Shaw Communications, western Canada’s largest cable company, has expanded its High-Speed Nitro DOCSIS 3 broadband service in British Columbia and Alberta.  Offering speeds of 100Mbps downstream and 5Mbps upstream, Shaw charges customers $149 per month for the new plan, assuming you also subscribe to other Shaw services.  The three latest cities to obtain upgraded service join Victoria in British Columbia, Saskatoon in Saskatchewan, and Winnipeg, Manitoba, where upgrades were unveiled earlier this year.

“The expansion of High-Speed Nitro into the cities of Calgary, Edmonton and Vancouver demonstrates Shaw’s commitment to continually enhancing our Internet services to meet our customers’ changing needs,” said Peter Bissonnette, President, Shaw Communications Inc.

Paying $150 a month doesn’t buy you unlimited broadband, however.  Despite the premium price, Shaw insists on slapping a usage allowance of 400 gigabytes per month.  While at first glance that limit seems generous, particularly compared with Comcast’s 250GB limit, paying $150 a month for Internet access apparently is not enough to spare their most generous customers from a pesky Internet Overcharging scheme.

Jeff from Calgary, a Stop the Cap! reader writes, “exactly how much profit does Shaw need to earn from customers before they turn the damn meter off?”

“It’s bad enough with a 100GB limit on their so-called High-Speed Extreme plan, which gives my family up to 15Mbps service for $45 a month.  If I am going to pay them $100 more a month for service, there shouldn’t even be a limit,” he adds.

The High-Speed Extreme plan seems to be the pricing “sweet spot” for Shaw, because the next step up in Calgary is High-Speed Warp, which brings 25Mbps service for the warped high price of $96 a month.  For nearly twice the price, Shaw only throws another 50GB towards customers’ usage allowances, limiting service to 150GB per month.

One day before the Federal Communications Commission in Washington announced draft guidelines to establish an American Net Neutrality policy, the Canadian Radio-television Telecommunications Commission (CRTC) announced its own guidelines to govern what Canadian broadband providers can and cannot do with the Internet traffic they deliver to millions of Canadian consumers.  While Bell (Canada), the nation’s largest telecommunications company praised the CRTC for its provider-friendly ruling, consumer groups varied their responses from “a step in the right direction” to “weak” to “here comes more gouging.”

The CRTC Net Neutrality policy for Canada essentially permits providers to continue to throttle broadband speeds for both retail and wholesale customers, and block traffic altogether should the CRTC grant permission in “exceptional cases,” as long as the provider discloses the practice to consumers up front, and warns them in advance of any policy changes that further slow their connections.

Laurel Russworm, who runs Stop Usage Based Billing, was not pleased.

“The CRTC decision doesn’t have a silver lining I can find; in fact they essentially said that usage based billing and caps are good tools to use to fight congestion. All Bell Canada has to do is warn us first, then they can gouge as they please. They’ve deferred making a decision on usage based billing until after the court challenges are dismissed, but I’m not holding my breath,” Russworm wrote.

On Wednesday the CRTC decided that Internet providers in Canada need measures to manage the traffic on their networks at certain times to deal with what providers claim to be a congestion problem.  At hearings held this past summer, several CRTC commissioners were receptive to the claims providers made that Canadian broadband does not have the capacity their American neighbors have.  Providers like Bell and Rogers claim that peer to peer traffic and increasing consumption of high bandwidth services have created capacity shortages on their networks, requiring traffic management which artificially slows certain traffic on their networks at “peak times.”  Canadian broadband providers almost universally also impose Internet Overcharging schemes on their customers, limiting customer use and charging them overlimit penalties for exceeding usage allowances.

The commission accepted the providers’ claims and gave the green light to those practices, but said before a provider literally blocks access to online services, or throttles time sensitive traffic on services like Voice Over IP telephone or two-way video conferencing to the point it becomes “degraded,” it needs to get Commission permission first.

Mirko Bibic, Bell Canada’s senior vice-president of regulatory and government affairs, told The Globe and Mail the ruling gives carriers the right to run their businesses the way they see fit. “We’re the experts, and we get the flexibility to determine how to manage our networks to give the user the best experience,” he said.

Bell already “throttles” its Internet service by slowing peer-to-peer downloading between 4:30 p.m. and 1 a.m. to make sure the network is not overloaded by a relatively small number of people transferring large video and music files.

Independent Internet providers are among the biggest proponents of Net Neutrality, and a ban on Internet Overcharging schemes known in Canada as “usage based billing.”  Many Canadian broadband providers obtain connectivity through wholesale accounts purchased from Bell.  The Canadian phone giant imposed both speed throttles and usage based billing on their wholesale customers.  Those costs, and the speed bumps that go with them, are now increasingly passed on to consumers.  Independent providers fear being put out of business.

For many of them, Wednesday’s decision might as well never have happened.

“This has really not changed anything,” Tom Copeland, chair of the Canadian Association of Internet Providers, told PC World.

Copeland said the “biggest, most glaring omission” from the ruling is the lack of restraints on the time of day or how long suppliers like phone or cable companies can manipulate traffic. “So we could continue to see traffic management every day of the year,” he said.

“We’re still not addressing the cause of the problem,” he added: “Either weak points in the network, or abuse by users.” Most casual users of peer-to-peer applications — the biggest offending programs in the eyes of providers – aren’t the problem, he said.

“We just went backwards at warp speed,” lamented John Lawford, counsel for a coalition of consumer groups that fought for an end to throttling of Internet traffic of consumers, “ while we watch the U.S. rocket ahead.”

“The CRTC has said in this decision that ISPs own your content and own your Internet connection” said Lawford, “You just got owned.”

The Public Interest Advocacy Centre represented the Consumers’ Association of Canada, Canada Without Poverty and Option consommateurs during the hearings on Net Neutrality.  PIAC argued that the Telecommunications Act required ISPs not to interfere with customers’ Internet traffic unless such traffic was clearly harming other users of the network and not otherwise.  “ISPs should act as common carriers and just carry traffic, not as broadcasters deciding what you watch” continued Lawford, “but now they can decide what gets through – and how much they get to charge you for the privilege.”  Lawford also noted the CRTC’s requirement for the ISPs to disclose their “Internet traffic management practices” will not actually stop any of the practices.

The CRTC has repeatedly taken broadband industry-friendly positions in direct opposition to Canadian consumer interests, helping to set the stage for Canada’s rapid decline in broadband leadership.  The country’s standing in broadband rankings has taken a stunning fall from its earlier top-shelf position.  Regulatory policies that permit abusive, anti-competitive practices and reward providers for rationing broadband instead of investing in expanding it are at the heart of the problem.

Since the CRTC has taken positions more worthy of a industry trade group than an independent regulator, an increasing number of Canadians are demanding the CRTC lead or get out of the way.  A large group of Canadian voters upset about any issue is sure to attract politicians, and the New Democratic Party of Canada (NDP) has arrived.

Charlie Angus (NDP)

Charlie Angus, New Democrat Digital Affairs Critic and MP for Timmins-James Bay, who already is on record opposing Internet Overcharging schemes, says the CRTC dropped the ball on Net Neutrality.

“Yesterday’s CRTC decision on Internet traffic-management practices is a blow to the future of digital innovation in Canada,” Angus said in a statement.

“This interference [from traffic management] will be bad news for small third-party competitors and leaves consumers subject to digital snooping and interference from cable giants,” he added.

“Basically the CRTC has left the wolves in charge of the henhouse. ISP giants have been given the green light to shape traffic on the internet in favor of their corporate interests,” he said. “This decision is a huge blow to the future competitiveness of the Internet.”

Angus says that the premise of today’s decision – that notification from the ISP will allow customers to make an informed decision on where to buy Internet service – misses the harsh reality that the market for Internet service in Canada is not nearly competitive enough to work.

“Canada has fallen to the back of the pack in Internet service provision and pricing after leading the way for years. This is the direct result of a small band of ISP giants blocking out competition,” Angus said. “This decision clears the way for ISPs to squeeze out third-party players who are attempting to provide better price and service options.”

South of the border, the FCC has taken clear steps toward the establishment of Internet neutrality on U.S. networks.

Angus said that principle of Net Neutrality should be at the center of Internet policy in Canada, and that the CRTC has missed a golden opportunity with yesterday’s decision.

“The principle of Net Neutrality must be a cornerstone of the innovation agenda. The CRTC has once again acted as the rubber stamp for large ISP and cable players to dominate the market and decide which traffic goes in the fast lane and which traffic gets stuck in the slow lane. This decision continues a long and dismal tradition of Canada’s communication policy decisions chipping away at the public interest to the benefit of a few corporate giants.”

Dissolve the CRTC, a group collecting signatures to petition for the closure of the Commission, also made several comments about the CRTC decision.

Among their conclusions:

• The new policy leaves the door open to providers deciding their economic interests are better served from traffic management practices like throttles and usage limits than network investments.  Short term limits may serve the interests of stockholders, but could discourage long term investments needed to create new 21st century broadband platforms;
• The Commission’s encouragement that providers make additional investments in their networks is likely to fall on deaf ears.  It was Bell’s lack of investment in their broadband network which led to the traffic management practices, and the recent hearings about them, in the first place.  Without mandates, there is no real pressure on Bell to change their investment strategy.
• The Commission’s policy to regulate this issue through a user complaint process that calls out bad actors has no historical precedent of working.  The CRTC has a long history of ignoring public involvement in telecommunications proceedings, and does not like to involve themselves with individual customer complaints.  Campaigns to flood the CRTC with complaints on specific issues using their language may be the only way to get them to investigate.  Additionally, complaints that call out the disparity in network management policies between wholesale and retail accounts may only lead to additional restrictions on both types of accounts, making a bad situation even worse.

Canadians must contact their elected officials and demand federal legislation to enact true consumer protection and broadband reform policies to restore Canada to a position of leadership in broadband.  The CRTC is ineffective and must not be the final arbiter on these important issues.

Wind Mobile

The Canadian Radio-television Telecommunications Commission (CRTC) is back in this news this week after running a dog and pony hearing at the behest of Bell, Telus, and Rogers (three of Canada’s largest incumbent telecommunications companies) pondering whether would-be wireless competitor Globalive was Canadian enough to do business in the country.

The Telecom Act specifies that all wireless phone companies must be controlled by Canadian citizens.  Toronto-based Globalive Wireless Management Corporation insists it has met the requirements of Canadian law, despite having a major percentage of its financing coming from Egyptian-based Orascom, a wireless mobile provider itself.  Globalive points to approval of its holding company business structure by Industry Canada.

Under the arrangement, Globalive would launch competitive wireless service under the brand Wind Mobile starting later this year.  Then the CRTC got involved.

Canada’s three current wireless phone companies — Bell, Telus, and Rogers, complained to the Commission that Globalive is violating the spirit of the Telecom Act and have essentially joined forces to keep Globalive out of Canada.

The CRTC was quick to respond to the incumbents’ concerns and scheduled hearings which started last Wednesday.  As expected, Globalive got hard questioning from the CRTC and the providers.  Canadian citizens looking for competitive choice weren’t on the agenda.

The Commission previously forced Globalive to publicly release more than 1,000 pages of company documents relating to its business structure, pages that were kept confidential by Industry Canada, but made available to Globalive’s existing competitors for their review.  The result was a gold mine of insight on their potential competitor’s business plan, and they used the information gleaned to argue against the company’s right to provide service.  itWorldCanada covered the response:

“I don’t know how the commission could possibly approve that deal now with that kind of capital structure,” Michael Hennessy, Telus’ senior vice-president of regulatory and government affairs said in an interview. “It would be unprecedented.”

Rogers could have gone along with the Industry Canada ruling, said Ken Engelhart, the company’s vice-president of regulatory affairs, “but when we read the documents we were just amazed. There has never been an approval like this before. The rules have always been [a telecom company] could have a major foreign shareholder, a major foreign debt holder, a major foreign strategic partner. But you could never have the same person being all three. Orascom has 65 per cent of the equity, 100 per cent of the debt and they provide the brand and all the strategic and technical skills.”

“If this is OK there’s no point having any more hearings. They should all get rubber-stamped because if this is Canadian owned and controlled, what isn’t?”

Bell concern trolled their way through written comments, ringing their hands over an ownership structure modified to address their earlier concerns is now even worse.

Anthony Lacavera, chief executive officer for Globalive Wireless Management said Globalive has every right to operate a wireless provider in Canada as he is a Canadian citizen and has control.
TMCNet’s Canadian Angle blog explains:

The biggest problem seems to come down to math.  Globalive states that Lacavera is in control, and he is a Canadian citizen.  The incumbents are complaining about the amount of ownership and possible influence that the Egyptian financial backer, Orascom Telecom, has on the Globalive company.  The way that Lacavera has explained it, the Globalive team is following all the rules while still allowing for some out of this country funding.  Here is the breakdown:

• Anthony Lacavera owns 35 % of Globalive, and Orascom owns 65%.
• Orascom funded over $500 Million so Globalive could pay for the wireless spectrum that they bought, and the bridge financing required for the infratructure
• Both of these parties have agreed to replace the loans with third-party investments – as soon as it is commercially viable.

Telus and Bell suggest that Globalive and Orascom are pulling a fast one – trying to get around the legalities by setting up separate companies but still providing Orascom with a majority stake in the company, and  also with the added benefit of controlling the operations.

It shouldn’t be a big shock that Globalive was financed through another country, and as long as Globalive and Orascom commit to what they say they are going to do, there shouldn’t be any problems.

Well – still one hefty problem – the CRTC is under the influence of the incumbents.  The decisions coming from this regulatory body will provide fuel for many posts to come.

Am I the only one that sees the irony in the CRTC grilling Globalive about being influenced by outside sources?  Isn’t this the pot calling the kettle black?

The reason for all of the debate is simple enough.  Canada’s three wireless phone companies could lose one quarter of their customers to competitors like Globalive and DAVE Wireless, according to Toronto-based Convergence Consulting Group, Ltd., which released a study on the matter last week.  Without Globalive being one of those competitors, incumbent providers will likely retain more customers and more revenue.

Thirsk

Marla Thirsk is still on dial-up, and wishes she had broadband. The Ucluelet, BC artist has lived in the Spanish Banks area for nearly 30 years. While her friends and neighbors have broadband service, her subdivision does not. The Canadian Broadcasting Corporation’s Spark program, dedicated to discussing technology and culture, recently covered Thirsk’s predicament. Host Nora Young explores what online life means for Marla and her nearby neighbors.

Phone interview with Marla Thirsk, as part of September 20, 2009 CBC Radio One’s Spark program. (6 minutes)

You must remain on this page to hear the clip, or you can download the clip and listen later.

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Delta, part of the Vancouver metro area, British Columbia

Stop the Cap! reader Rick has been educating me about some of the new-found aggression by Shaw Communications, one of western Canada’s largest telecommunications companies, in expanding its business reach across Canada.  Woe to those who get in the way.

Novus Entertainment is already familiar with this story.  As Stop the Cap! reported previously, Shaw launched fire sale pricing on its cable, broadband, and telephone services ($9.95 a month for each) and target marketed those limited special offers in and around buildings wired for Novus service.  Novus protested to the BC courts, claiming Shaw was engaged in predatory pricing behavior.

A few days ago, an Ontario court judge dismissed a suit brought by Rogers Communications against Shaw over Shaw’s plans to buyout Mountain Cablevision, a smaller cable provider serving parts of southwestern Ontario.  Rogers was upset because the purchase violated a “covenant” between the two telecom giants not to compete in each others’ service areas.

Now, Shaw’s trucks are rumbling down the roads of Delta, a community south of Vancouver,  as work begins on constructing a cable system that will directly compete against Bragg Communications’ Delta Cable.  Shaw also has won approval from the Canadian Radio-television Telecommunications Commission (CRTC) to competitively wire Ladner and adjacent neighborhoods southeast of Vancouver.

Shaw president Peter Bissonnette told industry news site Cartt.ca the wiring of Delta and Ladner comes as a result of “people there saying they would like to get Shaw.”  So now residents can look out their windows and see Delta Cable’s wiring on one side of the street and Shaw’s wires on the other.

Another success story for head-on competition leading to lower prices and more choice, right?

Not so fast.

As Cartt.ca reports (one article view is available for free, subscription required thereafter), there is a history to be considered here, and that may include another agenda beyond the “consumers wanted us so we came” explanation.

There’s a bit of history to the Delta system and Shaw, however. Back in 2006, when then-owner John Thomas decided to sell Delta Cable and Coast Cable, many assumed he would sell to Shaw. After all, Thomas was on Shaw’s board of directors. However, aware of the fact most of his employees would likely be out of work if nearby Shaw bought it, he instead surprised most by selling to what was then Persona Communications, for about $90 million.

Some months later, Persona itself was purchased for a reported $750 million by Bragg Communications, which does business, of course, as EastLink, primarily in Eastern Canada.

Cartt reports it is no secret Shaw wants the Delta region as part of its greater Vancouver service area, and the traditional route by which most cable companies do this is by buying out the incumbent provider.  Bragg Communications understands this, and has sold some of its own systems in the past, most recently in Saskatchewan.  But so far, not in Delta.

Bissonnette was cagey when asked if Shaw had pursued the buyout route, which is always cheaper than overbuilding an area with all new wiring.

“They know what we are doing. There’s always more than one way to skin a cat you know,” he said.

If Shaw adopts the same aggressive strategy in Delta they have used against Novus in downtown Vancouver, it will likely make Delta’s current cable system unprofitable.  Bragg would be forced to consider either engaging in a sustained price war, something Shaw is in a better position to handle because of revenue earned from non-competitive areas, or eventually sell the Delta Cable system at a fraction of its original value.

For comparison, Delta Cable charges $26 a month for analog basic cable plus $26.95 a month for a robust digital channel package.  Broadband service, with a 62GB usage cap is $39.50 per month.  They don’t seem to offer telephone service.  Shaw promoted a digital/basic combination package in downtown Vancouver for $9.95 a month and broadband for an additional $9.95.  Shaw to Delta Cable: Compete with that.

For a time, up to 28,000 households in the area may enjoy some benefits from a sustained price battle, unless Bragg capitulates and sells out early, but in the end, if Shaw engages in the kind of allegedly predatory pricing it has in downtown Vancouver against Novus, the benefits will be short-lived, and Shaw always has time to make up the difference down the road.