Lessons from Canada: Like ‘Additional Usage Billing,’ or ‘AUB’
by Leslie Ellis // February 09 2009
TORONTO — Is the broadband consumer with a monthly usage tab of eight Terabytes an uncomfortably heavy user, or your greatest customer ever?
Context: A terabyte equals one thousand Gigabytes. At a rate of eight Terabytes per month, itd take about 10 months to download the entire contents of the U.S. Library of Congress. [“Terabyte” is abbreviated the same as tablespoon: TB.]
On the one hand, it’s hard not to love customers who love your bandwidth that much. On the other hand, and from a network management perspective, traditional “all-you-can-eat” pricing structures make it difficult for broadband service providers to love heavy users, in the same way real all-you-can-eat restaurants have a hard time loving the person who goes up for three extra plates, then stuffs three doggy-bags with food to go.
That’s why some broadband providers in Canada chose to slowly, gently shift consumers to what they call “AUB,” or “Additional Usage Billing” — and the topic of this week’s translation.
The details came from last week’s first annual Canadian Summit, put on by the Society of Cable Telecommunications Engineers. [Aside: First time this moderator did a panel wearing long johns.]
Among the highlights: Internet bandwidth usage in Canada is tracking with the rest of North America, at a compound annual growth rate of about 40%.
People are streaming video more than they’re downloading with peer-to-peer (P2P) technologies. In the language of bandwidth patterns, this is huge.
Also: A slow, customer-focused approach to additional usage billing works to gently unclog the network.
Metered Billing Approaches
Cable and telco broadband providers in Canada were the first in North America to make the gradual shift to metered billing. Some, like Shaw, Telus, Eastlink and saskTel, define usage limits, but aren’t yet billing customers for overages. Shaw, for instance, calls customers who go over defined usage limits, but doesnt yet sent a bill.
Others, including Rogers, Cogeco, and Videotron, include monthly overage charges, on a per Gigabyte basis. [The 8 TB customer is in a Rogers system.]
Here’s how the pricing works at Rogers: Each of its five tiers of service now contains a monthly usage allowance, ranging from 2 Gigabytes to 95 Gigabytes. Per-Gig overage charges range from $1.50 to $5.00.
Example: Its “Extreme Plus” package offers downstream speeds of 18 Mbps , and 1 Mbps upstream. It costs $102.95/mo., with a usage max of 95 Gigabytes. Every gigabyte over the 95th Gigabyte costs $1.50, but never more than $25 in additional billing.
At the other end of Rogers’ broadband service spectrum, its $27.95/month “Ultra Lite” product, at 500 kilobits-per-second (kbps) down and 256 kbps up, includes a 2 GB /month usage max. Every gigabyte over 2 GB costs $5.00, but again, never more than $25 per month in overage billing.
Rogers implemented the plan slowly, over the course of two years. First step: Usage tracking, to baseline what was going on, per subscriber.
Next: An elaborate customer education plan, starting with a personalized letter showing actual usage over a series of months. An online tool lets consumers check their usage online at any time.
Follow up communication from Rogers taught consumers (read: parents and grandparents) how to identify any P2P applications running in the background. They showed consumers how to secure home wireless networks, so that only household members are using bandwidth.
Even digital cameras contribute to bandwidth usage, so Rogers showed its customers how to interpret and understand how picture quality settings impact file sizes.
When customers near an overage point, a notification pops up within a browser window: “Our records show that you’ve reached at least 75% of the 95 gigabyte (GB) per month limit provided with your service.”
Less Congestion, Low Churn
One year later, Rogers engineers report a significant positive impact on traffic flows, with very little churn. The top five percentile decreased consumption by about a quarter, over eight months. How many people were impacted by overage charges? Not many, AUB partakers say: Between three and five percent of its entire broadband subscriber base.
Other stuff I didn’t know about Canada, none of which has to do with AUB or the SCTE Summit: U.S. Superbowl ads don’t air in Canada. [Learned this after two Superbowl-related quips thudded during the long-johns panel.]
Also: Canadian broadband customers cant access streaming video sites, like hulu.com, because of copyright restrictions.
All in, and as one colleague noted, Canada is like your attic: You forget it’s up there, but when you do go up, you find lots of good stuff.
This column originally appeared in the Platforms section of Multichannel News.