peer-to-peer (P2P) file sharing networks are now carrying 600 petabytes per month more than they did this time last year, which means there is the equivalent of an additional 150 million DVDs crossing the network each month, for a total monthly volume of over 500 million DVD equivalents, or two exabytes. Despite this growth, P2P as a percentage of consumer Internet traffic dropped to 51 percent at the end of 2007, down from 60 percent the year before."

So P2P is growing, but not as fast as other forms of video; in particular, streaming video from sites like YouTube, Hulu, and Netflix is surging, and as HD streaming grows in popularity, the pressure on last-mile networks will be even greater. Apart from P2P traffic, Cisco estimates that video already accounts for one-quarter of consumer Internet traffic, and it will hit 32 percent by the end of 2008. By 2012, it will be 50 percent. Those are P2P-like bandwidth numbers.

ISPs like Bell Canada face a problem. Much of this new video is entirely legal, negating arguments that it's sort of okay to throttle P2P because, hey, we all know it's mostly used by pirates. If Bell thinks that P2P users complain when their torrents are throttled, wait until the general public can't access their Netflix HD streams or The Colbert Report on Hulu. As TV and movies continue to migrate to the web, throttling video bandwidth simply won't cut it as a business tactic anymore.

Companies like Verizon, that have made long-term infrastructure investments, won't have the same problems, but FiOS is available only in limited areas in the US. In much of Canada and the US, there's little competition, even when a duopoly exists. Sure, cable companies are pledging higher speeds from DOCSIS 3.0, but that rollout won't be complete for years. Most cable operators haven't even started. In most places, low-speed cable and DSL will be the two main choices for some time still, which means that companies will have less incentive to innovate and upgrade than to sit on a stagnant network and reap the fat profits.

When cast in terms of TV shows, that may not seem like the end of civilization, but when you consider the tremendous economic and social benefits that broadband can bring, it's not nearly so trivial.