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.

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.

Who dares break the most sacred Ark of the Cable Covenant?

In March 2000, two cable magnates sat down for the cable industry equivalent of My Dinner With Andre.  Fine wine, beautiful table linens, an exquisite meal, and a Monopoly board with pieces swapped back and forth representing hundreds of thousands of Canadian consumers.  Ted Rogers and Jim Shaw drew a line on the western Ontario border and agreed to stay on their respective sides of it.  Ted and Jim divvied up each others cable interests, swapping Rogers’ systems west of Ontario with Shaw’s systems east of the provincial line. Thus was born the Ark of the Cable Covenant, with its founding principle: Thou shalt not compete or intrude in my territory.

The only question left at the end of the meal was who was going to pick up the check.  You did.

And so it was.  Since 2000, Shaw Communications has kept its operations west of Ontario, Rogers stays in Ontario and points eastward.  A very nice state of affairs, as long as you are not a Canadian consumer looking for competitive relief from high prices and lousy service.

Shaw Raids Ontario

But in July there was heard a great rumbling across the prairies and into the verdant forests and rolling hills of southwestern Ontario.  What was that sound?  Who were these cowboy hat wearing hordes riding across the lands to the shores of Lake Ontario carrying saddle bags stuffed with cash?  Why look, Calgary-based Shaw is staging a $300 million dollar buyout raid on Mountain Cablevision, Ltd., a 41,000 subscriber independent cable company based in Hamilton, Ontario.

But what of the sacred agreement?  Ted Rogers passed away in December, leaving Shaw to rhetorically ask, “What agreement? Do you know anything about an agreement?”

Indeed, there is no honor among thieves and cable executives seeking the spoils of a highly uncompetitive industry.  Rogers was shocked to discover an invasion on their turf, and they responded with a torrent of attorneys to block the deal, as Canwest News Service notes:

“Shaw is bound by the restrictive covenant which prohibits Shaw from building or acquiring any broadband wireline cable business in Ontario, Quebec or Atlantic Canada,” Rogers argued in court documents released Thursday.

Thankfully for Shaw, Ontario courts do not typically recognize “covenants” as sacred documents not to be broken.  Justice Frank Newbould on the Ontario Superior Court of Justice rejected the de facto non compete agreement and said Rogers had not proven any irreparable harm from the sale, dismissing Rogers’ “proof” as “speculative in the extreme.”

Of course, you realize this means war.

Tim Pinos of Cassels, Brock & Blackwell LLP is Rogers’ lead lawyer on the file. Shaw’s intentions are clear, he said Friday: “Shaw desires to re-enter Eastern Canada and acquire cable systems.”

Aside from picking a competitive fight with Rogers, an expansion east would pit Shaw against smaller but powerful players, such as Videotron, which is owned by giant Quebecor Inc., and commands a near-monopoly in Quebec.

With the agreement shattered, Rogers is likely casting its eyes westward, observers say.

Earlier this week, Edward Rogers was appointed to the role of deputy chairman of the company his father built. He moves from heading up Rogers Cable and will also oversee new operational responsibilities, including strategic acquisitions.

Unfortunately for consumers, some sacred agreements will remain unbroken.  Namely the one that keeps companies like Shaw and Rogers from competitively wiring communities already served by each other and competing head to head.  That simply wouldn’t do.  It would ruin a perfectly delightful meal.

Shaw Communications has fired back against accusations by Novus Entertainment that it is engaged in predatory pricing by filing a defamation suit in the British Columbia Supreme Court.

Shaw president Peter Bissonnette said Novus is intentionally spreading misinformation about Shaw’s competitive promotion in the Vancouver area, which he said charged $29.85 a month for a comprehensive package including digital HD cable, high-speed broadband, and telephone service that includes free long distance calling across North America.

Novus fired the first legal shot in July, accusing Shaw Cable of engaging in predatory pricing by offering cable, broadband, and telephone service “below cost” only to residents in the high rise buildings where Novus currently offers service in the city of Vancouver.  Novus, a fiber optic-based competitor, offers service in 225 residential high rise buildings in downtown Vancouver, at prices that have traditionally been lower than those offered by Shaw, western Canada’s largest cable operator, based in Calgary, Alberta.  Novus announced it was filing a predatory pricing case with the Competition Bureau of Canada and the BC Supreme Court.

Shaw officials counter that many of those high rise buildings are owned by Concord Pacific, which also has a major ownership interest in Novus Entertainment.  Bissonnette dismisses Novus’ accusations of anti-competitive behavior, accusing Concord Pacific of blocking access to Shaw, preventing the company from wiring the buildings during their construction, which would have reduced costs significantly.

“Those buildings up until recently have never had access to our services,” he said.

February 2009 Shaw Communications Promotional Pricing (click to enlarge)

Novus’ disdain for Shaw began this past February, when Concord Pacific employees noticed Shaw was promoting special discount offers targeting their buildings’ residents with special discounts for new Shaw customer signups.  The special offers expired at the end of February, and the two companies stopped specifically targeting each other in greater Vancouver until July.

Novus co-president Doug Holman told the CBC that was when things really began to heat up.

The cable provider resumed its efforts in July with a more aggressive deal, which it promoted by slipping flyers under doors and with “street teams” that would stand in front of buildings and ask people entering and exiting whether they were Novus customers. If they were, they would get the $9.95 offer, he said.

The $9.95 offer Holman mentions was an even more aggressive promotion than the one Shaw offered in February. The July promotion offered each component of Shaw’s package — television, broadband, and phone — for $9.95 a month each, with two free months thrown in, as the promotional flyer obtained by Stop the Cap! illustrates (shown on the left).

Shaw's flyer distributed to Novus customers (click to enlarge)

Who exactly could obtain this promotional pricing became a point of contention between the two companies.  Shaw president Peter Bissonnette claims the promotion is not just available to existing Novus customers, but to any resident of West Vancouver, which he called “highly competitive” for cable and broadband service.  Novus claims the promotion is targeted specifically at their customers, and is not widely known or available outside of its own customer base.

Vancouver residents sharing their experiences with Stop the Cap! report that Novus’ version is probably closer to the truth.  When the skirmish went public with Novus’ PR and Twitter outreach campaign, many Shaw customers in Vancouver had no idea such an aggressive promotion existed.  Neither did Telus customers (British Columbia’s telephone provider).  Some Shaw customers called Shaw to complain about the wide disparity between the rates they were paying and those Novus customers enjoyed.  Some Telus customers also called Shaw in late July to inquire whether they could sign up for the promotion.  Existing Shaw customers were disqualified from the promotion because they were existing customers, and the Telus customers who shared their experiences with Stop the Cap! were told the “offer was not available in your area” by Shaw customer service representatives.

Indeed, other online forums reported some similar experiences, noting the offer was limited to a tight geographical area, notably right in the heart of Novus’ primary service areas — those high rise residential buildings.

One reader of Digitalhome.ca, one of Canada’s largest home entertainment forums, said Shaw would offer this promotion to him if he “moved downtown.”  He also noted some friends who do live downtown are trying to shovel through a blizzard of promotional mailers from Shaw received day after day, as well as personal visits from Shaw sales employees knocking on the doors of residents known to live in buildings wired for Novus, despite posted signs “clearly marked ‘No Canvassing’.”

On the CBC website, one Vancouver resident has received dozens of promotional mailers and plans to return them to Shaw at some point: “It’s insane; some friends and I are saving them up to dump on Shaw’s doorstep at some future point.”

Over on Broadband Reports, one resident looking for service outside of Vancouver was told the promotion was not available:

“I phoned up Shaw asking them to give me this offer at my residential house that is not located in Vancouver. They would not.  The closest deal that the Shaw customer service representative would give me is $70/month for six months and then $110/month after that – Citing at first that they could only offer this promotion to buildings with Novus/Telus/Bell. When I asked why I could not get the promotion at my house because I have Telus available, the CSR backtracked and told me that it was only available in multi-dwelling buildings. Eventually the CSR backed down and told me that Shaw was only offering the promotion to buildings with Novus.”

Another reader who did live in the right neighborhood and ostensibly should have qualified was told he did not:

“I called 15 minutes ago and spoke to a CSR about setting it up in my Kits apartment (moving on Aug 15, do not have an account with Shaw currently) and he came right out and told me it’s only for Novus customers. I said I understood it to be an offer to multi-dwelling buildings and that Telus was offered in my apartment as well, but he said that I don’t qualify because I’m not in a Novus building.”

Sign outside of The Concordia in Vancouver promoting Shaw Communications' special offer (click to enlarge)

One possible clue about who this promotion was intended for could be found on a signboard placed just outside the entrance of one Vancouver building heavily promoting the Shaw offer (see photo on right).

Meanwhile, both companies continue their war of words:

“They’ve publicly stated in the past that they’re going to become the bane of the life of Shaw,” Shaw’s Bissonnette said. “True to their word, they’ve embarked on this defamation campaign.”

Counters Novus’ Holman: “That number [$9.95] is way below our cost. We don’t know what Shaw’s cost is, but it’s hard to believe it could be that low and that their cost savings could be that much better than ours,” Holman said. “If we price matched on that, we’d be losing buckets of money.”

Vancouver residents have mixed reactions to the war of words (and pricing.)

Some are eager to take advantage of the competitive price war, and are dropping Novus for a year’s worth of service from Shaw at a fraction of the regular price, citing the savings during the current economic climate.

Others defend Shaw’s aggressive pricing as competition, brutal as it might appear, doing its job in reducing prices for consumers.  Some have suggested the aggressive rate cutting exposes the enormous profit margins enjoyed by the cable industry, particularly pointing to Shaw’s comments that they are not losing money, even at the low prices they are charging in certain areas of Vancouver, as clear evidence of the gouging that goes on elsewhere in cable pricing.

But some Vancouver residents are defending “the little guy,” upset that Shaw may be using its market power and presence across western Canada to put an upstart like Novus out of business.

One CBC reader summed up the views of Novus defenders:

I’m increasingly annoyed by how heavy-handed Shaw is being in this price war. I qualify for Shaw’s anti-competitive price, but have no intention of switching to get it. If I leave Novus now then I’d be playing right into Shaw’s dream of a city-wide monopoly.

And that’s before I even start to mention the aggression of Shaw’s sales tactics. Green-shirted employees on every street corner downtown, bugging me multiple times as I walk from point A to point B on a weekly basis. Two or three pieces of junk mail a week that get around the red dot I have in my mailbox that indicates I Do Not Want Junk Mail, because they’re addressed to Current Occupant.

I’m all for healthy competition, but this ain’t it.

A few Novus customers have found a happy middle ground while the war plays out in the courtroom.  They contacted Novus and asked them to match Shaw’s prices:

Novus customers who are tempted to switch should contact Novus, as they will match the deal. That is what I did, and I am now paying $10 bucks a month for 20Mbps (23.79 according to Speedtest.net) download speed. My total Internet bill over the next year will be $120 for a service that is equivalent to Shaw’s “High Speed Warp” package, a service that costs $94 a month! That’s the apples to apples comparison, and it works out to be a $1000 savings for Novus customers.

I felt really guilty asking Novus to match, since I am extremely happy with their service and was paying a very reasonable $30 a month. But it’s hard to pass up a deal like that, and I will do my best to spread the gospel about how much better value Novus is over Shaw, and especially Telus and Bell. Healthy competition is great, but I do hope the CRTC steps in to ensure Novus isn’t bullied out of the market.

Telus hasn’t gotten involved because they are more concerned with selling the worst service at the highest price, while Bell is busy pitching you on how fast their service is to your face, and then throttling your speed behind the scenes to the point where Google has come out against them. I haven’t had any bad experiences with Shaw myself, but Novus is a real gem.

So those of you who live in downtown Vancouver should do the logical thing, and stick with Novus. You have access to a service that most people across North America, let alone Canada, drool over.

Shaw's flyer distributed to Novus customers (click to enlarge)

Letting Shaw get away with this will let them buy up competitors like Novus for a pocket full of Toonies.

[Update 10:16am EDT 7/29] — Brion, one of our loyal readers, had a chance to visit Novus’ website and discovered that Novus has usage allowances on its own broadband service.  That’s naughty.  They are far more generous than Shaw’s, which start at 10GB and are more commonly in the 60GB range for average customers, but that’s besides the point.  The Comments section is where the discussion about the usage allowances are taking place.  We call on Novus to explain their limit policy, and more importantly, consider dropping it altogether and using that as a competitive tool against Shaw, which has far lower limits.  If the vast majority of customers are unlikely to hit them, why have them at all?  Write an Acceptable Use Policy that allows for informal communication with the extreme users consuming terabytes of bandwidth a month and offers them a commercial plan for them to consider.  Don’t be a part of the Internet Overcharging crowd.  We celebrate the kind of competition Novus can provide residents of Vancouver and Burnaby, but we’d like to make sure the competition is worth fighting for.

[Update 6:12pm EDT] — Welcome to Novus customers who discovered this site through Novus’ campaign website. Stop the Cap! is an all-consumer website designed to promote and defend the competitive broadband marketplace in both the United States and Canada.  Paul-Andre Dechêne is our Canadian editor. We are unalterably opposed to Internet Overcharging schemes, which include bit/usage caps, consumption-based pricing, and fees or penalties imposed by providers for exceeding them.  We are pro-competition, pro-Net Neutrality, and opposed to throttles.  Companies like Novus which provide needed competition in the cable television, telephone, and broadband marketplace are essential for a healthy marketplace with rational pricing.  Shaw’s obvious predatory pricing tactics are designed to drive away Novus’ customers, making the company ripe for takeover, by Shaw of course, for a pocketful of Toonies.  While those Shaw prices sound good today, driving away competition guarantees much, much higher pricing tomorrow in a monopoly environment.  Novus is installing fiber optic-based service, which means they are already kilometers ahead of Bell and the usual assortment of the Shaw/Rogers/Vidéotron old school cable companies.

We welcome your views.  Just leave your public comments in the editor box at the bottom of the page (or click the comments link just below the headline).  You can explore more than 400 articles on our issues from the menu bar at the top.  Drop down menus will let you read about the issues that are most relevant to you.  Thanks for joining us.  The fight for affordable broadband continues across Canada, and we welcome your participation.  Bookmark us and drop by regularly. — Phillip M. Dampier, Editor]

Imagine paying $9.95 a month for a digital cable package with two free high-definition set-top boxes with personal video recorders, more than 200 digital channels, more than 25 high-definition channels, and a movie channel package.  Not convinced?  How about also getting two free months thrown in.

Need telephone service?  How about free nationwide/U.S. calling, free installation, and a whole mess of phone features for $9.95 a month?  Don’t forget broadband.  That’s just $9.95 a month as well for 15Mbps service with free Powerboost.  To sweeten the deal to diabetic coma proportions, Shaw will throw in two free months of service for each of those packages, too.

What’s the catch?  You have to live in an area currently served by Novus Entertainment, Inc., an upstart independent fiber-based competitor wiring metro Vancouver, British Columbia.  Novus has aggressively wired high rise condominiums and other densely populated neighborhoods and buildings in Vancouver.  Novus is a tiny company compared to Canada’s national cable companies.  Shaw provides cable television service to 2.1 million customers in several Canadian provinces.  Novus has 9,000 subscribers in 220 buildings in Downtown Vancouver and Burnaby and is planning an expansion into Richmond. Those buildings are being peppered with marketing from Shaw, including this special pricing offer.

Existing Shaw customers, and those who live outside of Novus’ service area, cannot obtain the special pricing.  That is the heart of a complaint lodged by Novus against Shaw at the Competition Bureau of Canada and in the British Columbia Supreme Court, charging Shaw is engaged in predatory pricing designed to put Novus out of business.

“Shaw is abusing its dominant position in the market by offering services – which it normally makes nearly 50 per cent margins on – at a sizeable loss as a means to destroy a local competitor,” said Donna Robertson, Co-President and Chief Legal Officer of Novus Entertainment Inc. “The millions of existing Shaw customers paying full price should be outraged because they’re unwittingly subsidizing the costs that customers with a competitive alternate pay, which is unethical and unfair. If they don’t make the offer available to everyone, current customers should call Shaw and demand the same deal.”

Novus points out Shaw has been “on a buying spree” picking up smaller cable operators and independent providers, but has “been unsuccessful in getting traction with Novus,” company officials suggest.

Stop the Cap! has discovered Shaw’s discount offer is a remarkable one, compared with the regular pricing Shaw customers pay elsewhere:

Shaw Deal for Novus Cable TV Customers

$9.95 digital cable with two personal video recorders, movie channel package, digital channel package
Two free months service

Shaw Deal for Other Canadians

$67.85 HD package
$16.00 Movie Central/HBO or Super Channel premium movie network
$26.95 digital cable “specialty channel” package
$ 3.95 time shifting option
$30.00 Shaw HD personal video recorder set-top box

The grand total: $144.75 per month, with no free months.

“Shaw enjoys increasing cable margins of nearly 50 per cent, which it boasts to investors is ‘best-in-class’ compared to other North American cable companies,” said Robertson. “We believe that Shaw’s targeted campaign is an attempt to eliminate Novus from the competition, which would allow Shaw to maintain its near monopoly status and raise prices for all customers whenever it sees fit”

“Based on Shaw’s actions, we can only assume that they are trying to buy our customers by gouging their own prices,” said Robertson. “They’re offering these services at an enormous loss, while forcing the rest of their customers to make up the difference. We aren’t big enough to compete with Shaw’s predatory pricing, but we are faster and more reliable, and our service is actually less expensive over the long term.”

Novus has launched a website and is busy on Twitter asking Shaw customers across Canada to demand the same special offer they are making available in Novus’ service area.

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Do you want the 10 Bucks Offer too? Sign our Petition and call Shaw to request this special rate.

Greater Vancouver – 604-629-8888
Kelowna – 250-762-4433
Prince George – 250-562-1345
Fort St John – 250-785-3039
Victoria – 250-475-5655
Edmonton – 780-490-3555
Calgary – 403-716-6000