Usage based billing already killing competition

I have been an Acanac customer nearly since they started offering service.  Outside of a disastrously poor costumer service side (which is what happens when geeks go into business) and almost zero technical support in terms of price point it is the best value you can get.  Lightening fast, unlimited service for around 400$ a year.  To put that in perspective I am paying over 700$ for an equivalent service with Telus (I had to switch when I moved).  Given their costumer and technical service Acanac was never really a threat to Bell.  The vast majority of high speed consumers are of the Mac plug and play mentality with little tolerance for doing their own troubleshooting.  So Acanac serves primarily a niche market offering no frills unlimited high speed.

The short of it is their business model is now dead.  The CRTC ruling effectively means that Bell can impose its business model on Acanac and its customers.  As per my in-box:

Dear Acanac Customer,

The CRTC just decided to allow Bell Canada to charge independent ISPs, like Acanac Inc., what’s called “usage-based billing”(UBB)on our customers.

This means that Bell will force us to pay usages fees similar to those that Bell charges to its own retail customers, when you exceed certain limits. Bell and other Big Telecom companies are obviously trying to gouge consumers, control the Internet market, and ensure that consumers continue to subscribe to their television services.

If we do not fight this you will have no choice but to pay MORE for LESS Internet. This will crush innovative services, Canada’s digital competitiveness, and your wallet.

250,000 people across Canada have already signed the petition to stop these companies from charging you more. Signing the petition automatically sends Industry Minister Tony Clement an email. This is our best chance to stop usage-based billing.

Please Sign the Stop The Meter petition at: Please also help us spread the word to your friends and neighbors.

Please make your voices heard. If we don’t stop UBB, as of March 4th, 2011,  Acanac will make the following changes to accommodate the charges that will be FORCED on us and subsequently you, our valued customers:

Ontario Residential 5Mbps DSL Plan:
First 25GB at up-to 5Mbps. Beyond 25GB your speeds will be reduced to 100Kbps with unlimited transfer.

If you wish to remain at up-to 5Mbps, you can buy an additional 100GB of transfer for $9.95 per month. Beyond 125GB, speeds will be reduced to 100Kbps with unlimited transfer.

Quebec Residential 5Mbps DSL Plan:
First 60GB at up-to 5Mbps. Beyond 60GB, your speeds will be reduced to 100Kbps with unlimited transfer.

If you wish to remain at up-to 5Mbps, you can buy an additional 100GB of transfer for $9.95 per month. Beyond 160GB speeds will be reduced to 100Kbps with unlimited transfer.

Ontario & Quebec Residential MLPPP DSL Plans:
Same as above but multiply it by the number of lines you have. If you have 2 lines or Home 10Mbps in Ontario, you would get 50GB included and you can buy an additional 200GB for $19.90. Once you reach your allocated transfer, your speeds will be reduced to 100Kbps per line with unlimited transfer.  In this scenario you would have a total of 200Kbps after 250GB of usage.

Ontario Minimum Wage: Classic Arguments Against

I am not going to wade into the debate on whether the scheduled rather modest minimum wage increases in Ontario are a good thing.  I will, however, with pleasure reproduce this comment by a compassionate petty-proprietor over at the Star:

I have a business that has paid our employees $10.50 an hour to care for children with special needs. Three years ago that wage was good (until they graduated from college) but now its going to be minimum wage? What am I supposed to do, pay more to my employees so I don’t lose them or pay more and I end up making as much as my employees? People take the risk to start businesses to have a shot at the bigger things in life. I have a solid business, but the gov’t is screwing it up – spending my money to get themselves re-elected.

Classic, just a classic.

The Invisible Hand and the Central Banks Handouts

By Travis Fast

What a week hey! Do you remember that econ class where right after you were introduced to the invisible hand in the form of some bullshit general equilibrium model and then you were led to the inextricable conclusion that there is no free-lunch? And can you recall in that ideological daze masquerading as value free and clear thinking rigour you still could not square your education with the reality which appeared in the business pages?

Well this week is a particularly bad week for those still clinging to an ontology of capitalism which requires little state intervention. No less than 285 billion US dollars worth of liquidity was pumped into the markets on Thursday and Friday with the ECB kicking in a whopping 213 billion and the US Fed kicking in another 62 billion. And the markets want more! (See this weekend’s WSJ and FT for a fuller account).

But that is not all; the Fed did not just open the window wide open, it did not just provide short term liquidity, it actually directly bought morgage backed securities. That is right folks the Fed is propping-up prices in the securities market. And I thought Liberal Market Economies (LMEs) did not require any form of coordinated government intervention. I wonder if the executive officers are going to get paid according to their marginal contribution this year. Don’t hold your breath that tends to only work in one direction.

Moreover, I doubt we are going hear too many REAL economists cry about the massive government intervention (Austrians do not count as REAL economists) into the markets. Nor are we likely to hear too many cries to let the market choose its own equilibrium. The situation will of course be different if this “perfect financial storm” does real damage to the real economy and real workers start hitting the unemployment line.

Then you can bet when the first bright politician suggests state intervention into labour markets we will be retold some bullshit story about the invisible hand, Say’s Law and the litany.

Why small independent businesses should be pro union

The traditional hostility of small independent businesses (SIBs) to unions has never made much sense to me. In short, it seems to be an irrational ideological hostility. Why irrational? Glad you asked.

The fact is that most SIBs will never be targeted for unionization. Operations with less than twenty employees that are not part of a larger chain or franchise have very little to fear from unions. As far as organizing goes such establishments are a waste of union resources. Organizing and servicing are not costless activities and if unions are to have any chance of recouping those costs through dues the establishments must be much larger in order to warrant the attention of organizers.

But if this basic economic logic explains why SIBs have little to fear from unions it does not say why they should be pro union and not just ambivalent. However, if one takes into account the world of big box stores and franchises, which have cost advantages, and hence pricing power, over most SIBs then one begins to see why SIBs ought to be pro union. In so far as unionization leads to increased wages over non-unionized labour, then, *ceteris paribus*, large establishments will have less pricing power that they can use to squeeze their SIB counterparts.

Every time Walmart moves into a new community SIBs tremble at the prospect. As well they should. It is very hard to go toe to toe in pricing war with such a behemoth. However, were stores like Walmart, Canadian Tire, and Home Depot to be unionized then they would have much less pricing power and this would mean less price competition for their SIB counterparts. Ipso facto, the anti union stance of many SIBs is an irrational ideological belief.

**Of course all things are not equal and in many cases unionization increases productivity thereby off-setting the cost of higher wages.