Who will take on Canada’s telecom giants?

January 24 2011 by Ellen Roseman

The Internet is becoming more video-based. But you’ll have to pay more if you want to enjoy the rich resources online.

Canada’s telecom giants (Bell and Rogers) have imposed caps on Internet use, making clients liable for surcharges if they exceed their monthly limits. Shaw is doing the same on Feb. 1.

Meanwhile, it’s getting harder to find unlimited Internet plans at smaller competitors. Those using Bell’s network have to adopt the same usage-based billing, according to a ruling last fall by Canada’s broadcast regulator.

As a result, Primus is raising its Internet rates and adopting bandwidth limits, starting next month. I wrote about this trend in the Star and at my Moneyville blog.

When it comes to the Internet, I’m not a heavy user and I don’t want to subsidize heavy users through my rates. Usage-based billing has a place. But should it be the only choice in a rapidly growing marketplace?

Canada will start metering Internet use unless consumers make their voices heard. Luckily, there’s a group called Open Media, which is using social media tactics to organize opposition. It has a petition with 40,000 signatures and a Twitter campaign.

Steve Anderson of Open Media frames this as a battle to save a vital democratic tool.

For me, the efforts to close the open Internet (by metering or throttling) are in effect a war on sharing, a war on creativity, and ultimately a war on human potential.

Perhaps I’m a bit too much of a romantic for my own good, but I think the Internet can bring out the best of the human spirit; I think it has the capacity to reflect back at us, and encourage us to reach for, the potential for a more just and democratic society.

The Internet won’t itself solve the world’s problems, but it does help break down barriers between us, it does make it easier to collaborate and self organize. For me, saving the Internet is important because the Internet holds the possibility for a better world.

In wireless phones, as well, Canada has let the telecom giants run wild. There’s no regulation at the federal level. Instead, we have an industry lobby group writing a wireless code of conduct.

Not good enough. Not even close.

Since Ottawa has abdicated, Quebec passed a consumer protection law that restricts penalties charged on cellular contracts. Manitoba also plans to impose new rules, although perhaps moving too far into an area of federal responsibility. (See the Public Interest Advocacy’s Centre’s comments here.)

We’re at a turning point in Canada. The companies have too much power and consumers too little. The government is failing to ensure there’s a competitive market in telecommunications, a key area that affects all its citizens.

Consumers have to raise their voices and let Ottawa know they won’t stand for the status quo any longer.

24 comments

  1. Matthew Adie

    Jan 24 2011

    Usage Based Billing really isn’t being implemented in a fair manner. In reality, it’s simply a way for Bell to extort money from its monopoly.

    The cost per gigabyte over the caps is incredibly high (much much higher than what they pay to provide it) and with the growing prevalence of online backups, video streaming and VoIP, the average consumer will hit the cap at some point.

    I don’t see this as an issue of light users subsidizing heavy users, and I suspect that this has very little to do with internet usage loads at all.

    Instead, it’s an anti-competitive measure to protect traditional TV and telephone markets in an age of streaming video (Netflix comes to mind) and voice over IP services.

  2. Michael

    Jan 24 2011

    Meh…

    Not enough people causing a stir up about this issue.

    Until there is a change of some sort, jump off Rogers/Bell/Primus, keep your cable/dsl modem and sign up for Teksavvy with 200Gb monthly caps and same speed/service for less money (since they resell both Rogers and Bell):

    http://teksavvy.com/en/res-internet.asp

    Show them who you want to do business with by going to a reseller instead…

  3. Dave Ings

    Jan 25 2011

    I’m afraid I’ll have to respectfully disagree and suggest that much of this is much ado about nothing.

    I’m a Bell customer who streams from iTunes and Netflix. Bell will top up your plan’s download limit by 40 GB for each $5 extra a month you spend. So cancel your $100 a month cable service (I did) and spend $5 or $10 of it to top up your download limits. Then don’t worry about it! 🙂

    The only part of this issue that concerns me is the unilateral changes to existing contracts. That is wrong and should not be permitted by statute nor enforced by the courts.

    Regulate? Often when the government regulates something the price only goes UP (think milk, poultry, cable bills, etc) so I don’t see that as a viable proposal.

    Dave Ings

  4. jj

    Jan 25 2011

    The Forbes magazine bases it on ‘standard definition online viewing’. I think if there is a choice and most importantly if your usage limits allow it now, most people would prefer HD. I’m sure the numbers would be quite different if they based it on HD for comparison. SD is being phased out for more and more HD and that in turn probably eventually for blu-ray etc. etc. Even Youtube has HD now and if you compare it to SD videos there is a definite difference.

    “Receive up to 500 digital photos.” Please note the ‘up to’. Once again, with the HD in digital photography I can fill up 1GB pretty quickly and with much less than 500 photos. And ‘download 1.5 movies (or 2/3 of a movie in high definition)’ is a bit off if the increase in size of HD is anything to go by.

    I’ve had Rogers and their restrictive usage limits. I would log-in frequently to check my usage fearing that I would go over by even 1GB and of course the meters would always be delayed. At first I didn’t know that and I believed I was ok so I watched a HD stream, downloaded some music, updated some of my programs I hadn’t bothered to for months, some manga, some anime, some foreign TV shows and a couple of days after I was shocked at how my usage shot up. After that I basically didn’t use the internet except for basic web browsing for at least a week. And when you share the internet with other people in the household, the usage adds up. Even a little makes a difference. We switched providers to one with a generous 200GB (although the connection and speed is a big downgrade) which is sufficient for now… it’s a load off my back. I don’t have to worry about constantly checking my usage and getting hit with extra charges.

    I don’t know how I can go back to a lower cap… I was thinking of cutting my landline and cable to save money but now with UBB and no hope for updates in infrastructure where I live, I have no alternatives.

  5. Potato

    Jan 26 2011

    This CRTC decision was an absolute travesty. What’s the point in having competition if Bell gets to set the prices and everyone else has to play along? Plus, a 25000% mark-up is just criminal.

    I’m all for usage based billing in theory, but at the pennies per GB data actually costs, not the $2.50 Bell is charging.

  6. Potato

    Jan 29 2011

    Dave, there’s a few issues. The first is that the price per GB is way inflated.

    Even if you buy Bell’s package, you’re paying at least 12.5 cents/GB (and that’s if you use exactly 40 GB more — if you buy it just to go over by a few GB, the cost per GB is higher).

    For a family with a few avid internet users (I use ~40-50 GB/mo, my sister uses ~35 GB/mo, my dad uses ~5 GB/mo… it adds up!) you’ll run through the extra “top-up” and get hit with the ridiculous per GB overages.

    Plus, Bell doesn’t let you add those “insurance” packages for just the months you need them. If you have a big one-off download need (new Linux install, a big package of EEG data to analyze at home while you’re sick, a game from Steam or XBox Live…), you’ll have to foresee that at least one billing period in advance.

    The second issue is the anti-trust one: since these jacked up fees don’t represent actual costs, the incumbents aren’t charging their TV providers, which gives them a leg up on, say, Netflix.

    The third, and to my mind biggest one, is forcing the resellers/independent ISPs to charge the same fee structure. The small ISPs already pay for a data pipe and the usage of their users.

    One of the solutions to Bell’s and Roger’s usurious usage fees is to go to the competition — but now that option has been cut off at the knees.

    Government regulations do usually allow for price increases, sometimes more than you’d get in a truly competitive market. It’s a concession to monopoly providers. But we can’t allow monopolies (or duopolies) to exist unchecked, especially in a sector that is becoming a vital part of our infrastructure.

    We wouldn’t allow the gas company to charge an extra $500/mcf in the winter (when even the peak wholesale price of gas is in, say, the $5 range) just because it was high-demand time and you had no other choice.

  7. Da Ma

    Jan 29 2011

    I think this is going to be a big deal.

    Technology is supposed to, and does, get cheaper as time goes on. Any increase in prices for data is ridiculous.

    My 100mbit router cost less than my 10mbit. My DSL modem cost me less than my 56k, which cost less than my 2400baud before that, without even accounting for inflation.

    There’s no reason these telcos can’t offer unlimited or seemingly unlimited service.

    It’s funny how we regulate most other natural monopolies (phone, gas, water, sewage, electric), even those with several competitors (who really needs natural gas anyway?), but not data.

    I could truck in my own water and propane, but I don’t have these alternatives with internet. The connection is the product.

    So why don’t we regulate it as such?

    Give the ISPs a rate of return per gigabyte that actually increases usage by making it profitable to increase everyone’s connection to 100mbit/second.

    Oh wait, they all have radio stations, TV stations, telephone service, IPTV and broadcast distributors to protect. They were happy to offer unlimited always-on connections until it started cutting into their quadruple-prey (pun intended).

    Ellen, I think you should contact Wightmans Telecom, which offers fibre to the home for $40/month with no limits. How can they offer additional mbit/s for just $1/month?

    Ask them if they know why Bell can’t offer what Wightmans is offering, or what a gigabyte actually costs. Or even contact some of the overseas ISPs and ask them what their secret is.

  8. Mike

    Jan 31 2011

    Mike, we got your opinion the first time.

    Regardless, some people don’t want to use Bell. Some people want a choice. Some people don’t want to have parts of their internet limited or throttled.

    Bell does those things to their internet customers. That’s perfectly fine. The problem is forcing it on everyone else, and in the process, eliminating choice and competition in the marketplace. That’s the problem here.

    Sure, it may be much ado about nothing to you right now. But I doubt you’ll be happy when you’ll have only a few choices left.

    Pretty soon, it’ll be only Bell or the cable company left, and both their offerings will be almost exactly the same. What will you do then? What if they cut off access to a certain internet application you like?

    They could easily throttle Netflix access to stop it from competing with their own video offerings. Oh, and don’t forget about the ever increasing bills. Any Bell or cable customer can tell you about those.

    Your only other option would be to just not have internet at all. What kind of choice is that?

  9. CommieCowboy

    Feb 3 2011

    “What is the Ontario Government doing to protect its consumers?????”

    McGimpy and his cronies are more concerned about protecting boxers from punching each other too hard than they are about protecting consumers from their friends at the big telcos.

  10. Vic Bartram

    Feb 3 2011

    Our family used to be with Rogers, prior to switching back to Bell. There were times when we would see extra charges on our bill, sometimes as much as $50/$60 a month due to the overage on our usage on the internet.

    We found it difficult, especially with teenagers in the house, so went back to Bell. We signed up with unlimited usage and haven’t seen an increase as of yet.

    I think it will be difficult for companies to impose this new rule, as most families today have several computers in their home, including the various online gaming sites for the kids. It will be just too expensive, and most could be forced to cut back.

  11. William Russell

    Jun 8 2011

    Bell Mobility deceives both its employees and customers …. check my link to read my blog from employee perspective so you know what’s really been going on inside Bell Mobility

  12. JAG

    Aug 13 2012

    If you people realized what a joke this is, you would be even more upset. The fact is that no telco is saturated by internet speeds ever, but only sometimes at the last mile is a shared mile (which costs them money to upgrade). And that is not a GB per month issue, that’s a maximum bandwidth (spike) allocation issue.

    A room, about the size of an apartment, carries the data in each city for that entire city. It is all fiber, and it handles all bandwidth. And if your population were to increase 100X tomorrow, it would still have spare bandwidth.

    What they are doing here, and in other places with limited competition (usually due to government regulations) is they are giving the worst service possible for the highest price possible.

    This cannot be fixed by a consumer rights law. This is fixed by allowing anyone to start up their own telco and drop fiber or even wireless receivers to the last mile.

    But Canada has much the same mentality as the UK, where socialized everything is just peachy. So, this is socialism aka capitalism for the few aka crony capitalism. No options and no choice. Hope you enjoy it.

    Until you comprehend what it is, you will not get angry enough to act.