Videotron on the ABCs of Pricing Bandwidth

2 Nov ’06

From the Globe yesterday, some bizarre statements from Videotron on how to finance the bandwidth build-out that will be needed if it’s to profit from IPTV, VoIP and the rest: impose a tariff on the content providers, who are getting a free ride, it seems:

With video and music downloads gobbling up Internet bandwidth at an ever-expanding pace, cable company Videotron is pushing for content providers like movie studios to share some of the cost to expand broadband pipelines.

Videotron boss Robert Depatie wants the federal government to slap a transmission tariff on providers — like the music and film industry — so they can shoulder part of the burden.

The Quebec company will invest $300-million this year as its average customer uses four times more bandwidth than just a year ago, Depatie said Tuesday in a speech at a telecom conference.

He called it unfair for studios and companies like Apple and Amazon.com to use that extra service without cost — which he compared to free shipping.

“If the movie studio were to mail a DVD . . . they would expect to pay postage or courier fees,” Depatie said.

“Why should they not expect a transmission tariff?”

But Depatie said he’s against raising rates for Internet service and that it’s only fair for content providers to help foot the infrastructure cost.

“(For producers) it’s just a free ride — ‘Let’s provide movie downloads. It’s the telcos that will pay for it.'”

The answer, I suppose, to the question “Why should they not expect a transmission tariff”, is because they aren’t utter morons happy to pay twice – or more – to get their content online.

This has truly become a tedious debate.

Update: How unpleasant it is to attract lobbyist trolling. See comments, now closed.

David Canton has a lovely observation:

My perspective is that it would be equally logical for content providers to try to charge Videotron for the priviledge of allowing Videotron customers to access their content. After all, without providers of content and services such as Apple, Amazon, Google, etc., Videotron would not have customers eager to buy their services.

Update: Mike Masnick of Techdirt chimes in.

{ 4 comments… read them below or add one }

Rob Hyndman November 2, 2006 at 13:33

The issue is not what telecomm lobbyists would rather. The issue is what the customer would rather. And until the market is competitive, there is no “rather”.

And yes, of course one can seriously believe. The evidence is everywhere. Except here in North America, of course.

With all due respect, don’t you have better things to do with your client’s time than troll for opportunities to pump their message? Please, don’t go back to anyone’s message. Just leave.

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HandsOff43 November 2, 2006 at 13:29

If all content must be considered equal, regardless of how much bandwidth is used, all consumers will have to foot the bill so our internet’s infrastructure can keep up with innovation. I would rather ISPs charge the heaviest content providers than charge me to pay for something I’m not even using.

With regard to competition, I go back to Kahn’s argument, “By far the most promising intensification of that competition is the tens of billions of dollars that the phone companies themselves are spending converting copper to fiber, which will enable them to offer video programming pervasively, in direct competition with the cable companies. Can anyone seriously believe that competition would be forthcoming if those incumbents were still subject to public utility-type regulation? Or prevented from surcharging the heaviest content suppliers–the ones demanding the speediest possible access to subscribers that those telco investments will make possible?”

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Rob Hyndman November 2, 2006 at 13:07

Because it’s not a competitive market. This notion of a free market for broadband in Canada is a myth. There are rarely more than 2 providers in any geographical market, and those two do not compete on price, or anything else, with the possible exception of customer service. As a result, if my ISP wants to “monetize me”, I have little choice but to go along. A newspaper reader has virtually infinite choice, and that choice enforces a discipline upon the newspaper. With respect, if you follow this issue, you know that; the debate on this issue moved on a long time ago.

We are not “theirs” – not a captive herd to be sheared by the ISP every month for profit – or at least we should not be. And more to the point, broadband providers are providing what is increasingly a vital public utility. Their problem is that they recognize that it won’t be palatable to ding the end user with higher access fees – doing so would likely encourage a public debate that might well result in tighter regulation, including of pricing. They know that, and they’re looking for easier quarry.

By the way, one of the truly democratizing effects of the internet, I think, is the power of public memory. It allows me, for example, to search and quickly identify your organization as a lobby group for telecomms. Which helps explain your “opinion”.

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HandsOff43 November 2, 2006 at 12:47

From Videotron’s perspective it only makes sense. You may have already read Dr. Alfred’s Kahn’s editorial where he said, “Newspapers charge advertisers for access to their readers–more for big ads than small ones–television broadcasters charge similarly for access to their audiences; and the charges vary widely depending upon the anticipated size of the audience. Why is that any different from the proposed additional fees for guarantees of the unusually rapid rates of transmission required for some content, with its greater claim on the broadband facilities?”

Kahn understands that “net neutrality” is a non-issue and that certain corporations have created a false “hysteria” when in fact the free market offers the best consumer protections and will help ensure a quality internet for everyone.

I work with Hands Off the Internet Coalition and here’s the link to Dr. Kahn’s expert opinion.
http://pff.org/issues-pubs/ps/2006/ps2.24voiceofcautiononnetneutrality.html

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