Canada’s largest wireless carrier and near-largest Internet Service Provider has just become one of Canada’s largest Net Neutrality advocates. How did that happen?

In an ironic move, Alphabeatic reports Rogers Communications today filed a letter with the Canadian Radio-television and Telecommunications Commission that supports a ban on providers exempting customers from usage caps when accessing content owned by the provider or its preferred partners.

The issue arose after Vidéotron, Quebec’s largest cable operator and significant wireless provider, began offering an Unlimited Music service that keeps the use of eight streaming audio services – Rdio, Stingray, Spotify, Google Play, 8Tracks, Groove, Songza and Deezer – from counting against a customer’s usage allowance.

The practice of exempting certain preferred content from usage billing, known as “zero rating,” is a flagrant violation of Net Neutrality according to consumer groups. Rogers now evidently agrees.

“The Unlimited Music service offered by Vidéotron is fundamentally at odds with the objective of ensuring that there is an open and non-discriminatory marketplace for mobile audio services,” Rogers’ CRTC filing said. “Vidéotron is, in effect, picking winners and losers by adopting a business model that would require an online audio service provider (including Canadian radio stations that stream content online) to accept Vidéotron’s contractual requirements in order to receive the benefit of having its content zero-rated.”

The practice of zero rating can steer users to a provider’s own services or those that agree to partner with the provider, putting others at a competitive disadvantage. That is what bothers the Public Interest Advocacy Centre, which calls the practice incompatible with an Open Internet.

Rogers has an interest in the fight. The company owns a number of commercial radio stations across Canada, many that stream their content over the Internet. None are exempt from Vidéotron’s caps.

Rogers’ advocacy for Net Neutrality is new for the company, and ironic. Rogers partnered with Vidéotron and Bell to offer its own zero-rated online video service for wireless customers until last August, when consumer groups complained to the CRTC about the practice.

Rogers may also be in the best position to judge others for the practice while finding a convenient loophole for itself. Its current promotions include free subscriptions to Shomi, a video streaming service, Next Issue, a magazine app, or Spotify, the well-known music streaming service. While Rogers won’t exempt your use of these services from its usage caps, it will effectively exempt you from having to pay a subscription fee for the service of your choice, which could provide the same amount of savings zero rating content would.

A plan to place a 15GB monthly usage cap on Eastlink broadband service in rural Nova Scotia has led to calls to ban data caps, with a NDP Member of the Legislative Assembly of Nova Scotia leading the charge.

NDP MLA Sterling Belliveau is calling on the Liberal government to prohibit Eastlink from placing Internet data caps on rural broadband.

“This newly announced cap really sends us back to the 1990s when it comes to technology,” Belliveau said in a news release Tuesday. “The province paid $20 million to bring this service to rural communities, and as such, the Minister of Business needs to tell Eastlink this can’t stand.”

Belliveau’s office is being flooded with complaints from residents and business owners upset about Eastlink’s data cap, which includes a $2/GB overlimit fee, up to a maximum of $20.

“Only rural customers get penalized for using the Internet,” complained Angel Flanagan on Twitter. “We can’t have Netflix or YouTube. Eastlink, stop this cap and upgrade your services and give us better Internet. We don’t need to use it less.”

“I am so angry about the Internet capping,” said Emma Davis. “Eastlink you are out of your goddamn minds. Rural Nova Scotia is entering the Dark Ages.”

Eastlink’s Rural Connect package is a wireless service, delivering speeds up to 1.5Mbps at a cost of $46.95 a month. The service is provided where wired providers are generally not available, including Annapolis, Hants, Digby, Yarmouth, Queens, Lunenburg, Shelburne and Kings counties. Eastlink says its new usage cap was designed to accommodate “intended usage like surfing the web, reading/sending emails, social media, e-commerce, accessing government services, etc. — and NOT video streaming, for which the service was not intended.”

Belliveau

Eastlink’s continued dependence on a low capacity wireless network platform has conflicted with the changing needs of Internet users, who increasingly use high bandwidth applications like streaming video that can quickly clog wireless ISP traffic.

When the service was designed, the popular video streaming service “Netflix was shipping DVDs by mail,” says Eastlink spokesperson Jill Laing.

The cap was implemented to “address Internet traffic, which we believe will help provide equal access to the service and deliver a better overall rural Internet experience for customers,” Laing wrote.

Eastlink says the average customer uses about 12GB of traffic, excluding video streaming. Setting a usage cap at 15GB should not be a problem for customers who stay off Netflix, argues the ISP.

“Those who are using the service as it was intended to be used should not be impacted by monthly usage,” she wrote.

The fact Eastlink labeled some traffic legitimate while video streaming was discouraged did not go over well with customers.

“Who made them Internet Gods when our provincial tax dollars helped finance their Internet project,” asks Al Fournier. “The very fact they would suggest a 15GB cap with a straight face in 2015 should be ringing alarm bells in Ottawa about the rural broadband crisis in Canada.”

Fournier suspects Eastlink has not invested enough to keep up with a growing Internet because the service originally advertised itself as a way to listen to online music and watch video. But he also wonders if the data cap is an attempt to force the government to fund additional upgrades to get Eastlink to back down.

“This is why wireless ISPs suck for 21st century Internet,” Fournier argues. “They are incapable of keeping up with growing traffic and bandwidth needs and need to be retired in favor of fiber.”

But at least one wireless provider in Nova Scotia does not understand why Eastlink is making a fuss over data caps.

Cape Breton’s Seaside Wireless Communications offers Internet access in Antigonish, Cape Breton, Colchester, Cumberland, Guysborough, Inverness, Pictou, Richmond and Victoria counties, along with rural parts of Halifax County, and has no data caps.

“It is not even on our radar,” said Loran Tweedie, CEO of Seaside Wireless. “This is a differential we are proud of.”

Some Nova Scotians are also questioning why their Internet service is being capped while rural Eastlink customers in Newfoundland, Labrador and Ontario can continue to use the Internet cap-free, at least for now. Others are suspicious about the future of Eastlink’s maximum cap on overlimit fees, currently $20. Canadian providers have a history of raising the maximum cap, subjecting customers to greater fees.

“It’s hard to speak to what will happen over time. We’ll certainly evaluate where we’re at later in the fall,” said Laing.

Liberal provincial Business Minister Mark Furey said he was aware of Eastlink’s rural broadband data cap but only promised to monitor the situation for now.

Starting next month, Eastlink’s rural Internet packages will be capped at 15 gigabytes of usage per month. CBC Radio Nova Scotia’s “Information Morning” program speaks with Eastlink and Port Royal resident Gary Ewer about the impact the usage cap will have. (10:15)

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

Truth or Consequences: Does privatizing a government-owned telephone company encourage innovation and efficiency or serve to enrich a handful of executives and shareholders at the cost of customer service? Two essentially equal telephone companies serving the Canadian prairie provinces offer some useful insights.

The provinces of Manitoba and Saskatchewan are remarkably similar in their landscape and their sparse populations — 1.29 million in Manitoba and 1.13 million in Saskatchewan. Today, most are concentrated in or near a few large cities with many small agricultural towns scattered across great distances.

At the dawn of the 1900s, the “Sunny way” of Prime Minister Sir Henri Charles Wilfrid Laurier and his Liberal party was to push open the western frontiers and lay new railways across Canada. Part of the zeal for expansion came from a sense of growth and optimism, but there were also pervasive fears that without significant settlements in central Canada, the Americans could end up annexing huge swaths of empty Canadian agricultural lands for its own interests.

To prevent this and enhance its own national identity, Canada threw its doors open to immigration, especially to hard-working Americans from the midwest who were inundated with government-sponsored advertisements about a new life and opportunities that waited in the Canadian prairies.

The campaign worked. Between 1901 and 1906, the population of Saskatchewan surged from 91,279 to 257,763, 86.8% settled in rural farming areas. By 1911, the population almost doubled again to 492,432 with over 80% located away from the cities of Regina and Saskatoon. Next door in Manitoba, many new residents preferred areas south of Winnipeg, closer to the American border.

Serving this population boom depended heavily on Canadian railroads, which delivered settlers and laborers, medicine, farming equipment, and the latest news from Ottawa. The trains returned east with part of the harvest and various meats.

It was no surprise Canada’s telecommunications infrastructure (along with more than a few new towns) would grow up along its railway lines.

With Bell Canada preoccupied with its larger client base in Ontario and Quebec, both the governments of Manitoba and Saskatchewan established provincial, publicly owned, phone companies to take control of their telecommunications future. In 1908, the Manitoba Telephone System (MTS) was born, made up mostly of former Bell customers. In 1909, SaskTel was established as a publicly owned operation as well, again comprising former Bell customers in the province. Both MTS and SaskTel quickly bought out all the remaining private telephone companies still operating in their midst.

The Winnipeg Free Press notes both MTS and SaskTel successfully served their respective customers for nearly 90 years. In 1997, Manitoba’s Progressive Conservative premier Gary Filmon broke his pledge to keep hands off MTS and privatized the company, claiming it would be more innovative in private hands.

That move would not be repeated in Saskatchewan, where every political party in office usually treated SaskTel as sacrosanct to the province’s economic development. Even the conservative Saskatchewan Party, which held power in the province from 1982-1991, never got around to privatizing the phone company, and a pledge to privatize crown corporations in the near future was just one of several issues that led to the party’s downfall in the election of 1991.

For the last 18 years, Canadians have been able to see which province made the wisest choice. The newspaper concluded after nearly two decades, there is strong evidence MTS’ main priorities are to satisfy shareholders and commercial business customers, while rewarding their executives with handsome pay packages.

“Meanwhile, SaskTel appears to focus on customer service and satisfaction, being a good employer and on providing returns to their public shareholder: the people of Saskatchewan,” the Winnipeg Free Press concluded.

Evidence of SaskTel’s service ethic could be found last week when SaskTel was acknowledged as western Canada’s most dependable wireless carrier, according to a new study by market researcher J.D. Power.

“SaskTel ranks highest in overall network quality and performs particularly well in call quality, messaging quality and data quality,” J.D. Power said in its report.

SaskTel has never been reserved about its own accomplishments, particularly its success delivering innovative new services to sparsely populated regions across Saskatchewan:

• SaskTel was the first telecommunications company in Canada to complete its rural individual line service program, eliminating all party lines in 1990;
• SaskTel was at the forefront of Internet provision as the first in Canada to remove the long distance charges on dial-up Internet and the first in North America to offer high-speed service on phone lines through DSL technology;
• SaskTel was among the first commercial users of fiber-optics in the world, today offering customers competitive cable television, broadband, and phone service.

Filmon

MTS has not turned out to be the innovator it was promised to be as a private company. While SaskTel was becoming a world leader in converged fiber optic networks, supplying voice, data and video across a strand of fiber, MTS was raising rates on landline customers.

Today, a basic landline in Saskatchewan costs around $8 a month — 27% less than the cheapest MTS home phone service. Everything at MTS usually costs more, which has turned out very well for shareholders and executives. While MTS earns roughly double the profit of SaskTel, almost all goes to major shareholders and top executives. SaskTel has returned $497 million over the last five years to the provincial government as well as customers through an annual dividend payment. Over in Manitoba, MTS has proved to be innovative in avoiding its tax bill — only paying corporate taxes once in 10 years — and that was just $1.2 million in 2010. Creative accounting at MTS has allowed the profitable company to pay “a big fat zero in federal and provincial corporate income taxes,” according to the newspaper, and MTS does not expect to owe a penny in income taxes until 2020 at the earliest.

So where do MTS profits go? Last year, MTS former CEO Pierre Blouin received $7.8 million in compensation, well above his five-year average of $4.8 million. Blouin’s salary was more than 10 times higher than what SaskTel’s CEO receives annually.

The newspaper adds MTS directors are paid more than 10 times what SaskTel’s directors are paid. But even more disturbing, the man who made the Money Party possible for MTS — former premier Gary Filmon — had a cozy, well-compensated home waiting for him on the MTS board after he lost his re-election bid. He has used his time at MTS to feather his own nest with more than $1.4 million in director fees and compensation over 10 years, along with hundreds of thousands of dollars worth of shares.

“None of this is meant to suggest SaskTel is an ideal company, but it appears abundantly clear this publicly owned and operated company provides better service at lower costs to its customers than the privatized MTS, and it also provides much larger benefits to the people of the province from its profits,” writes economist Toby Sanger. “Despite all this, the Saskatchewan government may be laying the groundwork for privatization of SaskTel. If this is what we can expect from the privatizations of other public utilities — higher fees for the public, lower-quality service, much higher compensation for CEOs and executives, higher corporate profits but much lower returns for the provinces — we can see why Bay Street [Canada’s Wall Street] is so excited about the privatization of Hydro One — and why the people of Ontario should be very worried.”

Signing a three year contract usually meant a cheaper device.

Canadians still stuck on an old three-year wireless contract may be able to leave their current carrier penalty-free as soon as June 3rd as the Canadian Radio-television and Telecommunications Commission’s (CRTC) deadline on lengthy wireless contracts takes full effect this Sunday.

In June 2013, the CRTC banned three-year cell phone contracts in its wireless code to give customers a chance to switch providers more often without an expensive early termination fee to deter them. The commission set a two-year transition period which will end June 3.

But it turns out wireless carriers have not made the process of leaving penalty-free easy and the Commissioner for Complaints for Telecommunications Services (CCTS) expects the ombuds office will be forced to intervene on behalf of consumers. Some providers have applied creative interpretations of the wireless code the industry earlier sued to block on the grounds it created retroactive interference with contractual rights. The Federal Court of Appeal dismissed the wireless industry’s lawsuit last week. The CCTS is notifying providers what it expects from them.

There are two primary groups of customers affected by the June 3rd deadline:

• Those who signed a three-year contract before June 3, 2013:

These customers will see their three-year contracts cut to two years, and all will expire June 3. They can leave their current provider without any early termination fees or penalties.

• Those who signed a three-year contract between June 3-Dec. 3, 2013:

Things get more complicated for customers in this window. While carriers quickly introduced new two-year plans, there are a number of customers who managed to sign a three-year contract during this transition period. These longer contracts have also been cut to 24 months by the CRTC, but an early termination fee may still apply if the contract has not run a full two years and carriers will be permitted to get back their device subsidy if you have not yet paid off your device.

If you like your current carrier, you can stay on your existing contract and nothing will change. If you are ready to leave for another provider, you will need to calculate the termination fee you are likely to owe when you cancel service.

If you accepted a device subsidy to reduce the cost of your device, here is the formula to determine your payoff amount:

Jane Smith signed a contract with Rogers in the late fall of 2013. She is now about 20 months into her contract, which the CRTC has now automatically shortened from its original three years to two. For our purposes, let us say she received a device subsidy of $240 (the exact amount of the device subsidy you received is available from your provider.)

Carriers like Vidéotron offer customers discounts if they bring their old device along.

To calculate the payoff amount to buy out and cancel the contract, take the original device subsidy and divide it by 24. In our example, that equals $10. That means for each month Jane has been in her contract, she has repaid $10 towards the $240 subsidy she received. In this example, she has made 20 payments under contract, which means she has paid back $200 and still owes an additional $40. When she cancels service to switch to Bell (or whatever other carrier she chooses), her exit fee will be $40.

The CRTC also allows carriers to collect an Early Termination Fee (ETF) from customers who paid for a device upfront or brought their own when they signed a contract. These no-subsidy customers must either wait until 24 months have passed from the contract signing date or pay an ETF of the lesser of $50 or 10% of the minimum monthly charge for the remaining months of the now two-year contract.

Bill Smith brought his old iPhone to Telus and signed a three-year contract at the same time Jane did. The CRTC has already lopped off one year of his contract. He will hit the 24 month mark four months from now, but wants to leave to switch to Vidéotron Mobile today. The minimum monthly charge on his Telus bill is $65. For the remaining four months on his contract, he has to pay 10% of $65 for his termination penalty, which amounts to $26 total — his ETF.

Howard Maker, chief executive officer of the CCTS, said, “The calculation is maybe a bit challenging, because not all customers’ contracts will indicate what the device subsidy is.”

Some customers have used the impending end of their contracts as a tool to negotiate a better deal, but it can be tough finding one. After the demise of the three-year contract, last fall many Canadian cell providers raised the monthly price of service on two-year contracts to recoup lost profits.

Although Verizon FiOS retained top honors as the speediest major U.S. ISP according to performance tests conducted by Netflix, Canada’s Bell (BCE) Fibe Internet squeezed past Google Fiber as North America’s top performing ISP for the streaming video provider.

Bell’s fiber optic network delivered an average Netflix stream at 3.64Mbps, compared with 3.63Mbps for Google Fiber. Also performing exceptionally well, Grande Communications, EPB Fiber, CDE Lightband, and Midcontinent Communications. Cox turned in a significant improvement, up from 3.11Mbps last November. But many of Canada’s ISPs outperformed their American counterparts, particularly Bell Aliant, MTS, and Quebec’s Vidéotron.

Globally, both Canada and the United States were embarrassed by better average speeds in the United Kingdom (3.42Mbps) and Switzerland (4.04Mbps). Dragging down the U.S. and Canada are underperforming cable companies, DSL, and slow wireless. Clearwire was the worst performer overall, but telephone company DSL services from AT&T, Verizon, Frontier, Windstream, CenturyLink and FairPoint were also dismal performers.

A complete listing of ISPs rated by Netflix for the month of April in the United States and Canada follows:

CANADA