CNOC says its ’95th percentile’ pricing model easy, practical to adopt

GATINEAU, QUE.—The Canadian Network Operators Consortium Inc.’s (CNOC) “95th percentile” peak usage pricing model for wholesale Internet services would be easy to implement on all networks, the coaltion told the CRTC at a hearing Tuesday, contradicting the incumbents’ arguments that it would be difficult and costly. Under the proposal, reseller ISPs would be charged for data at sample rate of 95 per cent of their peak data usage instead of an aggregate volume of their monthly usage. CNOC counsel Chris Tacit told commissioners Tuesday that providers and incumbents are already using simple tools that can measure usage under the 95th percentile model. The measurement system would be easier than tracking the use of wholesale customers individually, he said. Bill Sandiford, president of CNOC and small ISP Telnet Communications, said he was surprised that BCE Inc. and cable companies Rogers Communications Inc., Quebecor Media Inc. and Cogeco Cable Inc. said the scheme would be complicated to employ. “The notion that this is a difficult concept to implement or do is very foreign to us,” he said. “We have some of the smallest and largest ISPs in the country in our midst and I don’t know of a single one of our members that hasn’t been able to implement 95 percentile billing. Further, we know for a fact that in the case of the incumbents, they do bill 95 percentile today. They send bills to our customers for our Internet transit services on a 95 percentile basis.” The cable companies said Monday that the model is difficult to implement and doesn’t reflect the traffic in a cable network, where the usage that drives costs occurs at neighbourhood nodes rather than the point of interconnection with the reseller ISP. Ken Engelhart, Rogers’ senior vice-president for regulatory, told commissioners Tuesday that his company’s peak traffic is spread throughout the network and is an average of many peaks. “It’s sort of like the old joke about averages,” he said. “You’ve got one foot by the fire and one foot in a bucket of ice water and on average you’re comfortable. It doesn’t really reflect what’s going on in those individual nodes.” He said cable nodes service 300 to 400 homes, which isn’t sufficient to produce a stable peak. Similar to Bell’s arguments on Monday, the cable providers called for a volume-based form of usage billing as opposed to a peak sample measure. But unlike Bell, the cablecos did not call for independent providers to pre-purchase monthly blocks of terabytes, with a premium rate for blocks of overage data. Dennis Béland, Quebecor’s senior director of regulatory affairs and telecommunications, said the proposed model would bundle usage fees in with the monthly rate. “We think that’s a rational model that reflects how networks are built in the real world. In the real world networks are built to accommodate a certain level of usage. They’re not built to accommodate no usage,” Béland said. The proposal would bundle access with 25 GB of usage per end user, with an additional charge for usage over the monthly cap. The reseller could aggregate the various end users’ charges so that one who doesn’t use the entire 25 GB could offset one who goes over. The monthly charge would be calculated at cost-based rates, the cablecos proposed. But CNOC said peak usage is the only model that addresses peak and non-peak traffic. “Our approach focuses on identifying peak usage when it actually occurs and paying for the usage of network capacity, but it does not require payment for non-peak traffic that is virtually free to carry,” Sandiford said. Peter Rocca, the director of Start Communications who appeared on the CNOC panel Tuesday, compared data networks to pipes. When the data flowing through the pipe doesn’t fill it up, its carriage doesn’t impose costs, he said. “A charge that is based on volume is not reflective of costs,” Rocca said. “Such a charge will only lead to a windfall for the entity that levies it, which amounts to an anti-competitive cross-subsidy.” CRTC chair Konrad von Finckenstein ended CNOC’s appearance Tuesday by saying he hoped the group would be prepared for Monday’s “rigorous debate” will Bell and the cable companies, when they reappear before the commission. “I’m looking forward, hopefully as a result of that debate, to discerning who is exaggerating, who is telling truth, and what should be the right model that we adopt,” he said. mburgess@thewirereport.ca

CNOC says its ’95th percentile’ pricing model easy, practical to adopt

News | July 13, 2011

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