If you went into a restaurant with a friend and they had an appetizer, main dish and a dessert while you had coffee and a salad, would you want to split the bill? The notion that if you consume more Internet traffic, you should pay more seems like a fair argument. The question then becomes, what is a fair price for those extra gigabytes of data?
To find out what is a fair price, I contacted several industry insiders. They informed me that approximately four years ago, the cost for a certain large Telco to transmit one gigabyte of data was around 12 cents. Thats after all of its operational and fixed costs were accounted for. Thanks to improved technology and more powerful machines, that number dropped to around 6 cents two years ago and is about 3 cents per gigabyte today.
Are these valid numbers? After the recent CRTC decision regarding UBB, it was announced that effective March 1st, Bell will be charging Third Party Internet Access (TPIA) providers $4.25 for a 40 GB block of additional data transfer.
The fact that Bell is able to sell 40 GB of data to wholesalers for $4.25 and still make a profit demonstrates that the true cost of data transfer is well below the 10.5 cents per gigabyte they are charging wholesalers. One TPIA provider agreed the 3 cents per gigabyte figure is probably close to the true cost.
So why are Internet service providers charging consumers $1 or more per gigabyte of data used beyond their respective data caps? Thats a good question.
Bell will charge you an additional $2 per gigabyte to a maximum of $60 a month up to 300GB. After 300 GB, you'll pay a $1 a gigabyte. Shaw is charging $2.00 per GB on its popular high-speed package while Rogers is charging a whopping $5 per gigabyte on its Ultra Lite plan and $2 per GB on its popular 10 Megabits per second service.
Assuming an inflated cost of 10 cents per gigabyte, it means that Bell, Shaw and Rogers are charging consumers between 10 and 50 times what it costs them to deliver data. This on top of their regular monthly Internet pricing! While I agree that heavy users should be prepared to pay more once they have reached their bandwidth caps, a fair price would be much closer to 10 cents per GB than the inflated $1-to-$5-per-gigabyte charge sanctioned by the CRTC.