Subscribe[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Raines Broadcasting CRTC Editorial 2-2-11.flv[/flv]
Chris Raines from Raines Broadcasting offered his take on Usage-based billing and Canada’s telecom regulator in this commentary. Raines calls Bell, Rogers, and Shaw bad actors in Canada’s broadband marketplace, caught throttling and overcharging their customers. (3 minutes)
Finckenstein at Thursday's hearing. Turn me over when I'm done on one side.
Canadian Radio-television and Telecommunications Commission chairman Konrad von Finckenstein appeared before a Commons committee last Thursday to answer questions regarding the growing scandal of so-called “usage-based billing (UBB).” The Commission’s decision to enforce this pricing scheme, ending unlimited broadband service in Canada, has created major headaches for the Conservative government of Prime Minister Stephen Harper.
Seasoned political observers were shocked when Industry Minister Tony Clement earlier tweeted his support for overturning the CRTC decision. Thursday’s hearing at the Standing Committee on Industry, Science and Technology also suggested the decision was made without any prior consultation with von Finckenstein, who appeared to be learning most of the details of the Clement’s decision at the hearing itself or in the morning newspapers.
Facing a grilling from members from just about every major political party in Canada, from the Liberals to the Bloc Quebecois, von Finckenstein only managed to add fuel to the fire, blaming “heavy users” for forcing the end of unlimited usage plans, all to protect what he called “innocent users.” He also blamed online video services like Netflix for forcing new pricing policies on Canadian consumers, who were increasingly using their broadband connections for more than just “e-mail and Facebook.”
At times exasperated, the chairman seemed to rely on industry talking points to address concerns with MP’s in attendance, occasionally without fully understanding their meaning.
At one point, he insisted Internet Protocol TV (IPTV), was never delivered over the Internet. At another, he claimed that providers would certainly use all of the funds collected from new, higher-priced broadband plans to rebuild their networks, asking rhetorically, “how else would they use that money?”
The head of the agency that is tasked with protecting the interests of Canadian consumers regularly compared the Internet to a power, gas, or water utility, which he said justified usage pricing. But von Finckenstein ignored landline telephone service, which is most related to broadband — a service moving towards flat rate pricing. Instead, he relied on cell phone pricing, which caused several reporters to cringe, as they reflected on newly-introduced flat-rate calling plans among new wireless competitors.
At this point a reporter for the Globe & Mail bemused with all of the utility comparisons tweeted: “Main difference is I can’t watch movies on my furnace.”
Watch the entire 90-minute hearing by clicking here and choosing the English version, which provides simultaneous translation as the hearing moves back and forth from French to English.
The CRTC’s decision to ignore hundreds of thousands of petition signers across Canada while quickly acceding to Bell’s request for a 60-day temporary delay in implementing the pricing scheme brought an angry response from Openmedia.ca, a pro-consumer group highly critical of UBB.
“The CRTC’s stubbornness in the face of a mass public outcry demonstrates the strength of the Big Telecom lobby’s influence,” said founder and national coordinator Steve Anderson . “While government officials have recognized the need to protect citizens’ communications interests, the CRTC has made it clear that their priorities lie elsewhere. Now is the time for citizens to demonstrate that they, rather than incumbent ISPs, are the real stakeholders.”
Some media observers and consumer groups are also scoffing at the government’s suggestion the CRTC should be allowed to review its own, earlier decision, claiming it is a virtual certainty the regulator will find their original decision was the correct one.
In fact, von Finckenstein’s relentless defense of usage-based pricing, even in light of recent political realities, suggest the Commission’s authority could be swept aside to keep the matter from becoming an issue in future elections.
“I would like to reiterate the Commission’s view that usage-based billing is a legitimate principle for pricing Internet services,” the chairman told members attending the hearing. “We are convinced that Internet services are no different than other public utilities, and the vast majority of Internet users should not be asked to subsidize a small minority of heavy users. For us, it is a question of fundamental fairness. Let me restate: ordinary users should not be forced to subsidize heavy users.”
The CRTC also claims the UBB policy will only impact residential customers — business accounts are exempt. But several MPs questioned that statement, suggesting home-based businesses, farmers and other entrepreneurs would face Internet Overcharging schemes.
Canada’s Liberal Party is using the occasion to embarrass the Tories’ handling of what they’ve called an Internet fiasco. Liberal’s industry critic, Marc Garneau, used some of his seven minutes of question time to ask whether the CRTC first heard of the Harper government’s stance on UBB through social media network Twitter.
Quotes from the CRTC Chairman; Image by Vojtěch Sedlák & Openmedia.ca
High gain Wi-Fi antennas like this one allowed one Ontario couple to leave Canada's cable companies behind and sign up for Time Warner service in the United States.
Last week, Stop the Cap! compared prices from two Internet Service Providers — Rogers Communications on the western side of the Niagara River — in Ontario, and Time Warner Cable on the eastern side in Niagara Falls, N.Y.
The price disparity is no secret to one Canadian family who read our piece and let us know they import their broadband service, thanks to long distance Wi-Fi, from the United States.
The couple, Neil and Michelle (we’ve been asked not their reveal their real names) and their three boys have lived along the Niagara River, which divides the United States and Canada, for over a decade. Jim has been fascinated with low power, long distance communications since his days in amateur radio.
“I’ve always been trying to see what stations I can pick up, especially low power ones,” Neil tells us.
That curiosity came with Neil to his interest in broadband wireless communications. Living along the river, Neil was fascinated to see Wi-Fi signals make their way across the river from the United States’ side.
“Thanks to a clear shot across the river, and a lot of businesses located adjacent to the Robert Moses Parkway, it’s easy to pickup Wi-Fi signals from businesses on the American side,” says Neil.
Neil discovered many networks wide open for public use and began to consider the implications of “importing” his broadband service from the United States to escape Rogers’ high prices.
“For Canadians, the idea of escaping the country’s communications providers is not that unusual,” Neil says. “Some already have ‘gray market’ satellite dish accounts with America’s DISH or DirecTV, and some even use American prepaid cell phones, which are much cheaper than our own services and get good local reception across Niagara Falls down to Fort Erie.”
“So I began wondering what would happen if we could install a decent Wi-Fi system high enough on the house to get a good signal from a partner on the other side of the river,” Neil pondered. “We started by putting a test signal up and driving through some Niagara Falls neighborhoods on the American side and found some good prospects.”
A long-shot advertisement on a well-known “for-sale/trade” website paid off, when an American family responded, intrigued by the experiment.
“The fact we were willing to pay their cable bill as compensation didn’t hurt either,” Neil suggests. “The chances appeared very good for success, because we can see some of their trees from our roof.”
Niagara Falls, Ontario (left) and Niagara Falls, N.Y. (right), divided by the Niagara River.
Neil guessed right because today, with the help of two raised directional, roof-mounted high-gain Wi-Fi antennas that can literally “see” one another, the Ontario family enjoys its cable-TV and broadband service from Time Warner Cable.
“The signal is rock solid and the only time we get some speed problems is if someone in one of the bed and breakfast places nearby ends up on our channel,” Neil says. “We can even watch television with the help of a Slingbox we installed on the American side which works perfectly fine on a Wireless N connection.”
Since the rise of Canada’s exchange rate against America’s declining dollar, the savings are dramatic. A comparable cable-TV plan with Rogers runs $80 a month for standard service, equipment fees, and HD service charges. Add another $50 for broadband service with the modem rental fee and Neil would pay Rogers $130 a month before taxes for the two services.
“And we would be limited to just 60GB of usage per month before the $2/GB overlimit fee started making the bill even higher,” Neil says.
Time Warner Cable currently charges Neil’s adopted family $87 a month for television and broadband on a promotion.
Today, Neil’s conscience (and savings) led him to decide “borrowing” another family’s account wasn’t fair, so now he pays for -two- accounts with Time Warner, one for the New York family, the other belonging to him.
“Time Warner thinks of us as apartment renters and bills a post office box,” Neil says. “The other family doesn’t care about cable-TV anymore so we’re just paying for their broadband account.”
The neighbors are certainly amused.
“When they come over, they call us ‘the American Embassy in Niagara Falls’ because of all the ads for Time Warner they see across the cable channels we get and because American cable systems ignore virtually all Canadian TV networks.”
Why go through all this?
“Now that we’re paying for two accounts, it’s a matter of principle,” Neil says. “I will not do business with a company that slaps usage limits on broadband, and now I don’t have to.”
In fact, now that the family’s sons are getting close to teen years, their Internet use is growing.
“We almost don’t care about the cable-TV anymore ourselves — we’re watching shows online, on-demand in this household,” Neil says. “For my kids, they are growing up with the concept of television being always on-demand and it works around their schedule, not the other way around.”
Besides, Americans have access to Hulu, and Canada does not.
“Hulu is very important, and Netflix was even before it was sold in Canada,” Neil says. “Now we can watch what we want, as much as we want, and pay a fair price for unlimited broadband.”
Neil can’t complain about Time Warner Cable, except for the fact it provides him with a U.S. IP address, which locks him out of a lot of Canadian online video-on-demand services from the CBC and other networks’ websites.
“They do a much better job than Rogers ever did with consistent broadband speeds and fewer outages, and we can live without replays of 18 to Life and Little Mosque on the Prairie,” Neil says. “I’m just glad you folks at Stop the Cap! convinced Time Warner to abandon the kind of pricing that is ruining the hell out of Canada’s broadband.”
Prime Minister Harper's government is facing an open revolt by Canadian consumers over Internet Overcharging.
A full-scale revolt among consumers across Canada has brought the issue of Internet Overcharging to the highest levels of government.
A spokesman for Prime Minister Stephen Harper said the government is very concerned about a decision from the Canadian Radio-television and Telecommunications Commission that has effectively forced the end of unlimited use broadband plans across the country.
Both the Liberal and NDP parties have made a point of protesting the CRTC decision, which happened under the Conservative Party’s watch. Harper’s Industry Minister Tony Clement stepped up his remarks this morning which hint the government is prepared to quash last week’s decision by the CRTC, which has already forced price increases for broadband service across the country.
“The decision on its face has some pretty severe impacts,” Clement told reporters in Ottawa after NDP and Liberal critics in the House of Commons repeatedly pounded the government on the issue of so-called “usage-based billing.”
“I indicated the impacts on consumers, on small business operators, on creators, on innovators. So that’s why I have to work through a process, cross my T’s, doc my I’s. When you’re dealing with a legal process, that’s what you have to do. But I will be doing that very, very quickly, and getting back to the prime minister and my colleagues very, very quickly,” said Clement.
As of this morning, more than 286,000 Canadians have signed a petition protesting the Internet Overcharging schemes.
The protest movement has now been joined by small and medium-sized business groups who fear the impact new Internet pricing will have on their businesses.
Richard Truscott, with the Canadian Federation of Independent Business, normally a group that prefers less government action, said his members are demanding a stop to the pricing schemes before they get started.
“The vast majority of small businesses rely on reasonably-priced Internet service to conduct their operations,” he said. “Generally this is the sort of thing that hits the most innovative sector with higher costs.”
Most cable and phone companies are lobbying Ottawa politicians to keep the new usage-based billing schemes, and several are pretending the protest movement doesn’t exist.
AgenceQMI, a cable-company owned wire service, is also coming under fire for misrepresenting Clement’s positions on the pricing schemes in a news report issued yesterday. The wire service claimed Clement supported the CRTC’s position, something Clement adamantly denied this morning.
The National Post, a self-described conservative newspaper, this morning published an editorial supporting usage-based pricing, claiming a handful of users were creating a problem that light users should not pay to solve. But many readers leaving comments on the article strongly disagreed, claiming the newspaper is out of touch.
Although the regime of usage caps, speed throttles, and overlimit fees have been in place with most major providers for at least two years, the culmination of several events in the last six months have brought the issue to the boiling point:
Bill Shock
Kevin Brennan, a graphic designer who works from home and downloads large files from clients, was first hit with extra charges in November, which cost him $34 above his usual Shaw bill.
“I’d never been contacted about going over before,” he told the Calgary Herald, adding he was also over in December. “Thirty-four dollars doesn’t seem like much, but over the course of a year it adds up.
“What concerns me, outside my own business, is the lack of innovation people will be able to do. And it makes Shaw a monopoly. . . . if you watch TV or the Internet, you pay more to them.”
Shaw reduced its usage allowance for customers like Brennan late last year from 75 to 60GB on its most popular broadband plan. It also now enforces a $2/GB overlimit fee.
John Lawford, counsel for the Public Interest Advocacy Centre, told the Herald the concern isn’t just that smaller companies can no longer offer unlimited plans, which reduces competition.
“The phone and Internet and cable companies of the world are playing it both ways. They’re saying, ‘Well, there’s these big data hogs that are using too much, we’ve got to punish them to keep the price down.’ On the other hand they’re buying media companies so they have stuff to shove down the wires, which doesn’t count toward your cap,” Lawford said. “That’s anti-competitive.”
Most Canadian media companies are now tightly integrated with large telecommunications companies. CTV, Canada’s largest commercial network, is now owned by Bell, the country’s biggest phone company. Rogers, Shaw, and Videotron — the largest cable companies in Canada own cable and broadcast stations, newspapers, and magazines. They also control cellphone companies, Wi-Fi networks, and have interests in satellite providers as well.
When a competitor like Netflix arrives to challenge the companies’ pay television interests, turning down consumers’ broadband usage allowances discourages cord-cutting.
The CRTC’s decision to allow Bell to charge usage-based pricing for wholesale accounts was the final death blow to unlimited Internet according to several independent service providers, because virtually all of them rely on Bell — a company that received taxpayer subsidies to build its broadband network — for access to the Internet.
Canadian Parliament
TekSavvy, a company that used to offer unlimited use plans, can do so no more. In a statement to customers, TekSavvy laid blame on regulators for being forced to increase prices.
“From March 1 on, users of the up to 5Mbps packages in Ontario can expect a usage cap of 25Gb (60Gb in Quebec), substantially down from the 200Gb or unlimited deals TekSavvy was able to offer before the CRTC’s decision to impose usage based billing,” read a statement sent to customers.
TekSavvy spokeswoman Katie do Forno said the CRTC decision is a disaster for Canadian broadband in the new digital economy.
“This will result in unjustifiably high prices and a reduction in innovation,” said do Forno. “I think it’s going to change behavior about how people use the Internet.”
The company underlines the point by including “before and after” pricing schedules on its website, an unprecedented move. Shaw, western Canada’s largest cable company, was heavily criticized for trying to hide their reduction in usage allowances.
Ottawa residents are planning direct action to protest the decision this Saturday. Shawn Pepin is organizing the protest rally.
“What they’re doing right now looks like a cash-grab scheme, and people aren’t going to take it,” he said.
[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC News Pay As You Go Tony Clement 2-1-11.flv[/flv]
Minister of Industry Tony Clement was pressed by CBC Television about the Harper Government’s stand on Internet Overcharging. The CBC asks why Canadians are paying some of the world’s highest prices for broadband and why Clement is finally getting involved. Watch as he mysteriously avoids stating the obvious: Canadians are in open revolt and politicians from competing parties are taking their side. (9 minutes)
Clement
On Monday, the Federal Minister of Industry Tony Clement issued a statement about Internet Overcharging that was so non-committal, media companies are interpreting his comments as “for” and “against” usage-based billing.
Tony Clement’s full statement:
“On Tuesday, January 25, 2011, the CRTC announced its decision to allow wholesale and retail internet service providers to charge customers for exceeding the monthly usage of data transfer permitted with their broadband Internet package. This will mean, for the first time, that many smaller and regional internet service providers will be required to move to a system of usage-based billing for their customers.
I am aware that an appeal has been initiated by a market participant. As Canada’s Industry Minister, it is my job to help encourage an innovative and competitive marketplace, and to ensure Canadian consumers have real choices in the services they purchase. I can assure that, as with any ruling, this decision will be studied carefully to ensure that competition, innovation and consumers were all fairly considered.
The Harper Government is committed to encouraging choice and competition in wireless and internet markets. Increased choice results in more competition, which means lower prices and better quality services for Canadians. We have always been clear on our policies in this regard and will continue on this path.
Our Conservative Government is focused on the economy and creating a positive environment for job creators and business to flourish. Canadians can count on us to do what is in the best interest of consumers.”
AgenceQMI and Videotron are both owned by Quebecor Media
CBC Radio made mention of Clement’s comments and indicated the minister had expressed concerns about the billing scheme, but readers of wire service reports from AgenceQMI are getting an entirely different view — Clement’s approval of the new pricing scheme.
In a French language story headlined, “Minister Clement justifies the end of unlimited Internet packages,” the news agency got just a little creative in interpreting Clement’s statement (roughly translated from the French original):
He also argues that billing based on actual usage would more efficiently manage Internet traffic and bandwidth and provide a better experience for light users, currently impacted by massive data exchanges among the Internet’s heaviest users.
Minister Clement, who supports this decision, said in a statement that it is his duty to encourage a more competitive market.
It’s hardly a coincidence that AgenceQMI‘s creative spin of Clement’s statement just happens to match the position of Videotron, Quebec’s largest cable company. They are both owned by Quebecor Media. Videotron engages in Internet Overcharging that left one Montreal student with an $1,800 broadband bill.
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