A Burlington, Ontario customer of Cogeco Cable, convinced by the company to upgrade his broadband service to a usage plan with a higher allowance, has been billed nearly $700 in broadband usage overlimit fees in a single month after the company quietly removed the cap on overlimit fees associated with the plan.

The customer first learned about the change in Cogeco’s usage-based billing policies when the company’s “auto pay” billing service deducted nearly $900 from his checking account to pay his cable bill, he told Broadband Reports.

Further charges and late fees have now racked up to almost $1,200 and so far Cogeco has only been willing to provide its customer with a $50 “courtesy credit.”

Cogeco claims it notified customers last fall it was removing the maximum overlimit penalty cap from two of its broadband plans, including the one the Burlington customer was persuaded to choose by a company representative.  Prior to October, The Ultimate 30 plan, designed for so-called “heavy users,” included a 125GB usage allowance with an overlimit fee of $1/GB, capped at a maximum of $50.

Canadian broadband users likely to exceed a broadband usage allowance typically upgrade to a service plan with a higher allowance or factor the capped, fixed overlimit fee into their assumed monthly cost for service.  But when providers like Cogeco quietly increase the maximum overlimit fee, or remove it altogether, usage-based billing shock often follows.

The customer claims he never received any change of terms notification until the first bill with unlimited overcharges arrived, and Cogeco admits it cannot assert every customer received the notification much less absorbed its meaning.  According to the Burlington man, Cogeco told him customers often don’t read the letters or throw them out, unopened, assuming it is advertising.

Even if Cogeco did send a letter, the man believes the company has gone out of its way to avoid prominently alerting customers about the possibility of explosive increases in broadband usage expenses.  Instead, they have framed the changes as an “enhancement” that will “help you get more from the Internet.”

When bill shock becomes an enhancement -- An informational message included on a recent Cogeco billing statement.

Cogeco customers upset about the change say it is easy for people to miss the implications buried in a rate chart that the maximum overlimit penalty has been removed.

“A Cogeco salesperson called me to change my service based on my usage,” said the Burlington man. “[The Ultimate 30 Plan] would cost me less money and in return I would receive faster internet and an increased data transfer capacity.”

Now the customer also gets hundreds of dollars in overlimit fees, too.  Even worse, the man complains, he was never given an opportunity to adjust his usage or service plan to avoid the enormous bills he has since received.

“I would have stepped down to the Turbo 20 package that has a maximum of $50 for usage or the Business Ultimate 50 package which [has] unlimited data transfer,” the man complains. “Either option would have saved me hundreds of dollars.”

The cable bill in your future?

Cogeco’s unwillingness to forgive overlimit usage charges seems strange to the Burlington man because several other Cogeco plans retain a fixed limit on overlimit fees.  Other Cogeco customers have begun to question the company’s logic in usage billing more generally, because hundreds of gigabytes consumed on a slightly slower usage plan would result in a bill a fraction of the cost the Burlington man now faces.

“Why does Cogeco’s bandwidth cost a ridiculous $1 per gigabyte on one plan, and considerably less on others with capped overlimit fees,” asks Stop the Cap! reader Jeff, another Cogeco customer who shared the story. “It’s a usage shell game and it’s all about the money because they won’t give a decade-long customer a break on fees they would never have charged many of their other customers.  The bandwidth costs to Cogeco are the same no matter what plan you are on.”

Jeff wonders whether customer goodwill matters anymore at telecommunications companies.

“They’d rather harass this man for hundreds in phantom ‘costs’ and destroy their reputation in the process.”

The customer says he can’t even be sure the bill is correct.

“Internet usage based billing is flawed,” he says.

He points out the methodology and devices that determine the bandwidth are not certified or regulated by Measurement Canada. There is no recourse for customers to ensure the integrity and accuracy of the bandwidth measurements. Cogeco customers must rely on an ‘Internet Usage’ meter Cogeco has on the website. The meter is not always up to date and has frequent outages, customers report.

Against this backdrop, the Canadian Radio-television and Telecommunication Commission new rules governing the practice of usage-based billing are set to take effect tomorrow, Feb. 1st.

“We are moving ahead with the implementation as planned to ensure that independent ISPs will continue to offer competitive and innovative services to Canadians,” said Leonard Katz, the CRTC’s acting chairman and vice-chairman of Telecommunications. “Some temporary adjustments have been made to ensure a smooth transition to the new billing regime and to ensure consumers are not inconvenienced.”

As an interim measure, independent ISPs who are customers of the Bell companies will have the flexibility to either merge their business and residential Internet traffic, or keep them separate.

In November 2011, the CRTC established how large telephone and cable companies should charge independent ISPs for the use of their networks.

In turn, cable and telephone company Internet Service Providers can continue to use usage-based billing practices similar to what Cogeco uses, or switch to a combination of flat-rate and usage-based billing.  But with the revenue potential Cogeco has illustrated it can earn from UBB, few large providers are anticipated to sell residential customers flat use plans.

“Caveat emptor,” says our reader Jeff.

Just a few weeks after announcing $2 rate increases on most tiers of the company’s broadband service, Rogers Communications has announced speed upgrades and tiny increases in usage allowances for certain customers:

• Express: download speeds will increase from up to 12Mbps to up to 18Mbps and data allowance will increase from 60GB to 70GB.
• Extreme: download speeds will increase from up to 24Mbps to up to 28Mbps and data allowance will increase from 100GB to 120GB.

These enhancements apply to customers utilizing Rogers DOCSIS 3.0 capabilities. Rogers will start rolling out the faster speeds to existing Express tier customers currently receiving download speeds of up to 12 Mbps starting January 26^th and will continue over the following weeks. New customers will experience faster speeds beginning February 21^st. All new and existing customers will benefit from higher data allowances starting March 8^th.

Rogers has played repeatedly with their usage allowances, particularly for its Extreme tier, which has seen increases and decreases over the past few years:

Rogers Extreme Tier Usage Cap History

• 2009: 95GB per month
• 2010: Reduced to 80GB per month (-15GB)
• 2011: Increased to 100GB per month (+20GB)
• 2012: Increased to 120GB per month (+20GB)

Rogers’ Express service gets just a 10GB monthly bump, making the speed upgrade less valuable because customers are restrained from using the service.

Rogers says the incremental upgrades are a result of Canadians using the Internet more than ever.

“Rogers customers are increasingly watching movies on Rogers on Demand Online, working from home and using multiple devices like tablets and laptops connected by Wi-Fi to the internet,” said John Boynton, executive vice-president and chief marketing officer at Rogers Communications. “The ways Canadians are using the internet are changing dramatically and we are constantly reviewing our plans and policies to ensure they deliver the best possible customer experience that lines up with evolving needs and usage patterns.”

Apparently those living in western Canada use the Internet even more, because Shaw Communications’ comparable broadband tiers are much more generous:

Shaw Communications Usage Allowances

• High Speed 10Mbps: 125GB per month
• High Speed 20Mbps: 200GB per month
• Broadband 50Mbps: 400GB per month

Katz

A former executive at Bell Canada and Rogers Communications has been named interim chairman of Canada’s telecommunications regulator.

Current Canadian Radio-television Telecommunications Commission (CRTC) vice-chairman Leonard Katz was appointed interim chairman Wednesday, following the departure of Konrad von Finckenstein.

Katz is not expected to hold the position for long.  Political insiders point to Conservative government favorite Tom Pentefountas, who has spent months lobbying for the CRTC top spot.  In July, Pentefountas asked a consumer group, “what is so undemocratic about allowing a few companies to control the Internet?”

Katz is yet another regulator who has spent most of his professional life working for the companies he is now expected to oversee.  Katz held senior posts at both Bell and Rogers, Canada’s largest telecommunications companies, before joining the CRTC in 2005.  He has served as its vice-chairman since 2007.

Katz has crossed swords with the Conservative government led by Stephen Harper on more than one occasion, most recently being embroiled in the controversy over Usage Based Billing.  An initial decision by the CRTC to adopt much of a plan submitted by Bell that would end unlimited flat rate access to the Internet in Canada was reversed by then-Industry Minister Tony Clement.  The government’s decision to overrule the Commission opened the door for ridicule by opposition Liberal and NDP MPs, who questioned the credibility of the CRTC and its authority under Conservative leadership.

Departing chairman Von Finckenstein blamed outdated regulatory policies for much of the controversy at the CRTC.  The government agency has been forced to adopt a largely deregulatory stance towards telecommunications, and has regularly been accused of catering to the interests of some of Canada’s largest telecommunications companies.

In the past several years, the CRTC has overseen a telecommunications marketplace that is rapidly consolidating, especially around companies like Bell, Rogers, and Shaw Communications, which have interests in broadcasting, publishing, entertainment, and telecommunications services.

Pentefountas

Katz could be replaced as early as this fall, and the controversial Conservative Montreal lawyer Tom Pentefountas remains the favorite pick among political watchers in Ottawa.

But Pentefountas has his enemies.  He has been roundly attacked for lacking the necessary experience and credentials to act as a commissioner on the CRTC, much less serve as its chairman, particularly by NDP Heritage Minister Critic Charlie Angus (Timmins-James Bay).

Pentefountas, Angus claimed, told national media five months after being considered for the post of vice-chairman of the CRTC, “he didn’t know anything about the job.”

One unnamed source told Postmedia News Mr. Pentefountas may not grasp the transformational nature of the Internet and its impact on traditional broadcasting and telecommunications companies.

“He’s occasionally comes out of left field,” the source said.

CBC-TV aired this exchange last February between NDP Heritage Critic Charlie Angus (Timmins/James Bay), Dean Del Mastro, Parl. Secretary for the Minister of Heritage, and Liberal MP Marc Garneau (Westmount/Ville-Marie) regarding Tom Pentefountas, the challenges at the CRTC, and controversy over a new policy that would allow the reporting of “false news.”  (12 minutes)

In what might be considered a funny throwback to The Flintstones if it wasn’t so expensive, some British Columbia residents buying Apple’s popular iPad tablet are bringing home an iRock instead — a box filled with a bag of modeling clay.

Surrey, B.C. resident Sundeep Randhawa was initially delighted to unwrap an Apple iPad this Christmas, until she opened the shrink-wrap sealed box and found carefully-wrapped modeling clay instead.

Randhawa told CTV News she thought at first it was a joke — a gag gift from her husband.

“$695 worth of clay,” husband Mark responded.  He didn’t find it funny either.

Retailers across the Vancouver area initially treated customer returns of the boxes of clay with skepticism, suspecting fraud on the part of the person seeking a refund or replacement.  But as consumers started bringing back more boxes of clay to major electronics outlets like Future Shop, WalMart, and Best Buy, British Columbia authorities, at the behest of CTV consumer reporters, soon announced a crime ring was responsible.

Apple's iRock Claypad

It turns out the affected iPads were previously purchased with cash, replaced with clay of similar weight, and professionally re-shrink-wrapped and returned for a cash refund.  The perpetrators ended up with brand new iPads and received a full refund from retailers because the product appeared unopened.  In turn, retailers returned the products to store shelves where unsuspecting consumers ended up buying them.

“It’s a fraud and it just shows how creative some of these fraudsters are,” says the RCMP’s Tim Shields.

Shields notes finding those behind the scam has turned out to be more difficult than just arresting whoever returns a re-wrapped unit.  That is because the crime ring is using Craigslist to recruit innocent third parties to act as “secret shoppers,” returning the clay iPads to “test” how retailers handle customer returns.  Authorities say those hired to manage the returns have been “unwitting mules” and are not being held criminally responsible.

Wireless providers selling mobile broadband-equipped iPads have so far been immune to the fraud, because most dealers pre-activate the wireless service in-store, which requires factory-sealed boxes to be opened within the store.  Returning the equipment, which is often accompanied by a two-year service agreement, is also much more complicated, making a clandestine 3G-clay replacement unlikely.

But with professional wrapping equipment at the disposal of criminals, other high-value electronics could soon be the next targets of fraudsters.

Although Sundeep’s Christmas was ruined by the fraud, her husband finally managed to secure a full refund.  Now he, along with some other BC residents, are opening their electronics purchases in-store to verify what they are buying before walking out the door.

Investigators suspect it is only a matter of time before this type of fraud reaches other parts of Canada and the United States.

CTV British Columbia reports on an innovative new fraud that could leave you holding a bag of clay instead of a shiny new Apple iPad.  (2 minutes)

Citing “the many enhancements they have launched” in the past year, Rogers Cable has announced an across-the-board broadband rate increase that will cost subscribers an additional $2 a month for Internet service effective March 1, 2012.

Rogers claims the rate increases come as a result of investments in their broadband network and the introduction of SpeedBoost, which delivers a temporary speed increase during the first few seconds of file transfers.

Rogers also claims they have increased monthly usage allowances and download speeds on many of the company’s broadband packages.

The rate increase is not going over well with subscribers, however.

Stop the Cap! reader Nick in Markham, Ontario is one of them.

"No additional charge," except for the $2 rate increase Rogers suggests comes after the addition of "service enhancements" like SpeedBoost.

“Rogers introduced ‘SpeedBoost’ as a ‘free’ feature which we are now apparently/effectively going to pay more for,” Nick writes. “I am really unimpressed with Rogers’ ‘generosity,’ especially respecting bitcaps, considering they are totally arbitrary.”

Nick notes customers in Quebec and western Canada have more generous usage allowances, and often lower bills.

“Shaw customers are getting a much better deal than Rogers’ customers these days,” Nick says. “If Rogers increased prices by $2 and took the caps completely off, I’d gladly pay a little more just to end years of headaches over watching my Internet usage.”

“I am so tired of feeling like my Internet connection is being rationed, and considering my choices have been Bell or Rogers, I think I’ll sacrifice some of the higher speeds and just consider switching to TekSavvy DSL, because it costs less and doesn’t come with Rogers’ stingy caps.”

A Montreal Gazette piece on the Canadian telecommunications industry says stockholders and company executives are doing much better, enjoying major boosts in telecom industry dividends.  The industry enjoyed a 25% boost in stock price + dividend yield over other Canadian stocks over the past 12 months.  The industry also enjoys the benefits a barely-competitive marketplace that offers opportunities for unfettered rate increases:

Canada remains a heavily protected market in telecommunications, which is one reason why consumers don’t get the kind of deals available in other countries.

But in the absence of such [competitive] changes, there’s a strong case to be made that telecom and cable companies will post solid profit growth this year and next.

Canadian taxpayers gift Rogers-owned Macleans magazine $1 million annually, just because.

The Tories running the Canadian federal government are on a mission to slash government spending.  In addition to budget cuts, Ottawa is about to start pink-slipping public service workers.  But executives at Rogers Communications, Canada’s gi-normous media conglomerate can rest easy knowing their corporate welfare payments are still safe from the government axe.

At a time when North Americans are abandoning print media in droves, it’s more than a little odd that Rogers is getting a government handout for a whole mess of magazines the company still prints and sells to an increasingly disinterested public.

It turns out the Canada Periodical Fund exists to throw nearly $71 million a year in subsidies to magazines ranging from the endangered to the ubiquitous.  Among the titles getting taxpayer handouts include those even Americans recognize.  Rogers is getting $1.5 million a year in free money just for printing Maclean’s.  They get the same for Chatelaine, Canada’s version of Reader’s Digest, and Canadian Living.

In fact, more than a dozen well-known magazine titles get a cool million plus from the federal government, just for… existing.

Ironically, Canadian Heritage defends the subsidy program as an effort to ensure “Canadians have diverse Canadian print magazines, non-daily newspapers, and digital periodicals.”  Canadian publishing, much like its telecommunications marketplace, is increasingly about as non-diverse as you can get, as a handful of giant corporations consolidate their ownership of most major print publications.  Transcontinental and Rogers together account for half of the top 50 magazines in Canada.  Smaller titles are fading through a combination of increasing postal rates and decreasing interest on the part of an online-0bsessed culture.

The Ottawa Citizen thinks it has all gotten out of hand:

The central problem with this government program is that big magazines don’t need government help and the little ones aren’t worth it. A really generous observer could see public value in Atlantic Horse & Pony, Modern Dog or Hardware Merchandising, but this is Canadian culture writ extremely small.

The magazine program clearly helps prevent a Darwinian reduction in the astounding number of Canadian magazines. Thus we have Big Buck Magazine ($40,521) a quarterly periodical devoted to deer hunting. Subscribers who enjoy pictures of dead animals might also like Western Canadian Game Warden ($18,626), Ontario Monster Whitetails ($8,488) or The Canadian Trapper ($5,303).

Farm publications are soundly supported, including Canadian Ayrshire Review ($12,319), Canadian Cattlemen ($158,952) and Cowsmopolitan Dairy Magazine ($16,504). It includes no sex tips, by the way. The biggest beneficiary is The Western Producer, a weekly farm newspaper that takes in nearly $1.6 million.

Religious publications also do well, including Canadian Mennonite ($152,957), Mennonite Brethren Herald ($85,590), The United Church Observer ($191,592) and Presbyterian Record ($156,373).

Even the satirical magazine Frank collected $57,517 from the taxpayers, surely one of its best pranks.

[...] The taxpayers might not get much value from the Canada Periodical Fund, but the Conservative government is making the most of it. In the Canadian way, the magazine and weekly newspaper grants have been turned into pork. Local MPs announce these silly little grants, using standard language about how the giveaway contributes to the economy and the diversity of Canadian content.

A few thousand dollars could do wonders for most digital versions of small print publications, all without killing trees and wasting energy delivering them to a dwindling number of readers.  But giant-sized conglomerates like Rogers don’t need the handouts.  Not when the company enjoys a revenue largesse from its current holdings.  You cannot promote diversity handing out checks to companies that would like nothing better than to use the money to merge and acquire their way to an increasingly concentrated media marketplace.  Nobody has proved that better than Rogers Communications.

Usage caps low enough to set your hair on fire.

Bell customers across Ontario and Quebec are noticing the limbo dance is back in vogue as Bell Canada lowers the bar on usage caps for its Fibe fiber to the neighborhood service and boosts the maximum overlimit fee to $80.

Late last week, Bell’s website published the new, lower usage caps for broadband customers:

• Fibe 10 — 75GB 60GB (per month) (Quebec)
• Fibe 12 — 50GB 40GB
• Fibe 16 — 75GB 65GB (Ontario) 90GB 80GB (Quebec)
• Fibe 25 — 125GB 100GB (Ontario) 100GB 90GB (Quebec)

Users who exceed the new usage allowances face an overlimit fee of $1/GB — maximum $80 a month (up $20 effective Jan. 1, 2012).

New customers enjoy aggressively discounted introductory offers, but with usage allowances in decline, customers are being conditioned to use less or pay more.  It is the classic one-two punch of Internet Overcharging:

1. Gradually reduce usage allowances exposing customers to overlimit fees;
2. Increase the maximum penalty rate for exceeding the limit.

“I am watching my bill to see if they attempt to impose the new limits on existing customers,” shares Stop the Cap! reader François who lives in Toronto. “You pay Bell more for less and even as a new customer you might first pay less and also get less.  The ‘pay more’ comes after the first year.”

Want to use more?  You will have to buy Bell’s Usage Insurance in advance:

• $5/month for an extra 40GB
• $10/month for an extra 80GB
• $15/month for an extra 120GB

Ex-CEO Jim Shaw earns even more not working for the cable company his father founded.

The ex-CEO of Shaw Communications is a charter member of the 1% Club, raking in more than $25 million from a golden parachute retirement package cable customers are paying as part of their ever-increasing monthly cable bills.

Jim Shaw earned $1.2 million in 2011 from his duties as chief executive.  But when the 53-year old decided early retirement was right for him, the company that shares his name provided a generous $25.5 million parting gift.  That’s a golden parachute package equivalent to what more than 2,000 lower-middle class Canadians earn each year.

What makes Jim Shaw worth that much?  Company officials claim the departing CEO helped the company earn new revenue.  But Shaw subscribers know the recipe for higher revenue is easy to make — annual rate increases and overpriced products and services.

Shaw didn’t have much of a fight justifying his departing pay package.  Not with his father J.R. Shaw holding 79 percent of the cable company’s Class A voting stock.  The Shaw family has been especially generous with themselves in 2011.  Brother Brad pocketed $15.8 million this year for himself.

The Shaw Executive Money Party has grown so large, the company’s top six paid officers collectively walked away with compensation of $82.2 million in 2011, $1.5 million more than Shaw Communications earned in the entire fourth quarter of 2010.  Imagine one-quarter of your company’s earnings headed straight into the pockets of a half-dozen employees, often immediate family members of the CEO or company founder.

Even those sums are dwarfed by the $330 million the company has now set aside to guarantee executive pensions, even as Shaw’s lower level employees (and most of their customers) see their incomes continue to stagnate, if not outright decline.

That three Shaw family members collectively grabbed $58.6 million from the company accounts is not welcome news for shareholders.  Jim Shaw’s exit package in particular proved galling for some, particularly because he effectively sabotaged his own standing with image-damaging public comments and an abrasive management style.

“There was a lot of institutional backlash over the pension given to Jim on his departure because it was rather monstrous,” one pension fund adviser was reported as saying in the Edmonton Journal. “This is just another piece that will get everybody upset.”

Shareholders are also unimpressed with the value of their Class B Shaw stock, which has remained lackluster since 2006.

While top management earned big, Shaw has alienated customers with legendary call holding times that can extend for hours, annual rate increases for cable service, and less-than-impressive customer satisfaction scores.

Shaw is western Canada’s dominant cable operator.

Toast Sacramento produced this 28-minute documentary which succinctly tells the story of North American broadband, and how commercial providers have set us up for long-term failure, especially in rural and suburban areas.  Whether you live in the United States or Canada, phone and cable companies dominate the telecommunications landscape.  Unlike other modern-day necessities, broadband is almost entirely in the hands of an unregulated free market that fails millions.  Where competition exists, customers can get reasonably fast service, but it costs more than it should.  Where competition is hard to find: slow speeds, spotty access, and out-of-sight prices predominate.

The documentary explores:

• the neglect of suburban and rural DSL from large phone companies like AT&T;
• how phony, industry-influenced broadband availability maps convince public officials there isn’t a big broadband problem;
• why the country’s broadband demands may be too great for providers to handle without major new investments, leading to usage limits and slowdowns to delay needed upgrades;
• and how the latest broadband technologies being installed overseas fall victim to Wall Street temper tantrums back home.

Bell Canada is misleading potential customers when mailing them invitations to sign up for Fibe TV, which the company calls “a new TV service delivered through our new state-of-the-art fibre optic network.”

Only it isn’t “state of the art” or fiber to the home.

Bell characterizes its Fibe service as Canada’s “most advanced” telecommunications network, even better than traditional cable television.  But in fact, it’s a marriage between fiber optics and the decades-old copper wire phone network Bell continues to rely on to provide a triple-play package of phone, broadband, and television, all without investing in superior fiber to the home technology.

Only it's not a true fiber network.

That the company claims it is running the most advanced network in the country must come as quite a surprise to Bell Aliant, the dominant provider in Atlantic Canada.  Aliant is busily building a true fiber-to-the-home network for at least 600,000 customers in the most eastern part of the country.

While Fibe is an evolutionary move for Bell Canada, it is hardly revolutionary because of its dependence on traditional copper phone lines.  Canada remains behind the United States in deploying fiber technology of all kinds, including Fibe‘s fiber-to-the-neighborhood system.  Bell’s closest cousin AT&T has been running its own comparable U-verse system for a few years now.

Providers like the benefits of fiber-to-the-neighborhood technology and the fact it costs considerably less than rewiring every home for fiber optic connections.  Fibe can deliver speedier broadband than traditional DSL, but cable operators like Rogers and Videotron are already positioned to beat Fibe speeds, and a true fiber to the home network can beat anything on offer.

Phone and cable companies in the United States who have pitched older technology as a “state of the art fiber network” without actually providing one have been challenged by true fiber to the home competitors like Verizon, and forced to retreat.  But with so few Canadian providers in a position to challenge Bell’s fiber claims, it will be up to regulators to declare the advertising and marketing materials misleading.