Quotulatiousness

February 9, 2011

Real usage-based billing might work, but not the current form

Filed under: Cancon, Economics, Media, Technology — Tags: , , , , — Nicholas @ 12:25

Tim Wu contrasts the way the UBB issue is being presented and how it might actually be successful:

The issue of usage-based billing is a little tricky because such systems are not inherently evil. When you think about it, we usually pay for things on a usage basis. Gasoline, electricity and even doughnuts are generally billed based on how much you use. And the fact that usage-based billing sounds reasonable in theory is surely why the Canadian Radio-television and Telecommunications Commission approved the new rules.

But take a closer look and something far more insidious is going on. If bandwidth were actually billed like electricity or water, that might be fine. But what the CRTC approved is something different. Claiming that its profit and consumer welfare are exactly the same thing, Bell wants to remake Internet billing. It wants to make use of the most lucrative tricks from the mobile and credit-card industries by preying on consumer error to make money. And this ought not be tolerated.

Any rule that asks the consumer to guess at usage, and punishes you if you’re wrong, is abusive. Imagine being asked to guess how much electric power you need every month, with a penalty for mistakes. Yes, that’s what cellphone companies do — or get away with — but that hardly makes it a model. It’s a system of profit premised on human error, and this begins to explain Bell’s deeper interest in usage-based billing. Bell wants to make the horrors of mobile billing part of the life of Internet users. And that’s a problem.

H/T to Michael O’Connor Clarke for the link.

February 7, 2011

Licensing as a tool for restricting competition

Filed under: Bureaucracy, Economics, Government, Law — Tags: , , , — Nicholas @ 12:21

Stephanie Simon addresses the pro and con positions on licensing for various jobs:

[E]conomists — and workers shut out of fields by educational requirements or difficult exams — say licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.

“Occupations prefer to be licensed because they can restrict competition and obtain higher wages,” said Morris Kleiner, a labor professor at the University of Minnesota. “If you go to any statehouse, you’ll see a line of occupations out the door wanting to be licensed.”

[. . .]

At a time of widespread anxiety about the growth of government, the licensing push is meeting pockets of resistance, including a move by some legislators to require a more rigorous cost-benefit analysis before any new licensing laws are approved. Critics say such regulation spawns huge bureaucracies including rosters of inspectors. They also say licensing requirements — which often include pricey educations — can prohibit low-income workers from breaking in to entry-level trades.

Texas, for instance, requires hair-salon “shampoo specialists” to take 150 hours of classes, 100 of them on the “theory and practice” of shampooing, before they can sit for a licensing exam. That consists of a written test and a 45-minute demonstration of skills such as draping the client with a clean cape and evenly distributing conditioner. Glass installers, or glaziers, in Connecticut — the only state that requires such workers to be licensed — take two exams, at $52 apiece, pay $300 in initial fees and $150 annually thereafter.

California requires barbers to study full-time for nearly a year, a curriculum that costs $12,000 at Arthur Borner’s Barber College in Los Angeles. Mr. Borner says his graduates earn more than enough to recoup their tuition, though he questions the need for such a lengthy program. “Barbering is not rocket science,” he said. “I don’t think it takes 1,500 hours to learn. But that’s what the state says.”

In harder economic climates, expect to see a push towards trying to get some form of certification or licensing imposed in new fields. For example, I’ve seen several attempts to introduce mandatory certification for technical writers, usually with the intent of limiting access to the (reduced) pool of writing jobs in the field. Usually the biggest fans of certification are those who think they’re in a good position to dictate the requirements for certification (and often run courses/seminars which, I assume, would automatically appear in the final list of requirements).

February 3, 2011

CRTC head called to testify before Commons committee

Filed under: Cancon, Economics, Media, Politics, Technology — Tags: , , , , — Nicholas @ 07:29

In what some are hailing as a victory for Canadian internet users, but might well be just another Conservative sop to public opinion, the head of the CRTC has been called before a Commons committee:

The chairman of the CRTC will appear before the Standing Committee on Industry, Science and Technology on Thursday, as the regulator’s decision on usage-based billing for Internet services continues to generate anger among consumers and businesses.

Konrad von Finckenstein, chairman of the Canadian Radio-television and Telecommunications Commission, will appear before the committee of federal MPs to explain the regulator’s decision, which allows large Internet providers like Bell Canada to charge smaller providers who lease space on their networks on a per-byte, or usage, basis.

On Tuesday, Prime Minister Stephen Harper vowed to review the decision, lending clout to Industry Minister Tony Clement’s announcement to examine the CRTC ruling a day earlier. Mr. Clement and Mr. Harper’s cabinet, of course, have overturned the CRTC before — most notably by striking down the regulator’s ruling that Globalive, which now operates Wind Mobile, couldn’t launch service in the regulated sector because of foreign financial backing.

The problem for the government is that they need to be seen to do something, but the best “something” would be to open up the Canadian market to foreign competition in order to drive prices down toward world levels. That would upset too many cosy arrangements for the current beneficiaries of licenses to print money government approval to operate.

February 2, 2011

QotD: “Welcome to the Canadian Internet. Now stop using it.”

Filed under: Bureaucracy, Cancon, Economics, Quotations, Technology — Tags: , , — Nicholas @ 09:47

Welcome to the Canadian Internet, where extreme concentration in telecoms and a weak, lame regulator have given rise to a nation where your Internet access is metered in small, ungenerous dribs, and where ranging too far afield during your network use results in your ISP breaking into your browsing session to tell you that you’re close to being cut off from the net.

The incumbent telcos have successfully petitioned for “usage based billing,” wherein their customers only get so much bandwidth every month (they’ve also long practiced, and lied about, furtive throttling and filtering, slowing down downloads, streams, and voice-over-IP traffic). This will effectively make it cheaper to use their second-rate voice-over-IP and video-on-demand service than it is to use the superior services the rest of the developed world enjoys.

If you were a Canadian entrepreneur or innovator looking to start your own networked business, this would be terminal. How can an innovative service take hold in Canada if Canadians know that every click eats away at their monthly bandwidth allotment? I can think of no better way to kill Canadians’ natural willingness to experiment with new services that can improve their lives and connect them with their neighbours and the wide world than to make them reconsider every click before they make it.

Cory Doctorow, “Welcome to the Canadian Internet, now stop using it”, BoingBoing, 2011-02-02

February 1, 2011

Now roiling the hoi-polloi: bit-by-bit billing

Filed under: Bureaucracy, Cancon, Economics, Media — Tags: , , , — Nicholas @ 07:18

The internet is about to become a political topic . . . not the internet itself, but the prices Canadians will have to pay to get online:

Industry Minister Tony Clement says he is looking closely at the “usage-based billing” decision issued last week by the CRTC that has consumers, businesses and citizen groups’ decrying what they see as a price hike for Canadian Internet services that could clamp down on innovative technologies.

“I can assure that, as with any ruling, this decision will be studied carefully to ensure that competition, innovation and consumers were all fairly considered,” Mr. Clement said in a statement obtained by The Globe and Mail.

The decision will allow large Internet service providers (ISPs), such as Bell Canada and Rogers Communications, to charge smaller ISPs that lease space on their networks on a volume basis. Executives at smaller providers have already begun phasing out popular “unlimited” Internet packages because it has become economically unfeasible to continue offering them.

I wondered how long the current situation would last: Bell and Rogers used to tout their “unlimited” internet access, but if you read the fine print, it wasn’t really “unlimited”. Like any resource that is “free”, some will use far more of it. In the early days of broadband, that didn’t matter, as there were not enough users to consume all the bandwidth anyway. Now that there are many more subscribers, the heavier bandwidth users are causing problems.

In addition to the sheer number of broadband customers, another change that was not fully foreseen was the way those customers use their internet connections has changed. When Bell and Rogers got into this market, there were far fewer options for using the internet. You could visit websites all day long, read email, listen to cheesy renditions of popular music, and (for some) download pirated movies for hours on end.

Now that TV and movie viewers have better viewing options through their internet connections than they get over-the-air or through cable or satellite TV, the nature of internet traffic has been revolutionized, and not in a way that Bell and Rogers were anticipating.

Update: Michael Geist thinks I’ve been taken in by the big guys’ propaganda:

[. . .] arguments in support of UBB are frequently accompanied by the claim that the approach is like any other service — you pay for what you use. Yet Bell’s UBB plan approved by the CRTC does not function like this at all. Its plan features a 60 GB cap with an overage charge for the next 20 GB. After 80 GB, there is no further cap until the user hits 300 GB. In other words, using 80 GB and 300 GB costs the same thing. This suggests that the plan has nothing to do with pay-what-you-use but is rather designed to compete with similar cable ISP bandwidth caps. In fact, Primus has gone further, stating “It’s an economic disincentive for internet use. It’s not meant to recover costs. In fact these charges that Bell has levied are many, many, many times what it costs to actually deliver it.”

He also points out that the Canadian market is very tightly controlled by a oligopoly of key players:

While the CRTC’s UBB decision provides the immediate impetus for public concern, the reality is that the bandwidth cap issue in Canada is far bigger than just this decision. The large Canadian ISPs control 96% of the market, meaning the independent ISPs are tiny players in the market. Even if the CRTC denied Bell’s application for wholesale UBB, it would still only constitute a tiny segment of the overall Canadian Internet market.

As virtually every Canadian Internet user knows, the Canadian market is almost uniformly subject to bandwidth caps — the OECD reports that Canada stands virtually alone with near universal use of caps. The scale of the Canadian caps are particularly noteworthy — while Comcast in the U.S. imposes a 250 GB cap, Canadian ISPs offer a fraction of that number:

  • Videotron starts at 3 GB for Basic Internet, 40 GB for its next plan and tops at 200 GB for very fast speeds at $149/month
  • Rogers Lite service caps at 15 GB, it fastest service stops at 175 GB
  • Bell’s Essential Plus service offers a 2 GB per month cap, climbing to 75 GB for its fastest service

The caps are already having a consumer impact as Bell admits that about 10% of its subscribers exceed their monthly cap (a figure that is sure to increase over time). Moreover, the effect extends far beyond consumers paying more for Internet access. As many others have pointed out, there is a real negative effect on the Canadian digital economy, harming innovation and keeping new business models out of the country. Simply put, Canada is not competitive when compared to most other countries and the strict bandwidth caps make us less attractive for new businesses and stifle innovative services.

January 21, 2011

Alfred Kahn, godfather of deregulation

Filed under: Bureaucracy, Economics, USA — Tags: , , , — Nicholas @ 08:17

An obituary at The Economist for one of the key players in the deregulation of American business that was critical to solving the economic malaise of the 1970s:

WHEN everyone else at the airline counter for the flight from Hicksville to Washington was sighing, checking their watches and using their elbows on their neighbours, Alfred Kahn would be smiling. And later, cramped in his seat between some 20-stone wrestler and a passenger whose “sartorial, hirsute and ablutional state” all offended him, snacking from a tiny packet of peanuts that had cost him a dollar, he would sometimes allow the smile to spread under his Groucho Marx moustache into a big, wide, gloating grin.

For Mr Kahn had made this crowd and packed this aircraft. His deregulation of America’s airlines in the 1970s opened up the skies to the people, for better and worse. And though, being an economist, he could not help muttering about the imperfection of societies and systems and the absurdity of predictions—and though, being an inveterate puncturer of himself, he would demand a paternity test if anyone called him the father of the deregulated world—his adventures with airlines led on to the freeing of the trucking, telecoms and power industries, and heralded the Thatcherite and Reaganite revolutions.

When he took over the Civil Aeronautics Board for President Jimmy Carter in 1977 air travel was regulated to the hilt, with prices, routes and returns all fixed and aircraft, which could compete only on the number of flights and the meals they served, flying half-full. Mr Khan, furiously resisted by companies, pilots and unions, removed the rules. As an academic, author of “The Economics of Regulation” in two stout volumes, he was eager to see those elusive and fascinating things, marginal costs, brought into play: to let prices follow the constantly shifting value of an aircraft seat as demand changed or departure time loomed, or indeed as shiny new jet planes depreciated above him, just “marginal costs with wings”.

November 26, 2010

British Columbia: Canada’s Banana Republic

Filed under: Bureaucracy, Cancon, Government, Politics — Tags: , , , , , — Nicholas @ 13:50

A story in the Globe and Mail on how Elections BC rigged the rules after the fact to reject a petition:

Elections BC rejected a Fight HST recall application as too lengthy — but did so using rules that were drafted after it received the application.

The rejection has led recall organizers to suggest the province’s chief electoral officer deliberately thwarted their attempt to get approval to launch a petition to oust a Liberal MLA who supported the harmonized sales tax, and should step down.

While Elections BC has defended its new rules — which pushed the Fight HST application over a 200-word limit by counting the acronyms MLA and HST as eight words instead of two — recall organizers expressed concern that they were not included in the application form when they downloaded it from Elections BC’s website.

“It’s a total joke. This is the kind of thing they do in banana republics … when they don’t want to have elections or they don’t want people to win. And we’re doing it right here in Canada,” said Chris Delaney, an organizer of the Fight HST campaign.

H/T to Steve Muhlberger for the link.

May 1, 2010

Call out the inspectors

Filed under: Bureaucracy, Health, USA — Tags: , , , , , — Nicholas @ 07:50

A busybody manages to create a lot of new jobs in San Diego County with one little phone call:

On Tuesday, we were surprised inspected by the San Diego County Department of Environmental Health. The two inspectors were sent out to visit our facilities (and other breweries in San Diego) as a patron had lodged a complaint about local tasting rooms. So I’d like to take a moment to thank that one person who felt it was important to lodge a complaint about brewery tasting rooms all over San Diego. Apparently they were concerned that we didn’t have a GIANT BLUE “A” on our cold boxes!

Thank you from the bottom of my heart.

You see, my fellow brewers and brewery owners are now having our hands forced (in the name of public safety) to go through the plan check and approval phase so that all of us can earn Health Permits for our tasting rooms.

What’s even better and the reason we’re all so thankful for your efforts today is that Port Brewing and The Lost Abbey has been issued a cease and desist for the sampling of beer in our tasting room. Because, as we all know, beer is a public nuisance laced with nasty things that can kill you!

I personally want to extend my gratitude to that consumer who felt this industry needed more regulatory agencies knocking on our doors. (The Health Department has never been interested in us before this call) Muchas Gracias Amigo (or Amiga) wherever you might be. There are breweries all over the City of San Diego who are now going to have to spend thousands of dollars on repairs that at best are “marginally justified.”

What follows is a long list of local businesses that will be seeing more income from San Diego breweries, as they all scramble to get into compliance with regulations they didn’t have to worry about until now. Before you consider this is a good thing, make sure you read up on the broken window fallacy (scroll down to paragraph 1.6).

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