Canadian internet left out in the cold

The Canadian Radio-television and Telecommunications Commission ruled on January 25th that major providers of internet infrastructure could charge users and internet service providers usage-based fees for using their services. This immediately prompted companies like Bell Canada (by far Canada’s largest telecommunications provider) to implement per-gigabyte fees on data for Canadians.

These usage-based fees have been passed on to consumers. Many ISPs are now offering plans that require users to pay a monthly fee for a particular amount of bandwidth (say 25gb) and then pay a hefty per-gigabyte fee if they exceed that limit, much like purchasing extra cell phone minutes once your plan is used up. Canadian users are in an uproar, because they feel that the limits imposed are insufficient to allow them to take advantage of things like online music downloads and streaming video. (Also, they feel that the $1/gigabyte fees are unfair, given that the actual cost to the companies of transmitting a gigabyte of information is more like $.03.)

For internet entrepreneurs, this ongoing saga means two things. First, it’s likely to hurt companies like Hulu, or any other services that require sending massive amounts of data to make their products work. Even though Youtube and other services are still “free,” users will end up paying hefty fees to get all the data necessary to watch videos or download large files. Even makers of computer games are likely to be adversely affected.

The new pricing structure does create some entrepreneurial possibilities, though. Many internet companies have introduced new services to help deal with the new regulations – like services that tell you how big an online video is before you download it. Another company is offering to download files for users and then ship them to them on CD. The ruling has ultimately provided some creative opportunities for entrepreneurs to make a buck off the new market structure.

Want to read more about what’s going on? Ars Technica has a great article on the subject.