Genachowski

On Tuesday, Federal Communications Commission Chairman Julius Genachowski said that he generally supports data caps and tiered broadband pricing plans. The chairman’s comments came during an interview at the Cable Show with former FCC Chairman Michael Powell, now the top lobbyist with the National Cable and Telecommunications Association.

Genachowski has remained consistent in his cautious support for “industry innovation” that includes usage-based pricing, with a caveat providers should not exploit that at the expense of consumers.  But consumer groups like Free Press already believe usage caps, particularly on wired broadband services, are already bad for consumers, exploit a marketplace duopoly, and are worthy of investigation by the agency.

“All the evidence shows that caps on wired broadband platforms like cable make no sense. They don’t affect network congestion, even in the rare instances where congestion actually exists on these systems,” says Free Press policy director Matt Wood. “Cable companies use them to penalize their subscribers and discourage them from using innovative services that compete with cable TV.”

Free Press reminded Genachowski of Comcast’s recent actions which exempted its own video content from usage caps, while leaving them in place for competitors.

“Comcast’s recent actions show both the harms of these caps and the lack of any legitimate reason for them,” noted Wood. “[Now] Comcast changed course and suspended caps temporarily in all but a few markets — but promised to start overcharging any users there who exceeded these arbitrary limits.”

“The FCC has turned a blind eye to this competition problem. If it wants to see experimentation in pricing that actually benefits consumers, we need a competition policy that creates more experimenters.”

Comcast today announced it was incrementally increasing its 250GB usage cap by 50 additional gigabytes per month as part of a new trial, the first allowance increase since the company started the cap in 2008.

But before so-called “heavy users” celebrate, the company is also announcing it will test overlimit fees for customers who exceed the new 300GB cap.

Cathy Avgiris, Executive Vice President and General Manager, Communications and Data Services, Comcast Cable:

We’ve decided to change our approach and replace our static 250 GB usage threshold with more flexible data usage management approaches that benefit consumers and support innovation and that will continue to ensure that all of our customers enjoy the best possible Internet experience over our high-speed data service. In the next few months, therefore, we are going to trial improved data usage management approaches comparable to plans that others in the market are using that will provide customers with more choice and flexibility than our current policy. We’ll be piloting at least two approaches in different markets, and we’ll provide additional details on these trials as they launch. But we can give everyone an overview today.

The first new approach will offer multi-tier usage allowances that incrementally increase usage allotments for each tier of high-speed data service from the current threshold. Thus, we’d start with a 300 GB usage allotment for our Internet Essentials, Economy, and Performance Tiers, and then we would have increasing data allotments for each successive tier of high speed data service (e.g., Blast and Extreme). The very few customers who use more data at each tier can buy additional gigabytes in increments/blocks (e.g., $10 for 50 GB).

The second new approach will increase our data usage thresholds for all tiers to 300 GB per month and also offer additional gigabytes in increments/blocks (e.g., $10 per 50 GB).

In both approaches, we’ll be increasing the initial data usage threshold for our customers from today’s 250 GB per month to at least 300 GB per month.

In markets where we are not trialing a new data usage management approach, we will suspend enforcement of our current usage cap as we transition to a new data usage management approach, although we will continue to contact the very small number of excessive users about their usage.

Tell Comcast to drop the padlock on your broadband connection altogether.

The change comes at the same time Comcast is under fire for allegedly giving preferential, cap-free treatment to its own video content through an Xbox video game console app.

Comcast has followed AT&T’s pricing, testing a new overlimit fee of $10 for each 50GB increment customers exceed their allowance.  While not outrageous on a per gigabyte basis, the minimum charge of $10 is steep, especially considering Comcast pays only pennies per gigabyte to move traffic.

Stop the Cap! urges Comcast customers to use the occasion to demand the company suspend its unnecessary and arbitrary usage cap altogether.

The best approach for consumers is the one Comcast plans for markets not subject to a trial of their latest Internet Overcharging schemes. Namely, leaving the overwhelming majority of Comcast customers alone while informally reaching out to the tiny minority of customers the company feels are consuming data at levels that create significant problems for other customers on their network. With Comcast’s near-universal adoption of DOCSIS 3 technology, those problems are rarer than ever.

Rogers Communications has following up its “Next is Now” corporate video from 2010 with a sequel: “Next is Now… More Than Ever,” which highlights how Canadians are increasingly relying on mobile communications for news, entertainment, social life, work, and education.

While Rogers wanted the video to promote how the company would be a part of that telecommunications transformation, many of their customers can’t help but reflect on the fact the revolution is well-tempered with Internet Overcharging schemes like usage caps.

Stop the Cap! reader Alex is among them, noting the video says nothing about the company’s restrictive usage limits on home broadband and the even harsher caps on its mobile services.

Rogers, like most telecommunications companies, repeatedly tells investors there is real money to be made attaching meters to monetize megabytes.  Charging for broadband usage is a growth industry, and with the company’s own projections for data growth, they are well-positioned to be in the money for years.

With broadband dependency being as pervasive, if not more so, in Canada as in the United States, the barely regulated services on offer in both countries often come at a steep (and increasing) price — all for something even Rogers hints is becoming a utility — one as important as electricity, gas, and clean water.

Rogers Communications’ “Next is Now… More Than Ever” has broader implications than the company realizes. (3 minutes)

Growing questions are being raised about whether Comcast is violating FCC and Department of Justice policies that prohibit the cable company from prioritizing its own content traffic over that of its competitors.

Comcast’s Xfinity Xbox app offers Comcast customers access to Xfinity online video content without eating into their monthly 250GB Internet usage allowance. Netflix has called that exemption unfair, because its content does count against Comcast’s usage cap. New evidence now suggests Comcast may also be prioritizing the delivery of its Xfinity content over other broadband traffic, a true Net Neutrality violation if proven true.

Bryan Berg, founder and chief technology officer at MixMedia, believes he has found proof the cable company is giving its own video content preferential treatment, in this somewhat-technical finding published on his blog:

What I’ve concluded is that Comcast is using separate DOCSIS service flows to prioritize the traffic to the Xfinity Xbox app. This separation allows them to exempt that traffic from both bandwidth cap accounting and download speed limits. It’s still plain-old HTTP delivering MP4-encoded video files, just like the other streaming services use, but additional priority is granted to the Xfinity traffic at the DOCSIS level. I still believe that DSCP values I observed in the packet headers of Xfinity traffic is the method by which Comcast signals that traffic is to be prioritized, both in their backbone and regional networks and their DOCSIS network.

Berg also contends Comcast’s earlier explanation that its Xfinity content should be exempt from its usage cap because it travels over the company’s private Internet network is also flawed:

In addition, contrary to what has been widely speculated, the Xfinity traffic is not delivered via separate, dedicated downstream channel(s)—it uses the same downstream channels as regular Internet traffic.

Berg

Broadband traffic management is of growing interest to Internet Service Providers, who contend it can be used to manage Internet traffic more efficiently and improve speed and time-sensitive online applications like streamed video, online phone calls, and similar services. But manufacturers of traffic management equipment also market the technology to ISPs who want to favor certain kinds of content while de-prioritizing or even throttling the speed of non-preferred content. The technology can also differentiate traffic that counts against a monthly usage cap, and traffic that does not.

Quality of Service (QoS) technology can be used to improve the customer’s online experience or help a provider launch Internet Overcharging and speed throttling schemes that can heavily discriminate against “undesirable” online traffic.

Berg further found that when he saturated his 25Mbps Comcast broadband connection, traffic from providers like Netflix suffered due to the bandwidth constraints.  Because he flooded his connection, Netflix buffered additional content (slowing his stream start time) and reduced the bitrate of the video (which can dramatically reduce the picture quality at slower speeds). But when he launched Xfinity video streaming, that traffic was unaffected by his saturated connection. In fact, he discovered Xfinity traffic was exempted from his normal download speed limit, allowing his connection to exceed 25Mbps.

While that works great for Xfinity fans who do not want their videos degraded when other household members are online, it is inherently unfair to competitors like Netflix who are forced to reduce the quality of your video stream to compensate for lower available bandwidth.

According to the consent decree which governs the merger of the cable operator with NBC-Universal, prioritizing traffic in this way is a no-no when the company also engages in Internet Overcharging schemes, namely its arbitrary usage cap:

“If Comcast offers consumers Internet Access Service under a package that includes caps, tiers, metering, or other usage-based pricing, it shall not measure, count, or otherwise treat Defendants’ affiliated network traffic differently from unaffiliated network traffic. Comcast shall not prioritize Defendants’ Video Programming or other content over other Persons’ Video Programming or other content.”

This graph shows Berg's artificially saturated 25Mbps Comcast broadband connection. The traffic in red represents Xfinity Xbox traffic, which is given such high priority, it allows Berg to exceed his usual download speed limit.

Comcast sent GigaOm a statement that denies the company is doing any such thing:

“It’s really important that we make crystal clear that we are not prioritizing our transmission of Xfinity TV content to the Xbox (as some have speculated). While DSCP markings can be used to assign traffic different priority levels, that is not their only application – and that is not what they are being used for here. It’s also important to point out that our Xfinity TV content being delivered to the Xbox is the same video subscription that customers already paid for and is delivered to their home over our traditional cable network – the difference is that we are now delivering it using IP technology to the Xbox 360, in a similar manner as other IP-based cable service providers. But this is still our traditional cable television service, which is governed by something known as Title VI of the Communications Act, and we provide the service in compliance with applicable FCC rules.”

Our View

Comcast, as usual, is talking out of every side of its mouth. In an effort to justify their unjustified usage cap, they have pretzel-twisted a novel way out of this Net Neutrality debate by paving their own digital highway on a Comcast private drive.

Comcast argues their 250GB usage cap controls last-mile congestion to provide an excellent user experience. That excuse completely evaporates in the context of its new toll-free video traffic. In fact, their earlier argument that its regionally-distributed streaming traffic should not count because it does not travel over the “public Internet” at Comcast’s expense does not even make sense.

Berg provides an example:

A FaceTime call from my house to my neighbor’s—which never leaves even the San Francisco metro area Comcast network, given that both of us are Comcast customers—goes over the “public Internet.”

Yet Comcast’s Xbox streams, which pass from Seattle to Sacramento to San Francisco through all of the same network elements that handle my video call (and then some!) are exempt from the bandwidth cap?

You can’t have it both ways, guys.

DOCSIS 3 technology has vastly expanded the last mile pipe into subscriber homes. If Comcast can launch their own private pipe for unlimited IPTV traffic that travels down the same wires their Internet service does, they can comfortably handle any additional capacity needs to support their “constrained” broadband service without the need to limit their customers’ use.

Usage caps remain an end run around Net Neutrality. Consumers given the opportunity to view content under a usage cap on the “public Internet” or using the “toll-free” traffic lane Comcast created for content from their “preferred partners” will make the obvious choice to protect their usage allowance. Comcast is certainly aware of this, and it is a clever way to discriminate through social engineering. It’s also less obvious. You don’t have to de-prioritize or block traffic from your competition to have an impact, you just have to limit it. Customers who repeatedly exceed their usage allowance face suspension of Comcast broadband service for up to one year. That’s a strong incentive to follow their rules.

Netflix is fighting to force Xfinity traffic to fall under the same arbitrary usage cap regime Netflix endures — a truly shortsighted goal. The real issue here is whether Comcast should be capping any of its Internet service.

Comcast has given us the answer, launching the very bandwidth-intense video streaming it used to decry was contributing to an Internet traffic tsunami.

It’s time for Comcast to drop its usage cap.

Cox Cable has slammed its phone company competition in a series of new TV commercials that call out antiquated and slow DSL. But customers switching to Cox have to endure that company’s unjustified Internet Overcharging schemes.  Cox arbitrarily limits your Internet usage in an effort to maximize profits and reduce costs.  Watching the online video Cox advertises could put you perilously close to your monthly allowance. Exceed it once too often and you may find your account shut off.

Cox executives promise they’ll listen to customers and what they want. Stop the Cap! urges you to participate in our pushback against Cox usage caps. Tell the cable company it does no good selling their broadband service for online video when the company threatens to shut it down if you watch “too much.”  (2 minutes)

Consumer Reports today released its 2012 list of America’s best phone, broadband, and pay television providers (subscription required), giving top scores to fiber-to-the-home and cable broadband and exposing some familiar phone and cable companies which year-after-year deliver “bottom of the barrel” scores.

Nearly 70,000 readers of the consumer magazine participated in rating their local telecommunications providers for value, reliability, customer service, and broadband speed.  No provider scored higher than “average” for value, but wide discrepancies in broadband speed and the quality of service made choosing winners and losers easy.

Top-rated WOW! (formerly WideOpenWest), is the 15th largest cable provider in the United States, but regularly wins top scores from Consumer Reports readers for the quality of its services. WOW! currently serves mostly suburban subscribers in a handful of cities in Illinois, Ohio, Michigan and Indiana. But the provider will soon be coming to several new locations thanks to its April purchase of cable overbuilder Knology, which provides service in multi-dwelling units and administers some community-owned broadband networks around the country.  This could provide relief for customers dealing with onerous usage caps in cities like Lawrence, Kan., where Knology’s buyout of Sunflower Broadband kept that company’s Internet Overcharging scheme in place. WOW! has no usage limits on their broadband service.

Verizon’s FiOS fiber to the home network is also a consistent winner in the ratings, especially for its fast broadband service.

AT&T’s U-verse also scored high in the ratings for broadband.  AT&T’s fiber-to-the-neighborhood service still works with existing copper phone wiring inside the home and delivers 20+Mbps broadband, a major improvement over AT&T’s traditional DSL service, which usually tops out at 7Mbps.

Among top-rated cable companies you have heard of, Bright House Networks scored a major coup, winning third place for its broadband service.  Ironically, consumers gave very high marks to Earthlink delivered over Time Warner Cable, scoring it fourth place for broadband. But Earthlink’s performance on Time Warner Cable is actually slightly less than the cable company’s own broadband service. Although both services share exactly the same network, Time Warner adds “speedboost,” a temporary speed increase for downloads. But the cable company got no respect from customers, who put TWC in 19th place.

Other findings of interest:

• TDS, an independent phone company serving primarily rural areas scored a very high fifth place in broadband, despite offering only traditional DSL service (except in limited areas where it has built fiber networks to stay competitive with community-owned providers and cable companies).  But the company won high marks for service reliability;
• Frontier Communications’ inherited FiOS fiber to the home services in Indiana and the Pacific Northwest were that company’s only bright spots for broadband, putting both systems in sixth place.  Everywhere else… forget about it. The company’s traditional DSL service was rated a lousy value and delivered mediocre speeds, earning 24th place.
• Satellite fraudband providers Wildblue and HughesNet continue to torture their customers, scoring dead last for lousy value, speeds, reliability, and everything else.
• Still awful after all these years: Mediacom, Charter, and FairPoint Communications all continue their dubious distinction scoring at the bottom of the barrel for broadband. It’s nothing new for any of them, and it appears nothing is likely to change those rankings in the immediate future.

Americans still hate the big boys.  Outside of AT&T and Verizon’s shorter history delivering triple-play-packages of cable, phone, and Internet service, the legacy of lousy pricing and service from the country’s largest cable operators still hold them back in the ratings.  Comcast managed only 24th place, dragged down by terrible customer service and worse value.  Cablevision did better at 16th place with higher marks for everything but value.  It was the same story for 12th place Cox Cable.

What was the top choice for telephone service in 2012?  Ooma, a Voice over IP phone company that works with an existing broadband connection.  Phone companies that have been in the business of phone service for decades (or longer) were all bottom-rated: AT&T, Verizon, FairPoint, and Frontier Communications.  Only Mediacom, a cable operator, kept Frontier from scoring dead last.  And they wonder why Americans can’t wait to disconnect traditional landline service?

In fact, Consumer Reports says no other industry alienates consumers more than America’s telephone and cable companies.

But you can fight back and score a better deal.  Stop the Cap! was quoted in the magazine piece with our advice to play hardball with cable and phone companies who charge too much and deliver too little.

“The magic word is ‘cancel,’ ” says Phillip Dampier, of the website Stop the Cap! He suggests you schedule your disconnection date for a week or two in the future. “When you’re on their disconnect list, they are going to start calling you offering very aggressive deals,” he says.

Top-rated WOW! only delivers service in a handful of cities in the midwest, but is getting larger after acquiring Knology in April 2012.

Indeed, Consumer Reports found most providers willing to deal… eventually, but they have gotten wise to halfhearted negotiation tactics by consumers looking for a better deal. If a provider suspects you won’t follow through on a threat to change providers, they often stubbornly refuse to deal. That’s why we recommend requesting to be placed on a “pending disconnect” list — proof you are prepared to leave in a week or two if they won’t negotiate.

We’ve followed investor conference calls for most major providers over the past two years. Every provider has gotten more aggressive with customer retention offers, in part because of the poor economy and increased competition. Customers are paring back cable packages and cutting out extra channels and services they can no longer afford. Some have become expert at bouncing between new customer promotional offers. Cable operators like Time Warner Cable have tried to keep customers, even those coming to the end of promotions, with slightly less aggressive discounting.

“We have a very well-choreographed program for moving people from the most heavily discounted promos into the rational next-step pricing packages,” Rob Marcus, president of Time Warner Cable told the magazine. “Over time, that discount will decrease, but you’d probably still save 20 to 30 percent off the rack rate,” or regular price.

But we found consumers who get back on the disconnect list usually do much better than Time Warner’s “next-step” pricing, some even earning a better retention offer than what they received in 2011. The more serious customers are about their willingness to leave, the better the offer in return.

Dead last place for cable companies... again.

The magazine also offers solace for customers who literally have nowhere else to go for service:

Alan Curtis of Manchester, N.H., whose condominium is served only by Comcast, says his rates go up each year but he pushes back. “If you say, ‘We’ll have to buy less,’ occasionally they’ll come up with a cost-cutter that will apply to you,” he says. Similarly, a staffer who lives in a New York City apartment served only by Time Warner Cable more than offset a $5 increase in his overall bill by negotiating an $8-a-month cut in his DVR rental fee for 12 months.

Consumer Reports also warns customers to choose broadband providers wisely, because the speeds they advertise may never materialize. Case in point, Frontier Communications’ dreadful DSL service, which the magazine found met the company’s speed marketing claims only 67% of the time. Frontier has been struggling with a vastly oversold broadband network, causing speeds to slow dramatically during peak usage times, particularly in states like West Virginia.  The magazine recommends fiber to the home providers and cable operators for more consistent broadband performance that comes closer to the broadband speeds advertised.

At all costs, avoid satellite broadband, which remains slow, expensive, and heavily usage-capped.

The home of Atlantic Canada’s largest hot air balloon festival is getting more than hot air from broadband providers promising better broadband in New Brunswick.  Bell Aliant announced this month it will spend $2 million to expand its FibreOp fiber to the home service to 3,000 homes and businesses in the town of Sussex.

“Access to the FibreOP network represents a tremendous growth opportunity for Sussex, and has huge potential to connect businesses and families,” said Andre LeBlanc, vice president of Residential Products for Bell Aliant. “We are excited to continue our expansion in New Brunswick, and to offer the best TV and Internet to our customers in the Sussex area.”

Bell Aliant’s FibreOp delivers broadband speeds up to 250/30Mbps and is marketed without data caps — a rarity from large providers in Canada.

The company was the first in Canada to cover an entire city with fiber-to-the-home and by the end of 2012, will have invested approximately half a billion dollars to extend it to approximately 650,000 homes and businesses in its territory. FibreOP builds are complete in Greater Saint John including Quispamsis, Rothesay, Grand Bay/Westfield, as well as Bathurst, Fredericton, Miramichi, and Moncton, including Riverview, Dieppe and Shediac. Customers in parts of Nova Scotia, Prince Edward Island, and Newfoundland & Labrador also enjoy fiber to the home service.

While Bell Canada owns a controlling stake in Bell Aliant, it allows the Atlantic Canada phone company to operate under its own branding and supports their aggressive fiber upgrade project across the relatively rural eastern provinces.  Even more remarkably, while Bell is one of Canada’s strongest proponents for usage-based billing and caps on broadband usage by its customers, Bell Aliant competes with cable operators by advertising the fact it delivers unlimited, flat rate service.  Bell Aliant is aggressively expanding fiber to the home service in Atlantic Canada while Bell relies on its less-advanced fiber to the neighborhood service Fibe TV in more populated and prosperous cities in Ontario and Quebec.

That is counter-intuitive to other providers who eschew fiber upgrades in rural communities, suggesting the cost to wire smaller towns is too high for the proportionately lower number of potential customers.  That does not seem to bother Bell Aliant, who considers fiber to the home its best weapon to confront landline cord-cutters.

Bell Aliant introduces Atlantic Canada to its FibreOp fiber to the home service, delivering unlimited fiber-fast broadband.  No Internet Overcharging schemes here.  (2 minutes)

Hastings vents on his Facebook page.

As Stop the Cap! has warned Netflix for years, Internet Overcharging schemes like usage caps, usage-based billing, and speed throttles represent an end run around Net Neutrality. If a provider cannot openly discriminate against the competition, slapping usage limits on them (while exempting favored services from that cap) can eventually accomplish the same thing.

Netflix founder Reed Hastings is finally getting the message after a frustrating weekend watching his Comcast usage allowance bleed away while streaming video.  He shared his views on his Facebook page:

Comcast [is] no longer following net neutrality principles.

Comcast should apply caps equally, or not at all.

I spent the weekend enjoying four good internet video apps on my Xbox: Netflix, HBO GO, Xfinity, and Hulu.

When I watch video on my Xbox from three of these four apps, it counts against my Comcast internet cap. When I watch through Comcast’s Xfinity app, however, it does not count against my Comcast internet cap.

For example, if I watch last night’s SNL episode on my Xbox through the Hulu app, it eats up about one gigabyte of my cap, but if I watch that same episode through the Xfinity Xbox app, it doesn’t use up my cap at all.

The same device, the same IP address, the same wifi, the same internet connection, but totally different cap treatment.

In what way is this neutral?

Comcast says it is “neutral” by framing its own Xbox-streamed video as a “set top box replacement,” even though the video that flows to the Xbox console travels down the same last-mile network Comcast says it needs to “protect” with its 250GB monthly usage cap.

Comcast doesn’t actually need a 250GB usage cap, particularly after the company upgraded its broadband facilities to DOCSIS 3 technology.  That vast improvement in capacity at a comparatively low cost (easily recouped by the company’s latest round of rate increases) should be shared with customers.  Instead of “applying caps equally,” Comcast should abandon them altogether.

[Thanks to Earl, one of our regular readers, for sharing the story.]

Google's prototype

Google’s plan to revolutionize eyewear by turning it into a virtual Internet appliance could be tempered considerably by the Internet Overcharging schemes enforced by most of North America’s wireless phone companies that would provide the connectivity.

Google’s Project Glass reportedly will produce the first set of Google glasses, which provide eye-activated online content, before the end of the year.  Without any vision correction, the glasses are anticipated to retail for $250-600, not including your wireless Internet plan.

Chris Green, principal analyst at Davies Murphy Group Europe, told the BBC Google may have bit off more than they can chew, and that other companies have considered similar techwear but abandoned prototypes because technology was insufficient to adequately power the devices.

I see a data cap.

“Monetization opportunities would be enormous, but there are still big issues involved with shrinking the technology and making the computer that receives and processes the data truly portable,” Green said.

The glasses project icons and images within the wearer’s field of vision and allow voice-activated control and communication.

The constant connectivity could provide a major new revenue source for usage-capping wireless providers, especially if the wearer decides to pass the time watching something other than what is directly within the field of view. While short messages and updates would have almost no impact on wireless data allowances, streamed content, especially video, could.

That may make the initial price tag for the glasses the least expensive part of owning them.

A two-year contract for wireless data can run more than $720 with companies like AT&T.

Google’s prototype eyeglasses can surf the Internet in this Google-produced video envisioning potential uses.  (2 minutes)

Canadian cable, phone, and satellite providers have done a better job stymieing would-be “cord-cutters” than their counterparts further south in the United States.

The Canadian Radio-television and Telecommunications Commission’s (CRTC) annual report on the country’s telecom companies shows all of them remain exceptionally profitable, keeping pay TV customers far more effectively than American providers. Total revenues climbed from $12.5 billion to $13.5 billion in just one year, as price hikes, Internet Overcharging schemes like usage-based billing, and lack of competition continue to takes its toll on Canadian wallets.

The biggest winners were the biggest telecom companies in Canada — Rogers Communications, Bell Canada (BCE), and Shaw Communications, which all saw profits soar 8.2% to $11 billion.  Costs increased about 10.7% in 2011, fueled by network upgrades and rampant hikes in programming costs — an interesting state of affairs considering Rogers and Bell own or control a substantial number of the programmers demanding higher payments.  Most of those increases were passed on to customers in the form of rate hikes.

Although Canadians are increasingly interested in streaming online video, virtually every major Internet Service Provider in the country has effectively prevented customers from dropping cable television service in favor of broadband-only access.  They manage it with usage caps and usage billing on their broadband products.  With streamed video accounting for a substantial drain on customers’ monthly usage allowances, Canadians are unlikely to cancel cable TV in favor of watching all of their favorite shows online.

In fact, the number of Canadian households that subscribed to a cable company’s basic television service actually increased by 2.8% in 2011 to reach 8.5 million.  Experts say the country’s transition to digital over the air television may account for some of that increase, but a few high broadband bills with overlimit fees for “excessive Internet use” can effectively drive online video fans back to traditional cable TV as well.

Satellite television in Canada remained flat,  with a virtually unchanged 2.9 million Canadians relying on Bell and Shaw satellite service for television entertainment.

But everyone is paying more to watch.

In 2011, cable companies paid $2.1 billion in wholesale fees to the pay and specialty services they distribute, an increase of 10.2% over the $1.9 billion paid the previous year. The fees paid by satellite companies rose by 2.8% in one year, going from $894.4 million to $919 million.

That leaves vertically and horizontally-integrated conglomerates like Bell in the perfect position to extract higher programming payments.  Those costs are passed down to Canadian consumers and blamed on “greedy programmers,” despite the fact those programmers are owned in part or outright by Bell.

A Rogers retail rental store

Rogers is also well-suited to remain a part of the Canadian entertainment experience.  The company owns cable systems, wireless phone networks, programmers, and even home video stores. However Stop the Cap! reader Alex notes Rogers has been closing a number of those video stores over the past few months.

“This gives customers one less choice for renting movies, basically forcing them to use Rogers On Demand instead,” writes Alex.

Rogers On Demand comes with a higher price, too.  In-store rentals from Rogers are priced at 2 for $9 or 3 for $15.  A recent look at Rogers’ video on demand website, Rogers Anyplace TV, shows most movie titles priced at $4.99 each.  With Rogers closing 40 percent of their retail rental outlets, movie fans have had fewer competitive choices for movie rentals.

One potential new contender coming to Canada – kiosk video rentals.  Although services like Redbox are now commonplace in the States, they are virtually unknown in the north.  Jim Gormley, former owner of Jumbo Video is back with Planet DVD.  With just 2% of Canadians renting movies from kiosks, Gormley believes there is plenty of room to grow, especially as Rogers scales back its video rental business.

Planet DVD has a pilot project running with supermarket chain Sobeys to place kiosks in front of nine store locations.  The first kiosk was erected in early March in front of a Sobeys store in Mississauga, Ont.

A new release at a Planet DVD kiosk is priced at $3 for a one-day rental.  That’s less than what most video stores charge, but more than double what Americans pay at a Redbox kiosk.