Just this week, Canada approved usage-based billing for the internet. What’s this mean? Now, Canadian Internet Service Providers (ISPs) can place caps on the amount of bandwidth subscribers can use, and charge them heftily for crossing that cap. While this may make sense in the abstract, the implementation is where it’s all shot to hell: Bell Canada is switching to an incredibly low 25GB monthly cap, and is charging almost $2 for each gigabyte past that cap. (The cost to Bell to deliver a gigabyte of data is far less than a penny, for reference.)

This is bad in so many ways.

It’s bad for those who work from home, and may need to regularly download large files. Under UBB policies, working from home in Canada may become far more difficult and less financially feasible.

It’s bad for those who enjoy watching streaming video, like on YouTube or Netflix– and bad for those who like uploading their own content. It’s bad for those who like using Skype to contact their friends or loved ones. It’s bad for those who enjoy buying and downloading games on online game stores like Steam, and it’s bad for those who like buying music on online music stores like iTunes or Amazon.

It’s bad for anyone who wants to offer a free WiFi hotspot as a friendly gesture, as a perk, or just because.

It’s bad for those who like to protect their data, and frequently back up to internet backup sites.

It’s bad for those who like playing online games, either Flash games in the browser, or games like World of Warcraft or EVE Online.

But, perhaps worst of all– this is bad because it could greatly decrease the amount of free content on the internet, privileging Internet publishers who don’t need to give space to advertisers. With this move, Bell Canada has laid the foundation for an Internet that prefers the big guy over the little guy; where a small publisher who needs to allow advertisement is at a significant disadvantage to a big corporation that doesn’t. And while this may seem like an acceptable situation when dealing with tangible products, when we’re talking about the flow of information, this is a grave danger.

Today, a lot of the free content you find on the internet is paid for by the sale of advertising. Certainly not all of it, but a lot. Just as the cost of publishing a newspaper is offset by printing ads, so is the cost of hosting a website offset by putting ads in the site. Problematically, however, these ads can range from simple images, which are relatively small, to embedded Flash objects or video, which are larger. On an unmetered system, that’s not a problem. But when users have to carefully watch their bandwidth usage, it’s another story.

Each time you view a webpage, you are actually downloading most of its content. You won’t find it saved in your Documents folder, but in order to view it in your browser, it has to come down the information pipeline and be received by your computer, and that’s downloading. Now, if you go to a smaller site, they’ll often have ads on the page, in order to help offset the costs of hosting their stuff on the Internet. But, as mentioned above, ads are unpredictable in size. With usage-based billing, users have an economic incentive to avoid small publishers who need to offer advertising slots, and flock to large publishers who don’t need that.

Since advertising revenue on the internet is usually based on hits (how many people load/click the ad), with fewer people visiting sites with ads, the small publishers of those sites will gain less advertising revenue, effectively creating a barrier for entry that prevents small-scale publishers from making nearly as much money with ads. And without that revenue, some small-scale publishers will be financially unable to publish.

What’s more, this gives further incentive to publishers to simply charge for access to their content. By setting low usage caps and discouraging advertising, Canadian ISPs are providing indirect pressure on publishers to find new forms of revenue. The advertising model fails because it runs the wrong way: it tries to recoup costs after the content has already been delivered. This is okay when users’ bandwidth limits are negligible, but counterproductive when they aren’t. A pay-to-enter model, however, works with the system, because it totally prevents user access until costs to the publisher have been recouped. Whereas ads can be relatively large, a splash page that prevents access to users without page subscriptions would be relatively small, making the broadband cost to the user low.

It’s bad. This decision could set us down a dangerous path of restricted internet access and walled gardens. This is not the direction the internet should be going.

It needs to be fought where it is in Canada, lest service providers in America try to emulate it.