Bell's Aggregated Volume Pricing (AVP)

Bell’s Aggregated Volume Pricing (AVP) proposal for high-speed Internet services used by wholesale ISPs

On March 28, 2011, Bell proposed that the CRTC implement a new wholesale Internet pricing model that supports investment, competition and choice.

Called Aggregated Volume Pricing, or AVP, the model provides wholesale ISPs with complete pricing flexibility on a per-customer basis. It offers wholesale ISPs the flexibility to develop their own pricing approaches, while supporting the fundamental principle that those who use less network capacity do not subsidize those that use the most.

The AVP model also enables Bell to move forward with billions of dollars in investments to increase capacity and improve broadband – investments in infrastructure that are needed if Canadians are going to continue leading the world in time spent online.

By enabling wholesale ISPs to purchase network capacity based on overall volume of usage, rather than on a per-customer basis, the new model gives wholesale ISPs greater flexibility to offer service packages based on their own business objectives and requirements.

The CRTC’s review of wholesale ISP billing practices was launched on February 8, 2011, in response to concerns over usage-based billing (UBB) being applied to wholesale ISPs. The review is scheduled to continue into the summer of 2011.

How the AVP model works:

Wholesale ISPs would pay a monthly access fee and a volume rate. Access rates would vary by speed and whether services are offered over legacy or next-generation networks. The same volume rates would apply to all service speeds regardless of the network over which the services travel.
In the case of legacy networks, the vast majority of ISPs will not have to pay for AVP because Bell will provide a significant usage credit up to 42.1 GB per user on an aggregate basis. As long as the ISP average does not exceed 42.1 GB per user, it will not have to pay AVP.
In addition to their monthly access fee, each wholesale ISP would pre-purchase blocks of capacity at a flat rate (one terabyte – 1,024 gigabytes – for $200, approximately 20 cents per gigabyte) based on the volume they estimate is needed to support their customers. Additional charges of approximately 30 cents per gigabyte would apply should overall monthly usage exceed estimated levels.
Bell’s AVP proposal aligns with recommendations from other parties – including a number of wholesale ISPs – that an aggregated pricing approach apply to wholesale access to Bell’s Internet infrastructure.

Advantages of the new AVP model:

It links wholesale ISPs’ costs to their aggregate usage of the shared network
It features a straightforward and standard per-GB charge that applies to all usage over a threshold set by the ISPs themselves
ISPs have an incentive to monitor their usage of the shared network and provide accurate pre-paid volume estimates

Principles on which the new AVP model is based:

Flexibility: no impact on the business models of wholesale ISPs
Fairness: ensures those who use the least do not subsidize those who use the most
Predictability: provides ISPs with an incentive to manage usage of the shared network and accurately forecast usage growth
Investment: supports investment in building and extending broadband capacity
Transparency: enables wholesale ISPs to pay in proportion to their network usage