UBB vs. Small Business
Posted by Laurel L. Russwurm on June 8, 2010
I’ve heard it said that UBB won’t have a negative impact on Canadian businesses, because businesses have business accounts, and business accounts won’t be affected by Usage Based Billing.
But Usage Based Billing will certainly have a huge impact on many small Canadian Businesses. Big corporations like Bell Canada might have “money to burn” but small businesses almost always operate on tight budgets.
Private start-ups and “on the side” businesses are likely to enter the Internet via personal internet accounts, not business accounts. Many small businesses start out as hobbies or spare time projects with no bank loans or investors. There is no outside capitalization; often just an idea or a dream begun as a personal project or a hobby financially supported by the entrepreneur’s “day job”. That’s exactly how almost all those eBay sellers go into business.
A good number of these businesses are created by students. Or at-home parents. Others are begun by people re-entering the workforce after parenting or other hiatuses or perhaps after being “downsized” (before or during the recession). The clear advantage of setting up a business in this way is that a minimal cash outlay allows you to determine if there is even a market for the business you want to launch. It isn’t necessary to go into personal debt or apply for government grants or subsidies to get a business started this way.
A wide array of online services like eBay.ca, Amazon.ca, Elance, CreateSpace, Twitter, Identi.ca, MySpace, Facebook, Reverbnation, WordPress, Craigslist and Kijiji.ca have sprung up to serve the explosion of online entrepreneurs with little or no cash outlay.
But Canadians will be far less likely to embark on these small business ventures if they can’t afford to launch due to the inflationary cost of Usage Based Billing.
A decade ago the Internet was a luxury item; a time waster for most small businesses. That is no longer the case.
In the beginning small businesses without a computer or Internet component didn’t have to be on the Internet. If they had an owner or employee with the ability to learn how, or the budget for training, they may have put together a web page. Or spent money to hire someone to make a web page for them. Many companies started web pages or blogs, and once they were online, they remained exactly the same. Because maintaining, adding to and changing web pages is expensive.
But it is hard for a small business to justify contracting out or using employee man-hours to create web pages because most web pages don’t generate any income at all.
Big businesses like Bell Canada may have a budget for branding but small businesses usually don’t.
Many blogs and websites are undertaken by people without expectation of recompense. People create nonprofit informational or public service websites to educate and inform people about their area of expertise or subjects close to their hearts. These sites or blogs are in essence avocations or hobbies, although they often add to the reputation of the person or business behind it. They are not income creating websites. It is reasonable and even acceptable for these websites and blogs to be conducted under non-commercial accounts.
Canadian experts may think twice in future before taking on this type of web commitment once Usage Based Billing is implemented. It’s one thing to offer your expertise gratis, but something else to have to have to pay an unwarranted price for the privilege.
Canadians have led the world in embracing the Internet which means that in today’s world small Canadian businesses must have a web presence. It isn’t enough to just have a web page, it is important to continually add content of some kind in order to draw web traffic. Because if no one goes to your web page you don’t have a web presence.
If you are a photographer or an artist, you might want to show off your work. If you’re a fine artist, you might use your website to show techniques and features of how art is made, educating your readers using your art as examples. If you’re a cake artisan, you will want to show a gallery of your creations. If you’re a card maker you’ll want to put your catalogue onlline. If you’re a musician, you’ll want to sell your music online. If you are an actor, you might undertake a project to do 100 Jobs. If you’re a geek, you might get together with other geeks and put together a website to tell people about interesting stuff.
Taking your existing business “online” may enhance your business, or maybe only allow it to hold it’s own. Not being able to will be detrimental to your business. Small Canadian businesses running close to the bone will certainly be penalized by these sky-high Usage Based Billing price increases, and may well have to give up their attempts at establishing a web presence as a direct result.
The exorbitant cost of Usage Based Billing may well stop many small Canadian businesses from being able to compete.
An unexpected movement has been happening in the computer world. It’s called FLOSS, which stands for Free Libre Open Source Software. As incredible as it may sound to those of us who grew up in the 20th Century, people whose day jobs computing devote a great deal of their spare time working with others from around the world to create and share software. For free. Both free as in speech and free as in beer.
These people often communicate and work together exclusively though the Internet. And by working together they have created such things as GNU/Linux, the operating system used by most of the world’s supercomputers (like the ones at the University of Toronto), as well as a growing number of personal computers. (I don’t know about you, but I think freeing people from the tyranny of Microsoft and Apple is a good thing.) Wikipedia is another bit of altruism that could never have come to exist were it not for people working together for the good of all. The Internet allows people to come together to accomplish these things to benefit all.
Canadians who participate in these non-commercial ventures will now be penalized by the inflationary Usage Based Billing.
Like Vincent Van Gogh, who was unable to make a living selling his art in his lifetime (although his paintings are worth something today), artists create their art regardless of whether or not it is profitable. A tagline on a talented Canadian singer/songwriter/musician/recording artist’s website reads:
“Why music?” “Why breathing?”
For half a century the Canadian Music Industry was been almost entirely controlled by the CRIA, a very small handful of very powerful branch plants of American recording companies. By virtue of their exclusive control of the distribution network they were able to force Canadian artists to sign contracts that were terribly beneficial for the record companies, but more akin to indentured servitude to the recording artists, who generally had to give up some or all of the copyright to their own work in exchange to have their music recorded, promoted and distributed.
Pretty much the only notable exception to this regime was Canadian troubadour Stompin’ Tom Connors. But if you read his autobiographies you will see just what was involved in becoming an Independent recording star in a world dominated by the CRIA.
For most creators just being able to get their work before an audience is the most important thing. The Internet gives Canadian creators unprecedented opportunity to be heard. For the first time in history the Internet has given Canadian creators relatively easy and affordable access to the entire world to disseminate their art and find an audience. Canadian culture is thriving in a way it hasn’t been able to since the 1950’s now that artists can distribute their music yet still retain their copyright and control over their art. Many Canadian artists who might not otherwise been able to get established are able to make a living with their art.
Some will succeed and be able to do business, and some will never become viable propositions. But at least they can take their shot, which is why 30% of the Canadian recording industry is now independent of the CRIA. The horizons of our cultural smorgasboard have expanded. But like anything else, until creators begin generating income, it is reasonable for them to use a non-commercial internet access. Yet this is precisely the type of Internet connection that will at least double if Usage Based Billing is implemented.
Under the old music business model, the best way for a recording artist to become known was through radio airplay. This was such a crucial component of success that a huge scandal erupted when it became known that representatives for the big American record companies had been engaging in “Payola” which was the fine art of bribing Disk Jockeys to play records. After all, no one was likely to go out and buy records of music they had never heard.
One of the chief marketing methods of modern Independent recording artists is to make their music available to their potential audience, by offering the opportunity to listen to it on the artist’s website or download it. Recording artists may well give away digital copies of their recordings freely under creative commons licenses. If the website is in Canada, and the website traffic increases as the music becomes well known, Bell Canada’s Usage Based Billing may well put many Independent recording artists out of business — right at the point they are about to become a viable business.
Many Canadian creators may find Usage Based Billing makes access to the Internet prohibitively expensive.
Coming and Going
Every private Canadian who has chosen to host their own website and paid extra for a domain name– even those who have paid a premium to be get a CIRA dotCA domain name– these Canadians who create content on their own will be hit both ways: they will be charged Usage Based Billing when they upload content to their websites as well as when others visit their site and view it.
What this means is that the more successful the site is, the more expensive it will be to host.
If you are a recording artist, it often takes a while to build a following. Being able to cover the costs of your recording session is not the same thing as being able to make a living from your art. It takes time to get established in any artistic endeavor. And now it will be more difficult as creators will need to pay Bell’s inflationary Usage Based Billing during the difficult early days.
The only way to avoid being penalized for our success will be to make the painful but economically sound decision to put our primary content on commercial sites. A trade-off of exclusive control of our own creations in order to be able to participate on the Internet.
What does that mean exactly?
Certainly everyone is aware of the Facebook privacy issues. When Facebook first began their default privacy settings offered users a very high level of privacy, and over the years they have summarily changed them, leaving the onus on their users to scramble to understand and try to re-protect their private information. So that’s the first thing: when your content is hosted on someone else’s site, they can change the rules without your consent.
Another issue is that most of these sites are physically housed in the USA. and so fall under the terms of American law, not Canadian. The United States has had the DMCA for twelve years now, and under this law it only takes is an allegation of copyright infringement before your content would be taken down by American hosts like YouTube. This is an allegation understand, facts don’t have to enter into it. Brit Rocker Edwyn Collins had his own music to which he was the rights holder pulled from his MySpace page after his former label alleged he was infringing copyright. So when Canadians put our content on American web pages we are placing it under the jurisdiction of American Law, in particular the DMCA, even before our own Bill C-32 is passed. That’s something else to consider.
But economic constraints may in fact force Canadian creators to place their own content under the control of others and outside Canadian legal jurisdiction because of extortionate Usage Based Billing costs.
Usage Based Billing will punish Canadian creators for their very success.
The Flip Side
The CRTC accepted Bell Canada’s application to apply Usage Based Billing to the customers of the Independent ISPs as a means of “traffic management”. The intent is to force Canadians to use the Internet less.
This will impact not just on small businesses but big businesses too, because Canadians will use the Internet less because using it the way we do today will cost us more. Since most of us don’t have the first idea of how much bandwidth we are actually using, we will simply cut back on anything non-essential. Instead of casually using the Internet for everything at the drop of a hat as we do now, Canadian Internet traffic will go down. It isn’t just small businesses that will feel this crunch. We are still in a recession after all.
Usage Based Billing will mean that all Canadian Internet traffic to all Canadian businesses will go down.
Bell Canada’s Bandwidth Estimator?
Clearly Canadians don’t know how much bandwidth we are using. Most us us don’t understand what Bandwidth is.
That this estimator is even necessary is a good indication why Usage Based Billing is an incredibly bad idea.
If we don’t understand what our usage is, how can we be expected to budget for it?
Or pay for it?
As far as we know. they will be making it up as they go along. Certainly without understanding how our bandwidth consumption is even being measured we will be unable to effectively budget our usage.
Because I’ve been taking digital photographs for quite a while, let’s take a look at measuring digital photographs.
On the Bell Canada’s Estimator virtual gauge I’ll select 40 photographs as my monthly usage. The Bell estimator tells me that this would be an Estimated Total Monthly Usage of 0.30 GB
I have spent most of my life as a mathphobe. That said, even I can see a serious problem with the Bell Estimator page which is supposed to tell Canadians how much bandwidth what we do online will consume. It’s quite simple really.
All photos are not created equal.
This is the part that doesn’t make sense. To demonstrate, let’s look at this sequence of photos of my dog Cody.
#1. Cody on the Deck: This image was 18.5 kilobytes. To use 40 photos this size would be = 740 kilobytes
#2. Cody in the Field: This image was 141 kilobytes. 40 photos this size would be = 5,640 kilobytes
#3. Cody on the Beach: This image was 1918 kilobytes. 40 photos this size would be = 76,720 kilobytes
#4. Cody at Soccer: This image of him was 4241 kilobytes. To use 40 photos this size would be = 169,640 kilobytes
Because my photo sizes are in kilobytes, first I’ll convert 0.30 GB which would be 300,000 kilobytes.
Forty copies of my smallest images adds up to a mere seven hundred and forty kilobytes.
Two hundred times that amount would give you a mere one hundred and forty eight thousand kilobytes, again half of the three hundred thousand kilobytes that Bell estimates would be the bandwidth needed for 40 photos.
The largest of my images is Cody at Soccer.
4241 kilobytes is quite a large photograph, yet forty images this size falls short of 300,000 kilobytes, only makes one hundred and sixty nine thousand six hundred and forty kilobytes. Yet Bell says I will be using three hundred thousand kilobytes, or almost twice as many kilobytes as forty copies of my large images would add up to.
What is Bandwidth?
Bandwidth is the measurement of download speed, measured in how many bits per second you can download.
Bandwidth has also come to refer to the transfer cap being placed on Canadian internet users, which is measured in gigabytes.
Put another way, bandwidth is a data transfer measurement of
(a) how fast you can go at any given time – your rate of speed, or
(b) how how far you can go in any given month – your allowed capacity.”
Since we are talking here about allowed capacity, I can’t begin to imagine what the measurement of usage is based on if not on the physical size of the photograph.
Then if we look at the difference in the size if the large and small images. Forty copies of the largest photo are much bigger than the smaller images. More than two hundred times greater in size. Yet Bell’s Estimator makes no such distinction. Bell says Forty pictures = .30GB = 300,000 kilobytes
But in my world Forty pictures = (size 4) 4241 kilobytes = (size 3) 169,640 kilobytes = (size 2) 76,720 kilobytes = size (2) 740 kilobytes.
That’s quite a size range.
The kilobytes sizes I’m talking about are the physical size of my digital images. But even forty of the largest images only adds up to half the number the estimator says are necessary for 40 photos. How can that be? What is the bandwidth Bell is talking about?
I’ve also read somewhere that there was a considerable difference of opinion between Bell Canada and the Independent Internet Service Providers in respect of bandwidth measurement. As much as 800% discrepancy. So how will these usage figures to be determined? Will Bell Canada pulling figures out of a hat?
If Bell’s photo guideline is so vague as to be useless, even nonsensical, how can Canadians possibly be expected to keep track of our usage?
At least back in the days when AOL charged by the minute, Canadians could budget our internet use accordingly. We understood minutes.
Cut to the Chase
Start-ups and trial sites ventured on personal web accounts will be less likely to use the internet as much or as freely — if at all — when Usage Based Billing is added to the cost. Doubling (or more) the cost to slow down Internet use will work. Canadians will be less inclined to use the Internet.
This will be bad for all Canadian business.
Oh wait: there is ONE Canadian Business that this won’t be bad for: Bell Canada.
Unlike businesses that have to function in a free market, Bell doesn’t have to trouble itself with reinvestment to improve the aging infrastructure.
Bell now has CRTC permission to charge whatever it likes, not only for their own customers, but for their competitors. I have no doubt that Bell Canada is happy that they will be able to double their rates without even having to improve the service. Sounds like a dream business plan to me.
Any corporation trying such a thing in a free market would shortly find themselves out of business. That really doesn’t sound very healthy for Canada’s economic future.