Bell, Canada’s largest telecommunications company, quietly increased the interest rate for late payments to a whopping 42.58 per annum, sparking complaints from company critics that accuse Bell of racing towards the nation’s 60 percent usury limit.

Michael Girard, writing for lapresseaffaires.cyberpresse.ca, says the company is way out of line demanding interest 42 times higher than the interest rate charged to the Bank of Canada on past due balances .

To “appreciate” Bell’s 42.58% rate, let’s compare it with other rates charged by lenders in Canada:

• It’s 42 times the Bank of Canada rate;
• 14 times the 3% prime rate charged to banks;
• Eight times the mortgage rate for five years (5.0%);
• More than twice the interest (19%) charged by credit card issuers;
• Approaching double the interest rate charged by the worst department store credit cards (28%)

The increase in interest charges took effect this past June.

Why has Bell increased its late fee interest rate into the stratosphere?  Because it can.  In July 2009 the Canadian Radio-television and Telecommunications Commission (CRTC), the agency that oversees the country’s telecommunications industry, deregulated late fees.  This policy change lets providers charge whatever they want for late payments, so long as they don’t exceed Canada’s 60 percent legal limit for interest charges.

Girard says the outrageous fees bludgeon customers who are least equipped to afford them.  He also suggests they are completely out of whack with what other telecommunications companies across Canada charge.

Girard

“Previously, Bell late fees amounted to 26.82%, the same rate as that charged by Rogers and Telus,” Girard writes. “Why did Bell require a rate so high? Bell Canada’s response: ‘The increase in the [interest] rate reflects our increased collection costs, which are now covered.'”

Somehow, Bell’s competitors eke out a barren, profit-scarce existence charging far less:

• Videotron appears the least greedy with annual interest of 19.56% (1.5% annualized per month) on outstanding balances;
• Cogeco ranks second by charging 24% (2.0% per month) on unpaid balances;
• Not far behind, we find Rogers and Telus, with their late payment fees of 26.82% (2.0% annualized per month).

Videotron last week unveiled 120/20Mbps broadband service loaded down with tricks and traps that will cost many Canadians far more than the $149.95CDN monthly asking price.

Québec’s largest cable operator introduced Ultimate Speed Internet 120 for “users who want to experience the fastest Internet access in Québec.”  But with a download limit of just 170GB per month combined with an upload limit of a paltry 30GB per month, what many Internet enthusiasts are also likely to experience is a huge bill.

Videotron is rolling out a high-speed Internet access service that will give residents of the Québec City area the fastest speeds in Canada. As of tomorrow, Ultimate Speed Internet 120 will support download speeds of 120 mbps and upload speeds of 20 mbps, a first for Québec City.

“Ultimate Speed Internet 120 pushes back the frontier for intensive Internet users,” said Robert Dépatie, President & CEO of Videotron. “Today, we are launching the high-speed Internet service of the future. With the pace at which users’ needs are changing, we are not so far from the day when 120 mbps will be a must-have convenience.”

Astonishing capacity
As of tomorrow, Ultimate Speed Internet 120 will be available in nearly 80% of the greater Québec City area, or to nearly 310,000 households and businesses. The service will be accessible throughout the Québec City area by December 31, 2010 and will then be gradually rolled out to other parts of Videotron’s service area.

Astonishing Overcharging

Yanette is going to the bank to withdraw more funds to pay her exorbitant Videotron broadband bill.

Unlike many other Internet Overcharging plans from Canada’s usage cap-happy providers, Videotron’s highest-speed plans don’t limit the amount of overlimit fees customers will be exposed to once their allowance is exhausted.  In little more than three hours of usage at near-maximum speeds, overlimit fees of $1.50CDN per gigabyte kick in until your usage allows resets the following month.  That’s more than $50 an hour in overlimit fees if running the service near top speeds.

Videotron’s press release says those limits are “well in excess of the current needs of heavy bandwidth users.”

Even worse, Videotron targets its highest speed broadband plan for “traffic management,” which throttles upload speeds dramatically for customers who “have uploaded a statistically significant amount of data,” which is never defined:

Every 15 minutes, a system checks the usage rate for each upload channel (each upload channel typically serves a few dozen modems). If the usage rate has reached a threshold beyond which congestion is imminent, the system identifies the USI 120 modems on that channel that have uploaded a statistically significant amount of data. Uploading from these modems is then momentarily given lower priority. Depending on the severity and duration of the congestion, uploading speed may be slowed for these modems.  […]The above measures are applicable at all times.

That assures customers of a less-than-blazing-fast broadband experience they have paid top dollar to receive.  In effect, this means Videotron’s customers who pay three times the regular price for a concierge-like-broadband-experience are pushed to the back of the line if they actually use it.

A Videotron customer on Broadband Reports wrote, “It’s like driving a jet-car in an alley. You can probably start the engine, but don’t open the gas too much!”

Another customer from Montreal noted it takes no time at all for customers to blow through those kinds of limits:

This is merely a political play to be able to advertise as “the fastest ISP in Quebec/Canada”. Obviously such ridiculous caps are nowhere near the needs of someone who would pay $150 for that kind of speed, but they don’t mind saying things like “well in excess of the current needs of heavy bandwidth users” because 90% of the population, even the journalists themselves, have no idea what gigabytes are in the first place.

Considering most recent games released on Steam/D2D can be over 20GB, one HD episode is 1.3GB to stream each, 170GB is very little.

The cable operator will also throw some small bones to their existing customers effective Oct. 13:

• Customers with Videotron’s standard High Speed Internet service ($42.95CDN – 7.5Mbps/720kbps) will get a 10 gigabyte usage allowance increase — to 40GB of usage per month.  The overlimit fee remains a stunning $4.50 per gigabyte, up to a maximum of $50 per month;
• Upstream speeds on Ultimate Speed Internet 50 service ($81.95CDN – 50/1Mbps) will be doubled from 1Mbps to 2Mbps with no price increase.  Considering that plan limits consumption to 125GB per month, the faster speeds mean unlimited overlimit fees of $1.50 per month will add up even faster.

Delivering high speed broadband at premium prices with usage limits and speed throttles is a business plan disaster.  Customers willing to pay the highest prices for fast broadband don’t seek those Cadillac plans to browse web pages.  They want to leverage the fastest possible speeds to make high bandwidth applications work better and faster.  In a business environment, those faster speeds save time, which saves money.  But broadband providers who engage in Internet Overcharging schemes that limit use and charge confiscatory overlimit fees destroy demand for their own products, because few customers are willing to pay the premium prices these plans charge -and- expose themselves to overlimit fees if they happen to exceed an arbitrary usage limit.

Further south in the United States, Americans are still rejecting overpriced DOCSIS 3-premium speed broadband plans, and they come with no usage caps.  Time Warner Cable’s DOCSIS 3 expansion delivers a premium price on the resulting faster speed tiers, and the company managed to sign up fewer than 2,000 customers as of January.

Now imagine a plan that commanded a premium price -and- slapped a limit on usage.

As they say in Québec: c’est ridicule!

Fashionably late, Verizon Wireless intends to change its wireless smartphone data plans to end unlimited usage in the next four to six months, according to Verizon CEO Ivan Seidenberg.

Seidenberg said Verizon Wireless’s new data plans, which he says will probably arrive in time for the holiday shopping season, will differ from AT&T’s but he refused to elaborate.

“We’re not sure we agree yet with how they valued the data,” he said at an investor conference Thursday.

The change has been widely anticipated in the wireless industry, as Verizon Wireless and AT&T, the nation’s largest and second largest carriers, charge nearly identical pricing for their wireless services.  Both carriers formerly charged smartphone customers $29.99 per month for unlimited wireless usage.  AT&T eliminated unlimited usage with two new plans unveiled in June with the introduction of the latest Apple iPhone.  One charges customers $15 a month for up to 200Mb of usage, and another charges $25 for up to 2GB of usage per month.  Customers exceeding the limits pay $15 for an additional 200Mb or $10 per gigabyte in additional fees.

Critics charge Verizon’s decision to slap usage limits and overlimit fees on customers is just another attempt to gouge wireless customers, made possible by the two providers’ market power.

Wall Street Journal reader Candace Kalish commented on the new limited usage attitude Verizon seeks to embrace:

What the carriers want is a tiered system with outrageous penalties for slight overages. The banks, car renters, airlines, and credit card issuers do very well with this. It is the most profitable business model since it requires careful underuse or disproportionate costs on the part of their customers. This is why they require people to guess their usage and impose punitive marginal costs on single byte transfers.

[…]I think the carriers’ actions indicate a much greater concern with short term profits rather than long term innovation and even great profitability.

[…]Since carriers impose rates on a take it or leave it basis, I don’t see rates improving much in the near future. I’ll stick with my ancient $30 a month plan and a cheap flip phone with an iPod Touch. When competition kicks in, possibly in the next 10 to 20 years, and they offer more for my money, I’ll consider a smarter phone. Right now the market is still what they used to call a natural monopoly, and the pricing structure proves it.

Seidenberg

Seidenberg made it clear the new Internet Overcharging schemes will arrive in time for the company’s introduction of its fourth generation data network – Long-Term Evolution, more commonly known as LTE.  Earlier, Verizon hinted to its investors it intends to market its LTE service at a premium price, anticipating customers will be willing to pay a higher price for faster service.  This, despite the fact LTE will deliver Verizon dramatically increased capacity at a lower overall cost, in terms of bang for the spectrum buck.

Company officials are still considering whether LTE pricing will carry a per megabyte charge with little or no usage allowance or a more common usage allowance plan with overlimit fees.  Either way, few expect wireless will offer an effective competing alternative to wired broadband service, unless one’s monthly usage is below 5GB.  Above that amount, overlimit fees could quickly accumulate, leaving customers with wireless bill shock.

Dave Burstein, publisher of DSL Prime, commented back in January about wireless data pricing:

Charging at the this level, if the other wireless carriers go along, is a blatant attempt to protect their other services. [A government agency] filing points out the likely reason: “The Commission also must keep in mind that the two largest US wireless providers, Verizon and AT&T, also offer wireline services in major portions of the country, raising the question of whether these providers will market these services as replacements for wireline services.”

If his prices carry the day, the […] broadband plan will accomplish very little. The [plan] implicitly counts on wireless for competition, because new wired networks are highly unlikely and their plan doesn’t change that. Wireless voice in the U.S. is a weak cartel, data a relatively strong cartel. [Verizon’s] signals may inspire the other carriers to also drastically cut the basic data allowance.  Or not.

If there’s a significant cut in the 5GB wireless allowance, then the broadband plan needs a huge redirection to measures that work [in] a telco-cable duopoly. That’s so tough I don’t know if Washington can do that.

Thanks to our regular reader Bones for sending word.

Big Apple Day

Thousands of New Yorkers impacted by last week’s tornado outbreak face indefinite wait times for restoration of cable and broadband service from the area’s two biggest providers — Time Warner Cable and Cablevision.

Last week’s storms have left debris from thousands of downed trees and utility poles still in the streets in some parts of the impacted areas, leading to criticism of city officials and cable providers for slow cleanup efforts.

In particular, calls to Time Warner Cable have been a frustrating experience, reports the NY Post.  Cable subscribers cannot get through to the cable company, and when they do, they receive little or no information about when exactly their service will be restored.  The company added a recorded message to help get customers off the phone, telling subscribers “technicians are doing everything they can” to restore service and that actual representatives can’t provide any other information.

Jayant, one of our readers in the hard-hit Flushing area in Queens made sure to request service credit for his cable outage, knowing many providers won’t provide service outage credits if they are not specifically requested.

“Considering the enormous amount of damage here, I can understand being without service over this past weekend — restoring power should and does come first, but since Tuesday Verizon and ConEd cleared out of this area after finishing repairs and some of us are still waiting for the cable company to show up,” he writes.  “Forget about calling them — it’s busy signals or ‘extended hold times’ that I suspect run into days at this point.”

He’s using Virgin Wireless’ unlimited mobile broadband service he read about on Stop the Cap! for now.

Another Queens resident shared her frustration with the Post:

Big Apple Day

As part of franchise negotiations between Cablevision, Time Warner Cable, and New York City officials, an agreement was reached to spend $10 million to provide “free Wi-Fi” service in some 32 parks across the metropolitan area.

But “free” access comes to those who can accomplish their wireless usage in ten-minutes, because that’s all the “free” use the two cable giants will allow non-customers on their wireless networks.  Specifically, non-cable customers can access the new Wi-Fi at no charge for up to three 10-minute sessions per month.  If you want more than 30 minutes a month of access, it will cost you $0.99 a day.

Broadband advocates in New York accused the Bloomberg Administration of selling out public spaces to private companies during the city’s closed-door negotiations with the two cable operators.

The NY Daily News: