Usage-based billing demystified (through analogies of gambling, all-you-can-eat and gas)

Usage-based billing may sound like a fair way for internet users to be charged for their bandwidth consumption. You pay for what you use…or so we thought. Before you get too comfortable with the idea of it, Jesse Brown at TVO lends a couple of his analogies on what usage-based billing REALLY means for you.

“Hey pal. Are you a gambler? Sure you are. If you pay for internet access in Canada, you have no choice but to gamble. No better which company you choose, you’re forced to place a bet every month, a wager on how much bandwidth you think you’re going to use in a month ahead. It might be 2 gigs, it might be 60 gigs. Hey, it might be 175 gigs. If you use less than your bet, you lose. The house keeps the difference up to 100 bucks a month. If you use more than your bet, you lose. And there’s almost no end to what that might cost you. Now if you hit your bet on the dot, you win. But there’s no real prize. You get what you paid for. Now it’s on you to try your luck against the house next month. Eventually, the house will win. The House always wins.

But what if you don’t want to gamble? What if you just want to be billed for as much internet as you actually use? No more, no less. I guess you could call that idea, usage based billing. Well according to a decision by the CRTC last week, you got it. Usage-based billing was approved. But it’s not what it sounds like. And Bell was the company that wanted it. Remember, this is Canada. The House always wins.”

To put it simply, the usage-based billing model is like an all you can eat buffet...with some restrictions:

“[It's] like a restaurant, and I enter the restaurant and I say 'I just want a snack. I just want to buy an appetizer.' And they say, 'Sorry sir, this is all you can eat and that’s all we offer here. It’s a 60 dollar all you can eat restaurant.' And I go, 'Ok, well in that case, I’m going to eat A LOT.' And then they say, “Actually, ‘all you can eat’ means four plates, and after that we’re going to charge you by the plate.'”

Sounds pretty unfair, right? If you’re still not convinced, think about how you'd feel if this model were applied to our sky-high gas prices:

“People would revolt if this was gas! And they said 'Okay, well you’re going to be buying a tank of gas a month, if you don’t use any gas you’re still paying for that tank a month. But if you use more than a tank, we’re going to charge you at a pretty high rate for the extra gas.'”

On his podcast show, Search Engine, Jesse Brown interviews Rocky Gaudrault, CEO of Teksavvy, an independent ISP across Canada to get his insight on what usage-based billing means to indie providers like Teksavvy, and to internet consumers like us.

Click here to listen to the podcast and here for the transcript.